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The economic uncertainty in the aftermath of the COVID-19 pandemic has spurred an unusual beneficiary – the gold loan business.
As the lockdown wreaked havoc on the finances of the layman, the gold loan business emerged as an easier mode of access to finance for the needy.
The business of banks and the non-banking finance companies (NBFCs) in the state soared, especially after the first phase of the lockdown.
Initially, it was the pent-up demand generated by salary cuts and job losses that forced more people to go for gold loans.
A gradual uptick in the economy saw the advent of a new class of customers including small traders and the self-employed, who desperately needed money to resume business.
According to V P Nandakumar, MD and CEO of Manappuram Finance, before the pandemic, the monsoon season used to spur demand for gold loan for meeting education and medical expenses. “This year, as the schools are still closed and most medical facilities are operating at lower levels, the incremental demand comes mostly from shopkeepers and small business owners.’’