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Doorstep gold loans seem to be slowly catching the fancy of customers with several lenders looking to expand services. Players including IIFL Finance, gold loan NBFC Indel Money and asset-backed digital lending platform Rupeek are expanding such services as they see demand picking up.
“I think the model is good. But like any other new thing that comes up, it’s a matter of customer trust and adoption,” said Rajesh Rajak, CFO, IIFL Finance, pointing out that even net-banking and online shopping took some time for widespread customer acceptance and adoption.
Acceptance in large cities
IIFL Finance is looking to expand it from six cities where it is present to about 30 cities in the near future. Doorstep gold loans have a wider acceptance in larger cities currently, Rajak told BusinessLine, adding that it could be because people have lesser time there.
“At present, this category is still being built. Many players are now offering this service, and hopefully, it will become a mainstream product someday,” he said.
Under doorstep gold loans services, an authorised person of the loan provider visits the home of the borrower to complete the KYC requirements, assess the gold jewellery and confirm the loan amount which is then transferred to the bank account. “The people who go to meet the customer follow the exact same procedure that they would have done at the branch. They take all the equipment and assess the gold in the customers’ presence at their homes,” Rajak explained.
Costing, logistic issues
Indel Money is also working towards cornering major market share by offering long-term gold loans.
“It is a part of our hybrid expansion, which is parallel to brick-and-mortar expansion. The hub supports five to six pairs of sales staff who go for doorstep gold loan banking. We have completed a pilot in Bengaluru, Hyderabad and Chennai and are now looking to expand to major cities such as Mumbai, Delhi and Ahmedabad,” said Umesh Mohanan, Executive Director and CEO, Indel Money.
The NBFC’s main focus is professionals who are strained on time and business people who still find it a taboo to visit gold loan branches. “The economics of doorstep gold loan is however, suitable only for urban and not rural centres due to costing and logistical issues. Further, people in tier 2 and 3 cities find it more comfortable to deposit gold in branches that they know,” he noted.
Rupeek also recently announced the launch of its doorstep gold loan services in three more cities of Kota, Ajmer, and Jodhpur in Rajasthan. The company aims to expand its footprint from over 35 cities currently to over 120 by the end of this year, said a statement.
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