Gold loan NPA rises in first five months while eases over a three-year horizon

Kolkata: India’s gold loan market has seen a rise in non-performing assets (NPA) in the first five months of this fiscal, although the ratio of bad loans to total advances in the category eased over a three-year time horizon, said a TransUnion Cibil study. Multiple borrowing accounts by the same customer help explain in part the recent rise in bad loans in the sector, experts said.

The size of the market, meanwhile, expanded nearly three times in as many years to Rs 22.5 lakh crore at the end of August, making gold loans the second largest pie in the personal loan segment, the report showed.

Also Read: Middle class spending boom in India comes with growing debt bill


The outstanding volume was Rs 7.5 lakh crore as of August 31, 2023.

The NPA rose to 0.3% at the end of August from 0.16% seen as of March 31, 2026. The ratio was 0.78% as of end-August 2023.

"One of the reasons behind the rise in NPA could be the high propensity of repeat borrowing with 27% of borrowers having four or more gold loans," managing director Bhavesh Jain told ET.

Also Read: UPI MDR proposal: Street vendors may pass on charges to customers or switch to cash, ISB survey finds

"It's too early to say whether the change in lending regulation is having any impact on delinquency. We have to wait at least a year to arrive at any such conclusion," he added.

The market counted 5.5 crore active borrowers as of August, accounting for 21% of India's credit-active consumers. One out of five borrowers are from Gen-Z, the report showed.

The report observed that gold loan borrowers have a markedly higher propensity for repeat borrowing compared with borrowers in other liquidity-oriented credit segments. "One in two gold loan borrowers originated another gold loan within 12 months," the report mentioned.

Incidentally, among borrowers with comparable high-risk and product segments, gold loan borrowers had the highest share of consumers with existing delinquency at time of originations, the credit information company said.

"The evolution of the gold loan market reflects more than growth in balances. As the product reaches a broader set of consumers, supports larger ticket sizes and exhibits high levels of repeat borrowing among good borrower profiles, sustainable growth will increasingly depend on lenders combining collateral-based lending with a comprehensive view of borrower-level credit behavior and overall financial obligations," it added.