Gold Loans in India Posted Dramatic Surge During Pandemic

SEATTLE (Scrap Monster): The gold loan segment in India witnessed robust growth during the pandemic period, mainly driven by distress selling by households to meet their financial needs at a time of tight economic crisis.

According to State Bank of India (SBI) - the country’s largest public sector bank reported that gold loans recorded a surge by 465% year-on-year to INR 209.87 billion during Q4 of the financial year ended 31^st March, 2021. Also, Manappuram Finance Limited- a leading non-banking financial company (NBFC) dealing with gold loans stated that its gold loan assets surged by 24% during the previous year.

The latest Reserve Bank of India (RBI) report suggests that outstanding loans against gold jewellery across the banks in the country rose sharply from INR 185.96 billion in January 2020 to INR 604.64 billion in March this year, surging ahead by over 225%.

The World Gold Council (WGC) estimates indicate that gold loan market is likely to grow by nearly 15.7% per annum to touch INR 4.617 trillion in the fiscal year ending March 2022, as compared with INR 3.448 trillion as at end-March 2020.

The rallying gold prices acted as the main trigger for gold loan growth in 2020. The recent fall in gold prices may badly impact the prospects of the segment. However, it is unlikely to lose its sheen any time soon.

YOU MAY ALSO BE INTERESTED IN:

Dip in Gold Prices Unlikely to Impact NBFC Asset Quality

Gold Loans Helped India Weather the Covid-19 Storm: WGC