Digital gold lending platform Indiagold raises $12m led by PayU and others

Indiagold will use the funds to scale the business and roll out its operations nationwide.

Indiagold offers gold backed loans, gold savings and gold storage services to consumers

The gold lending space in the organized market is largely dominated by traditional NBFCs such as Muthoot Finance and Manappuram Finance

Gold-focused digital alternative credit platform Indiagold has raised $12 million. PayU, the payments and fintech business of Prosus, and the Alpha Wave Incubation (AWI) fund, backed by DisruptAD and managed by Falcon Edge Capital, will lead the investment round. Other investors include Better Tomorrow Ventures, 3one4 Capital, RainmatterCapital and existing investor Leo Capital.

Indiagold will use the funds to scale the business and roll out its operations nationwide. Currently, it is operational in Delhi and Indore.

Founded by Nitin Misra and Deepak Abbot in 2020, Indiagold offers gold backed loans, gold savings and gold storage services to consumers. It strives to enable the monetization of India’s private gold reserves by offering a range of credit, savings and investment products.

One of the startup’s offerings, the Gold Locker, allows consumers to keep their gold in a secure locker at affordable rates and also makes the process easier, the company said. It also backs the client’s gold with insurance.

Commenting on the funding, Misra and Abbot added, “India offers a large $650 billion addressable gold lending market which is highly fragmented and currently dominated by the informal segment. Even the formal segment has not adopted large-scale digital practices. Indiagold’s suite of financial products bridges this critical gap by digitally transforming loans into gold.

According to a statement from the company, the informal gold sector accounts for around 70% of gold lending in India. These loans meet the cash needs of Indians who do not have access to unsecured credit used by less than 10% of the total labor force. The Covid-19 pandemic has accelerated demand for short-term, low-cost, secure, and easily accessible formal credit options like digital gold loans.

The gold lending space in the organized market is largely dominated by traditional NBFCs such as Muthoot Finance and Manappuram Finance. Both companies operate primarily through a network of offline outlets and agents. According to a 2018 KPMG report, Muthoot and Mannapuram held almost 81% of the organized market for gold loans. However, slowly startups such as Redwood Back Rupeek and Delhi based gold loan provider Ruptok Fintech slowly emerging in the sector.

Recently, SBI, which is one of India’s largest lenders by assets, announced a disbursement of gold loans worth INR 209.87 billion for the fourth quarter of the financial year 2020-21, i.e. a growth of 4.7 times. RBI also noted that outstanding loans against gold jewelery among banks grew to INR 604.64 billion in March 2021, a growth of 2.25 times. But banks can charge interest rates of around 7% to 15%, so people are warming up to the idea of ​​the formal channel.

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