Google for India 2024: Google India on Thursday announced its partnership with gold loan non-banking financial company (NBFC) Muthoot Finance to enable gold-backed loans for small business merchants and consumers, particularly in rural India, via its payment app Google Pay. The partnership, announced at this year’s Google for India event, is expected to help small businesses leverage gold assets to fund their working capital needs and growth.
Speaking on the collaboration, Sharath Bulusu, Director, Product Management, Google said the latent asset can be mobilised for economic activity.
“Indians have a strong cultural relationship with gold that goes beyond it being a vehicle for investment which is why it makes sense that around 11 per cent of the world’s total gold is held by Indian households,” he said at the event.
These loans are unique because they are offered at affordable interest rates and have flexibility for borrowers to use them for a variety of purposes while providing security to the lender, Bulusu added.
Gold-backed credit access for businesses assumes significance with the market for gold loans by banks and NBFCs set to reach the Rs 15 lakh crore mark by March 2027
According to a report by credit rating agency ICRA in September this year, the organised gold loan market is expected to cross Rs 10 lakh crore in the current fiscal. At the same time, NBFCs hold the pole position in retail gold loans and are expected to expand at 17-19 per cent in FY25.
Another data by the Reserve Bank of India shows that loans against gold jewellery jumped by nearly 40 per cent in July in comparison to 16 per cent in July last year.
However, in a notification on October 1, the central bank had flagged irregularities in the processing of gold jewellery-based loans by supervised entities such as shortcomings in the use of third parties for sourcing and appraisal of loans, valuation of gold without the presence of the customer, etc.
The RBI had asked all gold loan providers to comprehensively review their policies, processes and practices on gold loans to identify gaps and initiate appropriate remedial measures.
The central bank is soon expected to launch its new Unified Lending Interface (ULI) platform to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers.
Google India had entered into the retail loan business in India last year including merchant loan offerings in collaboration with lenders including DMI Finance and ePay Later.