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It is no secret that India is a young country. Young Indians are making their mark across the globe in every field and making the country proud. Like with everything else, if there is one word that could be used to characterize this generation, it will be “Instant”.
The instant generation or the millennials have been defined by experts across the globe. I shall not venture into that territory. My intervention today is to tell you how a product like Gold Loan, which has been associated with the poor and rural people is more suited to the instant and urban populace, we have come to recognize as the millennials.
Traditionally, when the gold loan as the product was born it was a product for the poor. It gave them the liberty to monetize household gold deposits and offered instant cash in the direst of situations. However, as time has passed, fruits of economic progress have reached the interiors of our country. Farmers are now more educated and use the latest technology to carry out transactions for their day-to-day business needs. Gold loan product has also evolved and made itself future ready.
The preferred mode of transaction of the millennial generation is the credit card or the e-wallet. Service providers are introducing even post-paid wallets in the market, which allow you to spend now and pay later. Credit cards as a product are designed to spur spending and encourage purchase through means such as EMI, discounts and cash back etc. So where does an eponymous Gold Loan fit in this picture?
The primary utility of a gold loan for a millennial lies in its ability to bridge the cash flow mismatch where the due date may be before the salary day. In such cases, one could borrow against the jewelry to clear dues. Loan amounts can be as low as Rs 1000. Gold loans can be for any period of requirement and interest is paid only for the days' money is borrowed for, which makes it most convenient and instant.
A gold loan is a stitch in time that saves exorbitant penalty charges levied by the card companies, it also helps to maintain a good credit score. A good credit score later comes in handy when one applies for a car loan or a home loan or even a personal loan. All financial institutions rely on a credit score to assess an individual’s creditworthiness and delayed payments are often the difference between a loan sanction and rejection.
While one agrees that millennial may not have a big store of jewelry, whatever is available is usually kept at home or in lockers and rarely used. With mobile phones, and access to the internet available 24x7 gold loans can now be availed online with money transferred to account instantaneously. The Online Gold Loan or OGL as we call it at Manappuram also offers an overdraft as and when needed.
The best part of this arrangement is that one does not have to travel to a branch every time. In fact, the gold loans are also available instantly just like the noodles. A customer can ask for a loan against gold, through text message, at their doorstep and even through a mobile app at the flick of their finger. Once the OGL account is opened they can withdraw money directly to their bank account to pay EMIs/ Credit card dues. Once the salary is received these accounts can be closed just as easily. In fact, with the overdraft facility, an OGL is a very attractive option of ready cash that can be retained since it does not have any restrictions on the number of times a customer wants to borrow or repay, there is no pre-payment penalty either.
Thus far, the Gold loans have had what can be best described as an image problem. The traditional label of a product for rural and poor has stuck to them and the millennial audience have been wooed by the nimble products such as the wallets and cards. But as the times are changing, the gold loans are fast shedding their traditional tag and embracing the technology to appeal to the millennial user.
Joshy V.K.
National Head, Sales
(This article was published in Financial Express Online on April12, 2019)