Large jewellery retailers are only the latest, after banks and non-bank finance companies (NBFCs), to get into the game. In a reversal of past practice, when major jeweller chains like Tanishq and Kalyan would only let customers exchange old gold for new jewellery, they have lately been offering customers cash for their old gold, a service traditionally associated with small ‘family jewellers.’
This could be seen as a case of corporate jewellers, hit by rising global gold prices and higher import duties, moving into a field of high demand. Their shift seems in consonance with a sharp increase in gold loans by banks and NBFCs witnessed in recent months.
According to the Reserve Bank of India’s (RBI) June 2026 Financial Stability Report, gold loans have emerged as the largest segment within non-housing retail loans, growing at an annual compounded rate of 42.4% since March 2024, nearly twice the pace of overall non-housing retail loans, which recorded 23.0% growth over the same period.
Both banks and NBFCs have significantly expanded their gold-loan portfolios in 2025-26, outpacing the expansion of other retail loans. While credit growth moderated on the whole, lending to the retail segment remained robust, driven largely by a bulge in gold loans that now form 17.4% of NBFCs’ retail portfolios.
According to RBI’s Financial Stability Report, this increase in gold loans is driven primarily by existing borrowers who made use of higher gold prices to secure larger loans and roll over old debt. And it is pronounced among sub-prime debtors, whose outstanding personal loan balances and loan accounts declined.
The net result is a bit of a win-win. Asset impairment risks stay contained while hardening gold prices ensure that loan-to-value ratios offer lenders a cushion.
How should one read these developments? ‘As a sign of household distress’ is the usual answer whenever there is a domestic surge in gold loans. Observers may thus be tempted to extend this reading to a boom in ‘gold for cash.’
Given this metal’s hold over the Indian psyche, which explains why India remains one of its biggest importers and goes with a reluctance to part with it, that’s a plausible explanation.
Except that it is hard to reconcile large-scale distress with an economy that has been growing faster than an annual pace of 7% for over a year. Note that gold loans are not taken solely by lower-income customers. So could there be a less gloomy explanation?
Could it be that households are finally showing a willingness to put an unproductive asset to productive use? If so, it could have positive spinoffs for the larger economy. Agreed, past attempts to monetize privately held gold have not been a success.
The last such try, the government’s 2015 Gold Monetisation Scheme, got a weak response and was abandoned in March 2025. How much gold Indians have stashed away is unknown. Estimates suggest it could be anywhere between 25,000 and 35,000 tonnes.
Imagine if a sizeable chunk of it is drawn out by the temptation of high gold prices. It would help reduce bullion imports further (they fell year-on-year in the first quarter of 2026-27), thanks to domestic recycling, even as it pushes more money into the economy by way of private investment or discretionary consumption.
What if gold loans and encashments reflect a shift in disposition rather than household distress? It might speed up our path to Viksit Bharat.