Gold Loans, First-Time Borrowers Drive India's Credit Growth in December Quarter

• India's Consumer Credit Market Indicator (CMI) rose to 102 in December 2025 quarter, up from 97 a year ago, marking third straight quarter of growth.
• Improvement mainly driven by a sharp rise in gold loans, as higher gold prices encouraged borrowing against jewellery.
• Demand for credit increased to 96, with semi-urban and rural borrowers making up 54% of total, and first-time borrowers rising to 15%.
• Gold loans now account for 36% of total loan volume and 39% of value, becoming the largest category in retail lending.
• Loan repayment performance improved, pushing the performance index up to 107, indicating fewer defaults.

Key Questions Answered

Will gold loans continue driving credit growth in India?

Gold loans are currently a significant driver of credit growth in India, accounting for the largest share of retail lending.

How do first-time borrowers impact the credit market?

First-time borrowers are contributing to the expansion of India's credit market. There is rising consumption demand from these borrowers.

What changes for lenders with rising gold loan demand?

Lenders face heightened risks due to falling gold prices, which can erode collateral value and weaken recovery prospects.