BankBazaar to start giving gold loans, sells 1% stake to Muthoot FinCorp | Mint

Fintech firm BankBazaar has joined hands with Muthoot FinCorp to start offering gold loans. As part of the collaboration, Muthoot FinCorp has invested ₹15 crore in BankBazaar’s ongoing Series D2 round as equity investor.

As part of D2 round of the fundraise, BankBazaar – which is specialised in co-branded credit cards and credit score services — has raised ₹55 crore putting the company’s valuation at ₹1,700 crore. Of this, ₹15 crore investment has been made by Muthoot FinCorp which gets about 1 per cent stake in the fintech firm.

The remainder of ₹40 crore has been made by the current investors.

“Gold loans, being counter-cyclical to unsecured credit, will diversify our portfolio and strengthen our offerings. BankBazaar’s consumers will gain seamless digital access to Muthoot FinCorp’s high-quality, fully compliant gold loan products,” said Adhil Shetty, CEO, BankBazaar.com.

This will help leverage their extensive customer base of 67 million and cutting-edge analytics capabilities to drive superior customer experience, ensuring more inclusive credit access, including those who’ve been impacted by temporary financial setbacks, said Shaji Varghese, CEO of Muthoot FinCorp.

This collaboration is likely to be a major milestone in our journey to deliver credit solutions, empowering individuals to achieve their goals, Varghese added.

Unlike personal loans which are unsecured, gold loans are secured loans wherein money is disbursed against the collateral of yellow metal.

Division of work

Under the partnership, BankBazaar will handle digital data management, digital marketing, product education, digital customer experience, credit score improvement via prudent financial literacy, and consumer education, while Muthoot FinCorp will manage KYC compliance, verification, valuation, storage, loan disbursal and all other guidelines ensuring same-day loan disbursal via a seamless phygital lending experience, it said.

With gold’s strong cultural significance in India, these loans serve as a crucial financial tool for small business owners, helping integrate borrowers into the formal lending system, ensuring fair valuations, competitive rates, and protection from unregulated lending practices, it said.

Nearly 65 per cent of gold loans are still offered by unregulated players, underscoring the urgent need for secure, high-valuation financing at fair rates.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.