Many people in the country are facing a cash crunch as the income is affected due to the 40-day lockdown between the nationwide lockdown and the coronavirus outbreak. In such a situation, the demand for gold loan has increased rapidly. Lenders are also promoting gold loans in view of the prevailing circumstances. Due to a significant increase in the price of gold, customers are able to apply for a loan of more amount through gold loan.
For your information, let us tell you that India is the second largest consumer of gold after China. Here a large number of people keep gold in their homes. Due to the strong social welfare system and lack of widespread access to formal credit, gold works like an insurance policy and retirement plan in this country. The 40-day lockdown implemented to prevent the spread of coronavirus infection in the country has forced many Indians to take gold loans.
In his statement, PR Somasundaram, India's managing director at the World Gold Council, said in an interview, "Gold recycling and gold loans are expected to pick up in the next few quarters." He further said, 'There will definitely be strong growth in this area for two reasons. The first is that the prices of gold are constantly increasing. Therefore, they will be able to get more money for the same amount of gold. Secondly, banks will not be in a position to give loans without strong security in this situation of economic crisis, so they will encourage gold loans.
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