On Monday, the price of 24-carat gold rose to Rs 55,540 per 10 grams from Rs 52,000 a month ago.
“Rising gold price is always a win-win situation for the customers and the gold loan company,” said Muthoot John Muthoot, Managing Director, Fincorp. “In the last three months, gold prices has shown an upward trend and has appreciated further in the last month. If this trend continues in gold prices, then we will see good business between January 15 and September.
High gold prices prompt small businesses and businesses in the unorganized sectors to take gold loans to meet their working capital requirements. Gold loan provides easy access to credit for small businesses as it is a fully asset-backed loan and no credit history check is required to avail the gold loan. Higher gold price leads to better recovery of the value of the gold pledged. This also means lower collateral requirements under the prescribed loan-to-value framework Umesh MohananCEO, Indel Money.
“Given the steady revival of the economy and improving demand for gold loans, we expect a healthy growth in assets under management in Q3 and Q4 of 2022-23,” Mohanan said.
George Alexander Muthoot, Managing Director, Muthoot FinanceHowever, said that high gold prices cannot be considered as a factor driving the demand for gold loans from micro, small and medium enterprises.
“The demand for gold loans is driven by the diverse needs of the customers. Gold loans are generally taken as bridge loans and to aid productive business activities. The demand for gold loans is more or less uniform across India. However, we We are seeing slightly higher demand from northern states,” Muthoot said.
He said that the demand for gold loan is driven by the boom in the economy and the boom in the market, the company expects these factors to remain favorable during this financial year.