Market for organized gold loans to rise to Rs 15 lakh crore by March 2027 in India: Report
Young women choosing jewelry from jewelry shop in Meena Bazaar, Red Fort, Delhi, India.
New Delhi| The market for gold loans offered by banks and non-banking financial companies (NBFCs) may increase to Rs 10 lakh crore in the current financial year and is expected to increase to Rs 15 lakh crore by March 2027. This information was given in a report released on Wednesday.
Rating agency ICRA said that banks have more market share in gold jewelery backed agricultural loans. Public sector banks accounted for 63 per cent of the total gold loan book in March 2024. In March 2019, the figure stood at 54 percent. However, there has been a slight slowdown in the market share of NBFCs and private banks during this period. NBFCs’ share in the gold loan market could rise to 17 to 19 per cent in FY25.
In recent times, the trend of growth in NBFC gold loans has been influenced by other loan products like micro-finance, personal loans etc. which target similar categories. The report pointed out that the organized gold loan market had grown at a compound annual growth rate (CAGR) of 25 per cent between FY20 and FY24. During this period, the gold loan book of banks grew at a CAGR of 26 per cent and the NBFC gold loan book at a CAGR of 18 per cent.
Between FY20 and FY24, agricultural loans backed by gold jewelry in banks had grown at a CAGR of 26 per cent. At the same time, retail gold loans had grown at a CAGR of 32 per cent. The reason for this is the small base.
According to the ICRA, ABFC’s glode loan book could grow from 17 to 19 percent in FY25. At the same time, it is projected to grow at a CAGR of 14 to 15 per cent between FY26 and FY27.
