Lenders’ growing enthusiasm for gold-backed loans is projected to drive the total portfolio to Rs 30 lakh crore by March 2028, up from Rs 18 lakh crore in March 2026, according to a report by a domestic rating agency on Wednesday.
Icra Ratings noted that non-banking finance companies (NBFCs) are expected to outpace banks, with a 35 per cent rise in assets under management over the next two years. This growth will push their market share to 23 per cent by the end of FY28, compared to 22 per cent in FY26. However, the agency warned that heightened competition could squeeze yields and cap potential gains.
The total gold loan portfolios for NBFCs are set to grow at a CAGR of 35 per cent between 2026-27 and 2027-28, while bank portfolios are forecast to increase at a 30 per cent CAGR during the same period.
Despite this rapid expansion, the agency anticipates minimal credit losses due to the highly liquid nature of gold as collateral.
In the two fiscal years concluding in March 2026, gold lending saw a 38 per cent annual growth rate, with NBFCs and banks expanding their books by 54 per cent and 35 per cent, respectively.
“The entry of new players and large NBFCs in the gold lending space — whether organically or through acquisitions — along with their plans to significantly expand their branch networks, supports the strong growth outlook for this segment, particularly amid the stress in unsecured lending in the recent past,” its sector head R Srinivasan said.
This upward trend was largely fueled by retail gold loans (GLs). NBFCs, which primarily target retail GLs for business or personal consumption, saw their assets under management reach approximately Rs 4 lakh crore by March 2026.
For banks, retail gold loans nearly doubled during 2025-26, while loans for agricultural and other purposes grew by about 25 per cent. This surge in bank retail GLs is linked to both robust demand and the reclassification of certain agricultural loans into the retail category.
Icra observed that much of the current market growth is a result of high gold prices rather than a significant increase in the actual volume of gold being pledged.
While the loan books of major players expanded by 24 per cent between 2021-22 and 2025-26, the actual tonnage of gold jewellery held as security grew at a more conservative pace of 3-4 per cent.