The rush into gold loans is beginning to look less like a trend and more like a strategic shift across India's non-banking finance sector. Within a span of weeks, Tata Capital acquired a controlling stake in Kerala-based Yogloans, Godrej Capital bought the gold loan business of Kanakadurga Finance and Aditya Birla Capital announced plans to build a dedicated gold loan franchise with 1,000 branches.
Gold acquired a brighter glitter in the past few years as prices skyrocketed. However, large financial groups like Tata, Godrej and Birla, which are drawn to gold loan segment, are not chasing just glitter. The rise in gold prices may be a big driver but there are deeper reasons which suggest it's not just a gold rush but a strategic shift in business.
