Shree Ganesh Jewellery House Ltd (SGJHL) has acquired a Kolkata-based non-banking financial services company (NBFC), at an undisclosed price, for foraying into the gold loan business.
SGJHL previously sought the Reserve Bank of India's approval for setting up NBFC outfit.
“We had applied for an NBFC licence to the RBI in February. While, it might take sometime to get the due approval, we have taken the acquisition route to fast forward our entry in the segment,” Mr Ashok P Sahni, Chief Financial Officer, SGJHL, told
According to him, the acquired company has an existing portfolio of gold loans. The NBFC would function as a subsidiary of SGJHL and would be operational in the next three-to-four months. Mr Sahni, however, refused to divulge the name of the company and the cost involved in the acquisition.
More outlets
The jewellery major plans to roll out 50 finance outlets across the country through its NBFC arm by this year-end. “Loan against gold will be the primary business of the company. We have already set up 14 outlets. We hope to have 100 stores over the next two years,” he said.
SGJHL's Chairman, Mr Nilesh Parekh, in the company's annual report said the gold loan accounted for a mere 10 per cent of the total loan market in the country and the share of organised market stood at just about 25 per cent.
“Extending loan against gold, will not only help the company generate an attractive interest income, it will do so with collateral that exceeds the value of the loan by a safe margin,” he pointed out.
Considering that the individuals in the country hold close to 20,000 tonnes of gold and 10 per cent of it comes for mortgage, then the total size of the gold loan market would be Rs 4 lakh crore, said a senior industry official.