Gold loan at nominal rates to covid patients
The Kerala State Financial Enterprises (KSFE), which has a gold loan company worth about 3,000 crores a year, has declared that those infected with COVID-19 and their immediate family members will be eligible for a gold loan at a reduced rate and with fewer formalities.
Peelipose Thomas, chairman of the public sector finance firm, told that the move was made to prevent patients and their families from being forced to use informal money lenders, as has been the case in some states. He said the KSFE authorities had taken note of a storey in The Hindu about how people desperate for money for COVID-19 care were being charged exorbitant interest rates in some states.
He added that the gold loan to the KSFE targeted group will be at a rate of 5.5 per cent per year, which is 2% lower than the lowest rate of a regular gold loan. The loan had a maximum cap of 1.5 lakh.
The scheme will begin on Monday and operate until 1 p.m., subject to COVID-19 restrictions. The chairman said, “We have set aside auction of the usual chitties to ensure that gold loan applications in the category are attended to.” The loan was supposed to be cleared in about 15 minutes, with just the bare minimum of formalities. He said the applicant would need to carry the gold, as well as evidence of identity and proof of being a COVID-19 affected person’s immediate family member.
With 625 outlets, one for every two villages, the KSFE chairman said that the financial institution had a broad reach across the state. The KSFE had launched a similar programme, offering up to Rs 1 lakh to those who returned from Gulf countries during the pandemic’s first wave. A 3% interest rate was charged on the loan. It has also given a donation of Rs. 5 crores to the Chief Minister’s Vaccine Challenge Fund.
Meanwhile, gold-based lending slowed in Kerala in April, though there appeared to be an uptick after COVID-19 restrictions were lifted at the end of last year and the beginning of this year. According to sources at a leading NBFC in the state, the growth in the gold-based loan sector was usual last fiscal year.