Manappuram Plans Overseas Gold Loan Business
MUMBAI (Dow Jones)--India's Manappuram General Finance & Leasing Ltd.(531213.BY) is in talks with banks in Sri Lanka and Malaysia for jointventures to provide retail customers loans against gold jewelry, saidits chairman Thursday."We are trying to work out a model, which will suit those countries,"V.P. Nandakumar told Dow Jones Newswires in an interview, withoutspecifying any time frame.The international foray of the Indian gold loan company indicatesopportunities for such financiers as more customers turn to trade-intheir jewelry for cash. Meanwhile, overseas gold is inching toward$1,265.05 a troy ounce--the record high hit in June.Manappuram expects its outstanding loans by the end of this fiscalyear through March, 2011, to rise to INR70 billion from around INR42billion now.The company, based in the southern state of Kerala, plans to raiseINR10 billion to meet the regulatory capital requirement."We expect to raise this money by September-October," he added.About 90% of the company's branches are in south India and Manappuramnow plans to expand in the western states of Gujarat and Maharashtra,said Nandakumar.Gold jewelry is traditionally treated as a life saving investment inthe country. Indians buy gold jewelry for brides or during keyfestivals and then lock away their purchases. Families in the pastwould usually only sell the jewelry if in financial distress.The potential for offering gold loans in the country is huge, providedfinance companies offer attractive products, Nandakumar said."According to industry estimates, around 20,000 tons of gold is lyingwith Indians. Out of that, only around 400 tons is in the hands of theorganized loan sector," said Nandakumar.