New Delhi, Jan 22 Assets under management (AUM) of non-banking financial companies (NBFCs) specialising in gold loans is set to register a compound annual growth rate (CAGR) of 40 per cent between this fiscal and next, surpassing Rs 4 lakh crore by March 2027, a Crisil Ratings report showed on Thursday.
According to the report, the surge will be driven by elevated gold prices, a shift towards secured credit and an evolved regulatory environment, outpacing the CAGR of 27 per cent clocked between fiscals 2023 and 2025.
Large gold-loan NBFCs, having an established brand image, are scaling up their portfolio across existing branches. Meanwhile, their mid-sized counterparts are adopting a dual strategy of expanding their branch network as well as operating as originating partners for large NBFCs and banks, said Aparna Kirubakaran, Director, Crisil Ratings.
These efforts, combined with strong demand amid elevated gold prices, have boosted business per branch for gold-loan focused NBFCs by 40 per cent over the last two fiscals.
Their average AUM per branch stood at Rs 14 crore in the first six months of this fiscal compared to Rs 10 crore in fiscal 2024, Kirubakaran said.
Gold prices have soared 68 per cent in the first nine months of this fiscal to an all-time high.
This enhances collateral values, enabling lenders to scale up disbursements.
Furthermore, amid limited availability of credit from segments such as unsecured lending, borrowers are looking out for other sources of funding.
To capitalise on these lending opportunities, gold-loan NBFCs have been expanding their market presence, despite stiff competition from Banks, said the report.
On the regulatory front, streamlining of loan-to-value (LTV) norms for lower-ticket size gold loans, applicable from April 1, 2026, is expected to provide additional headroom to NBFCs for lending, it added.
Prashant Mane, Associate Director, Crisil Ratings, said that “Demand for gold loans is also being underpinned by a shift among borrowers from unsecured to secured credit”.
Following asset quality challenges in the unsecured lending space, which was followed by stringent underwriting practices adopted by lenders and stricter regulatory actions, credit availability through this route declined substantially, he mentioned.
Furthermore, gold-loan NBFCs will need to maintain strict control on risk management and operational procedures including purity assessment, weightage measurement and authenticity evaluation of the pledged gold.
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