Gold Loan Market Growth Driven by Higher Prices, Repeat Borrowing
The growth of India's gold loan market is being driven more by higher gold prices and repeat borrowing than new customers, according to a recent report by Motilal Oswal. The combined quantity of gold pledged with Muthoot Finance and Manappuram Finance has remained around 260-265 tonnes over the past couple of years, while their combined customer base has stayed around 9 million despite a surge in loans outstanding.
The report stated that recent asset under management growth has been driven largely by higher gold valuations and repeat borrowings rather than new customer acquisition or incremental collateral mobilisation. This trend means that the sharp rise in gold prices has increased the value of gold already pledged by customers, allowing lenders to extend larger loans without a corresponding increase in the physical quantity of gold being pledged.
The report also flagged the rising share of repeat customers as a key risk for the sector. Existing customers accounted for 82 per cent of gold loan originations in 2025, up from 76 per cent in 2022. Customers who already had a gold loan accounted for 90 per cent of originations.
Motilal Oswal expects the sector to continue growing strongly, estimating a compound annual growth rate of 28 per cent between FY26 and FY28, with the industry's gold loan book crossing ₹30 lakh crore by March 2028. However, it said stagnant gold tonnage, limited additions of new customers and the rising share of repeat borrowers will remain key factors to watch as the industry expands.