How Covid-19 has affected Demand of Gold loans

 The Covid-19 pandemic, and the subsequent nationwide lockdowns to curb the spread of the disease immensely slowed down economic activities in India. Consequently, the financial strain was felt at large, and people were bound to avail suitable financing options to meet urgent household as well as medical requirements.

As a result, there was a spurt in demand for gold loans in the country. Financial institutions and NBFCs experienced a 20% rise in business due to a high rise of gold loan requirements among people in India.

Factors that caused the rise in demand for gold loans during Covid in India

Gold is a high-value asset and can be easily liquidated into cash through convenient gold loan options. Let us look at why the demand for today Bajaj Finserv gold loans superseded other financing options during the COVID-19 pandemic.

● High LTV- The RBI approved 90% LTV for gold loans, thereby allowing borrowers to receive maximum funds against their leveraged gold.

●   No-end use restriction- Gold loan does not have any end-use restriction. Therefore, the borrowers could utilize the funds for multiple financial requirements.

●    CIBIL scores are not an essential factor- In comparison to other secured or unsecured loans, one does not need to possess a high CIBIL score for gold loans.

●    Minimal documentation process -To avail gold loan, one just needs to submit his/her KYC documents for the identification process. The best gold loan companies ensure a minimal documentation process, along with an online document verification facility.

All these factors collectively increased the demand for gold loans in the country, leading to an increased net profit of the financial institutions and NBFCs.