- Capri Global Capital expects a 40% growth in its gold loan portfolio this year, aided by rising gold prices
- Higher gold prices allow larger loans and help maintain acceptable loan-to-value ratios for asset quality
- The company targets a gold loan book of Rs 28,000 crore, expanding with 400 new branches by December
Capri Global Capital expects its gold loan portfolio to grow by around 40% this year, with rising gold prices supporting both loan growth and asset quality, Rajesh Sharma, Managing Director of Capri Global Capital, told NDTV Profit.
Sharma said higher gold prices allow borrowers to draw larger loan amounts against the same collateral, creating room for stronger portfolio growth. At the same time, higher gold prices help keep loan-to-value ratios within acceptable levels, which can support asset quality.
“Growth and asset quality both impact positively,” Sharma said in the interaction.
Gold Loan Book Targeted To Rise To Rs 28,000 Crore
Capri Global Capital's gold loan portfolio grew 111% last year, and the company is targeting at least 40% growth this year, according to Sharma.
The company plans to add another 400 branches this year, with the majority expected to be gold loan branches. Sharma said the expansion is expected to be completed by December.
Capri Global started its gold loan business in 2022 and has built a portfolio of nearly Rs 20,000 crore in less than four years. The company is now targeting a gold loan book of around Rs 28,000 crore, with growth expected to come from branch expansion as well as data science-driven schemes aimed at improving employee productivity.
Sharma said the company remains confident about demand for gold loans despite increasing competition. He pointed to the large pool of household gold that remains outside the formal lending system, saying the shift from informal lenders to banks and NBFCs can support industry-wide growth.
Gold Loan Yields Seen Stable
Capri Global's realised yield on its gold loan portfolio is currently around 18.6%, and Sharma expects it to remain in the 18%-18.5% range through the year.
The company is focusing on smaller-ticket gold loans rather than competing aggressively in larger-ticket loans and teaser-rate offerings. This strategy, according to Sharma, should help the company maintain its yields while growing the portfolio.
On funding costs, Sharma said the company does not expect significant pressure as it can use short-term instruments such as commercial paper to fund the short-tenure gold loan portfolio.
MSME Book Shows No Signs Of Stress Yet
On asset quality, Sharma said Capri Global has not seen a significant deterioration in its secured MSME, affordable housing or gold loan portfolios.
While higher input costs could lead to some margin compression and cash-flow pressure for MSMEs, the company has so far not seen a meaningful increase in cheque bounces, asset-quality stress or a decline in demand. Sharma said the company will continue to monitor the situation over the next quarter.
For gold loans, he said the company follows a strict LTV process. Its current portfolio-level LTV is around 72%, while some income-generating loans can go up to 80% based on the borrower's income and repayment track record. Consumption-oriented gold loans are generally capped at 75% at the time of disbursement.
Sharma said the company's LTV monitoring and collection process helps manage the impact of fluctuations in gold prices on the portfolio.
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