NBFC gold loans surge 66% to ₹3.74 trillion amid retail boom

Outstanding gold loans extended by NBFCs jumped 66.1 per cent year-on-year in September, reaching ₹3.74 trillion and emerging as one of the fastest-growing segments in the retail lending space. The surge reflects a sharp pickup in consumer demand for collateral-based borrowing, with gold-backed loans increasingly preferred by both lenders and borrowers amid volatile market conditions.

The exceptional growth rate substantially outpaced expansion in other retail lending categories, signalling a structural shift in borrower preferences toward gold-backed products. NBFCs have aggressively expanded their gold loan portfolios to capture market share, capitalising on the relatively lower default risk traditionally associated with precious metal collateral.

However, industry observers have flagged emerging concerns regarding credit quality within the rapidly expanding segment. A portion of borrowers carrying outstanding gold loans have accumulated overdue payment obligations, raising questions about underwriting standards and the sustainability of the current growth trajectory.

The acceleration in gold lending reflects broader trends in India's retail credit market, where consumers have increasingly turned to secured borrowing products. Analysts suggest the growth may moderate if asset quality metrics deteriorate or if regulatory authorities impose stricter lending guidelines on the NBFC sector.