Shriram Finance Reports Rise in Bad Gold Loans in Q2FY27

A higher number of repeat borrowers is posing a threat of

overleveraging in gold loans for shadow banks. On Friday, Shriram

Finance, one of the largest Non Banking Financial Company (NBFC)

joined its peers in flagging asset quality pressure in gold loans.

The lender with gold loans at Rs 8974 crore saw its gross stage 3

loans rise to 3.12 per cent for Q2FY27 from 2.57 per cent in Q1FY27

and 2.28 per cent in Q2FY26.

For an NBFC, Stage 1 loans are those that are 30 days overdue; Stage 2

assets are 31-90 days overdue; and Stage 3 loans are those that are

overdue for more than 90 days.

Shriram Finance reported a consolidated net profit for the quarter

ended September 30 at Rs 3,683.81 crore, against Rs 2,314.16 crore a

year earlier. For the half-year, profit stood at Rs 7,136.58 crore, up

from Rs 4,473.55 crore in the same period last year. The Net Interest

Income for the second quarter ended September 30, 2026 increased by

38.20 per cent and stood at Rs. 8,661.04 crore as against Rs. 6,266.84

crore in the same period of the previous year.

Bajaj Finance Q2 had also seen a headline asset quality blip with

Stage 2+3 up 15 basis points QoQ to 2.02 per cent, driven by around Rs

1050 crore transitory impact from ceasing short-tenor schemes in the

gold loanbook.

In its earnings concall this week, Piramal Finance too flagged the

rapidly rising presence of gold loans on borrowers' credit files as an

emerging risk.

Depending on how one counts, between 15 per cent and 23 per cent of

the industry's gross gold loan disbursements over the past year went

to customers who were already 90 days or more past due on at least one

of their live loans, said Jairam Sridharan, managing director and

chief executive officer of Piramal Finance said in a concall.

"It is a shockingly high number," he had said.

In absolute terms, about Rs 4.7 lakh crore of gold loans were

disbursed in FY26 to borrowers in such deep delinquency, Sridharan

estimated. However, Piramal's own figure for October so far was under

one per cent, as the NBFC does not disburse gold loans to customers

more than 90 days past due.