Indian household borrowing is showing a clear tilt toward secured credit, with loans against gold jewellery rising sharply even as growth in unsecured or consumption-linked segments such as credit card dues and consumer durable loans has slowed, according to Reserve Bank of India data. The latest numbers point to a notable change in borrowing behaviour at a time when banks continue to report healthy overall credit growth, but the composition of that growth is becoming more conservative.
Gold Lending Gains Pace
Loans against gold jewellery have emerged as one of the fastest-growing retail credit categories, registering a substantial increase in percentage terms. The surge is likely amplified by a favourable base effect, but the direction of travel is unmistakable: households are increasingly using pledged gold to meet short-term funding needs. That trend is consistent with a broader preference for secured borrowing, where lenders have collateral and borrowers often gain faster access to funds than through more documentation-heavy unsecured products.
Gold loans have historically served as a financial buffer for households across income groups, especially in periods of income stress or uneven cash flows. Their recent acceleration suggests that consumers may be prioritising liquidity while avoiding higher-cost or more restrictive forms of borrowing. For banks and non-bank lenders, the segment offers relatively lower credit risk because the loan is backed by an asset with established resale value, though it also reflects a more cautious consumer mood.
Unsecured Credit Slows
By contrast, credit card dues and consumer durable loans have shown only modest growth. That is significant because both categories are closely linked to discretionary spending and short-tenor consumption. Slower expansion in these segments may indicate that households are becoming more selective about non-essential purchases, or that lenders are maintaining tighter underwriting standards after a period of rapid retail credit expansion.
Credit card balances are often seen as a proxy for everyday consumption and revolving credit demand. When growth in dues softens, it can signal either restrained spending or a preference to pay down balances more quickly. Consumer durable loans, meanwhile, are typically used to finance appliances and electronics, and their muted growth suggests that demand for big-ticket household purchases is not accelerating meaningfully.
The contrast with gold-backed borrowing is striking. Rather than leaning on revolving or unsecured credit, households appear to be monetising assets they already own. That shift may also reflect the appeal of lower borrowing friction and, in many cases, more predictable repayment terms.
Personal Loans Still Dominate
Even with the slowdown in some retail categories, personal loans continue to grow and remain a major contributor to overall bank credit expansion. That keeps the broader retail lending market on a firm footing, even as the mix changes. Personal loans are typically used for a wide range of purposes, including medical expenses, education, travel, home repairs and debt consolidation, making them one of the most flexible forms of bank lending.
The RBI data indicates that bank credit rose markedly overall, underscoring that lending momentum remains intact despite the shift in composition. The key difference is that the growth engine is increasingly being driven by secured or relatively lower-risk lending rather than by aggressive expansion in unsecured consumer credit. For lenders, that may be a welcome development after concerns in recent quarters about stress in some retail portfolios.
For households, the trend may reflect a more pragmatic approach to borrowing in an environment where inflation pressures, uneven wage growth and higher living costs continue to shape spending decisions. Gold loans, in particular, offer a way to unlock value without selling family assets outright, making them a culturally familiar and financially expedient option.
The broader message from the RBI data is that Indian consumers are not necessarily borrowing less; they are borrowing differently. The preference is shifting toward credit that is easier to secure, cheaper to underwrite and backed by collateral. That change could have implications for banks' retail strategies, pricing models and risk management frameworks in the months ahead.