Gold Loan Market Set To Hit ₹30 Lakh Crore By FY28 As Lenders Expand Portfolio: Icra

Mumbai, July 29: The overall gold loan portfolio in India is expected to touch ₹30 lakh crore by March 2028, rising sharply from ₹18 lakh crore in March 2026, driven by increasing demand and greater appetite among lenders, domestic rating agency Icra Ratings said on Wednesday.

Non-banking finance companies (NBFCs) are expected to continue growing faster than banks in the gold loan segment, with their assets under management (AUM) projected to rise by 35 per cent annually over the next two years.

NBFCs’ share in the overall gold loan portfolio is expected to increase marginally to 23 per cent by FY28 from 22 per cent in FY26.

However, Icra cautioned that rising competition could put pressure on business yields and limit profitability gains for lenders.

According to Icra, NBFCs’ gold loan portfolios are expected to grow at a compound annual growth rate (CAGR) of 35 per cent during 2026-27 and 2027-28.

Banks’ gold loan books are expected to expand at a slightly lower CAGR of 30 per cent during the same period.

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Despite rapid growth, credit losses are likely to remain limited due to the liquid nature of gold as collateral, the agency said.

The gold lending segment recorded strong growth during the last two financial years ending March 2026, with annual growth of around 38 per cent.

Banks expanded their gold loan books by 35 per cent, while NBFCs recorded a sharper growth of 54 per cent during the period.

Icra Sector Head R Srinivasan said the entry of new players and expansion plans of large NBFCs, including branch network growth and acquisitions, are supporting the strong outlook for the segment.

The agency said growth has primarily been led by retail gold loans offered by banks and NBFCs.

NBFCs largely focus on retail gold loans for consumption and business purposes, with their AUM reaching around ₹4 lakh crore as of March 2026.

Among banks, retail gold loans nearly doubled in FY26, while loans for agriculture and other purposes grew by around 25 per cent. The rise in bank retail gold loans was partly due to reclassification of certain loans and strong demand for fresh borrowings.

Icra noted that the recent surge in gold loan portfolios has been largely driven by higher gold prices rather than a significant increase in the quantity of gold pledged.

The tonnage of gold jewellery held as collateral increased by only 3-4 per cent between FY22 and FY26, compared with a 24 per cent expansion in loan books of large lenders during the same period.

(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

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