Gold Loan Market Explodes 4x in 3 Years, But Defaults Rise: RBI Warns

• The gold loan market grew fourfold in three years, driven by rising gold prices and sustained demand from small towns and villages.
• Over 60% of new retail loans are issued in small towns and villages, where gold loans are preferred due to easy access and lower interest rates.
• Banks, SFBs, MFIs, NBFCs, and Fintech companies are expanding gold loan offerings, viewing them as a key product for business sustenance and revenue.
• RBI's December 2025 report shows gold jewelry loans saw triple-digit growth since February 2025, significantly outpacing overall credit growth.
• Outstanding gold loan amount surged 128.5% to ₹3.38 lakh crore by October 2025, raising concerns about increased default rates.

Why It Matters: Gold loan market booms but rising defaults pose a significant concern for borrowers and lenders.