Annual report
Gold loan :
growth forecast :
It also forecasts that the assets under management (AUM) of gold loan NBFCs would experience growth of 6% during FY 2022, and 11.4% during the FY 2023, as a result of the industry’s continued emphasis on expansion.
With our long-term focus, solid business model and brand, we are confident of registering a 10-15% growth in gold loans in the coming fiscal unless any further challenges come up.
competition :Company believe this is a temporary phenomenon as the levels at which
industry players are operating are unsustainable. We foresee the situation
to normalize in the next few quarters.
Gold loan industry :
the major share of gold loan stays with moneylenders and the informal sector. About just a third of India’s US$ 128 billion is under the organised sector.
Credit cost :
On the other hand, it is anticipated that the cost of credit would not change.
Non gold :
We see good potential in our non-gold businesses as well. We have established solid competencies in them, and now with the rural markets improving, our teams are actively reaching out to customers for business development.
Gold loan by MFI :
In the MFI businesses, the regulatory decision to increase proportion of secured loan book (other than microfinance) to 25% of the portfolio is a welcome move. With this, Asirvad Microfinance has initiated gold lending to improve quality of assets and so far, it has opened 320 branches exclusively for this business.
Microfinance outlook :
On the back of a resurgence in industry growth that might reach 30%, India Ratings has revised upwards its outlook on the microfinance industry to ‘neutral’ for FY 2023, moving it up from ‘negative’ in FY 2022. In comparison to the below 10% increase in AUM (assets under management) seen in each of the prior two years, it is expected that the industry will experience growth of 20%-30% in both FY 2022 and FY 202
Automobile industry growth
The volume of domestic vehicle sales has been projected to increase 5%-9% annually in FY 2023, following three consecutive years of constant decline in growth.
Home loan :
In FY 2023, housing finance businesses may increase by 13% annually, compared to 11% recorded in FY 2022, according to India Ratings and Research
OPPORTUNITIES:
Unexplored Potential of gold loan :
The World Gold Council estimates India’s privately held gold reserves to be between 20,000 and 25,000 tonnes. The primary objective of the gold loans business model is to inject liquidity into this inventory, which is currently mostly untapped.
Level Playing Field:
The Reserve Bank of India (RBI) has mandated that a standard restriction on LTV of 75% be applied to both banks and NBFCs. This has created a level playing field, which is beneficial to NBFCs.
unorganised sector :
Despite the expanding network of the formal sector, the informal sector continues to dominate the market for gold loans as a whole, presenting an opportunity to expand the network and acquire the informal sector’s business.
RISKS AND THREATS
AUM growth can be negatively impacted by a decrease in the price of gold.
Greater competition from NBFCs/banks/fintech could harm AUM growth and profits.
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