India gold loan growth signals household financial pressure

The rapid expansion of the gold loan market in India is raising concerns regarding household financial resilience. During the 2025-26 fiscal year, gold loan disbursements were estimated at ₹4.7 trillion. Data from Piramal Finance indicates that 15-23% of gross gold loan disbursements in the industry went to borrowers who were already more than 90 days overdue on at least one other outstanding loan.

Analysts suggest that some households may be pledging jewelry to repay existing debts rather than for productive expenses, signaling that financial buffers are under pressure. While gold provides immediate liquidity for emergencies like illness, using it to clear credit card dues or personal loan installments may indicate a cycle of exchanging one liability for another.

The amount available through these loans is influenced by gold prices and Reserve Bank of India (RBI) regulations. Following changes implemented on April 1, 2026, the Loan-to-Value (LTV) ratio is tiered: borrowers can access up to 85% of the gold's value for loans up to ₹2.5 lakh, 80% for loans between ₹2.5 lakh and ₹5 lakh, and 75% for loans exceeding ₹5 lakh.