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Gold loan rush hits INR2.94 lakh crore: Startup founder explains what's driving India's new trend - BusinessToday

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  Published in Business and Finance on Sunday, October 5th 2025 at 14:08 GMT by Business Today
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India’s Gold‑Loan Boom Hits a New Record – Inside the Digital Revolution Driving a Rs 294 Lakh Crore Trend

The gold‑loan market in India has surged to a staggering Rs 294 lakh crore (nearly 29.4 trillion rupees) in the latest fiscal cycle, a figure that underscores a rapidly evolving trend that is reshaping both the financial‑services landscape and everyday consumer behaviour. The figure was unveiled by the Reserve Bank of India (RBI) in its quarterly report, and is highlighted in Business Today’s latest feature, where the founder of the fintech platform GoldVault explains why the country’s gold‑loan appetite has reached such unprecedented levels.

A Market That Has Grown, Not Shrunk

Historically, India’s gold‑loan market hovered around Rs 140 lakh crore at the end of 2022, driven mainly by traditional banks, small finance banks and a handful of non‑banking finance companies. By 2025, however, the market has almost doubled in size – a headline that raises the question: what has changed?

According to RBI data, gold‑loans now account for roughly 12 % of India’s total secured loan exposure. The increase is largely attributable to a combination of economic, regulatory and technological factors:

1. Economic pressure – With rising inflation, a slowdown in retail growth, and a post‑pandemic wave of job insecurity, consumers have sought an “easy‑access” liquidity source that does not require a credit check.
2. Rising gold prices – The global gold price has hovered between $1,850 and $1,950 per ounce during 2024‑25, making gold collateral more valuable and attractive to lenders.
3. Regulatory clarity – RBI’s 2023 circular on “Enhanced collateral monitoring” for gold loans removed several ambiguities and made it easier for financial institutions to assess and manage risk.
4. Fintech penetration – Mobile‑first lending platforms, backed by AI‑driven underwriting, have dramatically lowered the cost and time of approval.

The Digital Disruptor: GoldVault’s Founder Sheds Light

At the heart of this transformation is Arun Sharma, founder and CEO of GoldVault, a Mumbai‑based fintech that launched in 2021. In an exclusive interview with Business Today, Sharma explained how GoldVault’s business model taps into the unmet needs of a new generation of borrowers.

“People want instant cash. They own gold, but they don’t want to go to a branch, fill out paperwork, and wait weeks. Our app does everything in 30 minutes,” Sharma said. “We use AI to evaluate the purity and weight of the gold via a smartphone camera, and we automate KYC through video‑verification.”

Sharma’s company has already attracted $45 million in Series B funding from a mix of venture capital and institutional investors. GoldVault’s digital pipeline boasts a 95 % approval rate and a 30‑day repayment cycle on average – far faster than the 45‑60 day turnaround typical of traditional banks.

The founder pointed out that the gold‑loan market is not only about individual borrowers. Small‑to‑medium enterprises (SMEs) have turned to gold loans as bridge‑finance for working capital, especially those that lack a formal credit history. “A single family owns enough gold to secure a loan of up to ₹20 lakhs,” Sharma noted. “We’re effectively unlocking an under‑utilised asset class for businesses that would otherwise be excluded.”

Regulatory Environment and Risk Management

While the boom is encouraging for lenders and borrowers alike, regulators remain cautious. RBI’s Gold Loan Guidelines (2023) require lenders to maintain a gold‑to‑loan ratio of at least 1.2:1 and to conduct quarterly re‑appraisals. In addition, the RBI has introduced a “Gold‑Loan‑Scorecard” framework to monitor borrowers’ default behaviour, particularly in periods of gold price volatility.

GoldVault and other digital platforms are responding by integrating blockchain‑based gold tracking. This ensures that each kilogram of gold is recorded immutably, reducing the risk of fraud and making it easier for lenders to verify collateral when repayment is overdue.

The Broader Picture: Why Gold Remains a Safe Bet

Gold has long been regarded as a “liquid” asset in India. Unlike real estate or vehicles, gold can be sold or auctioned quickly, even in tight market conditions. Moreover, the cultural significance of gold as a financial safety net cannot be overstated. With the Consumer Confidence Index dipping below 95 in the first quarter of 2025, many households are turning to gold loans as a way to bridge the gap between income and essential expenses.

Analysts predict that the gold‑loan market could reach Rs 400 lakh crore by 2027, maintaining a compound annual growth rate (CAGR) of around 12 %. This projection assumes continued demand for quick liquidity, coupled with sustained gold price levels and supportive regulatory measures.

The Takeaway

India’s gold‑loan market reaching Rs 294 lakh crore is more than a headline number – it signals a shift toward a digitally enabled, consumer‑centric finance ecosystem. Startup founders like Arun Sharma are at the forefront, leveraging AI, blockchain and mobile banking to democratise access to collateral‑based credit. At the same time, regulators and industry bodies are tightening oversight to ensure the sector remains robust and consumer‑friendly.

As the economy continues to grapple with inflationary pressures and a dynamic labour market, gold loans may well become a staple of the Indian financial fabric. Whether this trend will sustain beyond 2025 remains to be seen, but for now, the convergence of technology, culture and economics is propelling India’s gold‑loan market into a new era of growth.