Surge in Gold Loans Drives Bank Credit Growth in Q1
MUMBAI: Gold loans have significantly boosted personal lending and overall bank credit, with the segment expanding 93.8% year-on-year by the end of June 2026. Banks added Rs 74,171 crore in the first quarter of FY27, raising the gold loan book to Rs 5.4 lakh crore. This growth accounted for 13.1% of the Rs 5 lakh crore increase in non-food credit during the quarter, pushing total non-food credit to Rs 219.4 lakh crore.
Overall Bank Credit Growth
Overall bank credit rose 18.6% year-on-year, surpassing Rs 219.3 lakh crore at the end of the first quarter. Credit to industry saw a notable increase of 19.2%, marking the highest first-quarter growth in recent years, with outstanding loans reaching Rs 47.7 lakh crore. Large industries led this growth, with credit rising 16.6% to Rs 32.2 lakh crore, while medium enterprises experienced a 30% increase, bringing advances to Rs 4.7 lakh crore.
Within the industrial sector, petroleum, power, and engineering accounted for the largest share of incremental lending. Each of these sectors saw loan book expansions of around Rs 25,000 crore, contributing to 41% of the total incremental bank credit for the quarter. Overall, credit to industry increased by Rs 1.9 lakh crore during this period.
Personal Loans and Sectoral Performance
Advances to the services sector grew 21.4% year-on-year, while personal loans expanded at a slower rate of 15.8%. Growth in most personal loan segments moderated compared to Q1FY26 levels, except for vehicle loans, which rose 17.3% to Rs 7.5 lakh crore. Loans against gold jewellery remained the fastest-growing segment within personal loans, increasing 93.1% year-on-year to Rs 3.6 lakh crore, an increase of Rs 1.72 lakh crore from June 2025 levels.
Among industrial segments, medium enterprises recorded the fastest growth at 30.2%, with outstanding credit rising by Rs 1.2 lakh crore to Rs 5.1 lakh crore. The petroleum, coal products, and nuclear fuels sectors led sub-industry growth at 48.6%. In the services sector, credit to non-banking financial companies expanded 22.8% year-on-year, with outstanding loans increasing by Rs 3.8 lakh crore to Rs 20.6 lakh crore. Commercial real estate and trade followed, with growth rates of 21.4% and 18.7%, respectively.
Incremental bank credit rose by Rs 7.2 lakh crore, or 3.4% quarter-on-quarter, during Q1FY27. The services sector led this increase, contributing Rs 3.2 lakh crore, or 43.8% of the total incremental credit, followed by industry at Rs 2.5 lakh crore, or 34%. Within segments, non-banking financial companies accounted for the largest addition to credit during the quarter, with an increase of Rs 1.2 lakh crore. Loans against gold jewellery also contributed significantly to growth within personal loans, adding Rs 0.5 lakh crore in Q1FY27.
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