India is witnessing a major shift in household borrowing patterns, with gold loans now exceeding credit card debt by nearly ₹1.6 lakh crore.
According to data shared by Zerodha Capital, outstanding gold loans have surged to around ₹4.6 lakh crore, while credit card dues currently stand near ₹3 lakh crore.
Gold Loans Continue Rapid Growth
The data shows that gold loans overtook credit card debt around mid-2025 and have continued to widen the gap since then.
Outstanding gold loans from scheduled commercial banks have reportedly increased sharply:
- Below ₹1 lakh crore in 2021
- To over ₹4.5 lakh crore in 2026
In comparison, credit card debt growth has slowed and remained relatively stable near the ₹3 lakh crore level after several years of expansion.
Why Are Gold Loans Becoming More Popular?
Rising Gold Prices Boost Borrowing Capacity
Higher gold prices have significantly increased the value of pledged jewellery, enabling households and small businesses to borrow larger amounts against their gold holdings.
This has made gold loans an increasingly attractive liquidity option, especially during periods of economic uncertainty.
Gold loans are generally viewed as:
- Faster to obtain
- Backed by collateral
- Lower risk for lenders
- Easier to approve compared to unsecured loans
RBI’s Tightening on Unsecured Lending
The shift also comes amid stricter lending norms introduced by the Reserve Bank of India for unsecured retail credit products.
Banks and NBFCs have become more cautious toward:
- Credit card lending
- Personal loans
- Other unsecured retail borrowings
As a result, many lenders are now focusing more on secured lending products such as gold-backed loans.
Impact on Banks and NBFCs
The trend is expected to benefit financial institutions with strong gold loan portfolios, including:
- Muthoot Finance
- Manappuram Finance
- IIFL Finance
Higher gold prices typically improve collateral coverage and support loan growth for these lenders.
Conclusion
The sharp rise in gold loans compared to credit card debt reflects changing borrowing behaviour in India. Elevated gold prices, stronger collateral values, and tighter regulations on unsecured lending have accelerated the shift toward secured borrowing products. The trend also highlights the growing importance of gold-backed finance in India’s retail credit ecosystem.
Disclaimer:
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