The love of gold in Indian homes and the use of jewelery in times of emergency has a very old history. Whenever a middle-class family or a small businessman suddenly needs money, the yellow gold kept in the safes of banks or non-banking financial companies (NBFCs) becomes the biggest support. "Pledge gold and get instant cash" As simple and popular as this formula is, in the present time its results are becoming equally scary. The recent report of TransUnion CIBIL has given rise to a new concern in the financial markets of the country. According to this report, the total outstanding market of gold loan in the country has increased to a record historical figure of Rs 22.5 lakh crore, which used to be around Rs 7.5 lakh crore just three years ago, that is, this market has grown by about three lakh crores in the last few years. The number of gold loan defaults has doubled in just five months. The most scary thing that has come to light amid this wild expansion of gold loans is that people are easily taking loans by keeping gold from the bank, but are not able to repay it on time. According to CIBIL report, such loans which are not repaid Pending i.e. overdue for more than 90 days, their share was 0.2 percent of the total portfolio in March 2026, which has increased to 0.3 percent after just five months i.e. in August 2026. From the point of view of figures, this may seem a small percentage, but from the point of view of Indian economy and financial discipline, it is almost doubling of the default rate in just five months. About 21 percent of the total credit active consumers of the country, i.e. in every five. Today, every person is burdened with a gold loan in some form or the other. By August 2026, about 5.5 crore people across the country were struggling to repay gold loans, many of whom are finding it impossible to get back their family jewelery due to rising interest and financial pressure. Indian market has shifted from small loans to big loans. Entry of Gen Z. A big and interesting change has been seen in the pattern of the Indian gold loan market in the recent times. The total amount of gold loans sanctioned during the quarter from April to June 2026 increased by 12 per cent year-on-year to Rs 8.2 lakh crore, but on the contrary, the total number of customers taking new gold loans has registered a decline of 15 per cent. In this quarter, about 3.7 crore new loans were distributed and the total number of unique borrowers was about 2.4 crore. This simply means that even though there are less people taking new loans in the market, but People who are taking loans are now taking loans of huge amounts instead of small amounts. As per the data witnessed, there has been a sharp increase of 19 per cent in the number of large gold loans of more than Rs 2.5 lakh on an annual basis, which proves that now people are pledging gold for small needs as well as for big business and lifestyle needs. Along with this, the new generation of the country i.e. Gen Z is also not lagging behind in this race. Where the youth are coming forward in large numbers for startups, freelancing, expensive gadgets, higher education and to meet the lifestyle needs, due to which the financial risk on them has increased even more, the biggest financial threat is looming on those taking more than one loan. This comprehensive report of CIBIL has also revealed which class is facing the financial crisis the most. Those borrowers who are connected to multiple financial institutions simultaneously and have more than one gold loan account active. The risk of default is highest. Customers who have four or more gold loan accounts, the default rate in their portfolio has increased to 0.45 percent, which is almost one and a half times more than the average rate of the entire gold loan portfolio (0.30%). The surprising thing is that the share of people trapped in such excessive debt is about 27 percent in the total gold loan outstanding market. Experts believe that when a person takes a loan, When a person takes a second loan to repay the loan and a third loan to repay the second one, he gradually gets trapped in a vicious circle from which it becomes difficult to get out. Moreover, rural and semi-urban areas have accounted for almost two-thirds of the total gold loans disbursed during this period, which shows how the practice of pawning gold has become dominant due to financial insecurity and cash crunch even in small towns and villages of India. New rules of RBI and necessary security measures for customers Amidst the increasing default cases and panic in the market, the Reserve Bank of India (RBI) has implemented strict and clear rules to control the situation. From April 1, 2026, a new and revised framework has become fully effective for all commercial banks, regional rural banks, cooperative banks and NBFCs. Under the new rules, giving relief to small borrowers, tier-based LTV (LTV – Loan-to-Value) structure has been created, under which the maximum LTV limit for loans up to Rs 2.5 lakh has been directly increased from 75 per cent to 85 per cent, while for loans between Rs 2.5 lakh to Rs 5 lakh, the LTV has been fixed at 80 per cent and for loans above Rs 5 lakh, it has been fixed at 75 per cent. However, in cases of large loans of more than Rs 2.5 lakh, it has been made mandatory for banks to check the actual loan amount of the customer. Strictly evaluate the repayment capacity, so that they cannot over-lend on the basis of paper value. Strict rules have also been made for valuation of gold. Now banks will have to decide the price only on the basis of pure gold weight and the average closing price of last 30 days in the market or the closing price of the previous day (whichever is lower), in which the value of any type of stone, piece of jewelery or making charge will not be added. Moreover, if any If the financial institution does not return the pledged jewelery of the customer within 7 working days after the loan is repaid, then it will have to pay a penalty of Rs 5,000 per day, which is being considered a huge step towards protecting the rights of the customers.
