NBFC-Banks competition in cash disbursement and Mortgage Loans

by Suryaa |

For any emergency financial need, a short-term loan is the easiest and most reliable is a gold mortgage loan. Mortgage the jewellery, get the cash, and release the jewellery when any amount comes in hand again. Over the years, NBFCs have been the largest shareholder in the gold mortgage lending business. Banks are lagging behind in this regard. There were allegations that the banks did not give enough credit and that it would be repaid two or three times. But now the banks have changed.

Gold prices have risen since the removal of corona lockdowns last year. Then came the mortgage lending business. As the second phase of the corona begins, NBFCs cut interest rates to reduce defaults. While some companies are ready to repay the loans .. Others are attracted by special loan rates during the Diwali season. Interest rates have come down due to the Reserve Bank of India's (RBI) Leverage Policy Review decisions. Banks do not consider large-scale mortgage lending due to short-term and low interest rates. NBFC representatives say bank officials fear they will be rolled over if mistakes are made in the gold quality inspection.

Village 'Gold' branches
The rural economy has flourished in recent times. The unorganised sector has also bounced back from the second phase of Corona disruptions. This has led to a resurgence of interest in cash loans. NBFCs are now charging 14-15 per cent, an interest rate that was once 18 per cent on average. Banks, however, expect to impress customers with a lending rate of 6.5-13 per cent.

According to the head of marketing at an NBFC, customers who want a loan of up to Rs 75,000 usually go to NBFCs. The average term of a loan is usually four months. This results in higher operating costs. This is because in addition to cash storage and insurance costs, there are also appraiser costs that certify the quality of the metal. The maturity of the same home loan is 15- 25 years. Once a loan is made, it is then charged. Banks generally expect to reduce operating costs by giving high value loans. After Corona, middle class people are opting for gold loans. They all want high value loans. Bankers estimate that cash mortgage loans will increase 3-4 times if the current trend continues.

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