Rajasthan, April 20, 2022: Shriram City Union FinanceLtd. (Shriram City),a part of the Shriram Group,announced the launch of its Gold Loan Product in 17 branches across 17 cities in Rajasthan. These include Ajmer, Alwar, Udaipur, Jaipur, Jodhpur, Bhilwara, Jaiselmer, Kota, Bikaner, etc. The company has also launched the product in 53 branches across six states including Haryana, Himachal Pradesh, Jammu and Kashmir, New Delhi, Punjab, and Uttaranchal. This is to address the growing demand for the product. The company hasastrong gold loan franchise in southern India andaims toreplicate the success in the northernregion.
Demand for gold loans has especially risen for the last two years, where Shriram City’s portfolio hascontributed 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, indicatingbettertrends inFY23. Interestingly, the perception towards taking a gold loan is slowly changing, and Gold loans are also emerging as an all-weather loan. Today, gold loan as an asset class is one of the most convenient resorts to avail easy credit to address the immediate financial requirements of individuals/businesses.
Going forward, the company is targeting an average gold loan ticket size in the range of Rs. 50,000, withlimited Loan to Value(LTV)at 75%, leaving the scope of the marginal requirement for additional margins in times of adverse gold price fluctuations. Over a period, the company has seen the life of its loan in the range of 5-6 months despite the usual tenure norm of 12 months, reflecting the borrower’s propensity to repay. Most of the Gold loans offered by Shriram City involve bullet repayments, and the interest rates are very reasonable.
Commenting on the launch,Mr. Y.S. Chakravarti, MD & CEO, Shriram Citysaid:“There is a great opportunity, and immense affinity toward physical assets in India, and gold shines the brightest among them. 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 Rs 4,110 cr. We will target growing the gold book to Rs.15,000-20,000 croverfive 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 practicesthat have worked for us and look at profitable growth Pan-India.”
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