Gold loans became India's largest securitised asset class in Q1 FY27, accounting for 31% of the total ₹60,000 crore market. This shift highlights how NBFCs are increasingly using securitisation to manage liquidity and meet robust credit demand.
In a notable shift for India's financial sector, gold-backed loans have overtaken vehicle loans to become the largest asset class in the securitisation market during the first quarter of fiscal year 2027. Securitisation is a process where financial institutions bundle loans—such as gold, vehicle, or business loans—and sell them as investment products to other entities, typically banks, to raise immediate cash and free up their balance sheets for further lending.
Market Growth and Asset Shifts
According to data from CRISIL Ratings, the total value of securitised assets in India reached approximately ₹60,000 crore between April and June 2026, marking a 22% increase compared to the same period last year. Gold loans dominated this space, securing a 31% market share. In contrast, vehicle loans saw their share moderate to 26%, influenced by a decline in issuances from one of the sector's major players.
This trend underscores a strategic move by non-banking financial companies (NBFCs), which were responsible for over 98% of these securitisation issuances. By utilizing the direct assignment route—a method where loans are transferred directly to an investor rather than through a formal trust structure—gold loan financiers have successfully tapped into healthy investor demand to fund their growing portfolios.
Evolving Investor Dynamics
While gold loans gained traction, other segments saw varying shifts. Retail mortgage-backed securitisation fell to 12% from 21% in the previous year, largely due to reduced activity from a major private bank. Meanwhile, microfinance and business loan securitisation pools increased their presence, contributing 14% and 10% to the total volume, respectively.
Banks remain the primary buyers of these securitised assets, accounting for roughly 90% of total participation. Other investors, including mutual funds, insurance companies, and alternative investment funds, also continue to seek these instruments for yield. The market's depth is also expanding, with the number of unique companies issuing these securities growing to 115, up from 90 in the previous year.
Investor Context and Outlook
For investors, this shift indicates that NBFCs are effectively managing their liquidity through diverse funding channels. However, the reliance on securitisation means that the quality of the underlying loan pools is critical. As the market expands, investors should monitor the asset quality and portfolio performance of these gold loan originators. The sustainability of this growth will likely depend on the continued appetite of banks to purchase these pools and the ability of NBFCs to maintain steady credit demand without compromising on lending standards. The next important step for the sector will be to track whether this reliance on direct assignment continues as interest rate environments and retail credit demand evolve.