Loans against gold jewellery grew by ₹1.52 lakh crore in the first half of 2026, overtaking housing loan growth for the first time. This shift signals a rising preference for collateral-backed borrowing as banks increasingly fund NBFCs and large industries to drive credit expansion.
In a significant shift for India’s retail lending landscape, gold-backed loans have overtaken housing loans in terms of incremental growth during the first half of 2026. Data shows that outstanding loans against gold jewellery increased by ₹1,52,837 crore, narrowly surpassing the ₹1,47,454 crore rise in outstanding housing loans. This change reflects a departure from the historical trend where home loans traditionally led secured household borrowing.
The rapid expansion in gold loans is primarily driven by elevated gold prices, which have increased the value of collateral held by households. Banks, prioritizing asset quality in a volatile market, have shown a renewed preference for these secured products. By leveraging existing assets, households are accessing liquidity, while banks benefit from the lower risk associated with collateral-backed lending.
NBFCs and Industrial Credit Focus
The credit growth story for early 2026 is also defined by the role of Non-Banking Financial Companies (NBFCs). Bank credit to NBFCs rose by ₹2,45,183 crore, accounting for over 15% of the total incremental credit growth. Many of these NBFCs are primary participants in the gold loan market, creating a structural link where banks channel funds through these entities rather than extending retail credit directly. While this strategy helps banks manage direct balance sheet risks, it also means that the health of the NBFC sector and its borrowing levels are becoming critical points for regulatory oversight.
Simultaneously, large industrial enterprises saw a significant credit injection of ₹2,46,772 crore. Lending within the industrial space remains concentrated, with the power sector emerging as the largest beneficiary, contributing 24% of the growth in this segment. Other major industrial recipients include the engineering sector, basic metal manufacturers, and the petroleum and coal products industry. This concentration of credit in capital-intensive sectors mirrors broader macroeconomic data, including the 14% year-on-year growth in capital goods production reported in the first quarter of fiscal year 2027.
Compared to the unsecured retail lending boom observed in previous years, the current credit environment appears to prioritize secured assets and corporate capital spending. However, the reliance on NBFCs to distribute credit introduces a layer of systemic complexity. Investors monitoring these trends will look toward upcoming quarterly performance reports from both banks and leading gold-loan-focused NBFCs to assess asset quality, cost of funds, and the sustainability of this credit growth as the year progresses.