Gold loans are becoming the biggest driver of consumer borrowing? Here's what RBI FSR report says

Gold loans have become the fastest-growing retail credit segment in India, driven by soaring gold prices and rising demand for secured borrowing. according to the RBI's latest Financial Stability Report released on Tuesday.

Gold loans have emerged as the largest segment within non-housing retail loans, growing at a CAGR of 42.4 per cent since March 2024, the report pointed out. This is nearly twice the pace of overall non-housing retail loans (CAGR of 23.0 per cent) during the same period

The report also noted that, both banks and NBFCs have significantly expanded their gold loan portfolios in 2025–26, outpacing growth in other retail loan categories, including housing loans.

“This trend has been supported by a sharp increase in gold prices”

Key things to note:

• Gold loans have emerged as the fastest-growing non-housing retail loan segment, recording a CAGR of 42.4% since March 2024
• This is nearly double the 23% growth in overall non-housing retail loans
• Banks and NBFCs significantly expanded their gold loan portfolios in FY26
• The surge has been largely driven by soaring gold prices

Gold import growth down substantially in May

The report also pointed that the growth in gold imports "decelerated substantially" in May, which had witnessed multiple appeals by Prime Minister Narendra Modi to reduce consumption of the precious metal.

"Growth in gold imports, however, has decelerated substantially in May 2026 compared to the preceding month," it stated.

Gold imports stood at roughly USD 12 billion in May, marking the third consecutive month of decline, a graph presented by the central bank in the FSR showed.

Starting around May 10, with no certainty about an end to the West Asia crisis, which led to a steep increase in oil and commodity prices and put pressure on the rupee, with some fearing it would cross ₹100 per dollar, Modi made multiple appeals to citizens to stop consuming gold.

The RBI report said gold imports had risen significantly in FY27, especially on the back of a steep increase in the price of the commodity.

“Petroleum and gold together contribute more than half of the trade deficit, underscoring the trade balance's vulnerability to external shocks.”

The RBI said that an increase in precious metal prices is expected to cushion the fiscal arithmetic, which is going to come under pressure because of incomplete pass-through of elevated oil prices, excise duty cuts and the higher fertiliser subsidies.