Gold loan rollovers may hide stress in India's ₹22.5 lakh crore boom (opens the source in a new tab)
- India's gold loan book has roughly tripled in three years to ₹22.5 lakh crore, per TransUnion CIBIL, and reported bad loans remain small. One in two borrowers took another gold loan within a year.
- ET Prime describes an informal rollover at bank branches: when a one-year loan falls due and the borrower can't pay, a moneylender bridges it for a day for a fee, the loan is closed and a new one opened, so no default shows.
- Bajaj Finance has stopped short-tenor gold schemes after overdue loans rose. Piramal Finance's Jairam Sridharan says 15% to 23% of the industry's gold loan disbursements last year went to borrowers already 90+ days overdue elsewhere.
Why it matters Gold loans are now a mainstream source of household credit. If fresh loans are paying off old ones, clean books may be masking stretched borrowers, and a fall in gold prices would test the collateral everyone leans on.
Other side The gold sits in the vault, so lenders rarely lose money even when borrowers struggle, and the branch rollovers come from an on-ground check, not data. For a household needing quick cash, is a renewed gold loan worse than a moneylender?