Much of our lives have come to a standstill as the world is distanced from each other. In these challenging times, not only have we shut ourselves off from the rest of the world but within our borders as well. As the world economies are gradually opening with a slow pace, the troubles of survival of livelihood remain one of our primary concerns. Businesses are being either shut down, or some are struggling to maintain a pace to revive their activities, people at massive levels are facing unemployment and job cuts. It has led to the overall problem of liquidities in the economy. Also, people can make use of a free online gold loan calculator for better results.
Do we have a chance to survive? Can we see a short-term or long term solution to tackle the problem of liquidity?
Well, the answer is Yes!
Tackling the issue of liquidity in the market: It cannot be argued that the economy is itself suffering from the liquidity crisis. Small and big finance companies don’t have sufficient funds to provide to the borrowers. The traditional lenders are facing the world’s worst debt ratio. It is also believed that the lending process will further be constrained as these institutions continue to face liquidity challenges.
Gold loan: A ray of hope in the dark times
India is considered as the second-largest consumer of gold after China. The gold market in India is continuously expanding at an unexpected scale, and it is estimated that India’s gold loan market will reach Rs 4,617 billion by 2022.
Here are some explanations why the demand for gold loans is going to increase in the near future.
- Easy availability of loans: One of the primary reasons why people are attracted to the gold loan market is the easy availability of gold loans. While gold loans could be availed without any proof of income earlier also, but with the emergence of online gold markets, the process of providing the gold loans has further been simplified. The non-banking financial institutions are continuously working to explore the online models in the gold loan space.
- Low-interest rates: To fully explore the potential of gold loan markets and to help borrowers to revive the business and tackle the liquidity issues, the financial institutions are making efforts. For instance, Canara Bank has launched the gold loan campaign to provide a gold loan as low as 7.85%. Under this scheme, borrowers could utilise the money for any purpose. Also, the low-turnaround for the loan disbursement without any hassle is yet another highlight of the campaign.
- The increasing price of gold: Furthermore, the prices of gold are also continuously increasing; thus, the borrowers can get more loan amounts for the same gold weight. In March and April, the gold rates hit a record high, thus increasing the demand for gold loans.
- High loan to value ratio: To tackle the liquidity and gold price volatility ratio financial institutions continue to provide loans of higher amounts up to 90% of the loan amount. The Tamil Nadu State Apex Co-Operative Bank Limited launched a unique scheme for evaluating the gold at higher values than the regular valuation.
- Usage of gold loans: A gold loan is an ideal choice for the borrowers because of the advantages such as no proof of income required, no restriction on the usage of gold investments and hassle-free quick processing of gold loans. Along with that, the flexibility in the tenure of the gold loan as well as the repayment options makes it a popular choice for borrowing in these times.
Thus, with the faster adoption of digital markets for a gold loan along with the rising prices of gold makes it an ideal choice for dealing with the liquidity challenges and revive the livelihood and business.