Executive Summary:
This document presents the Ministry of Finance's response to Lok Sabha Unstarred Question No. 4021 regarding the increase in gold loan Non-Performing Assets (NPAs). It provides data on gold loans advanced by Scheduled Commercial Banks (SCBs) and Non-Banking Financial Companies (NBFCs) and addresses concerns about unethical lending practices. The response includes data up to March 2025 and outlines measures taken by the Reserve Bank of India (RBI) and the government to mitigate risks associated with gold loans.
Key Points / Main Content:
Data on Gold Loans and NPAs:
* RBI provides data on advances outstanding and Gross Non-Performing Assets (GNPAs) for gold loans from Upper and Middle Layer NBFCs for the past five years (as of Annex I) and from SCBs for the past three years (as of Annex II).
* Data on gold loans from SCBs prior to March 31, 2023, and from NBFCs prior to March 31, 2021, is not available with RBI.
* The ratio of Gross Non-Performing Assets in gold loans to outstanding gold loans for SCBs has marginally increased from 0.20 in March 2023 to 0.22 in March 2025.
* For Upper and Middle Layer NBFCs, the same ratio has increased from 1.21 to 2.14 over the same period.
* RBI does not maintain data related to gold loans auctioned by SCBs and NBFCs.
Risk Mitigation Measures:
* Banks and NBFCs undertake measures such as regular assessment of gold purity, empanelment of trained appraisers, CCTV surveillance during valuation, periodic audits, and advance notice to customers before auctioning pledged gold.
* The Department of Financial Services (DFS) advised Public Sector Banks on February 27, 2024, to review gold loan portfolios sanctioned between January 1, 2022, and January 31, 2024.
* RBI advised all supervised entities on September 30, 2024, to comprehensively review their gold loan policies and practices.
* Regulated entities are not permitted to extend loans exceeding 75% of the value of gold ornaments and jewelry (Loan-to-Value ratio).
* For bullet repayment loans, banks are not permitted to extend loans with a tenure exceeding 12 months.
Complaints Handling:
* The Office of the RBI Ombudsman received 188 complaints related to gold loans during the financial year 2024-25.
* These complaints are handled according to the RBI Integrated Ombudsman Scheme, 2021.
Impact Analysis:
Scheduled Commercial Banks (SCBs) and Non-Banking Financial Companies (NBFCs) (Upper and Middle Layer):
* Impact: Required to adhere to RBI guidelines for gold loans, including risk mitigation measures and Loan-to-Value ratio maintenance. Subject to review of gold loan policies and practices as advised by RBI. Increased scrutiny due to the rise in gold loan NPAs.
* Action Required: Implement and review gold loan policies, ensure adherence to regulatory guidelines, conduct comprehensive reviews of gold loan portfolios, and monitor gold loan portfolios closely.
Public Sector Banks:
* Impact: Subject to review of gold loan portfolios sanctioned between January 1, 2022, and January 31, 2024, as advised by DFS.
* Action Required: Conduct a comprehensive review of gold loan portfolios, covering assessment and assaying of collateral, analysis of interest and other charges collected from borrowers, etc.
Borrowers:
* Impact: Protected by measures ensuring fair valuation of gold, transparent lending practices, and advance notice before auctioning. Can lodge complaints with the RBI Ombudsman regarding grievances.
* Action Required: Be aware of their rights, monitor loan accounts, and clear liabilities in a timely manner to avoid auction.
Reserve Bank of India (RBI):
* Impact: Responsible for monitoring gold loan portfolios, issuing guidelines, and handling complaints through the Ombudsman scheme.
* Action Required: Continue to supervise entities, refine guidelines as needed, and address borrower complaints effectively.
Key Entities Referenced
SHRI RAHUL GANDHI: Member of Parliament who raised the question regarding gold loans in Lok Sabha.
Scheduled Commercial Banks (SCBs): Banks that are listed in the Second Schedule of the Reserve Bank of India Act, 1934.
Non Banking Financial Companies (NBFCs): Financial institutions that provide banking services without holding a banking license.
SHRI PANKAJ CHAUDHARY: Minister of State for Finance who provided the answer to the Lok Sabha question.
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector and monetary policy.
Department of Financial Services (DFS): A department within the Ministry of Finance responsible for overseeing the financial sector.
RBI Integrated Ombudsman Scheme, 2021: A scheme by the Reserve Bank of India for addressing complaints related to financial services.
Lok Sabha: The lower house of the Parliament of India, where the question about gold loans was raised.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 4021
ANSWERED ON MONDAY, AUGUST 18, 2025/ SRAVANA 27, 1947 (SAKA)
INCREASE IN GOLD LOAN NPA
4021. SHRI RAHUL GANDHI:
Will the Minister of FINANCE be pleased to state:
(a) the size of the gold loan market in the country and the details of gold loans advanced by Scheduled
Commercial Banks (SCBs) and Non- Banking Financial Companies (NBFCs) since 2016, year- wise;
(b) the details of gold loans advanced since January, 2024, month- wise;
(c) the details of outstanding gold loans, defaults, and gold loan NPAs since 2016, year- wise;
(d) whether there has been an increase in gold loan NPAs and if so, the reasons therefor;
(e) the details of gold auctioned by SCBs and NBFCs since 2016; and
(f) whether the Government has received any complaints regarding unethical practices by lenders,
including auction of gold without the knowledge of borrowers and if so, the details thereof?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (f): As per the Reserve Bank of India (RBI), data on advances outstanding and Gross Non-Performing
Assets (GNPAs) in respect of gold loans, including quarterly data since March 2024, as reported by Upper-
and Middle-Layer Non-Banking Financial Companies (NBFCs) for the past five years is at Annex-I, and
by Scheduled Commercial Banks (SCBs) for the past three years is at Annex-II. Gold loan data of SCBs
prior to March 31, 2023, and of NBFCs prior to March 31, 2021, is not available with RBI.
Further, in accordance with extant guidelines, banks and NBFCs undertake various measures to mitigate
the risks involved in gold loans. These measures, inter alia, include:
(i) Assessment and re-assessment of the gold offered as collateral at regular intervals to ensure
purity by methods such as acid tests, touchstone testing, and X-ray fluorescence (XRF) analysis.
(ii) Empanelment of trained and skilled appraisers to assess the value of gold pledged.
(iii) Valuation of pledged gold under CCTV surveillance in the presence of branch officials and the
borrower.
(iv) Periodic audits to ensure adherence to regulatory guidelines and internal policies.
(v) Auction of pledged gold in case of default, with prior advance notice to customers providing
them sufficient time to clear their liability.Further, the Government and RBI have taken additional steps to safeguard the gold loan portfolio and
reduce risks such as gold price fluctuations, valuation errors, and loan defaults. These include, inter alia:
(i) The Department of Financial Services (DFS), vide communication dated 27.02.2024, advised
Public Sector Banks to conduct a comprehensive review of their gold loan portfolios
sanctioned/disbursed during 1.1.2022 to 31.1.2024, covering assessment and assaying of collateral,
analysis of interest and other charges collected from borrowers, etc., to ensure adherence to
regulatory requirements and internal policies.
(ii) On 30.09.2024, RBI advised all supervised entities to comprehensively review their gold loan
policies, processes, and practices to identify gaps and initiate remedial measures in a time-bound
manner, closely monitor the gold loan portfolio, and ensure adequate controls over outsourced
activities and third-party service providers.
(iii) To safeguard lenders against risks such as gold price fluctuations and valuation errors, as per extant
RBI instructions, regulated entities including banks and NBFCs are not permitted to extend loans
exceeding 75% of the value of gold ornaments and jewellery. This Loan-to-Value (LTV) ratio of
75% is required to be maintained throughout the tenure of the loan.
(iv) For loans where both interest and principal are payable at maturity (bullet repayment loans), banks
are not permitted to extend loans with a tenure exceeding 12 months from the date of sanction, to
mitigate the risk of defaults.
The ratio of Gross Non-Performing Assets in gold loans to the outstanding gold loans for SCBs has
increased marginally from 0.20% in March 2023 to 0.22% in March 2025, while for Upper- and Middle-
Layer NBFCs it has increased from 1.21% to 2.14% over the same period. RBI has further informed that
the data related to gold loan auctioned by SCBs and NBFCs is not maintained with it.
The Office of the RBI Ombudsman has received 188 complaints related to gold loans during the financial
year 2024–25. These complaints are handled in accordance with the provisions of the RBI Integrated
Ombudsman Scheme, 2021.
*****Annex-1
Lok Sabha Unstarred question no. 4021, regarding Increase in Gold Loan NPA
Gold Loan Portfolio of NBFCs (ML & UL)
Amount in ₹ Crores
Advances to Individuals against Gold
Total Advances (Outstanding) - Funded (As on) Gross NPAs (As on)
31-03- 31-03- 31-03- 31-03- 30-6- 30-9- 31-12- 31-03- 31-03- 31-03- 31-03- 31-03- 30-6- 30-9- 31-12- 31-03-
2021 2022 2023 2024 2024 2024 2024 2025 2021 2022 2023 2024 2024 2024 2024 2025
NBFCs 1,12,421,18,971 1,29,787 1,54,315 1,64,4 1,73,6 1,89,0 2,08,4 1,365 2,749 3,021 3,634 4,250 4,731 4,783 4,470
(ML and 8 41 47 85 81
UL)
Note: The information given is for NBFCs in Middle and Upper Layer as on 31.12.2024Annex-2
Lok Sabha Unstarred question no. 4021, regarding Increase in Gold Loan NPA
Data of Scheduled Commercial Banks (Excluding RRBs and payments bank)
Amount in ₹ Crores
Advances to Individuals against Gold
Total Advances (Outstanding) - Funded (As on) Gross NPAs (As on)
31-3- 31-3- 30-6-2024 30-9-2024 31-12- 31-3-2025 31-3-2023 31-3-2024 30-6-2024 30-9-2024 31-12-2024 31-03-2025
2023 2024 2024
Scheduled 6,15,34 7,73,2 1,217 1,513 1,928 2,162
Commercial Banks 1 48 8,19,334 8,78,626 9,23,63 9,83,716 1,832 2,040
(Excluding RRBs 6
and payments bank