New Delhi: Gold-backed lending is emerging as one of India’s fastest-growing retail credit segments, attracting major corporate groups as demand for loans secured against household gold continues to rise.
The Aditya Birla Group is the latest major business house to enter the sector, announcing plans to establish a dedicated gold-loan franchise with more than 1,000 branches across India. Tata Capital has also announced the acquisition of Yogloans, while Godrej Capital has acquired the gold-loan business of Kanakadurga Finance.
Gold loans become mainstream
According to Reserve Bank of India data cited by the Financial Times, loans against gold have grown at a compound annual rate of more than 42% since March 2024. Growth accelerated to nearly 70% year-on-year in May and June, considerably faster than overall retail loan growth.
India’s households are estimated to hold around 25,000 tonnes of gold, much of it in jewellery. Traditionally, pledging gold was associated with financial hardship, particularly in rural communities. However, the expanding formal lending sector is changing that perception.
Rising gold prices have also increased the amount borrowers can obtain against the same quantity of jewellery.
Why companies are entering
Gold loans offer lenders an advantage because the collateral remains in their possession and can be liquidated relatively quickly if borrowers default. This makes them less complicated than loans secured against property.
The RBI’s revised gold-loan framework, effective from April 2026, has also increased permissible loan-to-value ratios for smaller loans while introducing tighter appraisal and conduct requirements.
Competition could reshape the sector
Rating agency ICRA expects the gold-loan market to grow at around 35% annually over the next two years. Large companies could bring stronger technology, wider branch networks and greater financial resources to a sector traditionally dominated by smaller regional lenders.
For borrowers, increased competition could mean easier access and more choices. For smaller gold-loan companies, however, the arrival of major corporate players could make an already competitive market considerably tougher.