India’s gold loan sector has experienced an impressive growth over the past five years, nearly tripling in size from $33 billion in FY19 to $83 billion in FY24, according to a recent report by consultancy firm Praxis Global Alliance. This translates to a robust compound annual growth rate (CAGR) of 20 percent, positioning the gold loan segment as one of the fastest-growing in India’s lending landscape.

Gold loans have long been a staple for Indian borrowers, rooted deeply in cultural affinity toward the precious metal. Many families regard gold not only as a symbol of wealth but also as a financial fallback, making it a widely used asset for borrowing. The simplicity, speed, and accessibility of gold-backed loans make them appealing across socio-economic strata.

Formal Lending On The Rise

A major factor contributing to this boom is the increasing preference for formal lending institutions like banks and non-banking financial companies (NBFCs). Improved regulatory standards have enhanced borrower protection and transparency, encouraging more people to turn away from informal moneylenders.

Government initiatives aimed at financial inclusion have further fostered trust in regulated lenders. Formalization is reshaping the market, making gold loans safer and more structured for borrowers nationwide.

Technology Reshapes Borrowing Experience

The gold loan market has been significantly influenced by digital innovation. From online loan applications to doorstep gold collection and digital disbursal, lenders, both new-age fintech firms and traditional players, have streamlined the entire process. Digital tools such as eKYC, biometric verification, and video-based onboarding have enhanced speed and convenience, especially for urban and semi-urban customers.

Gen Z Embraces Gold As A Financial Asset

The report notes a shift in mindset among younger Indians, who now view gold as a financial resource rather than a sentimental possession. Gen Z and millennials are increasingly using gold loans for short-term needs, reassured by the asset’s recoverability after repayment.

Flexible repayment plans, bullet payment options, and varied interest structures have further broadened the market’s appeal.

Regional Trends And Future Potential

Southern India continues to dominate, accounting for 79 percent of the total gold loan market. The region's long history of gold ownership and comfort with pledging it as collateral explains its leadership. However, attention is now turning to the eastern and western regions, where significant gold holdings remain underutilized for credit purposes. Lenders are actively targeting these areas as the next frontier for expansion.

With ongoing formalization, rising digital access, and evolving borrower attitudes, India’s gold loan market is poised for continued growth. Analysts expect it to become an even more vital component of the country's lending ecosystem in the coming years.