Gold-loan NBFCs will see up to 18% growth in AUM in FY21

Wednesday, October 28, 2020

Hindu Business Line 

 

Gold loan non-banking finance companies (NBFCs) will see a 15-18 per cent growth in assets under management in fiscal 2021 as demand for gold loans would rise with the Covid-19 pandemic-driven lockdowns being lifted slowly and economic activity clawing back, according to Crisil Ratings. 

Demand for gold loans would rise, especially from individuals meeting urgent personal requirements and from micro enterprises for working capital to restart businesses, the credit rating agency said. 

Crisil observed that gold loans would be preferred also because NBFCs and banks have tightened their underwriting norms for other loans, leading to cautious lending to micro and small enterprises, traders and the self-employed.
 

Gold loan growth was flat in the first quarter of this fiscal for NBFCs because of low disbursements in April and May due to the country-wide lockdown.
 

Krishnan Sitaraman, Senior Director, Crisil Ratings, said: “Unlike other asset classes, gold loan has not faced major issues in collection and disbursement, or re-pledge of loans, barring during the stringent lockdown phase in April and May. 

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