Amid soaring prices of the yellow meta​l, the organised gold loan (GL) market is expected to reach the ₹15-lakh crore mark in the current financial year, a year earlier than previously projected, credit rating agency ICRA said on Wednesday. Further, the GL size is expected to rise to ₹18 lakh crore by FY27, according to the latest estimates. 

Notably, the share of GLs with non-banking financial companies (NBFCs), concentrated among a few players, has seen a steady decline. The Top 4 players accounted for 81% of NBFC GLs as of March 2025, lower than 90% as of March 2022. Banks remain the dominant player with 82% market share in overall GLs, with NBFCs contributing to the rest. The share of NBFCs has declined from 22% in March 2021, a note from ICRA said.

“ICRA foresees the NBFC GL AUM (assets under management) to expand by 30-35% in FY26, 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. On Tuesday, the gold price hit a historic milestone of $4,000 per ounce for the first time ever. In India, the prices breached the ₹122,000 per 10-gm mark on Wednesday.

The GL AUM expansion of NBFCs was largely driven by the uptrend in gold prices. As of June 2025, the overall NBFC GL AUM stood at around ₹2.4 lakh crore and is growing at around 41% on a YoY basis. In FY25, ICRA added, GLs expanded at a CAGR of about 26% to ₹11.8 lakh crore as of March 2025, with banks showing a slightly higher expansion rate when compared to NBFCs. 

During the six years between FY20 and FY25, GL AUM of banks grew faster at around 26% relative to the 20% increase recorded by NBFCs, ICRA noted. The tonnage expanded at a modest 1.7% CAGR during this period, compared to a 20% increase in the GL AUM. The average loan ticket size, however, more than doubled during this period, according to the rating agency.

“NBFCs focussed 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. 

Agriculture and other loans secured by gold jewellery fuelled the overall growth, accounting for more than 70% of the overall GL as of March 2024. However, this segmental growth slowed significantly in FY25 as banks imposed stricter eligibility criteria and reclassified some of these loans under the retail/personal category, ICRA stated. Consequently, the share of retail/personal gold loans by banks increased to 18% (of the overall GLs) in March 2025 from 11% in March 2024, and the share of agriculture and other loans secured by gold jewellery declined to 63%, ICRA stated.