Google Taps India’s Gold Market to Boost Credit

Google is capitalizing on India’s profound fondness for gold to broaden its presence in the lending market of the world’s most populous nation

Muthoot Finance, India’s largest gold-backed loans provider, has partnered with Google Pay to provide secured loans to consumers nationwide, the company announced on Thursday.

According to Google, the partnership aims to increase credit availability in a market where conventional lending frequently fails.

Access to credit remains a challenge for many Indians who lack profiles with local credit bureaus despite the progress made by financial inclusion initiatives.

HSBC estimates that approximately 1 billion individuals annually spend approximately ₹1 trillion on gold imports in India, equivalent to over one-fifth of the global mine production. Gold holds a distinctive significance in the country.

In contrast to China, a substantial portion of this demand is generated by lower-income households, and a significant number of Indians already possess gold, which enables them to obtain credit at reduced interest rates.

Muthoot is responsible for managing, storing, and protecting gold from customers, as well as the extension of credit. Google is accountable for connecting potential users with lenders.

Sharath Bulusu, director of product management for Google Pay, stated in an interview with TechCrunch that a gold-backed solution is essential for increasing credit accessibility in India.

In addition, he stated that Google’s initiative has the potential to provide millions with new opportunities to access formal credit by capitalizing on the cultural, dynamic, and economic significance of gold.

“The beauty of this is that it serves as a stepping stone for them [the users] to gain access to more,” he stated. “This is their initial loan, establishing a credit history.”

In the future, they will continue to have the option to take out a collateralized loan, as we have observed that certain users consistently select collateralized loans due to their familiarity with the process and the lower interest rates, even after they have begun to establish a credit history.

This action resulted from Google’s collaboration with Indian banks and other lenders to provide loans to merchants and individuals through the Google Pay app last year.

On Thursday, The company announced that it partnered with Birla Finance, one of India’s largest banking financial companies, to enhance credit accessibility. Google assists Pay users in obtaining financing for a minimum of 10,000 Indian rupees ($120).

Google Pay is one of the most widely used payment applications in India. It processes over 37% of the 15 billion monthly transactions on UPI, a payments rail constructed by a coalition of Indian institutions. UPI is the most prevalent method of online transaction among Indians.

Google has announced that it has extended credit to Google Pay customers in 13,500 zip codes in India, thereby covering 70% of the country. The company stated that 80% of the loans it has disbursed were to users residing in smaller Indian cities and villages.

According to Google, its sophisticated AI model, Gemini, has been integrated to address user inquiries via voice and text on Google Pay.