Shriram City Union Finance launches gold loan product across 15 branches in Punjab

Chandigarh, April 19, 2022: Shriram City Union Finance Ltd. (Shriram City), a part of the Shriram Group, announced the launch of its Gold Loan Product in 15 branches located across 15 cities in Punjab. The cities include Amritsar, Bathinda, Patiala, Pathankot, Ferozpur, Jallandhar, Ludhiana, Mansa, etc. 

The company has also launched the product in 55 branches across six states including Haryana, Himachal Pradesh, Jammu and Kashmir, New Delhi, Rajasthan, and Uttaranchal. This is to address the growing demand for the product. The company has a strong gold loan franchise in southern India and aims to replicate the success in the northern region.

Demand for gold loans has especially risen for the last two years, where Shriram City’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. 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, 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. 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, Y.S. Chakravarti, MD & CEO, Shriram City said: “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 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.”