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PSU Banks Tighten Grip on Gold Loans as NBFCs Gain Volume Share

Public sector banks have consolidated their dominance, accounting for nearly 60% of the total gold loan portfolio outstanding as of November 2025. In contrast, gold-loan-focused NBFCs hold a smaller value share but command a significantly higher share of active borrower accounts, highlighting a split in business models. The overall gold loan portfolio grew by 41.9% year-on-year, driven more by larger loan sizes than new borrowers. With new RBI guidelines coming into force, competitive dynamics between banks and NBFCs are expected to intensify further.

Key Points: PSU Banks Dominate Gold Loan Value, NBFCs Lead in Volume

  • PSU banks hold 60% of loan portfolio value
  • NBFCs command 16.6% of active accounts
  • Gold loan portfolio surged 41.9% YoY
  • Asset quality improves across lender types
2 min read

PSU Banks tighten grip on gold loans even as NBFCs gain volume share: CRIF Report

CRIF report shows PSU banks hold 60% of gold loan value, while NBFCs lead in borrower accounts. Market splits between high-value and high-volume lending.

"PSU Banks are increasingly skewed towards higher-value loans, while NBFCs continue to dominate smaller-ticket, high-volume lending. - CRIF High Mark Report"

New Delhi, January 28

Public sector banks have further consolidated their dominance in India's gold loan market, even as gold-loan-focused non-banking financial companies steadily expand their presence in terms of borrower volumes, according to CRIF High Mark's latest CreditScape: Gold Loans in India report on Wednesday.

As of November 2025, PSU Banks accounted for nearly 60% of the total gold loan portfolio outstanding, strengthening their leadership position over the past two years. Their growing share reflects a strategic tilt towards secured lending, as banks prioritise strong collateral amid elevated gold prices and a cautious broader credit environment, the report said.

In contrast, gold-loan-focused NBFCs, while holding a smaller 8.1% share of portfolio outstanding, commanded a significantly higher 16.6% share of active gold loan accounts. This divergence highlights a clear split in business models: PSU Banks are increasingly skewed towards higher-value loans, while NBFCs continue to dominate smaller-ticket, high-volume lending.

The report notes that overall gold loan portfolio outstanding surged 41.9% year-on-year in November 2025, far outpacing growth in total retail and consumption loans.

However, the number of active gold loan accounts grew by just 10.3%, underscoring that growth is being driven more by larger loan sizes rather than new borrowers.

Private sector banks, meanwhile, saw a gradual erosion in both value and volume share, squeezed between PSU Banks' balance sheet strength and NBFCs' operational agility.

Analysts attribute this shift to PSU Banks' ability to fund large-ticket loans at lower costs, while NBFCs leverage specialised gold loan operations, faster processing, and deeper penetration in semi-urban and rural markets.

Despite rapid expansion, asset quality across lender types has improved. Early-stage delinquencies declined across the board in 2025, supported by rising gold prices and strong recovery mechanisms.

PSU Banks reported some of the lowest levels of late-stage delinquencies, while gold-focused NBFCs showed sharp improvement in early delinquencies, reflecting tighter underwriting and portfolio monitoring.

With new RBI guidelines on gold loans, introducing differentiated loan-to-value norms and tighter processes for smaller-ticket loans, set to be fully implemented by April 2026, industry experts expect competitive dynamics between banks and NBFCs to intensify further.

As gold loans cement their role as one of the fastest-growing segments in retail credit, the market appears headed towards a two-track structure: PSU Banks deepening their hold on high-value loans, and NBFCs expanding reach through volume-led growth at the bottom of the pyramid.

- ANI

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Reader Comments

P
Priya S
The split makes perfect sense. My uncle in a tier-3 city took a small gold loan from an NBFC last year for his daughter's admission. It was processed in hours! For bigger amounts like for a business, he would definitely go to SBI. NBFCs fill a crucial gap in accessibility. 👍
A
Aman W
While the growth is impressive, I'm concerned about the "two-track" structure it's creating. It feels like the big, established players (PSU Banks) are catering to the already well-off with large loans, while NBFCs serve the smaller, possibly more vulnerable borrowers. Hope the new RBI guidelines ensure fair treatment for all.
S
Sarah B
Interesting data. The 41.9% portfolio growth vs. only 10.3% account growth is stark. It clearly shows people are borrowing more against the same gold due to rising prices, not that more families are opting for it. This could be a sign of stress or just smart leveraging of an asset.
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Vikram M
Gold is our ultimate fallback. In villages, many still don't have proper credit scores. A gold loan from a local NBFC branch is often the only option during emergencies. Glad to see asset quality is improving. It means the system is working, and people are repaying.
K
Karthik V
Private banks losing share is surprising. They usually try to be agile. Maybe their interest rates are not competitive enough? PSU banks have the advantage of lower cost of funds. For the customer, more competition is always better. Let's see what happens after the 2026 RBI rules.

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