Gold Loan Providers expand into Home and Auto Finance to Cut Risk

Speak to the Reserve Bank of India’s apprehension over risk of concentration in single product financing, now gold loan firms are expand their business into automobile, housing and micro-finance businesses.

Muthoot Finance plans to extend its services to housing finance and white-label ATMs, while Manappuram Finance too thinks housing, automobile as segments worth looking at for diversification. “RBI has been often mentioning about the risk of concentration in single product financing companies.

As far as white-label ATMs are concerned, Muthoot sees it as both, an opportunity as well as a necessity. “RBI has been talking about likely restrictions on cash disbursements of gold loans. If such a scenario occurs, white-label ATMs will provide us the necessary infrastructure even in smaller cities to disburse loans. Further, the penetration of ATMs in the country is very low. In many western countries, white-label ATM model has been working successfully,” he added.