The sharp rise in gold prices is changing gold-loan borrower behaviour and strengthening the loan business, says Ajith Palat, managing director of UGS Gold Loan, as the young company enters its next phase of growth.
Persistent geopolitical tensions have continued to push up gold prices, reinforcing gold’s status as a safe-haven asset. According to Ajith, this shift is now clearly visible in customer behaviour as well.
“There has been a clear change in how customers approach gold loans,” Ajith says. “Earlier, many would delay or even neglect redeeming pledged jewellery. That is no longer the case.”
He points to three key trends:
Customers are redeeming gold on time
More borrowers are opting to renew loans instead of defaulting
Awareness of replacement cost has improved significantly
This shift is being driven by a better understanding of gold’s value. Borrowers are more conscious of how much it would cost to buy back the same jewellery at current prices, making them more careful about repayment and renewal decisions.
UGS Gold Loan was launched in 2020 from Mannarkkad in Palakkad district, at the height of the Covid crisis. Ajith, a former branch manager at a private bank, drew on his grassroots banking experience and the financial distress he witnessed among small traders and families during the pandemic. The company built its model around trust, transparency, and customer-centric products.
UGS introduced several innovative schemes, including interest-free gold loans during the pandemic. Flexibility has been a key differentiator for the company. UGS offers loans of up to ₹2 lakh against two sovereigns of gold and provides daily repayment options tailored to small businesses. Several products cover up to 90 percent of the gold’s value.
The company currently operates 26 branches across Palakkad, Thrissur, Kozhikode, and Malappuram.
A year after launch, Ajith’s brother Abhilash Palat joined the business after working in the UAE and now serves as group director.
UGS has since diversified into multiple verticals under its group structure. Several companies are currently operating under the UGS Group. These include UGS Gold Loan, Urban Grameen Nidhi Limited, Urban Grameen Council, UGS Finserv, Pyramid Agro Multistate Co-operative Society Limited, UGS Realtors, and UGS Group of Hotels and Restaurants (Palat Residency).
Ajith sees the current gold price cycle as an opportunity rather than a risk. UGS is also preparing for the next phase of growth with digital initiatives. A mobile app is planned by FY 2026–27 to enable customers to access loans, check eligibility, and make repayments. The company is also looking to introduce overdraft facilities against gold.
Through UGS Finserv, additional services such as forex, air ticketing, and insurance are being rolled out.
The company continues to focus on direct engagement with customers, conducting regular branch-level meetings to gather feedback from borrowers and depositors. Alongside business growth, UGS has also undertaken social initiatives.
Several companies now operate under the UGS Group, including UGS Gold Loan, Urban Grameen Nidhi Limited, Urban Grameen Council, UGS Finserv, Pyramid Agro Multistate Co-operative Society Limited, UGS Realtors, and UGS Group of Hotels and Restaurants (Palat Residency).
UGS recently appointed South Indian actor Trisha Krishnan as its brand ambassador as part of its expansion strategy in Kerala and Tamil Nadu. Ajith says the choice goes beyond star power. “We place strong emphasis on women’s empowerment. Around 80–85 percent of our workforce are women.”
In the new financial year, the company plans to expand its operations to other districts in Kerala and into Tamil Nadu. More branches are expected, including in Kochi. In the long term, the UGS Group aims to transform into a small finance bank.
