- In addition to the lower-middle class, HNI is now also taking gold loans!
Gold loans are cheaper, faster and more secure than other personal loans. Due to which most of the private and government banks are offering gold. Out of the current 25,000 tonnes of gold reserves in India, only 2,000 tonnes of gold is in the loan market. There are bright opportunities in the gold loan market. This was stated by George Alexander Muthoot, MD, NBFC Muthoot Finance, the country’s largest gold loan, in an interview with Dainik Bhaskar. Introducing the main part of the conversation
- Gold loans rallied during the first two waves of the Corona, what is the current situation?
Gold loans saw good growth between the first two waves of the Corona, as people needed money. Now the business is back to normal. While people used to take loans to meet their needs, now most people are taking gold loans to grow a business or start a new job.
- Last year, gold was worth Rs. 56 thousand per ten grams, which later dropped to between 45 thousand and 48 thousand. So was there an increase in default?
We only offer loans up to 75% of the value of gold. Not only that, we only mortgage jewelry, not bullion or coins. The price of jewelry is associated with the price of gold. Emotions are also connected with it. Which did not cause default. However, the average term of a gold loan is only four months.
- Now most of the private and government banks are offering gold loans. Does it have any effect on your business?
Gold loan is the most secure personal loan. That is why all banks have access to gold loans. This also benefits us. There is a growing awareness among the people about gold loans. The country has about 25,000 tonnes of gold reserves. Out of this, only two thousand tons of gold has entered the loan market. Earlier, only lower middle class or middle class used to take gold loan, now HNI is also taking it. Thus, there is a lot of potential in the gold loan market
- Where does the highest demand for gold loans come from? What is the reason for this?
The highest demand for gold loans for us comes from South India. This is followed by demand from North India and West India. Demand from the East is lowest. Due to high demand from South India, organized gold loan market was first developed here. While other areas have long been dominated by lenders.
- What are the plans for Muthoot’s growth? Will the branches continue to expand?
We have 4500 branches across the country. There is no district in the country where we are not present. In such a situation we will no longer expand the branch. Our aim will be to grow the business through these branches.