KOLKATA: A new wave is catching on to the banking sector of India amidst the global health crisis. Gold loans seem to be the order of the day for the financiers of India.
Executives from PSUs to small-scale NBFCs are starting to explore the prevalent nuances of the gold market, right now. It is amply evident from the vitalization that financial institutions like Canara Bank and SBI have injected into their gold loan businesses. The state-owned lender offered these loans to farmers for crop cultivation as well as to other individuals for emergency needs. Thus, with this scheme, they aim to cash in on the desperation of Indians who still have gold ornaments, in their possession.
On Monday, Canara Bank said, “The bank has identified the emerging financial needs of customers and the need to support their livelihood in view of the current challenges and uncertainties. In order to address these needs and to provide hassle free credit, the bank has launched a special business vertical dedicated for gold loans.”
SBI has also said that their gold loans have now become more accessible with its availability through their YONO net-banking app. They have even started promoting this scheme to customers by sending them app notifications.
On the other side, non-banking finance companies like Ujjivan have caught wind of this golden trend. They are currently trying to figure out their approach into gold loan business. However, other NBFCs like ESAF and Jana who already have footprints in this market sector, have started to expand their reach.
Gold, a precious commodity, is widely held by Indians as family asset, in the form of jewellery and coins. Consequentially, it is seldom leveraged for monetary requirements. So, in that regard, Canara Bank GM, D Vijay Kumar was quoted saying, “In times of need, this asset can be utilized to avail credit to support emergency cash requirements.”