Indian Fintech Gives Out $1 Billion a Year in Gold-Backed Loans

(Bloomberg) — Rupeek Fintech Pvt, a startup that lends against gold as collateral, raised $34 million to accelerate its efforts to monetize India’s $1.5 trillion private stash of the precious metal.

The Bangalore-based firm, whose technology links nearly a dozen banks to individual borrowers, received backing from investors including Lightbox, GGV Capital and Bertelsmann, taking its valuation to $634 million with $134 million raised so far. Rupeek’s annual loan disbursement rate was $1 billion in December, a first among India’s asset-backed lending startups, according to a statement Tuesday.

“Rupeek’s growth trajectory changed dramatically and loan volumes doubled in the second half of 2021,” Sumit Maniyar, founder and chief executive officer, said in an interview. “We are the first fintech to hit $1 billion milestone.”  

Consumers in India — where gold is considered both a status symbol and a popular investment — hold about $1.5 trillion of the precious metal, mostly in jewelry, according to the World Gold Council. But gold-backed loans account for only about $150 billion, mostly from street-corner money lenders and pawnbrokers, with traditional banks making up just 35%, according to CLSA estimates. Rupeek is among a number of startups determined to shake up the centuries-old business and help Indians put to work the thousands of tons of metal they’ve stashed away. 

The Accel and Sequoia Capital-backed startup uses technology to assess gold offered as collateral and crunches data to issue loans that monthly interest rates that 0.49% and can reach as high as 1.5%. To help borrowers escape a cultural stigma associated with pledging gold, agents riding motorcycles perform appraisals within customers’ homes, while teams back in offices complete background checks and process the loans electronically.  

“In many cities, our customers get the money deposited in their bank accounts in 45 minutes, the speed of a food delivery order,” said Maniyar. 

Read Bloomberg Businessweek’s profile of Rupeek

Founded in 2015, Rupeek plans to reach more than 120 cities by the year-end, up from the roughly 35 it’s operating in currently. In addition to doorstep lending, it now offers loans at physical branches as well as a new gold-backed credit card. After receiving a non-banking financial company license from Indian regulators, it’s begun co-lending with banking partners. Capital from the fundraising will be deployed to boost its loan book. 

“We are extremely capital efficient and have got here with less than $100 million of capital,” said Maniyar.

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