Gold loans increasingly used for short-term liquidity needs: Experian India

Gold loans in India are increasingly used for short-term funding as tenures shrink, ticket sizes rise, and asset quality improves across lenders

The tenure profile of gold loans shows a clear downward trend across lender categories, indicating growing use of the product for working capital and immediate funding needs rather than as a long-tenure credit facility, according to a report by Experian India. The share of gold loans with a tenure of less than three months rose to 47 per cent in Q3FY26 from 32 per cent a year earlier, while the average tenure of loans originated by non-banking financial companies (NBFCs) declined to 5.1 months from 6.4 months over the same period.

 

The shift in borrower behaviour comes amid rapid growth in gold-backed lending. Gold loan sanction value rose to ₹2.4 trillion in March 2026 from ₹1.4 trillion a year earlier, while personal loan sanctions remained largely stable at around ₹1.1 trillion. Monthly gold loan sanctions touched ₹2.7 trillion in February 2026 before moderating to ₹2.4 trillion in March, widening the gap with personal loans.

 

Despite the sharp rise in sourcing, asset quality improved across the industry. Net 30-plus-day delinquency declined to 1 per cent in March 2026 from 2.2 per cent in March 2023, while net 90-plus delinquency fell to 0.2 per cent from 0.4 per cent. Among lender categories, NBFCs saw net 30-plus delinquency improve to 0.6 per cent from 4.2 per cent, while public sector banks recorded a decline to 0.8 per cent from 2.3 per cent.

 

The report also pointed to a migration towards larger-ticket loans. The share of loans above ₹3 lakh increased to 20 per cent in March 2026 from 6 per cent in March 2023, while the share of loans below ₹50,000 declined to 20 per cent from 36 per cent. The share of customers upgrading to a higher-ticket gold loan after holding a personal loan rose to 48 per cent in Q3FY26 from 38 per cent a year earlier.

 

“Gold loans are moving beyond short-term liquidity support to become a strategic growth lever for lenders. Growth is driven by rising ticket sizes, wider geographic adoption, stronger customer demand and increasing participation across banks, NBFCs and specialised gold lenders,” said Manish Jain, country managing director, Experian India.

 

Borrowers moving from personal loans to gold loans were increasingly opting for higher ticket sizes, the report said. Gold loan sanction value rose to ₹2.4 trillion in March 2026 from ₹1.4 trillion a year earlier, while personal loan sanctions remained largely stable at around ₹1.1 trillion.