India's Golden Fortress: The Resilient World of Gold-Backed Lending
India's Golden Fortress: The Resilient World of Gold-Backed Lending India's gold loan market emerges as a formidable financial bastion, intertwining centuries-old cultural veneration for gold with cutting-edge lending practices. Led by giants like Muthoot Finance, which holds over 209 tonnes of gold collateral as of mid-2025, the sector disburses loans at LTV ratios up to 85% and interest rates spanning 10.9% to 22% annually. Defaults trigger meticulous processes involving grace periods, NPA classifications, and public auctions, with volumes fluctuating amid economic tides—peaking at ₹5,211 crore in FY2022 for Muthoot. Price surges enable top-up loans, while declines prompt margin calls. Over the past decade, NPAs remained low at under 3%, underscoring the model's safety. Globally, India's ₹7.1 lakh crore market eclipses fragmented counterparts in China, USA, EU, and ASEAN. This essay delves into holdings, defaults, regulations, volatility impacts, lender comparis...