Capri Global Eyes 40% Gold Loan Growth with 400 New Branches

Capri Global Capital projects a significant 40% expansion in its gold loan portfolio this year. Managing Director Rajesh Sharma confirmed this ambitious target, attributing the growth to rising gold prices and a strategic branch expansion.

Sharma explained that higher gold prices empower borrowers to secure larger loan amounts against the same collateral, directly fostering portfolio growth. This trend also helps maintain healthy loan-to-value (LTV) ratios, crucial for asset quality.

Key Growth Projections

• Capri Global aims for a gold loan book of Rs 28,000 crore.
• The company plans to open 400 new branches by December, primarily for gold loan operations.
• Having launched its gold loan business in 2022, the portfolio has rapidly grown to nearly Rs 20,000 crore.

The company anticipates sustained growth from a dual strategy: aggressive branch expansion coupled with data science-driven initiatives designed to boost employee productivity. Sharma highlighted the vast, untapped household gold outside the formal lending system as a key driver of demand.

Yields and Asset Quality Focus

Capri Global’s gold loan portfolio currently yields approximately 18.6%, a figure expected to remain stable between 18% and 18.5%. The company consciously focuses on smaller-ticket gold loans to preserve these yields, opting out of aggressive competition in larger-ticket or teaser-rate offerings.

Funding costs for its short-tenure gold loan portfolio are managed through short-term instruments like commercial paper. Sharma also noted consistent asset quality across secured MSME, affordable housing, and gold loan portfolios, with no significant deterioration observed.

• Portfolio-level LTV currently stands at about 72%.
• Consumption-oriented loans are capped at 75% LTV at disbursement.

Despite potential margin compression for MSMEs due to higher input costs, the company has not recorded a notable increase in cheque bounces or asset-quality stress. Strict LTV monitoring and robust collection processes are central to managing potential gold price fluctuations.

Capri Global’s focused expansion and careful portfolio management demonstrate a clear strategy to capitalize on India’s burgeoning gold loan market, solidifying its position in a competitive sector.