D. Arul Selvan, President and Chief Financial Officer, Cholamandalam Investment
Murugappa Group’s non-banking finance company (NBFC), Cholamandalam Investment & Finance Company Ltd (Chola), is set to enter the gold loan business, targeting a loan book of ₹1,000–₹1,500 crore over a pilot phase of 12 to 18 months. The company plans to roll out the new offering through 120 branches, initially focusing on southern and eastern India.
Last week, the Chennai-headquartered firm announced its formal entry into the gold loan segment in select geographies. “As a lending institution, Chola aims to be present across all major secured lending categories — and gold loans represent a strong secured asset class,” said D. Arul Selvan, President and Chief Financial Officer, in a conversation with BusinessLine.
Selvan explained that Chola initially avoided gold loans because the business requires a dedicated infrastructure—including secure vaults, specialized customer counters, and robust security systems—which the company’s existing branches did not support. Instead, Chola focused on expanding businesses that leveraged its existing setup, such as vehicle finance and loans against property.
“We also waited for robust traceability and security systems to be in place — solutions that enable remote monitoring and auditing of gold holdings at branches. With these technologies now available, we believe the timing is right to enter the gold loan business,” he added.
Chola will initially launch around 100 to 120 branches — though the final number could vary slightly — dedicated to the gold loan business. These branches will mostly be standalone units, with a few possibly located adjacent to existing Chola branches. The rollout will focus on urban centres, particularly in locations where multiple gold loan providers are already active, enabling Chola to tap into existing customer footfall.
Chola’s management revealed during its recent earnings call that an internal study of its customer base showed that they collectively borrow close to ₹1,000 crore per month in gold loans from the market. “If the pilot phase delivers strong results, we plan to expand by targeting our existing customers, many of whom are already active gold loan users,” it added.
The loan ticket size is expected to vary significantly. As per the Reserve Bank of India’s draft guidelines, the maximum loan amount will be linked to 1 kilogram of gold, with lending capped at approximately 75% of that value. At the lower end, loan amounts could range from ₹10,000 to ₹20,000, enabling the company to cater to a broad and diverse customer base.
Each branch will employ at least four dedicated staff members with specialised skills in gold appraisal, customer security management, and handling high-value transactions.
Published on April 29, 2025
