All that glitters is not low-risk

The Pattern #194

All that glitters is not low-risk

Mayank Jain

Head - Marketing and Content

Feb 27, 2026

Hello everyone,

Welcome to the 194th edition of The Pattern — a weekly newsletter on the latest in finance, technology, and the economy.

I’ve been in this space long enough to know that whenever gold prices start rising, a credit boom usually follows.

It’s predictable. Higher prices mean borrowers can raise more against the same jewelry. According to an Experian report, gold loans were among the fastest-growing secured retail segments this quarter, helped by exactly that dynamic.

Gold loans usually come with a psychological safety net for lenders. The presence of collateral changes how risk is perceived, even before deeper underwriting begins.

But this segment has never been as simple as it looks from the outside.

While volumes are rising, the RBI has tightened underwriting norms for gold and metal loans for 2026.The changes strengthen valuation processes, require deeper due diligence, and increase oversight around sourcing and pledging practices, particularly in jeweler-linked lending.

When I see growth and tighter supervision happening together, I don’t see conflict. I see wisdom born from experience.

Regulators have seen cycles before.

In secured lending, comfort around the asset can slowly push borrower assessment into the background. The assumption becomes that the collateral will cover mistakes. Sometimes it does. Sometimes the mistake is operational and shows up elsewhere.

Nitin Misra,founder of indiagold, recently wrote about how operationally demanding gold lending really is. Valuation discipline, documentation standards, tracking, and monitoring all have to hold up when volumes rise.

That’s what makes this moment interesting. As gold prices increase, loan amounts increase with them. The same jewelry now supports a larger disbursal. Growth also brings speed, and speed brings pressure.

But when prices are high and volumes are strong, the metal tends to dominate the conversation. The borrower doesn’t always get the same attention. And while gold offers recovery comfort, it doesn’t compensate for poor appraisal practices or improper documentation.

As lending expands, these weaknesses start to show... maybe not immediately, but inevitably.

I’ve seen secured products go through this before. Everything looks stable while volumes climb. The pressure builds in small places — appraisal quality, documentation checks, audit discipline — and only becomes visible when conditions tighten.

This is a substantial shift that will force a redrawing of processes, workflows, as well as even tooling among lenders. Be it gold loan veterans in the space or the new FinTech kids on the block – everyone will go through an overhaul to ensure compliance with the new standards

This could mean modernising their underwriting and risk stacks or investing in modern decisioning and intelligence platforms that help dynamically calculate LTVs and price loans.

The RBI tightening norms now suggest a desire to strengthen underwriting foundations before growth runs ahead of controls. Gold will remain a preferred liquidity option for households. That is not changing.

In the end, this comes down to whether the gold does heavy lifting, or the underwriting does.

That’s all for this week. See you next time! As always, leaving a reading list below.

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Cheers,
Mayank

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