The gold loan market is experiencing significant expansion beyond its traditional southern strongholds. According to Jefferies analysis, retail loans against gold jewellery grew 80% year-on-year and 18% from March 2026 as of July 2026. Including agricultural gold loans, gold-backed loans grew 50% YoY to ₹18.6 trillion, accounting for 11% of retail credit. The shift toward mainstream borrowing is evident as the share of prime and above customers rose from 43% in CY2022 to 52% in CY2025, moving beyond their traditional distress-based image.
Competition is intensifying rapidly with new entrants significantly expanding their presence. As reported by Jefferies, gold loans from new entrants grew 2.5 times YoY to ₹61.9 billion as of July 2026, taking their share of retail gold loans to 7.6%, up 50 basis points from March 2025. The brokerage estimates new players could add around 3,700 branches in FY27, compared with roughly 1,500 in FY26. Bajaj Finance is moving particularly fast, estimated to account for 35% of new branch additions with gold loan AUM at ₹21.2 billion in June 2026 and plans to target ₹300 billion by FY27.
The competitive landscape is shifting geographically as new entrants target previously untapped markets. According to Jefferies, while Tamil Nadu, Andhra Pradesh, Telangana and Karnataka still account for 70% of gold loans, origination growth is increasingly coming from states such as Uttar Pradesh, Rajasthan and Gujarat. New entrants are targeting North, West and Central India, including Maharashtra and Madhya Pradesh, where established players like Muthoot Finance and Manappuram Finance are present but have historically been less dominant than in the South.
For established players, the competitive response extends beyond pricing to product diversification and operational efficiency. As reported by Jefferies, both Muthoot Finance and Manappuram Finance have expanded product variants across ticket sizes and LTVs, including balance-transfer products, to defend yields and retain customers. New branches typically carry an initial opex-to-AUM of 6–8%, compared with 2.5–3.7% for established players, with new branches targeting break-even in around 18 months. This cost structure provides some breathing room for incumbents to maintain pricing discipline.
Despite competitive pressures, Jefferies identifies gold prices as the primary driver of AUM growth. Gold prices have fallen 6% after a 15% rally in August, with higher US yields and hawkish Federal Reserve comments weighing on prices. However, the brokerage sees US fiscal concerns, dollar debasement and central-bank buying as medium-term bullish drivers. Higher gold prices can increase the value of the collateral pool and ease competitive pressure, making them crucial for lender performance in the evolving market landscape.
