Loans against gold jewellery by both banks and non-bank lenders surged 50.4% year-on-year to ₹19 lakh crore at the end of March, making the segment the fastest growing among retail advances, according to the latest report by CRIF India. This massive jump reflects the growing popularity of gold as a financial asset, with the surge driven by rising gold prices and a fundamental shift in borrowing habits among consumers. The high borrowings against gold jewellery reflect in part the surge in the value of the yellow metal, which climbed 36% in dollar terms on a rolling 12-month basis, as reported by The Economic Times.
The surge in gold loans was significantly influenced by gold prices climbing 36% in dollar terms on a rolling 12-month basis, as reported by The Economic Times. A key factor driving this growth is the shift in borrowing nature - from the erstwhile last resort to the use of gold as a temporary liquidity tool. This transformation has expanded the customer base for gold-backed lending across various segments of the market, with commentators noting that this shift has cast the net wide for this loan type. The growth was accompanied by improvement in portfolio performance, with delinquency levels declining across most segments, reflecting strengthening asset quality alongside sustained market expansion.
Private banks experienced significant pressure on profitability in FY26, with return on equity (RoE) moderating across major lenders due to compressed net interest margins and declining treasury income. According to The Hindu BusinessLine analysis of investor presentations, the banking sector witnessed pressure on net interest margins as loan rates adjusted faster than deposit rates in a falling interest rate environment. HDFC Bank's RoE declined marginally to 14.3% in FY26 from 14.6% in FY25 and 16.1% in FY24, while Axis Bank's RoE dropped to 13.15% in FY26 from 16.52% in FY25. ICICI Bank's standalone RoE moderated to 16% in FY26 against 17.9% in FY25, with NIM easing to 4.32% in the March quarter from 4.41% a year ago. Kotak Mahindra Bank's return ratio slipped to 11.08% in FY26 from 12.57% in FY25, while South Indian Bank reported a marginal decline in RoE to 12.76% in FY26 from 12.90% in FY25. Bandhan Bank saw a sharper drop in RoE to 4.8% in FY26 from 11.6% in FY25, with interest margin falling to 6.2% in the fourth quarter from 6.7% year ago.
The Reserve Bank of India on Wednesday proposed significant restrictions on technology-based recovery practices for defaulting borrowers. Banks cannot disable or restrict mobile phones of defaulting borrowers to recover personal, car, or home loans, as part of efforts to curb aggressive recovery practices. However, banks will be allowed to restrict or disable functionalities of a defaulting borrower's mobile device if the device is financed by the lender. The RBI has proposed strict norms on conduct-related matters in loan recovery, with implementation scheduled from October 1, 2026. The central bank emphasized that banks should not deploy any technology-based mechanism that restricts or disables essential functionalities such as internet access, incoming calls, emergency SOS features, and emergency government notifications.
The growth in gold loans contributed significantly to the overall retail loan market expansion, with total retail advances growing 16.6% year-on-year to ₹170.2 lakh crore as of March 2026, according to CRIF India's latest report. This expansion was accompanied by improvement in portfolio performance, with delinquency levels declining across most segments, reflecting strengthening asset quality alongside sustained market expansion. Portfolio growth continued to outpace active loan growth, indicating a structural shift toward higher ticket sizes and continued premiumisation across products, highlighting the continued shift toward collateral-led secured lending.
