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Gold Loan Application Log 30-35% Surge Amid Record Hike Price In Yellow-Metal

24-Jul-2020

Gold Loan Application Log 30-35% Surge Amid Record Hike Price In Yellow-Metal

The lenders across India despite finance ministry’s nudge to increase credit offtake are turning away prospective loan borrowers, but gold companies are attending to them. And so many SMBs are taking on to their family owned gold that in such distressed times are proving to be a powerful collateral.

So, with a record surge in gold loan application, the asset base also of these companies has increased massively.

“Higher gold prices have helped borrowers get maximum value for their gold,” said John Muthoot, chairman and managing director, Muthoot FinCorp. As unsecured loans dried up post-lockdown and during the moratorium, borrowers moved to gold loans, he added.

Muthoot FinCorp in the last 3 months has disbursed a total of Rs. 9000 crore to as many as 20 lakh customers who are primarily from rural and semi-urban businesses.

Also, for working capital loan some of the banks are even considering gold as a collateral.

George Alexander Muthoot, managing director, Muthoot Finance said, “We expect to achieve 15% loan growth target set for this fiscal before Covid-19. We are asking customers to map bank accounts with us, which mitigates business threats that may arise out of extended lockdown.”

Umesh Mohanan, chief executive, Indel Money, said, “Cash flows in local markets reduced due to the pandemic, triggering higher demand for gold loans.” The Kerala-based company rolled out the country’s first long-term gold loan scheme, with a two-year tenure.

Originally Posted On:  Goodreturns - Muthoot FinCorp Gold Loan Company