You are here: Home » Current Affairs » News » National
Business Standard

Coronavirus pandemic to boost gold loans to $55.2 billion in 2020-21: WGC

Gold loan industry traditionally been a pillar of support for small businesses and households in need of emergency short-term assistance

Topics
gold loans | Coronavirus | World Gold Council

Press Trust of India  |  Mumbai 

gold loan
The Covid-19 pandemic has boosted demand for gold loans through banks and non-banking financial companies

With gold being a prominent feature in India's investment landscape, the demand for has grown due to the impact of the COVID-19 pandemic and is expected to grow to Rs 4,05,100 crore (USD 55.2 billion) in 2020-21, according to a report.

"Demand for gold loans, both through banks and NBFC, has grown in response to the economic impact of the pandemic.

"As a result, outstanding organised gold loan is expected to grow to Rs 4,05,100 crore (USD 55.2 billion) in 2020-21 from Rs 3,44,800 crore (USD 47 billion) in 2019-20," the (WGC) said in the report, titled 'help India weather the COVID-19 storm'.

The gold loan industry has traditionally been a pillar of support for small businesses and households in need of emergency short-term assistance and for the unorganised lending that normally co-exists with any robust gold market, WGC Managing Director (India) Somasundaram PR said.

He added that the regulated institutional framework of in India has made it ubiquitous over the past decade, which is a boon.

The COVID-19 pandemic has boosted demand for gold loans through banks and non-banking financial companies (NBFCs), and the recent rise was seen some time since July 2019 when prices started moving up sharply. "A 28.8 per cent rally in domestic gold price this year and the need for quick credit among small businesses will further spur gold loans' growth post the pandemic."

Gold loans will benefit not just the demand side but also the supply side dynamics, as many banks and NBFCs target this product segment on account of its acceptable risk profile, he stated.

"India's leading gold NBFCs expect their gold loan AUMs (assets under management) to grow 15-20 per cent in the current financial year. Further branch expansions of gold loan NBFCs and increased adoption of technology make the growth outlook of the gold loan market look even more promising," he added.

Somasundaram also said the market is expected to grow at an annual rate of 15.7 per cent and reach Rs 4,61,700 crore in 2021-22 from Rs 3,44,800 crore in 2019-20.

The report further stated that the gold loan industry constitutes an important pillar in supporting the financing needs of individuals and small businesses in the country.

Gold is a preferred savings for Indian households as it provides capital preservation, liquidity and source of funding during bad economic times, supporting the relevance of gold as a strategic asset in India.

With the emergence of the pandemic, there has been a clear trend in increase in gold loan demand from individuals and businesses, it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 10 2020. 21:09 IST
RECOMMENDED FOR YOU
.