India’s organised gold loan market is projected to double in value to ₹14.19 lakh crore over the next five years, despite anticipated moderation in growth due to stricter regulations, according to a PwC India report.
The report, titled "Striking Gold: The Rise of India’s Gold Loan Market," reveals that the market was valued at ₹7.1 lakh crore in fiscal 2023-24. It is expected to grow at a compound annual growth rate (CAGR) of 14.85% to reach ₹14.19 lakh crore by FY 2029.
Indian families hold an estimated 25,000 tonnes of gold, valued at approximately ₹126 lakh crore. However, the gold loan market is anticipated to experience moderate growth in the next two years due to increased regulatory scrutiny, particularly concerning loan-to-value (LTV) maintenance and auction procedures.
The report highlights that the temporary inactivity of the second-largest gold loan player could impact market growth in FY25. Additionally, the Reserve Bank of India’s advisory limiting cash disbursal to ₹20,000 might drive customers toward the unorganised sector.
The RBI's concerns about fintech lending evaluations have also contributed to a decline in the share prices of major non-banking financial companies (NBFCs).
"Gold loan lenders are expected to use this period to comply with regulatory guidelines while enhancing their operations through digital initiatives," said PwC. The report notes that rising gold prices may lead lenders to adopt cautious lending rates to avoid LTV breaches and operational issues.
The growth of the gold loan market is projected to be driven by both banks and NBFCs, with digital gold loan aggregator platforms playing a key role. These platforms, in collaboration with banks and NBFCs, are expected to tap into a new segment of digitally savvy customers.
PwC's Jaikrishnan G, Partner (Financial Services), commented, "Gold loans, being one of the oldest forms of credit, continue to be an attractive option for both consumers and lenders. With high return-on-assets and manageable risk, they are well-positioned to support the growing needs of small and medium enterprises."
South India remains the dominant market, accounting for 79.1% of outstanding gold loans. The report also notes that not all of the ₹126 lakh crore worth of gold will be available for pledging due to factors such as jewellery with religious or emotional significance.
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