Shutdown causes spurt in demand for gold loans

Finance companies see over 20% rise in business

The general shutdown of normal economic activities, loanees’ inability to keep repayment schedules on unsecured loans and financial burdens imposed by restrictions on businesses have fuelled demand for gold loan in the State. Incidentally, some establishments have seen over 20% rise in business on year-to-year basis. “Gold is virtually liquid cash. It is safe anywhere from losses and theft even in places where it is pledged,” said sources in a leading gold loan company on Wednesday reacting to the uptrend in business during the last financial year. Early indications are that the trend will continue. But they added, “It is too early to comment on the new year” due largely to shutdown of schools, disruption in the agricultural cycle, and people being forced to stay home. Kerala State Financial Enterprises (KSFE), a State-owned chit and gold loan company, has seen demand for its Saukhya loan, aimed exclusively at those afflicted by COVID-19, go up by ₹5 crore over two months. The company provides a loan of up to ₹1 lakh to the family or close relative of one who is treated for COVID-19 for a period of six months at an interest rate of 5%. This could be the lowest rate available for the purpose, sources said. The facility, which was announced on June 15, will be available till July 15.