Gold loans are glittering like never before, driving a surge in credit growth for non-banking financial companies (NBFCs) and emerging as the fastest-growing segment of retail credit amid high gold prices.
Outstanding NBFC loans against gold jewellery surged by 69.9% to Rs 3.29 lakh crore by the end of May 2026 from Rs 1.94 lakh crore in May 2025, outpacing the 19.5% growth in overall retail loans, according to the latest Reserve Bank of India data.
Gold loan outstandings of NBFC players jumped by 136% over the last two years.
As a result, gold loans by NBFCs accounted for a much larger share of retail credit, reflecting increased borrower preference for secured lending backed by rising gold prices.
“In a country where household gold holdings are significant, the rapid growth of gold loans is enabling households to convert a traditionally held asset into a source of accessible finance. This is supporting greater financial inclusion while enabling consumers to meet a wide range of personal and livelihood needs,” said Manish Jain, Country Managing Director of Experian India.
The growth story is also becoming increasingly broad-based across the country.
While Southern India continues to remain an important market for gold loans, strong sourcing growth in FY26 was seen in states such as Uttar Pradesh (138%), West Bengal (112%), Rajasthan (105%) and Maharashtra (102%), highlighting growing acceptance of gold-backed lending beyond its traditional regional concentration and indicating a broader pan-India expansion trend, Experian said.
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There is evidence that gold loans are becoming an increasingly important gateway to formal credit for a wider spectrum of consumers.
By unlocking the value of household gold, priority sector gold loans are helping convert dormant assets into productive capital, especially supporting women-led households, micro-enterprises, livelihood generation and greater participation in the formal financial ecosystem.
While companies have not yet reported any signs of stress in the segment, the practice of rolling over gold loans by making partial payments to extend the tenure and reset the loan period has become widespread. However, latest RBI guidelines have placed strict limits on such rollovers.
Borrowers are now required to repay bullet loans within 12 months fully, and lenders are barred from “evergreening” loans by repeatedly extending the tenure without conducting fresh appraisals, said an industry player.
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Muthoot Finance, the largest player in the segment, reported Rs 1.65 lakh crore in gold loans and 196 tonnes of gold held as security from customers in FY2026.
The industry portfolio, including banks, also expanded substantially from Rs 6.3 lakh crore in March 2023 to Rs.19.4 lakh crore by March 2026, reflecting sustained momentum across the category.
Retail loans accounted for the biggest share in non-banks’ loans at 43%, with gold loans, which are part of retail loans, making up 5.6% of all loans as at the end of May. Loans to industry had a share of 37.4%, with that of services at 13%.
Real estate loans spurt by 40.2%
Commercial real estate has emerged as one of the fastest-growing mainstream categories in credit growth in the NBFCs sector, with outstanding credit to the segment surging 40.2% year-on-year to Rs 1.196 lakh crore in May 2026 from Rs 85,317 crore a year ago, significantly outpacing the 10.2% growth recorded in May 2025, data released by the RBI on Tuesday shows.
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The sharp rise suggests stronger financing activity for commercial property projects amid improving demand in office, warehousing and mixed-use developments.
The spike has also raised concern as credit to commercial real estate is considered as a risky segment along with unsecured retail lending and microfinance lending, according to an official of a nationalised bank.
Overall, NBFCs, including housing finance companies (HFCs), continued to expand credit at a healthy pace in May 2026, with outstanding loans rising 14.2% to Rs 58.61 lakh crore from Rs 51.32 lakh crore a year earlier, RBI data shows.
Bank credit to NBFCs rose 33.7% year-on-year to around Rs 20.88 lakh crore by May 2026. This has improved NBFCs’ ability to extend loans to sectors where they have enjoyed a competitive edge, including commercial real estate.
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NBFC credit growth to industry also moderated with outstanding industrial credit rising by just 7.3% year-on-year to Rs 21.89 lakh crore in May 2026, compared with 10% growth in May 2025.
Infrastructure, which constitutes the bulk of industrial lending, expanded by 5.8%, down from 9.3% a year earlier. Lending to the power sector also slowed, recording 5.8% growth compared with 13% in the previous year, according to the RBI.
Consumer durables loans rise 42%
Retail loans remained the largest driver of NBFC credit expansion. Outstanding retail credit increased 19.5% to Rs 25.20 lakh crore in May 2026, compared with Rs 21.09 lakh crore in May 2025.
Within retail lending, consumer durables loans by NBFCs posted robust growth of 42% to Rs 68,814 crore, more than doubling the 20.6% growth recorded a year earlier. The increase points to resilient discretionary consumption and greater reliance on NBFC financing for household purchases, according to analysts.
Housing finance also registered steady expansion.
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Housing loans, including those extended by HFCs, rose 10.9% year-on-year to Rs 8.35 lakh crore in May 2026, improving from 5.1% growth in May 2025, RBI says. The segment continued to account for a substantial share of retail credit, supported by sustained demand in the residential property market.
RBI says agriculture and allied activities witnessed a notable acceleration in credit growth. Outstanding loans to the sector increased 17.9% to Rs 80,325 crore in May 2026 from Rs 68,127 crore a year earlier.
This compares with a modest 5% expansion recorded in May 2025, indicating stronger credit flow to rural and farm-related activities.
Credit to the services sector also maintained healthy momentum. Outstanding loans rose 16.7% year-on-year to Rs 7.60 lakh crore, lower than the 23.9% growth seen in May 2025 but still reflecting broad-based demand.
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Overall, the latest data indicate that NBFC credit growth has become increasingly driven by retail consumption, housing finance and commercial real estate, while industrial lending has lost some momentum.