Gold Loan NBFCs Ride Rally: India’s gold loan non-banking financial companies (NBFCs) are witnessing an unprecedented growth surge, driven by soaring gold prices and tighter credit conditions in unsecured and microfinance segments. As borrowers face limited options in personal loans and credit cards, gold loans have emerged as a preferred source of liquidity, prompting NBFCs to raise their full-year disbursement and AUM growth targets.
Why Gold Loans Are Becoming the Go-To Option
Tight Credit in Other Segments
As banks and NBFCs restrict unsecured lending, customers with limited or no credit history are increasingly turning to gold loans. Shaji Varghese, CEO of Muthoot FinCorp, said, “Growth is being fuelled by customers without strong credit histories, new-to-credit borrowers, and expanding access to digital gold loans.” This segment has become critical in maintaining the momentum for gold loan NBFCs.
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Investor Sentiment Mirrors Industry Growth
The robust performance of gold loan NBFCs is reflected in stock market gains:
- Muthoot Finance: +23% since the start of FY26, closing at ₹2,929
- Manappuram Finance: +25%, closing at ₹232.75
- IIFL Finance: +33%, closing at ₹434.50
Investors remain optimistic about the sustained growth momentum in gold loans, driven by rising gold prices, digital adoption, and regulatory support.
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FAQs
Q1: Why are gold loans in high demand despite other credit options?
High gold prices and tightened credit in unsecured loans and microfinance have made gold loans an attractive borrowing option. Customers, especially those without strong credit histories, use gold as collateral to secure liquidity.
Q2: How has RBI supported gold loan growth?
The RBI raised maximum LTV ratios for loans below ₹5 lakh and removed credit appraisal and end-use monitoring requirements for smaller loans. These measures make it easier for NBFCs to lend against gold, boosting sector growth.
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