Indian banks are tapping into gold-backed loans to boost lending – The National
- Date: 31-Jul-2020
- Source: The National
- Sector:Financial Services
- Country:Oman
Indian banks are tapping into gold-backed loans to boost lending – The National
The country's demand for gold-backed loans has only risen as its global price approached $2,000 an ounce
India's market for gold lending is set to expand by at least 34 per cent to 4.6 trillion rupees. AFP
Indian families, sitting on the world's biggest private stash of gold, are rushing to borrow against their jewelry as the precious metal rallies to records and the coronavirus pandemic fuels an economic downturn. Now, financial firms and banks are using that demand to lure more customers from pawnbrokers and money lenders.
The added competition could lower borrowing costs for Indian consumers, who in desperate moments of financial stress often pay exorbitant rates to informal lenders to use gold as collateral. Firms like HDFC Bank and Federal Bank are expanding the loans they make against the precious metal. India's gold lenders, such as Muthoot Finance and Manappuram Finance, are making it easier for their clients to borrow.
Manappuram is offering gold-backed loans at the customer's doorsteps through a 24-hour bank network since people are reluctant to leave their homes while coronavirus cases are surging in India. And