Last Updated : 19 March 2010 at 16:15 IST

Mahindra’s gold loan product launched in Kerala

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KOCHI (Commodity Online): Kerala has witnessed a surge in Gold loan schemes in the recent past with several private financial institutions rushing to the state to set up shop.

The latest entrant to the mad rush is Mahindra Finance, the financial services arm of the $ 6.3 billion Mahindra Group.

Mahindra Finance this week launched its loan against gold product in Kerala with much fanfare.

Kerala has a host of financial institutions like Muthoot and other groups who offer gold loans. The Mahindra product has been specifically designed to provide liquidity against gold ornaments without having to sell them. This facility was ideal for meeting contingency requirements of customers and effectively harnesses the potential of gold transforming it into a productive asset.

The company is confident of winning the customers trust and playing a leading role in shaping this industry.

Meanwhile, the Kerala-based, Muthoot Pappachan Group is all set to become the latest player to foray into the housing finance business in the country by setting up a separate subsidiary in the next fiscal, although the group has dropped its earlier plan to apply for a banking license.

The Group plans to invest around Rs 100 crore over the next two years in the new venture, Muthoot Housing Finance Limited, which would be set up as a wholly-owned subsidiary of Muthoot Fin Corp.

Muthoot said the company would soon approach the National Housing Bank for necessary approval to set up the new company and hopes to start lending operations by the third quarter of next financial year.

Entry of local players like Muthoot, which has a good hold in the southern pockets of the country and a strong local knowledge, is expected to intensify the prevailing competition in the small loan segment. Started in 1939, Muthoot runs two NBFCs, Muthoot FinCorp and Muthoot Capital Services Limited.

The group has operations in brokerage, auto, Gold and mortgage finance, Hospitality and infrastructure. Muthoot Fincorp has over 360 branches and offers products and services like gold and auto loans, money transfer and investment solutions.