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Gold Loans: A sharp increase is being seen in the cases of taking gold loan by mortgaging gold jewelery with banks. In the first seven months of the current financial year 2024-25 till October 18, 2024, there has been an increase of more than 50 percent in the cases of taking gold loans from banks. However, due to skyrocketing inflation, weak consumer demand and RBI’s strictness on unsecured lending by banks, there has been a decline in the cases of taking other personal loans as compared to gold loans.
Cases of taking gold loan are increasing
Banking sector regulator Reserve Bank of India (RBI) has released the data of loans given by banks to different sectors on 29 November 2024. According to the same data of RBI, by October 18, 2024, the outstanding gold loans of banks have increased by 56 percent to Rs 1.54 lakh crore. Whereas during this period last year, there was an increase of only 13 percent in gold loans of banks. In such a situation, the question arises that why the cases of taking gold loan are increasing in the country? According to experts, the biggest increase in the cases of taking gold jewelery or gold loan is seen during financial crisis or emergency. But there is another aspect to it also.
There is a connection with the sharp rise in gold prices
The sharp rise in the number of gold loan loans is also directly related to the sharp rise in gold prices. In the current year 2024, a sharp rise in gold prices has been seen. From Diwali of 2023 to Diwali of 2024, an increase of about 30 percent has been seen in the prices of gold. During Diwali of the year 2023, gold was available at Rs 60,282 per 10 grams, whose price has reached close to Rs 78173 per 10 grams. Due to the sharp rise in gold prices, the cases of taking gold loans have also increased. Banks give gold loan to the consumer up to 60 to 65 percent of the total value (loan-to-value) of gold jewellery.
Gold loan is safe for banks
Ashwini Rana, former banker and founder of Voice of Banking, says, ‘The trend of taking gold loans has increased in banks. A major reason for this is the rise in gold prices due to which customers get more loans. Second. Customers do not face any problem in taking gold loan. Banks easily give gold loans to customers because this loan is given against gold jewellery. This is a secured loan for banks because the loan is guaranteed. He told that, this is the reason why the demand for gold loan has increased.
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