Banks race to match NBFCs as gold loans surge 105%

The Story in Brief

Banks are beefing up gold loan operations with more appraisers, new testing gear and digital processing to challenge NBFCs that dominate the market. Union Bank of India now offers loans within 30 minutes at its 1,671 gold loan points. Indian Bank has turned 725 branches into Gold Shoppes and added 982 appraisers in six months. Indian Overseas Bank says it completes loans in about 15 minutes when documents are in order. Federal Bank, with a Rs 40,000-crore gold loan book, relies on in-house appraisal.

RBI data shows bank gold loans surged 105% year-on-year to about Rs 5.2 lakh crore in May 2026. According to a written reply in Lok Sabha, public sector banks held over Rs 11.31 lakh crore gold loans. Five southern states, Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and Kerala, account for over 80% of that total. Despite the rapid growth, gross NPAs for scheduled commercial banks fell to 0.12% and for NBFCs to 0.81%. The Reserve Bank attributes the growth to rising gold prices and notes that loan-to-value ratios have declined, strengthening collateral buffers.