Gold loans surge, NBFCs eye Rs 30 lakh crore by 2028

Why in news

ICRA projected a significant surge in gold-backed loans to ₹30 lakh crore by 2028, highlighting the growing role of NBFCs in this credit segment.

Background

ICRA projects gold-backed loans to grow at a 30% CAGR, reaching ₹30 lakh crore by March 2028. Currently, about 90% of NBFC gold loans use a bullet payment method, making them sensitive to gold price fluctuations.

Facts for Prelims

• FactProjected gold-backed loan market size: ₹30 lakh crore by March 2028.
• FactCurrent cumulative NPA ratio for banks: ~0.5%.
• FactOverall NPA ratio: ~3%.
• FactNBFCs' projected market share in gold loans: 23%.

For Mains

Q. Discuss the role of Non-Banking Financial Companies (NBFCs) in deepening financial inclusion through gold-backed lending and the risks associated with bullet payment structures.

Dimensions to cover in your answer

• Role in credit penetration
• Asset quality and NPA management
• Sensitivity to commodity price volatility
• Regulatory oversight of NBFCs

Keywords: Financial Inclusion · Asset Quality · Credit Risk · NBFCs · Liquidity Management

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