KOCHI: Muthoot Finance may have a formidable grip on India's organised gold-loan market, but its 47 per cent share among NBFCs is facing an increasingly competitive environment as banks step up lending against gold and new players enter the fast-growing segment.
While most Kerala banks have successfully expanded their gold-loan portfolios, Thrissur-based CSB Bank's gold loans now account for about 54 per cent of its total loan book.
Muthoot Finance says it commands 47 per cent of the gold-loan market among NBFCs, making it by far one of the most dominant players in the business. Its standalone gold-loan assets under management rose 44 per cent year-on-year to Rs1,63,298 crore in the first quarter of FY27, underlining the scale at which the company is expanding.
The question, however, is whether Muthoot can retain its share as the market itself becomes increasingly attractive to competitors.
The organised gold-loan market is projected to reach Rs16 lakh crore in FY26, up 33-36 per cent from about Rs12 lakh crore a year earlier, according to Muthoot Finance. The company estimates that only 2,950-3,350 tonnes of the roughly 34,600 tonnes of gold held by Indian households are currently pledged as collateral.
That enormous untapped pool is attracting lenders across the financial system. Banks have become increasingly active in gold loans, while existing gold-loan NBFCs are strengthening their franchises. New entrants are also seeking a foothold in a market where demand is expanding rapidly.
Tata Capital's acquisition of a majority stake in Yogakshema Gold Loans is among the more recent signs of institutional interest in the segment. The entry of a large diversified financial services player adds another dimension to the competition for gold-loan customers.
For Muthoot, however, competition is not limited to outside players.
The group is also expanding its own gold-financing businesses. Muthoot Money, another group company, saw its assets under management more than double year-on-year to Rs10,550 crore in the first quarter of FY27. Its AUM grew 111 per cent, while revenue increased 139 per cent and profit surged 366 per cent during the quarter.
Gold loans for business expansion
The rapid expansion suggests that Muthoot is seeking to capture more of the market even as competitors attempt to narrow its lead.
The competitive dynamics have also changed because gold loans are no longer viewed purely as an emergency source of finance. Muthoot says micro-enterprises are increasingly using gold loans for inventory purchases, business expansion and routine working capital.
This broadening of the customer base could make the market more attractive to banks and diversified lenders with large customer networks.
The growing competition could also benefit borrowers. The increasing presence of banks and NBFCs has narrowed the pricing gap between gold loans and other forms of credit, making loans against gold more competitive with personal loans and credit available to small businesses.
For Muthoot, therefore, the challenge is unusual. The market is growing rapidly enough for its loan book to expand even if its market share declines. But with competitors aggressively positioning themselves for the same pool of household gold, retaining a 47 per cent share could become increasingly difficult.
The company enters this contest with formidable advantages — a large branch network, an established gold-loan franchise, millions of customers and years of experience in valuing and lending against gold.
But the gold-loan market is no longer Muthoot's preserve. As banks, established NBFCs and new financial players compete for a larger share of India's household gold, the next phase of the market may determine whether Muthoot's 47 per cent share represents a durable competitive advantage or the peak of its dominance.
