Hello, my name is Priyanka Salve, I am writing to you from Singapore.
Welcome to the latest edition of Inside India — your one-stop destination for the stories and developments in the world’s fastest-growing large economy.
This week, I analyze what’s driving the rapid rise in gold loan growth in the world’s second-largest gold market. Lending against gold is a multi-billion dollar industry in India, fueled by households holding $5 trillion worth of bullion.
Appreciate!
Any ideas for today’s newsletter? Share them with the team.
The big storyIndian households are sitting on a mountain of gold.
They own more than 34,000 tonnes of the yellow metal, according to a Morgan Stanley report from October last year, with Kotak Mahindra Bank putting its value at around $5 trillion.
This vast pool now powers one of the fastest growing lending segments in India. As other forms of consumer credit slow, gold loans have increased, driven by tighter banking rules for unsecured loans, a sharp rise in global gold prices, greater access and perhaps growing financial stress among households.
While around 90% of Indian households billboards are still unused, according to Shripad Jadhav, head of gold loans at Kotak Mahindra Bank, gold-backed loans are starting to reshape the retail credit landscape in India, even attracting some global investors.
Global private equity firm Bain Capital has made a bold bet on gold loans, with plans to acquire up to 41.7% stake in Manappuram Finance, the second-largest gold loan provider in India.
The agreement, approved by the Reserve Bank of India last month, shows how international investors see opportunities in the country’s most traditional but underutilized asset.
In December last year, Japanese financial giant MUFG announced it was acquiring a 20% stake in Indian shadow banking firm Shriram Finance, which plans to double its loans against gold.
RBI data shows gold lending is higher than double in a year, rising to 4,000 billion rupees ($43.3 billion) in January, compared to 1,750 billion rupees a year earlier. Gold-backed loans now constitute the country’s largest retail lending segment after home and auto loans, as well as the fastest-growing retail credit category.
The actual amount of gold loans in India is estimated at 14 trillion rupees, said Yan Wang, chief emerging markets strategist at Canada-based Alpine Macro, adding that the RBI data only takes into account personal gold loans from some commercial banks.
Non-banking financial companies, or NBFCs, account for 45-50% of the gold loan volume, according to a Macquarie report last month – which is not taken into account by the RBI.
Gold rushWhen India’s central bank tightened rules on unsecured lending in late 2023, it cut off access to this credit line for many smaller and private business borrowers, Hanna Luchnikava-Schorsch, head of Asia-Pacific economics at S&P Global Market Intelligence, told me.
“Personal loan growth has slowed from an average of 30% in the six months to December 2023 to 12.2% in 2025,” she said. At the same time, global gold prices have soared.
From 2024 to date, gold gained more than 140% to cross $5,000 per ounce, struck several records this year.
Higher gold prices increase the value borrowers can unlock with the same amount of metal, making gold loans more attractive, Luchnikava-Schorsch said.
Historically, demand for loans against gold was driven by India’s southern states and the semi-urban market, particularly among farming communities, experts say.
Today, this growth is widespread across India, says Kotak Mahindra Bank’s Jadhav, as middle-class and high-net-worth individuals in big cities use gold loans to finance their urgent financial needs.
NEW DELHI, INDIA – OCTOBER 18: People buying gold and silver jewelry on the occasion of Dhanteras at PP Jewelers, Karol Bagh on October 18, 2025 in New Delhi, India.
Hindustan Times | Hindustan Times | Getty Images
The biggest beneficiaries of this demand for gold loans have been NBFCs such as Finance Manappuram and industry leader Muthoot Finance. Their shares have risen 24% and 47% respectively over the past year, significantly outpacing the benchmark Nifty 50 index.
“Most NBFCs can disburse a loan within an hour of a customer walking into a branch,” said Shreya Shivani, NBFC analyst at Nomura.
Even someone with a “bad” credit score and good quality gold can get a loan at a much better rate than unsecured personal loans, she said. While this expands access to credit, it also raises questions.
A rapidly growing lending segment that bypasses traditional credit assessments could indicate strains in the economy, with the Macquarie report also attributing feelings of financial hardship and revenues not keeping pace with costs among the reasons behind the gold lending boom.
Shripad says the increase in gold lending is “a marker of financial maturity” as people monetize the precious metal and use it as a hassle-free, quick and inexpensive line of credit.
Need to knowIndia’s Modi reaches out to Iran. Indian Prime Minister Narendra Modi called Iranian President Massoud Pezeshkian a few hours before arriving in Tehran new supreme leader pledging to keep the Strait of Hormuz closed, as New Delhi works to mitigate energy supply risks.
The conflict between India and the United States is testing relations with Iran. While millions of barrels of oil to flow to China via the Strait of Hormuz, India — Tehran’s former ally — has not yet secure safe passage for its ships stuck in the critical waterway as New Delhi’s deepening ties with the United States and Israel strain relations with Iran.
Consumer inflation in India rises for the fourth consecutive month. Consumer inflation in India pink to 3.21% in February, compared to 2.75% the previous month, but in line with the expectations of economists polled by Reuters.
Future
March 20: RBI weekly update on Indian foreign exchange reserve.
March 20: Central Mine Planning & Design Institute IPO opens.
March 24: HSBC India Flash Manufacturing and Services PMI.