CIBIL reports surge in repeat gold loan borrowing and heightened repayment stress among low‑risk customers
Summary
- CIBIL's latest credit behaviour report shows a rise in repeat borrowing of gold loans by customers previously classified as low‑risk.
- Borrowers who missed more than one EMIs in the past six months are three times more likely to become delinquent on future repayments.
- The repayment stress is persisting despite tightening of credit underwriting norms by banks and NBFCs.
- Gold loan portfolios contributed to over 25% of the growth in overall loan disbursements in the last quarter.
Key Facts
- · Repeat borrowing of gold loans increased by 12% YoY among low‑risk borrowers.
- · Borrowers with >1 missed payment in six months have a 3x higher delinquency risk.
- · Gold loans account for roughly one‑quarter of total loan growth in Q3 2024.
- · CIBIL's delinquency index for gold loans rose to 5.8% from 4.6% in the previous quarter.
Why it matters
Gold loans are a major component of retail credit in India; rising repeat borrowing and delinquency among previously low‑risk borrowers indicate potential credit quality erosion, which can affect banking sector profitability and necessitate tighter regulatory oversight.
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