Gold Loan Market Booming in India, Expected to Reach Rs 15 Trillion in FY26

India’s organised gold loan market is expected to reach Rs 15 trillion (Rs 15 lakh crore) in the current financial year (FY26), a year earlier than previously predicted, according to a report.

The market is also expected to grow to Rs 18 trillion (Rs 18 lakh crore) by FY27, driven by rising gold prices, the report from credit ratings agency ICRA said.

The price of Gold is also increasing rapidly in India. Price of 10g 24k Gold in Delhi is Rs.1,26,310.00.

Public sector banks (PSBs) remain dominant players in the space, driven by agriculture and other loans that are backed by gold jewelry. During FY2024 and FY2025, PSB GL grew at a CAGR of 27%, while GL from private sector banks expanded at a relatively slower CAGR of 22%, despite a lower base.

Slower growth in unsecured loans also helped increase the gold-loan assets managed by NBFCs.

The report predicts that NBFC gold loan assets under management (AUM) will grow by 30–35 per cent in FY26. This growth is supported by players diversifying into gold loans and the large amount of free gold held in the country.

Gold loans had grown at a compound annual growth rate (CAGR) of around 26 per cent during FY24–FY25 and reached Rs 11.8 trillion by March 2025. Banks showed slightly faster growth compared to NBFCs.

Banks remain the largest players, holding 82 per cent of the overall gold loan market, while NBFCs account for the rest, ICRA said.

The growth in gold loans was mainly driven by agriculture and other loans secured by gold jewellery, offered by banks. However, this growth slowed in FY25 as banks tightened eligibility criteria and reclassified some loans as retail or personal loans.

NBFCs that focus on gold loans maintain strong lending spreads. Their net earnings are supported by better operational efficiency and moderate credit losses. However, competition is increasing from new entrants and banks expanding in this segment, which could reduce yields for market players.