Gold loans and aspiration: How Bharat is writing its own story

India’s growth story has always been powered by aspiration—the desire to build a business, create better opportunities, and secure a stronger future. But aspirations can only translate into action when individuals have access to timely and reliable capital.

As India’s financial ecosystem evolves, the conversation around credit is also changing. Borrowers are no longer looking only for financing; they are seeking solutions that match the pace of their ambitions. For millions of Indians, gold continues to play a unique role in this journey, serving as a trusted financial asset that can unlock opportunity when it matters most.

Gold has long been the quiet anchor of Indian household wealth—stored in lockers, worn at weddings, passed down through generations. For decades, it remained outside the formal financial system, more heirloom than instrument. That is changing in ways that are both measurable and meaningful.

According to a Morgan Stanley Report (October 2025), Indian households collectively hold upwards of 34,600 tonnes of gold, valued at roughly $3.8 trillion, one of the largest privately held asset pools in the world. What is new is that this wealth is no longer merely decorative. It is being unlocked. Households are leveraging their gold to borrow, preserving the asset but still accessing the liquidity it represents.

The numbers confirm the shift. RBI data shows India’s outstanding gold loan portfolio grew 123% year-on-year as of March 2026, reaching ₹4.60 lakh crore. The TransUnion CIBIL Gold Loan Landscape Report 2026 tells a more structural story: gold loan balances have grown 3.8 times since March 2022, with their share in India’s retail credit portfolio rising from 5.9% to 11.1% by December 2025. Gold loans are now the second-largest retail credit product by balance, behind only housing loans. This is not a blip. It is a permanent repositioning of an asset class.

Who Is Borrowing, and Why It Matters

The more important story is in the borrower profile. The conventional assumption that gold loans are a refuge of last resort no longer holds. Prime and above-prime borrowers now account for approximately 52% of gold loan originations, up from 43% in 2022. Borrowers with access to multiple credit formats are actively choosing gold loans for their speed, simplicity, and accessibility. According to TransUnion CIBIL’s Gold Loan Landscape Report, the average ticket size has more than doubled, from around ₹90,000 in early 2022 to approximately ₹1.96 lakh in 2025.

Women are emerging as a particularly significant force. They now account for 39% of gold loan originations by volume, up from 36% in 2022, with growth spreading across India. Given that gold ownership historically sits with women in Indian households, gold-backed lending is doing something important: translating inherited wealth into financial agency.

For farmers, it offers working capital aligned with crop cycles. For first-generation entrepreneurs without formal credit histories, it provides collateral that banks and NBFCs can accept. For MSMEs navigating cash flow gaps, it offers a quick, reliable alternative to longer underwriting processes. Gold loans are becoming the first rung on the credit ladder.

A Structural Shift, A Regulatory Endorsement

India’s gold loan ecosystem has also evolved with stronger regulatory oversight. In June 2025, the Reserve Bank of India introduced a comprehensive framework for lending against gold collateral, bringing greater clarity and standardisation to the sector.

One of the key aspects of the framework is the defined loan-to-value (LTV) structure, which determines how much a borrower can access against the value of their gold. Under the revised norms, loans up to ₹2.5 lakh can be provided with an LTV of up to 85%, while loans between ₹2.5 lakh and ₹5 lakh have an LTV limit of 80%. For higher-value loans above ₹5 lakh, the LTV limit is capped at 75%.

For borrowers, this creates greater transparency around how their gold is valued and how much credit they can access. The guidelines also bring more standardised valuation processes, clearer borrower safeguards, and expanded eligibility norms.

For responsible lenders, this regulatory clarity provides a strong foundation for sustainable growth, ensuring that the expansion of gold-backed lending is supported by prudent assessment, transparency, and long-term trust.

Beyond The Numbers

India’s aspiration economy will not be built on formal credit records alone. It will be built on the assets that ordinary households already own, finally brought into productive engagement with the financial system. Gold loans are rarely the destination. For millions of first-time borrowers, they are the entry point—the first formal credit relationship from which a financial identity is built.

Their gold was always there. So was the ambition. What Bharat needed was a formal bridge between the two—and that bridge is being built, one gold loan at a time.

(The author is Joint Managing Director, Muthoot Finance. Views are personal.)