Secured Loans Surge as RBI Tightens Unsecured Credit
Why in the news
Tighter rules on unsecured lending have pushed banks, NBFCs and borrowers towards loans backed by collateral such as deposits, securities and gold.
Key facts
- In November 2023 the RBI raised risk weights on unsecured personal loans and card dues; the NBFC-related increase was rolled back in February 2025.
- Secured options in demand: loans against FDs, loans against shares and bonds, and gold loans.
| Segment | Growth, Dec 2023 | Growth, Feb 2025 |
|---|---|---|
| Loan against FDs | 6.7% | 11.9% |
| Shares/bonds loans | 8.5% | 16.7% |
| Gold loans | 18.6% | 87.4% |
| Credit card dues | 32.6% | 11.2% |
| Unsecured loans | 22.9% | 7.9% |
Why borrowers switched
- Collateral-backed loans are safer for lenders and easier for asset holders.
- Rising gold prices mean less gold is needed per loan.
- Retail customers now use loans against shares, once mostly for HNIs.
Exam angle
- Fastest-growing secured product: gold loans.