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VP Nandakumar is the Managing Director and Chief Executive Officer of Manappuram Finance Limited, a non-banking financial company (NBFC) focused on providing loans. These loans include gold loans along with home loans, personal loans, vehicle finance, small and micro finance.
The 67-year-old Nandakumar has helmed Manappuram Finance, which was founded by his father, for the last 35 years. The company was listed on the Bombay Stock Exchange in 1992 and currently manages assets of about INR 27,600 crore.
The 67-year-old Nandakumar has helmed Manappuram Finance, which was founded by his father, for the last 35 years. The company was listed on the Bombay Stock Exchange in 1992 and currently manages assets of about INR 27,600 crore.
He has keen interest in farming and has multiple farms that house livestock including domestic animals, exotic birds and fishes.
In an interview with Forbes Advisor India, Nandakumar spoke about how gold loans have picked up during the coronavirus pandemic and what it means for India’s savings culture.
How are gold loans given to customers?
The gold holding in the country is very large in quantity. Some estimates go up to the extent of 30,000 tonnes. Our official statistics itself show 800-900 tonnes of gold being imported every year. So we do have a large quantity of gold, the larger part of it gets converted into jewelry. Every year middle and low-income citizens from villages across India buy gold ornaments in small quantities from their savings.
We help them monetise their precious gold jewelry by offering finance at affordable rates. Otherwise, they will invariably have to borrow at very high rates from moneylenders—something that has been common in India since many decades.
Many people use a gold loan as a means for a temporary or short-term loan and would like to get back the same gold chain that they had originally pledged. The Indian psychology is different, and so the best way to monetise gold is by way of loans against jewelry.
Initially, the biggest challenge faced by lenders like us was to change the perception of taking a gold loan from a distress product choice to a lifestyle product. We have been able to do it by first advertising the product via trusted celebrity endorsements to build trust and by introducing technology-driven products.
With our digital gold loan product, the customer can park their gold in our branches and get a drawing power, which can be used as an overdraft limit that may be operated from anywhere using a mobile phone.
For those customers who can’t reach our branches, we allow the gold loan to be disbursed to them at home. Consumers can store their ornaments with us free of cost and do not need to pay any interest unless they use it for a gold loan. If they avail a loan for a day, they needs to pay one day’s interest.