Shriram City Union Finance extends gold loan offerings in 7 north Indian states
Premium- Gold loan products will be made available through 70 branches in Punjab, Rajasthan, Haryana, Himachal Pradesh, Jammu & Kashmir, New Delhi, and Uttarakhand.
Shriram City Union Finance on Tuesday announced the launch of gold loan facility in the states of Punjab, Rajasthan, Haryana, Himachal Pradesh, Jammu & Kashmir, New Delhi, and Uttarakhand. Gold loan products will be made available through 70 branches in these seven states.
“The company has a strong gold loan franchise in southern India and aims to replicate the success in the northern region," Shriram City Union Finance said in its statement.
Data shows that demand for gold loans rose significantly in the first year of Covid-19. Shriram City Union Finance said the demand has especially risen for the last two years, where the company’s portfolio has contributed 13% of the AUM as of December 2021, against 10% in the previous year.
“Overall, gold loan disbursals have observed a healthy growth of Rs. 4,610 crore in the nine months of FY22 compared to Rs. 4,140 crore year-on-year, indicating better trends in FY23. Interestingly, the perception towards taking a gold loan is slowly changing, and gold loans are also emerging as an all-weather loan," the company said.
“We initiated our approach of lending to the credit-tested customers of Shriram, and have seen strong demand, good credit quality, and no stress on repayments. Our gold loan book as of Dec-21 stands at ₹4,110 cr. We will target growing the gold book to Rs. 15,000-20,000 cr over five years. In South India, we have a strong franchise for gold loans, and the majority of our business comes from this region. We will replicate in the north the best practices that have worked for us and look at profitable growth Pan-India," said Y.S. Chakravarti, MD and CEO, Shriram City. “There is a great opportunity, and immense affinity toward physical assets in India, and gold shines the brightest among them."
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The company is targeting an average gold loan ticket size in the range of ₹50,000, with limited Loan to Value (LTV) at 75%, leaving the scope of the marginal requirement for additional margins in times of adverse gold price fluctuations.
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