India’s Gold Loan Market Hits ₹18.6 Lakh Crore, Overtakes Personal Loans

India’s organised gold loan market has expanded nearly fourfold over the past five years, reaching a valuation of ₹18.6 lakh crore by March 2026. This significant growth positions gold loans as the second-largest asset class within the retail lending sector, surpassing personal loans.

According to a report by Motilal Oswal, this segment now trails only home loans in size. Data from CRIF further indicates that gold loans constitute 15.7% of consumption loans, demonstrating their growing prominence in the financial landscape.

Understanding the Market Expansion

Retail gold loans among banks have recorded a remarkable 78% CAGR over the last three years, solidifying their position as the fastest-growing retail asset class. The industry’s gold loan book is projected to continue its ascent, growing at a CAGR of 28% from FY26 to FY28.

This trajectory suggests the market could exceed ₹30 lakh crore by March 2028. The structural growth is underpinned by several factors that contribute to increasing acceptance and demand for gold-backed financing.

• Market expansion has been aggressive, supported by improved processes.
• A strong upward trend in gold prices has made gold a more attractive collateral.
• Low penetration among households signals vast untapped potential for future growth.
• Increasing acceptance of gold loans as a viable financing option.
• The entry of more banks and diversified non-banking finance companies (NBFCs) into the sector.

Untapped Potential and Beneficiaries

A substantial opportunity for further expansion lies in the vast amount of gold held by Indian households. This is estimated at around 28,000 tonnes, valued between ₹380-390 lakh crore.

Currently, only about 8% of this household gold stock has been monetised through the organised gold loan market. Gold loans are also gaining significant traction across diverse borrower segments, offering distinct advantages.

• Micro, Small, and Medium Enterprises (MSMEs) benefit from quicker access to funds.
• Microfinance borrowers find gold loans a flexible and accessible option.
• Personal loan customers are drawn to the minimal documentation requirements.
• Benefits include faster disbursal and flexible repayment structures.

Evolving Competitive Dynamics

The competitive landscape within the gold loan sector is undergoing considerable evolution. Public sector banks (PSBs) currently command approximately 60% of the overall gold loan market, a figure that includes agriculture-linked gold loans.

Gold-focused NBFCs have seen their market share increase from 6% in November 2023 to 8% in November 2025. Motilal Oswal anticipates a shift in market dynamics as large private banks and diversified NBFCs increase their focus on higher-ticket gold loans.

This intensified competition is expected to lead to a moderation in gold loan margins, though overall profitability is projected to remain healthy. Concerns persist regarding potential risks such as repeat borrowing, overleveraging, and any stagnation in gold tonnage or new customer acquisition.