BankBazaar to diversify into gold loans, sells 1% stake to Muthoot FinCorp for ₹15 crore

Fintech firm BankBazaar.com specialising in co-branded credit cards and credit score services, has partnered with gold financier Muthoot FinCorp to enter the secured loans market with a gold loan product.

As part of this NBFC-FinTech collaboration, Muthoot FinCorp has also invested ₹15 crore in BankBazaar's ongoing Series D2 round as an equity investor to further strengthen the digital platform.

As part of the D2 round of the fundraise, BankBazaar.com 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% stake in the fintech firm.

The remaining ₹40 crore investment has been made by existing 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," Adhil Shetty, CEO of BankBazaar.com said.

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 significant collaboration is poised to be a major milestone in our journey to deliver seamless credit solutions, empowering individuals to achieve their goals and aspirations, Varghese added.

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 MuthootFinCorp 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.

BankBazaar is optimistic about India's resilient consumer credit market, particularly the growth potential of gold loans, it said.

With gold's deep 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% of gold loans are still offered by unregulated players, underscoring the urgent need for secure, high-valuation financing at fair rates.

With Muthoot FinCorp investing in BankBazaar's ongoing Series D2 round, alongside internal and new investors, bringing the total to ₹55 crore, the company's total equity funding has now reached $116 million.