₹16.2 Lakh Cr Gold Loans: Is Rapid Growth Raising Regulatory Risks?

Synopsis: Macquarie has warned that gold loan growth is accelerating at an unsustainable pace, drawing parallels with past RBI crackdowns on fast-growing credit segments, signalling rising policy and stability risks ahead.

Gold-backed lending in India has seen a sharp acceleration, with the overall portfolio scaling to Rs 16.2 lakh crore. The segment has emerged as one of the fastest-growing areas in retail credit, supported by rising gold prices, higher borrower leverage, and strong demand from both banks and NBFCs.

Despite strong stock performance from major gold financiers, the rapid pace of credit expansion has triggered caution from global brokerages like Macquarie. The key concern is not growth itself, but its speed, raising the risk of regulatory intervention that could reshape growth expectations in the sector

Stock to watch out for: Gold financier stocks have rallied in response to strong lending momentum, with Muthoot Finance up around 13 percent, Manappuram Finance gaining about 9.6 percent, and IIFL Finance rising nearly 8.55 percent from the start of April. However, sentiment is tempered by growing regulatory concerns over possible RBI tightening measures.

Macquarie’s warning draws parallels with the RBI’s earlier crackdown on unsecured personal loans and microfinance in late 2023. At that time, excessive credit growth led to higher risk weights and tighter disbursement norms. The brokerage argues that gold loan growth running at more than twice the pace of personal loans for two consecutive years fits a similar historical pattern that typically invites regulatory intervention in India.

While RBI has already tightened norms via tiered LTV caps and repayment restrictions from April 2026, Macquarie argues these steps may be insufficient if growth persists. Further tightening through lower LTVs, higher risk weights, or stricter compliance could pressure gold financiers’ growth and margins.

Key Pointers

• Rapid Expansion of Gold Loan Portfolio: The gold loan portfolio has expanded 3.8 times since March 2022, emerging as one of the fastest-growing segments in retail lending. It has now become the second-largest retail credit category after housing loans, surpassing personal loans with a Rs 16.2 trillion portfolio in Q3FY26.
• Rising Borrower Leverage and Market Depth: RBI data shows credit against gold jewellery rose 127.6 percent year-on-year in December 2025 to Rs 3.82 trillion. Average loan per borrower increased from Rs 1.9 lakh to Rs 3.1 lakh, while ticket sizes have more than doubled, indicating stronger leverage and rising demand intensity.
• Gold Prices Driving Loan Expansion: Gold loan growth is tightly linked to surging gold prices. Gold has risen nearly 80 percent year-on-year as of Feb 2026, with prices above Rs 90,000 per 10 grams amid geopolitical tensions. Higher collateral values allow larger loans, inflating portfolios without new borrowers.
• Higher Valuations Boosting Loan Sizes: Higher gold valuations have lifted average loan sizes, with credit per borrower rising 1.8 times purely due to price appreciation. For lenders like Muthoot Finance, Manappuram Finance, and IIFL Finance, this creates a dual tailwind of rising borrower inflows and higher ticket sizes per customer.

Conclusion

The sharp expansion in gold lending, amplified by rising gold prices and aggressive portfolio growth, has created a structurally strong but increasingly sensitive credit segment. While current RBI measures have begun tightening underwriting standards, they may not be sufficient to fully moderate the pace of expansion if growth continues at elevated levels.

The sector remains fundamentally strong in the near term, supported by high collateral values and strong lender participation, but regulatory risk is clearly building. Any further tightening through LTV reductions, higher risk weights, or stricter compliance norms could gradually cap growth momentum and compress valuations in gold financier stocks.

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