Gold Loan NBFCs - Unbreakable Niche: Nirmal Bang

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Nirmal Bang Report

Gold loan non-banking financial companies are operating in a niche segment which is unlikely to be targeted by banks.

We base this conclusion on our recent interaction with a gold loan-focused fintech.

Despite the banks’ high inclination towards the product because of its perceived risk-free nature and high profitability, the challenges related to distribution and overall execution are major supply-side deterrents.

For perspective, consider that Muthoot Finance Ltd.’s branch count is 84% of HDFC Bank Ltd. while its loan book is less than 9% of HDFC Bank’s retail book.

From a demand standpoint, pricing is one of the factors but not a decisive one alone.

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