People problem in gold lending
Disclosure: I co-founded indiagold. We lend against gold and we hire the people this article is about. Every number below is sourced, and the conclusion is not one that helps me recruit.
Most of the data here comes from one document: HDFC Securities Institutional Equities' sector thematic on gold loan NBFCs, published 7 July 2026. Where a figure is an analyst estimate rather than an actual, I say so.
The build-out, in actual branch counts
Forget the press releases. Here is the distribution as it stood at the close of FY26, and what the lenders themselves have guided for FY27.
Muthoot ran 4,968 gold loan branches. Muthoot Fincorp 3,900. Manappuram 3,524, unchanged for four straight years. IIFL 2,887. Bajaj Finance 1,507, up from 181 in FY23. Capri Global 999. Muthoot Money 998. Fedfina 628. Asirvad 520. L&T Finance 330. SBFC 220. Piramal 180, from 22 the year before. Cholamandalam 119. Belstar 81.
Guided additions for FY27, by the companies themselves: Manappuram 500 to 550, L&T 400, Poonawalla 400, Capri 350, Cholamandalam 300, Muthoot 200 to 300, Belstar 200, IIFL 100. Several others, Bajaj among them, gave no branch guidance at all. Aditya Birla Capital and Godrej Finance are in the pipeline.
HDFC Securities' estimate: NBFCs add roughly 3,000 gold loan branches in FY27 alone. Add the guided numbers above and you reach about 2,500 before counting anyone who declined to guide.
Two things in that list are worth pausing on. Bajaj added more than 1,300 branches in three years. And Manappuram, the second-largest specialist in the country, did not open a single net new branch between FY23 and FY26.
The growth has almost no new borrowers in it
Every one of those expansion plans is justified by AUM growth. Gold loans are ₹18.6 trillion, about 11% of India's retail credit, and grew at a 34% compound rate over FY21 to FY26, with 50% in FY26 alone.
Now look at what produced it. Over the same FY21–FY26 stretch, gold prices compounded at 24%.
The company-level data makes it unambiguous. In FY26, Muthoot's gold loan AUM grew 50%. Its borrower count grew 1%. Its tonnage pledged fell 6%. Manappuram: AUM up 98%, borrowers up 3%, tonnage up 11%.
Stretch it over three years and the pattern holds. Across FY24 to FY26, Muthoot's AUM compounded at 36% while gold prices compounded at 35%, tonnage at 3% and customers at 6%.
The mechanism is not mysterious, and HDFC Securities states it plainly: higher gold prices drive muted tonnage growth, because a customer's credit requirement is met with less metal. The relationship runs in reverse during downcycles.
So the incumbents are lending more against the same gold, to broadly the same households. Penetration of eligible household gold sits at roughly 10%, and it has barely moved through the fastest AUM growth the sector has recorded.
One important exception, because the claim is not universal. IIFL grew borrowers 54% and tonnage 49% in FY26. Challengers taking share genuinely do acquire customers. It is the incumbents, and the market as a whole, where the rupee growth is revaluation.
What that does to branch economics
A gold loan branch is a fixed-cost machine: vault, security systems, insurance, rent, staff. It needs throughput to break even.
Industry average branch productivity was around ₹12 to ₹15 crore of AUM as of March 2026. Muthoot, after decades of density, runs ₹31 crore. IIFL ₹18.2 crore. Manappuram ₹13.9 crore.
New entrants start near zero and climb. So roughly 3,000 new fixed-cost machines are being built into a market whose underlying customer growth is running in low single digits, funded by a price effect.
HDFC Securities expects industry growth to moderate through FY27 and FY28 as gold prices consolidate, and puts steady-state growth at 12 to 15% during periods of stable gold prices against the 34% just delivered. Their Muthoot forecast is a deceleration to roughly 16% CAGR.
The gold price does not have to fall for this to bite. It only has to stop rising.
And if it does fall, there is a precedent. In the 2012–14 cycle, a roughly 20% correction in gold prices took Muthoot's profits down 42% from peak and its AUM down 19%. Manappuram's profits fell 83%. Historically, gold's appreciation phases are followed by long consolidations: seven years after 2013, twenty-two years after 1980. The current run-up has lasted about six years and roughly tripled the price.
The headcount arithmetic
Use disclosed staffing, not an assumption. In FY26, employees per branch ran at 6.4 at Muthoot, 5.7 at IIFL and 8.5 at Manappuram.
At six people per branch, 3,000 new branches need roughly 18,000 people. The appraisal function is a subset of that, typically one to two per branch once dual custody, leave cover and audit re-assay are accounted for.
No institution in India trains gold appraisers at that rate. Which is why, if you can value gold across a counter and be trusted with the result, you are currently the scarcest input in the fastest-expanding retail credit product in the country.
Why the money is loose, and why it will not stay loose
When a listed lender enters a new category, it has a board mandate that the first two to three years are investment. Branch capex, vaulting, security and payroll are budgeted as build cost. Nobody is appraised on cost ratios in year one. Headcount targets are, and they are hard.
A hard hiring target next to a soft cost constraint is what produces large fixed-pay offers.
The compression is already visible. Manappuram's yields fell about 340 basis points in FY26 as it pivoted to larger tickets and longer tenures to arrest market share loss. HDFC Securities expects competitive intensity to increase further in FY27, pressuring both yields and loan growth.
Note also what the cost structure demands. Muthoot runs opex-to-AUM at 2.6%. Manappuram and IIFL both run 4.6%. Every new entrant starts worse than 4.6% and has to climb toward it. That climb is where compensation gets re-examined.
When yields compress and cost discipline returns, three things happen, in this order. Increments normalise to single digits. Incentive slabs get re-cut so the same performance pays less. Achievement thresholds move up.
None of that is a criticism. It is what disciplined lenders do once an investment phase closes. It is also predictable, and it lands on the people hired during the loose phase.
So here is what to ask before you move You have real leverage right now. Use it properly. The mistake is evaluating the offer on the fixed hike alone.
Compare total cash, not fixed. If you earn ₹40,000 fixed and ₹15,000 to ₹20,000 in monthly incentive, your real number is ₹55,000 to ₹60,000. A 40% hike on fixed takes you to ₹56,000. If the new scheme pays less in practice, you have moved sideways and surrendered your earning ceiling.
Find out what people there actually take home. Not the scheme document, not on-target earnings as described by HR. Find a loan manager already working there, in a comparable market, and ask what they banked last month and the month before. Ask what share of the branch hit 100% of target.
Ask what last year's increment cycle looked like for the gold loan vertical specifically. If the business is a year old, ask what the parent's other verticals received.
Ask whether the incentive scheme has been revised since launch, and in which direction. A scheme already re-cut once, twelve months in, tells you what the next three years hold.
Ask what happens when the branch matures. Schemes that reward disbursal growth pay well while a branch ramps from zero. Once it stabilises, growth-linked incentives collapse even though the book performs.
Ask what the branch break-even AUM is and how long they have modelled to reach it. The industry average branch sits at ₹12 to ₹15 crore. If you are being asked to get there in eighteen months in a market where customer growth is low single digits, you are being hired into a target that requires taking customers from somebody else. That is achievable. It is also the kind of target that gets revised downward, along with the payout curve attached to it.
For some people the move is right. A larger balance sheet, a stronger brand, a real ladder and a large fixed jump can be better even with a weaker variable. The point is not to refuse. The point is to price all of it before signing, because the fixed hike is the number you negotiate once and the incentive scheme governs the next five years.
The objection worth confronting
If appraisal is so scarce, why does Muthoot train freshers into the role in weeks?
Because the technique is not the scarce thing. Purity testing is learnable. What is scarce is technique audited over time in a live book, in someone with a clean re-assay record.
Which is why hiring at this rate is an operational risk, not just a cost. Gold lending carries low credit risk and high operational risk: fraud, spurious metal, theft, embezzlement. The gap between the best and the rest is large. Frauds ran at 0.1% of pre-tax profit at Muthoot in FY25 and 2.1% at Manappuram. And in March 2024 the RBI barred IIFL Finance from sanctioning or disbursing gold loans altogether.
Every lender adding a branch a day is scaling appraisal capacity faster than supervision. Some of them will find out what that costs.
The structural read
The salary bubble is a two-year condition: simultaneous board-approved build phases meeting a one-time regulatory unlock, funded by AUM growth that is largely a revaluation effect.
The underlying opportunity is real. Household gold holdings run to about 30,000 tonnes, of which roughly 22,500 tonnes is jewellery and ornaments, and only about 10% of eligible holdings are pledged. Formalisation is a decade-long shift. The June 2025 Directions, effective from April 2026, removed the LTV cap entirely for income-generation loans while raising it on smaller consumption tickets, which structurally improves what a formal lender can offer against a pawnbroker.
But the sector is currently solving that opportunity by buying scarce people at cyclical-peak prices and putting them in fixed-cost boxes, in a market that is 75% concentrated in five southern states.
The first year of this build-out is a hiring race. Every year after that is a training and systems problem.
Price accordingly. On both sides of the table :-)
Primary source: HDFC Securities Institutional Equities, "Gold Loan NBFCs: Beware the Gold Rush", Sector Thematic, 7 July 2026. HDFC Securities is a subsidiary of HDFC Bank, which competes in this market; the report discloses this. Regulatory chronology from the same report's compilation of RBI circulars. NBFC credit growth from RBI sectoral deployment data. FY27 branch additions and FY27–FY28 growth rates are analyst estimates, not actuals.
