Over Lakh Families Will Lose Their Gold On Wednesday As Banks And NBFCs Will Auction Defaulters' Jewelry - Vibes Of India

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Over Lakh Families Will Lose Their Gold On Wednesday As Banks And NBFCs Will Auction Defaulters’ Jewelry

| Updated: February 22, 2022 21:04

Over a lakh families who had taken loan by mortgaging gold and have not been able to repay face a doomsday scenario as NBFCs (Non banking financial companies) and banks are about to auction their jewellery.

Muthoot and Mannapurnam gold loans control 50 percent of the market. These companies give easy loans against gold jewellery. In most cases, customers get around 70 percent finance by mortgaging gold.

In these transactions it is easy for the customers to get the loan and even easier for NBFCs to get their money back by auctioning it if they fail repay the loan on time. NBFCs and banks auction such gold every month. During this month, they have issued more than 59 notices across 15 cities of India.

The pandemic caused unemployment and left hundreds of people with no choice but to mortgage their gold to get a loan. In pre COVID times, India’s gold loans were around Rs 29,000 crore which increased two and a half times to Rs 70,871 crore in just two years. This is way higher than the education loan in India.

Muthoot finance is India’s biggest gold finance company. Its portfolio has increased from Rs 39,096 crore to Rs. 61,696 crore.

According to the data, gold loans in India range from Rs. 70,000 and average time of loan is 4 months.Experts are of the opinion that people faced enormous financial hardships during COVID and had no option but to mortgage their gold jewellery.

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