India’s gold loan market has grown dramatically over the last five years, increasing from USD 33 billion in FY19 to USD 83 billion in FY24, according to a report by Praxis Global Alliance. This represents a compound annual growth rate (CAGR) of 20%, highlighting the increasing reliance on gold as a financial asset.
Gold loans have long been a preferred borrowing tool for Indians, deeply rooted in the cultural and emotional significance of gold in Indian households. With gold being widely available and easy to use as collateral, it has served as a convenient funding option for people across income levels.
One key factor behind this surge is the growing trust in formal financial institutions such as banks and non-banking financial companies (NBFCs). Regulatory reforms and government efforts promoting financial inclusion have made borrowing more secure, steering people away from informal moneylenders still prevalent in rural and semi-urban areas.
The rise of digital technology has further transformed the sector. Digital-first lenders and start-ups now offer services that allow customers to check loan eligibility, pledge gold, and receive funds online or even at home. Innovations like eKYC, video verification, and biometric authentication have made gold loans quicker, more convenient, and accessible—especially for urban and semi-urban populations.
Attitudes toward gold loans are also evolving. Many in the younger generation, including Gen-Z, now view gold as a functional financial asset, not just a family heirloom. With easy redemption upon repayment, gold loans are increasingly seen as low-risk and efficient short-term financing tools.
Lenders are also adapting by offering custom repayment structures, including bullet payments and flexible interest rates, which cater to a wide variety of borrowers—from small business owners to salaried professionals.
Southern India remains the dominant force in the gold loan market, accounting for 79% of the national share due to long-standing cultural practices around gold ownership and its use as collateral. However, attention is now shifting to eastern and western India, where gold ownership is high but loan penetration remains low. Lenders are actively targeting these areas as future growth markets.
With increased formalization, wider digital access, and a shift in public perception, India’s gold loan sector is poised for continued growth, reinforcing its role as a critical pillar in the country’s evolving financial ecosystem.