Gold loans have done well but here’s how India’s small businesses could exploit the idea’s potential

Subscribe to enjoy similar stories.India stands at a unique economic crossroads. It possesses massive household wealth that remains largely disconnected from its industrial engine. While the nation’s micro, small and medium enterprises (MSMEs) grapple with a staggering credit gap estimated at about $310 billion, Indian households are sitting on an estimated 34,600 tonnes of gold valued at roughly $3.8 trillion as of June 2025 as per a Morgan Stanley report.

This is a colossal pool of idle capital that, if leveraged correctly, could bridge the MSME funding deficit several times over. However, tapping this resource requires more than standard financial products; it demands ‘phygital’ infrastructure, which blends digital experiences seamlessly with the physical world, and respect for Indians’ cultural and emotional relationship with jewellery. The main reason household gold is seen as an ‘asset of last resort,’ one that is liquidated last, is its historical context.

Traditionally, gold loans in India have been reserved for dire emergencies. This is driven by the cultural and emotional significance of gold jewellery, which many families refuse to melt or pledge (for too long) because it is essential for social functions and weddings. While there has long been a buzz around making productive use of household gold, current windows like the Gold Monetization Scheme (GMS) are estimated to monetize hardly 1-2% of the total stock.

Even proposals by the Indian Bullion and Jewellers Association to have the jewellery industry manage GMS for working capital needs face the same hurdle. To unlock this asset, psychological barriers must be addressed by providing a ‘locker-like’ experience. Business owners frequently ask questions like,