Indian household borrowing is showing a clear tilt toward secured credit, with loans against gold jewellery emerging as the standout category even as unsecured retail segments lose momentum. Reserve Bank of India data indicate that credit card dues and consumer durable loans have grown only modestly, suggesting that consumers are becoming more cautious about discretionary spending and are increasingly preferring loans backed by collateral.
Gold Loans Lead Shift
Loans against gold jewellery recorded a sharp rise in percentage terms, a move that appears to have been amplified by a favourable base effect but still signals strong demand for this form of borrowing. The surge underscores the enduring role of household gold holdings in India's credit ecosystem, particularly during periods when borrowers seek quick access to funds without taking on the higher costs or stricter underwriting associated with unsecured loans.
Gold loans are typically faster to disburse and easier to obtain than many other retail products, making them attractive for households facing short-term liquidity needs. Their growth also reflects how borrowers are responding to a tighter consumer environment, where inflation pressures, uneven income growth and a more selective lending stance from banks and non-bank lenders can push demand toward collateralised products.
Unsecured Credit Cools
By contrast, credit card dues and consumer durable loans have shown only limited growth. That is notable because both categories are closely linked to consumption sentiment. Credit card spending often rises when households are comfortable taking on revolving debt, while consumer durable loans tend to track purchases of appliances, electronics and other household goods. Slower growth in both areas suggests that consumers are either delaying purchases or financing them more conservatively.
The moderation also points to a possible recalibration in lender behaviour. Banks and fintech lenders have become more attentive to asset quality in unsecured retail portfolios after a period of rapid expansion. Higher borrowing costs, tighter risk controls and greater scrutiny of repayment capacity may be tempering growth in these segments. For lenders, the shift toward secured products can be seen as a lower-risk way to maintain retail credit growth while protecting balance sheets.
Personal Loans Still Expand
Personal loans continue to grow and remain a major contributor to overall bank credit expansion. Unlike gold loans, personal loans are unsecured, but they are often used for a wide range of purposes, including medical expenses, education, travel and debt consolidation. Their continued growth suggests that demand for retail credit has not weakened across the board; rather, it is becoming more selective and segmented.
The RBI data show that overall bank credit rose markedly, indicating that lending activity remains healthy even as the composition changes. The broader picture is one of resilience in credit demand, but with households and lenders alike showing greater preference for products that either offer flexibility or are backed by collateral. That mix may help explain why overall credit growth can remain strong even when some consumer-facing categories slow.
The trend is also important for the banking and fintech sectors because it highlights a structural shift in how Indian households access funds. Secured lending, especially against gold, can expand rapidly in times of uncertainty, while unsecured retail products may face more measured growth as borrowers become more price-sensitive and lenders more risk-aware. For policymakers and market participants, the data offer a useful signal: household credit is still expanding, but the engine is increasingly moving toward safer, asset-backed borrowing rather than pure consumption-led debt.