Glittering Growth : How India’s Booming Gold Loan Market Is Attracting Global Investors?

Despite gold prices soaring to record highs over the years, the allure of the yellow metal remains undiminished among Indians. According to a Morgan Stanley report released in October last year, Indians collectively hold more than 34,000 tonnes of gold, CNBC notes. Yet, much of this treasure remains largely dormant as about 90% of gold hoardings in Indian households sit idle, according to Shripad Jadhav, business head of gold loans at Kotak Mahindra Bank.

However, the CNBC report further noted that gold-backed lending is rapidly getting popular among Indians. Banks and non-banking financial companies (NBFCs) are increasingly leveraging India's dormant gold reserves to fund loans, attracting attention not only domestically but also from international investors.

RBI Data Reveals True Size Of The Gold Loan Market In India

Data from the Reserve Bank of India (RBI) showed that gold loans more than doubled over a single year, rising to Rs 4 trillion ($43.3 billion) in January 2026 from Rs 1.75 trillion the previous year. Today, gold-backed lending has emerged as the third-largest retail loan segment in India, after home and vehicle loans, and also ranks as the fastest-growing category of retail credit.

Traditionally, gold loans were concentrated in South India and semi-urban markets, especially among agricultural communities. However, the appeal of gold loans has changed today with middle-class families as well as high-net-worth individuals in major cities turning to gold-backed lending to address time-sensitive financial needs.

Yet, these RBI figures capture only a portion of the market. Yan Wang, chief emerging market strategist at Canadian firm Alpine Macro, estimates that the total size of gold loans in India is closer to Rs 14 trillion, CNBC reports. The beneficiaries of this trend have been prominent NBFCs, including Manappuram Finance and Muthoot Finance, India's two largest gold loan providers, with their shares performing well in the stock market over the past year.

The sector's growing prominence has also caught the eye of global investors. CNBC report stated that private equity giant Bain Capital announced plans to acquire up to a 41.7% stake in Manappuram Finance, a move approved by the RBI last month. Similarly, Japanese financial behemoth MUFG acquired a 20% stake in Indian banking firm Shriram Finance in December 2025, underscoring international confidence in the country's gold loan market. Shriram Finance, like other lenders, plans to expand its focus on gold-backed lending in the coming years.

With billions of dollars of idle gold circulating in households across India, gold loans are transforming a traditionally sentimental asset into a powerful engine for credit and investment. From small-town farmers to city-based high-net-worth individuals, more Indians are realizing that their jewelry can do more than decorate, they can generate liquidity, fund urgent financial needs, and even attract global capital.