The Reserve Bank of India's move to exempt small-ticket gold loans from stringent appraisal requirements will go a long way in enhancing credit accessibility for the common man, gold loan companies said. They also said that the RBI’s decision to reduce the repo rate by 50 bps from 6% to 5.50% is expected to boost the overall credit situation in the country.
John Muthoot, chairman & managing director of Muthoot FinCorp, said, “ The move to exempt small-ticket gold loans from stringent appraisal requirements addresses a long-standing ask from the sector and will go a long way in enhancing credit accessibility for the common man. We look forward to reviewing the final guidelines in detail."
RBI’s decision to reduce repo rate by 50 bps from 6% to 5.50% is expected to boost the overall credit situation in the country. The central bank has also reduced the cash reserve ratio (CRR) of banks by 100 basis points, from 4% to 3%. These steps will improve the liquidity condition in the banking system, reduce credit cost, and enhance credit availability. "These measures will also help foster consumption and improve household savings. The overall improvement in the liquidity condition will stimulate economic growth and enhance credit availability, especially in the rural economy and MSME sector, which are badly in need of formal credit," said Umesh Mohanan, executive director & CEO of Indel Money.
"The likely uptick in consumption will also boost gold loan business and formal credit demand. Further, the RBI’s decision to release the final regulation on gold loans is most welcome, as the industry is eagerly waiting for it. It is expected to hike the LTV ratio of small-ticket loans (ie, below Rs 2.5 lakh) to 85% from the current 75%. It is a major boost to all players in the gold loan industry," Mohanan added.
"Though the health of Scheduled Commercial Banks and NBFCs remains comfortable, and the economy is progressing well, the central bank clearly states that the stress in the microfinance sector is persisting. So, the RBI is not ready to lower its guard on the unsecured lending and credit card receivables. This cautious approach is going to strengthen the formal credit system," he said.
John Muthoot, chairman & managing director of Muthoot FinCorp, said, “ The move to exempt small-ticket gold loans from stringent appraisal requirements addresses a long-standing ask from the sector and will go a long way in enhancing credit accessibility for the common man. We look forward to reviewing the final guidelines in detail."
RBI’s decision to reduce repo rate by 50 bps from 6% to 5.50% is expected to boost the overall credit situation in the country. The central bank has also reduced the cash reserve ratio (CRR) of banks by 100 basis points, from 4% to 3%. These steps will improve the liquidity condition in the banking system, reduce credit cost, and enhance credit availability. "These measures will also help foster consumption and improve household savings. The overall improvement in the liquidity condition will stimulate economic growth and enhance credit availability, especially in the rural economy and MSME sector, which are badly in need of formal credit," said Umesh Mohanan, executive director & CEO of Indel Money.
"The likely uptick in consumption will also boost gold loan business and formal credit demand. Further, the RBI’s decision to release the final regulation on gold loans is most welcome, as the industry is eagerly waiting for it. It is expected to hike the LTV ratio of small-ticket loans (ie, below Rs 2.5 lakh) to 85% from the current 75%. It is a major boost to all players in the gold loan industry," Mohanan added.
"Though the health of Scheduled Commercial Banks and NBFCs remains comfortable, and the economy is progressing well, the central bank clearly states that the stress in the microfinance sector is persisting. So, the RBI is not ready to lower its guard on the unsecured lending and credit card receivables. This cautious approach is going to strengthen the formal credit system," he said.
