What's driving the rapid growth and interest in India's gold loan market

Tata Capital on Monday announced its foray into the gold loans market with the proposed acquisition of Yogakshemam Loans Limited (Yogloans), adding in to the growing interest among lenders as well as investors in this rapidly growing space. Thrissur, Kerala-based Yogloans is an RBI registered non-bank finance company (NBFC), primarily focusing on gold loans.

Tata Capital is a diversified NBFC, part of the Tata Group, offering a suite of over 25 lending products from consumer loans to loans for business. As of March 31, 2026, it had net assets under management of Rs 2.8 lakh crore as of March 31, 2026.

The transaction is based on a pre-money equity valuation of Yogloans not exceeding Rs 318 crore, subject to customary adjustments, and includes a primary capital infusion of about Rs 93 crore to support the company's growth plans. When the transaction completes, Tata Capital will hold around 88.6 per cent of Yogloans’ share capital.

How big is Yogloans?

 Yogloans currently has a network of 162 branches across Kerala, Karnataka, Tamil Nadu, and Andhra Pradesh. Its AUM stood at Rs 708 crore as of March 31, 2026. The company serves around 32,000 gold loan customers and has built strong capabilities in sourcing, underwriting and servicing over more than a decade in the gold loan business.

Why is Tata Capital now entering the gold loans business?

Tata Capital's entry into the gold loan business adds a secured lending product with significant growth potential to the company’s retail lending portfolio and supports its strategy of building a diversified lending franchise, according to Rajiv Sabharwal, the MD and CEO of Tata Capital.

How fast is the market growing?

Tata Capital’s entry into the segment comes in the backdrop of an extremely strong growth that the gold loan market has seen in recent years. Over 2024 and 2025, gold prices surged amid global geopolitical uncertainties and rising investment demand. This benefits gold loan consumers as they can borrow more with the same amount of gold pledged or pledge less gold for the funds they are seeking.

According to Experian, gold sourcing has grown at an exponential rate of 84 per cent year-on-year in financial year 2026 and 69 per cent in FY2025, outpacing all other retail credit products.

From around Rs 6.3 lakh crore in March 2023, the industry AUM has grown to Rs 19.4 lakh crore in March 2026.

“Gold loan is no longer a secondary product – it is emerging as a key driver of retail credit growth. Customers are increasingly choosing gold loans, leading to a visible shift in the overall lending mix,” it noted.

Average ticket size have also seen a sharp increase from Rs 0.98 lakh in FY2023 to Rs 1.96

lakh in FY2026, which indicates borrower capacity is growing as is demand for larger loan amounts.

Over the last few years, unsecured personal loans saw a strong growth. But, concerns also grew over potential delinquencies. Gold loan minimises worries given that physical gold is pledged as collateral.

A report by TransUnion CIBIIL in April 2026 noted that gold loan balances now accounted for 11.1 per cent of India’s retail credit portfolio, up from 5.9 per cent in March 2022.

How the interest in the segment is growing

Public sector banks have held close to 58 per cent share of the gold loan market. However, NBFCs, comprising standalone players like Muthoot Finance, Manappuram Finance and IIFL among many others, have been slowly gaining traction. As of March 2026, their share had touched 20 per cent, growing 5 per cent YoY in FY2025 and again in FY2026, according to Experian.

This is driving more interest into the segment. In 2025, global private investment firm Bain Capital entered into definitive agreements to acquire joint control in Manappuram Finance, the second largest gold financier in India.

Elsewhere, Mumbai-based diversified NBFC L&T Finance acquired the gold loan business of Paul Merchants Finance (PMFL), which included the transfer of PMFL’s Rs 1,350 crore gold loan book.

L&T Finance has rapidly scaled up the gold loan business since. Its gold finance book has more than doubled to Rs 3,829 crore in the first quarter of FY2027 from Rs 1,360 crore in the year ago quarter and the number of active branches have jumped from 130 to 343 in the same period.   

According to analysts at HDFC Securities, the addressable market based on gold holdings remains huge, with just 10 per cent penetration. The unit economics for NBFCs are also lucrative with high yields and minimal credit risk, they point.

However, they also note that the business is branch-led and fraught with multiple operational challenges such as frauds, thefts, auctions etc. and high operating leverage. The rising competitive intensity is also likely to put pressure on yields, they said.