Small finance banks turn to gold loans as microfinance bad debts mount

Bad microfinance ratios are pushing banks toward secured gold lending

Small Finance Banks are increasingly leaning on secured products like gold loans to steady earnings and financial health, as unsecured microfinance continues to struggle with elevated bad-loan ratios. The shift aligns with regulator pressure to diversify away from concentrated risk. Larger banks are also expanding microfinance, but the overall pivot toward collateral-backed lending signals a strategy for long-term stability.