MINING REFINING

Gold loan fintechs get boost as RBI calls for digitization

Fri May 02 2025

The Reserve Bank of India (RBI) is formalising the gold loan market, creating new opportunities for fintechs like Rupeek and Indiagold. However, digitising this cash-heavy and trust-driven sector poses significant challenges, according to industry insiders.

Driving the news:

• BankBazaar has partnered with Muthoot Fincorp to source gold loans, marking one of the first collaborations between a digital platform and a traditional non-banking financial company (NBFC).
• PhonePe has formed sourcing partnerships with various gold loan players.
• Traditionally, banks have relied on fintechs such as Rupeek, Manipal Fintech and Oro to offer technology-led gold loans, competing with large NBFCs.

What’s driving this shift:

• The RBI’s new draft guidelines aim to standardise the gold loan sector and enhance transparency.
• The regulator wants lenders to adopt digital tools and improve underwriting, fostering a role for tech-enabled players.
• New entrants, including Poonawalla Fincorp, InCred Finance, and L&T Finance, are now venturing into the gold loan market.

Why it matters:

• Fintechs, facing pressure in the unsecured lending sector, view secured gold loans as a safer entry point to expand their portfolios.
• Despite regulatory scrutiny and valuation challenges, formalisation may lead to a more straightforward path to sustainable growth.

Source: https://economictimes.indiatimes.com/