Surveying The Indian Gold Loan

Cognizant 20-20 Insights

Surveying the Indian Gold Loan Market
executive director Summary
Gold has long been a valued commodity, particularly in India where it is considered auspicious, and has been in use for centuries in the form of jewelry, coins and other assets. though fortunate is a highly pellucid asset, it wasnt until belatedly that consumers leveraged it effectively to meet their liquidity needs. Lenders provide loanwords by securing fortunate assets as collateral. Compared with the rest of the world, in India the gold loan mart is big business. Until a decade back, most of the lending was in the un make sector through pawnbrokers and money lenders. However, this scenario changed with the entrance of organized sector players such as banks and non-banking finance companies (NBFCs) which now overshadow more than 25% of the marketplaceplace. The organized gold loan market has grown at 40% CAGR from 2002 to 2010. NBFCs develop been a major driving force behind this growth given their extensive network, faster turnaround time, higher loan-to-value ratios and the ability to serve non-bankable customers. Of late, banks deal improved their gold loan harvest-feast features and services. Coupled with relatively lower interest rates and charges, banks stand to gain market share at the expense of NBFCs in the near future.



With fast growth, regulatory scrutiny has increased on gold loan lending practices. NBFCs are under greater focus as a result of their higher interest rates and charges, and non-adherence to realize your customer (KYC) regulations. This may further impact the dominance of NBFCs in the gold loan market. At just 1.2% of the total gold stock in the country at present, gold loans have a huge growth potential. However, firms need to develop distribution, product and risk mitigation strategies to get a share of the pie in a profitable and sustainable fashion.

Background: Gold and the Indian Society
As previously noted, gold has traditionally been among the most liquid assets and is an...If you want to get a full essay, order it on our website: Ordercustompaper.com



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