NEW DELHI/KOCHI: Financial stress due to reduced income and increased medical emergencies amid a raging pandemic are forcing more people to default on gold loans and, in turn, NBFCs to auction such pledged gold.
Manappuram Finance Ltd, one of India’s largest gold financiers, said on Wednesday that it conducted gold auctions worth a whopping Rs 404 crore in the January-March 2021 quarter. Such a large quantum of pledged gold being auctioned in a single quarter points to the deep financial pain the pandemic has inflicted on the common man. Consider this: the combined value of auctions in the previous three quarters was just Rs 8 crore.
V P Nandakumar, MD & CEO of Manappuram Finance, attributed the higher gold auction to economic distress and the fall in bullion prices. “The prices of gold declined by 21% after hitting a peak of Rs 5,100/gm in August 2020. So, some customers allowed the gold to be auctioned,” he said.