Non-performing assets accounted for less than half a percent of Muthoot's retail loan book in recent years.
Its gold loans stood at $2.9 billion at the end of November, about six times their total in March 2008, a listing document showed.
Others ramping up gold lending include Reliance Capital, controlled by billionaire Anil Ambani, and M&M Financial Services, part of the group that controls top utility vehicle maker Mahindra & Mahindra.
They compete in a fragmented industry with the likes of specialists Muthoot Finance and No 2 player Manappuram General Finance and Leasing, banks such as South Indian Bank Ltd, and unregulated moneylenders that charge more.
Organised firms control only one-quarter of an Indian gold loan market worth $50-$60 billion, according to Ambit Capital.