Shriram Group, the Chennai based financial institution plans to enter into the gold loan segment. The company would be using its strong customer base and branch network as core competencies. Presently, the consumer finance arm of the Group, Shriram city union finance ( Scuf) in into gold loan business.
Since Scuf is operative mostly in Maharashtra and southern India, the auto loan arm of the company, Shriram Transport Finance ( STFC) would also be involved in the business owing to its larger customer base and branch network.
According to STFC MD, R Sridhar, " We will be lending gold loans on behalf of Shriram city union and they will remain in the books of that company. We have over seven lakh truck operators as customers besides a large number of investors. Plus, we have a country wide network of 500 branches. We are aiming to have a gold loan portfolio of Rs 1000 crore".
This would benefit the company in increasing its fee based income and enable it to uses its funds for short term. Shridhar said that as the gold loans churn fast, so it would be easy to maintain the portfolio size.
The scheme has already been launched in Delhi.