India’s gold-loan NBFCs eye 40% annual growth as prices surge
India’s gold-loan non-banking financial companies (NBFCs) are set for rapid expansion. According to Crisil Ratings, firms like Muthoot Finance and Manappuram Finance will see their assets under management (AUM) grow by over 40% annually. By March 2027, the sector’s combined AUM is expected to exceed 4 trillion rupees, driven by rising gold prices and shifting borrowing trends.
A surge in gold prices has boosted lending capacity. Over the first nine months of this fiscal, gold values climbed by 68%, allowing lenders to increase disbursements. Borrowers, facing tighter credit conditions elsewhere, are also turning to secured loans backed by gold rather than unsecured alternatives.
Business per branch has risen sharply, with average AUM reaching 14 crore rupees in the first half of this fiscal—a 40% jump over the past two years. Large NBFCs are expanding their portfolios within existing branches, while mid-sized players are opening new locations and partnering with originators to widen reach. Regulatory adjustments are adding to the momentum. The Reserve Bank of India’s streamlined loan-to-value (LTV) norms give lenders more flexibility, making gold loans more attractive. However, competition from banks and disciplined risk management—such as tracking LTVs in real time and enforcing auction protocols—will be critical to maintaining growth. The sector’s AUM is projected to grow at a compound annual rate of 40% between 2025 and 2027, far outpacing the previous 27% growth rate. This acceleration reflects both market demand and regulatory support.
The gold-loan sector’s expansion will hinge on sustained gold prices, regulatory tailwinds, and effective risk controls. With AUM on track to surpass 4 trillion rupees by 2027, lenders must balance growth with competition and prudent lending practices. The shift from unsecured to secured credit is likely to keep demand strong in the coming years.
