4 days ago
Corporate Entrants Intensify Competition in India’s Gold-Loan Market
India’s gold-loan business is attracting many large financial companies.
Muthoot Finance and Manappuram have traditionally been well-known lenders in this market.
Now companies such as Tata Capital, Aditya Birla Capital, Shriram Finance, L&T Finance and Godrej Finance are joining or expanding.
The market has grown very quickly and was worth ₹18.6 lakh crore by March 2026.
Analysts expect it to become even larger over the next two years.
More lenders may offer cheaper loans to win customers.
This could reduce the money that existing lenders earn from each loan.
Muthoot says running this business well requires special skills, branches and trusted customer relationships.
Tata Capital, Aditya Birla Capital, Shriram Finance, L&T Finance and Godrej Finance are entering or expanding in gold loans.
India’s gold-loan segment reached ₹18.6 lakh crore by March 2026, nearly quadrupling in five years.
The market is projected to grow at a 28% CAGR and exceed ₹30 lakh crore by March 2028.
New competition and larger loans are expected to pressure yields for established gold-loan NBFCs.
L&T Finance and Shriram Finance are planning major branch and gold-loan book expansions.
- Who
- Muthoot Finance, Manappuram and new or expanding lenders including Tata Capital, Aditya Birla Capital, Shriram Finance, L&T Finance and Godrej Finance.
- What
- Large corporate-backed non-bank lenders are intensifying competition in India’s gold-loan market through new products, acquisitions and branch expansion.
- Where
- India.
- When
- The changes are occurring in recent months; the market data cited covers March 2026, with growth projected through March 2028.
- Why
- The gold-loan segment has expanded rapidly and offers significant room for growth, while lenders seek borrowers, scale and market share.
New Entrants and Competitive Expansion
Incumbents and Operational Advantages
Pricing and yields
New Entrants and Competitive Expansion
New lenders can use their balance sheets and potentially lower funding costs to offer attractive rates and win borrowers.
Incumbents and Operational Advantages
Established lenders face pressure on effective yields; Muthoot Finance’s gold-loan yield fell 300 basis points sequentially to 17.93% in the first quarter of the current financial year.
Scale and distribution
New Entrants and Competitive Expansion
Corporate-backed lenders are pursuing acquisitions, new branches and existing customer networks to build gold-loan scale quickly.
Incumbents and Operational Advantages
Muthoot Finance argues that gold lending is operationally intensive and that focused players have advantages in appraisal, collateral management, servicing and branch execution.
Ability to challenge incumbents
New Entrants and Competitive Expansion
The sector’s rapid growth and banks’ 75% market share leave substantial headroom for new and existing NBFC lenders.
Incumbents and Operational Advantages
Analysts say customer trust, specialized expertise and established branch networks take considerable time and investment to replicate at scale.
Key facts
- Market size
- ₹18.6 lakh crore as of March 2026
- Five-year growth
- The segment has nearly quadrupled in the past five years
- Growth forecast
- 28% compound annual growth rate over FY26-FY28
- Projected market size
- More than ₹30 lakh crore by March 2028
- Market shares
- Banks hold 75% of the market; NBFCs hold 12%
- Aditya Birla Capital target
- 1,000 gold-loan branches in three years
- L&T Finance plan
- 500 dedicated gold-loan branches annually for four to five years
- Shriram Finance plan
- More than double its gold-loan book to ₹20,000 crore and enable 500 additional branches
Quotes
R Srinivasan
Vice President and Sector Head for Financial Sector Ratings at ICRA
“The increasing share of higher-ticket loans, driven by rising gold prices, is also placing gold loan NBFCs in competition with banks targeting a similar borrower segment, thereby adding to competitive pressures.”
financialexpress.com
“As lenders seek to establish scale, competitive pricing and targeted expansion are likely to exert pressure on yields, particularly in higher-ticket and relatively rate-sensitive borrower segments.”
financialexpress.com
George Alexander Muthoot
Executive Vice Chairman-designate of Muthoot Finance
“Focused gold loan players and also gold loan players have a difference, which people will realize after some time only. Because this is a very operationally challenging, operationally intensive business.”
financialexpress.com
Sources
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Aditya Birla Capital Enters Gold Loans, Plans 1,000 Branches Nationwide
Gold loans set for Rs 30 lakh crore by FY28
India’s Gold Loans Surge Fourfold Despite Low Household Gold Penetration
Indian Bank Gold Loan Portfolio Seen Surpassing ₹1.5 Lakh Crore
