New Delhi. Gold loans are going to grow rapidly in India. According to rating agency ICRA, the organized gold loan market will cross ₹ 10 lakh crore this financial year and reach ₹ 15 lakh crore by March 2027. Retail gold loans from non-banking financial companies (NBFCs) are expected to grow by 17-19% in FY 2025.

From FY20 to FY24, the organized gold loan sector has witnessed a compound annual growth rate (CAGR) of 25%. Banks have contributed the most to this growth with a CAGR of 26%. While NBFCs have grown by 18%. Agricultural loans taken against the pledge of gold jewelry made a significant contribution with a growth rate of 26%.

Public sector banks (PSBs) have about 63% share in the gold loan market, which was 54% in March 2019. At the same time, the share of NBFCs and private banks has decreased. ICRA's A.M. Karthik said that the trend seen in other loan products has also benefited NBFC gold loans. Karthik said, "Gold loan growth resumed in FY 2024 and is expected to continue in FY 2025 as well."

Market concentration:
The NBFC gold loan market is in the hands of very few people. The top 4 companies have an 83% market share by March 2024. The credit cost of gold loans is very low at 0.5 percent. This shows how easy it has become to get a gold loan. One of the major reasons for getting a gold loan so easily is that gold is very liquid in nature, which means that it can be easily converted into cash.

Lenders moving online
Lenders are moving to online platforms to attract more customers. "Healthy growth, low loan costs, and better pricing power support gold loan companies," Karthik said. However, market regulators' measures to enhance operational efficiency will be necessary to make more profits.