Economic Survey 2026: Gold jewellery loans jump 125.3% as rising prices fuel personal loan growth

Personal loans have led the growth, especially loans against gold jewellery, which have surged due to rising gold prices.

• Credit growth surged, led by a 125.3% YoY rise in loans against gold jewellery
• Bank asset quality improved, with GNPA ratios at multi-decade lows
• Recovery rates for stressed assets doubled from FY18 to FY25

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Amidst stability, credit growth has picked up again in the second half of the year. The Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman on January 29 said that a key factor driving credit growth is a sharp increase in loans against gold jewellery, which have risen by 125.3 percent (YoY), possibly due to rising prices of the yellow metal.

"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," the survey said.

After moderating earlier in FY26, lending picked up sharply towards the end of 2025. As of December, bank credit was growing at 14.5 per cent year-on-year. Personal loans have led this growth, especially loans against gold jewellery, which have surged due to rising gold prices.

India’s banking system has demonstrated strong signs of stability, supported by healthier balance sheets, low bad loans, and consistent profits. Recent data indicates that scheduled commercial banks (SCBs) are in a much better position than a few years ago, and this improvement boosts overall economic confidence.

One of the biggest positives is asset quality. The gross non-performing asset (GNPA) ratio and net NPA ratio of SCBs have fallen to multi-decadal lows, indicating that banks are better managing stressed loans. At the same time, banks remain well capitalised. The capital-to-risk-weighted-asset ratio stood at a strong 17.2 percent in September 2025, per the economic survey.

The survey also revealed that bad loans in industry, services, and personal loans declined over the past six months. Industry GNPA fell to 1.9 percent, services to 1.8 percent, and personal loans to 1.1 percent by September.

Agriculture remains a concern, with a higher GNPA of 6 percent, which improved slightly from 6.1 percent in March 2025.

Banks are also recovering more money from stressed assets. Recovery rates have nearly doubled since FY18, aided by improved resolution mechanisms. "The recovery rate in NPAs in SCBs has approximately doubled from 13.2 per cent in FY18 to 26.2 per cent in FY25," stated the Economic Survey.

The survey showed that the slippage ratio of SCBs, indicating the growth of NPAs relative to standard loans and advances at the start of the fiscal year, improved from 7.1 percent in FY18 to 1.4 percent in FY25, and declined further to 1.3 percent in the September quarter.