‘Gold’ spilled from government banks! Stormy pace of private banks and NBFCs in the gold loan market, big revelation in the report

The dominance of public sector banks in the gold loan market is gradually decreasing, while private banks and non-banking financial companies (NBFCs) are strengthening their hold. The report titled Gold Loan Market Development and Consumer Trends released by credit data analyst firm Experian says that better distribution network, faster loan approval and changing preferences of customers are the main reasons for this change in the gold loan business.

According to the report, the share of public sector banks in gold loan source declined to 37 percent in the March quarter 2025-26, which was 45 percent in the same quarter a year ago and 53 percent in the July-September quarter 2025-26. In contrast, the share of NBFCs in this loan market increased to 44 percent in the March quarter, from 33 percent a year ago and 22 percent in the September quarter 2024.

NBFC gained momentum

The report said that NBFCs have emerged as the fastest growing lender category in the region and have overtaken public sector banks by March quarter 2026, while continuously increasing their market share in recent quarters. However, public sector banks are still in a strong position in the priority sector gold loan (PSGL) segment.

Their share in this segment was around 88 percent in the March quarter, but it has declined by two percent on an annual basis. PSGL’s contribution to their total gold loan source in the financial year 2025-26 was about 42 percent. According to the report, public sector banks remain the leaders in this segment due to their wide branch network and deep reach in rural areas, while private banks and small finance banks are also turning to secured retail loan assets with lower risk and better returns.

ever growing market

According to the report, PSGL is now emerging as a stable, scalable and regulatory friendly growth opportunity for lenders. The growth in this segment is being boosted by the addition of new customers from rural, town and underserved areas, thereby increasing the possibilities of financial inclusion. Moreover, the gold loan market is now witnessing a shift towards higher value loans. The growth of this sector is now being driven not only by the increase in the number of loans but also by the increase in the amount of loans.