Rajasthan. Shriram City Union Finance Limited (Shriram City), a unit of Shriram Group, announced the launch of its Gold Loan across 17 branches in 17 cities of Rajasthan. These include Ajmer, Alwar, Udaipur, Jaipur, Jodhpur, Bhilwara, Jaisalmer, Kota, Bikaner etc. The company has launched this product in 53 branches across six states including Haryana, Himachal Pradesh, Jammu & Kashmir, New Delhi, Punjab and Uttaranchal. The company has taken this step to meet the growing demand for gold loans. The company has a strong gold loan franchise in South India and aims to replicate the same success in the Northern region.
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The demand for gold loans has particularly increased over the past two years, where Shriram City’s portfolio contributed 13 per cent of the AUM as of December 2021 as against 10 per cent in the previous year. Overall, gold loan disbursements have registered a healthy growth of Rs 4,610 crore in the nine months of FY22, while the year-on-year growth has been Rs 4,140 crore. This means that there are signs of a better trend in the case of gold loans in FY23. Interestingly, the perception towards taking a gold loan is slowly changing and gold loan is also emerging as an all-weather loan. Gold loan as an asset class today is one of the most convenient ways to avail easy loans to meet the immediate financial needs of individuals/businesses.
Moving in the same direction, the company is targeting an average gold loan ticket size in the range of Rs 50,000 with 75 per cent Limited Loan to Value (LTV). This target has been fixed excluding marginal requirement for additional margin in times of adverse gold price volatility. The company has seen its loan tenure in the range of 5-6 months, while the normal tenure is generally considered to be 12 months, which also reflects the repayment propensity of the borrower. Most of the gold loans offered by Shriram City involve bullet repayment, and the interest rates are very reasonable.
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Commenting on the launch of Gold Loan, Shriram City MD & CEO Y. s. Chakraborty said, “There is a great affinity for physical assets in India, and gold shines the most among them. We pioneered our lending approach to credit-tested customers of Shriram, and have seen strong demand, good credit quality and no pressure on repayment. As of December-21, our gold loan book is Rs 4,110 crore. We will aim to increase the gold book to Rs 15,000-20,000 crore in five years. We have a strong franchise for gold loans in South India, and most of our business comes from this region. Now we will repeat all those practices in the north with the help of which we have achieved tremendous success in this direction and thus we will achieve profitable growth across the country.
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