Gold Loan Boom: Public Sector Banks disbursed record Gold Loans in FY25
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India’s public sector banks witnessed a record surge in gold loan disbursements during the financial year 2024–25 (FY25), primarily driven by rising gold prices and increased demand for secured personal loans. As the price of gold touched new highs, more individuals turned to gold loans as a quick and reliable source of credit, helping banks grow their portfolios at a significant pace.
SBI Leads the Gold Loan Growth with ₹50,011 Crore in FY25
State Bank of India (SBI), the country’s largest public sector lender, reported a 53% year-on-year (YoY) increase in personal gold loans, reaching ₹50,011 crore as of March 31, 2025. This marks one of the highest jumps in the bank’s secured retail loan portfolio and underscores the growing popularity of gold-backed borrowing. Click here to download SBI Financial Results.
Indian Bank Records 81% Growth in Retail Jewel Loans
Indian Bank saw the highest growth among major banks, with its retail jewel loan portfolio (non-priority sector) jumping by a massive 81%, from ₹5,366 crore in FY24 to ₹9,706 crore in FY25.
According to Binod Kumar, MD & CEO of Indian Bank, the spike in gold prices enabled customers to borrow higher amounts using the same quantity of gold.
“A customer who earlier got ₹80,000 for a certain amount of gold is now getting ₹90,000 to ₹95,000,” he said, adding that the bank plans to grow its gold loan portfolio by another 20% in FY26.
Bank of Baroda Sees 55.6% Increase in Gold Loans
Bank of Baroda (BoB) also saw impressive growth in its gold loan book, reporting a 55.6% increase in retail gold loans, which rose from ₹4,546 crore in FY24 to ₹7,076 crore in FY25. This shows a consistent trend across the public sector banking space, where gold loans have become a major lending product. Click here to download BOB Financial Results.
Rising Gold Prices Boost Loan Value for Customers
The average gold price per gram rose by over 30% in FY25 — from ₹6,455 on April 1, 2024, to ₹8,450 by March 31, 2025. This dramatic rise increased the loan-to-value (LTV) potential for borrowers, allowing them to receive higher loan amounts against their gold jewellery.
How Loan Value is Calculated:
- Loan-to-Value (LTV) Ratio: Capped at 75% of the gold’s market value (as per RBI guidelines)
- Average LTV availed by borrowers is around 67%
This means borrowers were able to extract more value from the same gold collateral, making gold loans even more attractive in FY25.
Indian Overseas Bank Grows Jewel Loans by 45%
Indian Overseas Bank (IOB) reported a 45% increase in its total jewel loans, which grew from ₹47,732 crore in FY24 to ₹69,188 crore in FY25. Over 85% of these loans were disbursed under the agriculture category, while the rest came from retail customers.
IOB MD & CEO Ajay Kumar Srivastava said:
“This was our highest-ever growth in jewel loans. Soaring gold prices and the safe nature of this lending product made it a preferred segment. Our NPAs in this portfolio are almost zero, making it a low-risk asset for the bank.”
Why Gold Loans Are a Safe Bet for Banks
Gold loans have become a preferred lending product for banks due to several reasons:
- Quick disbursement and minimal documentation
- Lower credit risk (secured against physical gold)
- High loan recovery rate
- Very low NPAs
As a result, many banks are prioritizing the gold loan segment in their overall retail and agriculture lending strategies.
What’s Ahead in FY26?
Looking at current trends, most public sector banks expect gold loan demand to continue rising in FY26. With gold prices staying firm and consumer trust in gold-backed lending strong, this segment is set to remain one of the top-performing portfolios.
Key Takeaways
| Bank | FY25 Gold Loan Growth | FY25 Loan Value |
|---|---|---|
| SBI | 53% | ₹50,011 crore |
| Indian Bank | 81% | ₹9,706 crore |
| Bank of Baroda | 55.6% | ₹7,076 crore |
| Indian Overseas Bank | 45% | ₹69,188 crore (mostly agriculture) |
The gold loan market in India has seen a strong upswing in FY25, backed by increased gold prices and growing consumer demand for secure, short-term credit. For public sector banks, gold loans are proving to be a low-risk, high-growth segment — and are likely to play a key role in their retail lending strategy in the years ahead.
