According to a research released on Wednesday, the combined amount of organised gold loans given by banks and non-banking financial organisations (NBFCs) is expected to surpass Rs 10 lakh crore in the current fiscal year and reach Rs 15 lakh crore by March 2027.
According to rating agency ICRA, banks continue to dominate the market because of their agriculture loans guaranteed by gold jewellery. About 63% of all gold loans were made by public sector banks (PSBs) as of March 2024, up from 54% in the same month the previous year. During this same time, the proportions of NBFC and private banks decreased proportionately.
According to the survey, NBFCs are leading the way in retail gold loans and are predicted to grow at a rate of 17–19% in FY25.
In recent years, the growth trends of NBFC gold loans have been impacted by those of other loan products that target comparable customers, such as microfinance and unsecured business or personal loans.
“The NBFC gold loan book growth revived in FY24 and the trend is expected to continue into FY25, with intensifying headwinds for unsecured loans, resulting in lower growth vis-a-vis the previous fiscal, and supported by buoyant gold prices,” stated AM Karthik, Co-Group Head, Financial Sector Ratings, ICRA.
During the FY20–FY24 period, the market for organised gold plans grew overall at a compound annual growth rate (CAGR) of 25%. Banks were the main drivers of this expansion, with their loans growing at a higher CAGR of 26% while NBFCs expanded at a rate of 18%.
According to the research, bank gold loans expanded at a CAGR of 26% between FY20 and FY24, driven mostly by loans for agriculture backed by gold jewellery. On a lower base, bank gold loans grew by 32%.
ICRA estimates that NBFC gold loans would increase at a CAGR of 14–15% in FY26–FY27, after expanding at a rate of 17–19% in FY25.
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