Axis Bank Launches Gold-Backed Loans for MSMEs

Axis Bank has launched a gold-backed loan product exclusively for micro, small, and medium enterprises (MSMEs), strengthening its secured lending portfolio at a time when Indian lenders are increasingly moving away from unsecured credit. The new facility allows eligible MSMEs to access working capital against pledged gold, offering faster liquidity and simplified documentation.

The product is being rolled out across more than 3,300 Axis Bank branches nationwide, with loan amounts ranging from ₹50,000 to ₹1 crore, positioning it as a scalable solution for small businesses seeking short-term funding.

High LTV and Same-Day Disbursal for MSMEs

Key Features of Axis Bank’s Gold-Backed MSME Loan

The gold-backed facility is structured as a secured overdraft, allowing borrowers to pay monthly interest only, while the principal remains outstanding against pledged gold. One of the key highlights is the loan-to-value (LTV) ratio of up to 82 per cent, which is higher than typical industry standards for gold loans.

Axis Bank said the higher LTV is supported by robust risk management practices, including customer segmentation and stringent gold valuation and monitoring processes.

MSMEs can benefit from same-day over-the-counter disbursal, subject to eligibility and documentation. Required paperwork includes standard KYC, Udyam Registration or Assist Certificate, and ITR or GST registration, making the process faster and more streamlined.

According to Bipin Saraf, Group Executive & Head of Bharat Banking at Axis Bank, the product is aimed at helping MSMEs access working capital quickly while remaining fully compliant with regulatory norms.

Gold Loan Facility Launched Amid Shift Toward Secured Lending

Why Banks Are Focusing on Collateralised Credit

The launch comes amid a broader industry shift toward secured lending, driven by rising stress and higher slippages in unsecured segments such as personal loans and microfinance. Over the past few years, asset quality pressures have prompted banks to rebalance their portfolios, with gold loans emerging as a preferred collateral-backed product.

Rising gold prices have further strengthened the appeal of gold-backed credit, offering lenders both asset security and liquidity.

Sharp Rise in Gold Loans Across the Banking System

RBI Data Highlights Rapid Growth

According to Reserve Bank of India (RBI) data, credit extended against gold jewellery surged 127.6 per cent year-on-year in December 2025, reaching ₹3.82 trillion. This marks a sharp increase compared to December 2024, when gold loan credit stood at ₹1.68 trillion, reflecting an 84.6 per cent year-on-year rise at that time.

The acceleration in gold lending has coincided with a strong rally in gold prices, which were up nearly 80 per cent year-on-year as of early February 2026.

RBI Sees No Red Flags in Gold Loan Growth

Central Bank Comments on Asset Quality and LTV

The RBI has maintained that the rapid rise in gold loans does not pose systemic risk. After the latest RBI MPC meeting, RBI Governor Sanjay Malhotra stated:

"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. The Loan-to-Value (LTV) ratios for the gold loans are quite low, although we have a higher limit going up to even 85 per cent depending on the amount of loan. But the LTV ratios being maintained by the banks as well as the NBFCs are on the lower side."

Shift in Lending Patterns Explained by RBI

Gold Loans Gain Share as Unsecured Credit Slows

Deputy Governor Swaminathan J explained that the growth in gold loans is part of a natural shift in bank lending behaviour:

"We will have to see the gold loan as a proportion to the total lending book. Increase (gold loan) is not unexpected because primarily in the previous years the unsecured personal loans had a major role in terms of contributing to the overall growth. When there are higher slippages seen in certain segments like MFI or personal loans which are unsecured, banks move more towards safety and collateralised loans will see a pickup. There has been a shift but that has also been aided by the spurt in the gold prices,"

At the system level, the RBI said the overall risk profile remains comfortable. Swaminathan J further noted:

"While slightly higher LTV have been permitted, at the system level, it is still below 70 per cent. There is absolutely no concern about gold loans as a percentage of the overall pie that it has in the bank credit and secondly, LTV levels are even comfortable at this point in time. So there is no worry."

What Axis Bank’s Move Signals for MSMEs

Axis Bank’s latest offering reflects growing confidence in gold-backed MSME lending as a stable and scalable credit solution. With high LTV, faster disbursal, and regulatory backing, gold loans are becoming an increasingly important tool for MSMEs navigating volatile cash flows—while allowing banks to maintain asset quality amid changing credit cycles.