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Kochi/Mumbai, Aug.1 (ANI): The easy Kochi/Mumbai, Aug.1 (ANI): The easy availability of gold in Indianavailability of gold in Indianhouseholds and the minimum chance households and the minimum chance of consumers defaulting on loans, isof consumers defaulting on loans, ismaking the loan-against-gold market making the loan-against-gold market grow in the country grow in the country
The gold loans market now valued at The gold loans market now valued at 7.95-9 billion dollars is set to grow7.95-9 billion dollars is set to growmanifold as more financial manifold as more financial institutions and banks enter the institutions and banks enter the lucrativelucrativebusiness. business.
Gold has traditionally been a safe Gold has traditionally been a safe asset to almost every household inasset to almost every household inIndia. And with changing trends, it India. And with changing trends, it has emerged as a convenient meanshas emerged as a convenient meansto avail a loan.to avail a loan.
The gold loan-business in the country The gold loan-business in the country has flourished over the past fewhas flourished over the past fewyears, as lending against gold is years, as lending against gold is proving to be a safer and easier wayproving to be a safer and easier wayfor people to get cash instantly. for people to get cash instantly.
Having its roots in southern India, 85 Having its roots in southern India, 85 to 90 percent of the goldto 90 percent of the goldloan-market exists in states like loan-market exists in states like Andhra Pradesh, Tamil Nadu andAndhra Pradesh, Tamil Nadu andKerala. Kerala.
However, the business is gradually However, the business is gradually picking up in other parts of thepicking up in other parts of thecountry also. country also.
"Keralaiets are very much fascinated "Keralaiets are very much fascinated about purchasing of jewellery.about purchasing of jewellery.So, because of the large prevalence of So, because of the large prevalence of jewellery, the jewel loans havejewellery, the jewel loans haverelatively been higher in Kerala, relatively been higher in Kerala, followed by the other states likefollowed by the other states likeKarnataka, Tamil Nadu and Andhra Karnataka, Tamil Nadu and Andhra Pradesh", said V. P. Nandakumar,Pradesh", said V. P. Nandakumar,Chairman, Manappuram Finance, Chairman, Manappuram Finance, Kerala. Kerala.
"Gold loans are becoming an opportunity "Gold loans are becoming an opportunity for customers to borrow, byfor customers to borrow, bygiving security and thereby reducing giving security and thereby reducing their unsecured borrowing cause.their unsecured borrowing cause.I think gold opportunity is becoming a I think gold opportunity is becoming a good opportunity, both for bankgood opportunity, both for bankand the customers", said Shyam and the customers", said Shyam Srinivasan, Managing Director and CEO,Srinivasan, Managing Director and CEO,Federal Bank, Kerala. Federal Bank, Kerala.
According to an estimation of the Icra According to an estimation of the Icra Management Consulting ServicesManagement Consulting Services(IMACS), the organised gold loan-(IMACS), the organised gold loan-market in India stands at $8 billionmarket in India stands at $8 billionUSD and is growing at a compound USD and is growing at a compound annual growth rate of 40 per centannual growth rate of 40 per centsince 2002. since 2002.
With more financial institutions and With more financial institutions and banks entering this lucrative andbanks entering this lucrative andsafer business, the industry is set to safer business, the industry is set to grow manifold.grow manifold.
Many public sector banks are offering Many public sector banks are offering gold loans for a low rate ofgold loans for a low rate offive to eight percent per annum, five to eight percent per annum, while home and personal loans standwhile home and personal loans standat nine to sixteen percent rate per at nine to sixteen percent rate per annum.annum.
Private banks too are cashing in on Private banks too are cashing in on this trend. this trend.
"With the advantage now of "With the advantage now of formalised players, the players like formalised players, the players like largelargebanks, even public sector banks such banks, even public sector banks such as SBI or large private sectoras SBI or large private sectorbanks such as HDFC or ICICI or large banks such as HDFC or ICICI or large NBFC's, Manappuram, Muthoot,NBFC's, Manappuram, Muthoot,Reliance, Reliance,
I think all of them are looking to the I think all of them are looking to the gold loans togold loans tocustomers whether the loans are customers whether the loans are required to be utilized for business,required to be utilized for business,education etc education etc
And, I think, all that is giving a fill up And, I think, all that is giving a fill up to make thisto make thismore popular", said Harsh Vardhan more popular", said Harsh Vardhan Roongta, CEO, Apna Paisa. ndia hasRoongta, CEO, Apna Paisa. ndia has18,000 tonnes of privately held gold, 18,000 tonnes of privately held gold, which is estimated to be worthwhich is estimated to be worth900 billion USD. 900 billion USD.
The flow of gold in the market will The flow of gold in the market will add to economic growth of the add to economic growth of the country. country.
Nandakumar added, "This gold is Nandakumar added, "This gold is practically lying idle with thepractically lying idle with thehousehold, which is not coming to household, which is not coming to the mainstream economy. the mainstream economy.
When itWhen itcomes to the mainstream economy, comes to the mainstream economy, the growth potential for the economythe growth potential for the economywill definitely go up by another 150 will definitely go up by another 150 or 200 basis points. So, thisor 200 basis points. So, thiswill help the economy to grow."will help the economy to grow."
Since rural India holds 65 per cent of Since rural India holds 65 per cent of the total gold stock, organizedthe total gold stock, organizedplayers in the gold loan industry are players in the gold loan industry are targeting rural customers totargeting rural customers tofulfill their requirement for gold. fulfill their requirement for gold.
They want to grab the share of large-They want to grab the share of large-operated unorganized gold loansoperated unorganized gold loansmarket which includes numerous market which includes numerous money lenders and cooperative money lenders and cooperative societiessocietiesoperating primarily in rural Indian. operating primarily in rural Indian. (ANI) (ANI)
