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Indian gold market and loan sector trends

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2026-09-08 04:12 UTC → 2026-09-08 21:11 UTC · added ~~removed~~

The Indian gold market has entered a period of recovery and expansion. Following a price correction in June, domestic gold prices stabilized in July and began rising in early August, with prices in rupee terms gaining approximately 7 percent during the first two weeks of that month. This recovery was supported by factors including shifting monetary policy expectations, a weaker U.S. dollar, and increased gold ETF inflows. Consequently, gold imports into India doubled in July compared to June, and the jewelry market saw increased footfall as jewelers replenished inventory for the festive season. This upward trend in gold valuations has subsequently driven significant growth in the gold loan market. While some reports suggest growth is primarily fueled by surging valuations and repeat borrowing—with repeat customers accounting for 82 per cent of originations in 2025—other lenders have reported robust growth in both volume and customer base. For instance, Manappuram Finance saw its gold-loan assets under management rise by 97.9 per cent in Q1 FY27, supported by an 18.3 per cent increase in gold tonnage. Looking ahead, the gold lending sector is projected to achieve a 28% compound annual growth rate (CAGR) through FY28, positioning it as the second-largest consumer loan category behind home loans. This is driven by the formalization of credit and the underutilization of an estimated 28,000 tonnes of gold held by Indian households. However, the industry faces intensifying competition as public and private banks expand their offerings. Specialist NBFCs like Muthoot Finance have reported pressure on yields and declining net interest margins in 1QFY27, attributed to the moderation of gold-price-led growth and competition from diversified lenders such as Bajaj Finance, L&T Finance, and Shriram Finance. Despite government efforts to manage the national trade deficit, gold demand remains high.

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