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

SEATTLE (Scrap Monster): The World Gold Council (WGC), in its latest report, said that gold loans have helped India to weather the Covid-19 storm. The economic impact of COVID-19 pandemic has resulted in growth in demand for gold loans through banks and non-banking financial companies (NBFCs).

In its report, which analyzes the growth of organized loan market in the COVID era, the Council also provides details on the regulatory landscape for gold loan market in the country. According to WGC, the outstanding gold loan in India is expected to grow to $55.2 billion in FY21, compared with $47 billion in FY20.

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WGC noted that gold loans are generally used to meet the expenditures for health, business, education, and marriage. The loans are popular in urban as well as rural areas of the country. The gold loan market is often categorized into organized and unorganized. The organized sector comprises of banks and NBFCs, whereas the unorganized sector is led by pawnbrokers and moneylenders.

The gold loan NBFCs have been the major drivers of gold loan market, displaying accelerated growth during recent times. The gold jewellery kept as collateral against loan by the country’s top three gold loan companies totalled 298.8 tonnes at the end of FY 2019-’20. However, bank’s share of the country’s gold loan market has remained above 70%, on account of the diverse portfolio of loans offered by them, WGC report said.