The crash in gold prices have triggered a surge in demand for jewellery, but analysts are concerned that the dip could “significantly” hit the asset quality of gold loan companies.
Market Price of Gold was Rs 26,040 yesterday. It is now cheaper by 25% for every 10 grams. Due to fall in prices footfalls at jewellery shops have increased but it may be due to upcoming marriage season.
But glitter of gold is losing as consumers attention is now on banks and gold loan companies whose collateral value would be under stress. Analysts are of the view that the portfolio of gold NBFCs is vulnerable. According to India Ratings NBFCs are giving loans at 80% LTV.
Today gold is only a form of asset and its glitter as jewellery is vanishing. People now want gold only for the purpose of investment. Gold loan is becoming very popular.
Further discussions are always welcome.