Panaji, Oct 14 (Calcutta Tube) Easy availability of gold in Indian households and minimum chances of consumers defaulting on loans are making the loan-against-gold market grow in the country, which is now valued at Rs.79,000 crore, said a finance company official.
Padmanabh Bhongole, gold loans project head of Chennai-based Shriram City Union Finance (SCUF), said borrowing against gold is emerging as a sought after financial option as the yellow metal’s prices hit record high and people lose their inhibitions over pledging their family heirlooms as collateral.
‘Loan-against-gold is one of the biggest things in the loan market, especially in India, where it has caught on like wildfire,’ Bhongole said on the sidelines of an event held to mark the start of SCUF’s operations here Wednesday.
‘Maharashtra alone accounts for Rs.26,000 crore of India’s loan-against-gold market. There is much scope for growth.’
Traditional Indian households, especially in south India, have shown tremendous receptivity to the concept, he said,
adding that SCUF has 1,200 branches across the country.
‘Its popularity is also increasing with the lenders too because the defaulting rate is minimum. The asset is secured and gold has always shown an appreciative trend, which means that you are never in red as far as asset value is concerned,’ said Bhongole.
Set up in 1986, SCUF is part of the Shriram Group and has a customer base 15 lakh customers.