Context:
The Reserve Bank of India (RBI) issued draft guidelines on April 9, 2025, to harmonize the regulatory framework for gold loans, aiming to strengthen governance in the sector and address observed regulatory concerns. The new rules are expected to bring more stability and clarity to the gold loan market, which could help attract further investments and partnerships, particularly for fintech firms.
Rising Interest from Fintech Firms
- New fintech players are seeing a significant opportunity in the gold loan sector due to these regulatory changes. Many fintechs that have traditionally focused on unsecured consumer lending are now exploring co-lending partnerships with banks and non-banking financial companies (NBFCs) to offer secured gold loans.
- Co-lending is seen as a way to expand credit offerings and mitigate risks, offering a lucrative growth avenue for fintech firms in an otherwise competitive space.
New Market Entrants
- Several new players are entering the gold loan market, including L&T Finance and Poonawala Fincorp, signaling further growth potential.
- Established fintech companies like Rupeek, Oro Money, Indiagold, and Manipal Fintech are already active in the space, with the latter recently appointing Puja Abhishek Singh as CEO, who previously led business operations at Paytm.
Partnerships and Expansion
- Startups like Moneyview, which achieved a $1 billion valuation in 2024, are now looking to enter the gold loan market, further indicating the sector’s growth potential.
- Digital payments firm PhonePe has started acquiring gold loan customers for Muthoot Finance and Muthoot Fincorp through its app, marking a strategic expansion into the lending sector.
- BankBazaar, traditionally an unsecured loan sourcing platform, has also entered the gold loan market by partnering with Muthoot Fincorp to source gold loan customers via digital channels. Muthoot Fincorp has even invested ₹15 crore to acquire a stake in BankBazaar.
Market Potential and Consumer Demand
- India is home to approximately 25,000 tonnes of gold across households, making borrowing against gold jewellery a popular means of financial protection, especially during times of economic uncertainty.
- A large portion of India’s gold loan market remains underserved, with an estimated 65% of the market being informally served. The introduction of clearer regulations is expected to help formalize and expand access to this under-served segment.
TET
