The increase in assets under management of NBFCs (with a gold loan share of more than 50 percent in their assets under management) will be driven by higher gold prices, a shift towards secured credit and an evolved regulatory environment, which will exceed the 27% CAGR clocked between the 2023 and 2025 budgets, the report said.
“Gold prices rose 68 percent to a record high in the first nine months of this fiscal. This increases the value of collateral, allowing lenders to scale up disbursements,” the agency said.
Moreover, given the limited availability of credit from segments such as unsecured loans, borrowers are looking for other sources of financing.
The agency ruled that to capitalize on these lending opportunities, NBFCs with gold loans (both major: with a gold loan AUM of over ₹10,000 crore; and medium: with gold loan AUM of ₹100 crore to ₹10,000 crore ) have expanded their market presence despite stiff competition from banks.
Aparna Kirubakaran, Director, Crisil Ratings, said, “Large gold loan NBFCs, which have an established brand image, are scaling up their portfolios into existing branches. Meanwhile, their mid-market counterparts are adopting a two-pronged strategy of expanding their branch network and also acting as originating partners for large NBFCs and banks.
“These efforts, combined with strong demand amid high gold prices, have boosted sales figures
industry for gold loan-oriented NBFCs by 40% in the last two fiscals. Their average assets under management per branch stood at ₹14 crore in the first six months of this fiscal, compared to ₹10 crore in fiscal 2024.”
The agency noted that a crucial aspect of the growth story of gold loan NBFCs is managing competition. Over the years, these NBFCs have carved a niche by strengthening internal policies, improving underwriting capabilities and expanding into both prime and non-prime locations.
With banks also stepping up their presence in the gold loan space, the ability of gold loan NBFCs to maintain growth momentum while managing the competition will be a wait and see.
Regulatory front
On the regulatory front, streamlining Loan-to-Value (LTV) norms for gold loans with lower ticket size, applicable from April 1, 2026, is expected to provide additional leeway to NBFCs for lending.
The agency highlighted the potential benefits of allowing higher LTV of 85% and 80% (vs. 75% earlier) for quick repayment loans with a ticket size of less than ₹2.5 lakh (consisting of 50% of assets under management) and ₹2.5 – ₹5 lakh (20% of assets under management) respectively.
The analysis shows that the LTV for bullet loans with lower ticket sizes could potentially increase from 65-68% currently to 70-75% after the implementation of the revised LTV norms, even after taking into account accrued interest as per the revised LTV calculation guidelines.
The agency emphasized that the combined effect of higher gold prices and revised LTV norms will allow borrowers to avail more credit against the same amount of gold, increasing the attractiveness of gold loans.
Prashant Mane, Associate Director at Crisil Ratings, said, “Gold loan demand is also supported by a shift among borrowers from unsecured to secured credit. Due to asset quality challenges in unsecured lending, followed by strict underwriting practices of lenders and stricter regulatory measures, the availability of credit through this route has declined significantly.
“Against this backdrop, gold loans have emerged as a strong alternative source of credit, offering easy availability, fast turnaround times and flexible repayment options.”
Crisil Rating said that while the growth trajectory remains strong, effective management of inherent risks will be critical to support sustainable scale. An increase in demand and payouts at higher LTVs will ultimately lead to a lower buffer to manage gold price fluctuations. Therefore, tracking LTVs on a market value basis and maintaining discipline at auctions will be critical, especially in the event of a sharp drop in gold prices.
In addition, NBFCs providing gold loans will have to exercise strict control over risk management and operational procedures, including purity assessment, weighting measurement and authenticity evaluation of the pledged gold. In addition, periodic internal audits at branch level will be essential to avoid surprises in the auction phase.
Published on January 22, 2026
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