Non-bank lender L&T Finance has set an ambitious target for its gold loan business, expecting it to contribute more than 10% to its total loan book by 2031, compared to around 3% at present. As reported by The Hindu BusinessLine, Chief Operating Officer Raju Dodti stated that "I will not be surprised if the gold loan portfolio will be upward of 10% of the loan book in 2031. I do not see any challenge in that happening, actually." This growth trajectory is supported by the company's aggressive expansion plans, with L&T Finance planning to open at least 500 new gold loan branches annually until 2031, significantly scaling up from the current 343 active branches at the end of Q1 FY26. According to The Economic Times, the company is planning to open 500 gold loan branches in this financial year, increasing its network from 330 branches as of March 31 to expand its footprint in the sector that is projected to grow at a compounded annual growth rate of 30% for the next two years.
The company's gold loan business has demonstrated remarkable growth since its acquisition, with L&T Finance achieving 180% growth in the gold loan book size over the last year. According to The Hindu BusinessLine, the gold loan book size stood at ₹3,829 crore at the end of Q1 FY26, compared to just ₹1,300 crore when the acquisition was completed in June 2025. This acquisition of the gold loan business of Paul Merchants Finance Private Ltd was an all-cash deal worth ₹537 crore, which helped L&T Finance acquire a ₹1,350 crore loan book, 130 branches and 700 employees. As reported by The Economic Times, Dodti said that "while the lender aims to grow more than 20% at the enterprise level, its gold loan business is expected to increase over 50%, albeit on a low base." The company aims to end this financial year with upward of 800 active branches and continue adding 500 branches annually during the Lakshya 2031 period.
As part of its transformation strategy, L&T Finance plans to increase its secured and unsecured loan mix from the current 56:44 ratio to 60:40 by 2031. According to The Hindu BusinessLine, Dodti explained that "By 2031, the secured and unsecured mix should be in the range of 60:40. That is what we would like it to be." The company's secured loan portfolio includes home loans, loan against property, micro loan against property, two-wheeler loans and tractor or farm finance, alongside its growing gold loan business. Dodti highlighted that "Gold as a commodity is in surplus in the country. We have basically a large amount of gold that can be monetized in the form of a formal credit," positioning the formalization of informal gold loan finance as a key growth driver. As reported by The Economic Times, Dodti emphasized that "Gold loan serves as one of the key drivers of our growth agenda, as L&T Finance continues its transformation into a risk-first, tech-first, AI (artificial intelligence)-native retail financial institution."
Credit rating agency ICRA continues to project a more than 30% compound annual growth rate in organized gold loans by banks and non-bank financial companies during 2026-27 and 2027-28. As reported by The Hindu BusinessLine, this growth is expected to surpass ₹30 lakh crore by March 2028 from ₹18.5 lakh crore at the end of March this year. According to Experian, gold sourcing grew at 84% year-on-year in financial year 2026 and 69% in FY2025, outpacing all other retail credit products. From around ₹6.3 lakh crore in March 2023, the industry AUM has grown to ₹19.4 lakh crore in March 2026, supporting L&T Finance's strategic expansion into this high-growth segment.
