TruCap Finance to exit gold loan business in Rs 330cr deal with InCred Finance

TruCap Finance Limited has announced its decision to sell its gold loan business to InCred Finance for an estimated ₹330 crore. The transaction, structured as a slump sale, is still subject to final agreements, regulatory approvals, and pre-closing conditions, but is expected to be completed by April 2025.

This move is part of TruCap’s broader strategic realignment aimed at capital efficiency improvement and a sharper focus on high-growth segments, particularly MSME business loans and Green Energy Finance. By offloading its gold loan business, the company anticipates a significant reduction in debt and operational costs while strengthening its balance sheet for more sustainable, long-term growth.

How will this transaction impact TruCap’s financial position?

One of the most immediate effects of the sale will be a notable capital efficiency improvement, with TruCap’s leverage projected to fall below 1.5x post-transaction. Additionally, operational costs are expected to decline by over 70%, allowing the company to redeploy resources toward more profitable lending segments.

With a renewed focus on MSME business loans, TruCap Finance is positioned to build on its existing assets under management (AUM), which stood at over ₹450 crore as of December 2024. The transaction will also bolster the lender’s net worth, providing a stronger financial foundation for future expansion.

Since entering the lending space in 2018, TruCap has extended over ₹1,100 crore in credit, serving more than 100,000 borrowers. The company maintains an active borrower base of approximately 34,400, with an average ticket size of ₹1.1 lakh per loan. This includes financing support for Green Energy projects, an area that aligns with India’s growing push for sustainable development.

What does this mean for the MSME business loan segment?

By exiting the gold loan business, TruCap Finance is signaling a clear shift toward its MSME business loans and Green Energy Finance verticals. This decision aligns with the company’s long-term objective of supporting small and medium enterprises (SMEs) that have historically faced challenges in securing institutional credit.

TruCap has been a key player in MSME financing, offering credit solutions that empower small businesses and entrepreneurs. Over the years, the company has built a network of more than 300 distribution partners, enhancing its reach and borrower engagement. With additional capital unlocked from the gold loan business sale, TruCap plans to expand its lending capacity and scale operations more efficiently.

A major focus remains on women entrepreneurs, with TruCap having already served over 19,000 female borrowers. The company continues to promote gender-inclusive financing, ensuring that underbanked segments gain better access to credit solutions.

How will TruCap manage credit risk and collections?

A robust credit assessment and collections strategy will be key to TruCap’s growth in the MSME business loans sector. The company’s risk management is led by an industry veteran with over 32 years of experience in a nationalized bank. Underwriting policies are designed to maintain capital efficiency improvement, ensuring that credit quality remains high despite expansion efforts.

On the collections side, TruCap has brought in a specialist with more than three decades of experience managing secured and unsecured lending portfolios across major financial institutions such as Bajaj Finance, GE Capital, and Tata Finance. The company employs a hybrid model, combining a dedicated field team with digital tracking systems to ensure high recovery rates.

With a strong tech-enabled collection mechanism, TruCap emphasizes proactive customer engagement, minimizing default risks while optimizing portfolio performance. The lender’s ability to efficiently manage risk-adjusted returns will be critical as it scales its MSME business loans portfolio.

What are the long-term implications of this transaction for TruCap?

The decision to divest its gold loan business is a defining moment for TruCap Finance, marking a strategic pivot toward higher-value lending segments. By reducing leverage and freeing up capital, the company is better positioned to accelerate growth in MSME business loans and Green Energy Finance, both of which offer significant long-term potential.

TruCap’s exit from the gold loan business also reflects a broader industry trend where financial institutions are increasingly shifting toward secured business lending and sustainable finance. With an established network, a growing customer base, and a strengthened balance sheet, TruCap is set to play a more prominent role in India’s SME lending ecosystem.

As the lender finalizes the deal with InCred Finance, industry observers will closely watch how TruCap deploys its newly available capital. The move is expected to provide greater financial flexibility and higher returns in the coming years, making the company a key player in the evolving credit landscape.