Mumbai, November 10 (PTI) With gold being an important feature of the investment landscape in India, demand for gold loans has increased due to the impact of the COVID-19 pandemic and is expected to reach 405,100 crore rupees ($ 55.2 billion) in 2020-2021, according to a report.
“The demand for gold loans, both through banks and the NBFC, has increased in response to the economic impact of the pandemic.
“As a result, the outstanding amount of organized loans on gold is expected to reach Rs.45,100 crore (US $ 55.2 billion) in 2020-2021, compared to Rs.344,800 crore (US $ 47 billion). in 2019-2020, “according to the World Gold Council (WGC) said in the report, titled” Gold loans help India weather the COVID-19 storm. “
The gold lending industry has traditionally been a mainstay of support for small businesses and households in need of short-term emergency assistance and for unorganized lending that normally coexists with any gold market. robust, said WGC (India) General Manager Somasundaram PR.
He added that the regulated institutional framework for gold lending in India has made it ubiquitous over the past decade, which is a godsend.
The COVID-19 pandemic has boosted demand for gold loans through banks and non-bank financial corporations (NBFCs), and the recent increase has been seen since July 2019, when prices started to rise sharply. “A 28.8% rebound in the price of domestic gold this year and the need for rapid credit among small businesses will further stimulate growth in gold lending after the pandemic.”
Gold lending will benefit not only demand but also supply dynamics as many banks and NBFCs target this product segment because of its acceptable risk profile, he said.
“India’s major gold NBFCs expect their gold lending assets under management (AUM) to grow 15-20% in the current fiscal year. Further expansions of NBFC’s gold lending branches and increased adoption of technology make the growth prospects of the gold credit market appear even brighter, ”he added.
Somasundaram also said the market is expected to grow at an annual rate of 15.7% and reach Rs 4,61,700 crore in 2021-2022 from Rs 3,4,4,800 crore in 2019-2020.
The report further states that the gold lending industry is an important pillar in meeting the financing needs of individuals and small businesses in the country.
Gold is a preferred saving for Indian households as it provides preservation of capital, liquidity and a source of funding during tough economic times, supporting gold’s relevance as a strategic asset in India.
With the emergence of the pandemic, there has been a clear trend of increasing demand for gold loans from individuals and businesses, he added. PTI SM HRS
Disclaimer: – This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI