Hello, I am Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of Inside India – your one-stop destination for stories and developments from the world’s fastest growing major economy.
This week, I explain why gold loan growth is accelerating in the world’s second largest bullion market. Loans against gold in India are a multibillion-dollar industry, run by families holding bullion capital of $5 trillion.
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big story
Indian households are sitting on a mountain of gold.
According to a Morgan Stanley report in October last year, they hold more than 34,000 tonnes of the yellow metal, with Kotak Mahindra Bank valuing it at around $5 trillion.
That huge reserves are now powering one of the fastest growing lending sectors in India. As other forms of consumer credit are slowing down, gold loans have increased due to stricter banking regulations for unsecured loans, a sharp rise in global gold prices, better access and perhaps increased financial stress among households.
While almost 90% of Indian families Hoardings still lie idle According to Shripad Jadhav, business head of gold loans at Kotak Mahindra Bank, gold-backed loans are starting to reshape India’s retail lending landscape, even attracting some global investors.
Global private equity firm Bain Capital has made a bold bet on loans against gold, with plans to acquire a 41.7% stake in Manappuram Finance, India’s second largest gold loan provider.
deal, allowed The move by the Reserve Bank of India last month signals how international investors see opportunities in the country’s most traditional but underutilized asset.
In December last year, Japanese financial giant MUFG had said it was acquiring 20% stake in Indian shadow banking firm Shriram Finance, which plans to double the loans against gold.
RBI data shows that gold loans are even higher than this double In one year, it rose to 4 trillion rupiah ($43.3 billion) in January from 1.75 trillion rupiah a year earlier. Gold-backed loans are now the largest retail loan segment in the country after home and vehicle loans, as well as the fastest growing retail loan category.
The actual size of gold loans in India is estimated at Rs 14 trillion, said Yan Wang, chief emerging markets strategist at Canadian firm Alpine Macro, adding that the RBI data only reflects individual gold loans from a few commercial banks.
According to last month’s Macquarie report, non-banking financial companies, or NBFCs, account for 45%-50% of the gold loan volume – which is not captured by the RBI.
gold Rush
As India’s central bank tightened unsecured lending rules in late 2023, it closed off access to this line of credit for many small and private business borrowers, Hannah Luchnikava-Schorsh, head of Asia-Pacific economics at S&P Global Market Intelligence, told me.
“Personal credit growth has slowed from an average of 30% in the six months to December 2023 to 12.2% in 2025,” he said. During this period, gold prices have increased globally.
From 2024 till today, Sleep This year it has created many records, crossing $ 5000 per ounce with a gain of more than 140%.
Luchnikwa-Schorsch said higher gold prices increase the value that can be unlocked with the same amount of metal for borrowers – making gold loans more attractive.
Experts said that historically, demand for loans against gold was driven by south Indian states and the semi-urban market, especially agricultural communities.
This growth is now widespread across India, says Jadhav of Kotak Mahindra Bank, as the middle class as well as high-net-worth individuals in big cities are using gold loans to meet time-sensitive financial needs.
NEW DELHI, INDIA – OCTOBER 18: People buy gold and silver jewelry on the occasion of Dhanteras at PP Jewellers, Karol Bagh in New Delhi, India on October 18, 2025.
Hindustan Times | Hindustan Times | getty images
The biggest beneficiaries of this demand for gold loans have been NBFCs like Manappuram Finance and industry leaders Muthoot Finance. Their shares have risen 24% and 47%, respectively, over the last year, and have outperformed the benchmark Nifty 50 index by a wide margin.
“Most NBFCs can disburse the loan within an hour of the customer visiting the branch,” said Shreya Shivani, NBFC analyst at Nomura.
Even a person with a “poor” credit score who has good quality gold can get a loan at a better loan rate than an unsecured personal loan, he said. While this increases access to credit, it also raises questions.
While the rapidly growing loan segment that bypasses traditional credit appraisal may indicate stress in the economy, the Macquarie report also attributed the surge in gold loans to people feeling financially strapped and income not keeping pace with costs.
Sripada says the growth in gold loans is “an indicator of financial maturity” as people are monetizing the precious metal and using it as a hassle-free, quick and low-cost credit line.
need to know
India’s Modi reached Iran. Indian Prime Minister Narendra Modi called Iranian President Massoud Pezeshkian just hours after Tehran’s new supreme leader vowed to keep the Strait of Hormuz closed, as New Delhi struggles to minimize energy supply risks.
India’s US-Israel tilt is testing relations with Iran. Whereas millions of barrels of oil goes to China through India’s Strait of Hormuz. – Tehran’s longtime ally – has so far been unable to secure safe passage for its ships stuck in the vital waterway as ties with Iran have come under strain due to New Delhi’s deepening ties with the US and Israel.
India’s consumer inflation has increased for the fourth consecutive month. India’s consumer inflation rose to 3.21% in February, up from 2.75% in the previous month, but in line with expectations of economists polled by Reuters.
is coming
March 20: Weekly RBI update on India FX reserves.
March 20: Central Mine Planning and Design Institute’s IPO opens.
March 24: India HSBC Manufacturing & Services PMI flash.
