Gold loans for business purposes are mostly used by small businesses as short-term working capital for storage.
With gold prices hovering around Rs. 47,000 pr. 10 g, small businesses need to take out loans to resume operations, industry executives say.
George Alexander Muthoot, CEO of Muthoot Finance, told ET: “They will take gold loans for bridge financing to restart their operations. Due to the closure, the payments have not come to small businesses, shop owners and merchants. So they need money that they will pledge their gold to take out loans. Nearly 75% of our customers are small shop owners, merchants and small businesses. ”
Muthoot said some of the company’s branches, which are not in hotspots or containment areas, have started operating. “Customers are slowly coming in. However, the flow is less as we have to follow social distancing norms. Our expectation is that the demand for gold loans will be more from northern India, western India and eastern India. opened 1,300 branches, ”he said.
NBFC is looking at a 15% growth in gold loans this fiscal year.
VP Nandakumar, MD of Manappuram Finance, said: “Our usual assessment has been that approx. 30% of our customers belong small business category, mostly small businessmen, salesmen and dealers, self-employed such as carpenters, electricians and others. Whether this composition undergoes any changes to the post-lockdown scenario is somewhat premature to tell, as our branches only resumed business recently. What is usually approx. 30%, may increase by three or four percentage points. ”
Gold dealers take gold loans more than other players in the industry, Nandakumar said.
“In the situation we are in now, where jobs are drying out and incomes are impacted, we can see a rising demand for gold loans for consumer purposes and meet the needs of the family. The next significant contributor is likely to be retailers and small shop owners as they seek to get back on their feet, ”Nandakumar said.
Like Muthoot Finance, Manappuram Finance expects a 10-15% growth in gold loans this fiscal.
if(geolocation && geolocation != 5 && (typeof skip == 'undefined' || typeof skip.fbevents == 'undefined')) !function(f,b,e,v,n,t,s) if(f.fbq)return;n=f.fbq=function()n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments); if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0'; n.queue=;t=b.createElement(e);t.async=!0; t.src=v;s=b.getElementsByTagName(e); s.parentNode.insertBefore(t,s)(window, document,'script', 'https://connect.facebook.net/en_US/fbevents.js'); fbq('init', '338698809636220'); fbq('track', 'PageView');