Gold loans soar in India, but it’s southern households leading the charge

Gold loans in India have expanded fourfold since March 2022, emerging as the second-largest segment in the retail credit portfolio after housing loans, with an outstanding value of ₹16.8 lakh crore. However, this rapid growth has been uneven, with southern states continuing to dominate the market and widening the gap with northern regions.

According to TransUnion CIBIL’s Gold Loan Landscape report, as cited by ToI, Tamil Nadu, Andhra Pradesh and Karnataka together account for 51.1% of total gold loan originations in the country, underscoring a strong regional skew despite rising nationwide demand for credit against gold.

Tamil Nadu leads by a wide margin, holding a 25.8% share of total originations and recording a 23% growth in volumes. Andhra Pradesh follows with a 13.6% share and 34% growth, while Karnataka accounts for 11.7% of the market and has seen a 41% increase.

The broader southern region continues to reinforce this dominance. Kerala contributes 9% of total originations with a 16% growth rate, while Telangana holds an 8.8% share and has registered a sharper 55% rise.

In contrast, northern and western states have a significantly smaller share of the gold loan market, though some are witnessing faster growth. Maharashtra accounts for 5.8% of originations with 40% growth, while West Bengal holds 3.6% with a 46% increase. Gujarat’s share stands at 3.3% with 51% growth, and Odisha contributes 3% with a 21% rise.

Uttar Pradesh, despite being India’s most populous state, accounts for just 2.7% of total gold loan originations. However, it has recorded the highest growth among the top ten states at 75%, indicating rising adoption from a low base.

The report notes that while the south remains the core market for gold loans, expansion is increasingly visible in emerging regions such as Assam, Uttar Pradesh, Rajasthan, Madhya Pradesh and Gujarat. Much of this growth is driven by lower base levels, which are translating into sharper percentage increases in loan originations.

(With inputs from ToI)