Gold has long served as one of the preferred saving instruments for Indians. There is also a tradition of using gold as collateral to borrow money—the total amount of credit against gold jewelry was around Rs 74,000 crore as of March 2022.
One of the reasons why Indians choose loans against gold is that it’s easily accessible: 65% of India’s total gold reserves are in rural India. And then, just like personal loans, people can use the credit for different purposes, ranging from working capital for their business, spending on a household, or anything else.
Unsurprisingly, entities like Muthoot Finance and a few startups including Rupeek and Indiagold are trying to tap into this space, which has remained largely unorganized. A Mumbai-based startup, Bold Finance, is also making efforts to leverage this market with a new approach: allowing people in tier 2 and tier 3 cities to get credit via their nearest jeweler.
Think of us as “Oyo of gold loans,” Bold Finance co-founder Durgesh Suthar told Entrackr while explaining the company’s proposition. The objective is to develop a network of jewelers and build a gold loan business at a much larger scale than any other bank or NBFC would be able to do so, he added.
Simply put, Bold Finance partners with small jewelers and rebrands them as credit franchises. These jewelers approve gold loans using the company’s platform. At the backend, Bold Finance’s partner bank underwrites the loan.
Suthar highlighted that, unlike its rival Rupeek, Bold Finance focuses on smaller cities and low and middle-income groups. Also, the model helps open up the possibility of having deeper reach in an area as compared to entities like Muthoot. For customers, it aims to make things more accessible.
“Our reach in the geography we operate is also 3-5x more than Muthoot or similar competitors,” he claimed.
Founded in November 2021 by Suthar and Nikhil Jain, Bold Finance raised an undisclosed sum in pre-seed funding from Antler earlier this year.
The company has partnered with 35 jewelers as of now and is operating in the suburbs of Mumbai. At the moment, customers can get credit between Rs 10,000 and Rs 15 lakh for a period of six months through the platform.
In the next three to six months, the startup aims to expand its operations in the suburbs of Mumbai and gradually reach the Gujarat border in line with its focus on smaller towns. The company is contemplating expanding its product portfolio to add more services. Some of the possible new features on the platform include a gold savings scheme, which is inspired by the SIPs in the banking sector.
“Our vision is to enable financial freedom for ‘Bharat’ which is for the next 400 million users, which are mainly from the lower- and middle-income groups… we hope to evolve into a no-code financial service provider for them,” Jain told Entrackr.