Godrej Capital aims to build a Rs 5,000-crore gold loan portfolio by 2031 as it looks to diversify the lending business and grow its overall assets under management (AUM) to Rs 1 lakh crore over the next five years, Managing Director and CEO Manish Shah told FE.
The company, which currently manages about Rs 30,000 crore in AUM, sees gold loans as one of the fastest-growing retail lending segments, driven by rising formalisation and an increasing consumer acceptance of borrowing against gold.
Godrej Capital’s first acquisition
On Wednesday, Godrej Capital acquired the gold loan business of Kanakadurga Finance through its subsidiary Godrej Finance. The transaction, the company’s first strategic acquisition, adds around Rs 280 crore of AUM, nearly 12,000 customers, 54 branches across Andhra Pradesh and about 250 employees.
“We believe gold has significant long-term potential as more borrowers move from informal sources of credit to organised lenders. It has become an attractive option for short-term working capital and fits well into our diversified lending strategy,” Shah said.
Shah said the acquisition provided Godrej Capital with an experienced team and an established operating platform, while also allowing the business to benefit from lower borrowing costs and stronger access to capital under the Godrej Group. The company also plans to expand the gold loan business organically into Maharashtra and Gujarat.
Shah said Godrej Capital has turned cautious on lending to sectors exposed to global uncertainties. The company had reduced fresh lending to tariff-sensitive industries and borrowers with lower credit scores and high leverage after witnessing some stress in unsecured business loans last year. Despite the selective approach, overall credit demand across its focus segments remains healthy and the portfolio has remained resilient, with the cost of risk expected to stay below 1%, he said.