Gold Loan Boom in India: Market Surges to ₹14.5 Lakh Crore as Demand Skyrockets

Even without cash in hand, having a small amount of gold is enough to secure a loan from a bank or an NBFC. With the rise in gold prices, gold loan companies in India have seen rapid growth over the past year.

As of September this year, gold loan NBFCs in the country have issued loans worth ₹14.5 lakh crore, backed by gold and gold ornaments. This is a 36% increase compared to the same period last year. According to credit rating agency ICRA, the gold loan market is expected to reach ₹15 lakh crore by March next year.

Why is demand increasing?

Gold prices have risen nearly 60% this year.

Microfinance institutions are hesitant to offer unsecured loans.

This has led middle-class families, farmers, and small business owners to rely more on gold loan companies.

Some NBFCs are offering loans up to 70–80% of the gold value.

Analysts expect this trend to continue next year as well.

Expansion of new branches

Due to rising demand, gold loan companies plan to open nearly 3,000 new branches next year.

Of these, around 1,800 branches will be set up by major NBFCs like Muthoot Finance, Muthoot Fincorp, Bajaj Finance, and IIFL Finance.

L&T Finance and Poonawalla Fincorp are also preparing to expand into the gold loan segment.

Jio Finance is expected to enter the gold loan market soon.

Overall, the surge in gold prices and rising demand are driving significant expansion in India’s gold loan industry. The gold loan market may grow by 30–35% in the coming financial year.