Synopsis: With over 205 tonnes of gold held as collateral, Muthoot Finance manages more gold than several sovereign nations, including Pakistan. Built on trust, disciplined expansion, and a secured lending model, the company has scaled into a gold-loan giant, highlighting the depth of India’s household gold market.
What started off as a gold lending operation in Kerala has today become one of the largest gold-backed NBFCs in the world. The company currently has more than 205 tonnes of gold as collateral, which is more than the gold reserves of several nations, including Pakistan. The secret to its success lies in its unique and successful business model, which involves lending against trusted family jewellery with speed, transparency, and operational integrity. The magnitude of its success also speaks of the massive importance of gold in the Indian financial system.
With a market cap of Rs 1.35 lakh crore, the shares of Muthoot Finance Ltd have closed at Rs 3,353 and are trading at a PE of 15.4 compared to its industry PE of 18.3. The shares have given a return of more than 155% in the last 5 years.
How did the company scale so much?
The history of the company’s expansion dates back to a period when the formal banking system was not accessible, and gold jewellery was accepted as a trusted asset in Indian households. Lending against gold jewellery was a natural way to satisfy the immediate liquidity requirement, particularly in the Kerala state’s urban and rural areas.
The company’s success was based on a simple and transparent lending process, quick disbursal, less paperwork, and transparent charges. Customers could bring gold jewellery to the company, assess its value, and immediately receive loans. Flexible repayment terms and over-the-counter transactions made the process convenient, thereby eliminating the stigma associated with gold loans.
The company had a lean and family-managed model that focused on prudent growth and avoiding leverage. The company did not choose to grow rapidly but instead grew steadily, maintaining operational discipline. As the Indian financial system evolved, the company adjusted to the new environment but remained committed to its gold loan business.
Over the years, the extension of business into other states, apart from Kerala, and the opening of over 4,950 branches in 29 states, as well as other countries, has helped to strengthen its presence. The constant observation of the volume of gold and the loan-to-value ratio, apart from lending only in jewellery and the low default rate of borrowers, has helped to maintain the quality of its assets.
Countries which have lesser reserve than Muthoot
Muthoot Finance has over 205 tonnes of gold as collateral, making it a special case compared to several sovereign nations. On the basis of the World Official Gold Holdings (Feb 2026 IFS) data, several prominent nations have official gold reserves lower than that of Muthoot Finance. These nations include Singapore (193 tonnes), Brazil (172 tonnes), Mexico (120 tonnes), Egypt (129 tonnes), and South Africa (125 tonnes). This comparison illustrates how the company’s gold reserves as collateral compare to, and in some cases, surpass those of mid-sized economies with sovereign status.
Other prominent nations with official gold reserves lower than 205 tonnes include the Philippines (133 tonnes), Qatar (115 tonnes), Greece (114 tonnes), Hungary (110 tonnes), and Indonesia (85 tonnes). Although central banks hold gold reserves for macroeconomic reasons and currency stability, the volume of gold handled by Muthoot Finance indicates the size of the household gold market in India and the success of its secured lending system.
A telling comparison can be made with Pakistan, which possesses approximately 65 tonnes of gold as official reserves, as per the same data set. The gold holdings of Muthoot Finance are thus three times larger than the sovereign reserves of Pakistan. This not only highlights the scale of its gold-backed lending business but also the significance of gold in the Indian financial system, as a private NBFC handles such large amounts of collateral.
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