According to reports from CNBC TV18, gold-backed loans across banks and non-banking financial companies (NBFCs) are now around ₹20 lakh crore, with NBFCs accounting for about ₹4 lakh crore. Governor Sanjay Malhotra described the overall gold-loan book as still a single-digit share of the total credit book. The rapid growth has been driven by several factors, including the rise in gold prices, which means borrowers can become eligible for higher loan amounts against the same collateral. As reported by CNBC TV18, Malhotra attributed some of the growth to the RBI's rationalisation, clarification and simplification of its gold-loan rules.
As reported by CNBC TV18, Malhotra said the asset quality of gold-backed loans had improved for both banks and NBFCs over the past year. Gross NPA levels are at less than 1%, about 0.4–0.5% and improving, which does not suggest any overheating or matter of concern. The RBI has implemented sufficient guardrails around gold lending, including LTV requirements, prudent benchmark prices used by lenders to value gold and supervisory monitoring. According to the governor, the current LTV levels provide a cushion against a fall in gold prices, with regulatory LTV limits in the range of 75% to 85% depending on the applicable loan category.
According to reports from CNBC TV18, the gold-loan market has expanded sharply in recent years. A recent Motilal Oswal Financial Services estimates that the organised gold-loan segment reached ₹18.6 lakh crore in March 2026, nearly four times its size five years earlier. The brokerage estimates that the segment grew 50% year-on-year in FY26, helped by a more than 60% increase in gold prices and higher demand for using gold to meet consumption and business requirements. The rise in gold prices is particularly relevant because the value of the collateral determines how much a borrower can raise against pledged gold.
As reported by CNBC TV18, Malhotra said the current LTV levels provide a cushion against a fall in gold prices, with regulatory LTV limits in the range of 75% to 85% depending on the applicable loan category. His illustration showed that if the value of gold fell by 33% from 100 to 67, a loan at a 75% LTV would still remain collateralised. If gold prices fell by 50%, the loss would be limited to around 13% under that illustration. According to Motilal Oswal, current industry LTVs are estimated at around 55% for banks and 60% for NBFCs, which are average industry LTV estimates from the brokerage and should not be confused with the RBI's regulatory LTV ceilings.
While the RBI governor said current asset quality does not point to overheating, Motilal Oswal has flagged a separate risk: a growing dependence on repeat borrowers and top-up loans. According to the brokerage, existing-to-asset borrowers accounted for 82% of gold-loan originations in 2025, up from 76% in 2022. Existing-to-gold-loan borrowers accounted for 90% of originations. The brokerage said this means portfolio growth is increasingly being driven by repeat borrowing and top-up loans, which could pose an overleveraging risk. Motilal Oswal also noted that the gold tonnage and customer base at Muthoot Finance and Manappuram Finance have remained broadly stagnant even as their loan books have risen, suggesting that higher gold valuations and repeat borrowing have contributed to the increase in outstanding loans.
