Private Banks Sharpen Gold Loan Play to Capture High-Value Market Share
Large private banks are expanding gold loan operations, targeting urban and higher-ticket segments, with industry growth projected at 28% CAGR through FY28.
Large private banks are significantly scaling up their gold lending operations, a move that analysts believe will shift market dynamics in the higher-ticket loan segment. The push comes as the sector experiences robust growth, attractive returns, and broader customer acceptance.
Historically, private banks have maintained a limited footprint in organised gold lending. Building a profitable operation requires substantial upfront investment in specialised branches, trained valuers, secure vaults, and robust systems, resulting in longer payback periods compared to other retail products. This has traditionally given gold-loan NBFCs and public sector banks an edge in rural and semi-urban areas, where they leverage wider networks, faster processes, and established customer relationships.
However, the competitive landscape is changing. The combination of rapid portfolio growth, low credit costs, and increasing customer comfort is prompting private banks to invest in dedicated branches, specialised teams, and digital sourcing. This expansion is expected to intensify competition, particularly in urban centres and for larger loan amounts.
The shift is already visible in recent financial disclosures. HDFC Bank's gold loan book grew 34% year-on-year to Rs 237 billion in FY26, reaching Rs 255 billion by June 2026. Axis Bank saw a 23% increase to Rs 133 billion. IDFC First Bank's portfolio surged 79% to Rs 39 billion in FY26, while AU Bank's more than doubled to the same figure. RBL Bank's book expanded dramatically from Rs 4 billion to Rs 43 billion, and Bandhan Bank reported a 57% rise to Rs 30 billion.
Diversified NBFCs are also intensifying the race. Bajaj Finance's gold loan book has grown at an 86% CAGR over three years to Rs 210 billion, with guidance for Rs 300 billion by March 2027. Industry-wide, the gold loan market is projected to grow at a 28% CAGR between FY26 and FY28, with large private banks and diversified NBFCs expected to capture an increasing share of the incremental business.