Emphasising that old loan pools originated before January 2026 continue to benefit from accumulated price appreciation since disbursement, India Ratings and Research (Ind-Ra) stated that loans originated during the recent period of elevated gold prices have lower valuation buffers, as gold prices are around 16 per cent below recent peak levels (Gold 916 hallmark).
The report noted that these exposures are more sensitive to gold price movements, highlighting the importance of active loan-to-value (LTV) management and timely corrective actions by originators during periods of sharp price volatility.
Ind-Ra rated gold loan securitisations are backed by relatively early‑stage loan pools with limited amortisation to date. The pools have exhibited minimal initial delinquencies and benefit from strong LTV buffers, as the loans were originated before the recent rise in gold prices.
Gold Loans Expand Rapidly
The report pointed out that lending against gold jewellery has witnessed strong growth in recent years. Outstanding gold loan portfolios increased around 128 per cent year-on-year (YoY) to nearly Rs 4.28 trillion as of February 2026, according to the Reserve Bank of India data.
Gold loan securitisation volumes rose sharply in FY26, with the asset class emerging as the second-largest segment in the domestic securitisation market, after vehicle loans, Ind-Ra emphasised in the report.
“Gold price volatility does not, by itself, weaken gold loan securitisation transactions, but it heightens the importance of execution discipline and LTV management. While earlier vintages benefit from valuation cushions, recent originations are more sensitive to price movements, underscoring the need for timely MTM actions and closer monitoring,” said Jatin Nanaware, Senior Director, Structured Finance, Ind-Ra.
The report mentioned that if LTV exceeds internal triggers, borrowers will be required to either make partial prepayments or pledge additional gold collateral. This mechanism supports LTV correction and protects transaction performance.
However, a prolonged decline in gold prices could test borrower capacity to meet margin requirements, leading to higher delinquencies, increased auction activity and greater sensitivity of recoveries to market conditions. Ind-Ra added that in securitisation structures, this could affect amortisation timing and CE utilisation. Heightened volatility can trigger concurrent auctions, thereby elevating operational and execution risks. Periods of significant volatility may lead to clustering of auctions, placing pressure on logistical capacity, security arrangements and price discovery, the report highlighted.