India’s Gold Story (Chapter 1): The Market Size & its YoY growth

We keep hearing about India’s love for gold. Data reflects that clearly. Indian households own gold worth ₹8,00,00,00,00,00,000 (80 lakhs crore) which is almost 40% of our GDP, accumulated over decades. In Comparison, RBI holds just 3% of total gold in India and our temples have over 16% which is almost 16 lakhs crore (our temples are rich!!!). And this gold has been donated to temples by common people like us.

This precious assets gave birth to a very unique business in india almost a century ago, called “Gold Loans”. Gold became the gold standard for a secured loan in an unorganized sector. Several decades ago, the Muthoot family saw this as a huge opportunity and launched it formally in Kerala.

Today the organized gold loan sector alone has a market size of ₹5.7 lakhs crore ($67bn) growing at a rate of 15% CAGR. It is believed that unorganized sector is even larger than this, taking the unofficial market size to well over $100bn.

The market for organized gold loan is expected to cross $78bn in FY24.
NBFCs like Muthoot, IIFL & Manappuram have been ruling the market, but recently large public sector banks & many private banks have started focusing on this asset class.

Here is a quick snapshot of some of the staggering numbers & their growth YoY for some of the institutions. Banks like HDFC, ICICI, Kotak, BOI, BoB and Canara Bank are doubling down on it and enabling their bank branches to process gold loans too.

Do follow me for more such interesting data point and stories on India’s love for their asset class and how it is fast becoming an alternate credit enabler for over 200mn Indian households not directly served by other lending products. Let me know what else you would like me to cover in future chapters.
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