Gold loan market trebles since 2023 as defaults accelerate sharply

The gold loan market has tripled in size since 2023, driven by robust consumer demand and lenders' aggressive expansion into tier-2 and tier-3 cities across India. However, this rapid growth has come with a significant caveat: delinquency rates have surged sharply in 2026, signalling emerging stress in the borrower base.

According to industry executives, specific borrower segments are proving particularly vulnerable to payment defaults. Those carrying multiple gold loans simultaneously face heightened financial strain, while borrowers taking smaller loan amounts and those with prior histories of missed payments represent higher-risk categories. The concentration of risk among these groups suggests that rapid credit expansion may have outpaced adequate underwriting discipline.

Lenders are now grappling with the implications of this delinquency spike as the sector matures. The gold loan business, traditionally viewed as a secured lending category due to collateral backing, relies on borrower capacity to service debt. As loan books swell and reach increasingly diverse customer segments, maintaining asset quality has become a critical challenge for the industry.

Experts attribute the delinquency rise to macroeconomic pressures, seasonal income volatility, and competition-driven relaxation of credit standards during the boom phase. Going forward, lenders are expected to tighten eligibility criteria and implement more rigorous monitoring of multi-loan borrowers to prevent further deterioration in portfolio quality.