KOCHI: When technology blends with products and services of non-banking financial companies (NBFCs), innovation happens. The latest technological advancement in the gold loan business is online gold loans and industry majors are gearing up to introduce this product at the earliest.
Manappuram, Muthoot Fincorp and Kosamattam Finance have already chalked out plans to enter into this business. NBFCs forsee two major benefits from the product — to attract the tech-savvy customer and to reduce operation cost.
Industry sources point out that cost of running this business could be reduced somewhere between 25-50 per cent once clicked.
“Manappuram has invested `40 crore to run online gold loan business. We are now working on an eLocker facility. Once it is implemented the customer can view his gold pledged with us. The prototype of the eLocker will be ready in our 500 branches initially,” said Mohan Vizhakat, Chief Technology Officer, Manappuram Finance.
“Online gold loan is another revolutionary product which will be linked with eLocker. Soon this product will be introduced and the customer can avail a loan online without being physically present in the branch,” he added.
At present, gold loan companies are providing online payment facility to its customers.
“Online gold loan service will be the next big thing in this business segment. We are in the process of introducing the product in the near future. Our primary target will be people living in Indian Metros as they are more exposed to technology,” said George Muthoot, Director, Muthoot Pappachan Group.
Experts are of the view that NBFCs may bring down interest rate for online gold loan as their cost will be low for these products. For NBFCs the prevailing rate of gold is 18-24 per cent, private sector banks charge 13-16 per cent and for public sector banks the prevailing rate is 12-13 per cent.
“Companies in the business (gold loan) segment will be forced to introduce online gold loan as it will be the next big innovation. We have plans to create more online services to our customers,” said Mathew K Cherian, Chairman and Managing Director, Kosamattam Finance.
How the tech-based system works
Online gold loans are available for customers who have availed the gold deposit services with the NBFC. The purity will be checked when the gold is deposited in the locker. The customer automatically becomes eligible for gold loan up to the LTV (loan to value) limits. As and when such customers need a gold loan, they can apply online, without having to physically visit any branch. Loan can be disbursed to customer’s bank account almost instantaneously. The software will automatically check the eligibility criteria before disbursing the loan.
