Shriram Finance to Expand Gold Loan Portfolio and Launch Dedicated Branches

Commodities

Updated on 03 Nov 2025, 01:58 pm

Reviewed By

Aditi Singh | Whalesbook News Team

Short Description :

Shriram Finance is planning to significantly increase its gold loan portfolio and explore launching dedicated gold loan branches to diversify its asset base. While not introducing new products, the company aims to enhance reach with existing ones, particularly in gold financing. The non-banking financial company (NBFC) reported a 16% year-on-year growth in assets under management (AUM) to ₹2.81 lakh crore in Q2. Gold loans currently constitute 2% of the AUM, with commercial vehicles at 46% and passenger vehicles at 21%. The company also expects loan growth to be between 15-18% for the current fiscal year and has secured shareholder approval for increased borrowing limits.

Shriram Finance to Expand Gold Loan Portfolio and Launch Dedicated Branches

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Stocks Mentioned :

Shriram Finance Limited

Detailed Coverage :

Shriram Finance, a leading vehicle lending institution, is strategically planning to bolster its gold loan business as part of a broader effort to diversify its asset base. Executive Vice-Chairman Umesh Revankar stated the company will focus on increasing its activities in gold loans, potentially establishing specialized gold loan branches. Currently, gold loans represent a small fraction, just 2%, of the company's overall Assets Under Management (AUM), which reached ₹2.81 lakh crore in the second quarter, showing a 16% year-on-year increase. The dominant segments remain commercial vehicles (46% of AUM) and passenger vehicles (21% of AUM).

Revankar also provided an optimistic outlook on loan growth, anticipating it to be better in the second half of the fiscal year compared to the first. While maintaining a guidance of 15% growth for the current fiscal year, the company expects actual growth to be closer to 17-18%. Shareholders have approved an enhancement of the borrowing limit to ₹2.95 lakh crore, alongside additional limits for securitization, providing financial flexibility.

Impact: The strategic push into gold loans aims to reduce Shriram Finance's reliance on the volatile vehicle financing sector, potentially enhancing its overall risk profile and opening new revenue streams. A successful expansion in this segment could lead to improved net interest margins and broader market reach. The company also anticipates its net interest margin to rise to 8.5% by the end of FY26 and maintain credit costs below 2%.

Difficult Terms: NBFC (Non-Banking Financial Company): A financial institution that provides banking-like services but does not hold a full banking license. They can offer loans and other financial products. AUM (Assets Under Management): The total market value of the investments that a financial institution manages on behalf of its clients. YoY (Year-on-Year): A comparison of a value from one period to the same period in the previous year. FY (Fiscal Year): A 12-month period that a company or government uses for accounting purposes. AGM (Annual General Meeting): A mandatory annual meeting for shareholders of a public company. GST (Goods and Services Tax): An indirect tax levied on the supply of goods and services. Repo Rate: The rate at which the central bank (like the RBI) lends money to commercial banks. Net Interest Margin (NIM): A measure of profitability that indicates the difference between the interest income generated by a financial institution and the interest paid out to its lenders, relative to the earning assets. Credit Cost: The amount of money a financial institution loses due to loans that are not repaid.