The corona epidemic has disturbed the economic condition of everyone in general and special. The second wave after the other and then the third wave has increased the difficulties of the common people to the businessmen, banks and non-banking financial companies (NBFCs) who are leading in giving gold loans. Due to loss of employment or loss of income, common people have no money to take back their gold. At the same time, NBFCs and banks are not getting buyers of gold despite cheap offers by 15 to 20 percent due to reduced business.
Experts say that the trouble of gold loan default is much bigger than it appears, in it there are dangerous economic signs for the times to come. He says that the increasing number of gold loan defaulters and the auction of gold on behalf of finance companies indicates an economic slowdown. This is such a financial crisis that has come in the life of the common man troubled for the last three years, which is not visible.
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NBFCs in more trouble than banks
In the first wave of Corona, the speed of gold loans had doubled. Whereas in the second wave it intensified. But now the difficulty is of a different kind. Gold loan borrowers are not coming to get back their gold due to loss of income or loss in business. Due to this, NBFCs are more worried than banks. Experts say that banks usually give loans against jewelery and do not take gold coins or biscuits. Whereas NBFCs accept all types of gold. In such a situation, the customers of their gold loan are more and the gold loan is also more. Now in the event of default on gold loan, it is becoming difficult to sell such gold.
Businessmen are not even ready to take cheap gold
When NBFCs or banks auction gold, it is bought by jewelers. But even after two serious waves of corona, their condition is not good. Yogesh Singhal, President of Bullion and Jewelers Association Delhi, says that in view of the Corona crisis and inflation, it is becoming difficult for the customer to run the house. In such a situation, buying gold is being done when it is very important. This has reduced the purchase of gold. In such a situation, when the jeweler does not have a buyer, then what will he do even with 15 or 20 percent cheaper gold. In this situation the auction is no longer attractive.
If the price is higher in the auction, the amount is returned
Gold auction is not very easy for a bank or NBFC. A top banker associated with gold loans said that for auction, banks-NBFCs have to give several notices which is an expensive process. After this, a minimum price has to be kept, which is calculated on the basis of the then and current price of gold. He said that if a higher amount is received after deducting the loan and other charges taken in the gold auction, then it is returned to the customer through bank draft. However, the process being costly does not make much sense to the customer. Apart from this, being a defaulter also makes it difficult for him to get gold loan further.
Benefit for customers who pay EMI on time
Customers who repay the gold loan EMI on time benefit from the rise in the price of gold. Banks offer the facility of top-up loan to the customer in a specific ratio when the price increases. This also increases the tenure of the loan. Experts say that you have given a gold loan of one lakh rupees but the value of your mortgaged gold increases by 20 thousand rupees, then banks-NBFCs offer 70 to 80 percent of the top-up i.e. 14 to 16 thousand rupees. .