Gold Loans Rise to Second Largest Retail Credit Segment in India
According to a recent report from credit bureau TransUnion Cibil, gold loans have emerged as the leading product in new loan originations and now constitute the second-largest retail credit book in India. The gold loan portfolio stands at an impressive Rs 16 lakh crore, trailing only behind home loans, which hold a substantial Rs 44 lakh crore. This significant growth highlights the increasing reliance on gold as collateral in the financial market.
Shift in First-Time Borrower Trends
In a notable shift, consumer durable loans, primarily for mobile phones, have become the main entry point for first-time borrowers. This development marks a change from previous trends where two-wheelers and priority sector loans dominated this segment. The evolution reflects changing consumer preferences and the growing accessibility of credit for everyday electronics.
Credit Market Improvement in Q3 FY26
The TransUnion Cibil credit market indicator report reveals that credit markets showed improvement during the third quarter of the fiscal year 2026. Demand for credit increased, driven by GST rate cuts and festive season spending. Concurrently, a sharp rise in gold prices led to a boost in credit supply through gold loans, as lenders capitalized on the higher collateral value.
Lenders have strategically enhanced asset quality by focusing on higher ticket loans, seasoned borrowers, and individuals with stronger credit scores. This approach has resulted in lower delinquency rates across most retail segments, contributing to a more stable credit environment.
Declining Delinquency Rates Across Segments
Delinquencies have decreased in various retail credit categories. Unsecured segments, including credit cards, personal loans, and consumer durables, have seen improvements. Similarly, secured segments such as home loans and auto loans reported lower delinquency levels. Personal loan delinquencies have been on a steady decline since September 2025, while home loan delinquencies remained stable at low levels, ranging from 0.7% to 0.8%.
Areas of Continued Stress
Despite overall improvements, some segments continue to exhibit relatively higher stress levels. Commercial vehicles recorded delinquency rates of around 2%, construction equipment stood at 1.2%, and micro loans against property remained elevated at approximately 3%. However, these levels have remained stable, indicating no significant worsening in these areas.
Outlook for Q4 FY26
Commenting on the outlook for the fourth quarter of FY26, a representative from TransUnion Cibil noted that after the festive season, demand has "normalized" in January and February 2026. Early indicators for January show continued improvement in delinquency rates, suggesting that the credit market indicator may strengthen further in the final quarter of the fiscal year. This positive trend points towards a resilient and growing credit market in India.
Gold Loans Dominate New Originations
In the retail credit market, gold loans now account for nearly one-third of all new loan originations. As gold prices have doubled, the ticket sizes for gold loans have increased by 1.8 times, further solidifying their position as a key financial product. This growth underscores the pivotal role of gold in India's credit landscape, driven by economic factors and lender strategies.
