Despite a significant surge in gold loan uptake across India, a recent study by TransUnion CIBIL highlights a concerning rise in delinquencies, particularly among borrowers with larger loan amounts. The report indicates that lenders and regulators are closely monitoring this trend as the gold loan segment continues to expand.
Delinquencies Higher for Bigger Gold Loans
The study, which analyzed gold loans originated in the six months ending June 2025, found an overall delinquency rate of 1.1 percent. However, this rate climbed to 1.5 percent for borrowers whose post-origination gold loan outstanding amount surpassed Rs 2.5 lakh. This figure is more than double the 0.7 percent delinquency rate observed among borrowers with smaller exposures.
TransUnion CIBIL defines delinquency as any trade reported as 60 days past due within six months of the loan's origination. The findings suggest that for a segment of financially stressed borrowers, gold loans may increasingly be serving as a product of last resort, with their credit-access closure rate being 1.6 times higher than that of non-defaulting borrowers.
Balancing Growth with Prudence
Bhavesh Jain, MD and CEO of TransUnion CIBIL, emphasized the need for lenders to balance growth with prudence in the expanding gold loan segment. "Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers," Jain stated. He urged lenders to adopt a more holistic assessment approach, considering total borrower indebtedness, repayment capacity, recent credit behavior, and cross-lender exposure.
Market Growth and Shifting Borrower Profiles
The demand for gold loans has been fueled by surging gold prices over recent years, driven by global geopolitical uncertainties. Higher gold valuations typically allow borrowers to secure larger loan amounts against their pledged gold. In cases of default, the pledged gold is auctioned off by the lender to recover the outstanding amount.
According to the study, gold loan balances have grown 3.8 times since March 2022, with their share in India’s retail credit portfolio expanding from 5.9 percent to 11.1 percent by December 2025. The average gold loan balance per account also increased significantly, from Rs 1.1 lakh in March 2022 to Rs 1.9 lakh in December 2025.
Jain noted a shift in borrower profiles, with the segment attracting more individuals with stronger credit profiles, larger ticket sizes, and repeat usage. This indicates that gold loans are evolving beyond short-term liquidity solutions and becoming an integral part of broader household borrowing behavior. The average ticket size rose from Rs 90,000 in Q1 2022 to Rs 1.96 lakh in Q4 2025, reflecting a market widening in reach and moving towards higher-value borrowing.
Lender Landscape
The study also observed changes in the lender landscape. Non-banking finance companies (NBFCs) increased their share of gold loan balances from 7 percent in March 2022 to 11 percent by December 2025. Public sector banks similarly saw their share rise from 57 percent to 62 percent over the same period.