Interview Series!!! What is the future Market trends for gold loan business?
What is the market outlook that you see in the coming few months with regards to gold, gold loan business and coronavirus? Where are we heading?What is the market outlook that you see in the coming few months with regards to gold, gold loan business and coronavirus? Where are we heading?
By: Shailendra Wade Zonal Business Head : Rest of India, Fedbank Financial Services
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Introduction
Currently, what I feel Indian household’s Gold consumption in the first half of FY20 plunged by 56% on yearly basis to 165.6 tones. Meanwhile coronavirus triggered lockdown also slashed demand by 70% in the June Quarter to 63.7 tones, the lowest in more than a decade, this is primarily due to loss of jobs, pay cuts, business slowdown and larger infection in India crossing more than 1.5 million.
Gold Loan business
This is broadly affected due to high prices; investment mindshare to keep hard cash balance, there would be some spike in the festive seasons. Good corrections expected to happen post the COVID 19 vaccine, which would be widely available and help people, services and economy to resume and perform in accordance with the GDP uptrend expectation though will be sluggish in FY 21.
Amidst Coronavirus also all the Gold loan Business did good support to public at large by giving option to borrow for their emergency needs. Branches were opened/closed by all banks, NBFCs as per the MHA guidelines, during the same time still if the branches were opened, customer preferred to visit the branch, avail fresh loans or pay interest in physical cash form. Many tech savvy customers also used all the available online payment options through billdesk using Net banking/UPI or debit card option sitting at home to avoid any delay in repayment and avoid the penalties of any sort as per their scheme offered.
Road to Digital options
COVID lockdown has given lot of learning to all Gold loan NBFCs to invent lot of Digital options and transform the existing processes to reduce the physical contacts, reduce the documentation and reduce the cash exchange, which was more vulnerable to infections to spread in employees and customers. This in turn resulted into adopting e-lending modules starting from customer on boarding, underwriting, disbursement and e-documents sharing to customer registered mobile through Whatsapp or mail id.
In fact for Gold loans even all vintage players offered the door step service to clients who are willing to avail average or big ticket gold loans, it was made possible to meet the service needs, digital support and transactions control with available gazettes. Online Gold loan has picked up well and customer could avail loan amount in his bank account over the click sitting at his house. This also ensures that the Gold transition is safe and secure and 100% ensured. When the company representative reaches to his hub branch, the gold is deposited in safe vault until the borrower takes it to home with full closure. This has also given hand to boost and increase the popularity of Gold loan in the market.
