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Factors behind the rise of gold loans
Shift toward collateral-backed lending
A key factor driving the rise in gold loans is the preference for secured, collateral-backed loans.
Borrowers have moved from unsecured personal loans to loans backed by assets like gold.
This change reflects a shift toward more stable borrowing options.
George Alexander Muthoot, Managing Director of Muthoot Finance, noted the role of gold loans:
“Gold loans act as a tool for financial inclusion, offering access to credit for those without a prior credit history. Many borrowers use these loans to support small businesses, which strengthens economic activity.”
This trend shows that gold loans are meeting the needs of a wide range of borrowers, especially in the MSME sector.
Lower-risk borrowing
Secured loans, such as gold loans, are backed by valuable assets, offering lenders assurance of repayment in case of default.
This lower risk for lenders often results in lower interest rates compared to unsecured loans.
Regulatory support and market trends
The Reserve Bank of India (RBI) has taken steps to promote secured lending.
Measures have been introduced to shift borrowers from unsecured credit to secured options like gold loans.
These actions have helped build trust in the gold loan market.
Muthoot Finance reported ₹1 lakh crore in consolidated loan assets under management in 2024. The company’s Q2 FY24 net profit grew by 21% to ₹1,321 crore, while total revenue increased by 36.7% to ₹4,928.8 crore.
Estimates suggest that the gold loan market could reach ₹15 lakh crore by 2027.
Outlook for 2025 and beyond
The organised gold loan market is expected to surpass ₹10 lakh crore in the current financial year, with projections from ICRA suggesting it could exceed ₹15 lakh crore by 2027.
This growth is driven by the shift toward secured lending and the formalisation of the gold loan sector.
Public sector banks are seeing growth in agricultural loans secured by gold jewelry, while NBFCs are projected to expand their gold loan portfolios by 17-19% in FY2025.
A look at gold loan rates of some of the lenders
| Name of the Bank | Interest Rate | Loan Amount |
| Axis Bank Gold Loan | 17% p.a. onwards | ₹25,001 to ₹25 lakh |
| HDFC Gold Loan | 9.30% p.a. to 17.88% p.a. | ₹25,000 onwards |
| Canara Bank Gold Loan | 9.25% p.a. (MCLR) | ₹5,000 to ₹35 lakh |
| Muthoot Gold Loan | 10.90% p.a. | ₹1,500 onwards |
| SBI Gold Loan | 10.20% p.a. onwards | ₹20,000 to ₹50 lakh |
| Kotak Mahindra Gold Loan | 9.00% p.a. – 24.00% p.a. | ₹20,000 to ₹1.5 crore |
| IndusInd Bank Gold Loan | 10.35% – 17.05% | Up to ₹20 lakh |
| Manappuram Gold Loan | 21% p.a. to 26% p.a. | As per the requirement of the scheme |
| Bank of Maharashtra Gold Loan | 9.30% p.a. onwards | Up to ₹25 lakh |
| PNB Gold Loan | 9.15% p.a. | ₹25,000 to ₹25 lakh |
| Bank of Baroda Gold Loan | 9.15% p.a. | Up to ₹50 lakh |
(Source: Bankbazaar)