RISKY BUT STILL THIS COMPANY BET ON THIS BUSINESS...READ NOW

WHY

IS DOUBLING DOWN ON GOLD LOANS DESPITE REPAYMENT RED FLAGS Gold loans are booming in India — but rising defaults are raising questions about how safely lenders can grow. Shriram Finance wants to significantly expand its gold-loan business. The catch? Its gold-loan portfolio is showing signs of rising repayment stress, creating a critical test for its growth strategy. 1. The Big Bet: Shriram Wants to Double Its Gold-Loan Exposure Shriram Finance has set an ambitious target to increase gold loans from around 2.5% to 5% of its total loan book over three years. Gold-loan book: Approximately ₹9,000 crore, according to the latest earnings-call report. Long-term target: Management has also discussed expanding the portfolio towards ₹20,000 crore. Growth strategy: Use its extensive branch network to scale organically rather than relying primarily on acquisitions. -->The Red Flag: Repayment Stress Is Increasing The latest numbers have put asset quality under the spotlight. Gold-loan asset-quality indicator Latest reported figure Gross Stage 3 gold loans 3.12% Previous quarter 2.57% Year-ago level 2.28% Gold-loan book Nearly ₹9,000 crore --->Why Expand Despite the Risk? There are three strategic reasons: 1. A large, underpenetrated market: India's organised gold-loan market has expanded rapidly, supported by rising gold prices and demand for secured credit. 2. Collateral protection: Unlike unsecured lending, gold loans are backed by a physical asset. If a borrower defaults, the lender may recover dues through the collateral, subject to applicable rules and procedures. However, recovery is not automatic or risk-free. --->Stocks That Could Be in Focus MUTHOOTFIN SHRIRAMFIN MANAPPURAM IIFL FINANCE --->What Investors Should Track Next Stage 3 and overdue trends: Are delinquencies stabilising or continuing to rise? Credit costs: Is gold lending increasing the cost of risk?