India’s lending landscape is evolving as technology makes credit more accessible and businesses look for faster ways to raise funds. From households using gold as collateral to small businesses seeking formal credit, borrowing is becoming an important part of how individuals and enterprises manage their financial needs.
In a conversation with Vivek Law on The Simple Hai! Show, Rakesh Singh, Executive Director and CEO (NBFC) at Aditya Birla Capital, discussed the growth of gold loans, the credit gap faced by micro, small and medium enterprises (MSMEs), the role of digital platforms in lending, and why responsible borrowing must remain a priority.
Gold Loans: Putting Household Savings to Productive Use
Gold has traditionally been an important form of savings for Indian households. Singh noted that Indian families collectively hold an estimated USD 5 trillion worth of gold, presenting a significant opportunity for the gold loan market.
According to Singh, the gold loan industry has grown considerably over the past two to three years, partly because rising gold prices have increased the value of the collateral borrowers can offer. He cited an industry size of around Rs 19 lakh crore, with NBFCs accounting for approximately Rs 4 lakh crore and banks making up the remainder.
Gold loans can help people access funds without selling family jewellery. Singh explained that borrowers often use these loans to invest in their businesses or pay for their children's education, making them a source of funds for specific financial needs rather than everyday consumption.
He also highlighted the potential in semi-urban and rural areas, as well as Tier 3 and Tier 4 markets, where access to such lending products can expand further.
Trust Is Key to the Gold Loan Business
Borrowing against gold involves more than a financial transaction. For many families, jewellery carries emotional and generational value, making trust an essential part of the process.
Singh said established brands can help customers feel more confident about pledging their gold. Transparency, responsible handling of jewellery and a customer-first approach are important to building that confidence.
He also pointed to a geographical shift in the market. While gold lending was previously concentrated in southern states, Singh said growth is increasingly visible in northern, eastern and central India, including markets such as Delhi-NCR, Uttar Pradesh and Rajasthan.
For Aditya Birla Capital, entering this segment is an opportunity to expand its lending presence across the country while focusing on customer trust and responsible growth.
MSMEs Continue to Face a Credit Gap
Access to formal credit remains a challenge for many small businesses. Singh observed that some MSMEs continue to borrow from friends, family or local sources, sometimes at significantly higher rates, because they cannot easily access suitable formal financing.
He said banks, NBFCs and fintech companies each have a role to play in addressing this gap. Rather than simply competing with one another, these institutions need to reach different customer segments and offer products suited to their requirements.
Speed is another important factor. For a small business, delays in accessing funds can affect day-to-day operations and growth plans. Lenders therefore need to combine appropriate credit assessment with efficient processes.
Singh also shared that approximately 57–58 percent of Aditya Birla Capital's loan book, which he referred to as around Rs 1.70 lakh crore during the discussion, was directed towards MSMEs.
How Digital Platforms Are Changing Lending
Digital infrastructure is making it easier for lenders to assess small businesses that may previously have had limited access to formal credit.
Singh highlighted the role of digital payments, Aadhaar-based verification, PAN linkages, GST records and credit bureau information in helping lenders understand customers and their financial activity. As more businesses use digital payment systems, lenders can gain a clearer picture of their transactions and banking behaviour.
Aditya Birla Capital developed its Udyog Plus digital platform to serve MSMEs. Singh said the platform had close to 2.4 million registered businesses at the time of the conversation.
Through digital processes, some smaller loans can be assessed, approved and disbursed within minutes. Larger or more complex applications may still require intervention from branches and credit managers.
Digital platforms can also help businesses access services beyond financing, including support related to accounting and human resources.
Digital Lending Must Be Matched With Responsible Borrowing
Technology has made it easier for customers to access credit, including through digital platforms and financing options offered during online purchases. However, Singh cautioned that easier access to loans also brings risks.
When customers take multiple loans from different lenders, their overall debt burden can rise. Singh stressed that lenders need to monitor a borrower's leverage not just when approving a loan, but also after the money has been disbursed.
For borrowers, understanding repayment capacity is equally important. People should assess how much they can repay, when their income is likely to arrive and whether the repayment schedule suits their financial circumstances. This can be particularly important for those with irregular or seasonal earnings.
Singh also emphasised the importance of awareness around credit scores and repayment discipline. Delayed payments can affect a borrower's credit record and future access to loans.
The Future of Lending Depends on Access and Awareness
India's growing economy, expanding digital infrastructure and changing borrowing needs are creating opportunities for lenders. Gold loans can help households unlock funds against an existing asset, while better access to formal credit can support small businesses.
But greater access alone is not enough. As Singh explained, lenders must understand the customer segments they serve, manage risks carefully and ensure that credit reaches borrowers whose needs and repayment capacity align with the product.
For borrowers, the message is equally clear: a loan should serve a financial purpose, and taking one should always involve a clear understanding of its cost and repayment obligations.
