Daijiworld Media Network - New Delhi

New Delhi, Mar 19: A vast reserve of gold held by Indian households is increasingly transforming the country’s lending landscape, according to a recent report.

As per Morgan Stanley, Indian households collectively possess over 34,000 tonnes of gold. Estimates by Kotak Mahindra Bank suggest that this stockpile is worth nearly $5 trillion, making it one of the largest privately held gold reserves in the world.

While nearly 90 per cent of this gold remains unused, a growing portion is now being leveraged as collateral for loans. Gold-backed lending has rapidly emerged as one of the fastest-expanding segments in India’s retail credit market.

This shift comes amid tighter regulations on unsecured loans. The Reserve Bank of India introduced stricter norms in late 2023, limiting easy access to personal loans. As a result, borrowers are increasingly opting for gold loans, which are easier to obtain, involve minimal documentation, and offer quick disbursal.

Adding to the appeal is the sharp rise in global gold prices since 2024, which has significantly boosted the borrowing capacity against pledged jewellery.

Official data from the RBI shows that gold loans more than doubled within a year, rising from ?1.75 trillion to ?4 trillion by January.

This growth makes gold loans one of the fastest-rising categories in retail lending, second only to housing and vehicle loans.

However, the true size of the market is believed to be far larger. Industry estimates place it at around ?14 trillion, as official figures do not fully account for lending by non-banking financial companies (NBFCs), which make up nearly half of the sector.

The rapid expansion has also attracted global investors. Private equity firm Bain Capital is planning to acquire up to a 41.7 per cent stake in Manappuram Finance, a move recently cleared by the RBI.

In another development, Japan’s Mitsubishi UFJ Financial Group has picked up a 20 per cent stake in Shriram Finance, which is also ramping up its gold loan operations.

The growing reliance on gold-backed borrowing highlights how traditional household assets are now playing a key role in shaping modern credit trends in India.