Gold loans jump 70% as NBFC credit grows 14% in May

Non-banking finance companies grew their loan portfolios 14% from a year earlier in May, data from the Reserve Bank of India showed. That was three percentage points slower than the banking system's 17% growth in the same period.

Within the NBFC book, retail loans expanded 20%. Agriculture loans rose 18%. Loans against gold jewellery jumped 70%, while consumer durable loans increased 42%. Vehicle loans grew 15%. Credit to the services sector rose 17%.

The 70% gold-loan growth rate is nearly five times the headline NBFC expansion and more than double the pace of the wider retail segment. Gold loan yields in India typically range from 12% to 24% annually, making them one of the highest-yielding segments for NBFCs. For a broader view of gold, the gold profile tracks prices and demand patterns.

Consumer durables, at 42%, also outpaced the overall number by a wide margin. These loans are often underwritten at point-of-sale for electronics and appliances, a profitable niche for NBFCs that manage the retail partnership channel.

Vehicle loans, at 15%, grew in line with the overall NBFC book. Services sector credit matched the banking system's growth rate of 17%.

The divergence within the retail bucket is clear from the data: secured lending categories like gold loans are seeing faster uptake than vehicle loans, which are more sensitive to interest rates and economic cycles.

Banks expanded at 17% in May, outgrowing NBFCs by three percentage points. The two credit channels operate in different segments, with NBFCs more concentrated in gold and consumer durables.

The RBI releases banking and NBFC credit data monthly. The next set will cover June.