The gold loan demand is coming from people moving away from unorganized sources of finance, such as pawn brokers as well as money lenders:
Kotak Mahindra Bank offers instant gold loans, with interest rate starting at 9%, with the triple benefit of minimal documentation, transparency in interest rates and easy repayment options. The bank extends flexible loan tenure, which ranges from a few months up to 3 years. Both existing and non-existing customers can avail gold loans.
Glittering Branch Expansion
Kotak Mahindra Bank has opened 100 gold loan branches as of February, 2023. The bank was offering gold loans through its 400 branches as of March 31, 2022. It plans to further expand its gold loan branch network by opening another 50 gold loan branches by the end of FY 2022-23. As on 31st December 2022, Kotak Mahindra Bank has a national footprint of 1752 branches.
Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank, updates: “We are delighted to have opened more gold loan branches covering additional 49 cities during 2022-23. Gold loans have emerged as one of the most preferred modes of availing finance to meet personal as well as business needs. With the addition of 100 gold loan branches in FY2022-23, our bank now offers gold loans through its 500 branches spread over 253 cities across the country.”
Unorganized Sources Down
Indians have idle gold and with gold prices soaring, gold loans have become an attractive proposition. Manish explains: “The demand is coming also from people moving away from unorganized sources of finance, such as pawn brokers as well as money lenders. This is due to greater awareness about risks associated with unregulated sources of finance offered by pawnbrokers, at relatively higher interest rates. We feel the trend will continue in the time to come as well.”
Urban Lower Income Groups
Given that gold is available with a larger section of the population across India, there’s no one specific market area which is seeing demand. Manish elaborates: “We are offering gold loans in over 250 cities across the country, which is a mix of metro as well as urban locations. Majority of the customers are from middle to lower income groups, who avail gold loans to meet their immediate credit needs. Gold loans are attractive for customers because they are cheaper than other loan products.”
Kotak Mahindra Bank follows the branch led strategy for gold loans. Manish Observes: “We have seen that branches provide comfort to customers walking in with their gold. Our branches are located at locations, where visibility is high. Additionally, we ran an integrated, multi-channel campaign ‘Make it a happen with a Kotak Gold Loan’ to promote gold loans. It includes outdoors in select cities, pan-India activations, branch visibility as well as social media.”