Important StoriesRubio seeks greater energy trade with India; eyes Venezuelan crude refining opportunitiesGold loans lead NBFC growth; portfolio share touches double digitsFast tracking strategic petroleum reserves critical for India’s energy securityGovt not to regulate airfares; caps only in exceptional casesAssets of AIFs grow to ₹7.59 lakh crore as of June 30Follow UsFOLLOW US ON WHATSAPPHomeGO BACK TO HOME THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. THIS AD SUPPORTS OUR JOURNALISM. SUBSCRIBE FOR MINIMAL ADS. Gold loans lead NBFC growth; portfolio share touches double digits Elevated gold prices and tighter unsecured lending are accelerating growth in gold loans By Ashokamithran T Updated - October 20, 2026 at 10:05 PM.×ShareWhatsAppXFacebookLinkedInMessengerRedditMailhttps://www.thehindubusinessline.com/money-and-banking/gold-loans-lead-nbfc-growth-portfolio-share-touches-double-digits/article71605139.eceCopy Gold necklace ornaments expensive and wealthy asset of Indian women. The brand new Indian currency bank notes of 50, 200, 500 and 2000 rupees bundle. Success and got profit from business. GST tax on goods and service. Wealth creation concept. | Photo Credit: santhosh_varghese

Gold loans have become the fastest-growing segment for NBFCs, with their share of overall loan books reaching double digits as lenders increasingly pivot towards secured credit amid stress in unsecured lending and microfinance.

Gold loans accounted for nearly 10 per cent of the combined loan book of Bajaj Finance, HDB Financial Services, L&T Finance and IIFL Finance in the September quarter, up from 9.3 per cent in the preceding quarter and 6.23 per cent a year earlier, highlighting the segment’s rapid expansion. The combined gold loan book of the four NBFCs stood at nearly ₹1 lakh crore during the quarter ended September 2026, compared with ₹48,831 crore in the year-ago period, reflecting a 98.6 per cent year-on-year growth.

Among the four lenders, IIFL Finance remained the largest player in the gold loan segment, with a gold loan book of ₹65,729 crore, accounting for nearly 53 per cent of its total assets under management (AUM) of ₹1.24 lakh crore during the quarter. The share has risen steadily from about 50 per cent in the previous quarter and 38.4 per cent a year earlier. Gold loans at the company grew 90 per cent year-on-year from ₹34,577 crore in the second quarter of FY26.

Nirmal Jain, Chairperson of IIFL Finance, said, “Higher gold prices have increased the borrowing capacity of households and small businesses with gold as collateral. At the same time, tighter conditions in unsecured lending and microfinance have prompted many borrowers to shift towards gold loans.”

“Despite geopolitical uncertainties, economic activity remains resilient, with improving business sentiment driving demand for credit among small enterprises,” he said.

Other lenders also scaled up their gold loan businesses aggressively. Bajaj Finance, L&T Finance and HDB Financial Services more than doubled their gold loan books over the past year. Notably, gold loan portfolios at Bajaj Finance and HDB Financial Services doubled year-on-year, while L&T Finance reported a three-fold increase, albeit on a smaller base.

The company said the sharp rise was aided by a low base and reiterated its intention to continue expanding in the segment. “Growth in our gold loan business is being driven primarily by rapid branch expansion. We added more than 200 branches this quarter and plan to add another 300 by year-end, taking the total to around 800,” said Sudipta Roy, MD & CEO, L&T Finance.

At Bajaj Finance, gold loan AUM surged 105 per cent year-on-year to Rs 24,195 crore in the September quarter from Rs 11,789 crore a year earlier. On a sequential basis, the portfolio expanded 14.4 per cent, outpacing the company’s overall gross loan book growth of 6.4 per cent by nearly eight percentage points.

HDB Financial Services, a relatively new entrant in the segment, reported a gold loan book of Rs 2,007 crore during the quarter. Gold loans now account for 1.6 per cent of its gross AUM of Rs 1.24 lakh crore, compared with 0.9 per cent a year ago, when the company had lent Rs 990 crore against gold.

The strong expansion comes even as global gold prices have cooled after a sharp rally that saw prices rise by as much as 60 per cent in 2025. Industry executives, however, believe elevated gold prices continue to support strong demand for loans against the precious metal.

At the same time, some lenders are beginning to flag emerging risks in the segment. Piramal Finance in its analyst call noted that 15-23 per cent of gold loan disbursements across the industry over the past year were reportedly extended to customers who were already more than 90 days past due on another live loan. The company also highlighted rising gold loan penetration, with the share of customers holding an active gold loan elsewhere increasing to more than 35 per cent, from 20-25 per cent two years ago.

NBFCs are aggressively lending against gold because of strong demand, said Piran Engineer, Head of Research at CLSA. “Even as the gold rally has moderated, the year-on-year gold prices are still up, so companies are expanding aggressively,” he added.

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.

Terms & conditions | Institutional Subscriber