RBI data shows a 15% growth in the gold loan market, with assets under management reaching Rs. 1 lakh crore in the financial year 2024. The main drivers of this demand are financial inclusion and a growing economy, which are boosting consumerism. New digital consumers, many of whom are first-time bankers, are significantly contributing to this demand. Banks, non-banking financial companies (NBFCs), fintech companies, and dedicated gold loan firms are all addressing this rising demand for gold loans.
The gold loan market is thriving in Viksit Bharat. With financial inclusion widening to unlock the economic primitives of identity, data, and payments at the population scale, the demand for digital lending is also growing. The new-age, emerging digital consumers, mainly from the hinterland, have started upgrading for a better lifestyle.
The Gold Loan Drivers
Farmers constitute the major clientele for gold loans, availing of the loan during the harvest season and closing the loan when harvesting is over. Other gold loan customers include small traders and retailers, micro-enterprise owners, and salaried middle-class individuals from tier III and IV towns who are increasingly turning to gold loans for their various financial needs. Be it for the education of children, marriage in the family, or any unprecedented medical urgency, they are upgrading and open to digital lending. Undoubtedly, the easy and convenient onboarding process also contributes to the fast growth of gold loans. Small business owners have been showing increased interest in gold loans as the smartest means to secure working capital requirements. Additionally, traditionally, there has always been an affection for owning gold as part of culture, creating a sustained demand for gold loans across diverse demographic segments. Customers are now unlocking the potential of their assets by pledging them as per their liquidity requirements. In fact, the rising gold prices are adding momentum to the gold loan business. The rising gold prices also allow existing gold loan borrowers to seek a top-up on their existing loans.
Gold Loan Supply
The Indian economy is reporting steady growth and marching towards a GDP of $5 trillion USD, with regulators keeping a constant eye on banking and finance. The demand for gold loans is being catered to by banks, NBFCs, exclusive gold loan companies, and fintechs; there is a possibility of microfinance institutions (MFIs) entering the gold loan business. While it will support the fast-growing demand for gold loans, MFIs will potentially open newer opportunities in the gold loan market. Owing to their agility, NBFCs are expected to continue playing a significant role compared to banks in gold loans. The gold loan market in India is on a growth trajectory, with partnerships between banks, NBFCs, MFIs, and fintechs increasing the reach to the hinterland, serving the last-mile customer.
About Arvog
Arvog is a new-age, AI/ML-powered, customer-centric finance company that makes digital lending quick, efficient, and easy. We see worth in lending wings to people’s aspirations, hopes, and dreams. We believe purpose-driven credit can be a true-life enabler. Arvog is here to lend a helping hand, with affordable loans designed specifically for those who need them the most. Arvog empowers NBFCs and fintechs with the tools and solutions they need to get fast access to credit, thus building more resilient and confident communities.
