Gold loans are experiencing a rise in India. Recent reports show an unprecedented rise in the value of loans secured by gold. This increasing tendency indicates the evolving economic environment in the nation. As an increasing number of individuals are relying on their precious metals for liquidity. In this article today, we will discover what implications does this hold for the Indian economy?
Notable increase in gold loans
In India, there has been a notable increase in gold loans. Loans from banks backed by gold jewellery have experienced a 50.4 percent increase in the first seven months of this financial year, concluding on October 18, 2024. This increase stands in contrast to other personal loan types, which have experienced single-digit growth, as per data from the Reserve Bank of India (RBI).
Monthly comparison
As per RBI, loans secured by gold jewellery rose by roughly 40 percent in July of this year and 31 percent in June, compared to 16 percent and 19 percent during the same month last year. Likewise, gold loans rose by 30 percent in May this year, compared to just 15 percent in May 2023.
As of October 18, the total outstanding gold loans stood at Rs 1,54,282 crore, rising from Rs 1,02,562 crore in March 2024. This indicates an increase of 56 percent year-over-year, in contrast to 13 percent in October 2023.
Other personal loans growing rather slowly
Other segments of personal loans have experienced slower growth. Home loans increased by 5.6 per cent to Rs 28.7 lakh crore during the seven-month timeframe, reflecting a 12.1 per cent rise compared to the last year, but a decrease of 36.6 per cent from the year before.
Credit card loans increased by 9.2 percent to reach Rs 2.81 lakh crore, driven by a surge in online transactions. Other personal loans, such as unsecured loans, experienced a slight rise of 3.3 percent. Total bank lending increased by 4.9 percent to Rs 172.4 lakh crore, whereas industrial loans rose by 3.3 percent.