India's gold loan market is experiencing a significant boom, with assets under management (AUM) rocketing from approximately ₹6.3 lakh crore in March 2023 to an estimated ₹19.4 lakh crore by March 2026. This impressive growth trajectory has captivated major financial players, leading to increased investment and consolidation within the sector.
One of the latest entrants is Tata Capital, the diversified non-banking financial company (NBFC) arm of the Tata Group. The company recently announced its proposed acquisition of Yogakshemam Loans Limited (Yogloans), a Kerala-based RBI-registered NBFC specializing in gold loans. Yogloans currently operates 162 branches across southern India and managed an AUM of ₹708 crore as of March 31, 2026. Tata Capital's MD and CEO, Rajiv Sabharwal, stated that this move strategically adds a secured lending product with substantial growth potential to its retail lending portfolio, diversifying its financial services.
The surge in the gold loan market is primarily driven by escalating gold prices, which have seen a significant uptick between 2024 and 2025 due to global geopolitical uncertainties and heightened investment demand. Higher gold values enable borrowers to secure larger loans against the same amount of pledged gold or pledge less gold for their required funds, making it an increasingly attractive option for individuals seeking quick and secured credit.
Data from Experian highlights the sector's explosive expansion, with gold loan sourcing growing by 84% year-on-year in FY2026 and 69% in FY2025, outperforming other retail credit products. The average loan ticket size has also doubled, from ₹0.98 lakh in FY2023 to ₹1.96 lakh in FY2026, indicating a growing capacity and demand for larger loan amounts. A TransUnion CIBIL report from April 2026 noted that gold loan balances now constitute 11.1% of India’s retail credit portfolio, a substantial increase from 5.9% in March 2022.
While public sector banks traditionally held the lion's share of the market, accounting for nearly 58%, NBFCs are rapidly gaining ground. Their market share reached 20% by March 2026, showing a consistent 5% year-on-year growth in both FY2025 and FY2026. This growing traction has also attracted global investors, as seen with Bain Capital acquiring joint control in Manappuram Finance in 2025. Similarly, L&T Finance acquired the gold loan business of Paul Merchants Finance (PMFL), subsequently doubling its gold finance book to ₹3,829 crore in the first quarter of FY2027.
Analysts from HDFC Securities suggest the addressable market for gold loans remains vast, with only about 10% penetration, indicating immense potential. They also point to lucrative unit economics for NBFCs, characterized by high yields and minimal credit risk due to the physical gold collateral. However, the business is not without its challenges; it is highly branch-led and prone to operational risks such as fraud, theft, and auctions. Rising competitive intensity is also expected to put pressure on yields, requiring robust operational efficiency and risk management.