With bullion climbing toward $5,200 an ounce — up nearly 6% in six sessions and almost 20% so far this year — India's gold financiers are riding a powerful tailwind. The rally, driven by rising geopolitical tensions in the Middle East, fresh US sanctions on Iranian entities, and renewed “dollar debasement” trades, has pushed prices back above $5,000 after a brief pullback from January's record $5,595 peak.
For lenders, higher gold prices are translating directly into faster loan growth. According to brokerage notes from Macquarie and Jefferies, gold loans have clocked growth of over 30–40% in recent years, outpacing most other retail segments. As of November, loans against gold (excluding agricultural gold loans) accounted for roughly 10% of retail loans, with penetration still relatively low — suggesting room to grow.
Rapid Growth, Rising Competition
Macquarie notes that gold loans are now the largest category within retail loans after housing, forming 14–15% of banks' retail books excluding high-ticket gold-backed agriculture loans. Growth has been particularly strong among non-banking financial companies (NBFCs), which account for nearly 45–50% of gold loan originations by value and as much as 45–50% by volume.
Jefferies estimates gold loans grew 42% as of November 2025, aided significantly by rising gold prices. Banks' share in retail gold loans has inched up, but NBFCs such as Muthoot Finance and Manappuram Finance continue to dominate the segment.
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The competitive landscape, however, is evolving. Multiple NBFCs — including mid-sized players — are expanding branch networks. Analysts estimate that leading players have added hundreds of branches over the past year, while regulatory proposals to ease branch expansion norms could accelerate growth further.
Yet, despite the flurry of activity, brokerages say competitive intensity has not meaningfully dented sector growth so far.
Gold Prices: Tailwind and Risk
The bullion rally remains the key swing factor. Gold prices are up about 17–20% year-to-date in dollar terms, bolstering loan-to-value buffers and supporting healthy growth. Higher gold values allow borrowers to access larger ticket sizes against the same collateral, while lenders benefit from stronger collateral cover.
Asset quality metrics appear comfortable. Macquarie's data shows that delinquency levels — including PAR 31–90 and PAR 91–180 buckets — remain broadly contained across public sector banks, private banks, and NBFCs. Analysts note that loss rates on gold loans are typically lower than unsecured personal loans due to the secured nature of the product.
A sharp correction in gold prices, however, could affect growth momentum and recovery values, especially if loan-to-value ratios come under pressure.
Are Gold Loans the New Personal Loans?
One structural question emerging from the data: are gold loans substituting personal loans?
With gold loan growth running at more than twice the pace of personal loans in recent years, some analysts suggest that rising leverage and consumption needs may be partly shifting toward gold-backed borrowing. At the same time, low penetration — only around 8% of pledged household gold is estimated to be financed through organised channels — points to a long runway.
For now, as bullion shines amid geopolitical strain and currency concerns, India's gold lenders appear firmly in a sweet spot — backed by strong price momentum, improving penetration, and resilient asset quality.
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