Gold Loan Growth Surges 68.5% Amid Rising Gold Prices

The Reserve Bank of India (RBI) has released data showing that gold loans extended by non-banking financial companies (NBFCs) grew 68.5% year-on-year in July, continuing a strong growth momentum witnessed over the past few months.

This surge in gold loan growth comes amid a sharp rise in gold prices over the past few quarters, which has increased the value of collateral available against such loans.

The strong growth in gold-backed lending also reflects lenders' comfort with the segment, as the loans are secured against high-value assets. However, it has also raised concerns about the increasing use of credit for consumption rather than productive purposes or asset creation.