KOCHI: Households in the state are increasingly turning to their gold for liquidity, pushing bank gold loans to a record Rs 1,47,948.91 crore as of June 30, 2026, even as bankers insist that the yellow metal is rapidly shedding its image as a last-resort source of cash.
For the first time, agri-gold loans issued by banks alone crossed the Rs 1-lakh crore mark, reaching Rs 1,06,726.41 crore at the end of June 2026, according to the latest data from the State Level Bankers’ Committee (SLBC).
The numbers tell a striking story. Total gold loans provided by the banks — both nationalised and private — in the state jumped by Rs 45,294.31 crore, or 44.1%, in two years, from Rs 1,02,654.60 crore in June 2024. The increase is particularly sharp in the non-agricultural segment, where outstanding loans rose from Rs 25,428.08 crore to Rs 41,222.55 crore — an increase of nearly 63%. Agri-gold loans, meanwhile, rose by nearly Rs 29,500 crore during the period.
The surge comes at a time when household budgets are under pressure from rising living costs and gold prices have climbed sharply, offering borrowers a bigger loan amount against the same quantity of jewellery. Whether the numbers point to greater financial stress or simply a change in borrowing habits, the growing dependence on gold as a source of liquidity is hard to miss. Bankers, however, see this as a structural shift rather than distress alone.
“Gold loans are now increasingly treated as a mainstream and regular credit product, and are no longer considered a last-resort pledge. Gold loans, historically dominated by informal lending channels, are now moving to organised lenders like banks and dedicated gold loan NBFCs,” said Anto George T, executive vice-president and chief operating officer of South Indian Bank.
Easy availability of gold loans another factor
Easy availability of the loans is another factor. Households, traders, small businesses, and self-employed borrowers can pledge gold quickly with relatively simple documentation without selling the asset.
“Higher gold prices have contributed to the increase in the value of gold loans, as customers can access more liquidity against the same quantity of gold,” said George Alexander Muthoot, MD of Muthoot Finance. He said gold loans are increasingly seen as a convenient form of secured credit, offering quick access to funds while allowing borrowers to retain ownership of their gold.
The borrowing pattern also offers a glimpse into how households manage their finances. “Repeated gold loan borrowings and multiple loan holdings suggest the borrowings are not meant for offsetting existing liabilities but seen as one of the borrowing strategies,” said Anto George. He said higher gold prices have enabled borrowers to unlock greater value from the same asset.
“The increase in gold loans appears to be due to stronger credit demand and the sharp rise in the value of pledged gold. The gold-price effect may be particularly important in explaining the large increase in the value of gold-loan portfolios,” said Manoj Ravi, CEO of Supra Pacific Financial Services, a Kochi-based gold loan NBFC.
Among banks, SBI leads Keralam’s gold-loan market with Rs 28,623.32 crore, followed by Canara Bank at Rs 25,828.92 crore, Federal Bank at Rs 12,202.39 crore and South Indian Bank at Rs 7,873.67 crore. The SLBC figures do not include sizeable gold-loan portfolios of NBFCs such as Muthoot Finance, Manappuram Finance and Indel Money. That makes the Rs 1.48-lakh-crore figure only part of Kerala’s gold-backed borrowing story — one in which household jewellery is increasingly becoming a readily accessible line of credit.