Will India's Organised Gold Loan Market Reach Rs 15 Lakh Crore in FY26?
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Synopsis
Discover how India's gold loan market is set to soar to Rs 15 lakh crore in FY26, a year ahead of forecasts. This growth is attributed to rising gold prices and shifting financial strategies. Explore what this means for banks and NBFCs in the evolving financial landscape.
Key Takeaways
- India's gold loan market is set to reach Rs 15 lakh crore in FY26.
- Projected growth to Rs 18 lakh crore by FY27.
- NBFC gold loan AUM expected to rise 30-35% in FY2026.
- Banks dominate the market with 82% share.
- Operational efficiency crucial for NBFCs to combat competition.
New Delhi, Oct 8 (NationPress) The organised gold loan sector in India is projected to hit Rs 15 trillion (Rs 15 lakh crore) during the ongoing financial year (FY26), marking a year ahead of previous estimates, according to a report released on Wednesday.
Moreover, the market is expected to grow further to Rs 18 trillion (Rs 18 lakh crore) by FY27, spurred by increasing gold prices, as stated in the report from credit ratings agency ICRA.
A.M. Karthik, senior vice president and co-group head of financial sector ratings at ICRA Limited, noted that the deceleration in the growth of unsecured loans has also played a role in boosting the gold-loan assets managed by NBFCs.
The report anticipates that the gold loan asset under management (AUM) for NBFCs will increase by 30-35 percent in FY2026, aided by a diversification of players entering this market and a substantial estimated free gold reserve within the country.
Gold loans have seen a compounded annual growth rate (CAGR) of approximately 26 percent during FY2024-FY2025, totaling Rs 11.8 trillion as of March 2025, with banks exhibiting a marginally higher growth rate compared to NBFCs.
Banks continue to dominate, holding 82 percent of the overall market share in gold loans, while NBFCs account for the remaining portion, according to ICRA.
The surge in gold loans has primarily been driven by agricultural financing and other loans secured by gold jewellery, which banks have extended. However, growth in this area slowed considerably in FY2025 as banks implemented stricter eligibility criteria and reclassified some loans under the retail or personal categories, according to the ratings agency.
“NBFCs concentrating on gold loans maintain a strong lending spread, backed by improved operational efficiencies and moderate credit losses, which support their net earnings. Nevertheless, competitive pressures are increasing, with new entrants and banks expanding in this sector, leading to potential yield challenges for market players,” Karthik elaborated.
Thus, the ongoing enhancement of operational efficiencies will be vital for these players to create adequate buffers against such yield pressures.
Point of View
I believe that India's gold loan market's rapid growth reflects the dynamic changes in our financial landscape. It highlights the importance of both traditional banks and emerging NBFCs in providing accessible credit solutions while navigating market challenges. The ongoing evolution of this sector should be closely monitored as it holds significant implications for economic stability and growth.
NationPress
08/10/2025
Frequently Asked Questions
What is the projected size of India's gold loan market in FY26?
The organised gold loan market in India is projected to reach Rs 15 lakh crore in FY26.
What factors are driving the growth of the gold loan market?
The growth is being driven by rising gold prices and a slowdown in unsecured loan growth.
What is the expected growth of NBFC gold loan AUM?
NBFC gold loan assets under management are expected to grow by 30-35 percent in FY2026.
How do banks and NBFCs compare in the gold loan market?
Banks hold an 82% market share in gold loans, with NBFCs contributing to the remainder.
What challenges do players in the gold loan market face?
Increasing competition from new entrants and banks may lead to yield pressures for market participants.
