The growth in gold loans of banks reached an all time high in the financial year 2024-25.
According to the latest data of Reserve Bank of India the gold loan portfolio of scheduled commercial banks increased 87.4 percent in the April 2024 and February 2025 period of the last financial year as against 15.4 percent growth in the corresponding period of previous financial year.
While total outstanding portfolio under gold loans was at ₹ 1,02562 crore, it reached ₹1,91,198 crore as on February 2025.
Informal industry data pegs the full year growth at 104 percent. While the consolidated data on increase in gold loans of banks for the full year of FY25 has not been released by RBI yet, the data from individual banks show the phenomenal increase in gold loans in the last financial year.
For instance, State Bank of India (SBI) posted 53 percent growth in the outstanding portfolio under gold loans at ₹50,011 crore in FY25 compared to the previous year.
“The demand for gold loans was consistently high during the last fiscal and the same trend is also continuing in the current fiscal too. We are following norms at all branch levels where customers are being advised to repay the loans as per the terms of the loans without giving an option of renewing the loan after taking interest. If they need, they can take a fresh loan later. Thus, this is a safe portfolio of the banks and good for customers too,’‘ a senior SBI official told businessline.
“The recent growth in the gold loan portfolio suggests some shift in the households’ loan-seeking behaviour, i.e., pledging the metal for availing loans for a variety of needs and for consumption smoothing. For banks and other financial institutions, it seems to have worked better to push gold loans because of its increasing price rather than going for an unsecured loan portfolio,’‘ Debashis Acharya, Professor, School of Economics, University of Hyderabad said.
The market share in gold loans may tilt in favour of banks, and NBFCs in near future and one may see reduction in unorganised lending against loans, he added.
According to an economist with a major private bank, the increase in price of gold and subsequent rise in the amount of loan per gram also driving more demand for gold loans especially from those who have issues in accessing other retail personal loans due to Cibil score and other issues.
Strict norms
Meanwhile, our enquiries with banks reveal that banks are acting tough on renewals of gold loans beyond the stipulated terms.
“Till recently many a bank used to renew the loan by taking the interest by showing it as a fresh loan in the books without the customers actually repaying the loans and claiming back their jewellery. But RBI norms prohibit this type of renewal. This is being strictly implemented now,’‘ said Chief General Manager of a public sector bank.
Similarly, banks have also stepped up vigil on gold loans for agricultural purposes to ensure that the loans amounts are not being directed for non-agricultural purposes, as per directions of the State Level Bankers Committees.
Published on May 5, 2025
