Exploring the Surge in NBFC Gold Loans Against Jewellery Amidst Stricter RBI Regulations
Loans against gold jewellery by non-banking financial companies (NBFCs) surged 69.3% year-on-year, reaching Rs 3.41 lakh crore at the end of June 2026, according to data from the Reserve Bank of India (RBI). This growth follows a 69.9% increase in May, indicating a strong demand for gold-backed credit despite the RBI tightening its regulatory framework for such lending.
Gold Loans Outpace Overall Retail Credit Growth
In contrast to the rapid growth in gold loans, the overall retail loan portfolio of NBFCs grew by 20.3% year-on-year in June, up from 14.3% a year earlier. The total outstanding retail credit stood at approximately Rs 25.62 lakh crore, compared to Rs 21.29 lakh crore in June 2025. Within this sector, housing loans increased by 11.4% to around Rs 8.44 lakh crore, while vehicle loans rose by 15.2% to about Rs 6.24 lakh crore. Consumer durable loans saw even more significant growth at 46.8%, reaching Rs 72,201 crore. However, gold-backed lending continued to outpace these segments, expanding at more than three times the rate of overall retail credit.
RBI’s Regulatory Concerns Over Gold Lending
The RBI’s recent data comes after the introduction of a harmonised regulatory framework for lending against gold and silver collateral. The RBI (Lending Against Gold and Silver Collateral) Directions, 2025, issued in June 2025, established rules for regulated entities, including NBFCs. This framework was prompted by supervisory concerns raised in September 2024 regarding practices among some lenders, such as inadequate due diligence and weaknesses in monitoring loan-to-value ratios. Despite these regulatory measures, the growth in gold-backed lending has persisted.
Moderation in Industry and Services Credit Growth
While gold loans have seen significant growth, credit to other sectors has moderated. Credit to industry grew by 6.7% year-on-year in June, down from 10.3% a year earlier, primarily due to subdued growth in infrastructure. Credit growth in the services sector also slowed to 17.6%, compared to 22.4% a year prior. Notably, agriculture and allied activities experienced a sharp increase in credit growth, accelerating to 17.9% in June from 5.1% a year earlier. The RBI’s provisional sectoral credit data covers a sample of NBFCs and housing finance companies, which together account for about 87% of the total credit referenced by the central bank.
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