AUM of gold-loan NBFCs to cross ₹4 trillion by end-FY27: Crisil Ratings

Crisil Ratings projects gold-loan NBFC AUM to cross ₹4 trillion by FY27, driven by high gold prices, a shift to secured credit and easing LTV norms

Assets under management (AUM) of non-banking financial companies (NBFCs) specialising in gold loans are projected to cross ₹4 trillion by March 2027, supported by elevated gold prices, a growing preference for secured credit and regulatory easing, according to a report by Crisil Ratings.

 

According to the rating agency, gold-loan NBFCs are expected to post a robust compound annual growth rate (CAGR) of around 40 per cent between FY25 and FY27, sharply higher than the 27 per cent CAGR recorded between FY23 and FY25.

 

The surge comes amid a sharp rally in gold prices, which have risen nearly 68 per cent in the first nine months of the current fiscal, significantly enhancing collateral values and enabling lenders to increase loan disbursements.

 

Aparna Kirubakaran, director, Crisil Ratings, said: “Large gold-loan NBFCs, having an established brand image, are scaling up their portfolio across existing branches. Meanwhile, their mid-sized counterparts are adopting a dual strategy of expanding their branch network as well as operating as originating partners for large NBFCs and banks.”

 

She said these efforts, combined with strong demand amid elevated gold prices, have boosted business per branch for gold-loan-focused NBFCs by 40 per cent over the last two fiscals. Average AUM per branch stood at ₹14 crore in the first six months of this fiscal compared to ₹10 crore in fiscal 2024.

 

Crisil noted that stress in the unsecured lending segment — triggered by asset quality concerns, tighter underwriting norms and regulatory action — has reduced the availability of unsecured credit. This has prompted borrowers to shift towards secured credit options such as gold loans, which offer faster processing, flexible repayment structures and easier access to funds.

 

Large gold-loan NBFCs are leveraging their established brand presence to scale up lending through existing branches, while mid-sized players are pursuing a dual strategy of expanding branch networks and acting as loan-originating partners for banks and larger NBFCs. These initiatives have led to a sharp increase in productivity, with average AUM per branch rising by about 40 per cent over the past two fiscals to nearly ₹14 crore in the first half of the current fiscal, compared with around ₹10 crore in FY24.

 

Prashant Mane, associate director, Crisil Ratings, said: “Demand for gold loans is also being underpinned by a shift among borrowers from unsecured to secured credit. Following asset quality challenges in the unsecured lending space, which was followed by stringent underwriting practices adopted by lenders and stricter regulatory actions, credit availability through this route declined substantially.”

 

The sector is also expected to benefit from regulatory streamlining of loan-to-value (LTV) norms for lower-ticket gold loans, effective April 1, 2026. Revised norms could allow higher borrowing against the same quantity of gold, improving credit availability and making gold loans more attractive to borrowers, Crisil said.

 

However, the agency cautioned that sustaining growth will depend on effective risk management. Higher disbursements at elevated LTVs reduce buffers against gold price volatility, making close monitoring of LTVs, disciplined auction practices and strong operational controls critical. Increasing competition from banks in the gold loan segment will also test the ability of NBFCs to maintain growth momentum, Crisil added.