Women’s Day: Women borrowers lead growth in gold loan segment as of Dec 2023, says report

CIBIL data from December 2023 shows gold loan industry advances at Rs 7.15 lakh crore, which has grown at CAGR of 19 percent for the last three years.

Gold loan disbursals to women borrowers have grown 16 percent between December 2022 and December 2023, according to a study released by credit information company CRIF Highmark. In the overall retail loan portfolio where women are the borrowers, gold loans accounted for 44 percent in December 2023 (refer to graphic).

The total retail loans outstanding as far as women borrowers are concerned has risen by 19 percent, from Rs 26 lakh crore in December 2022 to Rs 30.95 lakh crore in December 2023.

Ease in processing and cost-effectiveness leading growth in gold loan

According to a World Gold Council report, Indian households have 27,000 tonnes of gold. Further, CIBIL data from December 2023 shows gold loan industry's advances at Rs 7.15 lakh crore, which grew at CAGR of 19 percent for the last three years. Soaring gold prices and easier availability of gold loan from banks and non-banking financial corporations (NBFCs) have led to a growing number of consumers unlocking the value of their gold jewellery to meet their credit needs.

Unlike other credit products which have stringent eligibility criteria, gold loan has a simpler application and disbursal process. By utilising gold as a collateral, borrowers can enjoy lower interest rates compared to conventional credit, translating to savings during the course of the loan tenure.

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Shripad Jadhav, President – Retail Agriculture and Gold Loans, Kotak Mahindra Bank said, “Gold loans are a versatile financial product and cater to a wide range of consumer needs. Easy accessibility, same day processing, attractive pricing, and the security of gold jewellery contribute to its appeal among aspirational consumers.” As a result, an increasing number of individuals are considering gold loans as a cost-effective option comparable to other credit products, indicating a shifting trend in consumer financial behaviour, he added.