Mumbai: India’s gold loan sector is growing very fast. Higher gold prices and rising customer demand are driving this growth.
According to industry data and a Jefferies India report, total gold loans increased 42 percent year-on-year to Rs 15.6 trillion as of November 2025.
Retail loans taken against gold jewellery jumped 93 percent. Bank gold loans grew even faster, rising 127 percent compared to last year.
Not Just a Price Cycle
Shaji Varghese, CEO of Muthoot FinCorp, said this growth is not just because gold prices are high. He called it a 'structural shift.'
Earlier, gold loans were seen as a last option in emergencies. Now, many MSMEs, small traders and households are using gold loans in a planned way.
People are using these loans to manage business cash flow, farming needs and short-term financial requirements.
Shift From Informal to Formal Lenders
Another big change is that borrowers are moving away from informal moneylenders.
Instead, they are choosing regulated NBFCs and banks because of better transparency, customer protection and clear rules.
India has a large amount of household gold that is not being used productively. Awareness about using gold as collateral—without selling it—is increasing. This is helping more people take gold loans.
Rising Competition in the Sector
The sector is also seeing strong competition. Many new and mid-sized NBFCs have opened more than 900 new branches in FY26 so far.
Large players like Muthoot and Manappuram may expand further if the RBI relaxes rules for opening new branches.
Branch productivity is important. Muthoot FinCorp reports average assets under management (AUM) of Rs 281 million per branch, which is higher than many competitors.
High Gold Prices Supporting Growth
Gold prices have risen 17 percent so far this year. Higher prices increase the loan value that customers can get against their gold.
Analysts believe leading companies in the gold loan sector are well placed for steady growth because of strong fundamentals and disciplined lending.
