Gold prices have been nearly flat for the past two years and are good for all businesses, including gold lenders, said George Jacob Muthoot, chairman of Muthoot Finance, a major player in the segment. .
“It may be true that in recent quarterly analysis, the price of gold has seen fluctuations. But overall, if you look at the last one or two years, we see that the trajectory of the price of gold Gold is steadily rising. It hasn’t fallen,” he said. Activity area.
“We can say that the price is almost stable. Sometimes there are ups and downs, but today the price is stable,” he explained in an interview.
Has gold lending activity reached a saturation point?
Definitely not. Indian households sit on one of the largest private gold stocks in the world at 25,000 tonnes. Only 10% of this gold is staked on the organized market involving all the gold lending companies in operation. With 90% still to be exploited, we believe the saturation point is miles away.
Do start-ups and independent businesses now have more access to gold loans?
Our portfolio also includes business loans for start-ups and other businesses. Most view gold loans as bridging loans to meet timely fundraising in the event of a delay in receiving capital through other means.
Lending gold as a means of lending is hassle-free and does not require any credit checks; probably, this factor could have influenced these companies to prefer gold lending to other categories. In terms of our portfolio, I don’t know if we can still refer to them as a new emerging category of borrowers, but yes, they do hold a share of our portfolio.
Two-thirds of lending activity is carried out in the unorganized sector and most of the gold is held in the rural sector. Do you need to reach rural India even more aggressively?
We have over 5,000 branches in nooks and crannies of India. About 65-75% of them are located in Tier 2 and Tier 3 cities, which means we primarily serve customers in rural areas.
Our current operations show that we are already reaching out to rural India. Many rural households depend on micro-finance to meet their needs. It gives more purchasing power to the lower and middle segments of society and boosts the revival of the economy. We will also continue to serve rural areas in the future.
Are you worried about competition from new era fintech gold loan providers?
Our business goal is to serve customers well. We will continue to do so as long as we are in this business. It is a fact that new era players are making inroads into the industry and there is a lot of competition. But this only goes to show that the gold lending industry has great prospects for growth. Although there is a lot of competition, we must also understand that the market is expanding and new customers are entering the market.
We have leveraged technology to bring more convenience to customers, especially the acquisition and retention of next-gen and millennial customers. This includes AI-powered chatbots, an integrated WhatsApp banking facility , a video/digital KYC for customer onboarding, a BBPS-enabled payment process, and collaborations with platforms such as Paytm, PhonePe, and GooglePay.
We have also launched a “home loan” facility where the client can take out gold loans from the comfort of their home. We have a dedicated team at Emsyne, our IT division, to continuously observe digital disruptions and check for opportunities to adopt them where possible.
How do you rate the increase in demand for personal loans, credit card loans and sustainable consumer loans compared to gold loans?
Personal loans, credit card loans and durable consumer loans are entirely different categories. Gold loans do not involve any CIBIL score assessment; you are simply pledging the asset instead of cash, and it requires very little documentation. Gold loans come with much more reasonable interest rates than others. So far, I think we’re on the right track. The economy has started to pick up and we are now adding new customers.
Do industrial relations in the gold lending sector need to be rethought? Is employee attrition a major concern here?
The employee attrition rate in the gold lending industry is similar to other industries. I don’t think there’s a particular concern about that right now. The continuous expansion of urbanization has brought more opportunities for growth. Job candidates can now choose the path they want to excel in their career. As far as we are concerned, we believe that “freedom of choice” is something good for people in terms of career.
April 20, 2022