Gold loans may cross ₹30 lakh crore by FY28: Why more Indians are pledging gold

India's organised gold loan market is on track for unprecedented growth, with rating agency ICRA projecting that loans extended by banks and non-banking financial companies (NBFCs) will cross ₹30 lakh crore by March 2028, up from around ₹18 lakh crore in March 2026. The forecast implies a compound annual growth rate (CAGR) of more than 30% over FY27 and FY28, underlining the increasing role of gold-backed lending in India's credit market.

The surge is being fuelled by a combination of rising consumer demand, aggressive expansion by lenders and evolving market dynamics.

Why are gold loans growing so rapidly?

According to ICRA, one of the biggest drivers has been the strong demand for retail gold loans, particularly from individuals borrowing for personal consumption or business needs. NBFCs, which have traditionally dominated this segment, had retail gold loan assets under management (AUM) of around ₹4 lakh crore as of March 2026. At the same time, banks witnessed a sharp jump in retail gold lending, with their retail gold loan portfolio nearly doubling during FY26.

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

The demand has also been supported by the stress seen in unsecured lending over the past year. As gold loans are backed by physical collateral, lenders view them as relatively safer than unsecured personal loans, while borrowers benefit from faster approvals and generally lower borrowing costs.

ICRA expects banks and NBFCs to continue expanding their branch networks and gold loan offerings, ensuring sustained growth even as gold prices have moderated after last year's rally.

Who is borrowing?

The report suggests that the growth is largely being driven by retail borrowers. These include households seeking short-term liquidity for medical emergencies, education expenses, weddings, working capital for small businesses and other consumption needs.

Unlike large corporate loans, retail gold loans are typically secured by household gold jewellery, making them accessible to borrowers who may have limited formal credit history or need funds quickly.

Within banks, the rise in retail lending has also been aided by the reclassification of certain loans previously categorised under agriculture and other segments, although fresh demand has remained strong.

MUST READ: India's gold loan rally faces its biggest test: What happens if gold prices correct?

Competition is heating up

The gold loan business is becoming increasingly competitive. New lenders are entering the segment organically or through acquisitions, while established NBFCs are rapidly expanding their branch presence. As a result, the market share of NBFCs is expected to rise to 23% by FY28, even though banks will continue to account for the majority of organised gold loans.

Interestingly, the dominance of the top four gold loan NBFCs has gradually reduced. Their combined share has fallen to 70% of the NBFC gold loan market in March 2026 from about 90% in March 2022, reflecting the entry of new players and increasing competition.

ALSO READ: Gold loans just crushed credit card debt in India. The gap is now massive

New rules could reshape the market

While the outlook remains strong, ICRA believes lenders will have to adapt to evolving regulations. The transition from bullet repayment loans to regular repayment structures, assessment of repayment capacity for larger loans and changes in loan-to-value (LTV) norms could lead to higher short-term delinquencies as borrowers adjust to the new framework. However, credit losses are expected to remain contained because gold is a highly liquid collateral that can be auctioned to recover dues.

As competition intensifies, ICRA says lenders will need robust risk management practices to balance growth with prudent lending standards, particularly if volatility in gold prices increases.

MUST READ: PPF loan vs personal loan vs gold loan vs credit card EMI: Which borrowing option makes the most sense?