Gold loans are now India’s largest securitised asset class: CRISIL explains why

Gold loans have become the largest securitised asset class in India during the April-June quarter of FY27, overtaking vehicle loans for the first time this financial year, according to a CRISIL Ratings report. The report showed gold loans accounted for around 31% of total securitisation volumes, ahead of vehicle loans at 26%, as overall issuances rose 22% year-on-year to about ₹60,000 crore.

Securitisation is a process through which lenders pool loans and sell them to investors to raise funds and free up capital for fresh lending.

Here’s what drove the shift, according to CRISIL Ratings:Strong growth in gold loan portfolios

Gold loan financiers witnessed robust portfolio growth during the quarter, prompting them to increasingly tap the securitisation market to raise funds. CRISIL said sustained credit demand was one of the key factors supporting higher issuances.

NBFCs dominated fund-raising

More than 98% of securitisation issuances in the April-June quarter were originated by non-banking financial companies (NBFCs). Unlike previous peak periods, banks played only a limited role as originators, with NBFCs driving the market.

Healthy investor appetite for gold-backed assets

Investor demand for securitised gold loan pools remained strong. According to CRISIL, public sector banks were among the biggest buyers, attracted by the asset class’s negligible historical credit losses and favourable risk-weight treatment.

Vehicle loan issuances moderated

Gold loans also gained ground because the share of vehicle loan securitisation declined. CRISIL attributed this to fewer issuances by a large originator, reducing the segment’s share to 26% during the quarter.

Direct assignment emerged as the preferred route

The funding mix also shifted during the quarter. Direct assignment transactions accounted for 54% of total securitisation volumes, compared with 46% for pass-through certificate (PTC) transactions. Nearly 87% of securitised gold loan transactions were executed through the direct assignment route.

What does the report expect next?

CRISIL Ratings expects the securitisation market to maintain its growth momentum over the coming quarters, supported by healthy retail credit demand and increasing participation from lenders. The number of originators accessing the market rose to around 115 in the April-June quarter from about 90 a year earlier, indicating broader adoption of securitisation as a funding tool.

-With PTI inputs