Gold Loan Market To Reach ₹30 Lakh Crore By FY28

The gold loan market in India is expected to reach ₹30 lakh crore by March 2028, up from ₹18 lakh crore in March 2026, according to Icra Ratings. This growth is driven by increasing demand and a greater appetite among lenders, particularly non-banking finance companies (NBFCs).

NBFCs are expected to continue growing faster than banks in the gold loan segment, with their assets under management (AUM) projected to rise by 35% annually over the next two years. Their share in the overall gold loan portfolio is expected to increase marginally to 23% by FY28 from 22% in FY26.

Icra cautioned that rising competition could put pressure on business yields and limit profitability gains for lenders. Despite this, the gold lending segment recorded strong growth during the last two financial years ending March 2026, with annual growth of around 38%.

Banks expanded their gold loan books by 35%, while NBFCs recorded a sharper growth of 54% during the period. Icra Sector Head R Srinivasan attributed the strong outlook for the segment to the entry of new players and expansion plans of large NBFCs.

The growth in the gold loan market has primarily been led by retail gold loans offered by banks and NBFCs. NBFCs largely focus on retail gold loans for consumption and business purposes, with their AUM reaching around ₹4 lakh crore as of March 2026.

Among banks, retail gold loans nearly doubled in FY26, while loans for agriculture and other purposes grew by around 25%. The rise in bank retail gold loans was partly due to reclassification of certain loans and strong demand for fresh borrowings.

Icra noted that the recent surge in gold loan portfolios has been largely driven by higher gold prices rather than a significant increase in the quantity of gold pledged. The tonnage of gold jewellery held as collateral increased by only 3-4% between FY22 and FY26, compared with a 24% expansion in loan books of large lenders during the same period.

The growth of the gold loan market is expected to continue, driven by increasing demand and the expansion plans of lenders. However, rising competition and pressure on business yields may limit profitability gains for lenders.

In terms of the outlook for the segment, Icra expects NBFCs' gold loan portfolios to grow at a compound annual growth rate (CAGR) of 35% during 2026-27 and 2027-28. Banks' gold loan books are expected to expand at a slightly lower CAGR of 30% during the same period.

Overall, the gold loan market in India is expected to reach new heights in the coming years, driven by increasing demand and the expansion plans of lenders. However, lenders will need to navigate the challenges of rising competition and pressure on business yields to achieve profitability gains.

The growth of the gold loan market has significant implications for the Indian economy, particularly in terms of providing access to credit for individuals and small businesses. As the market continues to grow, it is likely to play an increasingly important role in supporting economic development and financial inclusion in India.

In conclusion, the gold loan market in India is expected to reach ₹30 lakh crore by March 2028, driven by increasing demand and the expansion plans of lenders. While there are challenges to be navigated, the outlook for the segment is positive, and it is likely to continue to play an important role in supporting economic development and financial inclusion in India.