Gold lending: Banks and NBFCs publish auction notices when defaults increase; looking at further losses as the value of the yellow metal drops from the 2020 high

Over the past few days, a full page notice regarding the NBFC Gold Lending Company Gold Lending Auction has been published in various newspapers across the country. Banners related to gold loan auctions can also be spotted outside many branches of the country’s largest public lender, the State Bank of India (SBI).

There are several reasons for the rise in gold loan auctions. First, people are unable to pay the gold loan IME amid the second wave of the coronavirus pandemic, the reduction in income, the decline in gold prices compared to the year last and even the expectations of a further reduction in prices and difficulties associated with the recovery. .

See Zee Business Live TV Streaming below:

NBFC companies as well as public sector banks give notices regarding auctions of gold loans to their clients, as reported by Anurag Shah, Reporter, Zee Business.

After the Covid-19 epidemic in the country, the Reserve Bank of India (RBI) had authorized banks to grant loans of around 90% of the value of gold in order to reduce the financial burden on the population.

Last year, when the pandemic was at its peak, the price of gold had crossed Rs 56,000 per 10 grams, but by the end of March 2021, the gold rate fell to Rs 45,500 per 10 grams. , which means that the collateral kept with the banks reduced in relation to the loan amount. If there is a further decline in the price of gold, then the banks will have to suffer more losses.

Rising gold loan auctions, falling gold prices are the challenges facing people who take out loans due to financial hardship due to Covid-19.

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