Indel Money in talks with two banks for co-lending, sets Rs 700 cr target

Indel Money had a total outstanding assets under management (AUM) of Rs 81,740.86 lakh, as of September 30, 2023. (Representative image)

Kerala-based gold loan provider Indel Money plans to forge co-lending partnerships with two major banks to augment its gold lending operations.

Indel Money has set a portfolio target of Rs 700 crore through these deals over the next one year, executive director and chief executive officer Umesh Mohanan told Moneycontrol in an exclusive interview on January 24.

The partnerships will be primarily aimed at gold loan distribution. He didn’t disclose the identity of the banks, saying talks are still going on.

"Currently, we have a co-lending partnership for gold distribution with two banks -- DCB Bank and IndusInd Bank. We enjoy a combined line of around Rs 600 crore,” Mohanan said.

“We are in talks with a private bank and a major public sector bank (PSB) for the next tie-ups. We are expecting the PSB to come up with Rs 400 crore, "said Mohanan.

What is co-lending?

Co-lending or co-origination is a set-up in which banks and non-banks enter into an arrangement for the joint contribution of credit for priority sector lending. To put it simply, under this arrangement, both banks and NBFCs share the risk in a ratio of 80:20 (80 percent of the loan with the bank and a minimum of 20 percent with NBFCs).

The gold loan company, which is planning an initial public offering (IPO) in 2026-27, announced a public issue of debentures worth Rs 200 crore, on January 23. The fourth public issue of secured, redeemable non-convertible debentures (NCDs) of Rs 1,000 face value would open for subscription on January 30 and it offers the highest rate option of 12.25 percent for 72 months.

The issue includes a base size for an amount of up to Rs 100 crore, with an option to retain an over-subscription up to Rs 100 crore, aggregating up to Rs 200 crore. Asked why the company was going for a public offer of NCDs now, Mohanan said: "This is in anticipation of the IPO we are targeting in 2026-27".

"Our business strategy is designed to capitalise on our competitive strengths to enhance our position in the gold loan industry and to expand our presence. The first half of FY2024 saw the company demonstrating a stellar performance with its profitability surging by a record 568.86 percent, buoyed by strong AUM growth, heightened demand for gold loans, expansion into new territories, and operational efficiencies, despite a challenging business environment," he said.

Physical expansion

Currently, the Kerala-based company has about 250 branches, most of which are located in south India.

"Since the last two years, we have been breaking barriers, reaching all the way up to Odisha and Maharashtra. We have also crossed into Madhya Pradesh and opened our Delhi operations, which will be coming up with eight branches and another 18 in the coming month. Then, in this quarter itself, we’ll be launching Gujarat operations, and, along with that, Andaman and Nicobar Islands. We have plans to enter Rajasthan and West Bengal. Delhi would be serving as a hub support for the northern states, "he said.

“In terms of customer acquisition, Indel Money has crossed around 1.3 lakh,” he said.

"The first half of FY24 saw the company demonstrating a stellar performance with its profitability surging by a record 568.86 percent, buoyed by a strong AUM growth, heightened demand for gold loans, expansion into new territories, and operational efficiencies despite a challenging business environment, "Monhanan added.

Indel Money had a total outstanding assets under management (AUM) of Rs 81,740.86 lakh, as of September 30, 2023, as compared to Rs 64,768.53 lakh, as of March 31, 2023. Gold loans accounted for 82 percent of the loan portfolio, as of September 30, 2023.