It is a segment of the lending business that just keeps expanding – loans against gold jewellery were Rs 5.52 lakh crore as on 31 July, 2026, as compared to Rs 2.93 lakh crore a year earlier, according to data recently released from the RBI.
The growing importance of gold loan financing to meet business or personal fund requirements is once again highlighted by the above strong growth in gold loans.
The continued surge in gold loans has also attracted other leading NBFCs to enter this segment – Aditya Birla Capital recently entered this segment. The company plans to open up to 1,000 dedicated branches over the next three years.
Also, Tata Capital , a leading NBFC, recently entered into gold loans business by acquiring nearly 89 per cent stake in Kerala-based Yogakshemam Loans (Yogloans).
This has resulted in intense competition in the booming gold loan segment – PSU and private sector banks along with small finance banks are also growing aggressively, and give stiff competition to the two leading gold loan NBFCs, Muthoot Finance and its smaller rival, Manappuram Finance .
Gold loans have very high margins and this has resulted in different types of financial institutions entering this segment, in a bid to offset the ‘soft’ interest rate environment of the RBI.
No doubt, loan growth for the two leading gold loan NBFCs, Muthoot Finance and its smaller rival, Manappuram Finance has been buoyant in the June 2026 quarter. Gold prices in Mumbai are currently at Rs 1.58 lakh per 10 gram.
However, intense competition in this segment is being reflected with Muthoot Finance’s net interest margins (NIM) at 10.4% as compared to 12.15% a year earlier.
For perspective, HDFC Bank , the largest private sector bank, earlier highlighted its NIM (net interest margin) was 3.4% based on interest earning assets as compared to 3.5% a year earlier.
Nevertheless, rising competition in the gold loan segment has not gone unnoticed by investors.
Market Correction: Factoring in the ₹510 Crore Impairment Hit
Muthoot Finance, ended 2.8% lower at Rs 2,905 on Tuesday, and the stock is trading above its 52-week low of Rs 2,649.4 that was reached on 1 September, 2025.
Meanwhile, Manappuram Finance ended 1% lower at Rs 337.6 on Tuesday. The stock had a 52-week high of Rs 381.4 on 30 July, 2026, given the superior loan growth it reported (view table below).
To get a greater insight on the gold loan business, we looked at the operational performance on various parameters of Muthoot Finance and Manappuram Finance.
The AUM Divide: Why Manappuram’s 97% Growth Outpaces the Industry Leader
The two leading gold loan NBFC reported very strong growth in loans in the first quarter of a financial year, which is typically a ‘slack’ period for credit, and it is commendable.
For instance, Muthoot Finance, the country’s largest gold loan financier, highlighted its standalone gold loan AUM (asset under management) grew by a buoyant 44.3% y-o-y to Rs 1.63 lakh crore.
Meanwhile, smaller rival, Manappuram Finance’s standalone gold loans AUM was Rs 54,655 crore, a growth of staggering 97.4% y-o-y.
Muthoot Finance v/s Manappuram Finance in the June 2026 quarter
| Standalone loan growth y-o-y (%) | NIM / Yields (%) | Standalone net profit growth y-o-y (%) | |
| Muthoot Finance (gold loan business) | 44.3% | 10.4% | 24.6% |
| Manappuram Finance (gold loan business) | 97.4% | 17.7% | 40.7% |
The growing importance of gold as a collateral for loans is highlighted with Manappuram Finance pointing out the average ticket size of online gold loan at Rs 1.35 lakh as compared to Rs 85,200 a year earlier.
The core gold loan business is reflected in the standalone results of both the NBFCs.
The 10.4% Margin Squeeze: How New Entrants Are Eroding Legacy Spreads
Gold loan NBFCs have broadly been able to protect their NIMs / spread, despite the ‘soft’ interest policy of the RBI for several quarters. However, with rising competition in the high margin gold business, one is witnessing pressure on NIMs on gold loan NBFCs.
Muthoot Finance has highlighted net interest margin (NIM) of 10.4% as compared to 12.15% a year earlier.
Manappuram Finance has not provided its NIMs in the results presentation. It has highlighted gold yields of 17.7% as compared to 17.1% in Q4FY26 along with FY26.
Asset Quality Check: Unpacking the 107% Surge in Bad Debt Provisioning
Muthoot Finance’s net stage 3 loan assets to gross loan assets was 1.99% as against 2.1% a year earlier. The ratio of stage 3 loan assets to gross assets is a financial metric that shows the proportion of a financial institution’s loans that are considered non-performing or past due, typically by more than 90 days.
However, its impairment of financial instruments rose 48.5% y-o-y to Rs 510.3 crore. Muthoot Finance in its results presentation has highlighted a rise in bad debts written off y-o-y in the quarter.
Nevertheless, a strong demand for gold loans helped Muthoot Finance’s standalone net profit rise nearly 24.6% y-o-y to Rs 2,550 crore.
Meanwhile, Manappuram Finance has highlighted its net stage 3 loan assets to gross loan assets was 1.1% as compared to 2.56% a year earlier.
However, its impairment on financial instruments rose 107.2% y-o-y to Rs 148.5 crore.
A strong growth in loans helped Manappuram Finance’s standalone net profit grow 40.7% y-o-y to Rs 551.8 crore.
The ₹5.5 Lakh Crore Catalyst: Inflation and the Digital Collateral Shift
The yellow metal has been a traditional savings avenue for Indian households with nearly 25,000 to 27,000 tonnes held in the country and valued at between $ 4-6 trillion, as per various estimates. And with employment opportunities getting harder and / or incomes not keeping up with inflation in prices of goods and services (especially in urban area), households are increasingly mortgaging their gold with NBFCs and banks to raise funds for business, marriages or meeting family emergencies.
This in turn has created new business opportunities for banks and NBFCs with new loan customers being increasingly acquired digitally along with online loan repayment options.
Capital Allocation: The True Driver of NBFC Valuations
Muthoot Finance had a ROE of 30.6% on a standalone basis, according to Screener.in, and it was 11% for Manappuram Finance.
HDFC Bank’s ROE was 14% on a standalone basis, according to Screener.in
Muthoot Finance is the most efficient user of capital
| Standalone Return on Equity (%) | |
| Muthoot Finance | 30.6% |
| Manappuram Finance | 11% |
| HDFC Bank | 14% |
The 33% Valuation Gap: Pricing in the ₹1 Lakh Crore Borrowing Expansion
Muthoot Finance trades on the preferred valuation matrix – price to (standalone) book value of 3 times, according to Screener.in, while it is 2 times for Manappuram Finance.
For perspective, HDFC Bank trades on the above valuation matrix at 1.9 times, according to Screener.in.
Manappuram Finance trades at 33% discount to Muthoot Finance
| Price-to-(standalone) book value | |
| Muthoot Finance | 3 times |
| Manappuram Finance | 2 times |
| HDFC Bank | 1.9 times |
Meanwhile, Manappuram Finance has disclosed that it has sought enhancement of borrowing limits to Rs 1 lakh crore subject to shareholder approval. The above fund raising by Manappuram Finance comes at a time when demand for gold loans is expected to remain strong, going forward.
However, with the entry of more NBFCs in this segment, investors will be paying close attention to NIM and asset quality, amongst other operational parameters, of Muthoot Finance and Manappuram Finance.
Readers can add Muthoot Finance and Manappuram Finance to their watch list of stocks for 2026 , and see if their performance matches expectations.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family have no shareholding in any of the stocks mentioned in the article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.