Gold-loan assets under management of non-banking financial companies (NBFCs) could grow 15-18% this fiscal despite a poor start in the first quarter, according to rating agency Crisil.

Growth in gold loans was flat in the first quarter because of low disbursements in April and May due to the country-wide lockdown.

With the COVID-19 pandemic-driven lockdowns being lifted slowly and economic activity clawing back, demand for gold loans would rise, especially from individuals meeting urgent personal requirements and from micro-enterprises for working capital to restart businesses, Crisil said in a report.

Gold loans would be preferred also because NBFCs and banks have tightened their underwriting norms for other loans, leading to cautious lending to micro and small enterprises, traders and the self-employed.

Crisil's senior director Krishnan Sitaraman said unlike other asset classes, gold loan has not faced major issues in collection and disbursement, or re-pledge of loans, barring in the stringent lockdown phase in April and May.

With many NBFCs facing collection challenges and a likely increase in delinquencies, fresh disbursements, especially to the MSME and unsecured loan segments, have remained low.

"Consequently, gold-loan financiers are expected to benefit. Preliminary estimates indicate that gold loan disbursements, including re-pledge, at NBFCs have more than doubled sequentially in the second quarter of this fiscal," said Sitaraman.

In August, the Reserve Bank of India (RBI) had increased the permissible loan to value ratio (LTV) for loans against pledge of gold ornaments and jewelery for non-agricultural purposes from 75% to 90%. The increase on LTV ratio on gold loans was for banks and is applicable up to 31 March 2021.