Version 1: Muthoot Finance's profit rises 36% as gold loans grow: what pledging a gold chain means

Costlier gold lets the same jewellery fetch a bigger loan, and India's largest gold loan company now has more money lent out than ever.

Picture a gold chain lying in a family locker. Nobody has worn it since a wedding years ago. Today, that same chain can fetch a much bigger loan than it could two years ago, without anyone adding a single gram to it. That simple change is a big reason Muthoot Finance now has more money lent out than ever before.

On Saturday, 31 October 2026, Muthoot Finance, a gold loan company from Kochi in Kerala, reported a group profit of Rs 3,278 crore for July to September 2026. That is 36% more than a year ago.

First, who is Muthoot Finance?

Muthoot Finance is the largest gold loan NBFC in India. An NBFC is a non-bank finance company: it lends money like a bank but is not one. You cannot open a savings account there. Its customers include small shop owners, vendors, farmers, traders and salaried people, says the same Wikipedia page.

Its branch network grew to 7,904 branches from 7,524 a year earlier. That is roughly one new branch every day.

How does a gold loan work?

Think of it like leaving your cricket bat with a friend as a promise that you will return the Rs 500 you borrowed. Once you pay him back, the bat comes home.

A gold loan works the same way. You take your gold chain or bangles to a lender. The lender checks how pure the gold is and weighs it. Then the lender gives you cash, up to a part of what the gold is worth. You pay interest, which is the rent for using the lender's money. When you repay the full loan, you take your gold home.

Four steps of a gold loan: pledge the chain, lender values the gold, get cash and pay interest, repay and take the gold home — A gold loan in four simple steps.

India's central bank, the RBI, made clear rules here. From 1 April 2026, a lender can lend up to eighty-five per cent of the gold's value for loans up to Rs 2.5 lakh, 80% for loans between Rs 2.5 lakh and Rs 5 lakh, and 75% above that. After you close the loan, the lender must hand back your gold on the same day or within seven working days. If the lender is late, the rules say it pays a fine of Rs 5,000 for every day of delay.

If a borrower does not repay, the lender can auction the gold. The rules say the borrower must get notice first, and any extra money left after the auction must go back to the borrower within seven days.

Why are gold loans growing so fast?

The short answer is the price of gold. Between March 2024 and March 2026, the gold price index rose 144%, says an explainer by Kotak Neo. Gold even crossed Rs 2 lakh per 10 grams at the end of January 2026. On 22 October 2026 it was about Rs 1,43,447 per 10 grams.

When gold costs more, the same chain is worth more. So the lender can give a bigger loan against the very same chain. The Kotak Neo explainer, quoting the rating agency ICRA, says the amount of gold jewellery pledged with large lenders grew only 3% to 4% between FY22 and FY26. In the same period, their loan books grew about 24%.

The average gold loan almost doubled, from Rs 98,000 in FY23 to Rs 1.96 lakh in FY26, the explainer adds. It calls this a story of gold getting more valuable, not of a borrowing rush.

Average gold loan size rose from Rs 98,000 in FY23 to Rs 1.96 lakh in FY26 — The average gold loan almost doubled in three years.

Gold loans are also quick. For smaller loans there is no long check of your income, and no wait for approvals, the explainer says. It adds that gold loans have overtaken personal loans to become India's second largest kind of retail loan after home loans.

What did Muthoot actually earn?

Big companies report two kinds of numbers. "Consolidated" means the whole family of companies added together, like a joint family's total income. "Standalone" means only the main company, like one brother's own salary.

Group (consolidated) profit: Rs 3,278 crore, up 36%.
Main company (standalone) profit: Rs 2,977 crore, up 27% from Rs 2,345 crore a year ago.
Total loans given out by the group: Rs 2.09 lakh crore (Rs 2.09 trillion), up 42% from Rs 1.48 lakh crore.
Gold loans of the main company: up 43% to Rs 1.79 lakh crore.
Gold loans of the whole group: up 46% to Rs 1,93,212 crore, as per the half year update.

Muthoot Finance group profit of Rs 3,278 crore for July to September 2026, up 36% — Group profit for July to September 2026.

More people are also walking in. Active customers went up from 64 lakh to 69 lakh during the six months to September.

Is everything going up?

Not quite. Money kept aside for loans that may not be repaid, called impairment, rose to Rs 515 crore from Rs 95 crore a year ago, Business Standard reported. Finance costs, the interest Muthoot pays on its own borrowing, rose 46% to Rs 3,365 crore. A lender is like a samosa stall: if the potatoes get costlier, the stall's own cost goes up too.

What did the company say?

Executive vice-chairman George Alexander Muthoot said "India's gold loan market continues to present significant growth opportunities". He linked this to rising demand for secured credit, which means loans backed by something valuable, like gold.

The group also plans to merge Muthoot Money, a lender it owns that now gives only gold loans, into Muthoot Finance from 1 April 2027, if approvals come through.

This video from Upstox explains the wider gold loan boom in India.

Watch on YouTube

What does this mean for families and small shops?

For a family, gold in the locker is now a bigger safety net. In an emergency, the same bangles can bring in more cash than before. A small shop owner who needs money to stock up can pledge gold and get cash fast, often without income papers.

Many borrowers are not taking the full amount. Muthoot's average loan recently stood at only 58% of the gold's value, says the Kotak Neo explainer, well under the RBI limit.

There is a flip side. Gold prices are set by world markets, not by Indian families, and every change in the gold price changes how much a family's jewellery can fetch as a loan, the explainer notes. And a gold loan still costs interest every month, like any other loan. The new RBI rules also say borrowers who choose to pay everything at the end must clear both the loan and the interest within 12 months.

Gold buying itself is slower this season. Gold sales volumes in India may fall around 11% in October 2026 from a year ago, even with festive buying, says Surendra Mehta of the India Bullion and Jewellers body, as reported by Kotak Neo. Dhanteras and Diwali fall in November.

This Times of India video answers common questions about gold loans, such as interest and the process.