Budget 2026 Wishlist – Now, all eyes are on the Union Budget, which the Modi government is expected to present on February 1st. The budget is likely to be particularly important for government employees, farmers, and those seeking loans. Interest in taking out loans has increased significantly in recent years.
Previously, NBFCs dominated the gold loan market. However, banks are now giving NBFCs tough competition in the gold loan business. This has benefited consumers, who are actively seeking gold loan opportunities.
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Gold loan companies like Muthoot Finance and Manappuram Finance have high expectations from the Union Budget 2026. On budget day, everyone will be watching Finance Minister Nirmala Sitharaman’s speech. Here’s what to expect from the Union Budget 2026.
What NBFCs are saying
According to NBFCs, gold loans are mostly preferred by low-income individuals. Most gold loans are for amounts less than ₹50,000. This money is typically used for medical expenses, education, agricultural needs, and as working capital for small businesses.
Banks receive priority sector lending benefits for such loans. Gold loan NBFCs do not receive this benefit. This forces NBFCs to raise funds at higher interest rates.
According to gold loan NBFCs, if they are granted priority lending status, it would reduce their cost of funds. This would allow them to offer gold loans to customers at lower interest rates. This would make affordable loans available to people in smaller towns and rural areas. While people in large cities have many loan options, those in remote areas lack sufficient access to credit.
Gold Credit Line facility via UPI
Surprisingly, the gold loan industry expects the government to introduce a gold credit line facility via UPI in the budget. A large portion of the country’s population uses UPI.
If a gold-linked credit line is launched through UPI with the help of NBFCs, it will greatly benefit people. Most importantly, they can use the UPI revolving credit line to pledge gold jewellery through UPI applications. This will allow them to get instant loans when needed, preventing them from being forced to take out loans at high-interest rates.
Relief in this regard
It’s worth noting that currently, the rules related to single-counterparty exposure limits for gold loans by NBFCs are quite strict compared to other NBFCs. Gold loans are inherently secure, and their repayment record is also very good.
If their exposure limit is increased to the standard 20 per cent of Tier-1 capital, NBFCs with sufficient capital will be able to utilise their capital effectively. Surprisingly, this could also boost the gold industry.