Gold lending spike and auction spike may hide a lot of pain

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The 5-7% drop in gold prices after March 2021 exacerbated borrowers’ problems, prompting margin calls and auctioning of pledged jewelry.

Themes
Gold | gold loans


Raghu Mohan

George Alexander Muthut, Managing Director of Muthoot Finance, believes that his company knows the gold lending business better than others: “We work closely with our clients and understand their needs better. I haven’t noticed any signs of stress in our business. ” What he won’t say bluntly is that this may not apply to banks.

He confines himself to the cryptic phrase: “We do it better than they.” And therein lies the tale. Gold loans rose nearly 85 percent to Rs 60,464 crore. The trigger is the Covid-19 pandemic with …

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First published: Monday 16 August 2021 06:03 AM IST



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