Reserve Bank of India data points to a notable change in household borrowing patterns: Indian consumers are leaning more heavily on secured loans, especially loans against gold jewellery, while unsecured retail credit categories such as credit card dues and consumer durable loans are expanding only modestly. The trend comes at a time when overall bank credit has risen strongly, but the composition of that growth is shifting toward products that are backed by collateral and typically carry lower lender risk.
Gold Loans Surge
Loans against gold jewellery have recorded a sharp rise in percentage terms, reflecting both a genuine increase in demand and a favourable base effect from last year's lower levels. The jump underscores the enduring role of household gold as a financial backstop in India, particularly when families need quick access to funds for working capital, medical expenses, education costs or short-term liquidity gaps.
The surge also suggests that many borrowers are becoming more cautious about taking on unsecured debt. Gold loans are often faster to process, require less documentation and generally come with lower interest rates than personal loans or revolving credit. For banks and non-bank lenders, the product offers a secured asset class with relatively contained credit risk, which can be attractive in an environment where consumer stress is uneven and lenders are watching delinquency trends closely.
Unsecured Credit Slows
By contrast, credit card dues and consumer durable loans have shown only limited growth. That is significant because both categories are closely tied to discretionary spending and household confidence. Credit card spending usually reflects short-cycle consumption, while consumer durable financing is linked to purchases such as appliances and electronics. Weak growth in these segments may indicate that households are delaying non-essential purchases or choosing to fund them through more conservative means.
The slowdown does not necessarily point to a collapse in consumption, but it does suggest a more selective borrower. Households appear willing to borrow, but increasingly on terms that reduce cost or improve approval odds. In practical terms, that means secured borrowing is gaining share even as the broader retail credit market remains active.
Personal Loans Still Expand
Personal loans continue to grow and remain an important driver of overall bank credit. Their expansion shows that demand for flexible, unsecured funding has not disappeared. However, the pace and mix of that demand matter. When personal loans grow alongside a stronger rise in secured lending, it often indicates that households are managing cash flow more actively rather than financing broad-based discretionary spending.
The RBI data also points to a marked rise in overall bank credit, which suggests that lending activity remains healthy even if the retail mix is changing. For banks, this is a nuanced picture: stronger credit growth supports balance-sheet expansion, but a tilt toward secured products may also reflect a more risk-aware lending stance and a borrower base that is prioritising affordability over convenience.
The broader implication is that Indian households are adapting to a more cautious financial environment. Rising borrowing costs in some segments, tighter underwriting in others and an uneven consumption recovery may all be contributing to the shift. Gold loans, in particular, have emerged as a practical bridge for households that need liquidity without taking on expensive unsecured debt.
For lenders, the trend could reshape product strategy. Banks and fintech lenders may increasingly focus on secured retail offerings, especially in semi-urban and rural markets where gold-backed credit has long been a familiar financing tool. At the same time, subdued growth in credit cards and consumer durable loans may prompt issuers and lenders to sharpen incentives, adjust risk models or recalibrate underwriting to revive demand.
The RBI figures therefore capture more than a simple lending uptick. They point to a behavioural change in Indian household finance: consumers are still borrowing, but they are doing so more cautiously, more selectively and with a stronger preference for collateral-backed credit.