Shriram Finance expands gold lending despite rising stress

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Shriram Finance Limited (

) plans to continue expanding its gold loan portfolio despite rising repayment delays and asset-quality concerns. On its Q2 FY27 earnings call, management reiterated its target of doubling the gold loan book's share of total assets from around 2.5% to 5% over three years. What happened? The gold loan portfolio stood at approximately ₹9,000 crore. Gross Stage 3 gold loans, overdue by more than 90 days, increased to 3.12% of the portfolio from 2.57% in the previous quarter and 2.28% a year earlier. Management attributed some repayment delays to customers adjusting to EMI and interest-servicing products rather than the traditional bullet repayment structure. The company plans to improve customer communication while continuing its expansion strategy. Why does it matter? Gold collateral provides lenders with a recovery mechanism, but it does not eliminate repayment risk. Rising delinquencies may indicate borrower stress or difficulties adapting to repayment structures. Rapid portfolio growth makes underwriting standards and timely recovery increasingly important. My view The growth opportunity is significant, but rising Stage 3 loans deserve close attention. The key question is whether the deterioration is temporary and product-related or reflects broader borrower stress. Management's explanation needs to be supported by subsequent improvement in repayment behaviour. What I am watching next I would track gold loan delinquencies, collection efficiency, credit costs, loan-to-value ratios and the performance of EMI-based products to assess whether portfolio expansion remains sustainable. No Recommendations Source: NDTV Profit Disclosure: My relatives or associates hold a position in Shriram Finance Limited.