The deal, which brings Godrej Capital assets under management (AUM) of about Rs 280 crore, is structured as a portfolio and team transfer rather than a company acquisition. The Vijayawada-headquartered lender’s 54 branches and staff will move over, while the gold loan book itself shifts onto Godrej Capital’s balance sheet. The company plans to expand its specialised gold loan branches to 350 in the next five years.
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“We see this as an opportunity for us over the next five to 10 years, to build a (Rs) 5,000-crore gold loan business,” Shah told ET, describing the acquisition as foundational rather than an end in itself. “We really see this being the focal point around which we build our gold business.”
According to him, the expansion will follow two tracks. Godrej Capital will deepen its presence in Andhra Pradesh and push into neighbouring Telangana, Tamil Nadu and Karnataka, while simultaneously launching gold loan operations from scratch in Gujarat and Maharashtra, markets where it already has other lending businesses.
Shah said the strategy is not about cross-selling through shared branches but about building parallel networks that reinforce brand visibility across Godrej’s lending and housing finance businesses in the same districts.
“I have yet to find a single business that we are in that does not have strong competition,” he said regarding competition in the gold loan business. Godrej Capital’s confidence, he said, stems from the sheer scale of the opportunity rather than any edge over rivals.
India’s organised gold loan market, currently around Rs 11-12 lakh crore, is expected to nearly double over the next five years, driven by borrowers moving from informal, high-interest lenders, where rates can run to 35%, to regulated players charging 12-18%.
Godrej Capital’s Rs 5,000 crore target represents a small slice of that expanding pie, Shah said. “It’s less about how we compete, it’s more about how we deliver quickly in our decisioning and quickly in disbursing the loans,” he said.
On risk, the company keeps loan-to-value ratios conservatively below the regulatory ceiling, based on trailing monthly gold prices rather than spot rates. The short tenure of gold loans — typically three to 12 months — also cushions against price swings. “You have reasonable protection against reasonable volatility,” Shah said.
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Gold loans form part of a broader Rs 1 lakh crore AUM target Godrej Capital has set for 2031, split roughly between a Rs 70,000 crore non-banking financial company and a Rs 30,000 crore housing finance portfolio.
Within housing, affordable housing is expected to account for half of new originations within 18 months, even as AUM continues to skew toward prime in the near term, according to Shah. The group crossed Rs 30,000 crore in overall AUM this year, with credit costs held under 1%.
“We’re quite pleased that despite Covid we’ve managed to reach milestone number one, which is not just Rs 30,000 crore—we’re profitable this year and hope to exceed Rs 500 crore in pre-tax profit in our lending business,” Shah said. “We’re arguably among the fastest non-banks, particularly on the retail side, to get to this mark.”