India's gold loan market has witnessed unprecedented growth with bank loans against gold jewellery surging 130% to ₹4.61 lakh crore in FY26, up from ₹2 lakh crore in FY25, according to Business Standard citing RBI's latest Handbook of Statistics. This represents a spike of 417% over the last three years, highlighting the explosive growth trajectory of the sector. The surge reflects changing borrower behavior as households increasingly pledge gold for small funding requirements beyond dire need, marking a fundamental shift in consumer lending patterns.
India's largest conglomerate-backed non-bank financiers are making strategic moves to enter the fast-growing gold loan market through acquisitions. On 13 July, Tata Capital acquired an 88.56% stake in Kerala-based Yogakshemam Loans Ltd for ₹411 crore, gaining access to a gold loan franchise with assets under management of around ₹708 crore and a network of 162 branches as of 31 March 2026. Similarly, on 22 July, Godrej Capital agreed to acquire Kanakadurga Finance's gold loan business for ₹117.5 crore, adding a loan book of about ₹280 crore as of March end. According to Mint, these acquisitions reflect a broader realignment among diversified non-bank lenders who see gold-backed lending as one of the country's fastest-growing secured credit segments.
The gold loan market is experiencing explosive growth, with bank loans against gold jewellery jumping over two-fold year-on-year to ₹5.14 trillion as of May end, while NBFC gold loans grew 70% to ₹3.29 trillion. As reported by Mint, 24-carat gold prices in India were up 45% from a year ago at ₹1.41 lakh per 10 grams as of 28 July. Godrej Capital's Manish Shah told Mint that the company expects gold loans to contribute about ₹5,000 crore to its target of ₹1 lakh crore AUM by 2031. Tata Capital's Rajiv Sabharwal indicated the company expects to add close to 500-plus branches and build a portfolio of approximately ₹4,000-5,000 crore over the next 2.5-3 years. According to Fitch Ratings, the industry is undergoing a structural transformation with borrower behaviour fundamentally changing, as households now pledge gold for small funding requirements beyond just dire need.
According to Icra Ltd, banks hold around 82% market share in gold loans, with NBFCs contributing the rest. The share of NBFCs has shrunk from 22% in March 2021, as reported by Mint. Among NBFCs, Muthoot Finance, Manappuram Finance and IIFL Finance are the top players. Godrej Capital's Shah explained that the acquisition of Kanakadurga Finance provided expertise and geographic fit, with plans to expand into Andhra Pradesh, Maharashtra, Gujarat, Telangana, Tamil Nadu and Karnataka. The gold business will be housed within Godrej Finance, with branches remaining dedicated to gold lending but integrated as an integral part of the overall business. Tata Capital's Sabharwal noted that the company has applied to RBI for approval and expects approvals to come towards the end of the calendar year.
The gold loan sector faces regulatory challenges, particularly around loan-to-value ratios. As reported by Mint, RBI's regulations have introduced consumption loans and income-generating loans, where lenders can go up to 85-90% LTV. Jinay Gala from India Ratings warned that any volatility in gold prices would impact NBFCs heavily. The RBI's Financial Stability Report noted that while asset impairment risks remain contained, the rapid growth in gold loans amid elevated gold price volatility merits continued vigilance. Despite these concerns, analysts believe the consolidation trend will continue, with experts noting that smaller NBFCs cannot grow without stronger capital and liquidity support. The recent increase in gold loans is driven primarily by existing borrowers using higher gold prices to secure larger loans and roll over existing debt.
