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The organised gold loan market in India is projected to reach the Rs 15 trillion mark by March 2026, a year ahead of earlier expectations, according to credit rating agency ICRA. The surge is attributed primarily to the sustained uptrend in gold prices, which have scaled record highs in recent months.
ICRA now estimates that the market size of organised gold loans could further increase to Rs 18 trillion by FY2027. "ICRA foresees the NBFC GL AUM to expand by 30-35 per cent in FY2026, considering elevated gold prices and lower growth in the unsecured loan products, which are also generally targeted at the same borrower segments. Further, diversification by players into this space and a sizeable estimated free gold-hold in the country provide visibility for achieving this,"said A.M. Karthik, Senior Vice President and Co-Group Head, Financial Sector Ratings, ICRA Limited. While growth has been driven largely by higher gold prices, the tonnage of gold held as collateral grew modestly at a CAGR of 1.7 per cent during FY2020-FY2025. The average loan ticket size is more than doubled during this period, even as the number of branches grew at a slower 3.3 per cent CAGR. During FY24-FY25, gold loans expanded at a compound annual growth rate (CAGR) of around 26 per cent, reaching Rs 11.8 trillion as of March 2025. Banks registered slightly faster growth than non-banking financial companies (NBFCs), leading to a decline in the latter's share in the overall organised market. As of March 2025, banks accounted for about 82 per cent of the overall organised gold loan market, while NBFCs held the remaining 18 per cent. The share of NBFCs has dropped from 22 per cent in March 2021, underscoring the strong position of banks in this segment. ICRA's data further showed that the overall NBFC gold loan assets under management (AUM) stood at Rs 2.4 trillion as of June 2025, marking a robust year-on-year growth of around 41 per cent. The segment continues to remain concentrated, with the top four players accounting for 81 per cent of the NBFC gold loan market, down from 90 per cent in March 2022. "NBFCs focused on GLs maintain their robust lending spread, supported by improving operational efficiencies and moderate credit losses, which sustain their net earnings. Nevertheless, competitive intensity is steadily increasing from new entrants and the ongoing expansion of banks in this segment, resulting in potential yield pressures for market participants. Consequently, continuous enhancement of operating efficiencies will be crucial for these players to build adequate buffers against such yield pressures,"Karthik added. (ANI)
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