Reserve Bank of India data points to a notable change in household borrowing patterns, with Indian consumers showing a stronger preference for secured loans at a time when unsecured retail credit appears to be losing some momentum. Loans against gold jewellery have surged in percentage terms, while growth in credit card dues and consumer durable loans has been relatively muted, suggesting that borrowers are increasingly turning to assets they already own to access liquidity.
Gold-backed borrowing rises
The sharp increase in gold loans stands out in the latest lending data. Such loans are typically used by households seeking quick access to funds, and their rise often reflects both demand-side caution and supply-side convenience. In the current environment, gold loans appear to be benefiting from a favourable base effect, which can amplify year-on-year growth rates when the comparable period was relatively weak. Even so, the scale of the increase indicates that gold continues to play a central financial role for many Indian households, especially in periods of tighter budgeting or uncertain income visibility.
The move toward gold-backed credit also highlights a broader behavioural shift. Rather than taking on unsecured debt, which usually carries higher interest rates and stricter underwriting, borrowers may be preferring loans secured by jewellery because they are faster to obtain and easier to service. For lenders, this segment offers collateral-backed comfort, which can make it attractive in a market where consumer stress signals are being watched closely.
Unsecured retail credit cools
By contrast, credit card dues and consumer durable loans have shown only modest growth. That is significant because both categories are closely tied to discretionary spending and short-term consumption demand. Credit card balances often rise when households are willing to finance everyday purchases or larger ticket expenses through revolving credit, while consumer durable loans are linked to appliance and electronics purchases. Slower growth in these segments suggests that households may be becoming more selective about spending, or that lenders are tightening underwriting standards in response to risk considerations.
The moderation does not necessarily imply a collapse in consumption, but it does indicate a more measured borrowing posture. In an economy where retail credit has been a major engine of bank loan growth, a slowdown in unsecured categories can signal that consumers are prioritising balance-sheet resilience over convenience borrowing. That shift may also reflect the impact of higher borrowing costs, as well as a preference for loans that are tied to collateral rather than future income alone.
Personal loans still expand
Personal loans continue to grow and remain an important contributor to overall bank credit expansion. Their resilience suggests that demand for credit has not weakened across the board; rather, it is being redirected within retail lending. Personal loans are often used for medical expenses, education, weddings, travel, or debt consolidation, and their continued expansion shows that households still rely on formal credit for a wide range of needs.
At the same time, the composition of growth matters as much as the headline number. A credit market increasingly supported by secured lending and personal loans may be less risky than one driven heavily by revolving unsecured balances, but it can also indicate that consumers are becoming more conservative. For banks and non-bank lenders, the mix of retail credit will be critical to monitoring asset quality, pricing, and future growth.
Overall bank credit has risen markedly, underscoring that lending activity remains healthy even as the internal composition shifts. The data suggests that Indian households are not stepping away from formal finance; they are simply choosing different instruments. Gold loans are gaining ground as a fast, collateral-backed source of funds, while credit cards and consumer durable financing are growing more slowly. The pattern points to a more defensive borrowing cycle, one shaped by caution, asset leverage, and a search for liquidity without taking on excessive unsecured debt.