Kolkata: Throughout 2025, the runaway prices of gold and the way the prices kept climbing higher and higher almost without a pause hogged the headlines. The rise in gold prices has boosted gold loans too, and to an incredible extent of 125.3% year on year. According to the Economic Survey 2025-26, acceleration in loans against gold jewellery boosted personal loans in 2025, when it rose by 12.8%, ahead of all major sectors of credit.

“In terms of sectoral deployment of non-food credit, among the categories of agriculture and allied activities, industry, services and personal loans, the highest YoY growth has been observed in personal loans, with an increase of 12.8 per cent in November 2025. A significant factor contributing to this growth is a substantial rise in loans against gold jewellery, which have increased by 125.3 per cent (YoY), likely due to the increasing prices of gold,” it was mentioned in the Economic Survey.

The rise in global prices of gold

The last calendar year witnessed a surprising rise in the price of the yellow metal. Prices in the global markets climbed from $2,607 to $4,315 per ounce. The tailwinds were US dollar weakening against major currencies, expectations of declining interest rates, geopolitical uncertainty and rising investor demand.

But volatility would bring its own troubles too. While the surge in gold-backed lending was also thought to introduce sensitivity to price movements in the yellow metal. If there was a sharp correction in gold prices it would compress collateral buffers and raise repayment pressure for borrowers. Regulators and lenders typically mitigate this risk through conservative loan-to-value norms.

The LTV (loan to value) in gold loans is 75% now, meaning if you pawn gold whose current market value is Rs 100, you will get a maximum of Rs 75 as loan. However, the LTV will changed to a tiered structure from APril 1, 2026 with higher LTV for lower ticket size of loans.

Other loans

According to RBI data, overall bank credit rose 14.5% year-on-year to Rs 203.23 lakh crore. The growth rate was 11.2% at this time a year ago. Housing loans under priority sector jumped 37% (year-on-year) to touch Rs 10.28 lakh crore. Home loans overall from banking sector increased 11.1% year-on-year and 8.2% in the fiscal year to reach Rs 32.56 lakh crore.

The bank exposure to personal loans rising at 14.4% was higher than 12% a year ago. The outstanding amount on credit card dues rose by 15%, which is a tad slower than the 16% in the preceding fiscal. Credit to industry was a bright point. It recorded a year-on-year rise of 13.3% against 7.5% in the corresponding period last year.