Somewhere in your house, there’s probably gold that hasn’t seen daylight in years — a wedding chain, an old bangle, coins from a festival long forgotten. What if that gold could work for you instead of just sitting in a locker? Millions of Indians have already figured this out, and they’re turning idle jewellery into instant cash through gold loans.
The business has grown so fast, so quietly, that it now rivals some of banking’s biggest lending categories.
Motilal Oswal’s top pick amongst gold loan market stocks
Brokerage house Motilal Oswal expects India’s gold loan market to enter another strong growth phase, with the industry loan book projected to grow at a 28% compound annual growth rate (CAGR) between FY26-28. The brokerage expects the market to cross Rs 30 lakh crore by March 2028.
Its top picks in the segment are ICICI Bank, State Bank of India (SBI), Kotak Mahindra Bank, AU Small Finance Bank, Bajaj Finance and L&T Finance. Interestingly, none of the gold loans focused NBFCs made it to this list.
Gold loans have already become a major retail asset class
The gold loan segment has grown nearly four times over the past five years. It stood at Rs 18.6 lakh crore as of March 2026, making it the second-largest retail asset class after housing loans and ahead of personal loans.
Growth was particularly strong in FY26. The industry expanded 50% year-on-year. This was driven by a more than 60% increase in gold prices and rising demand from households and businesses looking to unlock the value of their gold.
The brokerage Motilal Oswal estimates that India’s gold loan book will grow at a 28% CAGR through FY28 and cross Rs 30 lakh crore by March 2028.
Banks could take a bigger slice
Public sector banks currently dominate gold lending. They accounted for around 60% of the market, including agricultural gold loans, as of March 2026.
Private banks and diversified NBFCs are rapidly expanding their gold loan businesses. Motilal Oswal report added, “Competition is intensifying as private banks and diversified NBFCs rapidly scale up operations.”
Why Muthoot Finance and Manappuram face a challenge
The changing competitive landscape could put pressure on gold-focused NBFCs such as Muthoot Finance and Manappuram Finance.
Motilal Oswal expects these companies to lose some market share as banks and diversified NBFCs expand.
The brokerage has maintained a ‘Neutral’ rating on both stocks. It estimates a 21% CAGR in gold loans for Muthoot Finance and 27% for Manappuram Finance between FY26 and FY28, compared with 28% growth for the overall industry.
“Gold -focus NBFCs will cede some market share,” added Motilal Oswal.
More competition could squeeze margins
As more banks and NBFCs enter the space, lenders could compete more aggressively on pricing. This could moderate product margins. Motilal Oswal expects margins across the industry to remain healthy, but sees some pressure from rising competition.
The brokerage house noted in its report, “For gold-focused NBFCs like Muthoot and Manappuram Finance, incremental earnings would be dependent on balance-sheet expansion rather than margin resilience.”
Gold-focussed financial companies: Key challenges
One key concern is repeat borrowing. The brokerage also wants investors to track gold tonnage and new customer additions. The report added, “A higher number of repeat borrowers does pose a threat of overleveraging in the sector.”
Only a small portion of India’s gold is monetised
Indian households are estimated to hold around 28,000 tonnes of gold. Yet, only about 8% has been monetised through the organised gold loan market.
Motilal Oswal expects rising acceptance of gold loans, better processes and wider lender networks to help unlock this opportunity.
RBI rules could reshape the sector
The Reserve Bank of India (RBI) is increasing its vigilance on gold lending. While tighter oversight could create some short-term disruption, Motilal Oswal expects more uniform rules to eventually make the sector more transparent and scalable.
“Harmonised gold loan guidelines, lower penetration among households and higher acceptance of gold loan products are all likely to aid sustainable growth in the gold loan segment,” the report noted.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.