The opportunity is clear.
Indians have traditionally used gold as a store of wealth and hold 10 percent of the global supply, much of it in jewellery.
At the same time, more than half of Indian adults operate outside of the formal financial sector, according to the Reserve Bank of India.
The risk for the industry is that high interest rates and margins and the potential excesses of accelerating competition will draw a regulatory backlash of the sort that has crippled India's once-soaring microfinance sector.
Although gold is currently trading at more than $1,500 an ounce and hit a record $1,575.79 on Monday, a plunge in gold prices would erode the value of collateral held by lenders and undermine demand as borrowers receive less cash.
Image: The American giant Goldman Sachs is among the global banks who are gung-ho about the Indian gold lending market.