Hedge Finance enters gold loan business

KOCHI: Hedge Finance, a non-banking financial company which is promoted by the Baby Marine Group, is entering gold loan business. The group had brought forward their plans to enter the gold loan segment for a year, taking into account of the possible growth in demand for gold loans in the post-COVID period.

“Since Hedge Finance got the NBFC licence eight years ago, we had been focusing on loan-against securities to support the capital market. Then we had a thinking within the group that it should be developed into a separate NBFC vertical and hence we brought in KP Padmakumar, former chairman of the Federal Bank [as whole-time director]. We started with vehicle loans, business loans, MSME loans, equipment loans and property loans,” said Alex K Babu, managing director of Hedge Finance Ltd.

The company, which has an equity size of Rs 22 crore, now has a loan book of Rs 110 crore. “For us, gold loan business is a natural extension of our existing portfolio. Our original plan was to start the gold loan business next year, but then we advanced our plans looking at the current situation – gold is a rising asset class and there is good demand for gold loans now,” Babu said.

Hedge Finance now has 20 branches in Kerala – at the least on office in each district and in certain districts, two each. “Initially, the gold loans will be available at the Mamangalam branch in Kochi. Then, during the next three or four months, we will add another five branches, all in the suburbs of Kochi. Once the system is stabilized, towards the end of December 2020, we will expand to rest of the state,” Babu said.

Once Hedge Finance establishes its new line of business in Kerala well, it will start expanding to neighbouring states of Tamil Nadu, Karnataka, Telangana and Andhra Pradesh, Babu said. The company will raise the funds for the new business through privately listed debentures and bank loans, he added.

Courtesy: TOI

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