MUMBAI: Gold loans are surging despite low growth in the number of borrowers as well as the quantity of gold that is pledged with lenders. Gold loans have grown over 50% in FY26 largely because of larger loans by existing borrowers and a shift from other personal loan products to secured gold loans.Gold loans accounted for 22.4% of total consumer credit as of March 2026, making them the second-largest retail credit segment after home loans, which had a 26.3% share. NBFCs increased their share of the organised gold loan market to 22% in March 2026, while gold loans accounted for 20% of their assets under management.According to a study by Icra, growth in the gold loan book over the past five years was primarily driven by rising gold prices. NBFC branch additions and the total tonnage of gold jewellery held as collateral grew at a modest rate of 3-4%, compared to a 24% expansion in the loan book of major players during 2021-22 to 2025-26. Data from credit bureau CRIF reveals that the number of borrowers grew by only 3.1% in FY26 to 899.2 lakh.

“Growth was achieved via higher collateral valuation per gram, allowing existing borrowers to take higher ticket sizes against the same physical gold,” said A M Karthik, senior vice-president and co-group head, financial sector ratings, Icra.“Gold loans have functioned countercyclically, capturing demand from borrowers shifting away from unsecured credit options (such as personal loans, SME credit, and microfinance) toward secured gold financing,” he added. In other words, existing borrowers are using the gold already pledged with lenders to borrow more.Among nationalised banks, the largest share of gold loans is with Canara Bank, whose non-agri gold loan book crossed Rs 1 lakh crore in Q1FY27. “We expect gold loans to continue growing at a strong pace going forward given the bank’s concentration of branches in South India where gold loans are popular,” said Brijesh Kumar Singh, the bank’s MD and CEO.According to Karthik, the slowdown in unsecured lending had prompted lenders to shift their focus to gold loans.