Value of gold loans crossed Rs 2.5 lakh crore by May 2025, up 115% YoY: MoS Finance

The value of loans from pledged gold jewellery crossed Rs 2.5 lakh crore by May this year, rising by nearly 115.25% from a year ago.

Minister of State for Finance Pankaj Chaudhary on July 28 informed the Lok Sabha that the value of bank loans against gold jewellery increased from ₹1,16,777 crore in May 2024 to ₹2,51,369 crore in May 2025. This reflects “the combined impact of regulatory efforts and shifting borrower preferences to gold loans due to the relatively higher loan to value (LTV) ratio vis-à-vis other types of collateral,” he said.

The RBI has taken several measures to improve formal credit availability against gold, particularly for small borrowers requiring small value loans, such as raising the maximum LTV ratio for consumption loans against gold collateral to 85% for loans up to ₹2.5 lakh, and 80% for loans between ₹2.5 lakh and ₹5 lakh, while the previous limit of 75% remains for loans above ₹5 lakh, the minister further said.

Responding to a question on the impact of gold price in core retail inflation, he further said that the average monthly contribution of gold to core inflation in the CPI basket during the last 12 months --- July 2024 to June 2025 -- is about 20%.

Noting that gold in India serves a dual role of not only a consumption item but also an investment avenue, the minister said that an increase in gold price positively influences household consumption through the wealth effect, as the notional value of existing gold holdings appreciates.

Meanwhile, responding to another question, the minister shared data with the Lok Sabha that banks have transferred over Rs 67,003 crore of unclaimed deposits to the Depositor Education and Awareness fund by June 30 this year.

Public sector banks had deposited Rs 58,330.26 crore to the fund and private sector banks had deposited Rs 8,673.72 crore by June 30. Of these, State Bank of India had deposited the highest amount of Rs 19,329.92 crore, followed by Punjab National Bank, which deposited Rs 6,910.67 crore and Canara Bank that deposited Rs 6,278.14 crore. Private sector lender ICICI Bank deposited Rs 2,063.45 crore to the fund.

“Balances in savings and current accounts that remain inoperative for 10 years, or term deposits not claimed within ten years from the date of maturity, are classified as Unclaimed Deposits and subsequently transferred by banks to the Depositor Education and Awareness (DEA) fund maintained by RBI,” the minister said, adding that Non- Banking Finance Companies (NBFC) are not required to transfer unclaimed deposits to DEA fund.