Budget 2014: Classify gold loan as a priority sector lending

By George Alexander Muthoot, Managing Director, Muthoot Group

With the Narendra Modi government ready to present its first Union Budget on July 10, 2014, Muthoot Finance has some expectations from Finance Minister Arun Jaitley.

Our expectations from Union Budget 2014 aim at helping the NBFC sector serve Indians better.

In addition, in view of the important role Gold Loan NBFCs play in extending financial inclusion , classifying Gold Loan as a priority sector lending would be a step in the right direction.

It would re-open loans from banks thereby helping NBFCs reduce cost of funds and improve lending rate to customers. Further, easing of guidelines on access to funds through NCDs would also be beneficial for the positive growth of the NBFC sector.

Recognition that gold-loan is a low-risk category in the overall loans portfolio is the need of the hour. Bias against gold-loan products should be removed since gold jewellery provides financial empowerment and can be easily used as an asset even by the poorest in India to secure a financial loan.

Our vision is to empower the rural Indian via inclusive development by way of providing access to credit and financial services to every Indian.