India Sees Surge in Gold Loans as People Borrow Against Jewellery

Gold loans are on the rise in India as people increasingly borrow against their gold jewelry instead of selling it. According to recent data, credit against jewellery by non-banking financial companies (NBFCs) has increased by 68.5% year-on-year in July 2026 compared to the previous year.

The rapid growth is partly due to high gold prices, which have risen by 59% in the second quarter of 2026 compared to the previous year. This increase in gold prices has also led to a higher loan amount that can be borrowed against the same quantity of gold.

Gold loans are attractive because they allow people to access cash quickly without having to sell their gold, which is often emotionally valuable and difficult to replace. Additionally, gold loans are secured by the physical gold pledged with the lender, providing extra security for both lenders and borrowers.

The trend of using gold as collateral to get access to formal credit has become more prevalent in India's retail credit market. In fact, bank lending against gold jewelry has increased rapidly, with outstanding credit reaching approximately Rs. 5.52 lakh crore by July 2026.