Tata Capital, a diversified non-bank finance company (NBFC) and part of the prominent Tata Group, has officially entered India’s burgeoning gold loan market. The company announced its proposed acquisition of Yogakshemam Loans Limited (Yogloans), a Kerala-based NBFC specializing in gold-backed lending, on Monday, July 13, 2026.
This strategic move underscores the escalating interest among lenders and investors in a segment that has seen its assets under management (AUM) nearly triple in just three years, reaching an impressive ₹19.4 lakh crore by March 2026.
Tata Capital's Foray and Acquisition Details
The acquisition will see Tata Capital secure approximately 88.6% of Yogloans’ share capital upon completion. The transaction is structured around a pre-money equity valuation for Yogloans not exceeding ₹318 crore, with customary adjustments. Additionally, Tata Capital plans a primary capital infusion of about ₹93 crore into Yogloans to fuel its expansion plans.
Yogloans, an RBI-registered NBFC, operates a network of 162 branches across key South Indian states including Kerala, Karnataka, Tamil Nadu, and Andhra Pradesh. As of March 31, 2026, the company managed an AUM of ₹708 crore, serving roughly 32,000 gold loan customers. Rajiv Sabharwal, MD and CEO of Tata Capital, stated that this entry adds a secured lending product with significant growth potential to their retail portfolio, aligning with their strategy for a diversified lending franchise.
What's Driving the Gold Loan Boom?
The gold loan market's explosive growth is a direct response to several factors. Global geopolitical uncertainties and increased investment demand contributed to surging gold prices in 2024 and 2025. This rise benefits borrowers, allowing them to secure larger loans against the same amount of gold or pledge less gold for their required funds.
According to Experian, gold loan sourcing witnessed exponential year-on-year growth rates of 84% in FY2026 and 69% in FY2025, outperforming all other retail credit products. The average ticket size for gold loans has also doubled, from ₹0.98 lakh in FY2023 to ₹1.96 lakh in FY2026, indicating increased borrower capacity and demand for higher loan amounts.
Unlike unsecured personal loans, which have seen rapid growth but also raised concerns about potential delinquencies, gold loans offer a crucial advantage: physical gold as collateral significantly minimizes credit risk. A TransUnion CIBIL report from April 2026 highlighted that gold loan balances now constitute 11.1% of India’s retail credit portfolio, a substantial increase from 5.9% in March 2022.
Increasing Investor Interest and Market Dynamics
While public sector banks traditionally dominate the gold loan sector with nearly 58% market share, NBFCs, including prominent standalone players like Muthoot Finance, Manappuram Finance, and IIFL, are rapidly expanding their presence. Their collective market share reached 20% by March 2026, growing 5% annually in both FY2025 and FY2026.
This shift has attracted significant investor attention. In 2025, global private investment firm Bain Capital acquired joint control in Manappuram Finance. Similarly, Mumbai-based L&T Finance acquired the gold loan business of Paul Merchants Finance, subsequently doubling its gold finance book to ₹3,829 crore in Q1 FY27 from ₹1,360 crore a year prior.
Analysts at HDFC Securities point out the immense untapped potential, with only about 10% penetration in the addressable market based on gold holdings. They also note the lucrative unit economics for NBFCs, characterized by high yields and minimal credit risk. However, they caution about operational challenges inherent in a branch-led business model, such as fraud, theft, auctions, and high operating leverage. Rising competition is also expected to exert pressure on yields.