Top NBFCs flag early signs of stress in India's fast-growing gold loan market

Bank loans against gold rose 83% year-on-year to Rs 5.6 trillion in August 2026, according to the latest Reserve Bank of India (RBI) data. For non-bank lenders, gold loans increased 69% to Rs 3.6 trillion during the same period, separate RBI data showed.Banks and non-bank financial companies have stepped up lending against gold holdings as they consider such loans more secure, says report.New Delhi,Oct 22, 2026 11:45 ISTIndia’s gold loan market has grown rapidly over the past year, with banks and non-bank lenders stepping up lending against gold jewellery. However, two major non-bank lenders, Bajaj Finance and Piramal Finance, have flagged early signs of stress in this fast-growing segment, reported Reuters.While the level of overdue loans remains low, both lenders have pointed to risks that need to be tracked as gold-backed borrowing continues to rise.GOLD LOANS SEE SHARP GROWTHLoans against gold have emerged as one of the fastest-growing lending segments in India over the past year.Bank loans against gold rose 83% year-on-year to Rs 5.6 trillion in August 2026, according to the latest Reserve Bank of India (RBI) data. For non-bank lenders, gold loans increased 69% to Rs 3.6 trillion during the same period, separate RBI data showed. Banks and non-bank financial companies have stepped up lending against gold holdings as they consider such loans more secure.However, the rapid growth has also raised concerns about the repayment capacity of some borrowers.BAJAJ FINANCE FLAGS OVERDUE GOLD LOANS Bajaj Finance, which has a gold loan portfolio worth Rs 24,000 crore, reported an increase in the share of loans overdue by more than 30 days in its July-September quarterly results.The lender said its overall assets classified under Stage 2 and Stage 3, which reflect loans with signs of stress, rose by 15 basis points compared with the previous quarter.A significant part of this increase came from short-term gold loans, Bajaj Finance said. The company has now stopped offering these loans.The lender reported a nearly 30% year-on-year increase in consolidated profit after tax. However, its shares were trading 3.2% lower at Rs 926.80 on Wednesday at 12.40 pm, while the benchmark Nifty 50 index was down 0.6%.Brokerages also flagged other risks for Bajaj Finance, including rising inflation, likely RBI curbs on revolving credit and tighter commission rules introduced by the insurance regulator.PIRAMAL FINANCE WARNS OF EMERGING RISKSPiramal Finance has also highlighted risks linked to the rapid growth in gold-backed lending.During its call with analysts, the company's CEO, Jairam Sridharan, said nearly 35% of its customers had a gold loan from another financial institution.He also pointed to industry data showing that, in 2025-26, around Rs 4.7 trillion in gold loan disbursements went to customers who had other loans overdue by more than 90 days.Sridharan, however, said the presence of a gold loan did not necessarily indicate that a borrower was riskier.- Ends