13 hrs ago
Gold Loan Boom Widens Gap Between Leading NBFCs
Gold loans let people borrow money by pledging their gold jewellery.
In India, this type of borrowing grew very quickly during the year.
Manappuram Finance grew its gold-loan business faster than the larger Muthoot Finance.
Manappuram also reported stronger profit growth, but its bad-debt provisioning rose sharply.
Muthoot remained more profitable in return on shareholders’ money and had a higher valuation in the stock market.
More banks and finance companies are entering the gold-loan business.
This competition may reduce the extra interest income that established lenders earn.
Investors will be watching growth, loan quality, margins and future borrowing plans.
India’s gold loans reached ₹5.52 lakh crore by 31 July 2026, up from ₹2.93 lakh crore a year earlier.
Manappuram Finance’s standalone gold-loan assets grew 97.4% year over year, versus 44.3% growth for Muthoot Finance.
Manappuram reported a 17.7% gold yield and 40.7% profit growth, while Muthoot reported a 10.4% NIM and 24.6% profit growth.
Muthoot’s impairment rose 48.5% to ₹510.3 crore, while Manappuram’s increased 107.2% to ₹148.5 crore.
Manappuram trades at about two times standalone book value, compared with three times for Muthoot Finance, a roughly 33% discount.
- Who
- Muthoot Finance and Manappuram Finance are the main companies discussed, alongside new and established bank and NBFC competitors.
- What
- Gold loans expanded sharply, with Manappuram Finance growing faster than Muthoot Finance but trading at a lower price-to-book valuation.
- Where
- India, including gold prices reported in Mumbai.
- When
- The comparison concerns the June 2026 quarter and data through 31 July 2026.
- Why
- Households and businesses are increasingly using gold as collateral for funds, while lenders are entering the high-margin segment amid strong demand and softer interest rates.
Growth and Opportunity
Competition and Risk
Manappuram’s faster expansion
Growth and Opportunity
Manappuram’s gold-loan assets grew 97.4% year over year, well ahead of Muthoot’s 44.3% growth, and its standalone profit rose 40.7%.
Competition and Risk
Muthoot remains the larger gold-loan financier, with ₹1.63 lakh crore in standalone gold-loan assets compared with Manappuram’s ₹54,655 crore.
Valuation difference
Growth and Opportunity
Manappuram’s lower price-to-book ratio of two times could appeal to investors seeking a cheaper alternative to Muthoot Finance.
Competition and Risk
Muthoot’s three-times price-to-book valuation may reflect its higher 30.6% return on equity, compared with 11% for Manappuram.
Industry growth versus margin pressure
Growth and Opportunity
Gold loans reached ₹5.52 lakh crore, and strong demand could support continued growth for lenders.
Competition and Risk
New entrants, including Aditya Birla Capital and Tata Capital, are intensifying competition and may pressure margins; Muthoot’s NIM has already declined to 10.4%.
Key facts
- Gold loans outstanding
- ₹5.52 lakh crore as of 31 July 2026, compared with ₹2.93 lakh crore a year earlier.
- Muthoot gold-loan AUM
- ₹1.63 lakh crore, up 44.3% year over year.
- Manappuram gold-loan AUM
- ₹54,655 crore, up 97.4% year over year.
- Muthoot net interest margin
- 10.4%, down from 12.15% a year earlier.
- Manappuram gold yield
- 17.7%, compared with 17.1% in the previous quarter and FY26.
- Stage 3 loan ratio
- 1.99% for Muthoot Finance and 1.1% for Manappuram Finance.
- Return on equity
- 30.6% for Muthoot Finance, 11% for Manappuram Finance and 14% for HDFC Bank.
- Proposed borrowing limit
- Manappuram Finance has sought approval to raise its borrowing limit to ₹1 lakh crore.
Sources
Related news
Gold loans set for Rs 30 lakh crore by FY28
Aditya Birla Capital Enters Gold Loans, Plans 1,000 Branches Nationwide
How Indian Gold Loans Made Two Families Billionaires
Muthoot Fincorp Files ₹3,000 Crore IPO Draft with SEBI
NBFC gold jewellery loans jump 69%; RBI reports record growth
Indian Bank Gold Loan Portfolio Seen Surpassing ₹1.5 Lakh Crore
