Economy · 8 Aug 2026

gold loan evergreening RBI

With reference to India's gold-backed lending sector, consider the following statements:

  1. Bank gold loan portfolios grew by nearly 94% year-on-year to reach about Rs
  2. 4 lakh crore by June 2026, even as jewellery demand fell to its lowest recorded share of overall gold demand.
  3. The RBI's new mandate requires full repayment of principal and interest before a gold loan can be repledged, specifically to prevent the "evergreening" of retail debt.
  4. The 2015 Gold Monetisation Scheme has successfully captured the current surge in gold-backed lending, integrating it into a formal financial architecture.

Which of the statements given above is/are correct?

A1 and 2 only
B2 and 3 only
C1 and 3 only
D1, 2 and 3

Tests the ability to distinguish an effective regulatory fix from a related but documented policy failure, requiring careful reading rather than simple fact recall.

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This question is based on: The 94% Gold Loan Surge: Smart Household Finance or a Credit Bubble the RBI Is Racing to Defuse?
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About this question

Why in news

Bank gold loan portfolios surged 94% year-on-year even as gold prices rose roughly 60%, prompting the RBI to tighten repledging rules to prevent the evergreening of retail debt.

Why for UPSC

This tests whether aspirants can distinguish a genuinely working regulatory intervention (the repledging mandate) from a scheme that sounds relevant but has actually failed to address the phenomenon (Gold Monetisation Scheme) - exactly the kind of nuanced "what's actually working" distinction UPSC probes.

Prelims summary

India's gold loan portfolio surged 94% YoY to Rs 5.4 lakh crore by June 2026. The RBI mandated full repayment before repledging to prevent evergreening. The 2015 Gold Monetisation Scheme has failed to capture this shift into any formal financial architecture.

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