Gold Loans Shine as They Represent 13% of New Bank Credit Growth
MUMBAI: Gold loans have emerged as a significant driver of retail borrowing, constituting over a third of the incremental bank credit in the retail segment for the first four months of FY27 (April–July 2026). According to the Reserve Bank of India (RBI), retail credit accounted for 36% of all incremental bank credit, with industry credit at 33%, services at 20%, and agriculture at 9.3%.
The banking sector is experiencing robust growth. Non-food bank credit increased by 19.1% year-on-year for the fortnight ending July 31, nearly doubling the 9.9% growth from the same period last year. The personal loans segment also saw a year-on-year increase of 16.2%, up from 11.9% a year ago, totaling over Rs 2.4 lakh crore in incremental credit.
Gold loans have been particularly noteworthy, contributing Rs 90,888 crore and making up 13.6% of all new non-food credit in the banking system. Vehicle loans also maintained strong growth, adding Rs 25,877 crore. In contrast, unsecured retail segments showed signs of cooling, with credit card outstandings increasing by only Rs 3,295 crore, representing just 0.5% of the incremental credit. Advances against fixed deposits contracted by Rs 7,588 crore.
Credit to the industry sector has seen a significant turnaround, with a year-on-year growth of 20%, compared to just 6.5% in the same fortnight last year. The sector absorbed Rs 2.2 lakh crore in new credit, capturing 32.4% of the incremental credit, a notable increase from its historical share of 21.9%. This growth was primarily driven by large enterprises, which secured about Rs 1.5 lakh crore in incremental credit, while medium enterprises added Rs 37,051 crore. Key industries such as infrastructure, basic metals, engineering, chemicals, and textiles experienced particularly strong growth.
The services sector also reported impressive year-on-year growth of 22.9%, up from 10.2% last year. However, it captured only 20.25% (Rs 1.4 lakh crore) of the incremental credit, which is lower than its 28.2% share of the overall outstanding credit.
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