New Delhi, March 19 Indian households are sitting on an enormous reserve of gold, and that wealth is now quietly reshaping the country’s lending market, a report has said.
According to a report by Morgan Stanley, Indian households collectively own more than 34,000 tonnes of gold.
Kotak Mahindra Bank estimates this stockpile to be worth nearly $5 trillion. While most of this gold -- around 90 per cent -- still lies idle, it is increasingly being used as collateral to raise quick loans.
Gold-backed lending has emerged as one of the fastest-growing segments in India’s retail credit space.
This comes at a time when other forms of consumer loans, especially unsecured personal loans, have slowed due to tighter regulations.
The Reserve Bank of India had tightened rules around unsecured lending in late 2023, limiting easy access to such credit for many borrowers.
As a result, more people are turning to gold loans. These loans are easier to access, often require minimal paperwork, and can be disbursed quickly.
At the same time, a sharp rise in global gold prices has made this option even more attractive.
Since 2024, gold prices have surged significantly, increasing the value borrowers can unlock against their jewellery.
Data from the RBI shows that gold loans more than doubled in just one year, reaching Rs 4 trillion in January from Rs 1.75 trillion a year earlier.
This makes gold loans the fastest-growing retail credit category in India, after home and vehicle loans.
However, the actual size of the gold loan market is believed to be much larger. Experts estimate it to be around Rs 14 trillion, as RBI data does not fully capture lending by non-banking financial companies (NBFCs).
These NBFCs account for nearly half of the gold loan market. The rapid growth of gold loans is also drawing global attention.
Private equity firm Bain Capital is planning to acquire up to a 41.7 per cent stake in Manappuram Finance, a deal recently approved by the RBI.
Meanwhile, Japan’s financial giant Mitsubishi UFJ Financial Group has acquired a 20 per cent stake in Shriram Finance, which is also expanding its gold loan business.
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