Axis Bank rolls out gold backed loans for MSME with high LTV, same day access

Axis Bank has unveiled a gold-backed loan product tailored specifically for micro, small, and medium enterprises (MSMEs). With loan amounts ranging from Rs 50,000 to Rs 1 crore, the secured overdraft facility is available at more than 3,300 branches nationwide. This initiative is designed to provide MSMEs with expedited access to working capital by leveraging their existing gold assets amid a broader industry transition towards secured lending. MSMEs seeking immediate liquidity may benefit from the facility’s same-day over-the-counter disbursal and streamlined documentation requirements, including standard KYC, Udyam Registration or Assist Certificate, and ITR or GST registration.

The new loan product offers a loan-to-value (LTV) ratio of up to 82 per cent, which exceeds typical industry norms for gold-backed credit. Axis Bank credits its ability to offer a higher LTV to robust risk management strategies, customer segmentation, and stringent gold valuation and monitoring processes. Borrowers need only pay monthly interest, while the principal remains as an overdraft secured against pledged gold. According to Bipin Saraf, Group Executive & Head of Bharat Banking at Axis Bank, the aim is to help MSMEs access working capital more quickly while adhering to regulatory guidelines.

Gold loan facility

The introduction of this loan facility comes at a time when Indian lenders have increased their focus on secured lending, largely in response to asset quality stress and higher slippages in unsecured segments, including personal and microfinance loans. The banking industry has experienced mounting pressure in recent years, prompting a noticeable shift from unsecured to collateralised lending, with gold loans emerging as a preferred option due to the rising valuation of gold.

Rise in gold loans

Recent Reserve Bank of India (RBI) data showed that credit extended against loans on gold jewellery grew by 127.6 per cent year-on-year in December 2025, reaching ₹3.82 trillion. This compares to an 84.6 per cent year-on-year rise in December 2024, when gold loan credit stood at ₹1.68 trillion. The growth reflects both a surge in gold prices—up nearly 80 per cent year-on-year as of early February 2026—and a strategic shift by banks away from unsecured products.

The RBI has indicated that the rise in gold loans is not considered a cause for concern. Last week after the 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

Deputy Governor Swaminathan J provided further perspective on the shift in lending patterns. “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,” he said.

At the system level, the RBI maintains that the overall risk profile of gold lending remains manageable. Swaminathan J emphasised, “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.”