The Reserve Bank of India (RBI) on Friday said the spurt in gold loans amid sharp price rises is not a major cause for concern for the banking system.

The loan spike, according to the RBI, has been led by banks shifting away from unsecured lending to gold-backed collateralised loans.

“We have been reviewing all the portfolios, whether it is gold loans, whether it is MSMEs, whether it is personal loans, all categories they show good asset quality, low slippages and no cause for any concern,” RBI Governor Sanjay Malhotra told reporters after the bi-monthly monetary policy announcement.

Malhotra said the loan-to-value (LTV) ratios for gold loans are much lower than the prescribed norms across the industry. Banks as well as non-banking financial companies (NBFCs) have maintained the ratio below the allowed limit of up to 85%.

As per RBI data, loans against jewelry rose 127.6% year-on-year in December 2025 to Rs 3.82 lakh crore, mainly driven by a sharp rise in prices of the yellow metal. In December 2024, this loan segment had grown 84.6% YoY to Rs 1.68 lakh crore. 

RBI Deputy Governor Swaminathan J pointed out that gold loans, despite the surge, comprised a small portion of the total lending book. The shift away from unsecured portfolios was not unexpected and was caused by stress in personal and microfinance loans. Gold loans benefitted from this and its dramatic growth was aided by a spike in the yellow metal’s prices.

Swaminathan said there was nothing to be concerned about the extraordinary growth in gold loans, both in terms of its share of overall bank credit or the LTV ratio, which remains below 70% at the system level.