Gold Loan Warning: Over 50% of Low-Risk Borrowers Take Another Loan Within 12 Months

Gold loans have become a common way for people to meet urgent financial needs. However, a new study by TransUnion CIBIL has revealed that more than half of low-risk gold loan borrowers take another gold loan within the next 12 months. The findings highlight the growing dependence on gold-backed borrowing in India.

The report also shows that India`s outstanding gold loan market has expanded significantly, reaching ₹22.5 lakh crore as of August 2026.

More Than 50% Borrow Again Within 12 Months

According to the TransUnion CIBIL study, more than 50% of low-risk borrowers who took gold loans between July 2023 and June 2025 borrowed again within the following 12 months.

The repeat borrowing rate was:

- Loans up to ₹2.5 lakh: 57%

- Loans above ₹2.5 lakh: 54%

The figures include loan renewals, top-up loans and fresh loans taken from other banks or financial institutions.

Even Borrowers with Good Credit Scores Are Taking Gold Loans Again

The report indicates that repeat gold borrowing is not limited to people with a poor repayment history.

According to TransUnion CIBIL`s definition, borrowers with a credit score of 731 or above and no loan payment overdue by 30 days or more during the previous six months may fall under the low-risk category, subject to other credit-related conditions.

Despite their relatively strong credit profiles, many borrowers in this category are returning to gold loans within a year.

Gold Loans Record the Highest Repeat Borrowing Rate

The study compared repeat borrowing across different loan categories. Gold loans recorded a higher rate than personal loans, credit cards and unsecured business loans.

These figures suggest that gold loans are increasingly being used as a recurring source of funds rather than only for one-time financial emergencies.

India`s Gold Loan Market Reaches ₹22.5 Lakh Crore

The outstanding value of gold loans in India reached ₹22.5 lakh crore in August 2026, according to the report. This is nearly three times thehe level recorded in August 2023.

Other key findings include:

- Around 5.5 crore people have gold loans.

- Gold loan borrowers account for 21% of the country`s total borrowing customers.

- The average outstanding loan per borrower is approximately ₹4.1 lakh.

- Between April and June 2026, the number of gold loans disbursed declined by 15%.

- However, the total value of loans disbursed increased by 12% year-on-year to ₹8.2 lakh crore.

- Gold loans above ₹2.5 lakh recorded 19% growth.

The figures indicate that while the number of loans disbursed declined during the quarter, the value of lending increased, particularly in the higher loan-value segment.

Rural Borrowers and Women Account for a Significant Share

Gold loan borrowing is also widespread among rural and semi-urban communities.

The report highlights the following trends:

- Around two-thirds of gold loan disbursements come from rural and semi-urban areas.

- Two out of every five gold loan borrowers are women.

- Gold loan borrowing among Gen Z customers increased by 19% in one year.

- Borrowers with credit scores above 800 account for 40% of gold loan customers.

These findings suggest that gold loans are being used by people across different age groups, income levels and credit profiles.

Loan Repayment Performance Shows Improvement

The report also points to an improvement in repayment performance. The share of active gold loan borrowers with payments overdue by 30 days or more declined from 2% in June 2025 to 1.4% in June 2026.

However, borrowers who missed more than one instalment during the previous six months were three times more likely to miss another payment in the following six months compared with other borrowers.

TransUnion CIBIL Managing Director and CEO Bhavesh Jain highlighted the importance of assessing a borrower`s overall debt burden, income and repayment capacity rather than relying only on the value of the pledged gold.

What Should Gold Loan Borrowers Keep in Mind?

Gold loans can help meet urgent financial requirements, but repeatedly borrowing before clearing existing dues may increase financial pressure.

Borrowers should consider their existing loan balances, interest payments, monthly income and repayment capacity before taking an additional loan. They should also understand the repayment terms and the conditions for recovering pledged jewellery.

A good credit score alone does not guarantee that a borrower can comfortably manage additional debt. Planning repayments carefully is important to avoid financial difficulties and the risk of losing pledged jewellery.