Gold Loans to Sustain the NBFC-Retail Growth Momentum in FY2027

Category: NBFC – Retail & Commercial Finance | Source Insight Basis: ICRA Research, Quarterly Update, 31 July 2026


Body

The non-banking financial company (NBFC) retail lending segment continues to show resilience, with gold loans emerging as a key driver of growth heading into FY2027. According to ICRA Research, NBFC-Retail (excluding Housing Finance Companies) assets under management (AUM) are estimated to grow at 18-20% year-on-year during FY2027, reflecting sustained demand across retail credit categories.


At the same time, credit costs for the sector are expected to remain relatively elevated, in the range of 2.1-2.3% during FY2027. This indicates that while growth momentum remains healthy, NBFCs will need to continue exercising disciplined underwriting and risk management practices to protect asset quality.


The broader economic backdrop also plays an important role in shaping this outlook. ICRA's Business Activity Monitor (BAM) index recorded year-on-year growth of 12.0% in June 2026, a 32-month high, improving from 9.4% in May 2026. This acceleration was supported by improvement across 13 of the 16 constituent indicators, aided in part by a temporary ceasefire in West Asia during mid-June to early-July 2026 and favourable conditions for construction and mining activity following subdued rainfall in June.


However, the research also flags that the renewed conflict in West Asia presents an incremental downside risk to both growth and asset quality for the sector going forward, adding an element of caution to an otherwise steady growth narrative.


For NBFCs, promoters, and finance leaders tracking sectoral trends, this update reinforces a broader theme: growth in retail lending, particularly gold loans, is likely to continue, but external macroeconomic and geopolitical developments warrant close monitoring in the coming quarters.


Key Highlights

• NBFC-Retail (excluding HFCs) AUM growth estimated at 18-20% YoY in FY2027
  
  

• Credit costs expected to remain elevated at 2.1-2.3% during FY2027
  
  

• Gold loans identified as a key segment sustaining NBFC-Retail growth momentum
  
  

• ICRA's BAM index rose to a 32-month high of 12.0% YoY in June 2026, up from 9.4% in May 2026
  
  

• Improvement was seen in 13 of 16 constituent indicators of the BAM index
  
  

• Temporary ceasefire in West Asia (mid-June to early-July 2026) supported near-term economic activity
  
  

• Subdued June rainfall aided electricity generation, mining output, and construction activity
  
  

• Renewed conflict in West Asia poses incremental downside risk to growth and asset quality
  
  

Conclusion

The NBFC-Retail segment appears well-positioned to sustain healthy growth in FY2027, with gold loans playing a significant role in this momentum. That said, elevated credit costs and geopolitical uncertainty in West Asia are factors that lenders and stakeholders should continue to track closely. For NBFCs and financial institutions, this environment underscores the importance of maintaining strong credit fundamentals, robust risk assessment practices, and a well-prepared rating and financing profile to navigate both opportunities and emerging risks in the sector.


FinMen Advisors works with NBFCs and financial sector entities to strengthen their credit rating readiness and financing profile in line with evolving sector dynamics such as these.


Disclaimer

This content is based on publicly available research insights published by ICRA Research (an affiliate of Moody's) dated 31 July 2026, and is intended for general informational and educational purposes only. It does not constitute investment, financial, credit rating, or professional advice, nor does it represent the views of ICRA Limited beyond what has been publicly summarised. FinMen Advisors Private Limited is an advisory firm and is not a SEBI-registered Credit Rating Agency; it does not issue, guarantee, or influence credit ratings. Readers are advised to refer to the original ICRA report and consult relevant professionals before making any business or financial decisions. For the complete report, please visit ICRA's official website.


Source: ICRA Research – "Gold Loans to Sustain the NBFC-Retail Growth Momentum in FY2027," Quarterly Update, 31 July 2026. https://www.icra.in/Research/ViewResearchReport/gold-loans-to-sustain-the-nbfc-retail-growth-momentum-in-fy2027/7049