To meet their immediate needs, a large part of the Indian population turns to the only asset they have: gold. The need for less paperwork and faster disbursements also makes gold lending a popular choice. To better understand this new phenomenon, we struck up a conversation with an industry veteran Meghraj Jain, the managing director of one of the fastest growing NBFCs in India today, Mangal Credit and Fincorp Ltd. Before even starting his business, Mr. Jain had worked for several years in various companies related to gold lending. Review what he has to say about this uptrend.

Meghraj Jain, MD, Mangal Credit & Fincorp Ltd.

Despite the pandemic, your business performed remarkably well this fiscal year and experienced 28% growth in your AUM. What is your opinion on this incredible performance?
The launch of our retail lending products at just the right time is perhaps the main factor that has fueled Mangal Fincorp’s growth despite the pandemic. By analyzing the situation and its needs, this August we put in place gold loans as well as unsecured personal and business loans. There has been a serious liquidity crisis in the market for some time now due to the shutdown of several other industries. This in turn gave our gold loan products, helping us achieve our goal. But, of course, while other factors may be favorable, the gold lending market remains one of the most competitive areas. The fact that we were able to achieve these numbers despite being a start-up highlights the depth of our knowledge and expertise in the sector in question.
What are some of the unique products that have helped you achieve such a bottom line?
There are several innovative products that Mangal Fincorp has recently launched in the market, some of which have completely changed the face of the gold lending industry. We have become the first and only NBFC in India to offer loans for gold and diamond jewelry. To make the loans more accessible, there are no processing or registration fees. We have also given priority to the rapid disbursement of fees as well as competitive interest rates.
How do you plan to take advantage of this growth? What are your business growth plans?
Encouraging figures from the last financial quarter have prompted our team to develop plans to capitalize on the growth. The first of these plans that we plan to achieve in the first quarter itself is to create at least six to eight new branches to cater for our ever-growing family of customers. We also plan to take our interstate operations with plans for new branches in Gujarat.
Besides the physical branches, we are eager to embrace digitization in the form of TCS software. We’re even planning to go paperless in our gold lending process. With the software to support our processing, we expect the time taken to take out a loan to be much less and we can provide more personalized and efficient customer service. In addition, we are also trying to integrate new payment gateways for a better collection mechanism in the years to come.
We are also constantly working to increase the strength of our sales team. Our target AUM for 2025 is 500 cr, keeping the calculations conservative.
You have worked in this industry for over 25 years. How has this experience helped you build this successful business?
With 25 years of real market experience under my belt, I have made some personal observations that you cannot get by just going through facts and figures. One of these observations is that after traditional banking, the gold lending industry is the most preferred choice. The lending and borrowing part of this industry makes it accessible to a larger part of the population. In addition, working closely with retail clients allowed me to better understand their needs and expectations. It helped me find personalized solutions that perfectly meet their needs. One of these customization solutions is of course the loan that we offer against collateral of diamond jewelry. This product is one of a kind in the entire financial industry in the nation.
What is the potential of the industry? How do you think the industry will behave this year?
If you look at the whole financial scenario of the country, you will see that due to the stagnation in other industries, people are facing monetary problems. With no signs of improving the pandemic situation, we cannot expect conditions to change anytime soon. So naturally, the cash flow crisis prompts people to explore different options for liquidating their assets. Now combine this fact with the unique economic configuration of our nation. The majority of our staff own a substantial amount of assets in the form of gold and diamond jewelry. Considering these factors, the gold lending industry is expected to experience even faster growth in the coming quarters.