The Banks of India and NBFC’s are seeking for the opportunity to attract more and more customers from money lenders and pawnbrokers as many Indian Households who have the world’s biggest hive up of gold, are hurrying towards borrowing money against their ornaments, as the price of gold globally rose and touched to $2000 per ounce, it may provide them with a chance to get the higher loan amount at less interest rate.
The Covid-19 pandemic and the Lockdown has created a situation of economic downfall in the country, which is forcing the population to borrow short term funds against collateral securities to pay off their current necessary expenses.
Many NBFC’s Gold Lenders like Manappuram Finance Limited and Muthoot Finance Limited easing the processes of borrowing for their customers like Manappuram Finance Ltd. has initiated to provide doorstep delivery of Gold-Loans through a 24 hrs. bank network while the people are hesitant in coming out of their homes due to the fear of rising cases of Corona Virus, as it has the proper resources to cater to its customer’s requests.
HDFC bank is trying to expand the amount of Gold Loan which it was providing earlier the pandemic period and is also setting up many rural branches in India to offer the Gold loans there as they can get an advantage over the informal moneylender who charges an exorbitant rate of interests.
According to the estimates provided by the World Gold Council, the Indian Households altogether uphold around $1.5 Trillion of Gold which mainly consists of jewellery that is many a time inherited by the families or are gifted up in the Indian weddings.
According to data’s till 31st March Muthoot and Manappuram Finance Ltd. hold around 248.4 tons of gold which are pledged by its clients that are equal to half of the gold reserves of European Central Bank.
According to a statement made by P.R. Somasundaram, managing director for India at the World Gold Council, in this fiscal year, the banking sector can help in growing the market for gold loans by 20% to 25% due to their constant efforts as between the demand of family-owned small businesses and agricultural operations.
He also said that “When most of the businesses will open after the lockdown, they will require Capital and a great jump in the Gold Loan Market will be seen.”
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