New Delhi, Jan 22 (NationPress) The assets under management (AUM) for non-banking financial companies (NBFCs) that focus on gold loans is projected to experience a remarkable compound annual growth rate (CAGR) of 40% from this financial year to the next, exceeding Rs 4 lakh crore by March 2027, according to a recent report by Crisil Ratings.

The report indicates that this growth will be fueled by high gold prices, an increasing preference for secured credit, and a more favorable regulatory landscape, significantly outpacing the CAGR of 27% recorded between the fiscal years 2023 and 2025.

Major gold-loan NBFCs, known for their strong brand presence, are expanding their portfolios within existing branches. On the other hand, mid-sized firms are implementing a dual approach, increasing their branch networks while also partnering with larger NBFCs and banks, as noted by Aparna Kirubakaran, Director of Crisil Ratings.

These strategies, coupled with robust demand driven by high gold prices, have resulted in a 40% increase in business per branch for gold-loan focused NBFCs over the past two fiscal years.

The average AUM per branch reached Rs 14 crore in the first half of this fiscal year, compared to Rs 10 crore in fiscal year 2024, Kirubakaran highlighted.

Gold prices have surged by 68% in the first nine months of this fiscal year, achieving an all-time high.

This rise enhances collateral values, allowing lenders to increase their disbursements.

Additionally, with limited credit options available from unsecured lending sectors, borrowers are actively seeking alternative funding sources.

To seize these lending opportunities, gold-loan NBFCs are broadening their market reach, even in the face of intense competition from banks, the report states.

On the regulatory side, the adjustment of loan-to-value (LTV) guidelines for smaller gold loans, set to take effect on April 1, 2026, is anticipated to provide additional leeway for lending by NBFCs.

Prashant Mane, Associate Director at Crisil Ratings, remarked that “the demand for gold loans is also supported by a shift among borrowers from unsecured to secured credit.”

In light of the asset quality issues in the unsecured lending sector, which have led to stricter underwriting practices and regulatory measures, the availability of credit through this avenue has significantly diminished, he added.

Moreover, gold-loan NBFCs must maintain stringent risk management and operational protocols, including purity checks, weight assessments, and authenticity verification of pledged gold.