Gold loan rush hits ₹2.94 lakh crore: Startup founder explains what’s driving India’s new trend

India’s gold loan market is witnessing a record-breaking boom, surging 122% year-on-year to reach ₹2.94 lakh crore as of July 2025, according to Parimal Ade, Founder of InvestYadnya. 

In a post on X (formerly Twitter), Ade highlighted how Indians are increasingly choosing to leverage rather than sell their gold, taking advantage of high prices and easier access to short-term credit. 

“When prices of gold glitter, Indians don’t sell — they leverage,” Ade wrote, noting that gold loans are emerging as India’s fastest-growing retail credit segment, offering liquidity without breaking emotional ties to family gold. 

What’s fueling the rush 

Ade pointed to two major factors behind the surge: 

• Soaring gold prices, which have boosted the value of pledged collateral. 
• RBI’s relaxed credit norms, allowing banks and NBFCs to expand lending against gold with greater flexibility. 

This has led to a growing appetite among both rural and urban borrowers for short-term liquidity — whether for business needs, emergencies, or personal spending — without selling their gold assets. 

Banks offering lowest interest rates 

Ade also shared a comparison of leading banks’ gold loan rates (per annum): PNB – 8.35%, Bank of India – 8.60%, Indian Bank – 8.75%, Canara Bank – 8.90%, Kotak Mahindra – 9.00%, ICICI Bank – 9.15%, HDFC Bank – 9.30%, Bank of Baroda – 9.40%, Union Bank – 9.65%, SBI – 10.00% 

For instance, Ade noted that a ₹1 lakh loan for one year can start at an EMI of around ₹8,700 per month with PNB. 

Gold loans have long been popular in India’s informal credit markets, but the recent boom indicates a mainstream shift toward institutional borrowing. Financial experts see this as a sign of increasing financial inclusion and better utilization of idle assets. 

Ade summed it up succinctly: “Sometimes, it’s not ‘Sell your gold’ — it’s ‘Make your gold work for you.’”