InvestorQ : Why has there been a major proliferation of gold loan companies in the last few years?
Anu Biswas made post

Why has there been a major proliferation of gold loan companies in the last few years?

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Neelam Naik answered.
2 years ago
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Low cost is one of the big advantages that gold loan companies enjoy. There is a huge demand for these gold loans in semi-urban and rural areas where the gold loan company can effectively operate through a network of franchises and brokers. This reduces their establishment cost substantially with only a variable payout entailed. Secondly, rural and semi-urban folks prefer to approach the gold loan companies as the documentation requirement is much simpler and is just limited to a promissory note and a simple form. Running operations in rural and semi-urban areas is much cheaper for these gold loan companies and that is what has stood them in good stead. Above all, rural and semi urban India has a lot of idle gold to which they have a sentimental attachment. Gold loans meet their precise needs as they get funding and are able to monetize this gold without selling the same.

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