Hello, I’m Priyanka Salve reporting from Singapore. Welcome to this week’s edition of Inside India, your gateway to the latest stories from one of the world’s fastest-growing economies. Today, we delve into the remarkable surge in gold-loan growth within India, the second-largest bullion market globally. With households collectively holding an estimated $5 trillion in gold, loans against this precious metal are becoming a multibillion-dollar industry.
Recent data reveals that Indian families possess over 34,000 tons of gold, a figure highlighted in a Morgan Stanley report from October 2022. This vast reserve is now driving the rapid expansion of gold-backed lending as traditional consumer credit slows. The growth is fueled by stricter banking regulations on unsecured loans, escalating global gold prices, enhanced accessibility to credit, and an uptick in financial pressures on households. According to Shripad Jadhav, head of gold loans at Kotak Mahindra Bank, while roughly 90% of gold holdings remain untapped, the gold loan segment is beginning to reshape India’s retail credit landscape, attracting interest from international investors.
Notably, global private equity firm Bain Capital has taken a significant step by aiming to acquire a stake of up to 41.7% in Manappuram Finance, India’s second-largest gold loan provider. This deal, approved by the Reserve Bank of India, underscores the growing recognition of gold as a viable asset for investment. Similarly, Japanese financial giant MUFG announced its acquisition of a 20% stake in Shriram Finance, a player focused on gold loans, indicating a broader international interest.
Data from the Reserve Bank of India shows gold loans more than doubled in just one year, surging to 4 trillion rupees (around $43.3 billion) by January 2024, up from 1.75 trillion rupees in the previous year. Yan Wang, chief emerging market strategist at Canadian firm Alpine Macro, estimates the actual size of gold loans in India to be as high as 14 trillion rupees, noting that much of this volume comes from Non-Banking Financial Companies (NBFCs), which represent approximately 45% to 50% of the market-a segment not fully captured by RBI statistics.
The tightening of unsecured lending by India’s central bank in late 2023 has significantly impacted access to credit for small and private businesses. As Hanna Luchnikava-Schorsch from S&P Global Market Intelligence points out, personal loan growth has slowed markedly, falling from an average of 30% in late 2023 to just 12.2% in early 2025. Meanwhile, gold prices have skyrocketed, increasing over 140% since 2024 to exceed $5,000 per ounce, making gold loans increasingly attractive as borrowers can unlock greater value from their assets.
Historically, demand for these loans has come mainly from South Indian states, particularly among agricultural communities. However, growth has expanded nationally, with middle-class and high-net-worth individuals across major cities now utilizing gold loans for immediate financial needs.
Market leaders like Manappuram Finance and Muthoot Finance have reaped the benefits, with share prices surging significantly over the past year. Shreya Shivani, an analyst at Nomura, notes that NBFCs can expedite loan disbursement, often processing applications within an hour, making gold loans accessible even for those with poor credit histories.
While this growing reliance on gold loans highlights financial agility, it also raises concerns about economic stability as many households grapple with rising living costs and stagnant incomes. Jadhav emphasizes the trend as a sign of financial maturity, as individuals increasingly leverage gold for quick, low-cost credit solutions.
In other news, Indian Prime Minister Narendra Modi has reached out to Iran for discussions on energy supply risks amidst escalating tensions, while India’s consumer inflation has risen for the fourth consecutive month, reaching 3.21% in February. For more updates, stay tuned to CNBC as your trusted source for business news.
Original Source: https://www.cnbc.com/2026/03/19/gold-loan-demand-rises-india.html
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Publish Date: 2026-03-19 09:36:00
