Top Indian non-bank lenders flag early signs of stress in loans against gold

For non-bank lenders, loans against gold rose 69% to 3.6 trillion rupees as of August, separate data from the Reserve Bank of India showed. While delinquencies in this segment remain low, both Bajaj and Piramal flagged early signs of stress. Bajaj Finance, which has a gold loan portfolio of 240 billion Indian rupees($2.54 billion), flagged a rise in the proportion of loans overdue by more than 30 days, as part of its July-September quarterly results.

The lender said overall assets classified as 'stage 2' and 'stage 3', which reflect loans overdue by more than 30 days rose 15 basis points compared to a quarter ago. A large part of this came from short-term gold loans, which the lender has now stopped offering, it said. The non-banking financial company reported a nearly 30% year-on-year rise in consolidated profit after tax on Monday. Indian financial markets were shut for a public holiday on Tuesday.

Shares of Bajaj Finance were trading 3.2% lower at 926.80 rupees as of 12:40 p.m. IST, while the benchmark Nifty 50 index was down 0.6%. Alongside early signs of stress in gold loans, brokerages cited risks from rising inflation, the RBI's likely curbs on revolving credit and the insurance regulator's tighter commission rules as risks for the lender. Piramal Finance, in its call with analysts, said the rapid increase in gold loans is an emerging area of risk.

Nearly 35% of the lender's customers had a gold loan from another institution, Jairam Sridharan, CEO of Piramal Finance said. In 2025-26, across the industry about 4.7 trillion rupees of gold loan disbursements went to customers with other loans that were overdue by more than 90 days, Sridharan said. "Today, presence of a gold loan on file is not an indicator of higher risk on the portfolio, but these data points are worth noting and tracking," Sridharan said.

Piramal Finance reported a profit after tax of 5.45 billion rupees, up 66% on year. Shares of the lender were trading 3.7% higher at 2,019.50 per share.