Muthoot FinCorp Joins Hands with BankBazaar to Launch Digital Gold Loans

BankBazaar.com has partnered with Muthoot FinCorp to offer a digital gold loan product. This marks BankBazaar’s entry into the secured lending segment. Muthoot FinCorp, which operates in the gold loan space, will manage the operational aspects of the product.

Investment and Funding Round

As part of the collaboration, Muthoot FinCorp has invested ₹15 crore in BankBazaar’s ongoing Series D2 funding round. The total amount raised in the round now stands at ₹55 crore. Following this, BankBazaar’s valuation is estimated at ₹1,700 crore. Muthoot FinCorp’s contribution accounts for approximately a 1% equity stake in the company. The remaining ₹40 crore in the round has come from existing investors.

Operational Roles

The responsibilities have been divided between the two companies:

• BankBazaar will handle digital onboarding, customer engagement, marketing, financial literacy initiatives, and credit score improvement support.
• Muthoot FinCorp will be responsible for KYC, gold valuation, loan disbursal, storage, and compliance with lending regulations.

The loan disbursal process will follow a hybrid model, combining digital interfaces with physical services.

Market Context

A large portion of India’s gold loan market continues to be served by informal and unregulated lenders. Current estimates suggest nearly 65% of gold loans are outside the formal sector. The companies plan to move more borrowers into the regulated financial system by providing structured gold-backed loan options.

Read more: Muthoot FinCorp Opens ₹400 Crore NCD Issue with Yields Up to 10.10%!

Use and Demand

Gold loans are secured loans where the borrower pledges gold as collateral. They are commonly used for short-term credit needs, particularly among individuals and small businesses. The product offers an alternative to unsecured personal loans.

Company Performance

BankBazaar reported 62.5% growth in co-branded credit cards in FY24 and projected 46% annual revenue growth from FY22 to FY25. The company expects to reach EBITDA profitability in FY25.

Conclusion

The partnership focuses on combining digital access with regulated lending processes to offer gold loans backed by formal financial institutions.

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