Muthoot Finance MD George Alexander Muthoot
“The overall demand for credit is very good not only in rural areas but also in urban areas. Specifically for gold lending companies, the demand for gold loans is rising as other forms of financing including microfinance, unsecured personal loans, credit card loans and fintech loans are taking a back seat,” the MD said, adding that borrowers are now feeling more comfortable taking loans against gold as gold prices have also witnessed a rise.
Muthoot said many banks and NBFCs, which were previously not in the gold loan business, have started disbursing larger amounts of gold loans. Noting this trend last year, the Reserve Bank of India (RBI) revised its gold loan guidelines, specifying key regulatory requirements.
“Every time a new player comes along and compromises on the processes, the regulator will resolve the issue. With the revised guidelines, the regulator has clarified several business aspects. LTV (loan to value ratio) is just one aspect, there are many more factors including how gold should be stored, checking the quality of gold, the pricing aspect, auction norms and giving right returns to the customers,” Muthoot said.
He added that commercial banks currently have ₹13 lakh crore worth of gold loans on their books, while NBFCs have only ₹3 lakh crore and hence there is room for everyone to grow.
“Today, more people are willing to pledge their gold. Even wealthy people pledge gold, this is not a desperate move. Do not think that gold loans are taken by poor, underprivileged borrowers. Today, out of about 25,000 tonnes domestically, only 3,000 tonnes are in the gold loan market,” he said.
Muthoot Finance recently infused ₹500 crore of fresh capital into its wholly owned subsidiary Muthoot Money. Muthoot Money started as a financing company for used cars and used commercial equipment, but shifted to gold loans after the pandemic due to recovery issues. If the regulator informs that Muthoot Money will be merged with Muthoot Finance as both companies are in the same industry, the NBFC will follow the RBI’s instructions, the MD said.
Further, the NBFC expects to keep the net interest differential at around 11 percent and expects financing costs to decline by 15 to 25 basis points in the second half of FY26. It will take shareholder approval to raise up to ₹2 lakh crore in the current fiscal, including ₹35,000 crore through non-convertible debentures, and will raise money as deemed necessary, Muthoot said.
Published on November 14, 2025
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