Gold-backed loans rise in India as price of precious metal surges to record highs

Sunday, August 09, 2020

The National, Abu Dhabi ...


Gold loans company Manappuram Finance is seeing a steady rise in the number of people, mostly poor, borrowing money against their gold jewellery. The record surge in gold prices has given them an opportunity to get their hands on some extra cash to make both ends meet during the Covid-19 pandemic.
 
“Most of our customers belong to the poorer sections [of the society],” says VP Nandakumar, managing director and chief executive of the company based in South Indian state of Kerala. “A loan against gold jewellery is perhaps the most convenient option available to them for quick and easy access to credit. These are small shopkeepers, farmers, labourers, small and medium household businesses.”
 
Many of them “lack documents to prove regular income and therefore are unable to access formal credit from the banking system”, he says.
 
With the rise in borrowings, the company expects its gold-backed loan portfolio to see a 10 to 15 per cent year-on-year expansion at the end of the current financial year.
 
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