Banks are rapidly gaining ground in India's fast-growing gold loan market, with their share jumping to 49.7% in FY25 from just 30.6% in 2020, according to latest market data. NBFCs' share of aggregate gold loans fell by nearly 20 percentage points over the past five years to 50.3% as of March 2025, from 69.4% in 2020. The shift represents a dramatic transformation in what was traditionally an NBFC-dominated segment. Banks' market share increased by 9.6 percentage points in just one year to 49.7% in FY25 from 40.1% a year earlier, highlighting the speed with which banks have scaled up their gold loan operations. The competitive landscape has been reshaped by banks leveraging their lower funding costs and wider branch networks to compete aggressively on pricing and reach.
Gold loans continued to outperform all other retail segments, registering 125.3% year-on-year growth in November, significantly higher than the 77.3% growth recorded in the same period last year. Outstanding gold loans surged to ₹3.5 lakh crore by November-end 2025, representing more than doubling on a year-on-year basis from ₹1.59 lakh crore in November 2024, which itself had grown from ₹89,898 crore in November 2023. According to the Reserve Bank of India's Financial Stability Report, combined gold loans of banks and NBFCs accounted for 5.8% of total outstanding loans as of September-end. Around 20% of agricultural gold loans were reclassified as retail loans following an increase in eligibility limits, boosting reported personal loan growth. Gold prices rose nearly 68% in 2025, reaching around ₹1.38 lakh per 10 grams of 24-carat gold, more than double the 24.5% increase seen a year earlier, lifting the overall value of gold-backed credit.
Non-food credit grew by 11.5% year-on-year as of November 28, 2025, reflecting sustained lending activity across the economy, according to latest Reserve Bank of India data. Loan demand from industry strengthened to 9.6% year-on-year growth, improving from 8.3% in the corresponding period last year. Credit to micro and small enterprises and medium industries continued to show double-digit growth, underscoring stronger demand from smaller manufacturers and service providers. Among large industries, credit growth remained buoyant in infrastructure, engineering, textiles, and petroleum, coal products and nuclear fuels. Earlier in the year, industrial credit growth had lagged retail loans, with industry expansion hovering near 7.3% in September 2025, while overall non-food credit was around 10.2%.
Bankers say demand for gold loans started gaining currency during the pandemic, when the RBI temporarily relaxed loan-to-value (LTV) norms to support credit growth and household liquidity. The regulatory easing allowed banks to enter the segment more aggressively, leveraging their lower funding costs and wider branch networks to compete with NBFCs on pricing and reach. Loan books also expanded after lenders began reclassifying gold-backed loans, originally given for agricultural activity, as gold loans in line with RBI's master circular on gold loans. As a fully-secured product with short tenures and relatively low credit risk, gold loans gained traction when unsecured retail lending was under regulatory scrutiny. Higher gold prices allow borrowers to raise larger loans against the same quantity of gold, while keeping loan-to-value ratios comfortable for lenders.
Retail credit growth moderated to 12.8% year-on-year in November 2025, compared with 13.4% growth a year earlier, according to a CareEdge Ratings report, with the headline growth largely driven by the sharp rise in gold loans. Securitisation volumes rose to ₹1.87 lakh crore in nine months of fiscal 2026, with NBFC originations recording sharp year-on-year growth of about 35% in the third quarter. Public sector banks have indicated stronger loan enquiries in the second half of FY26, supported by infrastructure-led spending and a gradual revival in private investment. With gold prices remaining elevated and credit conditions supportive, analysts expect competition in the gold loan segment to intensify further, blurring the traditional lines between banks and non-bank lenders in one of India's fastest-growing retail loan categories.