The Inner Workings of a Gold Loan
“Gold Loans- The Old Concept in a New Package”
Introduction:
It has been observed recently that Indians own more gold than the citizens of any other country. They use the glittering metal as ornaments to flaunt family wealth, as a source of retirement savings and as insurance against calamities.
Gold and domestic savings: In rural areas in India, due to the lack of access to banks the poor continue to invest their savings mainly in gold. Also, there are strong cultural factors at work in India which make gold not only a desirable but also a necessary asset to hold.
But lately, gold has become something else: collateral, and the basis of one of the country’s fastest growing businesses, gold loans. It is therefore an apt moment to acquaint the reader with an insider’s perspective on why gold loans matter and why they hold so much promise for our country’s future. The purpose of this paper is to present a consolidated review of the various facets of the gold loans spreading with speed in India to the readers.
Gold Loan:
Gold loan is a secured loan issued by lenders against gold as the undersigned asset. Gold loan gives an opportunity for people to liquefy the value of their jewelry items and use it for financing purposes.
Rise in gold prices have increased the disbursal of Gold Loans in the middle and upper middle class. With changing times working women are becoming financially independent and taking active part in decision making process. They are working in unison with their husbands to ensure a bright and secured future for their family. As the couples are well employed, they seek to return the principal even within a month of receiving their salary. They are now using such loans to finance their children’s education, (particularly for meeting donation demands), which a bank will not entertain, car purchases, holiday trips or even to put up margin money for a home buy.
The loan process begins once the gold is deposited with the lenders. After a ‘purity’
Introduction:
It has been observed recently that Indians own more gold than the citizens of any other country. They use the glittering metal as ornaments to flaunt family wealth, as a source of retirement savings and as insurance against calamities.
Gold and domestic savings: In rural areas in India, due to the lack of access to banks the poor continue to invest their savings mainly in gold. Also, there are strong cultural factors at work in India which make gold not only a desirable but also a necessary asset to hold.
But lately, gold has become something else: collateral, and the basis of one of the country’s fastest growing businesses, gold loans. It is therefore an apt moment to acquaint the reader with an insider’s perspective on why gold loans matter and why they hold so much promise for our country’s future. The purpose of this paper is to present a consolidated review of the various facets of the gold loans spreading with speed in India to the readers.
Gold Loan:
Gold loan is a secured loan issued by lenders against gold as the undersigned asset. Gold loan gives an opportunity for people to liquefy the value of their jewelry items and use it for financing purposes.
Rise in gold prices have increased the disbursal of Gold Loans in the middle and upper middle class. With changing times working women are becoming financially independent and taking active part in decision making process. They are working in unison with their husbands to ensure a bright and secured future for their family. As the couples are well employed, they seek to return the principal even within a month of receiving their salary. They are now using such loans to finance their children’s education, (particularly for meeting donation demands), which a bank will not entertain, car purchases, holiday trips or even to put up margin money for a home buy.
The loan process begins once the gold is deposited with the lenders. After a ‘purity’
References: 3. The Economic Times, newspaper article published on July 29, 2010 4