Gold Loan Surge Drives Credit Market Growth in December 2025 Quarter

Gold loan originations soared in the Dec 2025 quarter, up 45% in volume and 108% in value, boosting the Credit Market Indicator. Doubling asset values increased loan sizes, making gold loans the top retail product by origination share.

Gold Loans Drive Credit Market Growth

The Credit Market Indicator (CMI) for supply rose in the December 2025 quarter, according to the gold-loan-credit-market. This upward movement in credit supply was primarily the result of a significant increase in gold loan originations across both volume and value. The report noted that "CMI for supply rose in the December 2025 quarter, driven by higher originations in Gold loans both by volume and value."

Gold loan originations surged by 45 per cent in volume and 108 per cent in value during the three-month period ending in December 2025. This momentum established the category as the largest product by share of retail originations, accounting for 36 per cent of total volume and 39 per cent of total value.

Key Growth Drivers: Asset Appreciation and Larger Ticket Sizes

The report stated that "one of the critical factors driving Gold Loan growth in the December 2025 quarter is the sharp rise in underlying asset values, which have doubled since March 2023." As a result of this valuation spike, "average ticket sizes have increased by 1.8x, indicating that as gold valuations rise, consumers are leveraging higher-value loans to meet their financing needs." The report clarified that "the category's expansion is being shaped not only by demand but also by market-linked asset appreciation, making future growth sensitive to movements in gold prices."

Market Position and Geographic Expansion

Gold loans now represent the second-largest retail product by outstanding balances at 11 per cent, positioned only behind the housing sector. Geographically, while southern states continued to represent more than half of all gold loan originations, new regions showed accelerated growth.

Growth Beyond Southern Strongholds

The report found that "western and northern states--particularly Rajasthan, Uttar Pradesh and Madhya Pradesh--are now expanding at above-average growth rates." Specifically, Rajasthan saw a 79 per cent year-on-year growth in volume, while Uttar Pradesh recorded a 96 per cent increase.

Expanding Consumer Base

According to the report, "lenders continue to focus on credit tested consumers with prime and above consumers making up 57% of all originations." Women made up approximately 40 per cent of the gold loan consumer base, and 68 per cent of originations came from rural and semi-urban areas. The report stated that "gold loans are expanding beyond traditional strongholds and attracting more diverse credit profile consumers, positioning the product as a mainstream retail lending category."

Performance in Other Credit Sectors

Other credit categories showed varied performance during the same period. Home loans and consumer durable loans maintained positive momentum despite declines in the previous year, with home loan values increasing by 13 per cent. Conversely, credit card originations experienced an 11 per cent decline in volume. (ANI)

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