The agency expects the gold loan portfolio of banks and NBFCs to grow at a compound annual growth rate (CAGR) of over 30% between FY27 and FY28. The growth will be supported by wider branch networks, entry of new lenders and continued demand for loans backed by gold collateral.
NBFCs are expected to grow faster than banks in the segment. ICRA estimates NBFC gold loan assets will expand at a 35% CAGR during FY27-FY28, compared with 30% growth expected for banks. This could increase the share of NBFCs in the organised gold loan market to 23% by FY28, although banks are expected to retain the largest share.
New lenders, branch expansion to drive growth
ICRA said increasing participation from new players and large NBFCs is supporting growth in the gold loan market. Several lenders are expanding their branch networks, either through organic growth or acquisitions, while banks are also widening their gold loan offerings across their existing branch infrastructure.
“The entry of new players and large NBFCs in the gold loan space, along with their plans to significantly expand branch networks, supports the strong growth outlook for this segment,” said R Srinivasan, Sector Head, Financial Sector Ratings, ICRA.
The growth in recent years has been led by retail gold loans. NBFCs have traditionally focused on loans against gold jewellery for consumption and business needs, while banks have also seen a sharp rise in retail gold loans.
According to ICRA, the organised gold loan book grew at a 38% CAGR during FY25-FY26, with growth reaching around 50% in FY26. During this period, banks’ gold loan portfolios grew at a 35% CAGR, while NBFCs recorded a higher 54% CAGR.
NBFCs gain ground, but competition rises
The share of NBFCs in the gold loan market has increased after declining for three consecutive years. Banks’ share in overall gold loan assets fell to around 78% in March 2026 from 82% in March 2024, while NBFCs gained market share.
ICRA also highlighted that the NBFC gold loan market has become less concentrated. The top four players accounted for 70% of NBFC gold loan assets in March 2026, compared with around 90% in March 2022, as more lenders entered the segment.However, rising competition could put pressure on lenders’ profitability. ICRA expects loan yields to remain under pressure as lenders compete for customers and adjust to regulatory changes.
Regulatory changes may impact loan structures
The agency said the shift from bullet repayment loans to regular repayment structures, along with changes in loan-to-value (LTV) norms for higher-ticket loans, could lead to near-term challenges for lenders.
Borrowers may take time to adjust to regular repayments, which could result in higher delinquencies in the short term. However, ICRA expects overall credit losses to remain limited due to the liquid nature of gold collateral and lenders’ ability to recover dues through auctions.
The agency cautioned that lenders will need stronger risk controls, especially if competitive pressure leads to higher LTV offerings amid volatility in gold prices.
