The World Gold Council ranks China and India as the largest gold consumers worldwide. India's household stocks about 24,000 tons of gold stock. Less than 10% of India’s gold stock plays out in organized markets such as gold loan companies.
The IIM-A (Indian Institute of Management) and the IGPC (India Gold Policy Centre) survey indicates that more than 75% of Indian households own gold pieces.
The COVID-19 pandemic imposed challenges that might impact the economy and the reserve bank for years. For instance, SMEs, MSMEs, unbanked customers, and low-income households opted for gold loan investment after banks and big institutions held onto their purses.
Therefore, gold loan demand has been booming since the pandemic. It has maintained momentum as economies start to heal.
Digitization processes have rapidly increased in all sectors, including the demand for gold loans. Consumers have higher expectations, and lenders use available tech options to innovate processes and meet the demands.
Digital innovations like super apps for remote banking and loan applications have helped eradicate most paperwork. Blockchain and other financial techs are hot trends that impact all sectors, such as the gold loan industry.
Millennial investors opt for digital gold, gold-oriented mutual funds, SGBs, and ETFs. Non-banking financial institutions say digital gold will finally become an option across all age groups. Nonetheless, it might take more time for the older generation to figure out the sentimental value of gold ornaments.
The shift is gradual due to limited trading hours, gold spot price fluctuations, and lack of direct ownership. Yet, these gold loan schemes can be the better option for flexibility, uniform pricing, minimal design costs, and purity. Investors are free to opt for smaller digital gold quantities for a start.
Besides, online payment methods such as UPI and other digital wallets have drastically increased. This step allows products like gold wallets and gold-secured credit cards to penetrate the market. Most companies have plans to implement such options within the next few years.
Due to the gold loan sector prospects, many investors are now offering the gold loan. This move has resulted in rising competition proving immense opportunities within the sector.
Finance facilities have recorded good gold loan growth in Q4 FY22. Also, the firm gold prices have helped eradicate the collateral safety side.
Non-banking financial companies who initially felt reluctant to invest in the gold loan are now willing to rely on online gold loans as a finance source. Hence, they are facilitating innovative solutions and constant technology growth.
You ought to master the gold loan calculator and improve your gold loan portfolio to leverage gold loan NBFCs. The loan to value you get depends on your gold jewellery portfolio.
This portfolio replicates your gold asset and gold jewelry. It would be best to check out economies with a high gold demand for insights.
