Macquarie highlighted a troubling trend: a sizeable slice of new gold‑backed loans in India is being used to service existing debt rather than fuel fresh consumption.
Piramal Finance’s Managing Director Jairam Sridharan disclosed that 15 to 23 percent of its gross gold loan disbursements in the past year were granted to borrowers who had been overdue for more than 90 days, a figure that exceeds the industry norm.
Bajaj Finance, which recently announced a strategic pivot away from short‑tenor gold products, said the move would mitigate accidental delinquencies by extending repayment periods. "Moving to longer tenors gives borrowers the breathing room they need," an official explained.
Reserve Bank of India data shows gold loans made up one‑third of all incremental retail lending in Q1FY27, positioning gold as the second‑largest non‑housing loan segment after mortgages, which account for 28 percent of the sector. Macquarie analyst Suresh Ganapathy added that lenders may be directing overdue borrowers to pledge gold and borrow elsewhere to clear NPAs.
Macquarie warns that many lenders entered the gold‑loan market without fully assessing associated risks, potentially fueling a cycle of debt‑clearing through collateral pledges. The report calls on regulators to tighten oversight ahead of the RBI’s upcoming policy review scheduled for early 2027. One borrower, a 42‑year‑old shopkeeper from Pune, said he had pledged his gold watch to clear a loan, fearing eviction.