Cholamandalam Investment & Finance Company (Chola) is looking to more than double its gold loan portfolio to Rs 4,000 crore in the current fiscal, riding on strong demand for jewel loans as part of its strategy to diversify beyond its core vehicle finance business.
“We closed FY26 with a gold loan AUM of Rs 1,800 crore in FY26. We would go somewhere in the range of around Rs 4,000 crore in FY27,” Arul Selvan, President & CFO of Cholamandalam Investment & Finance, told FE.
Chola entered the gold loan business in April 2025. In its first full year of operations, the NBFC disbursed Rs 2,469 crore worth of gold loans and built a portfolio of Rs 1,800 crore. The company also added 119 exclusive gold loan branches during the year and plans to open another 360 branches to support growth.
Riding the NBFC Wave
The aggressive expansion comes at a time when gold loans are witnessing unprecedented growth. Outstanding gold loans rose 50.4% year-on-year to a record Rs 18.6 trillion in FY26, driven by soaring gold prices, tighter credit conditions in unsecured lending, and the emergence of gold loans as a preferred collateral-backed borrowing option.
According to credit bureau Experian, gold loan outstandings surged 115% year-on-year to Rs 7.6 trillion in the March quarter of FY26. The growth was led by non-banking finance companies, whose combined market share increased to 40% in FY26 from 28% a year earlier.
Rebalancing Assets
For Chola, the push into gold loans is also part of a broader asset diversification strategy. The company aims to reduce the share of vehicle finance in its overall portfolio to around 50% by expanding its non-vehicle businesses, including loan against property, home loans, consumer and small enterprise loans (CSEL), and gold loans.
The Murugappa Group company ended FY26 with assets under management (AUM) of Rs 2.24 lakh crore. Vehicle finance accounted for 53% of the portfolio, followed by LAP at 23% and home loans at 10%.
“Progressively, vehicle finance will go to 50%, mortgage businesses would be in the 40%-45% range and the rest of the businesses would be 10%-15%,” Selvan said.
For FY27, Chola has guided for AUM growth of 20-23%. On the impact of rising fuel prices, Selvan said the vehicle finance business could see some pressure if diesel prices continue to increase, although freight demand remains the bigger determinant.
“I would say that more than the impact of the fuel price, the impact would arise if there is no load to carry. That is when the demand side drops,” he said.
The company has created a macro provision of Rs 200 crore to cushion its portfolio against any potential fallout from the ongoing West Asia conflict. “Right now, we feel that provision should be okay. How things escalate and what the fallout of this is difficult to predict at this time,” he said.