Muthoot MD explains gold loan boom

Muthoot Finance, India's leading gold loan non-banking financial company (NBFC), reported a stellar performance in the third quarter of FY2026 (October-December 2025), with standalone net profit surging 95% year-on-year to Rs 2,656 crore from Rs 1,363 crore in the same period last year. Consolidated profit after tax also rose sharply, reflecting robust growth in its core business amid sustained demand for gold-backed financing. 

In an interview, Managing Director George Alexander Muthoot attributed the strong results primarily to surging demand for gold loans, as borrowers increasingly turn to this secured option amid challenges in accessing unsecured credit.  "People are increasingly resorting to gold loans as a means of finance," he said, noting that this trend has persisted over the last four to five quarters and is expected to continue into Q4. 

The company's standalone loan assets under management (AUM) grew 51% year-on-year to approximately Rs 1.48 lakh crore, while gold loan AUM specifically rose 50% to Rs 1.40 lakh crore (or Rs 1,39,658 crore as reported in some updates). Consolidated AUM reached Rs 1,64,720 crore, up 48% year-on-year.  In an interview to a news channel, Managing Director George Alexander Muthoot attributed the strong results primarily to surging demand for gold loans, as borrowers increasingly turn to this secured option amid challenges in accessing unsecured credit. 

"People are increasingly resorting to gold loans as a means of finance," he said, noting that this trend has persisted over the last four to five quarters and is expected to continue into Q4. The company's standalone loan assets under management (AUM) grew 51% year-on-year to approximately Rs 1.48 lakh crore, while gold loan AUM specifically rose 50% to Rs 1.40 lakh crore (or Rs 1,39,658 crore as reported in some updates). 

Consolidated AUM reached Rs 1,64,720 crore, up 48% year-on-year. On operational metrics, standalone AUM showed solid growth, though some market observers noted a sequential dip in gold tonnage (weight of pledged gold) and slightly lower loan-to-value (LTV) ratios.  Muthoot explained this as a natural outcome of rising gold prices: borrowers need less gold by weight to obtain the same loan amount. 

For instance, what required 100-200 grams six months ago might now need only half that quantity. The portfolio typically churns every 3-4 months, with new loans involving smaller gold quantities per rupee lent. "The tonnage is going down because as the price goes up, the tonnage has to come down," he clarified, dismissing any notion of a weakening trend.  Credit costs surprised positively on the downside, primarily due to aggressive write-offs in the small personal loan portfolio (around Rs 3,000 crore, or just 3% of total AUM), which carries inherent risks unlike near-zero credit cost gold loans. 

Muthoot indicated these write-offs are policy-driven for prudence, with recoveries expected later, and the segment remains insignificant overall. The company also welcomed recent regulatory changes by the Reserve Bank of India (RBI), which removed the requirement for prior approval to open new branches once an NBFC exceeds 1,000 outlets—a rule that previously applied to larger players like Muthoot. 

This eases expansion, particularly in non-South regions, where the firm typically adds 100-150 branches annually but could now accelerate modestly to 200-250. Muthoot viewed this as a sign of regulatory confidence in the gold loan sector and larger, well-governed players, signaling support for industry growth. The overall gold loan market remains expansive, with banks holding over Rs 13 lakh crore and NBFCs around Rs 3 lakh crore, both expanding.