Gold Loan Securitisation Surges 11% in June Quarter, Outpacing Other Segments

Tuesday, July 8: India’s gold loan securitisation market witnessed remarkable growth in the June 2025 quarter, emerging as the fastest-growing segment among all asset classes. According to data released by CRISIL Ratings, gold loan securitisation climbed to ₹5,390 crore, accounting for 11% of the total securitisation volume. This marks a significant increase from its minimal contribution in the corresponding period last year.

Overall Securitisation Volume Up 9% YoY

The overall securitisation volume across India reached ₹49,000 crore in Q1 FY26, representing a 9% year-on-year increase. Securitisation, a crucial funding mechanism for banks and non-banking financial companies (NBFCs), involves pooling loans and selling them to investors, thereby providing liquidity to the originators.

The substantial growth in gold loan securitisation was primarily driven by the lifting of regulatory restrictions on a prominent originator, which stimulated higher activity in this asset class.

While CRISIL’s press release on July 7, 2025, did not name the specific originator, it noted that this regulatory change significantly boosted the gold loan securitisation segment. For context, IIFL Finance, a major gold loan originator, had faced a ban on disbursing fresh gold loans by the Reserve Bank of India (RBI) in March 2024 due to material supervisory concerns, a ban which was later lifted.

Vehicle Loans Hold Ground, Mortgages and Microfinance Decline

While gold loans saw a surge, other asset classes showed mixed trends:

• Vehicle loan securitisation maintained its leading position, holding a 41% share of the total volume, consistent with the previous year. This includes both commercial vehicles and two-wheeler loans, driven by strong originations from top players.
• Mortgage-backed securitisation saw a decline, dropping to 21% from 25%. This reduction was largely attributed to reduced volumes originating from a major private bank.
• Microfinance-backed instruments also experienced a decrease, falling to 11% from 14%. The microfinance industry has been grappling with rising delinquencies and has consequently adopted a more conservative lending approach, impacting securitisation volumes in this segment.

Personal and Business Loan Segments See Shrinkage

The securitisation share of personal loans and business loans each decreased by 200 basis points, now contributing approximately 9% and 7%, respectively, to the total volume. Small and mid-sized NBFCs, particularly those focused on microfinance and unsecured lending, reported subdued originations. This reflects a continued risk-averse stance from both lenders and investors in these specific segments.

NBFCs Maintain Focus on Securitisation

Despite challenges in certain categories, top-tier NBFCs continued to strategically leverage securitisation as a vital tool for diversifying their funding base. This trend underscores the ongoing reliance on capital market instruments by NBFCs, especially amidst tightening bank credit availability and as they seek to manage their balance sheets more efficiently. The share of NBFC originations in the overall market increased to 92% in Q1 FY26, up from 74% in FY25, highlighting their dominance in this space.

What’s in the Future?

Gold loan securitisation is set for continued growth, fuelled by rising investor confidence and regulatory clarity. The lifting of RBI restrictions has revived activity, especially among major players like IIFL Finance. With NBFCs leaning more on securitisation to manage liquidity and diversify funding, gold loans—being short-term and backed by collateral—offer a low-risk, high-turnover opportunity. If gold prices stay stable and demand for short-term credit rises, this segment could capture a larger share of the securitisation market in the coming quarters.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations