For over a decade now, Gold Loans have emerged as one of the most dependable sources of finance bringing about an increasing investment portfolio and ensuring that the growth of the consumers is substantiated through the mechanism of a well-built investment mechanism thereby improving the growth of gold loan markets in the economy. Through their institutional credit system, gold loans have established themselves as one of the most dependable and reliable sources of financial instruments in the economy bringing about organizational growth and development.
However, owing to the redundancy that has taken place in the system of rationing gold loans and the stagnant approach of the banking institution towards developing their existing gold loan process mechanism, the area of operation has been compromised to a certain degree bringing about a significant downfall in the qualitative aspect of people opting for gold loan facilities. These activities have discouraged the consumers and the gold loans have brought upon themselves an ill reputation of the market entity functioning thereby leading to a gap between the industrial demand and supply situation.
Following are some of the most inherent risks and defaults that have discouraged consumers to a considerable degree bringing a downfall in their attitude towards operational growth of an enterprise-
Gold Loss Discouraging Borrowers to go for Gold Loan
One of the prime disadvantages or risks which can be associated with the functioning of gold loans is the default in payment mechanism that is associated with the system of gold loans. When you opt for a gold loan, you are required to deposit collateral security to the banking institution which is further valued using the instruments present with the private banking commercial authorities, and an equivalent value of money is ascertained which is then loanable to the consumers or borrowers in accordance to their repayment capability and capacity.
However, at times it so happens that the consumers or borrowers are going through a difficult financial turmoil where they are incapable of paying the interest amount regularly and banking notices are served on him/her informed that if they default their payment the banking institution would not be responsible for further actions as the gold they had deposited will be confiscated by the banking authorities. This discourages the borrowers and thus they are often not inclined to go for gold loans as they fear that a default in the payment of interest would lead to a permanent loss of their non-current asset viability and they would be unable to recover the asset within a particular period.
Since the customers become aware of this kind of stance which may be adopted by the private commercial about Manappuram gold loan processing fees banking authorities, they do not venture out towards gold loans and thus opt for a safer option where more convenience is present and they can take help from the banking authorities as well.
Catering to a particular segment of society
It is quite evident from the name itself that for availing of a gold loan facility you should possess a sufficient quantity of gold at your disposal which you can further disburse to opt for the available loan amount from the banking authorities.
The gold loan facilities are suitable for only those sections of the consumer society who have adequate possession of this liquid asset and possess the capability to regulate it by keeping it with a banking body and earn a significant amount of money from it. Now gold in today's society is possessed only by that segment of the society who have significant assets at their disposal and have a high consumption capacity. Thereby gold loan facilities can only cater to a particular segment of the societal structure.
Thus gold loans must function unanimously and bring about changes in their organizational pattern so that they can reflect their objectives through all the sections of the society.
Also Read This-NO GUARANTOR NEEDED FOR A GOLD LOAN
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