How Are NBFCs and PSU Banks Set to Benefit from the ₹15 Lakh Crore Gold Loan Boom by FY26?
ICRA’s Outlook on India’s Expanding Gold Loan Market
India’s organised gold loan market is expected to reach nearly ₹15 lakh crore in FY26, one year ahead of previous projections, according to ICRA. The report highlights that NBFCs’ gold loan assets under management (AUM) could grow by 30–35% during FY26, supported by high gold prices, steady demand, and expansion of secured retail lending channels.
This impressive growth comes on the back of a strong performance in FY24–25, when the sector registered a ~26% CAGR. Notably, public sector banks (PSBs) grew faster at 27% CAGR compared to private banks at 22% CAGR, driven by increased agricultural and jewel-backed credit. The report underscores that robust gold prices are helping offset regulatory cost pressures for lenders.
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NBFCs: Driving the Next Phase of Gold-Backed Lending
ICRA’s analysis indicates that NBFCs remain pivotal to the gold loan growth story due to their agility, customer reach, and technological adoption. Firms like Muthoot Finance and Manappuram Finance are expected to be primary beneficiaries, leveraging regional penetration and digital tools for faster disbursals. The report adds that rising gold prices will cushion margin pressures, while strong collection efficiencies are expected to keep asset quality robust.
✅ Key Growth Driver: Digitisation of gold loan origination and collection platforms among NBFCs is enabling faster processing, better customer retention, and risk management even in volatile price cycles.
According to Gulshan Khera, CFP® — Main Strategist and Bank Nifty Expert at Indian-Share-Tips.com — gold loans have evolved from being cyclical to becoming structural growth assets for lenders. Khera observes that the shift in borrower behaviour, where households use gold as an active credit instrument, ensures steady NBFC demand despite changing interest rate cycles.
Public Sector Banks: Riding the Rural Lending Wave
Public sector banks (PSBs) are emerging as strong participants in the gold loan market, clocking an annual growth rate of 27% CAGR between FY24–25. The growth has been largely supported by agricultural lending programs, collateral-backed microcredit, and rural liquidity support schemes. As per ICRA, PSBs are expected to continue expanding their gold loan books, benefiting from branch-level penetration and government-backed inclusion initiatives.
💡 Insight: The resurgence of PSU banks in gold loans is a structural shift — reflecting renewed credit appetite in semi-urban India where gold remains a preferred borrowing asset. Strong gold prices further improve loan-to-value buffers, supporting lower credit risk across the system.
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📈 Outlook: The gold loan market’s structural resilience — supported by NBFC innovation and PSU bank penetration — positions it as one of the most stable credit segments through FY26, aligning with India’s broader financial inclusion goals.
Investor Takeaway
With India’s gold loan market expected to surpass ₹15 lakh crore by FY26, the growth narrative remains firmly supported by rising gold prices, diversified borrowers, and digital advancements. Both NBFCs and PSU banks stand to benefit as household savings increasingly get monetised into formal credit channels, paving the way for sustained lending expansion.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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