Gold-Backed Lending Shines in Retail Banking Portfolios, According to RBI Data
Loans against gold jewellery have emerged as a significant player in the retail credit landscape, with outstanding balances soaring to Rs 3.38 lakh crore in October 2025. This marks a remarkable year-on-year increase of 128.5% and a 63.6% rise since March 2025. Gold loans now represent nearly a quarter of the growth in banks’ personal loan portfolios over the past year. The Reserve Bank of India (RBI) attributes part of this surge to a reclassification of agricultural loans secured by jewellery, which shifted into the retail gold-loan category in May 2024.
Personal Loan Growth and Trends
The personal loan sector continues to thrive, with total outstanding loans reaching Rs 64.56 lakh crore by the end of October, reflecting a 14% increase from the previous year. This growth is primarily driven by secured borrowing, as evidenced by the rise in housing loans, which increased by 11% to Rs 31.87 lakh crore. Vehicle loans also saw a healthy growth of 12.5%, reaching Rs 6.77 lakh crore, while education loans rose by 14.7% to Rs 1.49 lakh crore. In contrast, unsecured loans have experienced slower growth, with consumer-durable loans increasing by just 1% to Rs 23,646 crore and credit card outstanding balances growing by 7.7% to Rs 3.03 lakh crore. Other personal loans saw a 9.9% rise, totaling Rs 16.17 lakh crore.
Retail Demand and Bank Credit Growth
Retail demand remains a crucial driver of bank credit, which grew by 11.3% year-on-year to Rs 193.9 lakh crore in October 2025. This figure represents a 6.3% increase over the past seven months since March. Non-food credit, which encompasses nearly all forms of lending, also rose by 11.1% to Rs 193.2 lakh crore. Among non-retail sectors, lending to services has been particularly robust, climbing 13% year-on-year to Rs 53.45 lakh crore. This growth is fueled by significant increases in specific areas, such as computer software, which surged by 29.4%, shipping at 28%, and commercial real estate at 14.1%.
Sector-Specific Lending Insights
Non-Banking Financial Companies (NBFCs) continue to attract substantial bank exposure, which increased by 10.9% to Rs 17.04 lakh crore. Public financial institutions are expanding their lending faster than housing finance companies. In the industrial sector, credit grew by 10% year-on-year to Rs 41.93 lakh crore, largely driven by micro and small enterprises, which saw a remarkable 25.9% increase in lending to Rs 9.54 lakh crore. Medium enterprises also experienced growth, with a 17.6% rise to Rs 3.98 lakh crore, while lending to large companies grew by a modest 4.6% to Rs 28.41 lakh crore.
Trends in Agriculture and Priority Sector Lending
Lending to agriculture and allied activities showed steady growth, increasing by 8.9% to Rs 24.03 lakh crore. In the priority sector, lending for renewable energy surged by 52.1%, while priority housing loans rose by 32.7%. Micro and small enterprises also benefited from increased lending, which grew by 25.8%. However, lending for social infrastructure has contracted, and export credit has also seen a decline. These trends highlight the shifting dynamics in the lending landscape, with certain sectors experiencing robust growth while others face challenges.
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