Gold loan doesn’t get infected by Covid-19
We are seeing the prevailing condition of covid-19 which is frightening each and every one. Every sector is getting affected by this pandemic. Demand and supply are not matching in the case of the oxygen production industry.15% of oxygen is supplied to the healthcare sector and the rest is consumed by the industrial sector. Recently Supreme court ordered to shift that 85% of supply to hospitals. There would be consequences to the industrial sector and as a result, there shall be a sharp decline in the Gross domestic product of the country(GDP). There are some sectors that are not at all affected by the pandemic. we can include the banking sector among them. In the aftermath of Covid- which adversely impacted financial condition of almost all households-There has been a substantial surge in the demand for loan. Specifically, due to ease of accessibility, demand for gold loan is more in prevailing circumstances.
Reason for the surge in gold loan demand
Due to the inherent benefits of gold loan and the prevailing economic scenario, the gold loan sector is seeing strong demand and disbursal growth. The lower credit eligibility makes gold loans accessible to all. A gold loan is more effective in managing liquidity needs faster than any other loan instrument. As there is reduced availability of credit in the market, the demand for gold loans will see a further uptick, banking on a higher loan to value (LTV) ratio. According to some assessments, the volume of household gold reserves is 25,000 tonnes and the value is approximately ₹110 lakh crore. Therefore, the growth horizon is quite broad for the gold loan sector.
These are the reasons that are making the financial sector a very indispensable part of our economy. The banking sector and specifically the loan sector is the most growing sector even in this pandemic time.