Market Brief: The Bullion Bonanza Rising gold prices have catalyzed a significant shift in India's lending landscape, turning gold loan portfolios into high-performance engines for both private and Public Sector Banks (PSUs). As of **February 24, 2026**, gold prices in India have surged past **₹16,150 per gram** for 24K gold, with MCX futures trading near **₹1,61,500 per 10 grams**. This rally represents a historic valuation increase, strengthening bank balance sheets through higher collateral values and improved risk profiles. Strategic Asset Appreciation The surge in the yellow metal has effectively de-risked gold loan books. Every **₹1,000 per gram** increase in price adds approximately **₹1 lakh** to the average household's borrowing capacity, allowing banks to maintain comfortable Loan-to-Value (LTV) ratios even as they disburse larger amounts. For many lenders, the gold loan segment is now outperforming overall credit growth, driven by a **103% year-over-year increase** in outstanding gold-backed credit. Regulatory Tailwinds and Tiers The Reserve Bank of India (RBI) has introduced a tiered LTV structure, effective **April 1, 2026**, which further incentivizes small-ticket lending. Under these guidelines, loans up to **₹2.5 lakh** are eligible for an **85% LTV**, while larger loans above **₹5 lakh** are capped at **75%**. This regulatory shift, combined with a crackdown on unsecured personal loans, has funneled a massive wave of borrowers toward secured gold credit. Institutional Growth Performance Smaller private banks and PSUs are capturing market share from traditional Non-Banking Financial Companies (NBFCs). While majors like Muthoot Finance reported a staggering **87% surge in net profit** to **₹2,345 crore** for Q2 FY26, banks are leveraging their lower cost of funds to offer more competitive rates. The organized gold loan market is currently projected to reach **₹15 lakh crore** by **March 2027**, a sharp rise from its **₹7.1 lakh crore** valuation in 2024. Asset Quality and Margins Lenders are witnessing a "balance sheet bonanza" as the inherent value of the underlying asset minimizes the need for aggressive provisioning. With gold serving as a primary store of value for over **25,000 tonnes** of household holdings, the shift toward asset-backed borrowing has stabilized net interest margins (NIMs) in an otherwise volatile interest rate environment. The market is now seeing a consolidation phase where digital-first lending and transparent valuation norms are becoming the industry standard.