Credit quality in India's rapidly expanding gold loan sector is deteriorating, with one in five loans now issued to borrowers who already have non-performing assets on other credit lines.
Bhavesh Jain, managing director and CEO of TransUnion CIBIL, highlighted the trend, pointing to a shift in borrower profiles that includes a growing share of younger applicants seeking quick liquidity.
The data underscores the tension between volume growth and risk management in India's non-banking financial company (NBFC) sector.
As gold loans emerge as the fastest-growing source of consumer credit, lenders are increasingly competing for market share by relaxing underwriting standards.
Jain's comments suggest that the sector's explosive growth is being fueled by borrowers who are already stretched across other trade lines, raising concerns about systemic credit risk.
This development comes as large NBFCs in India turn to mergers and acquisitions to scale their gold loan operations.