March 25, 2023

highlights

Gold has long been seen as an asset in Indian households.
People in India are likely to have gold worth about $1.5 trillion.
Loan against gold is also running from a very old time.

New Delhi. Gold has always been given a special place in Indian homes. Its limited quantity, strength and beauty have made it a symbol of affluence over the years. Equally, gold is also a great way to raise capital in times of trouble in Indian homes. Loan against gold has been going on for many hundreds of years. However, due to being an unorganized sector and there is no regulation, its illegal advantage has also been taken.

With the change in time, this situation has also changed and now taking loan against gold is more secure than before. There were some huge problems in the unorganized sector which have been solved by the organized sector. For example, the exorbitant interest on the loan taken for gold, the tricks used to repay it and the doubt whether the borrower will get back the same gold that he had given at the time of pledging. At the same time, now paperwork, regulation, monitoring and fixed interest rates have put an end to these problems.

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middle class consumer

In a survey by the India Gold Policy Center of IIM, Ahmedabad, it was revealed that most of the gold in India is bought by families with an annual income of 2-10 lakhs. In the last 5 years, an average of 56 per cent of the total consumption of gold in the country has gone to this category. More than 75 percent of households in India are in favor of keeping gold with them in one way or the other. According to the World Gold Council, people in India can have a total of 1.5 trillion dollars of gold.

dominance of the unorganized sector

Many institutions have come to give gold loan. Not only banks, many non-banking financial institutions are also offering gold loans. However, despite this, people’s fascination with the unorganized sector has not diminished. At present, 2/3rd of the loan being given on gold is from the unorganized sector. According to KPMG, only 5.5% of gold loans in 2019 were with the organized sector.

Take Advantage of the Organized Sector

As we told you above that the unorganized sector has high interest rates, unreliability and lack of transparency. There, even if you get the loan faster or the paperwork is less, you are more likely to fall into a debt trap in the long run. On the other hand, in the organized sector the paperwork might be a bit more, but the chances of your gold being tampered with are very less. Apart from this, you will not be charged arbitrary interest rates nor will illegal methods be used for settlement of payments.

Tags: business news, Golden, gold loan

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