Cholamandalam Investment & Finance Company, a key player in the vehicle finance segment, has entered the gold loan business with plans to build a Rs 1,500-crore loan book over the next few years.
“As a lender, we want to be present in all the secured lending segments,” D Arul Selvan, president and CFO of Cholamandalam Investment & Finance Company, told FE. “Gold loans is one segment where we haven’t participated so far, and want to start now.”
Selvan said the availability of stronger security features and better fraud detection tools compared to earlier years have encouraged the company to look at the segment more seriously. “Also, gold is a secured asset, and most of the time, its price only appreciates.”
Chola also sees a synergy in the customer profile of vehicle finance and gold loan which the company plans to leverage.
Selvan, however, said the company’s existing branch network cannot be fully utilised for gold lending since it requires dedicated branches with robust storage infrastructure. “We are now launching new branches exclusively for gold loans.”
The company aims to roll out the offering through 120 branches with initial focus on the southern and eastern regions. Cholamandalam Investment is the latest lender to enter the gold lending business, which recently saw the entry of Poonawalla Fincorp, Belstar Microfinance (a Muthoot Finance arm) and L&T Finance, besides several fintechs and lending startups.
The foray into gold loans is part of Chola’s broader strategy to diversify its portfolio beyond vehicle finance, which currently accounts for 55% of its Rs 1.85-lakh-crore assets under management (AUM) as of FY25.
The lender is targeting to bring down the share of vehicle finance in its overall portfolio to 50%. “We are on track. Vehicle finance will account for around 52–53% in FY26 and 50% in the year after,” Selvan said.
Chola has steadily been expanding its non-vehicle portfolio, including mortgage products such as loan against property, home loans, consumer & small enterprise loans (CSEL), and secured business loans. These products accounted for 45% of its assets in FY25, up from 31% in FY22.
The company’s AUM rose 27% year-on-year to Rs 1.85-lakh crore in FY25. However, the growth rate was lower than 37% recorded in FY24. Selvan attributed the slower growth to muted demand in the commercial vehicles segment.
Vehicle finance AUM grew 20% to Rs 1.01 lakh crore in FY25, down from a 26% growth in FY24. “This year, vehicle finance AUM will grow in the range of 15–20%,” Selvan said, adding that other products, especially in the mortgage segment, are expected to grow at a faster clip, helping the company achieve an overall AUM growth of 25% in the current fiscal.