India's gold loan market has experienced explosive growth, with the combined portfolio (bank + NBFC) reaching ₹18.6 lakh crore as of March 2026, representing a 50% year-on-year increase. According to The Financial Express, RBI data reveals even sharper growth in banks' retail gold lending, which has increased 105% YoY to ₹5.1 lakh crore as of May 2026. The growth is driven by three structural forces: tighter regulation of unsecured lending, stronger credit demand from MSMEs seeking quick working capital, and the ongoing migration of borrowers from the informal gold loan market to regulated banks and NBFCs. As reported by The Financial Express, effective April 1, 2026, all lenders now follow common rules on loan-to-value ratios, gold valuation standards, customer disclosures and auction procedures, creating a more level playing field while improving customer confidence.
ICRA projects the overall gold loan market will grow over 30% in the next two years to ₹30 lakh crore by March 2028, with NBFCs' market share expected to rise to 23% by 2027-28. However, the rating company warns that gold loan NPAs for NBFCs are likely to rise as lenders make a structural shift from bullet payments to monthly installment schemes. As reported by The Economic Times, 90% of gold loans provided by NBFCs were linked to bullet payment as of March, making them vulnerable to price volatility. ICRA's sector head R Srinivasan noted that the change to regular paying loans can lead to higher overdues as borrowers adjust to new requirements, though adequate risk control measures are crucial to prevent higher LTV loans during adverse gold price volatility. The agency expects NBFCs' overall gold loan books to expand at a CAGR of 35% during 2026-27 to 2027-28, while banks' growth is projected at 30% CAGR during the same period. According to Business Standard, the organised gold loan book expanded at a CAGR of 38% during FY25 and FY26, with NBFCs growing faster than banks at 54% compared to 35% for banks, largely driven by retail demand.
Gold loans have emerged as a dominant force in India's retail credit landscape, with gold loans accounting for 22.4% of total consumer credit as of March 2026, making them the second-largest retail credit segment after home loans which had a 26.3% share. As reported by The Times of India, this surge is primarily driven by larger loans from existing borrowers and a strategic shift from unsecured personal loan products to secured gold loans. According to a study by ICRA, growth in the gold loan book over the past five years was primarily driven by rising gold prices, with NBFCs increasing their share of the organised gold loan market to 22% in March 2026. Data from credit bureau CRIF reveals that the number of borrowers grew by only 3.1% in FY26 to 899.2 lakh, indicating that growth was achieved through higher collateral valuation per gram rather than expanding the customer base. As noted by A M Karthik, senior vice-president and co-group head, financial sector ratings at ICRA, "Growth was achieved via higher collateral valuation per gram, allowing existing borrowers to take higher ticket sizes against the same physical gold."
The growth in India's gold loan market is being supported by increasing participation from new players and large NBFCs, with several lenders expanding their branch networks through organic growth or acquisitions. As reported by CNBC TV18, ICRA's sector head R Srinivasan noted that "the entry of new players and large NBFCs in the gold loan space, along with their plans to significantly expand branch networks, supports the strong growth outlook for this segment." Banks are also widening their gold loan offerings across their existing branch infrastructure, contributing to the sector's expansion. The growth in recent years has been led by retail gold loans, with NBFCs traditionally focusing on loans against gold jewellery for consumption and business needs, while banks have seen a sharp rise in retail gold loans. According to ICRA, the organised gold loan book grew at a 38% CAGR during FY25-FY26, with growth reaching around 50% in FY26. During this period, banks' gold loan portfolios grew at a 35% CAGR, while NBFCs recorded a higher 54% CAGR.
Rising competition in the gold loan market could put pressure on lenders' profitability, with ICRA expecting loan yields to remain under pressure as lenders compete for customers and adjust to regulatory changes. The shift from bullet repayment loans to regular repayment structures, along with changes in loan-to-value (LTV) norms for higher-ticket loans, could lead to near-term challenges for lenders. Borrowers may take time to adjust to regular repayments, which could result in higher delinquencies in the short term. However, ICRA expects overall credit losses to remain limited due to the liquid nature of gold collateral and lenders' ability to recover dues through auctions. The agency cautioned that lenders will need stronger risk controls, especially if competitive pressure leads to higher LTV offerings amid volatility in gold prices. The NBFC gold loan market has become less concentrated, with the top four players accounting for 70% of NBFC gold loan assets in March 2026, compared with around 90% in March 2022, as more lenders entered the segment.
Muthoot Finance, India's largest gold loan NBFC with over nine decades of experience, demonstrated exceptional performance in FY26. According to The Financial Express, the company's consolidated gold loan AUM rose 54% YoY to ₹1.65 lakh crore, with operations through a network of more than 7,500 branches and an average gold loan AUM per branch of ₹31 crore, growing by 46% YoY. The company's financial metrics show remarkable improvement, with consolidated Net Interest Income rising 54.5% YoY to ₹30,371 crore and Net Interest Margin expanding by 130 basis points to 12.75%. Consolidated profit nearly doubled to ₹10,607 crore during FY26, while Return on Equity increased to 30.6% from 19.7% in the previous year. The company's stock is trading at 3.1x book value, in line with its five-year median, suggesting investors continue to assign a premium to its dominant market position and consistent execution.
Manappuram Finance represents a recovery story after facing challenges in its non-gold lending business. As reported by The Financial Express, the company's gold loan AUM grew 48.3% YoY to ₹63,798 crore in FY26, with gold loan AUM per branch nearly doubling to ₹13.9 crore from around ₹7 crore a year earlier. However, Net Interest Income and consolidated profit fell 11.5% and 17.5% YoY respectively, primarily due to weakness in the non-gold lending portfolio. The company's interest spreads compressed from 13.21% in FY25 to 9.96% in FY26, though management attributes the turnaround to lower operational expenditure, greater digital origination, and expanding co-lending partnerships. Bain Capital's strategic investment has resulted in a strong re-rating of the stock, with the price rallying nearly 40% in the last 12 months, reaching an all-time high of ₹362. IIFL Finance has staged one of the strongest recoveries in the sector following RBI's lifting of restrictions on fresh gold loan disbursals in September 2024. According to The Financial Express, gold loan AUM surged 114% YoY to ₹58,406 crore in Q1FY27, emerging as the primary growth driver. The company reported 214% growth in net profit to ₹1,817 crore in FY26, with Return on Equity improving to 17.9% from 7.0% in the previous year.
