In the recent past, the gold loan has no longer remained a taboo product but has become more of an optional product.
Be it the business expansion plans or the personal requirements, gold loans have been trailing as the best and most secure option.
Also, the gold loans have gained prominence in the market because there is no underwriting on the customer, but it is on the product.
In an exclusive interaction with ETBFSI, the CEO of Indel Money, Umesh Mohanan talked about the gold loan business in FY24, expansion plans and IPO.
He also talked about a few recent trends in the gold loan business and the increasing regulatory vigilance.
Here are the edited excerpts:
Q: How was the gold loan business in FY24?
The existing tight monetary situation has been fuelling the gold loan business. People use gold as a best tool to avail hassle-free, instant loan. The domestic gold loan market has grown 17% to 18%, and we have clocked 38-40% growth in our gold loan business in FY24.
For this quarter (Q4FY24), we are around nearly closing at Rs 1600 crores of AUM with revenue around Rs 200 crores and profitability around Rs 50 crores.
We are confident of achieving this on account of continuing credit squeeze, high cost of retail credit and the record gold prices.
Q: Any geographical expansion plans?
We are likely to expand our operations to new states like Rajasthan, Gujarat, Andhra Pradesh, Nicobar and West Bengal.
Since the last 2-3 years, we are geographically expanding. Last year we came all the way up to Delhi, we covered Madhya Pradesh, and Uttar Pradesh among others.
Q: What are the plans for IPO?
We are planning to go public by 2027. We haven’t decided on the issue size as of now but since we are driving it towards the Rs 5,000 crore AUM, so that’s the only target.
The issue size, valuation would be quite volatile to the then prevailing markets.
Q: What are the recent trends in the gold loan business?
One of the major trends right now is the rise in gold loan business. It is no more a taboo product. This is bringing more yield per gram for the gold.
Further, with the growth of the organised sectors, there will be more and more growth into this space.
On the other side, the regulators are getting quite strong. So, operators should be proactively engaging with the regulators and are very proactive on taking their directions rather than being very reactive.
Q: RBI/FinMin was vigilant over the gold loan biz in FY24, do the gold loan businesses have any specific plan in the coming year in this regard?
We are reviewing every gold loan account since January 1, 2022, assessing the collateral value and analysing collection charges.
We have been always proactively engaging with the regulators. And at any point of time, whenever they come in, with any sort of suggestions or any sort of directions, we would opt-in.
Q: What are the most common reasons for the borrowers to take gold loan?
Because of the changing credit parameters which is prevailing in our economic atmosphere has come to a point that the gold loan is the only loan product which has been availed in a couple of minutes.
Earlier, the gold loan market has been largely untapped. But now the scenario has changed. The size of the population availing gold loans has increased significantly. The disbursements were doubled and the yield has also gone up.
Also, another key reason is that the underwriting does not take place on the customer’s prevention. But, the underwriting takes place on the purity of the ornament which has been pledged.
