Chennai-based non-banking financial company (NBFC) Sundaram Finance is evaluating an entry into the gold loan segment as part of its 'Sundaram 75 Plan'. The initiative is being executed to mark the 75th year of the company in 2029, with a focus on diversifying into new business areas.
Gold Loan Demand on the Rise
Rajiv Lochan, managing director of Sundaram Finance, noted a significant increase in gold loan-based consumption. “In our conversations with credit bureaus and other institutions, we find that even youngsters pledging gold for consumption purposes is a trend that seems to be emerging,” he said. The company has evaluated the gold loan business as part of the Sundaram 75 Plan, and the proposal will be presented to the board for approval. “We have looked at a range of possibilities,” Lochan added.
Secured Lending Focus
Approximately 98% of Sundaram Finance's portfolio is in the secured segment. The company has previously evaluated the gold loan business, recognizing its potential as a secured lending avenue. “Our focus over the past 72 years has been to work with small enterprises that are looking to generate a livelihood. In the MSME segment, particularly micro and small enterprises, we do well, and the medium segment is something we are looking at. We evaluated gold loans because they are secured by different forms of collateral,” Lochan explained.
Competitive Landscape
Murugappa Group’s NBFC Cholamandalam Investment & Finance Company entered the gold loan business in Q1 FY26, and its gold loan book size is now estimated at about Rs 2,000 crore. This move by Sundaram Finance would place it in direct competition with other players in the gold loan market.
Financial Performance
Sundaram Finance, which lends to segments including medium and heavy commercial vehicles, passenger vehicles, construction equipment, tractors, and commercial lending, reported strong financial results. Its standalone profit after tax (PAT) rose 19% to Rs 1,834 crore in FY26 from Rs 1,543 crore in FY25. Net interest income (NII) stood at Rs 3,376 crore in FY26, compared with Rs 2,793 crore in FY25. In Q4FY26, PAT was Rs 608 crore (against Rs 546 crore in Q4FY25), and NII grew 20% to Rs 901 crore.
Disbursements increased by 14% to Rs 32,321 crore in FY26, while Assets Under Management (AUM) stood at Rs 59,908 crore, up 16% year-on-year as of March 2026.
