These 3 States Hold 51% of the Country's Gold Loans: Why Is the Demand for Pledging Gold on the Rise? Report Reveals Insights

Despite the nationwide surge in demand for loans against gold, the inclination toward this option is most pronounced in a specific region. These states collectively account for 51.1 percent of the country's total gold loans.

Gold Loans: A gold loan is a financial option that proves immensely useful to individuals during times of emergency. Recent reports reveal that gold loans have emerged as India's second-largest retail credit product, with a total value reaching ₹16.8 lakh crore. Since March 2022, gold loans have witnessed a fourfold increase.

Within the retail credit portfolio, gold loans now rank second only to housing loans. The trend of availing loans against gold is observed most prominently in the South Indian states. Tamil Nadu, Andhra Pradesh, and Karnataka are the three South Indian states that collectively hold a 51.1 percent share of the country's total gold loans. This highlights that, despite the rising demand for loans against gold across the nation, the concentration of this trend is highest in this specific region.

Who Leads Whom, and by How Much?

Among these three states, Tamil Nadu takes the top spot. With a market share of 25.8 percent, it leads the pack in terms of gold loan uptake.
Andhra Pradesh ranks second, holding a market share of 13.6 percent.
Karnataka stands at the third position with a market share of 11.7 percent.

Other South Indian states also feature in this list of gold loan borrowers. Kerala holds a market share of 9%, having witnessed a growth of 16%. Telangana holds an 8.8% share, boasting a growth rate of 55%. Maharashtra contributes 5.8% to this sector, marking a 40% increase. The list also includes states such as West Bengal, Gujarat, Odisha, and Uttar Pradesh.

Why Is the Demand for Gold Loans Rising?

The rising price of gold is the primary reason behind this trend. Due to the rise in gold prices, customers are receiving significantly higher loan amounts against their old jewelry. Furthermore, compared to personal loans, this option requires fewer KYC documents, and the funds are disbursed instantly. The share of women among gold loan borrowers is on the rise, having now reached approximately 40 percent.