“We will target growing the gold (loan) book to Rs 15,000-20,000 crore 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 north the best practices that have worked for us and look at profitable growth pan-India,” Shriram City Managing Director and Chief Executive Officer Y S Chakravarti said in a release.
Demand for gold loans has risen for the last two years. Its portfolio has contributed 13 per cent of the assets under management (AUM) as of December 2021 against 10 per cent in the previous year.
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 per cent, 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. Shriram City has 986 branches and a employee strength of 27,000 across the country as of December 31, 2021. It offers loans for two-wheelers and SMEs as well.