Skip to main content

Gold loan market to grow to over Rs 3 lakh cr by 2020: KPMG

The average gold demand in India is estimated to go up to around 850 to 950 tonnes per annum by 2020, with two-thirds of this demand coming from the rural India

Related Category: Sub Category:

The organised gold loan market in India is expected to grow to over Rs 3 lakh crore by 2020 at a three-year compound annual growth rate (CAGR) of 13.7 percent, British consulting multinational KPMG said on Tuesday, citing its report based on an industry survey.

The report titled “India’s gold loan market: Is the glitter fading?” cites the World Gold Council which estimated last year that average demand in the country would go up to around 850 to 950 tonnes per annum by 2020, with two-thirds of this demand coming from India’s rural market.

“Industry projections say the organised gold loan market in India will grow to Rs 3,101 billion (Rs 3.1 lakh crore) by 2020 at a three-year CAGR of 13.7 per cent,” quoting a KPMG release, IANS said.

India is one of the largest consumers of gold which had an estimated total stock of 23,000 tonnes in 2016, the majority of which is held by households, according to the report.

“With the country’s growing population and ever increasing disposable income, India’s fondness and inclination for gold has also increased manifold,” the report said.

There are broadly two categories of gold loan lenders in India. The formal sector consists of banks, non-banking finance companies (NBFCs) and cooperatives, while the informal sector is made up of categories like local moneylenders and pawnbrokers.

According to KPMG, gold loan companies are expected “to continue delinking the gold price volatility risk by offering more variants of lower tenure loan products”.

Noting that increased competition from small finance banks are having a yield reducing impact, the report said the gold loan space is likely to see “interesting partnerships with fintechs (financial technology companies) to help streamline and automate processes”.

The report has identified factors such as exclusion from mainstream personal and retail loans by commercial banks, and changing attitudes to applying for gold loans, as the growth drivers of the gold loan market in India.

Votes with an average with

Related Story

Data protection in pesticides development must in Insecticides Act

Chemicals and Petrochemical Secretary, P Raghavendra Rao, today concurred with the industry’s view on the need for data protection provisions in the Insecticides Act to encourage R&D in crop…

VP calls for zero-budget natural farming to make it profitable

The Vice President of India, M. Venkaiah Naidu has called for promoting zero-budget natural in agriculture to make farming viable and sustainable. He was interacting with the Governor of Himachal…

MSP hike for agri crops makes good economics, for now: ASSOCHAM

Increase in Minimum Support Price (MSP) may be debated as a "good politics but bad economics", but the ASSOCHAM feels that better realisations for farmers' crops would leave more disposable income…