Union Budget 2026: Gold Loans Could Become More Affordable - Major Updates Expected

All eyes are on the Union Budget 2026 , set to be presented on February 1 by Finance Minister Nirmala Sitharaman. This year’s budget is expected to be particularly important for government employees, farmers, and anyone seeking loans, as borrowing interest continues to rise across India.

The gold loan market is also in the spotlight. Traditionally dominated by NBFCs like Muthoot Finance and Manappuram Finance, banks are now fiercely competing in this segment, giving consumers more options and better rates. NBFCs are hoping the budget will give them new tools to stay competitive.

Gold Loans : Who Borrows and Why

NBFCs point out that gold loans are mainly used by low-income individuals for smaller amounts, usually under ₹50,000. People rely on these loans for medical emergencies, education, farming needs, and small business working capital. While banks enjoy benefits under priority sector lending, NBFCs do not, forcing them to raise funds at higher costs. Granting NBFCs similar priority status could reduce borrowing costs, allowing more affordable loans for smaller towns and rural areas.

Gold Credit Line via UPI: A Game-Changer?

One of the most exciting expectations is a gold credit line facility through UPI. With UPI being widely used across the country, this could allow individuals to pledge gold directly through UPI apps and access instant revolving credit. The move would be especially beneficial for people in need of emergency funds, helping them avoid high-interest borrowing.

Relaxed Rules Could Boost Growth

NBFCs also hope for a relaxation in single-counterparty exposure limits for gold loans. Currently, these limits are stricter for gold loans compared to other NBFC lending. Raising the exposure limit to 20% of Tier-1 capital could allow well-capitalized NBFCs to deploy funds more efficiently. This could not only benefit lenders but also give a boost to the gold market itself.

With the budget just around the corner, both borrowers and lenders will be watching closely. If the government takes steps to make gold loans more accessible and affordable, it could be a win-win for small borrowers and the gold finance industry alike.