By Sutanuka Ghosal

Copyright indiatimes

iStock”The rise in gold prices over the past year has boosted collateral values, enabling borrowers to secure higher loan amounts.”

Rising gold prices have led to an increase in the average ticket size of gold loans and also attracted high networth individuals to opt for these products. Rajesh Sharma, Managing Director, Capri Global Capital Limited, explains what it means. Excerpts from the interview:Gold price is inching upwards every day. What impact is this volatility in prices having on the gold loan sector?As of early September 2025, gold prices are hovering near record highs, driven by heightened global uncertainty, strong investor demand and a weaker rupee. This sustained rally has a multi-faceted impact on the gold loan sector.On one hand, elevated gold valuations directly increase borrowing potential. Borrowers can access higher loan amounts against the same quantity of gold, thus enhancing liquidity access, especially for rural and semi-urban segments.On the flip side, rising gold prices inject greater volatility into the market. Recognising this, we’ve reinforced our risk management framework, maintaining conservative & disciplined LTV levels, conducting regular monitoring and ensuring robust underwriting based on both collateral value and borrower repayment capacity.Importantly, gold loans continue to lead India’s retail credit expansion. The sector has emerged as one of the fastest-growing retail credit segments. This enduring demand reinforces the essential role gold loans play in financing households and businesses.Live EventsHas there been an increase in average ticket size of gold loans in the first five months of FY26 compared to the same period last year? Why?Yes, the average ticket size of gold loans has recorded an appreciation in the initial months of FY26 compared to previous year. The rise in gold prices over the past year has boosted collateral values, enabling borrowers to secure higher loan amounts. Consequently, our average ticket size has grown by around 10%, reflecting both enhanced valuations and stronger demand for liquidity. At the same time, reliance on gold loans continues to rise among households and small businesses. The growing preference for quick, hassle-free liquidity, supported by our digital onboarding services remains a key factor driving this momentum.It is being heard that HNIs are also opting for gold loans. What is the driving factor for HNIs opting for gold loans?That’s correct. We are seeing a growing trend of HNIs opting for gold loans, not as a necessity but as a smart liquidity management tool. For HNIs, this means unlocking value from idle gold holdings instantly, without disturbing their long-term investments. The combination of technology-led convenience, competitive interest rates, and quick turnaround times has positioned gold loans as an efficient solution for meeting working capital requirements or capturing new market opportunities. This trend underscores how digital innovation is reshaping secured credit, even for the affluent segment.The imposition of a 50 per cent US tariff has impacted the MSMEs most. MSMEs opt for gold loans as they sometimes fail to access credit from the formal banking sector. Will the US tariff impact gold loan offtake by the MSMEs?The recent imposition of higher US tariffs has undoubtedly created headwinds for MSME exporters, particularly in sectors such as textiles, handicrafts, and engineering goods. This pressure can affect their working capital cycles and impact cash flows. In such scenarios, gold loans could be one of the preferred financing options, given its speed, ease of access, and minimal documentation. We anticipate that MSMEs may increasingly turn to gold loans to bridge liquidity gaps and sustain operations during these challenging times. We are further strengthening our service capabilities to ensure we can cater to this segment of MSMEs with timely credit support. What was the AUM of Capri Loans in FY25? What is the target for this year? How do you plan to achieve the targets?In FY25, Capri Loans closed the year with an AUM of around Rs 22,860 crore, with the gold loan vertical registering an AUM of Rs 8,042 cr — making gold loan a key growth driver. For FY26, we are targeting a strong AUM growth and to achieve this, we plan to expand into new high-potential markets and add branches across South and East India, where the demand for gold loans and MSME credit remains strong.We are also deepening our focus on customer-centric digital solutions, with a fully digital onboarding process and leveraging digital channels. By combining wider physical reach with technology-driven efficiency, we aim to scale responsibly while continuing to meet the evolving credit needs of retail borrowers and MSMEs.What amount of gold is with Capri Loans that have to be auctioned? Has the volume of auctioned gold come down from FY24 to FY25? Why?The volume of gold coming up for auction within our portfolio remains largely linear, with only a slight increase compared to FY24 reflecting the overall stability of our gold loan book. The same is effectively managed through stronger collection mechanisms, proactive early warning systems, and more effective customer engagement. Add as a Reliable and Trusted News Source Add Now!
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