Kolkata (West Bengal): Gold loan companies like Muthoot Finance, Capri Global and others have stepped up gas ahead of the International MSME Day which falls on June 27. A large section of the MSME depends on gold loans to meet their working capital needs as it is easier and quicker to get and they can get loans of any ticket size. Generally, the ticket size of loans varies between Rs 80,000–Rs one lakh.
George Alexander Muthoot, Managing Director, Muthoot said, "Muthoot Finance is opting for innovative technologies to revolutionise credit access to MSMEs. Although our MSME customers may require to physically pledge their gold for evaluation, Muthoot Finance's extensive 5000 plus branch network, and a robust phygital infrastructure through Loan@Home initiative facilitate faster approval of loans and disbursements."
“We also encourage more digital transactions while disbursing gold loans, especially loans of Rs. 20,000 and above. We disburse loans via IMPS or UPI, apart from RTGS/NEFT networks which ensures that their credit history is also strengthened. Our mobile app and website provide customers with easy access to loan details and repayment options to enhance transparency and include MSMEs into the modern digital economy," he added.
According to industry estimates, Indian households have over 25000 tonnes of gold. And, less than a fifth of that is being pledged to raise loans. About 60 per cent of this market still remains outside the formal financial system, indicating vast potential in the gold loan sector.
"Muthoot Finance recognises the potential of pledging this idle gold in driving entrepreneurial spirit by navigating through unforeseen emergencies and working capital needs of small business. Gold loan, our principal business, is often opted by MSMEs and small business owners for a constant cash flow to manage critical situations such as machinery breakdowns, supply chain disruptions as well as to expand business operations or invest in newer technologies," added Muthoot.
"In such situations, most MSME owners face rejection from traditional lenders often leading to closure of operations. In alignment with the increased focus from RBI on accelerating growth and reducing stress in the MSME segment, gold loan NBFCs play a crucial role in providing them with a working capital cushion with quick access to funds and flexible amounts all without the need for a strong credit history. This is exactly what they need to seize new opportunities, and maintain business continuity," said Muthoot.
