Shriram Finance plans to double its gold loan portfolio to 5% of its total assets within three years. The company is also focusing on growing its MSME lending business to 20% of its loan book. This strategy aims to leverage its massive branch network to capture growth in secure retail and small business segments.
Detailed Coverage
Shriram Finance is shifting its lending strategy by focusing on faster growth in the gold loan and micro, small, and medium enterprise (MSME) segments. As of June 2026, the company reported gold loans worth Rs 7,514 crore, which makes up about 2.39% of its total loan book of Rs 3.13 lakh crore. The company intends to double this share to 5% over the next three years.
Expanding Gold Loan Presence
The gold loan portfolio has shown strong momentum, recording a 46% year-on-year increase in the first quarter of fiscal year 2027. This growth reflects the broader trend of financial institutions increasing their exposure to gold-backed lending, driven by rising gold prices and steady demand from Indian households. Unlike some competitors that have used acquisitions to enter this space, Shriram Finance plans to achieve this growth organically. The company aims to use its extensive reach of more than 3,200 branches and its existing customer base of over 1 crore people to cross-sell these products.
MSME Growth and Portfolio Changes
Alongside gold loans, the company is targeting a 20% share for its MSME loan portfolio in the coming years. As of June 2026, MSME loans stood at Rs 41,962 crore, marking an 8% increase compared to the previous year. This segment is currently the third-largest in the company's assets under management. Management believes that the MSME sector offers significant opportunities, supported by the company's recent capital infusion from MUFG.
While the company is pushing growth in these retail-focused segments, other parts of its business are seeing different trends. Notably, the construction equipment segment, which is the company's fourth-largest by assets, saw a contraction. The assets under management for construction equipment dropped by approximately 25.17% to Rs 12,373 crore for the quarter ending June 2026.
Investor Monitorables
For investors, the success of this strategy will depend on the company's ability to maintain asset quality while growing these newer portfolios. While gold loans are generally considered secure due to the collateral involved, expanding into MSME lending requires careful credit assessment, especially as competition in the small business lending space remains intense. Investors may track future updates on the growth rates of these specific segments and whether the decline in the construction equipment portfolio stabilizes or continues in the coming quarters.