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IIFL Finance says two-thirds of the company's portfolio is gold loan and home loan. Nirmal Jain, Founder and Chairman of IIFL Finance, told CNBC-TV18 on Thursday, that there is a significant increase in gold financing from banks and new NBFCs and that there is a pressure of competition in terms of growth.
He “There is definitely a significant increased competition by banks as well as many new NBFCs. We have been able to maintain some growth because we expanded our branch network by 40 percent in the last 18 months,” he said.
“This year, we are feeling the pressure of competition in terms of growth, otherwise, our expanded networks would have delivered more,” said Jain.
According to him, growth is a function of gold prices because in 2021, when gold prices went up almost 40 percent every gold loan company grew well because the ability to loan against the same pattern of gold was much higher.
Also Read: Residents now allowed to hedge gold price risk on recognised exchanges in IFSC — Who will benefit?
Talking about business, Jain said, “2/3rd of our portfolio is gold loan and home loan where the collateral is very good. And historically, most of the mortgage players as well as gold loan companies would not have had any significant loss through the cycle because you can realize the collateral whether it's a house property or gold which doesn't depreciate unlike many other collaterals.”
The stock of IIFL Finance gained more than 58 percent in the last one year. The company recently entered into an agreement with Capital Group and obtained a co-lending commitment for nearly $2 billion. IIFL Finance will cater to the un-banked and under-banked segments in India. The company has tie-ups with SBI, DBS Bank and the Central Bank of India.
For more details, watch the accompanying video