Shree Ganesh Jewellery House Ltd (SGJHL), a Kolkata-based manufacturer and exporter of handcrafted gold jewellery, plans to foray into finance by offering loan against gold to its customers. The company has applied for an NBFC (non-bank finance company) licence to the Reserve Bank of India.

“We applied for an NBFC licence in February this year and are awaiting RBI's approval for the same. Once we get the licence we plan to offer loan against gold to our customers,” said Mr Ashok P. Sahni, Chief Financial Officer, SGJHL.

Mr Sahni, however, refused to divulge details regarding the investments for the same. “We are in the planning stage, once we receive the approval we will look into that (capital adequacy ratio) matter and the likely investments for the same,” Mr Sahni told Business Line .

Procuring a licence from the RBI could take anywhere between three and twelve months, he added.

Once it receives the necessary approvals, SGJHL will set up stores across the country, particularly in the Tier II and Tier III towns to tap its prospective customers.

“Loan against gold is a very big market and it is largely untapped by the organised sector yet. So we see an excellent opportunity in this space,” he said.

Market size

Talking about the size of the market, a senior official in the industry said, “Considering that close to 20,000 tonnes of gold are held by individuals in the country and 10 per cent of it comes for mortgage, then the total loan book position should be Rs 4,00,000 crore. The industry has not penetrated even 10 per cent of that.”

Financial companies such as Manappuram Finance and Muthoot Finance specialise in such loans.

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