Gold loan offtake stays strong amid retail loan moderation in January

The gold loan portfolio of banks continued to show strong off-take with 76 per cent year-on-year (Y-o-Y) growth in January 2025 amid moderation in retail credit — especially in the unsecured credit segment — following increase in risk weights in November 2023.

The gold loan pool had grown 17.4 per cent Y-o-Y in January 2024.

The Reserve Bank of India (RBI) data showed that “loans against gold jewellery” under the retail segment stood at Rs 1.78 trillion in the fortnight ended January 24, 2024.

Since September 2024, the gold loan portfolio has shown over 50 per cent Y-o-Y growth each month.

The pace of retail loan expansion moderated to 14.2 per cent in January 2025 from 18.2 per cent in January 2024.

This is largely due to decline in growth rate in other personal loans, vehicle loans and credit card outstanding segments, RBI said in a statement.

The other personal loans — comprising unsecured credit — declined to 9.2 per cent from 20.8 per cent.

Bankers said some borrowers have turned to gold loans after lenders tightened norms for unsecured credit.

This is after a hike in risk weights in November 2023 and rise in stress in small-ticket loans.

In the retail portfolio, home loans expanded by 15.5 per cent against 16.6 per cent, vehicle loans 9.7 per cent, down from 16.4 per cent, a year ago.

Credit card outstanding grew by 13 per cent against 31.3 per cent.

Loans to industry showed a mild uptick to 8.2 per cent in January 2025 from 7.5 per cent in January 2024.

The pace of loan growth in the micro and small industry segment declined 9.5 per cent from 16 per cent a year ago.

The large industry segment showed growth improving marginally to 6.4 per cent from 5.7 per cent a year ago.

The medium-sized segment saw 18.5 per cent growth in January 2025 against 10 per cent in January 2024.

Among major industries, outstanding credit to ‘petroleum, coal products and nuclear fuels’, ‘basic metal and metal products’, ‘chemicals and chemical products’ and ‘all engineering’ recorded an accelerated growth, the RBI said.

Credit growth to the services sector moderated to 13.8 per cent from 21 per cent in January 2024, with a decelerated growth in credit to ‘non-banking financial companies’ (NBFCs) to 7.7 per cent Y-o-Y from 15.6 per cent a year ago.

Credit to agriculture and allied activities registered moderation with 12.2 per cent growth in January 2025, down from 20 per cent in January 2024, RBI said.