The most prominent non-banking financial enterprise (NBFC) in India, Shriram Finance Ltd., will grow its gold loan business and establish gold loan-specific branches in major markets. This will be a tactical move to diversify its assets and to consolidate its hold in the retail lending market.

The company will use its good network of branches to access more customers, according to the Executive Vice-Chairman Umesh Revankar, particularly in residential places where gold loan requirements are surging steadily.

Focus on Gold Loan Expansion

Umesh Revankar, in an interview with BusinessLine, indicated that the company will put more effort into its gold loan businesses, but not to create new ones, but to strengthen the existing ones.

“Although we are not introducing any new products, we will attempt to expand our coverage with the existing products. We will also intensify operations, especially in gold loans, to increase our gold portfolio. We are planning to open branches of gold loans, said Revankar.

This shows that Shriram Finance is seeking to exploit the increasing demand of the short-term and secured credit west of India using gold as security, where the current market is controlled by such giants as Muthoot Finance and Manappuram Finance.

Gold Loan Branch Strategy

Owing to the security and accessibility requirements of the customers, branches that are found near residential locations are the best to service the gold loans. Revankar underlined that the business model of Shriram Finance will be to provide residential areas with expansion branches that will also provide gold loans, with the addition of dedicated gold loan branches in the selected markets.

“International gold loan branches must be situated in residential locations; hence, our endeavor would be to make sure that the branches that are already situated in residential locations can provide gold loans. And perhaps we may have some gold loan-type incremental branches, he thought.

Such a two-fold method of upgrading the old branches and establishing new branches will assist Shriram Finance in tapping into unexploited areas of gold loan demand particularly in semi-urban and rural areas.

Strong Growth in AUM

Shriram Finance has been registering a strong financial expansion. According to the 2nd-quarter FY26 outcomes of the company:

• And assets under management (AUM) increased 16 percent annually (YoY) to 2.81 lakh crore.

• Commercial vehicle loans constituted 46 percent of the total AUM.

• Loans in passenger vehicles constituted 21%.

• The current ratio of 2% of total AUM as part of gold loans is a great opportunity for the company in the future.

This diversification strategy is clear to diminish dependence on car finance and move to the high-yield and low-risk loan in gold.

Financial Prospect: NIM and Credit Cost

Revankar also expressed optimism of FY26 with regard to finances. He anticipates the Net Interest Margin (NIM) to increase to 8.5 percent at the end of FY26, as opposed to 8.19 percent in Q2 FY26.

He further estimated that the credit cost of the company will still be below 2% which showed good quality of the assets and reduced risks.

“By the end of FY 26, he forecasted that NIM will increase to 8.5 percent as compared to 8.19 percent in Q2 and credit cost would remain below 2 percent in FY 26.

It is a sign of good profitability and financial discipline sustained despite spreading to new areas such as gold lending by Shriram Finance.

Why Gold Loans? The Strategic Advantage

The NBFCs’ lending products are among the most secure and profitable products because of:

1. Low Credit Risk: 80% secured with physical collateral in gold.

2. Very high liquidity: Swift disbursement and short tenures appeal to the borrowers.

3. Economic Uncertainty: Due to the rising prices of gold in the marketplace, gold loans are currently favored as a source of short-term credit.

4. Diversification: Assists in the balancing of the vehicle-dominated loan portfolio of Shriram Finance.

Shriram Finance will tap into consistent yields

Through this segmentation, exposure to the total risk and development of a robust, retail-based business foundation.

Broader Strategy of Shriram Finance.

Shriram Finance is the largest retail-oriented NBFC in India, created from the merger of Shriram Transport Finance, Shriram City Union Finance, and Shriram Capital. The company persists in expanding its base in vehicle financing, MSME loans, personal loans and gold loans.

The most recent announcement made by Revankar is consistent with the overall objective of the company to diversify its portfolio and shed its reliance on vehicle loans.

Industry Context

The Indian gold loan market has been growing at a high rate as the prices of gold are increasing and people are required to access funds immediately. The systematic market of gold loans in India is projected to reach ₹8-9 lakh crore by 2030, according to the industry estimates.

Through this better entrance, Shriram Finance is in a better position to compete with the existing players, using the strength of its well-operating distribution network and access to the rural population.

Conclusion

The proposal of Shiram Finance to increase its gold loan portfolio as well as introduce gold loan branches is an important strategic change to diversify its portfolio and grow its business in retail.

The company can increase its presence in the gold loan segment, which is a market with low risk and consistent returns, with increasing AUM, NIM, and low credit costs.

The focus is quite obvious, as Umesh Revankar stated: expand the existing products but not new ones and reach more customers in the most effective way.

This risk-balanced, customer-focused approach has made sure that Shriram Finance is one of the most reliable NBFCs in India, and we have a definite sustainable growth vision.

Frequently asked questions: Shriram Finance Gold Loan Expansion

Q1. What will the strategy of Shriram Finance be regarding gold loans?

The company will also seek to increase its portfolio of gold loans by establishing gold branches and allowing its existing branches in residential areas to provide gold loans.

Q2. What is the percentage of the AUM of Shriram Finance that is in gold loans?

The current number of gold loans is 2% of the total 2.81 lakh crore AUM.

Q3. What will be the NIM and credit cost of FY26?

NIM will increase to 8.5% in FY 26-end, whereas credit cost will remain at less than 2%.

Q4. What is the reason why Shriram Finance is targeting gold loans?

Gold loans are safe, high-rate lending sources, which aid the company in diversifying other than vehicle finance.

Q5. Does Will Shriram Finance introduce new products?

No, the emphasis is made on the expansion of the given products, particularly gold loans, but not on the introduction of the new one.