ARE INDIANS FINALLY MONETISING THEIR GOLD?

Gold is no longer just an heirloom in India; it's fast turning into working capital. On the other hand, Beijing is stockpiling it like never before. Two very different stories for one asset class.

Gold loans surge, India's silent credit shift

Let's start with India. Reserve Bank of India data shows loans against gold jewellery crossed 4 lakh crore rupees, or over $42 billion, by January this year. That is a 128 per cent year-on-year jump.

 

Zoom out further, and new gold loan sourcing surged 91 per cent year-on-year in last year's December quarter alone, with active accounts crossing 90 million. Non-banking financial companies, or NBFCs, are the engine.

 

Their gold loan books nearly doubled, up 96.5 per cent year-on-year, dwarfing the industry's 54.5 per cent growth.

That shows NBFCs are riding India's gold-backed loan boom.

South India leads, North is catching up fast

Geography tells the real story. Tamil Nadu leads with 5.96 lakh crore rupees in outstanding gold loans, followed by Andhra Pradesh at 3.08 lakh crore rupees, then Karnataka, Telangana and Kerala.

 

The five southern states are cornering nearly three-fourths of the entire market. But the map is shifting: Uttar Pradesh, Madhya Pradesh and Rajasthan are now emerging as high-growth frontiers. That is a clear sign gold-backed credit is going pan-India.

From crisis cash to growth capital: Gold

Why now?

Elevated gold prices mean smaller amounts of jewellery unlock bigger loans. In addition, RBI's crackdown on unsecured lending has pushed borrowers toward safer, collateral-backed products.

 

And crucially, this isn't panic borrowing, but productive borrowing for funding small businesses, education and agriculture inputs. The old "gold loan for a crisis" script is being rewritten into "gold loan for growth."

 

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Two nations, one metal, opposite strategies

Now over to China. It is a mirror image, at the sovereign scale. The People's Bank of China, or the PBOC, just booked its 20th straight month of gold buying, adding 480,000 troy ounces, or 14.93 tonnes, in June. That's China's largest single-month purchase since 2023. It is also the longest streak since 2015, taking reserves to roughly 2,346 tonnes.

Beijing bets big as gold prices crash

Tellingly, Beijing bought aggressively even as gold prices fell nearly 12 per cent in June. The latest decline marks the yellow metal's sharpest monthly drop since 2008. That trend shows a classic dip-buying by a reserve manager thinking in decades, not quarters.

 

Bottom line: Indian households are unlocking dead capital for livelihoods, while China is hoarding it to dedollarise reserves. Same metal, two entirely different bets on the future.

2026-07-08T07:27:07Z