Tamil Nadu Leads India in PSB Gold Loans at Rs 4.11 Lakh Crore

Tamil Nadu led the country in outstanding gold loans with public sector banks, recording Rs 4,11,656 crore as of March 31, 2026, according to data furnished in the Lok Sabha. The state's outstanding volume was approximately 85% higher than that of second-ranked Andhra Pradesh, which registered Rs 2,22,953 crore.

In Madras, Chennai-headquartered public sector lenders reported substantial growth in their gold loan portfolios over the fiscal year. Indian Bank’s gold loan book in Tamil Nadu jumped 50.3% year-on-year to Rs 1,06,818 crore as of March 31, 2026, up from Rs 71,079 crore a year earlier. By June 30, 2026, the bank's portfolio in the state expanded further to Rs 1,10,134 crore, marking a 42.6% increase over the year-ago quarter.

Agriculture served as the primary driver of demand for Indian Bank in the state, accounting for 85% of its portfolio, while retail and MSMEs made up 11% and 4%, respectively. A senior Indian Bank official noted that MSMEs in Tamil Nadu accounted for Rs 4,396 crore in gold loans, using the funds primarily to meet working capital requirements, finance manufacturing operations, and support business activities.

Indian Overseas Bank (IOB), another Chennai-headquartered public sector bank, logged a 54% year-on-year rise in its gold loan portfolio between FY25 and FY26. IOB Managing Director and Chief Executive Officer Ajay Kumar Srivastava said gold loans were accessed by small businesses, traders, manufacturers, and service providers to meet immediate requirements, including raw material purchases, inventory build-up, and machinery repairs.

The surge in borrowing coincided with a steep rise in the price of 22-carat gold, which increased from Rs 8,510 per gram on April 1, 2025, to Rs 11,460 per gram on March 31, 2026, before reaching Rs 14,650 per gram on August 28, 2026.

Jayantilal Challani, president of the Jewellers and Diamond Traders’ Association - Madras, stated that the rising value of gold altered retail market patterns. He observed that gold exchanges for purchasing new jewellery rose from under 25% to 50% in 2025-26, with several individuals and micro-enterprises leveraging pledged gold to fund property purchases, vehicles, or business modernisations.