Non-banking financial companies experienced exceptional growth in gold-backed lending during May 2026, with outstanding credit against gold jewellery surging 69.9% year-on-year to ₹3.29 lakh crore. According to data released by the Reserve Bank of India on Tuesday, this represents the fastest growth rate across all lending segments during the month. The dramatic increase in gold loans demonstrates the sector's strong performance and growing demand for secured lending products, with outstanding loans against gold jewellery standing at ₹3.29 lakh crore at the end of May 2026, up from ₹1.94 lakh crore a year earlier. As per the RBI data, this represents the most impressive growth rate among all financial services segments during the month. Gold loan outstanding of NBFC players has jumped by 136% from ₹1.4 lakh crore in the last two years, reflecting the sector's accelerating momentum. For banks, gold loan growth is even more extraordinary at 105%, with total gold loans standing at ₹5.1 lakh crore as at the end of May, while the share of gold loans in banks' total loans has increased almost 4x from 0.64% in May 2024 to 2.4% in May this year.
Within the retail loan portfolio, housing loans, vehicle loans, and gold loans against jewellery registered robust growth during May, contributing to overall retail credit rising 19.5% year-on-year compared with 14.9% in the year-ago period. Retail loans accounted for the biggest share in non-banks' loans at 43%, with gold loans — which are part of retail loans — making up 5.6% of all loans as at the end of May. This acceleration in retail lending growth indicates strong consumer demand across multiple segments of the NBFC market, with the retail credit portfolio showing consistent strength across secured lending products. As per Experian India, the growth story is becoming increasingly broad-based across the country, with strong sourcing growth in FY26 seen in states such as Uttar Pradesh (138%), West Bengal (112%), Rajasthan (105%) and Maharashtra (102%). According to TransUnion CIBIL, the share of gold loans in banks and non-banks' total loans had increased to 11.1% in December 2025, second only to housing loans, from 5.9% in March 2022, demonstrating the sector's rapid expansion.
Apart from gold loans, outstanding credit to the commercial sector by NBFCs recorded the second-highest growth at 40.2% year-on-year to ₹1.19 lakh crore in May from ₹85,317 crore a year ago. Commercial real estate has emerged as one of the fastest-growing mainstream categories in credit growth in the NBFC sector, with the sharp rise suggesting stronger financing activity for commercial property projects amid improving demand in office, warehousing and mixed-use developments. Credit to agriculture and allied activities also remained strong, registering 17.9% year-on-year growth in May 2026, sharply higher than the 5.0% growth recorded in the corresponding month last year. According to the RBI data, this broad-based growth across sectors demonstrates the diversified lending capabilities of NBFCs, with commercial lending showing particularly strong momentum.
The unprecedented rise in gold prices over the last one year – albeit one that has cooled in recent months – has led to such an increase in loans against the yellow metal that experts think Indians are now willing to pawn what they hold of it more easily than before even as prices have moderated. Over the last few years, the people taking gold loans have been increasingly more creditworthy, with prime and above-prime borrowers' participation rising from 43% to 52%, according to Simranjeet Singh, Chief Executive Officer of the SME and retail verticals at Anand Rathi Global Finance. This suggests "a structural shift in that borrowers now consider gold loans as a major financial tool rather than an emergency last resort option." The Reserve Bank of India noted in its Financial Stability Report that the rapid growth in gold loans has coincided with a decline in the increase in outstanding personal loans for borrowers who have both personal loans and gold loans. "This trend is particularly pronounced among sub-prime borrowers, whose outstanding personal loan balances and loan accounts have declined," the central bank said. An analyst tracking gold at a domestic brokerage noted that "the precious metal is not just for hoarding for a rainy day" anymore but is also "a good option for leveraging in a society where wage growth has been sluggish."
The RBI has expressed concerns about the rapid growth in gold loans, noting in its Financial Stability Report that elevated price volatility "merits continued vigilance." "A prolonged correction in gold prices could weaken collateral protection, increase borrower stress, and result in higher delinquencies," the central bank warned. Despite these concerns, the public's increased willingness to borrow against their gold also hits a sweet spot for lenders, with Singh of Anand Rathi pointing out that "the preference for secured lending by financial institutions indicates that the rise in the gold loan segment is here to stay and is not just a cyclical spike." Overall, NBFCs, including housing finance companies (HFCs), continued to expand credit at a healthy pace in May 2026, with outstanding loans rising 14.2% to ₹58.61 lakh crore from ₹51.32 lakh crore a year earlier, while bank credit to NBFCs rose 33.7% year-on-year to around ₹20.88 lakh crore by May 2026.
