Loans Against Gold Jewellery: Why NBFC gold loans are growing nearly 70% despite tighter RBI regulations

Outstanding NBFC loans against gold jewellery rose 69.3% year-on-year to Rs 3.41 lakh crore at the end of June 2026 (representative image)

Loans against gold jewellery by non-banking financial companies (NBFCs) continued to expand sharply in June, growing nearly 70% year-on-year, according to Reserve Bank of India (RBI) data.Outstanding NBFC loans against gold jewellery rose 69.3% year-on-year to Rs 3.41 lakh crore at the end of June 2026, following a 69.9% increase in May. The pace of growth was significantly higher than the expansion in NBFCs’ overall retail loan portfolio.The latest data point to sustained demand for gold-backed credit even as the RBI has tightened its regulatory framework for lending against precious-metal collateral.

Gold loans grow faster than overall retail credit

NBFC retail loans grew 20.3% year-on-year in June, accelerating from 14.3% growth a year earlier. Outstanding retail credit stood at around Rs 25.62 lakh crore, compared with Rs 21.29 lakh crore in June 2025, according to the RBI data.The central bank said that within retail lending, housing, vehicle and loans against gold jewellery recorded robust credit growth.Housing loans grew 11.4% year-on-year to around Rs 8.44 lakh crore, while vehicle loans rose 15.2% to around Rs 6.24 lakh crore. Consumer durable loans recorded even faster growth of 46.8%, reaching Rs 72,201 crore.However, gold-backed lending remained a standout segment, expanding at more than three times the pace of overall retail credit.

RBI had flagged concerns over gold lending practices

The continued surge comes after the RBI introduced a harmonised regulatory framework for lending against gold and silver collateral.The RBI (Lending Against Gold and Silver Collateral) Directions, 2025, issued in June 2025, laid down rules for regulated entities, including NBFCs.The framework followed supervisory concerns raised by the RBI in September 2024 over practices followed by some lenders.These included deficiencies in the use of third parties for loan sourcing and gold appraisal, inadequate due diligence, weaknesses in monitoring loan-to-value ratios and a lack of transparency in auctions of pledged jewellery after defaults.The RBI had also asked regulated entities to closely monitor their gold-loan portfolios amid significant growth at some lenders.Despite the regulatory scrutiny, gold-backed lending has continued to expand rapidly.

Industry and services credit growth moderates

The growth in gold loans contrasts with a moderation in credit to some other parts of the economy.Credit to industry grew 6.7% year-on-year in June, down from 10.3% a year earlier. The RBI attributed the slowdown primarily to subdued growth in infrastructure, a major component of industrial credit.Credit growth in the services sector also moderated to 17.6%, compared with 22.4% a year earlier. While commercial real estate recorded strong expansion, credit growth to trade and transport operators slowed.Agriculture and allied activities were a notable exception. Credit growth in the segment accelerated sharply to 17.9% in June, from 5.1% a year earlier.The RBI’s provisional sectoral credit data cover a sample of NBFCs in the Upper and Middle Layers and housing finance companies. Together, these institutions account for about 87% of the total credit covered by the central bank’s reference data, according to news agency ANI.