NEW DELHI — Gold loans have emerged as the largest segment in India’s retail credit market, accounting for 36 percent of total loan volumes and about 40 percent by value, according to a report released Tuesday.
The findings from TransUnion CIBIL highlight a surge in demand driven by rising gold prices and a growing consumer preference for secured borrowing. The report noted a sharp increase in average loan sizes, with the typical gold loan amount rising to around Rs 190,000 in the December 2025 quarter, reflecting a significant jump over the past two years.
The consumer market indicator (CMI), a key measure of credit market health, rose to 102 in the December 2025 quarter, up from 97 a year earlier and 100 in the previous September quarter. This marks the third consecutive quarter of improvement.
Higher gold prices have encouraged consumers to unlock the value of their holdings, contributing to a strong increase in both loan demand and disbursements, the report said.
Growth in gold loans is also expanding beyond its traditional base in southern India. Faster growth is now being seen in northern and western states, including Uttar Pradesh, Madhya Pradesh, and Rajasthan.
The segment is attracting a broader borrower profile as well, with more than half of loans being taken by prime and above-category customers. This shift points to increasing acceptance of gold loans as a mainstream credit product rather than a niche financing option.
While credit supply eased following festive-season demand and momentum tied to goods and services tax (GST) activity, the report said the slowdown appears to be seasonal rather than structural.
Demand for credit remained strong overall, particularly in semi-urban and rural areas. Non-metro regions accounted for 54 percent of the total borrower base, up three percentage points from a year earlier. The share of new-to-credit consumers also rose to 15 percent.
In comparison, auto loan volumes remained stable in the post-festive period, supported by demand in the affordable mid-segment category. Supply in the segment also increased on a daily average basis compared to the previous year. (Source: IANS)
