The gold loan market in India is preparing for a massive surge. According to a new report by Icra Ratings, the total gold loan portfolio in the country is expected to reach ₹30 lakh crore by March 2028. This is a big jump from the ₹18 lakh crore estimated for March 2026. Both banks and Non-Banking Financial Companies (NBFCs - financial firms that do not have a full banking license) are aggressively expanding their gold loan books as other types of lending become riskier.

In the upcoming years, NBFCs are expected to grow faster than traditional banks. The report predicts that NBFC gold loan assets will grow at a rate of 35% every year until 2028. During the same period, banks are expected to grow their gold loan portfolios at a rate of 30%. Because of this fast growth, NBFCs will likely increase their market share to 23% by the end of the 2028 financial year. However, high competition might lower the profit margins for these firms.

Looking back at the last two years ending in March 2026, the sector has already seen incredible momentum. The overall gold lending market grew by 38% annually. During this time, banks grew their books by 35%, while NBFCs saw a massive 54% growth. These numbers show that gold loans have become a favorite product for Indian lenders lately. This shift is partly due to rising stress in unsecured lending (loans given without any collateral like property or gold).

Bankers should note that the growth is not just coming from more people pledging gold. Most of the growth is actually driven by higher gold prices. When the price of gold goes up, the value of the collateral increases, allowing banks to give out bigger loans against the same amount of gold. In fact, the actual weight of gold held as collateral by large players only grew by 3-4% between 2022 and 2026, even though the total loan amounts grew by 24%.

For bank officers, the retail gold loan segment is the one to watch. Bank retail gold loans nearly doubled during 2025-26. While some of this is due to new demand, part of it also comes from the reclassification of loans. Many loans that were previously labeled as agriculture loans are now being moved to the retail category. Meanwhile, gold loans for agriculture and other specific uses grew at a slower pace of around 25%.

The future looks bright for this segment because credit losses are generally very low. Since gold is a liquid collateral (something that can be easily sold for cash), banks can quickly recover their money if a borrower fails to pay. Many large NBFCs are also opening new branches and acquiring smaller companies to reach more customers, which will keep the competition high for traditional bank branches.

To keep up, bank aspirants and current staff should focus on understanding Loan-to-Value (LTV - the ratio of a loan to the value of the asset purchased) ratios and gold price fluctuations. As the market reaches the ₹30 lakh crore mark, the focus will shift towards how lenders manage their profit margins while fighting for the same customers in a crowded market.