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SahiBandhu: Aggregating gold loans in rural India

Rajesh Shet, CEO & Co-Founder of SahiBandhu shares the details about the gold loan business scenario & expansion plans:

SahiBandhu: Aggregating gold loans in rural India

Ravi Lalwani: Is there any meaning in the name SahiBandhu?

Rajesh Shet: Indians ordinarily hesitate in opting for gold loans as their first choice due to the fear of gold being stolen, tampered with, or the challenge of exorbitant rates. SahiBandhu in the true sense refers to the right advisor whom our customers can rely upon with their emotional assets.

Growing up in a family of jewellers, I felt a strong connection to gold from a young age and witnessed how gold brought happiness to people. I saw many instances where people relied on shadow banking facilities to obtain loans against their gold, paying exorbitant interest rates and falling into debt traps, often losing possession of their asset.

Addressing such issues, SahiBandhu was accepted to bring such people to the organized lending sector. We created a platform that collaborates with India’s leading banks and enables access to formal credit with affordable interest rates for millions of people.

What mechanisms do you deploy to verify gold purity and filter out stolen gold?

As a tech-enabled platform, we have simplified the gold loan application and verification process for our customers, providing doorstep as well as in-branch services. In case a customer wishes to avail themselves of a gold loan from the comfort of their home, they need to enter their details on our platform, following which, a SahiBandhu officer visits their residence. Via an easy and transparent valuation through an approved appraiser, we initiate the appraisal process for the gold jewellery with our partner bank. Preventive measures are taken to safeguard stolen gold from being used as collateral through proper KYC & documentation like self-declaration as per the legal requirements.

What is the income profile of your most common borrowers?

Borrowers span across various segments, and it is difficult to share specific income profiles. However, young adults and millennials have shown a growing interest in opting for gold loans to facilitate specific financial goals, such as availing funds for international trips, and working capital needs for startups and small businesses, among other such reasons. Additionally, we have witnessed a rise in gold loan disbursals to women entrepreneurs, and at present, around 20% of our customer base is women borrowers. The farming community has also displayed an uptake in gold loans, and they form approx. 25% of our customers.

What seasonal variations does the gold loan business witness?

Festive seasons in India mark a period where people indulge in gifting, while many families take holiday trips and vacations, which is also a period when gold loan demand surges. During April, May and June, which is when millions of farmers across India sow seeds for the Rabi season, we witness a surge in demand for gold loans from rural areas. There has been a healthy growth in demand for gold loans across the calendar year.

What is the observation regarding repeat business from customers?

More and more first-time customers that have availed of gold loans through aggregators have enjoyed their experience due to the low-interest rates and easy repayment options, which has resulted in a healthy rise in repeat business from customers.

Which are the top 3, cities, and customer segments from which you get maximum business? Which are the top 3 emerging sectors?

Bangalore, Pune, and Surat are the top 3 cities from which the company receives most of the gold loan business. Working capital, agriculture, farming needs, and financial / personal needs are the key drivers. Margin money for housing, health, and foreign travel for employment are the emerging sectors for SahiBandhu.

What percentage of your business comes from the rural market?

Albeit the digital penetration in India, rural areas are yet to experience the true advantages and benefits of going digital. At SahiBandhu, we have actively engaged in several campaigns and initiatives to generate awareness around gold loans in rural communities, and within those that are largely agrarian. Around 65% of our customer base belongs to rural India, which is a significant proportion.

How many branches do you have in India? What are the branch expansion plans?

We are an aggregator platform for gold loans through leading banks of the country and have not opted for a branch-led model. Through our phygital model (physical feet on the street combined with digital gold tech), SahiBandhu has experienced exponential growth in the past few years, covering 650+ districts with more than 8800 pin codes. We have served over 225,000 happy customers across 29 states of India, covering more than 7100 branches of the country’s leading banks.

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