Gold Loans Lead the Charge in Personal Finance

In a remarkable financial trend, gold loans have seen an unprecedented surge, marking a 71% year-on-year increase by the end of December 2024. This growth positions gold loans as the fastest-growing segment within personal loans, outpacing other forms of individual borrowings.

Driving Factors Behind the Gold Loan Boom

Analysts point to three key factors fueling this growth: a regulatory shift favoring banks over NBFCs, rising gold prices enhancing loan values, and financial distress among households pushing towards secured loans. Banks now command an 82% market share, a significant leap from the previous year.

Personal Loans and Credit Growth Overview

While credit card outstandings grew by 15.6%, home loans remained the largest segment in bank credit, despite a slowdown in growth. Interestingly, consumer durables were the only segment to show a negative growth. The overall non-food credit saw an 11.1% increase, with the agriculture sector contributing significantly to this growth.