With the outbreak of covid situation in India and the entire world, the GDP and the Per Capita Income face a downfall. The financial situation of India is getting worse, but India is still trying hard to cope with it. The Reserve Bank of India has cut the repo rate to overcome the financial crisis prevailing in the country. Banks and Financial institutions are trying hard to attract their customers by providing them with attractive interest rates to contribute to the financial market in India. The amount of gold loan financed by the lender also includes registration, transfer, and stamp duty charges. If a person in a financial emergency finds it convenient to get a gold loan by pledging the gold jewelry, he must do a good market study to get the ideal gold loan. The gold loan calculator available on the online websites of financial institutions assists a person in determining the monthly instalment of a gold loan.
Gold loans have become the most convenient option for persons who are confronting financial troubles during the outbreak of the pandemic situation. People have lost their income source, some are underpaid, and some have lost job opportunities. But people still need to meet their ends. Gold loans come with low-interest rates and a flexible repayment period; therefore is the best option to cope with the need for funds to meet all financial requirements.
Many people are in a dilemma whether to spend all their savings to fulfil the basic demands of the family, like food, education, etc., as Covid has brought forth a massive level of unemployment. Therefore, different factors are to be observed before applying for a gold loan, including the interest rate of gold loan provided by the Financial Institutions, the processing fees charged by them, prepayment and foreclosure charges, loan repayment period, and gold loan per gram offered, and repayment options available.
According to the World Gold Council reports, the organized gold loan market holds a significant place from the current pandemic and economic downturn. It is expected to rise to Rs 4.5 lakh crore in the upcoming time. The growth figures are expected to be an annual rate of 15.7%. The demand for gold loans has grown in response to the economic impact of the pandemic both through Banks like Gold Loan SBI and Non-Banking Financial Companies like Muthoot Finance Gold Loan. The growth outlook for the organized gold loan market looks promising in India after the NBFCs are using technology to expand branch networks by gold loans.
The 28.8% rally in the domestic gold price this financial year has enhanced the demand for gold loans. The borrowers have benefited from the higher loan value for the same collateral. On the other hand, the creditors are enjoying the lower loan to value ratio on their existing loans and to sum up; there is a higher demand for gold loans in the current situation. Further, the pandemic pushed the Gold Loan AUM higher for India's leading Gold Loan providing NBFCs.
The gold loan industry has always been a pillar of support for small and medium-sized businesses and households as it furnishes short term assistance. Additionally, the unorganized lending typically existed with the old market, and the regulated institutional framework of Gold Loans in India appeared to be bliss. Both the gold loan lenders Banks and NBFCs have promoted their gold loan business during the lockdown and proved to be an easy source of emergency credit for many debtors.
The lockdown induced an effect on the economy of India, resulting in the financial inconsistency of maximum people and companies. Coping up with this unstable condition was extremely difficult. Still, to fulfill the family requirements, people had no option other than to use up their savings, trade their assets, or obtain loans to satisfy their financial crisis. People finance in gold to receive the wealth and benefit from its rapid liquidation at times of monetary crisis. Therefore, a gold loan is a logical way to ensure funding without liquidating people's long-term investments.
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