investment in gold Image credit source: Pixabay
The Indian market is growing rapidly. Look at any sector, from the stock market to retail. You will see speed. Not only this, you will be surprised to know that with this the graph of the loan market has also gone up rapidly. Here too the tendency to take loans, especially against gold, has increased. People are taking money out of banks in exchange for the gold they keep at home. A report estimates that its size will double in the next five years.
It will double in 5 years
Despite the expected slowdown in growth due to stringent regulations, India’s organised gold loan market is expected to double to Rs 14.19 lakh crore over the next five years. This possibility has been expressed in a report by PwC India. According to this report published on the country’s gold loan market, there was substantial growth in the organised gold loan market in the financial year 2023-24 and it reached a valuation of Rs 7.1 lakh crore.
According to this, with an annual growth rate of 14.85 per cent in five years, the loan against gold market is likely to reach Rs 14.19 lakh crore by the financial year 2028-29. The report says that Indian households hold a huge amount of gold, which is estimated to be 25,000 tonnes. The report says that the current value of gold held by Indian households is approximately Rs 126 lakh crore.
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The gold loan market is set to witness moderate growth over the next two years as lenders offering loans against gold face increasing scrutiny from regulatory authorities regarding loan-to-value (LTV) maintenance and auction-related processes. The report said, “The inactivity of the second-largest player in this market will impact market growth in the current financial year.”
This is the rule right now
Moreover, the Reserve Bank’s advisory to non-banking financial companies (NBFCs) on cash disbursal, capping the cash disbursement amount at Rs 20,000, may push customers to rely on the unorganised sector. The regulator has also raised concerns over the screening process for lending activities through fintech startups. PwC said share prices of major NBFCs have declined due to increased regulatory scrutiny and revised guidelines.
“Lenders offering loans against gold are expected to use this period to ensure they comply with all regulatory guidelines as well as streamline their middle and back offices through digitalisation initiatives,” the report said.
