India's gold loan market has increased from $33 billion in FY19 to $83 billion in FY24, growing at a compound annual growth rate (CAGR) of 20 per cent, according to Praxis Global Alliance report.

Gold loans have always been a popular way for Indians to borrow money. With a strong cultural link to gold, many families keep gold as part of their savings. Borrowing against gold is quick and easy, making it a preferred option for people from all income groups. The market includes both formal lenders like banks and non-banking financial companies (NBFCs), as well as informal moneylenders in villages and towns.

One of the main reasons for the gold loan market's growth is the increasing trust in formal lending channels. Regulatory improvements have made borrowing safer and more transparent, encouraging people to choose banks and NBFCs over informal lenders. Government efforts to promote financial inclusion have also helped build confidence in formal lenders.

Digital technology has played a big role in transforming the gold loan process. Start-ups and established companies are offering user-friendly digital services that let borrowers check loan eligibility, pledge gold, and receive funds online or even at home. Tools like eKYC, video verification, and biometric checks have made the process faster and more accessible, especially in urban and semi-urban areas.

People's attitudes toward gold loans are also changing. Younger generations, including Gen-Z, now see gold not just as a family treasure but as a useful financial tool. They are more willing to use gold loans to meet short-term needs without feeling emotionally attached to the gold. Since gold can be easily reclaimed after repayment, many view gold loans as a smart and low-risk borrowing option.

Lenders are also offering more flexibility, such as custom repayment plans, bullet payments, and different interest rate choices. This makes gold loans suitable for a wide range of borrowers with different financial needs.

Southern India continues to dominate the gold loan market, holding 79 per cent of the total share. This is because of the region's long-standing habit of gold ownership and comfort with using gold as collateral. However, eastern and western parts of the country are now seen as the next areas of growth. Households in these regions also have a large amount of gold, but use it less often for loans. Lenders are now focusing on these areas to expand their reach.

With growing formalization, digital access, and changing customer views, the gold loan sector is expected to keep expanding. It is set to become an even more important part of India's financial landscape in the coming years.

Published on July 1, 2025