Gold finance company
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Gold finance company

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Roots in business since 1887, Muthoot Pappachan Group (MPG) activities include gold finance, financial services, consumer loans, hospitality,infrastructure, automotive, alternative energy.

Roots in business since 1887, Muthoot Pappachan Group (MPG) activities include gold finance, financial services, consumer loans, hospitality,infrastructure, automotive, alternative energy.

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Gold finance company Gold finance company Presentation Transcript

  • Gold Finance Company www.muthoot.com
    • Sure, if gold prices crashed drastically, this loan would have been a non-performing asset. Always giving 100 per cent loan to the worth of gold is risky
    • But Nandakumar says gold prices have never crashed beyond 5 per cent. “Even if the prices rise, we won’t benefit because of the security, since it is para banking. We are not owners of gold, but only custodians of security,” he says
    • Alexander says that M-Fin gives loans only against gold ornaments, which have an emotional value. Customers tend to take it back once they get the money
    • “We lend up to 72 per cent of the value of the gold. Moreover, we don’t lend against the making charge of the ornament, which is around 15 per cent,” he says
    • Almost all other players follow a similar strategy to de-risk their business. “If a jeweller brings a tonne of gold for pledge, we will not lend to him.
    • But if a family brings a few sovereigns, we are happy to lend; we know they will surely come back to take it,” says Nandakumar
    • The major gold loan companies charge interest based on the value of gold.
    • If the borrower needs less money against the value of gold, the interest will be lesser.
    • “ Since gold loan is a secured credit, customers enjoy the benefit of much lower interest rates and faster loan processing compared to other forms of credit,” says Biju Pillai of HDFC Bank
    • According to Alex Mathew of Geojit BNP Paribas, people prefer pawning gold to taking a loan.
    • “Bank interest rates are going up. Availing a loan is more difficult, involves delays and paperwork,” he says. In fact, it is this “quick service” that has made gold loan popular
    • Thomas John of Muthoot Fincorp says gold loan is like an ATM facility. “You don’t draw money because you have an ATM card and an ATM nearby. You draw the money only if you need. Similarly, gold loan is also requirement based.”
    • The other challenges traditionally faced by the gold financiers include pledging of gold plated ornaments, lower purity gold, theft and robbery at the branches.
    • The organised players claim to have concrete strong rooms with safety precautions. They have insured the security as cover against theft. The quality of the gold is checked by trained appraisers.
    • Players such as M-Fin runs training schools to counter these issues. The precautions include strict observance of KYC (know your customer) norms and reference, points out Thomas John
  • Contact US
    • www.muthoot.com