Key Takeaways:
- Higher Loan Risks: Larger gold loans above ₹2.5 lakh show double the delinquency rates of smaller ones.
- Massive Market Growth: Gold loans now comprise 11.1% of India’s retail credit, doubling since early 2022.
- Shift in Strategy: Lenders must assess borrower repayment capacity rather than relying only on pledged gold value.
Delinquencies among Indian gold loan borrowers are rising, especially for larger loans, as soaring gold prices push more households toward higher-value borrowing, reflecting a broader gold loan surge India, according to a new study by TransUnion CIBIL.
Borrowers with post-origination gold loan balances above Rs 2.5 lakh recorded a delinquency rate of 1.5 percent in the six months ended June 2025, more than double the 0.7 percent rate for borrowers with lower balances, the study found.
Overall delinquency across gold loans stood at 1.1 percent during the period. Delinquency was measured as loans that were 60 days past due within six months of origination.
The findings come as gold loans gain popularity across India following a sharp rise in gold prices during 2024 and 2025, contributing to the ongoing gold loan surge India. Higher gold prices increase the value of pledged jewelry, allowing borrowers to secure larger loans against the same amount of collateral.
Larger Gold Loans Show Higher Default Rates
The study found that borrowers with a history of serious repayment issues were more likely to fall out of the formal credit system after relying on gold loans.
Their credit-access closure rate was about 1.6 times higher than that of borrowers without previous defaults, suggesting gold loans are increasingly being used as a last-resort financing option for some stressed households amid the gold loan surge India.
“As the gold loan segment expands, lenders’ priority must be to balance growth with prudence,” said Bhavesh Jain.
Jain said lenders should not rely only on the value of pledged gold when approving loans. “Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers,” Jain said. “Lenders will need to assess total borrower indebtedness, repayment capacity, recent credit behaviour and cross-lender exposure more holistically.”
Rising Gold Prices Drive Borrowing Surge
Gold loan balances in India have increased 3.8 times since March 2022, according to the study, highlighting the scale of the gold loan surge India.
Their share in India’s retail credit portfolio rose from 5.9 percent in March 2022 to 11.1 percent by December 2025. The average gold loan in India per account increased from Rs 1.1 lakh in March 2022 to Rs 1.9 lakh in December 2025.
At the same time, the average ticket size rose from Rs 90,000 in the first quarter of 2022 to Rs 1.96 lakh in the fourth quarter of 2025. “The segment is drawing more borrowers with stronger credit profiles, larger ticket sizes and repeat usage,” Jain said.
He said the trend shows gold loans are no longer used only for short-term cash needs and are becoming part of broader household borrowing patterns.
Lenders Urged To Tighten Credit Checks
Under a gold loan, borrowers pledge gold jewelry or other valuables as collateral. If they fail to repay, lenders can auction the pledged gold to recover the dues.
Even with that security, the study suggests larger loans may carry higher risks as borrowers stretch their repayment capacity during the gold loan surge India. The report also found that non-banking finance companies increased their share of gold loan balances from 7 percent in March 2022 to 11 percent in December 2025.
Meanwhile, public sector banks expanded their share from 57 percent to 62 percent during the same period, reflecting strong competition among lenders for a fast-growing segment of the retail loan market.
