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Leading NBFCs Flag Early Signs of Repayment Stress in Gold Loan Segment
Sentiment: NeutralHigh Priority
What Happened?
India's gold loan market is experiencing repayment stress, with Bajaj Finance and Piramal Finance reporting delays. A significant portion of loans is going to borrowers already overdue on other debts.
Key points
- Bajaj Finance and Piramal Finance report repayment delays in the gold loan segment.
- Between 15% and 23% of gold loan disbursements in 2025-26 went to borrowers overdue on other loans.
- Piramal Finance's MD & CEO estimates ₹4.7 trillion in disbursements to such borrowers.
- Bajaj Finance's gold loan portfolio is approximately ₹24,000 crore.
- Stage 2 and Stage 3 assets at Bajaj Finance increased by ₹1,601 crore during the quarter.
- Outstanding gold loans from banks rose 83% year-on-year to about ₹5.6 trillion as of August 31, 2026.
Key insights
- The high percentage of loans to overdue borrowers may indicate a growing risk in the gold loan market.
- Lenders need to assess borrowers' repayment capacity beyond the collateral of gold.
- A potential wave of defaults could pressure lenders to auction large quantities of pledged gold.
Why it matters
The trends in gold loan repayments could impact the financial stability of borrowers and lenders in India.
Tags
Entities
Bajaj Finance· CompanyPiramal Finance· CompanyIndia· Country
Source
Business Standard
