Gold loans have emerged as the strongest driver of India’s retail credit expansion, recording a remarkable 53% year-on-year (YoY) growth in the second quarter of FY26, according to the recently released CRIF High Mark “How India Lends” report. This surge not only places gold loans at the top of the credit growth chart but also shows how secured, short-tenure, liquid-backed lending continues to play a critical role in supporting Indian households’ borrowing needs.

The report highlights that gold loans accounted for 27% of the total retail loan originations value, amounting to ₹2,237.8 crore in the quarter ended September 2026. Given their ability to provide quick liquidity, flexible repayment structures, and lower risk for lenders, gold loans have become increasingly preferred across both urban and semi-urban markets.

Gold Loans: Fastest Growing Retail Credit Category

Gold loans have historically been counter-cyclical—demand rises during periods of financial stress or tight liquidity—but the FY26 numbers suggest a broader behavioural shift. The 53% growth far outpaces that of other retail credit products and signals a mix of rising household consumption, increased gold monetisation, and wider acceptance of gold-backed borrowing.

Consumers appear more comfortable pledging gold to manage short-term cash needs, small business working capital, emergency liquidity, and lifestyle-related expenses. Lenders, on the other hand, have doubled down on gold loans due to their low risk and high recovery assurance, as gold prices remain stable and asset liquidation is straightforward.

The report notes that personal loans were the second-fastest-growing category in retail credit, expanding 35.4% YoY. However, personal loans often carry higher interest rates and stricter creditworthiness checks, making gold loans a more accessible option for borrowers who seek speed and minimal documentation.

Retail Credit Grows Nearly 30% YoY

Overall retail loan originations expanded nearly 30% in the quarter, reflecting the strong borrowing appetite amid rising consumption, higher discretionary spending, and improved credit penetration. The increased demand also reflects expanding fintech-led distribution models and better digital onboarding processes that have lowered acquisition costs for lenders.

But the strong headline numbers are tempered by shifting borrower profiles, especially with respect to the New-to-Credit (NTC) category.

NTC Borrower Share Falls Across Most Loan Types

One of the most notable findings in the CRIF report is the decline in loans sanctioned to NTC borrowers. Except in the case of gold loans, all other major retail lending categories saw a fall in the proportion of new borrowers entering the credit system.

For gold loans, the share of NTC customers remained stagnant, meaning that gold-backed borrowing continues to be a stable entry point for first-time credit users. This aligns with the nature of gold loans, which require minimal credit history due to the secured nature of the asset.

In contrast:

• Two-wheeler loans, which traditionally act as the largest segment for NTC customers, saw their share fall from 39.5% to 34.4% YoY.

• Auto loans increased 13.6% in value but had only 12.5% penetration among NTC customers.

• Housing loans grew 14.3%, yet their NTC share dropped to 11.7%, indicating that first-time borrowers are finding big-ticket loans less accessible, possibly due to rising documentation requirements, higher ticket size, and affordability concerns.

The decline in NTC participation in sectors such as auto and housing also signals either a saturation in credit penetration or a temporary pullback due to macroeconomic uncertainties.

Delinquency Trends: Early Stress in Smaller Ticket Borrowers

In terms of asset quality, the report notes some stability but flags areas of concern. The portfolio at risk (PAR) between 31–180 days improved marginally, coming down to 3.4% in Q2 FY26 from 3.7% a year earlier. This is a positive sign, suggesting improved borrower discipline, strengthened underwriting norms, and more data-driven lending.

However, a worrying trend emerges in the 31–90 day delinquency bracket, particularly among borrowers availing loans in the ₹75,000–₹1 lakh range. This segment showed the highest delinquency levels, indicating financial stress in lower- to middle-income households.

These borrowers typically rely on small-ticket consumption loans, short-term credit, and emergency liquidity products. Any disruption in cash flows—such as job instability, inconsistent earnings, or inflationary cost pressures—can quickly lead to repayment delays.

Lenders Report Healthy Demand Across Key Segments

Despite the concerns, the CRIF report indicates that demand remains robust across major secured lending categories. Sachin Seth, Chairman of CRIF High Mark and Regional Managing Director for CRIF India & South Asia, stated that the country is witnessing “healthy demand for home, auto and gold loans” accompanied by “improved credit card outstanding coupled with elevated performance metrics across lender types.”

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