Gold loans have emerged as a glittering opportunity for fintechs at a time when pure-play digital lenders are experiencing stress on their books. Early movers in the space are particularly well-placed to grow rapidly.

Bengaluru-based Rupeek, one of the first gold loan startups in the country, has grown at a feverish pace in the past two years. As of June last year, it had assets under management (AUM) of around Rs 1,500 crore, up 129% from Rs 653 crore in March 2020. Recently, the company announced it had clocked up a billion-dollar annual disbursement run rate in December.

“Rupeek had set a target of about Rs 500 crore of monthly disbursals, but it seems to have exceeded this by doing close to Rs 600 crore of disbursals,” said a senior executive at another fintech who tracks Rupeek closely.

This is significant given that the company was founded by IIT alumnus Sumit Maniyar only six years ago. Its rising profile is partly linked to the upswing in the sector. RBI’s data shows that the current outstanding loan against gold jewellery in the country was Rs 65,630 crore as of November 2021, a spike of 130% from Rs 28,478 crore in October 2019. 

Both Rupeek and the industry have plenty of room to expand: over 80% of the gold loan market is still unorganised and dominated by pawnbrokers. But this is also a tricky business, where many customers borrow money as a last resort after exhausting their options at formal financial institutions. Plus, the fluctuating gold price affects the underlying asset valuation.