Introduction12345

Gold considered an auspicious metal is opening up business opportunities India. Largely

driven by the unorganized segment in the past, most of whom included the pawn brokers, the gold
loan market has now started to be driven heavily by the organised segment. The stigma attached to
pledging gold is slowly thinning among people while companies are campaigning that gold is an
effective assistant at the time of financial need. Express loan within 5 minutes is the most attractive
feature of this loan product offered by almost all market leaders. The characteristic of the gold
product is that the average tenor of the loan is about 90 to 100 days Investors have found this
product attractive with short term tenor. Moreover, the risk involved in the product is less. Gold
loan companies offer loan against a LTV (loan to value) ratio of about 75 to 80% which makes it less
risky. Any movement of gold prices that makes the value of the security to fall below the loan
offered would make the company exercise a margin call or cancel and issue a fresh loan. The
sentiments attached with the gold ornaments pledged also makes gold loan less risky with the
success of many players.

Many institutions have identified that this business model is not hard to replicate. But in almost all
the business models, one has to identify the sustainable source of competitive advantage. In case of
gold loan market, 80 to 85% customers are repeat customer. Hence the source of competitive
advantage would be the trust private institutions can build over time.

Our lives are filled with needs and very often to fulfil them we may require instant funds. The answer
to such financial requirement may not always be in personal loans. Loan against gold is a quick and
hassle free finance option requiring minimal documentation. So instead of keeping that gold
jewellery, coins, bars or biscuits lying ideal in your locker, you sure could use them to meet those
cash contingencies.