Project on -A Study of Increasing Trend of Gold Loan by Manthan Jogani

A STUDY OF INCREASING TREND OF GOLD LOAN

PROJECT REPORT ON

“A STUDY OF INCREASING TREND OF GOLD LOAN”

MASTER OF MANAGEMENT STUDIES SEMESTER __ 2013

SUBMITTED IN PARTIAL FULLFILLMENT OF REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES

BY: BY:

MANTHAN JOGANI ROLL NO ________ S!"# Y$%&$'(!$) *$+$' %",%$' -!$%$!$, .$'/$%

SINHGAN INSTITUTE OF BUSINESS MANAGEMENT PLOT NO# 12 MAHADA COLONY CHANDI4ALI MUMBAI5600072

1


UNI4ERSITY OF MUMBAI 2013

PROJECT REPORT ON “A STUDY OF INCREASING TREND OF GOLD LOAN”

MASTER OF MANAGEMENT STUDIES SEMESTER __ 2013

SUBMITTED IN PARTIAL FULLFILLMENT OF REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES

BY: BY:

MANTHAN JOGANI ROLL NO ______

S!"# Y$%&$'(!$) *$+$' %",%$' -!$%$!$, .$'/$%

SINHGAN INSTITUTE OF BUSINESS MANAGEMENT PLOT NO# 12 MAHADA COLONY CHANDI4ALI MUMBAI5600072

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CERTIFICATE This is to certify that MR# MANTHAN JOGANI R) N)# ____ has satisfactorily carried out the proect !or" o# the topic “A STUDY OF INCREASING TREND OF GOLD LOAN”$ for the %% Se&ester of ''S$ i# the acade&ic year ()*+,

-lace./ %%%%%%%% Date./%%%%%%%%

%%%%%%%%%%%%%%%% Si0#ature of E1a&i#er

%%%%%%%%%%%%%%% ''S Co/ordi#ator

3


DECLARATION

I$ MR# MANTHAN JOGANI stude#t of ''S se&ester %%2()*+3 here4y declare that I ha5e co&pleted the proect o# “A STUDY OF INCREASING TREND OF GOLD LOAN” I further declare that the i#for&atio# i&parted is true a#d fair to the 4est of &y "#o!led0e,

SIGNATURE 8M!# __________9

ROLL NO, %%%%%%%%%%

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ACNOWLEDGEMENT

I here4y e1press &y heartiest tha#"s to all sources !ho ha5e co#tri4uted to the &a"i#0 of this proect, I o4li0e tha#"s to all those !ho ha5e supported$ pro5ided their 5alua4le 0uida#ce a#d helped for the acco&plish&e#t of this proect, I also e1te#t &y hearty tha#"s to &y frie#ds$ our co/ordi#ator$ colle0e teachers a#d all the !ell !ishers, I also !ould li"e to tha#"s &y proect 0uide M!#PRAJEESH # for his 0uida#ce a#d ti&ely su00estio# a#d the i#for&atio# pro5ided 4y hi& o# this particular topic, It is &atter of out&ost pleasure to e1press &y i#de4t a#d deep se#se of 0ratitude to 5arious perso# !ho e1te#ded their &a1i&u& help to supply the #ecessary i#for&atio# for the prese#t thesis$ !hich 4eca&e a5aila4le o# accou#t of the &ost selfless cooperatio#, A4o5e all its si#cere tha#"s to the UNI4ERSITY OF MUMBAI for !hich this proect is 0i5e# co#sideratio# a#d !as do#e !ith out&ost serious#ess,

5


INDE; S!# N)

*,* *,( *,+

C)'(<'(% CHAPTER 1

-reface E1ecuti5e su&&ary A4out the study

P$=< N)

6 *) ** CHAPTER 2

(,* (,( (,+ (,< (,: (,= (,;

I#troductio# 7ac"0rou#d 8 Gold 9 I#dia# society Gold throu0h ti&es Gold eco#o&y De&a#d 9 supply of 0old Gold &ar"et i# I#dia Gold as a# i#5est&e#t ratio#ale

*+ *: *; *6 (( (< (=

CHAPTER 3

+,* +,( +,+ +,< +,: +,= +,; +,> +,6 +,*) +,** +,*( +,*+

Gold loa# 8 4asics Ratio#ale of 0old loa# Gold loa# 0ro!th N7FC sector 8 outloo" Gold loa# features Gold loa# sector 'aor players Gold loa# process Loa# i#terest rate co&pariso# across cate0ories Co&pariso# of 0old le#der offeri#0 Gold loa# aids fi#a#cial i#clusio# Critical success factors for 0old loa# co&pa#ies Cha#0i#0 co#su&er perceptio# dri5i#0 I#dia or0a#i?ed 0old loa# &ar"et

+* +< += +; <* <( <= <> :) :* :( :< ::

CHAPTER 6

<,* <,( <,+ <,<

I#diai#foli#e 8 A 5ie! Ser5ices Fi#a#cial product distri4utio# IIFL 0old loa#

:> =* == >< CHAPTER >

:,* :,( :,+ :,<

Research 9 study Fi#di#0s 9 a#alysis Case study Case study

>; >> *() *(( CHAPTER 

=,* =,( =,+ =,< =,:

Ris" to 4orro!ers a#d le#ders Re0ulatory e#5iro#&e#t Co#clusio# 7i4lio0raphy A##e1ure

*(= *(; *(6 *+* *++ 6


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CHAPTER 1

1#1 PREFACE PREFACE I ha5e 0reat pleasure i# prese#ti#0 &y proect to the 'u&4ai U#i5ersity, 'y topic is @A Study of I#creasi#0 Tre#d of Gold Loa#, I ha5e &ade si#cere efforts to &a"e this proect i#for&ati5e a#d I a& sure it !ould ustify the sa&e, IB& deeply elated to carry out &y proect o# study of Gold Loa#, The proect 0a5e &e a# opportu#ity to study 5arious aspects related to Gold Loa#, It !as a 0ood lear#i#0 e1perie#ce throu0hout throu0hout a#d it !ill certai#ly certai#ly 4e#efit the readers too, I a& uite asserti5e that &y proect !ill help the stude#ts of 'u&4ai U#i5ersity, 'y proect co5ers the 4asic "#o!led0e of the Gold Loa# Syste& i# I#dia$ !hich is esse#tial to u#dersta#d ho! Gold Loa# syste& !or"s a#d ho! Gold Loa# has de5eloped i# our cou#try to a 0reat e1te#t i# the prese#t a0e due to tech#ical ad5a#ce&e#ts,

8


Diff Differ ere# e#tt types types of Gold Gold Lo Loa# a#$$ Diff Differe ere#t #t type typess of Gold Gold Lo Loa# a# co&pa# co&pa#ie ies$ s$ -roce -rocedu dures res a#d a#d Reco5ery Syste& related to Gold Loa# a#d so o# has 4ee# co5ered i# the proect, Throu0h this proect I ha5e tried to fi#d out the i#creasi#0 tre#d of Gold Loa#, 'y topic !ill defi#itely help the researchers !ho !a#t to research o# proects related to Gold Loa#,

1#2 E;ECUTI4E SUMMARY I# I#dia$ 0old is as &uch a thi#0 to 4e possessed as it is a co#cept, The !ord 0oldB i# the a#cie#t te1ts has !ide &ea#i#0 a#d co##otatio#s$ ra#0i#0 fro& the &u#da#e to the su4li&e, I# the Sa#s"rit la#0ua0e there are at least se5e# sy#o#y&s for 0old$ 5i?, S!ar#a$ Su5ar#a$ ira#ya$ a#a"$ a#cha#$ e& a#d Ashtapada, Gold i# I#dia ser5es &a#y fu#ctio#s a#d !eari#0 it has se5eral i&plicatio#s, At the &ost o45ious le5el$ it is a for& of ador#&e#t$ a#d also a status sy&4ol, For i#dus$ 0old is associated !ith &ost reli0ious cere&o#ies$ such as the #a&i#0 cere&o#y or &arria0e, To si0#ify &arital status$ i#du !o&e# !ear a special "i#d of #ec"lace$ !hich co#sist of 0old pe#da#ts stru#0 s tru#0 i# a certai# co&4i#atio# !ith 4eads &ade up of other &aterials, I# certai# parts of the cou#try a 0olds&ith pierces a #e!4or# childBs ear !ith a 0old pi# i# a ritual perfor&ed t!el5e days after it is 4or#$ ofte# o#ly i# a sy&4olic &a##er thou0h,

9


The I#dia# epics$ such as Ra&aya#a a#d the 'aha4harata are replete !ith descriptio#s of or#a&e#ts, -ractitio#ers of traditio#al &edici#e i# I#dia clai& that pure 0old has se5eral therapeutic ualities. !he# co#su&ed re0ularly$ 0old is 0ood for circulatio# of the 4lood a#d e#ha#ce&e#t of the &i#d a#d lifti#0 the spirit 0old applied to s"i# helps co&4at a0ei#0, These clai&s$ ho!e5er$ are #ot supported 4y &oder# &edical scie#ce,

1#3 ABOUT THE STUDY @A Study of I#creasi#0 Tre#d of Gold Loa# 4asically ai&s at the co#cepts of Gold Loa#, Gold Loa# has attai#ed i&porta#ce i# the prese#t a0e due to tech#ical ad5a#ce&e#ts o5er other "i#ds of loa#s, The proect focuses o# the procedures of Gold Loa# a#d 5arious co&pa#ies offeri#0 the sa&e, It also thro!s li0ht o# the dra!4ac"s of it, The period 4et!ee# the e5olutio# of Gold Loa# i# I#dia to the curre#t leadi#0 sta0e has also 4ee# su&&ari?ed, It also 0i5es 4rief i#for&atio# a4out differe#t types of Gold Loa#s a#d its authe#ticity i# co&pariso# to other fi#a#cial loa#s, O?@<*("+<

*, To "#o! "#o! the the co#cept co#cept of Gold Gold Loa# Loa# i# I#di I#diaa (, To a#aly?e a#aly?e the i&pact of Gold Gold Loa# i# I#dia# I#dia# Eco#o&y Eco#o&y +, To u#dersta#d u#dersta#d a4out !hat &a"es &a"es Gold Loa# score score o5er other other sources sources of fu#di#0 fu#di#0 <, To a#aly?e a#aly?e a#d co&pare co&pare Gold Gold Loa# Loa# !ith !ith other cate0ory cate0ory loa#s loa#s

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METHODOLOGY P!".$! /$($:

'y pri&ary data !as collected throu0h Huestio##aire$ Face to Face co&&u#icatio# !ith so&e 0old loa# co&pa#ies as !ell as !ith so&e pu4lic i#5estors, I ha5e 5isited so&e Gold Loa#s Co&pa#ies i# a#d arou#d the 5ici#ity of 'u&4ai for collecti#0 pri&ary data, S<*)'/$! /$($:

'y seco#dary data !as collected fro& the e4sites$ 'a0a?i#e$ 7oo"s$ Ne!spapers$ Daily -eriodicals,

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CHAPTER 2

2#1 INTRODUCTION

Gold$ 4ecause of its a4ility to protect the !ealth of i#5estors ca# 4e a# ideal additio# to a portfolio, Also the short/ter& fluctuatio#s i# Gold offer 0ood pote#tial for tradi#0, Gold has 4ee# 12


o# its lo#0/ter& up!ards traectory !hich 4e0a# i# early ())*, This lo#0/ter& &o5e has 4ee# pu#ctuated 4y short/ter& pull4ac"s offeri#0 opportu#ities for late e#tra#ts to oi# the 4a#d!a0o#, ith the US eco#o&y out0ro!i#0 the lea0ue of de5eloped #atio#s duri#0 the last t!o years coupled !ith the !orse#i#0 of lo#0/ter& structural !ea"#esses a#d the su4seue#t &o5e&e#ts i# the USD ha5e &o5ed the focus a!ay fro& GoldBs use as a co&&odity, o!e5er the lo#0/ter& fu#da&e#tals of the yello! &etal ha5e also u#der0o#e a si0#ifica#t cha#0e !ith the &i#i#0 output falli#0 uite steadily duri#0 the last decade coupled !ith a# e5er0ree# de&a#d especially fro& Asia, Gold has lo#0 4ee# a 5alued co&&odity$ particularly i# I#dia !here it is co#sidered auspicious$ a#d has 4ee# i# use for ce#turies i# the for& of e!elry$ coi#s a#d other assets, Thou0h 0old is a hi0hly liuid asset$ it !as#Bt u#til rece#tly that co#su&ers le5era0ed it effecti5ely to &eet their liuidity #eeds, Le#ders pro5ide loa#s 4y securi#0 0old assets as collateral, Co&pared !ith the rest of the !orld$ i# I#dia the 0old loa# &ar"et is 4i0 4usi#ess, U#til a decade 4ac"$ &ost of the le#di#0 !as i# the u#or0a#i?ed sector throu0h pa!#4ro"ers a#d &o#ey le#ders, o!e5er$ this sce#ario cha#0ed !ith the e#tra#ce of or0a#i?ed sector players such as 4a#"s a#d #o#/4a#"i#0 fi#a#ce co&pa#ies 2N7FCs3 !hich #o! co&&a#d &ore tha# (:J of the &ar"et, The or0a#i?ed 0old loa# &ar"et has 0ro!# at <)J CAGR fro& ())( to ()*), N7FCs ha5e 4ee# a &aor dri5i#0 force 4ehi#d this 0ro!th 0i5e# their e1te#si5e #et!or"$ faster tur#arou#d ti&e$ hi0her loa#/to/5alue ratios a#d the a4ility to ser5e #o#/4a#"a4le custo&ers, Of late$ 4a#"s ha5e i&pro5ed their 0old loa# product features a#d ser5ices, Coupled !ith co¶ti5ely lo!er i#terest rates a#d char0es$ 4a#"s sta#d to 0ai# &ar"et share at the e1pe#se of N7FCs i# the #ear future, ith rapid 0ro!th$ re0ulatory scruti#y has i#creased o# 0old loa# le#di#0 practices, N7FCs are u#der 0reater focus as a result of their hi0her i#terest rates a#d char0es$ a#d #o#/adhere#ce to "#o! your custo&er 2YC3 re0ulatio#s, This &ay further i&pact the do&i#a#ce of N7FCs i# the 0old loa# &ar"et,

13


At ust *,(J of the total 0old stoc" i# the cou#try at prese#t$ 0old loa#s ha5e a hu0e 0ro!th pote#tial, o!e5er$ fir&s #eed to de5elop distri4utio#$ product a#d ris" &iti0atio# strate0ies to 0et a share of the pie i# a profita4le a#d sustai#a4le fashio#, I#dia# households typically ha5e a# e&otio#al attach&e#t a#d se#se of perso#al 4elo#0i#0 to the 0old they o!#$ !hich is usually i# the for& of e!elry$ coi#s or 4ars, Thus$ 0old o!#ed 4y I#dia# fa&ilies is rarely liuidated u#less i# e1tre&e fi#a#cial #eed K co#seue#tly$ &o#etary 5alue of a 0old i#5est&e#t is rarely reali?ed, 7ut$ pled0i#0 0old or#a&e#ts a#d other 0old assets to local pa!#4ro"ers a#d &o#ey le#ders to a5ail loa#s has 4ee# pre5ale#t i# the I#dia# society for &a#y decades$ particularly i# rural areas, o!e5er$ o5er the past decade$ the or0a#i?ed sector 8 4a#"s a#d N7FCs 8 ha5e ta"e# the lead, The ur4a# populace is also 4e0i##i#0 to reali?e the pote#tial 5alue that ca# 4e reali?ed throu0h 0old loa#s$ !hich has led to rapid 0ro!th of the 0old loa# &ar"et i# I#dia,

2#2 BACGROUND  GOLD  INDIAN SOCIETY Gold is a 5ery solid asset, 7uyi#0 physical 0old does ha5e ad5a#ta0es co&pared !ith other i#5est&e#ts, I#5est&e#ts i# 0old/4ac"ed fi#a#cial products a#d paper 0old should 4e left up to the professio#als, Gold is the oldest precious &etal "#o!# to &a#, Therefore$ it is a ti&ely su4ect for se5eral reaso#s, It is the opi#io# of the &ore o4ecti5e &ar"et e1perts that the traditio#al i#5est&e#t 5ehicles of stoc"s a#d 4o#ds are i# the areas of their all/ti&e hi0hs a#d &ay 4e due for a se5ere correctio#, To fully appreciate !hy >$))) years of e1perie#ce say  0old is fore5er$ !e should re5ie! !hy the !orld re5eres !hat E#0la#dMs &ost fa&ous eco#o&ist$ oh# 'ay#ard ey#es$ cy#ically called the 4ar4arous relic, hy 0old is 0ood as 0old is a# i#tri0ui#0 uestio#, o!e5er$ !e thi#" that the &ore pra0&atic a#cie#t E0yptia#s !ere perhaps &ore accurate i# o4ser5i#0 that 0oldMs 5alue !as a fu#ctio# of its pleasi#0 physical characteristics a#d its scarcity, •

Gold is pri&arily a &o#etary asset a#d partly a co&&odity, 14


•

'ore tha# t!o thirds of 0oldMs total accu&ulated holdi#0s accou#t as M5alue for i#5est&e#tM !ith ce#tral 4a#" reser5es$ pri5ate players a#d hi0h/carat e!ellery,

•

Less tha# o#e third of 0oldMs total accu&ulated holdi#0s is as a Mco&&odityM for e!ellery i# ester# &ar"ets a#d usa0e i# i#dustry,

•

The Gold &ar"et is hi0hly liuid a#d 0old held 4y ce#tral 4a#"s$ other &aor i#stitutio#s a#d retail e!ellery "eep co&i#0 4ac" to the &ar"et,

•

Due to lar0e stoc"s of Gold as a0ai#st its de&a#d$ it is ar0ued that the core dri5er of the real price of 0old is stoc" euili4riu& rather tha# flo! euili4riu&,

•

Eco#o&ic forces that deter&i#e the price of 0old are differe#t fro&$ a#d i# &a#y cases opposed to the forces that i#flue#ce &ost fi#a#cial assets,

•

South Africa is the !orldMs lar0est 0old producer !ith +6< to#s i# ())*$ follo!ed 4y US a#d Australia,

•

I#dia is the !orldMs lar0est 0old co#su&er !ith a# a##ual de&a#d of >)) to#s,

Gold has traditio#ally 4ee# a&o#0 the &ost liuid assets a#d is a# accepted u#i5ersal curre#cy, It has traditio#ally 4ee# co#su&ed 4y i#di5iduals i# the for& of e!elry$ especially i# I#dia !here it is co#sidered auspicious, Gold is presu&ed to 4e a safe ha5e# i# ti&es of eco#o&ic u#certai#ty$ a fact e1e&plified 4y a +)J i#crease i# the 5alue of 0old o5er the past year, I#dia is o#e of the lar0est &ar"ets for 0old$ accou#ti#0 for appro1i&ately *)J of the total !orld 0old stoc" as of ()*), Rural I#dia accou#ts for =:J of this 0old stoc", Thou0h 0old prices ha5e i#creased at &ore tha# *6J CAGR fro& ())( to ()*($ 0old stoc" i# I#dia has 0ro!# at ((J CAGR duri#0 the sa&e period to *>$))) to#s 2Rs, +($))) 4illio#3 The de&a#d for 0old has follo!ed a re0io#al tre#d !ith souther# I#dia accou#ti#0 for <)J of a##ual de&a#d$ follo!ed 4y the !est 2(:J3$ #orth 2()/(:J3 a#d east 2*)/*:J3,

15


The a4o5e fi0ure depicts =<=( 4# i# ())6$ **==6 4# i# ()*)$ (:))) 4# i# ()** a#d +())) 4# i# ()*(

2#3 GOLD THROUGH TIMES Thou0h the a#cie#t drea& to 4re! 0old 4y artificial &ea#s !as #e5er &aterialised$ the ad&iratio# for the 0lea&i#0 &etal #e5er parted !ith the culture a#d traditio# of the Ara4 people, 'a#y ce#turies later$ the lo5e for 0old !ould produce effects the alche&ists !ould ha5e o#ly drea&ed a4out, A &oder# proof of this$ the Du4ai Gold a#d Dia&o#d -ar"$ this lu1urious 5aria#t of a 0old sou" is the latest additio# to the 5e#ue of the 5isually pleasi#0 &etal, ust off the hi0h!ay 4et!ee# i#tercha#0es + a#d < o# Shei"h ayd Road$ its Ara4ic style faPade see&s #ot too differe#t fro& &a#y others arou#d, E#ter i#side ho!e5er$ a#d a# array of e1uisite 0litter stri"es the eye, A &ultitude of e!ellery shops e1ude a delicate spar"li#0 display$ rei#forci#0 16


Du4aiBs i&a0e as a leader i# the i#dustry of 0old, The City of Gold$ as the e&irate &ar"ets itself$ has 4eco&e a# esta4lished trade&ar", 7ut !hat is i# 0old that re#ders it supre&e to ha5e such a &oder# city proudly &a"e it its sy&4olQ

G)/% G)&"'= H"%()!

The oldest precious &etal "#o!# to &a#$ 0oldBs 0lea&i#0 te1ture cau0ht his atte#tio# i# the earliest of ti&es, No o#e ca# uite deter&i#e the date of &a#"i#dBs first e#cou#ter$ a#d co#seue#t o4sessio#$ !ith the fasci#ati#0 &etal, Artefacts fou#d i# Spa#ish ca5es su00est -aleolithic &a# used it as far 4ac" as <)$))) 7C, Disco5eries of &ore rece#t epochs re5eal 0old !as a sy&4ol of di5i#ity$ royalty$ a#d 4eauty throu0hout history, The &a"i#0 of e!ellery fro& 0old ca# 4e traced i#to history so&e fi5e to si1 thousa#d years a0o, Chai#s$ ri#0s$ earri#0s$ a#d all sorts of char&s ha5e 4ee# part of di5i#e a#d royal life e#ha#ce&e#t, i0hly &allea4le$ the precious &etal !as easily !or"a4le$ e#suri#0 a relati5ely s&ooth &ouldi#0 process, The 0reat a#cie#t ci5ili?atio#s de5eloped s"ilful 0old artistic traditio#s, -haraohs used the relic &etal for 4eautificatio# i# a#cie#t E0ypt, Greece a#d Ro&e too$ produced a sple#did le0acy of 0olde# treasures, Li"e!ise$ i# easter# ci5ili?atio#s such as those i# Chi#a a#d I#dia$ 0old has 4ee# &ade i#to articles of or#a&e#tatio# a#d i#to reli0ious ico#s, Later$ duri#0 the &iddle A0es$ the &etal fou#d !idespread use i# Europe for crosses$ altars$ doors$ chalices$ a#d reliuaries, The# ca&e Colu&4usMs disco5ery of A&erica$ !hich ope#ed a# era of 0old productio# the !orld had #ot see# to that ti&e, It pro&pted &a#y to lea5e for the #e! !orld i# search of 0olde# riches, A fe! hu#dred years later$ history !it#essed the &ost fa&ous 0old cra?e i# the Califor#ia 0old rush of *><>,

Today$ #early half of the !orldMs 0old is "ept 4y 0o5er#&e#ts a#d ce#tral 4a#"s, All cou#tries still re0ard it as a &ediu& of i#ter#atio#al pay&e#t, Its i#i&ita4le 5irtues ha5e &ade it the sole stuff accepted 0lo4ally i# e1cha#0e for 0oods a#d ser5ices, I# the for& of coi#s or 0old 4ars$ 0old has 4ee# used as a hi0h/de#o&i#atio# curre#cy, It 4ac"ed paper/curre#cy syste&s !he# they 4eca&e co&&o# i# the *6th ce#tury$ a#d fro& the *>;)s u#til orld ar I 0old &ade the 17


4asis for the !orldMs curre#cies, After *6>)$ 0oldMs for&al i&porta#ce i# the i#ter#atio#al &o#etary syste& 4eca&e o4solete$ 4ut the &etal is still 0reatly 5alued as a reser5e asset,

The prese#ce of 0old has i#deed &ade a re&ar"a4le i&pact o# the hu&a# psyche, Freud$ father of psychoa#alysis$ !ould ar0ue that our i#terest i# 0old has to do !ith the erotic fa#tasies of early childhood, A less a&4itious presu&ptio# si&ply &ai#tai#s that the passio# for 0old co&es fro& the co&4i#i#0 of 5isually pleasi#0 features !ith scarcity, I#deed$ 0old is so rare that !orld steel productio# for o#e hour is &ore tha# all the 0old e5er fou#d, The effect of 0old is also 4uilt up due to its per&a#e#ce$ as 5irtually all of the yello! &etal e5er &i#ed is still i# e1iste#ce, -utti#0 it all to0ether$ 0old is the o#ly precious &etal to pro5ide shi&&eri#0 4eauty$ hi0h &allea4ility$ rarity$ a#d 5irtual i#destructi4ility, No !o#der the passio# for 0old has 4ee# 5er4alised i# the fa&ous sayi#0$ @'ore &e# ha5e 4ee# "#oc"ed off 4ala#ce 4y 0old tha# 4y lo5e

H< &) )/% (< G)/ .$,<% (< !<% ### ?<*$%< $' ) "/")( *$' -!"'( -$-
2#6 GOLD ECONOMY @The story of 0old has a deeper &essa0e$ o#e that has #o#e of the tra#sitory ualities of !hat !e choose to use as &o#ey, See# i# this 4roader se#se$ the story of 0old has #o e#di#0, /-eter 7er#stei# i# @T< P)&

society tha# &ost other artisa#s$ pro4a4ly 4ecause they !or"ed !ith a precious &etal, The 0olds&iths e#oyed royal patro#a0e, istorical e5ide#ce su00ests that I#dia# e!ellers had early &astery of the 5arious s"ills reuired to &a"e fi#e e!ellery$ such as &i1i#0 alloys$ &ouldi#0$ setti#0 sto#es$ i#lay !or"$ relief$ dra!i#0 0old a#d sil5er i#to fi#e !ires$ plati#0 a#d 0ildi#0, The duties of the 0olds&ith ha5e 4ee# defi#ed i# a# a#cie#t social code$ 4ut are o4ser5ed &ore 4y 4reach tha# 4y adhere#ce, There is hardly a#y 5illa0e or to!#$ e5e# i# the re&ote cor#ers of the cou#try$ !here there is #o 0olds&ith, Today$ the 0olde!ellery i#dustry is fast/0ro!i#0$ !ith i&pressi5e do&estic a#d e1port sales, Ge&s a#d e!ellery co#stitute o#e of the fastest 0ro!i#0 e1port sectors i# I#dia$ accou#ti#0 for o#e/fifth of the a00re0ate e1ports, The curre#t si?e of the 0old eco#o&y is arou#d US = 4illio# a#d e&ploys o5er half a &illio# people, The #u&4er of 0old e!ellery &a#ufacturi#0 u#its is put at *))$))), Also$ a lar0e #u&4er of s"illed 0olds&iths0old &ercha#ts fro& I#dia are e#0a0ed i# 0old trade a#d i#dustry i# al&ost all the oil/rich 'iddle Easter# cou#tries, o!e5er$ for a lo#0 ti&e i# the e1iste#ce of the 0old eco#o&y$ the producers a#d co#su&ers of 0old e!ellery hardly fou#d a place i# a#y policy discussio# o# 0old, G)/ A**.$(")'

o! &uch 0old is there i# I#diaQ This is a ui#tesse#tial uestio#$ 4ut the a#s!ers are &a#y, For reaso#s o45ious i# a cou#try of co#ti#e#tal di&e#sio#$ it is #ot feasi4le to collect direct data 4y !ay of ce#sus to 0et a ha#dle o# the stoc" held$ particularly 4y pri5ate households, The official esti&ate puts the fi0ure at arou#d 6$))) to##es$ althou0h &uch hi0her esti&ates ra#0e 4et!ee# *)$))) a#d *:$))) to##es, The 0lo4al stoc" of 0old 4ei#0 esti&ated arou#d *<:$))) to##es$ the share of 0old held i# I#dia !ould fall i# the ra#0e of ;J to *)J, The story of 0old accu&ulatio# i# I#dia is as old as history itself, This is certai#ly #ot soði#0 u#iue to I#dia / &a#y of the a#cie#t ci5ili?atio#s e1hi4it this feature, hat is truly u#iue a4out I#dia is the fact that at #o ti&e i# history has I#dia &i#ed a#y su4sta#tial ua#tity of 0old, I# so&e old Gree" te1ts$ o#e ca# fi#d refere#ce to certai# tri4es i# !ester# I#dia procuri#0 si?ea4le 0old fro& sa#dy deserts to fi#a#ce !ar efforts, The curre#t 0old productio# per a##u& is arou#d 19


( to##es, O#e of the 0old fields i# souther# I#dia operated 4y the state/o!#ed 7harat Gold 'i#es Ltd 27G'L3 at olar has / AsiaBs oldest a#d deepest &i#es, This particular 0old field is "#o!# &ore for its co#tri4utio# to particle physics tha# for its 5olu&e of productio#$ past or prese#t. the co#clusi5e e5ide#ce that su4/#uclear ?ero/&ass particles i# cos&ic rays called Neutri#o4o&4ard the earth !as fou#d i# e1peri&e#ts co#ducted i# its deep pit, So&e ha5e sou0ht to e1plai# the process of accu&ulatio# of 0old i# I#dia i# ter&s of cultural factors alo#e$ 4ut there appear to 4e 5ery stro#0 eco#o&ic u#derpi##i#0s for this phe#o&e#o#. I#dia has e#oyed a co#ti#uously fa5oura4le 4ala#ce of trade for ei0ht ce#turies spa##i#0 the first a#d the seco#d &ille##iu& AD$ e#a4li#0 it to i&port precious &etals, The i#herita#ce la!s i# the 'u0hal period 2*:)) AD to *>:) AD3 pro5ided stro#0 i#ce#ti5e for 0old accu&ulatio#$ particularly 4y the !ealthy, Si&ply put$ u#der the 'u0hal le0al syste&$ o# the death of a perso#$ the estate left 4ehi#d !ould first co&pulsorily 4e 5ested i# the state, The le0al heir of the deceased !ould thereafter approach the state to 0ai# the i#herita#ce$ !hich !ould 4e 0ra#ted at the discretio# of the authorities$ o# pay&e#t of duties to the state a#d possi4ly i#duce&e#ts to the officials co#cer#ed, This syste& e#0e#dered t!o o45ious co#seue#ces. • •

Co#spicuous co#su&ptio# 4y the !ealthy a#d rich The te#de#cy to hide !ealth fro& the eyes of the authorities

Gold$ sil5er$ dia&o#ds a#d precious sto#es pro5ided the &ea#s to co#5ert sa5i#0s i#to the &ost co#ce#trated a#d i#destructi4le for& of !ealth, This also facilitated easy a#d hassle/free tra#sfer of !ealth fro& o#e 0e#eratio# to a#other !ithout state i#ter&ediatio#, The resulti#0 historical e1perie#ce of I#dia#s has 4ee# deeply i#0rai#ed i# their psyche, No !o#der$ the sa&e te#de#cy !ith re0ard to co#5ersio# of sa5i#0s i#to 0old is o4ser5a4le i# 0ood &easure e5e# #o!$ althou0h the la! a#d the i#stitutio#al &echa#is& surrou#di#0 sa5i#0s a#d !ealth are 5ery differe#t, I# the i#du$ ai# a#d Si"h co&&u#ity$ !here !o&e# did #ot i#herit la#ded property$ 0old a#d sil5er e!ellery !as$ a#d still is$ a &aor co&po#e#t of the 0ifts 0i5e# to a !o&a# at the ti&e of her &arria0e, e!ellery$ 4ecause of its easy co#5erti4ility i#to cash$ is re0arded as secure i#5est&e#t, E5e# a&o#0 the #o&adic a#d tri4al co&&u#ities$ 0old a#d sil5er e!ellery are re0arded as i#5est&e#t a#d ide#tity &ar"ers, 20


For 5ery poor people$ 0old ca# 4e held o# the perso# for (< hours a day$ !hich eli&i#ates safety co#cer#s a#d also facilitates fleei#0 i# distress, Gold ca# 4e &ort0a0ed or sold i# crisis, The ad5a#ta0e of 0old 5is/V/5is other fi#a#cial assets is that at ti&es of u#certai#ty the liuidity of 0old actually i#creases,

2#> DEMAND  SUPPLY OF GOLD •

I#dia is o#e of the lar0est &ar"ets of 0old accou#ti#0 for #early *)J of total !orld stoc"

•

!ith *>$))) to##es of 0old alue of 0old stoc" i# I#dia has 0ro!# at ((J CAGR fro& FY)( to FY*( -rice i#/elasticity. Despite i#crease i# 0old prices fro& Rs, *:$)(= to Rs, :*$*:) per ou#ce

•

•

4et!ee# ())( a#d ()*($ the de&a#d for 0old re&ai#ed relati5ely sta4le at arou#d ;)) to##es Rural Co#ce#tratio#. Rural I#dia is esti&ated to hold =:J of the 0old stoc"

21


•

Souther# I#dia is the lar0est &ar"et accou#ti#0 for <)J of I#diaBs 0old de&a#d$ follo!ed 4y est at (:J$ North at ()/(:J a#d East at *)/*:J of a##ual Gold de&a#d

To e1plai# the e5er/i#creasi#0 de&a#d for 0old i# I#dia$ 5arious hypotheses ha5e 4ee# put for!ard fro& ti&e to ti&e.

•

De&a#d for 0old has a# auto#o&ous character, Supply follo!s de&a#d, De&a#d e1hi4its i#co&e elasticity$ particularly i# the rural a#d se&i/ur4a# areas, -rice differe#tial creates i&port de&a#d$ particularly ille0al i&port prior to the

•

co&&e#ce&e#t of li4eralisatio# i# *66), A part of the de&a#d is caused 4y the #eed to stash a!ay u#accou#ted !ealthi#co&e,

• •

Gold de&a#d i# I#dia i#creased 4y a# a##ual co&pou#d rate of arou#d *:J fro& *66) to *66> duri#0 the period of li4eralisatio#$ !ith 0ro!th slo!i#0 thereafter, This !as hi0h$ #ot o#ly 5is/V/ 5is the !orld de&a#d 0ro!th rate of +,):J$ 4ut also i# relatio# to the tre#d I#dia# GD- 0ro!th rate 2:,:J3 a#d the 0ro!th rate of de&a#d for oil 2+,>J3$ e#er0y 2=J3 a#d su0ar 2:J3$ !hich e1hi4it hi0h i#co&e elasticity, Eually stri"i#0 has 4ee# the shift fro& s&u00led to official i&ports, Gold Fields 'i#eral Ser5ices Ltd 2GF'S3 esti&ate that i# *66( s&u00led i&ports accou#ted for **: to##es$ o5er o#e third of total i&ports of +() to##es, I# *66>$ s&u00led i&ports !ere esti&ated 4y GF'S at := to##es$ ust >J of the total i&port of ;*> to##es, Ta"i#0 the 0old i&port per year i# the 4e0i##i#0 of *6:)s at arou#d 6) to##es$ the lo#0/ter& co&pou#d 0ro!th rate of i&port i# the :*/year period 2*6:)/())*3 tur#s out to 4e +,>J, I# the rece#t past$ yearto/ year distri4utio# of i&ports a&o#0 official a#d s&u00li#0 cha##els respo#ded to custo&s duty 5ariatio#, S&u00led i&ports appeared to rise a0ai# after duty !as i#creased i# the *666 4ud0et 4ut fell 4ac" after the duty !as reduced a0ai# i# the ())* 4ud0et, 7y 5alue$ 0old i&port is the seco#d &ost i&porta#t ite& of i&port after fossil fuel, Si#ce *66; there ha5e also 4ee# cha#0es i# the for& of official i&ports, Si#ce the co&&e#ce&e#t of the #o#/reside#t I#dia# 2NRI3 route for i&port i# *66*$ there !as criticis& of this arra#0e&e#t o# the 0rou#d that &ost of the 0old i&ported i# this &a##er does #ot represe#t 0e#ui#e ear#i#0sa5i#0s of the retur#i#0 #o#/reside#t I#dia#s, It !as alle0ed that fu#ds for this type of i&port$ !hich thri5ed o# accou#t of differe#tials 4et!ee# do&estic a#d i#ter#atio#al prices$ !ere

22


pro5ided 4y di5ersio# of forei0# e1cha#0e resources of the cou#try throu0h the u#der0rou#d &ar"et 2ha!ala3, There &ay 4e a# ele&e#t of truth here, 7ut$ i# a#y e5e#t si#ce the i#troductio# of the restricted OGL arra#0e&e#ts i# *66; the i&ports of 0old u#der NRI has effecti5ely dried up, Gold i&ported officially for do&estic use is #o! cha##elled al&ost e1clusi5e 5ia the official a0e#ts or the authori?ed co&&ercial 4a#"s

2# GOLD MARET IN INDIA The 0old &ar"et i# I#dia is predo&i#a#tly a &ar"et for 4uyi#0 a#d selli#0 physical 0old, I# the !holesale se0&e#t$ #o&i#ated a0e#cies are the 4ul" i&porters, This &ar"et is reaso#a4ly efficie#t fro& the poi#t of 5ie! of distri4utio# of 4ars a#d scraps o5er the le#0th a#d 4readth of the cou#try$ !hich ta"es place i# a 5ery effecti5e &a##er, -rice u#ifor&ity is also 0e#erally o4ser5a4le i# areas !ith ide#tical i#cide#ce of duties a#d ta1, I# the &ar"et for or#a&e#ts a#d e!ellery$ co#su&er protectio# is still #ot assured$ althou0h it &ust 4e ad&itted that this has recei5ed &uch policy atte#tio# i# the last fe! years, It is custo&ary e5e# #o! for the !ell/to/do 23


i# I#dia to 4uy e!ellery ite&s a4road for 4etter uality assura#ce, It is a !ell/"#o!# fact that cheati#0 o# carata0e 2fi#e#ess3 is !idespread, I# April ()))$ the 0o5er#&e#t i#troduced 5olu#tary hall&ar"i#0 of 0old e!ellery throu0h the 7ureau of I#dia# Sta#dards, o!e5er$ the pro0ress i# this re0ard has 4ee# slo! so far$ !ith o#ly a4out ++: e!ellers ha5i#0 accepted the #ecessary certificatio# !ith &ost of the& ha5i#0 o#ly partial stoc"s of their e!ellery hall&ar"ed, Also$ there are o#ly ** assayi#0 a#d hall&ar"i#0 ce#ters i# the cou#try, Gold le#di#0leasi#0 5olu&es are s&all i# co&pariso# to physical 4uyi#0 a#d selli#0, 'ost of the leasi#0 acti5ities are u#derta"e# 4y #o&i#ated 4a#"s o# a 4ac"/to/4ac" 4asis 5ia supply fro& o5erseas, Do&estic le#di#0 resources are still &ea0re$ as &e#tio#ed 4efore, This se0&e#t of the &ar"et #eeds to de5elop for at least t!o reaso#s. To pro5ide !or"i#0 capital at lo! cost to0ether !ith 0old price hed0i#0$ #ot o#ly to the e1porters 4ut also to e!ellery &a#ufacturers for the do&estic &ar"et, At prese#t$ #o#/e1porters do #ot recei5e the #ecessary !or"i#0 capital fi#a#ce i# rupees fro& the 4a#"i#0 syste&, The e5ide#ce of the si0#ifica#t co#tri4utio# &ade 4y the spread of 0old leasi#0$ e5e# to s&all fa&ily e!ellery u#its$ i# 4oosti#0 e1ports a#d local sales i# Italy could pro5ide 0uida#ce i# the &atter, The e1iste#ce of a 0old le#di#0leasi#0 &ar"et is a pre/co#ditio# for ar4itra0e/free prici#0 of 0old for!ards!ap co#tracts i# the local &ar"et, E#ha#ci#0 le#da4le 0old resources 4y 4a#"s !ill 4e a &aor challe#0e, I##o5ati5e deposit products$ 4ac"ed 4y effecti5e &ar"eti#0 strate0y$ !ill 4e the "ey, o!e5er$ the respo#se of households is li"ely to 4e slo!, There is at prese#t #o le0al o4stacle to for!ard tradi#0 i# 0old 4y the #o&i#ated 4a#"s, It is hard to 0uess if a#d !he# the 0e#eral 4a# o# for!ard tradi#0 i# 0old !ill 4e lifted$ 4ut if the rece#t lifti#0 of the 4a# o# for!ard tradi#0 i# a0ricultural co&&odities is a#y i#dicatio#$ it is possi4le that the &easure !ill 4e e1te#ded to 0old i# the #ear future, There is a history of acti5e 0old futures &ar"ets operati#0 i# I#dia fro& the e#d of the First orld ar u#til the i&positio# of the 4a# o# for!ard tradi#0 i# 0old i# *6=(,

24


2#7 GOLD AS AN IN4ESTMENT RATIONALE For thousa#ds of years$ 0old has 4ee# 5alued has a 0lo4al curre#cy$ a co&&odity$ a# i#5est&e#t a#d si&ply a# o4ect of 4eauty, As fi#a#cial &ar"ets de5eloped rapidly duri#0 the *6>)s a#d *66)s$ 0old recorded i#to the 4ac"0rou#d a#d &a#y i#5estors lost touch !ith this asset of last resort, Rece#t years ha5e see# a stri"i#0 i#crease i# i#5estor i# 0old, hile a sustai#ed price rally$ u#derpi##ed 4y the fact that de&a#d co#siste#tly outstrips supply$ is clearly a positi5e i# this resur0e#ce$ there are &a#y reaso#s !hy peoples a#d i#stitutio#s are o#ce a0ai# i#5esti#0 i# 25


0old, I#di5iduals ha5e used 0old as store of !ealth a#d as i#sura#ce a0ai#st the fluctuatio#s a#d depreciatio# of paper &o#ey a#d other &acroeco#o&ic a#d 0eopolitical ris"s, -erhaps #o other &ar"et i# the !orld has the u#i5ersal appeal of the 0old &ar"et, Successful i#5esti#0 is a4out the di5ersificatio# a#d &a#a0e&e#t ris", I# lay&a#Bs ter&s this &ea#s #ot ha5i#0 all your e00s i# o#e 4uc"et, e "#o! fro& history that &ar"ets ca# a#d do crash a#d if you are #ot di5ersified your e#tire #est e00 ca# !iped out, So a healthy portfolio i#cludes a !ide ra#0e of assets i#cludi#0 a 5ariety of euities !ith e1posures to differe#t &ar"ets sectors a#d re0io#s a 5ariety of differe#t cou#tries 4o#ds a di5ersified property portfolio  a cash co&po#e#t a#d a :/*:J allocatio# to 0old 8 related i#5est&e#ts a#d 0old 4ullio# ,the "ey is to deter&i#e !hat a&ou#t of each asset class to ha5e i# a 0lo4ali?ed a#d i#creasi#0ly i#te0rated 0lo4al eco#o&y$ a portfolio should 4e co&piled 4ased upo# curre#t 0lo4al &acroeco#o&ic fu#da&e#tals, hile I#dia#s are 4y far the lar0est #atural 4uyers of 0old$ !e te#d to ha5e a &aor prefere#ce to!ards 0old e!ellery !he# co&pared to so&e of its other for&s, hile these e!ellery #o dou4t hold a hi0h e&otio#al a#d i#tri#sic 5alue i# the !orld$ they are #ot the s&artest !ay to 0o i# ter&s of i#5est&e#ts, The &ai# reaso# for this is o#e. the u#certai#ty of uality a#d t!o. the hi0h additio#al cost i#curred for the &a"i#0$ !hich i# ter&s of a# i#5est&e#t is pretty !orthless if #ot har&ful to the 5alue of 0old, The other optio#s li"e 4uyi#0 0old coi#s or 4ars also pose a pro4le& of uality$ authe#ticity$ stora0e a#d e5e# i#sura#ce$ !hich i#creases the cost of the asset 0reatly, hile 4a#"s$ !hich sell 0old$ cut out so&e of these pro4le&s$ the i#sura#ce issue still re&ai#s$ as !ell as the fact that 4a#"s do #ot 4uy 4ac" the 0old they ha5e sold, This lea5es purchasers !ith a relati5ely illiuid for& of 0old$ !hich the# has to 4e i#depe#de#tly sold to either a e!el shop or a#other 4uyer, All i# all$ this 4ri#0s us to 0old e1cha#0e traded fu#ds 2ETFBs3$ !hich te#d to ta"e a!ay the hassle of stora0e a#d i#sura#ce 4oth$ si#ce the 0old is stored a#d i#sured 4y the asset &a#a0e&e#t co&pa#y 2A'C3,

26


The 0old is also supposed to 4e authe#ticated a#d uality tested$ pro5idi#0 i#5estors a cha#ce to i#5est easily i#to this asset 4y &erely purchasi#0 u#its, These u#its are li"e shares a#d cha#0e i# 5alue as the NA &o5es up or do!#, The o#ly do!#side is the psycholo0ical ed0e of o!#i#0 psychical 0old o# your o!# is #ot there$ u#less the u#its are redee&ed 5ia the fu#d, The reaso# o#e &ay prefer 0old ETFs o5er other for&s of 0old 4uyi#0 is as !he# co&pared$ o#e fi#ds$ 4a#"s do#Bt 4uy 4ac" the 0old they sell$ 0old coi#s a#d 4ars are harder to store a#d 5erify for authe#ticity$ e!ellery is &ore e1pe#si5e due to the &a"i#0 char0es$ lea5i#0 0old ETFs as the preferred choice of i#5est&e#t, W =)/

Gold as such does !ell !he# there is hi0h ris" a5ersio# i# the &ar"et a#d till that sce#ario e1ists$ 0old !ill re&ai# attracti5e, hile curre#tly$ 0old &ay #ot 4e reacti#0 to e5ery asset class li"e it usually does$ ha5i#0 a #e0ati5e correlatio# to euities$ de4t a#d ha5i#0 a positi5e correlatio# to oil$ i# a#other t!o to three years it !ill #or&ali?e, Gold !ill the# co#ti#ue to act as a hed0e a0ai#st i#flatio#$ falli#0 euities a#d curre#cies, hile the 0old hi0h &ay4e o5er$ it still re&ai#s a po!erful asset class a#d u#til the !orld eco#o&y sta4ilises a#d ris" a5ersio# settles do!#$ it !ill #ot 4e 4o00ed do!#, 'ost i#5estors !ould 4e a!are that 0old is a 0ood hed0e a0ai#st i#flatio# a#d the 4est i#sura#ce a0ai#st the &ar"ets, o!e5er$ people &ay fi#d it odd as to !hy are !e discussi#0 i#flatio# !he# or falli#0 euities !he# the &ar"ets are loo"i#0 attracti5ely priced ri0ht #o!, This is &ai#ly due to the hi0h ris"s that &a#y #atio#s are ta"i#0 today$ 4e it 5ia offeri#0 hu0e sti&ulus pac"a0es as see# i# the US or 5ia i#creasi#0 their fiscal deficit as see# i# the case of I#dia, If either of these sce#arios play out$ the 0o5er#&e#ts !ill 4e left !ith little choice 4ut to pri#t &ore &o#ey$ there4y creati#0 i#flatio# a#d desta4alisi#0 the eco#o&y as !ell, I# such circu&sta#ces$ i#flatio# is 4ou#d to "ic" 4ac" i# a#d soo#er or later$ i#5estors !ill o#ce a0ai# ha5e to tur# to 0old for solace,

27


O# ela4orati#0 as to !hy is 0old so esse#tial duri#0 the prese#t circu&sta#ces$ Ar5i#d 0oes o# to e1plai#$ @hile the !orld eco#o&y is faci#0 a &aor crisis$ ri0ht #o! people #eed protectio#, So &a#y cou#tries these days are offeri#0 sti&ulus pac"a0es$ !hich &ea# these 0o5er#&e#ts$ i# order to raise the &o#ey for the sti&ulus pac"a0es$ !ill start pri#ti#0 &ore &o#ey, This !ill de4ase the curre#cies a#d i# such ti&es 0old is the 4est protectio# o#e ca# ha5e, H)&<+
Gro!i#0 Glo4al De&a#d Despite the !orld!ide eco#o&ic slo!do!#$ the hu0e e&er0i#0 eco#o&ies of Chi#a a#d I#dia are co#su&i#0 e5er 0reater ua#tities of 0old a#d sil5er, Co#seue#tly$ the de&a#d for these precious &etals is e1perie#ci#0 e1plosi5e 0ro!th$ !hich i# tur# dri5es up their price, These eco#o&ies are o#ly i# their i#fa#cy$ pro&isi#0 that this tre#d !ill co#ti#ue i#to the foreseea4le future, Not Li#"ed to Curre#cy Our #atio#al de4t is already se5eral ti&es our Gross Do&estic -roduct 2GD-3 a#d has se5erely !ea"e#ed the dollar$ !hich is #ot 4ac"ed 4y a#y ta#0i4le asset, hile the 5alue of paper assets is ti0htly li#"ed to that of the dollar$ the 5alue of a 0old i#5est&e#t is i#depe#de#t a#d u#i5ersal, I#5est I# Gold to Cou#ter Decli#i#0 Stoc"s Althou0h i#terest rates are at historic lo!s$ e5e#tually the 0o5er#&e#t !ill 4e forced to raise the& to cou#ter i#flatio#, As i#terest rates 0o up$ so does the cost of &o#ey, The hi0her cost of &o#ey &ea#s corporatio#s ha5e less &o#ey to i#5est$ dri5i#0 do!# the 5alue of stoc"s a#d 4o#ds, istory sho!s us that the 5alue of 0old al!ays reacts to cou#ter the decli#i#0 5alue of stoc"s a#d 4o#ds Other reaso#s.

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•

Gold is a !eapo# a0ai#st i#flatio#, The 5alue of &o#ey 4eco&es less a#d the 5alue of 0old 4eco&es hi0h i# the period of i#flatio#, -eople ca# i#5est their &o#ey for 0etti#0 this future 4e#efit

•

Go5er#&e#t ca# i#troduce curre#cy at the ti&e of rede&ptio# of loa#$ 0old ca# #ot 4e created

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If !e co&pare the rate of 0old to rates of 5arious co&pa#iesB shares i#

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A&erica# &ar"et$ it is o4ser5ed that 0old is cheaper tha# euity shares

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The i#5est&e#t i# 0old is profita4le !he# there is a tre&e#dous cha#0e i# eco#o&ic a#d social acti5ities, 7ut i# this period 0old 4eco&es dearer a#d the rates of other properties 4eco&e lo!er

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The i#5est&e#t i# 0old helps i# &ai#tai#i#0 our portfolio u#der co#trol

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CHAPTER 3

3#1 GOLD LOAN  BASICS

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W$( $!< =)/ L)$'%

'a#y people ha5e assets such as 0old or#a&e#ts a#d e!ellery that ear# #o i#co&e 4ecause they lie idle at ho&e or i# a loc"er, If you are i# #eed of a loa#$ a#d if you are co#fide#t of your a4ility to repay the loa# o# ti&e$ you ca# u#loc" the 5alue of these assets 4y ta"i#0 a loa# a0ai#st 0old, You offer the le#der your 0old, The le#der 0i5es you a loa# a0ai#st your or#a&e#ts after a uic" e5aluatio# of its purity, The le#der !ill usually #ot 0i5e you the loa# up to the full 5alue of the loa#$ 4ut 0e#erally you ca# 0et up to >)J of the 5alue, You pay i#terest o# the loa#, At the e#d of the loa#$ you repay the loa# a#d ca# ta"e your 0old 4ac" fro& the le#der,

H)& *$' I =<( $ =)/ L)$'

You ca# 0et a 0old Loa# throu0h either your 4a#" or throu0h a #o#/4a#"i#0 co&pa#y that speciali?es i# loa#s a0ai#st 0old, If you 0o to a 4a#" li"e DFC or ICICI$ you !ill 4e as"ed to produce 4ac"/up docu&e#tatio# related to your ID a#d other perso#al details, The process$ as ad5ertised$ ca# ta"e up to * hour, You &i0ht #eed to pro5e that the 0old is o!#ed 4y you, If you 0o to a #o#/4a#"i#0 co&pa#y such as 'uthoot or 'a##upura&$ the process ca# 4e as uic" as a fe! &i#utes accordi#0 to !hat these co&pa#ies ad5ertise, The docu&e#tatio# reuired is usually less tha# !hat 4a#"s !ill de&a#d, 7ecause the process is less ri0orous$ especially 4ecause these 31


le#ders do #ot re5ie! if you ha5e credit!orthi#ess$ they char0e a hi0her rate of i#terest tha# the 4a#"s, W$( $!< (< <$(!<% ) =)/ )$'% •

Secured Loa#. Gold loa#s are secured loa#s 8 you are 4orro!i#0 a0ai#st the security of your 0old that you 0i5e to the le#der a#d i# retur# for !hich you 0et the loa#,

•

-urpose. You ca# use the loa# to!ards a#y purpose$ as lo#0 as it is #ot for a#y ille0al acti5ity or for speculatio# i# the stoc" &ar"et, No#/4a#"i#0 co&pa#ies ha5e e5e# fe!er restrictio#s o# !hat you ca# use the loa# for,

•

I#terest Rate a#d Char0es. 7a#"s are curre#tly char0i#0 appro1i&ately *(,:J i#terest for !hate5er te#ure you ta"e the loa# for, They usually ha5e a processi#0 fee for the loa# as !ell, No#/4a#"i#0 co&pa#ies ha5e +)/=)/6) day a#d other sche&es !here the rates of i#terest ca# 4e appro1i&ately (JW per &o#th,

•

A##ually$ this !or"s out to 4e a4out (;J per a##u&$ !hich is a 5ery hi0h rate of i#terest, No#/4a#"i#0 co&pa#ies usually do#Bt ha5e a processi#0 fee for the loa#,

•

Loa# A&ou#t. Le#di#0 ca# start at a&ou#ts as lo! as Rs (:$)))$ 4ut so&e 4a#"s ca# le#d you a#y!here fro& Rs *) la"hs up to Rs ;: la"hs$ depe#di#0 upo# the 5alue of your 0old, The #o#/4a#"i#0 co&pa#ies usually deal i# &uch s&aller loa# a&ou#ts 4ecause they ofte# cater to a differe#t "i#d of custo&er 4ase, No#e of these t!o types of le#ders char0es a# e5aluatio# fee for your 0old,

•

Repay&e#t Ter&s. 7a#"s usually ha5e ter&s that ru# fro& + to *( &o#ths$ 4ut you ca# prepay at a#yti&e, At #o#/4a#"i#0 co&pa#ies you ca# choose the ter& that you !a#t$ a#d accordi#0ly select the loa# that suits you,

A!< =)/ )$'% $/+"%$?< W$( $!< (< $(
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Gold Loa#s ca# 4e a uic" !ay to 0et a loa# a0ai#st the security of your or#a&e#ts, This is particularly true if you &i0ht #ot ha5e a#y credit history, As !ith all loa#s$ o#ly ta"e the& if you co#fide#t of your a4ility to repay the loa# 4ac" to the le#der o# ti&e$ other!ise you !ill face char0es a#d pe#al i#terest, Do#Bt ta"e a loa# if itBs purely for co#su&ptio# purposes li"e 4uyi#0 a #e! fashio# accessory or cell pho#e, You !o#Bt ha5e a# asset to sho! for it at the e#d of your co#su&ptio#, -erso#al Loa#s are o#e alter#ati5e to 0old Loa#s$ ho!e5er they ca# 4e &ore e1pe#si5e tha# 0old Loa#s a#d !ill ofte# co&e !ith restrictio#s o# your a4ility to pre/pay the loa#s,

D) I $*< $' !"%, ($( =)/ -!"*<% &" .)+< - )! /)&'

As you ha5e pro4a4ly see# i# the &edia$ 0old prices are at a# all ti&e hi0h 2i# #o&i#al ter&s3$ a#d are e1pected to 0o hi0her, o!e5er$ you face #o ris" if there is a price &o5e&e#t duri#0 the ti&e your loa# is outsta#di#0, As lo#0 as you pay your loa# 4ac" o# ti&e$ you !ill 0et your 0old or#a&e#ts 4ac"$ e1actly i# the sa&e state a#d !ei0ht that you 0a5e at the ti&e you too" a loa#, Typically$ your 0old is safe !ith the le#der, 'ost of these le#ders co&e u#der strict re0ulatory super5isio# fro& the R7I, Go !ith a le#der that has 4ee# arou#d for a !hile$ #ot ust a#y upstart le#der,

33


3#2 RATIONALE OF GOLD LOAN C)'+<'"<'*<:

The sheer co#5e#ie#ce of a loa# propositio# a0ai#st such a liuid asset suits 4oth the le#der a#d the 4orro!er, I# so&e cases$ it &ay 4e the last resort for the clie#t$ 4ut it is a co#5e#ie#t o#e, Le#ders fi#d it a ti&eless$ 0ood 4usi#ess &odel$ !hile clie#ts$ !ho #eed &o#ey uic"ly$ fi#d this the 4est !ay to raise fu#ds, L)& I'(
7orro!i#0 a0ai#st 0old is fast e&er0i#0 as the &ost preferred fi#a#ci#0 optio# as the i#terest rate char0ed 4y i#stitutio#s are less co&pared to other retail loa#s such as perso#al loa#s, For i#sta#ce$ the rate of i#terest o# these loa#s is 4et!ee# *+J a#d (
It is 4etter to ta"e a loa# a0ai#st 0old tha# a perso#al loa# as the rates are lo!erKsi#ce this type of loa# is secured, F<"?""(:

34


'ost 4a#"sN7FCs allo!s to pay o#ly the i#terest o# the loa# &o#thly a#d the pri#cipal pay&e#t at the e#d of the ter& a#d #ot as a# E'I !hich !or"s 4etter fro& a# i#terest perspecti5e, F<&
7orro!er ca# decide the appro1i&ate loa# a&ou#t 4ased upo# hisher 0old 5alue$ i,e, #o i#co&e proof is reuired u#li"e i# a perso#al loa# !here the loa# a&ou#t is decided 4ased o# the i#co&e proofs pro5ided, The processi#0 of the loa# is also &uch faster 4ecause of easy docu&e#tatio#, 7a#"s such as ICICI 7a#" a#d DFC 7a#" &ay as" for ID a#d other perso#al details !hich ca# ta"e up to a# hour !hile #o#/4a#"i#0 fi#a#ce co&pa#ies such as 'uthoot Fi#a#ce or 'a##apura& Fi#a#ce clai& to process the loa# i# a fe! &i#utes, O--)!('"(:

I#stead of "eepi#0 0old idle i# a loc"er at ho&e or i# a 4a#"Bs loc"er$ it is a 0ood idea to 4orro! a0ai#st it at lo!er rates i# co&pariso# to other retail loa#s, 'oreo5er$ le#ders also prefer this route of fi#a#ci#0 as the default rate is #e0li0i4le, I# 0e#eral$ the loa#s &ay 4e pro5ided for up to 6: J of the 5alue of 0old, Added to these is the fact that pled0i#0 0old is #o lo#0er co#sidered a ta4oo a#d dis0raceful i# I#dia# society, This e1plai#s !hy 0old loa#s are #o! !idely reco0#i?ed as accepta4le &ea#s of raisi#0 fu#ds for &eeti#0 ur0e#t reuire&e#ts 4y all se0&e#ts of society, So&e people also 0o for it 4ecause they fi#d it &ore pri5ate tha# 0oi#0 to a #ei0h4orhood &o#eyle#der, Also$ !ith 0old prices soari#0$ e5e# 4a#"s ha5e 4e0u# to push custo&ers to!ard 0old loa#s, The tra#sactio#s ha5e 4eco&e &ore popular as s&all perso#al le#di#0 dries up 4ecause of risi#0 defaults o# ris"y loa#s,

35


3#3 GOLD LOAN GROWTH Gold loa# is a loa# pro5ided a0ai#st the pled0e of 0old or#a&e#ts, ItBs the &ost co#5e#ie#t !ay to recei5e cash i# #o ti&e fro& a#y 4a#" N7FC 4y pled0i#0 0old or#a&e#ts coi#s 4ars, This is o#e loa# product !hich co&es !ith &i#i&al docu&e#tatio# 9 #o processi#0 ti&e i# short itBs o5er the cou#ter product, The or0a#i?ed 0old loa# &ar"et i# I#dia pe00ed at (:$))) crores a#d is e1pected to 0ro! at a# a##ual rate of +:/<) J o5er the #e1t three years to reach a portfolio si?e of Rs, :)$))) 8 Rs, :+$))) crores 4y FY*:, I# last four years is a tre&e#dous scale/up, ThatBs the po!er of 0old at !or", ith 4a#"s #ot too happy a4out le#di#0 a0ai#st u#co#5e#tio#al assets a#d !ith &icrofi#a#ce i#stitutio#s i# the doldru&s$ loa#s a0ai#st 0old ha5e ta"e# off li"e a roc"et, I# the past fe! years$ co&pa#ies speciali?i#0 i# le#di#0 a0ai#st 0old ha5e 4ee# i# o5erdri5e$ as I#dia#s ha5e a collecti5e 0old hoard of *:$))) to##es$ of !hich less tha# : perce#t is i# 0o5er#&e#t ha#ds, Icra 'a#a0e&e#t Co#sulti#0 Ser5ices esti&ates that the total 0old loa# &ar"et is !orth > 4illio# 2Rs +=$))) crore3 a#d it 0re! at a co&pou#d rate of <) perce#t 4y ()*:,

36


The &ar"et is curre#tly s"e!ed to!ards the South !hich accou#ts for 6) perce#t of 0old loa#s, 'a#appura& has ;: perce#t of its 4ra#ches there, Its 0ro!th ca&e throu0h a ;6 perce#t e1pa#sio# i# 4ra#ch #et!or" a#d a dou4li#0 of the e&ployee headcou#t, A sustai#ed rally i# 0old prices also played a critical role i# s!elli#0 the loa# 4oo"$ t!o ualified i#stitutio#al place&e#ts i# this 0ro!th, The &aor ris"s i# this 4usi#ess i#clude 5olatility of 0old prices$ a#d re0ulatory challe#0es posed 4y the Reser5e 7a#" of I#dia, No#/4a#"i#0 fi#a#cial co&pa#ies ha5e rece#tly 4ee# left out of the defi#itio# of priority sector le#di#0$ !hich &ea#s they ca##ot access loa#s fro& 4a#"s as cheaply as they used to 4efore, I#stitutio#s offeri#0 0old loa# are 4a#"s 2pu4lic a#d pri5ate3$ cooperati5es a#d N7FCs, To #a&e a fe! leadi#0 fi#a#cers are 'uthoot Fi#a#ce$ 'a##apura&$ Neelachal Gra&ya 7a#" 2NG73$ DFC 4a#"$ S7I 9 its associates$ A#dhra 7a#"$ ICICI 7a#" 9 &a#y &ore,

3#6 NBFC SECTOR 5 OUTLOO The I#dia# N7FC sector ca# 4roadly 4e se0re0ated i#to as 4elo!. • • •

I#frastructure N7FC se0&e#t The ousi#0 Fi#a#ce N7FC se0&e#t The Retail or Co#su&er Fi#a#ce N7FC se0&e#t

The I#dia# No# 7a#"i#0 Fi#a#ce Co&pa#ies 2N7FCs3 accou#ts for a critical part of the cou#tryBs o5erall fi#a#cial syste&, It is esti&ated that the N7FCs as a !hole accou#t for 6,*J or Rs, < trillio# of assets of the e#tire fi#a#cial syste& i# I#dia, As !ith &ost 0ro!i#0 i#dustries the N7FC i#dustry i# I#dia has u#der0o#e 5arious structural cha#0es 2cha#0e i# 4usi#ess &odels$ cha#0e i# the 4roader &ar"et dy#a&ics a#d cha#0e i# the re0ulatory re0i&e3 si#ce the start of the decade a#d is today a &ore &ature a#d de5eloped i#dustry$ particularly after ha5i#0 co&e tac"led$ ar0ua4ly o#e of the &ost difficult phases i# its history/ the 0lo4al eco#o&ic crisis of ())>/())6, At the 4e0i##i#0 of the decade N7FCs i# I#dia faced co#sidera4le challe#0es ra#0i#0 fro& hi0h cost of fu#ds$ li&ited 4orro!i#0 sources a#d li&ited di5ersificatio#$ lo! asset profile$ i#te#se 37


co&petitio# fro& #ot ust N7FCs 4ut 4a#"s as !ell$ difficulties i# positio#i#0 the&sel5es 4et!ee# the 4a#"s a#d the &o#ey le#ders$ tepid eco#o&ic a#d i#dustrial 0ro!th a#d a hi0h de0ree of #o#/ perfor&i#0 assets, ith ti&e ho!e5er those foi4les 4e0a# to 0et !ashed a!ay as a fresh !a5e of cha#0es 4e0a# to e#5elop the sector, The N7FCs !ere a4le to 4roade# their fu#di#0 a5e#ues a#d e#sure 0reater di5ersificatio#, The N7FCs 4orro!i#0 profile e1te#ded 4eyo#d 4a#"s to i#clude &utual fu#ds$ i#sura#ce co&pa#ies a#d also usi#0 the rather i##o5ati5e &ode of securiti?i#0 their loa#s, O#e also 4e0a# to see 0reater pro5isio#i#0 a#d a# i&pro5e&e#t o# the asset uality a#d o5erheads, -eople also 4e0a# to loo" at N7FCs i# a 4etter li0ht a#d they !ere a4le to positio# the&sel5es i# 4et!ee# the 4a#"s 2a lot of 4orro!ers !ere #ot 4a#" !orthy a#d could#Bt &eet the #or&s prescri4ed 4y the 4a#"s3 a#d the &o#eyle#ders 2!ho used to char0e usurious rates of i#terest3, No#etheless the fi#a#cial crisis fro& ())>/()*) caused a si0#ifica#t de#t to the N7FC i#dustry Si#ce the N7FC 4usi#ess is esse#tially a# i#stitutio#al fu#ded 4usi#ess$ duri#0 the post/ Leh&a## crisis$ credit disappeared off the ta4le$ as the purse stri#0s !ere ti0hte#ed a#d co#fide#ce e5aporated, ith &o#ey 4eco&i#0 scarce it 4e0a# to affect N7FCs fro& 4oth the asset a#d lia4ility sides, The dearth of liuidity a#d credit also resulted i# a loss of co#fide#ce i# the fi#a#cial syste& !ith the 4a#"s u#!illi#0 to 0i5e out credit, Not ust 4a#"s$ sourci#0 fro& &utual fu#ds too 4eca&e a #o/sho! as the &utual fu#d i#dustry sa! !idespread rede&ptio# pressures !ith i#5estors opti#0 for i#5est&e#t i# safer ha5e#s or ust holdi#0 plai# cash, ith the N7FCs "ey credit li#es 4ei#0 asphy1iated$ it caused a se5ere dearth of liuidity, Their pro4le&s !ere further co&pou#ded at the other e#d$ !ith the dissipatio# i# liuidity$ co#fide#ce a#d de&a#d$ resulti#0 i# lo!er i#co&e a5aila4le !ith the 4orro!ers$ there4y stu#ti#0 their a4ility to pay off the loa#s ta"e# duri#0 the pre/ Leh&a## phase, Loss of e&ploy&e#t due to cost cutti#0 &easures !as a#other factor that co#tri4uted to the i#a4ility to pay off loa#s, This co#seue#tly resulted i# lar0e scale defaults a#d a# i#crease i# the No# -erfor&i#0 Assets 2N-As3 of the N7FCs, A#other pro4le& that N7FCs faced !as that &ore tha# half of their 4orro!i#0s had a &aturity period of less tha# a year !hile their loa#s had te#ures of &ore tha# three years, This asset lia4ility &is&atch caused se5ere strai#s o# their fi#a#cials, N7FCs that

38


had pro5ided a hi0h de0ree of u#secured loa#s 2perso#al loa#s$ u#secured S'E loa#s3$ ca&e u#der particular strai# duri#0 this period, o!e5er pic"i#0 up o# the !oes of the N7FCs a#d reali?i#0 their i&porta#ce to the fi#a#cial syste& as a !hole$ the R7I 2Reser5e 7a#" of I#dia3 ca&e up !ith a sle! of &easures to 4oost up the N7FC i#dustry, 7a#"s !ere per&itted to a5ail the liuidity support u#der the LAF 2Liuidity Adust&e#t Facility3 i# order to &eet the fu#di#0 #eeds of the N7FCs$ a special repo !i#do! u#der the Liuidity Adust&e#t Facility 2LAF3 !as pro5ided for the N7FCs$ a# e1isti#0 Special -urpose ehicle 2S-3 !as used as a platfor& to pro5ide liuidity support to N7FCs$ #o#/ deposit ta"i#0 N7FCs 2N7FC/ND/SI3 !ere allo!ed to raise short/ter& forei0# curre#cy 4orro!i#0s$ the ris" !ei0hts o# 4a#"Bs e1posures to clai&s o# N7FCs/ND/SI !ere reduced fro& *:)J to *))J$ a#d hi0her CAR 2Capital Adeuacy Ratio3 #or&s for N7FCs/ND/SI !ere deferred 4y a year, Aided 4y those &easures a#d a 0e#eral pic"up i# credit a#d co#fide#ce$ the fortu#es of the N7FC i#dustry 4e0a# to cha#0e !ith ti&e, Co&pa#ies !ith a stro#0 pare#ta0e 2'9' Fi#a#ce$ Relia#ce Capital$ Shrira& Tra#sport Fi#a#ce3 !ere 4etter positio#ed to deal !ith the crisis as they !ere a4le to raise further euity a#d also i&ple&e#ted a re/ali0#i#0 of their 4usi#ess &odels i# order to preser5e their sta4ility, The i&pro5e&e#t of co#fide#ce i# the credit syste& also sa! the asset lia4ility &is&atch reduci#0 as 4a#"s !ere !illi#0 to le#d to N7FCs for a 0reater ti&e period as opposed to ust a &a1i&u& ti&e fra&e of o#e year, Asset uality too i&pro5ed !ith &ore prude#t credit #or&s$ 0reater pro5isio#i#0 a#d the reductio# i# dis4urse&e#t of u#secured loa#s, O()), )! NBFC%

The I#dia# N7FC sector plays a 5ery i&porta#t role i# fi#a#cial i#ter&ediatio# i# the cou#try$ accou#ti#0 for arou#d 6/*)J of the total fi#a#cial assets i# the syste& a#d their fu#da&e#tal i&porta#ce to the cou#tryBs de5elop&e#t is set to co#ti#ue, o!e5er 0oi#0 for!ard the situatio# is li"ely to 4e a lot &ore challe#0i#0 as the N7FC sector see"s to 0rapple !ith the t!i# issues of di&i#ishi#0 co&petiti5e ad5a#ta0es 2!ea"er 4arriers to e#try3 a#d 0reater re0ulatory pressures,

39


N7FCs ha5e e#oyed tre&e#dous co&petiti5e ad5a#ta0es relati5e to their 4a#"i#0 peers for o5er a decade #o! 2a#d perhaps e5e# lo#0er3$ a#d so&e of the i#te0ral reaso#s for this occurre#ce !as 4ecause they !ere !illi#0 to put their &o#ey !here their &outh !as a#d see" to fi#a#ce se0&e#ts that the traditio#al 4a#"s !ere !ary off, hile the 4a#"s stru00led to u#dersta#d these ris"y &ar"ets !hich !ere predo&i#a#tly 4ased i# rural areas a#d i#5ol5ed a tar0et &ar"et that fu#ctio#ed o# 5aria4le sources of i#co&e a#d lac"ed a#y 4a#"i#0 ha4its$ the N7FC players too" the plu#0e a#d sou0ht to de5elop their e1pertise i# these se0&e#ts, Despite faci#0 i#itial stru00les$ the N7FC players ha5e$ !ith ti&e$ de5eloped a solid u#dersta#di#0 of their &ar"et a#d this ha5e 4ee# a4le to reali0# a#d adust their 4usi#ess &odels to cater to the &ar"et, ith ti&e$ these N7FCs ha5e also 4ee# a4le to de5elop #iche characteristics a#d there4y solid co&petiti5e ad5a#ta0es relati5e to the 4a#"i#0 class, o!e5er it #o! see&s e5ide#t that so&e of these co&petiti5e ad5a#ta0es &i0ht 4e e44i#0 a!ay, hile the N7FCs laid the fou#datio#s for a# i#stitutio#al u#dersta#di#0 of the traditio#ally u#4a#"ed &ar"ets such as the rural fi#a#ci#0 &ar"et$ the (#d ha#d 5ehicle &ar"ets$ the 0old loa# &ar"et$ etc, their 4a#"i#0 cou#terparts 2!ho are #o! feeli#0 co#sidera4ly reassured !ith the success of or0a#i?ed participatio# i# the &ar"et3 ha5e also reali?ed that they ca# le5era0e o# these fou#datio#s a#d are he#ce 4etter positio#ed to 4rea" the rather stro#0 4arriers to e#try, Thus 0oi#0 for!ard o#e is li"ely to see a 0reater i#flu1 of 4a#"i#0 players !ithi# the N7FC territories a#d u#less the N7FC players ca# di5ersify their product offeri#0s a#d tap #e!er &ar"ets their co&petiti5e ad5a#ta0es !ill di&i#ish, A#other o45ious tre#d that see&s to ha5e ta"e# shape is the 0reater re0ulatory restrictio#s that are li"ely to 4e i&posed o# the R7I o# the N7FC sector, I# the last fiscal the Usha Thorat Co&&ittee !as set up to loo" i#to the !or"i#0s of the N7FC sector a#d see" to 4rid0e the re0ulatory 0ap 4et!ee# 4a#"s a#d N7FCs a#d No# Deposit ta"i#0 N7FCs a#d Deposit ta"i#0 N7FCs, The #o# deposit ta"i#0 N7FC s are the 4est placed as they are #ot reuired to &ai#tai# CRR 2Cash Reser5e Ratio3 a#d SLR 2Statutory Liuidity Ratio3 a#d this has co#seue#tly e#a4led the& to e#oy 4etter yields a#d spreads, hile it see&s u#li"ely that #o# deposit ta"i#0 N7FCs !ill ha5e to start &ai#tai#i#0 CRR a#d SLR$ 5arious other &easures are poised to reduce the la1ities that 4oth deposit ta"i#0 a#d #o# deposit ta"i#0 N7FCs e#oy, This i#creasi#0 cost of 40


re0ulatio# is soði#0 that !ill challe#0e the profita4ility of N7FCs i# additio# to i&posi#0 co#strai#ts o# their 4usi#ess &odels,

3#> GOLD LOAN FEATURES

41


3# GOLD LOAN SECTOR The I#dia# 0old &ar"et is a &ar"et that has 0ro!# at a# i&pressi5e pace a#d is still curre#tly 4ri&&i#0 !ith opportu#ities, The orld Gold Cou#cil 4elie5es that 0old de&a#d i# the cou#try !ill co#ti#ue to 0ro! at +)J i# real ter&s dri5e# 4y ur4a#i?atio#$ rapid GD- 0ro!th$ 4ur0eo#i#0 &iddle class i#co&es a#d a sustai#ed a#d pote#tially risi#0 sa5i#0s rate of +:/<)J, Opportu#ities 0alore for the or0a#i?ed se0&e#t The reaso# for the opti&is& of the I#dia# 0old loa# &ar"et is esse#tially fou#ded o# the locatio# of the 0old loa# &ar"et itself/ I#dia/ !hich has a# e1ceptio#ally stro#0 associatio# !ith the &etal, The cou#try is esti&ated to 4e the lar0est i&porter of 0old a#d curre#tly o!#s *)J of the total 0old stoc" i# the !orld at *>)))/()))) to##es, hile this &a&&oth fi0ure o#ly hi0hli0hts the scope of the 0old loa# &ar"et$ the opportu#ity lies i# the fact that o#ly *)J of the 0old loa# stoc" i# the cou#try has co&e i#to the 0old loa# &ar"et, The re&ai#i#0 6)J still re&ai#s dor&a#t a#d herei# lies the opportu#ity for 0old loa# players, hat &a"es thi#0s particularly i#teresti#0 is that !hile *)J of the stoc" has 4ee# captured 4y the total 0old loa# players o#ly a &ea0re */( J is esti&ated to ha5e 4ee# captured 4y the or0a#i?ed players$ there4y offeri#0 ple#ty of scope for the or0a#i?ed listed players to 0ai# &ar"et share, 42


Custo&erBs perceptio# of 0old loa#s is i&pro5i#0 due to or0a#i?ed prese#ce, hile the pote#tial si?e a#d the scope of the 0old loa# &ar"et are 5ery ad&ira4le$ that alo#e is #ot e#ou0h, There has to 4e a# u#dercurre#t of stro#0 de&a#d to le#d crede#ce to the scope a#d e5e# o# this cou#t there is &uch to 4e opti&istic, I# fact there has 4ee# a radical shift i# the perceptio# of 0old loa#s 4y the a5era0e I#dia#, Earlier !hile pled0i#0 0old for loa#s !as fro!#ed upo# a#d !as lar0ely loo"ed upo# as a last resort$ these days 0old loa#s are 4ei#0 ta"e# e5e# for the &ost ele&e#tary reaso# 2or as 4rid0e loa#s3$ such that they ha5e co&e to 4e "#o!# i# co&&o# parla#ce as @the loa# of co#5e#ie#ce, Stro#0 co#su&eris& le5els ha5e o#ly co#tri4uted to the 4oo& of 0old loa#s, I# additio# to that !hile i#itially the 0old loa#s !ere o#ly ta"e# 4y the rural class$ these days a 4roader class of people e#co&passi#0 office 0oers i# &etros a#d se&i ur4a# places$ the elderly a#d the youth ha5e all e&4raced this product, O#e o#ly #eed to loo" at the !hoppi#0 0old loa# 0ro!th rates see# 4y esta4lished players such as 'uthoot Fi#a#ce a#d 'a#appura& Fi#a#ce, Or0a#i?ed 0old loa# N7FCs are 4etter positio#ed tha# 4a#"s a#d the u#or0a#i?ed sector The 0old loa# players are 4roadly di5ided i#to the u#or0a#i?ed se0&e#t 2pa!# 4ro"ers$ fu#d 4ro"ers$ &o#ey le#ders3$ the or0a#i?ed 0old N7FC players a#d or0a#i?ed 4a#"s, It is esti&ated that ;)J of the 0old loa# &ar"et is u#or0a#i?ed !ith o#ly +)J accou#ti#0 for the or0a#i?ed se0&e#t, The 0reater i#flu1 of the or0a#i?ed sector is respo#si4le for 4ri#0i#0 a de0ree of sta#dardi?atio# to the 0old loa# &ar"et a#d this has helped sto"e de&a#d, Of these three se0&e#ts$ the N7FC 0old loa# players are 4etter placed tha# the other t!o, hile the u#or0a#i?ed se0&e#t char0e usurious rates of i#terest a#d u#der5alue the 0old i# the #a&e of i&purity$ 4a#"s lac" a se#se of e1pedie#cy i# the dis4ursal of loa#s a#d lac" a&ple 0old appraisers, The N7FC 0old players reco0#i?ed these fla!s i# their co&petitors a#d !ere a4le to 4uild a suita4le 4usi#ess &odel that eluded these fla!s, R<%-<'/<'( G)/ L)$' .$!,<(

The 0old loa# &ar"et i# I#dia has 4ee# 4oo&i#0 for a !hile #o! as the price of 0old co#ti#ues its up!ard traectory a#d peopleBs perceptio# of 0old loa# co#ti#ues to cha#0e for the 4etter, Earlier !hile 0old loa#s !ere lar0ely li&ited to the rural areas a#d !ere 0e#erally ta"e# as the loa# of last resort, o!e5er !ith ti&e$ e5e# the se&i ur4a# a#d &iddle class se0&e#ts of society 43


ha5e reali?ed the 4e#efits of the 0old loa# !hich are also popularly "#o!# as @the loa# of co#5e#ie#ce, These days 0old loa#s are also 4ei#0 ta"e# as 4rid0e loa#s, Goi#0 for!ard there is a hu0e opportu#ity for the 0old loa# &ar"et, Greater !ord/of/&outh$ perceptio# cha#0es a#d the i#creasi#0 share of the or0a#i?ed se0&e#t i# the total 0old loa# &ar"et ca# help 4ri#0 the idle old 0old stoc" to the 0old loa# &ar"et, The 5ery #ature of its 4usi#ess &a"es i#5estors li"e the loa# a0ai#st 0old 4usi#ess, The ris" factors see& fairly lo! co&pared to the opportu#ities a#d 0ro!th prospects, Listed co&pa#ies i# this space recei5ed i#5est&e#ts fro& e5e# pri5ate euity i#5estors, Thi#0s could hardly ha5e 4ee# 4etter for these co&pa#ies, o!e5er$ o5er the last fe! uarters e5erythi#0 see&s to 4e 0oi#0 !ro#0 for these co&pa#ies$ a#d all the so/called positi5es see& to 4e 0etti#0 #eutrali?ed$ if #ot tur#i#0 #e0ati5e, -u4lic sector 4a#"s ha5e also 4ee# le#di#0 a0ai#st 0old e!ellery, Actually$ they ha5e also le#t a0ai#st 0old$ coi#s a#d so o#, The reaso# people 0o to GLCs is the #e1t/to/#il ti&e they ta"e i# dis4ursi#0 loa#s, There is a# alle0atio# a0ai#st these co&pa#ies that$ i# their ?est to dis4urse loa#s uic"ly$ ofte# they do #ot u#derta"e proper due dili0e#ce a#d ha#d out loa#s a0ai#st stole# e!ellery$ too, Typically$ GLCs le#d up to >) per ce#t of the 5alue of 0old$ &a"i#0 custo&ers a happy lot, o!e5er$ last &o#th$ the Reser5e 7a#" of I#dia 2R7I3 reduced the loa#/to/5alue for GLCs to =) per ce#t of the 0old co#te#t, 'a#y of these GLCs ha5e &ultiple #a&es u#der !hich they do 4usi#ess, These co&pa#ies accept cash deposits throu0h 0roup co&pa#ies !ith prese#ce i# the shopsoutlets fro& !here the loa#s are ha#ded out, This led to t!o issues, The first !as the case of &ista"e# ide#tity of the co&pa#y for the custo&er$ !ho thi#"s he is 0i5i#0 a deposit to the 0old loa# co&pa#y, The seco#d. that these N7FCs$ classified as #o#/deposit ta"i#0 e#tities$ !ere i# fact ta"i#0 the deposits, R7I$ the# prohi4ited these co&pa#ies fro& accepti#0 deposits at these outlets, GLCs !ould char0e i#terest rates up!ards of () per ce#t$ e5e# up to +) per ce#t$ !hile i# the case of pu4lic sector 4a#"s$ it !ould 4e less tha# half$ or *(/*+ per ce#t, The 4a#"s are happy !ith these loa#s as these are of short duratio#$ ha5e &ore tha# adeuate security a#d i# todayBs ti&es$ are &ore or less ris"/free, 44


The "#o!/your/clie#t 2YC3 #or&s #eed to 4e follo!ed 4y GLCs a#d 4a#"s ali"e, hile i# the case of a 4a#"$ the possi4ility of a !al"/i# custo&er #ot 0etti#0 a loa# is hi0h, Typically$ to 0et a loa# you !ould ha5e to 0o to a 4a#" !ith !hich you ha5e a# e1isti#0 relatio#ship, Not so !ith a GLC, You could !al" i#to a#y 4ra#ch of a GLC$ a#d 0et a loa#, The syste& is uite la1 a#d loa#s are easy to 0et, GLCsB tele5isio# ads sho! 4u#dles of #otes 4ei#0 e1cha#0ed across the cou#ter i# lieu of 0old e!ellery$ !hile i# 4a#"s there are restrictio#s o# cash !ithdra!als fro& o#eBs o!# accou#t, It is e1pected that cha#0es to this situatio# !ould 4e i#troduced shortly, The &icrofi#a#ce 4usi#ess has ta"e# a 4eati#0, The hype created arou#d the i#itial pu4lic offeri#0$ a#d thereafter$ of SS 'icrofi#a#ce$ is still fresh i# the &i#ds of i#5estors, Gold prices ha5e touched lifeti&e hi0hs i# I#dia$ tha#"s to a depreciati#0 rupee, o!e5er$ R7I is co#cer#ed a4out the future of GLCs if 0old prices !ere to softe# i# I#dia, Gold prices are softer a4road 4y a4out *( per ce#t, Fi#ally$ the periodic tappi#0 of the 4o#d &ar"et 4y GLCs to raise resources is also !orryi#0$ a#d does #ot help the cause of GLCs,

45


3#7 MAJOR PLAYERS The "ey players i# the I#dia# 0old loa# &ar"et i#clude the u#or0a#i?ed sector$ 4a#"s 8 pu4lic pri5atecooperati5es a#d N7FCs, hile the u#or0a#i?ed sector$ co&prisi#0 local pa!#4ro"ers 46


a#d &o#eyle#ders$ has traditio#ally do&i#ated the 0old loa# &ar"et for &a#y decades a#d still co&&a#ds #early ;:J of the &ar"et$ the or0a#i?ed sector$ led 4y N7FCs$ is catchi#0 up fast, The or0a#i?ed sector has 0ro!# at a rapid pace of <)J CAGR fro& ())( to ()*) is e1pected to 0ro! 4y ++J to <*J CAGR i# ()**, A#d i# doi#0 so$ these co&pa#ies are challe#0i#0 the do&i#a#ce of the lar0e u#or0a#i?ed sector, ithi# the or0a#i?ed sector$ N7FCs ha5e 0ro!# at a rapid rate fro& *>,
A4o5e fi0ure depicts the 0old loa# portfolio si?e for "ey or0a#i?ed sector players$ a0ai# hi0hli0hti#0 the rapidly 0ro!i#0 do&i#a#ce of N7FCs 2e, 0$ 'uthoot Fi#a#ce$ 'a#appura& a#d 'uthoot Fi#corp3,

M$@)! -$
G)/ )$' .$!,<( %$!<

G)/ )$' .$!,<( %$!<

820119

820129

47


'uthoot fi#a#ce 'a#apurra& fi#a#ce I#dia# 4a#" 'uthoot Fi#corp Federal 4a#" South I#dia# 7a#" S7T A#dhra 4a#" IO7

*+,)J <,+J =,*)J =,
*6,:J =,>J *),<)J :,6)J (,+J =,+)J :,*)J +,;J *+,6J

3# GOLD LOAN PROCESS

48


•

The prospecti5e 0old loa# custo&er is first e1plai#ed the differe#t 0old loa# sche&es a5aila4le,

•

After selecti#0 a certai# sche&e$ proof of ide#tity is procured fro& the custo&er e5e# as the reside#t 0old appraiser$ appraises the or#a&e#ts usi#0 a cali4rated !ei0hi#0 &achi#es, Other preli&i#ary a#d additio#al tests are do#e !ithout da&a0i#0 the or#a&e#ts,

49


•

The rate per 0ra& is fi1ed 4y the corporate office a#d this is used to deter&i#e the fi#al loa# a&ou#t thou0h the 4ra#ch &a#a0er also has the discretio# to appro5e hi0her rates of upto Rs,*) per 0ra&,

•

Co&puteri?ed records of the applica#t are &ai#tai#ed a#d the 0old is ta"e# to the i#/house safety 5aults e5e# as the loa# is prescri4ed at a particular rate,

•

The loa#s !hich are of a sta#dard period of *( &o#ths are usually repaid !ithi# three to si1 &o#ths after !hich the or#a&e#ts are ha#ded 4ac", Loa#s that are repaid i# less tha# *( &o#ths are usually char0ed a lo!er rate of i#terest tha# i#itially prescri4ed,

•

If the loa#s are #ot repaid 4ac" !ithi# *( &o#ths$ co&pa#y i#for&s the custo&er throu0h re0istered letters or le0al #otices, If the loa# is still #ot repaid after *> &o#ths$ the 0old is liuidi?ed a#d the accou#t is classified as N-A,

+,6 LOAN INTEREST RATE CO'-ARISON ACOSS CATEGORIES 50


A co&pariso# of i#terest rates char0ed 4y le#ders across loa# cate0ories is sho!# i# a4o5e, The co&pariso# of i#terest rates sho!s that 0old loa#s fetch 4a#"s hi0her rates as co&pared to ho&e loa#s a#d car loa#s, e#ce$ this cate0ory is 4ei#0 tar0eted a00ressi5ely 4y 4a#"s, o!e5er$ N7FCs ha5e a &uch 0reater focus o# 0old loa#s a#d co#ti#ue to pro5ide attracti5e loa# features !hich e#a4le the& to char0e hi0her rates$ 0e#erate hi0her profits a#d 0ro! rapidly i# a si#0ular directio#,

3#10 COMPARISM OF GOLD LENDER OFFERING

51


3#11 GOLD LOANS AID FINANCIAL INCLUSION 52


Rece#tly$ there has 4ee# co#sidera4le focus o# the success e#oyed 4y the leadi#0 players i# the 0old loa# se0&e#t 2i#cide#tally$ o#e of I#diaBs fastest 0ro!i#0 4usi#esses3$ a#d ho! i#creasi#0 #u&4er of people are sheddi#0 a0e/old ta4oos to 4orro! &o#ey a0ai#st their 0old e!ellery, hile this traditio#al 4usi#ess of le#di#0 &o#ey a0ai#st 0old !as professio#ali?ed a#d scaled/up i# rece#t years 4y N7FCs$ all the &aor #atio#al 4a#"s ha5e #o! u&ped i#to the fray !ith e#thusias&, Gold loa#s are particularly !ell/suited for I#dia 4ecause of the follo!i#0 reaso#s. A+)"/% /
A 0old loa# is settled either 4y repay&e#t or$ i# case of default$ 4y sale of the pled0ed security, The cycle of #o#/pay&e#t a#d rollo5ers of the loa# at escalati#0 rates of i#terest does #ot happe#, I# the !orst case the 4orro!er &ay lose his 0old 4ut there is #o de4t trap, S".-< -!)*
The for&alities i# a5aili#0 0old loa#s are &i#i&al a#d procedures are si&ple, This &a"es 0old loa#s ideal for the &icro/fi#a#ce se0&e#t !here the loa# a&ou#ts are s&all, N) /<-!<*"$(")' ) '/
U#li"e other secured loa#s$ the u#derlyi#0 asset i# a 0old loa# is #ot su4ect to depreciatio# a#d so$ the le#der al!ays e#oys a de0ree of co&fort #ot a5aila4le i# other loa#s As for a 4orro!er faci#0 te&porary difficulties$ the o#ly co&pulsio# is to "eep o# ser5ici#0 the i#terest co&po#e#t$ till heshe is a4le to repay, N) K<%(")'% $%,
-eople ofte# 4orro! &o#ey o# accou#t of social co&pulsio#s !hich ca##ot 4e a5oided i# our cultural co#te1t occasio#s li"e !eddi#0s$ festi5als$ reli0ious a#d social o4li0atio#s etc, I#diaBs 4a#"i#0 sector co#ti#ues to carry a ha#0o5er fro& the days of credit ratio#i#0 that 4a#" le#di#0 &ust al!ays 4e for @producti5e purposes, Gold loa#s are ad5a#ced solely o# the criterio# of the 5alue of 0old pled0ed a#d uestio#s a4out the purpose of the loa# !ould o#ly 4e to co#fir& that a#ti/social or !ildly speculati5e acti5ities are #ot i#5ol5ed, S"(
53


Gold loa#s are ideal for 6)J of I#diaBs !or"force$ e&ployed i# the u#or0a#i?ed sector a#d those lac"i#0 docu&e#ts to pro5e their i#co&es, This is a se0&e#t co#5e#tio#al 4a#"s usually a5oid 4ecause their appraisal a#d credit scori#0 is 4ased o# for&al docu&e#tatio#, Gai#s for the !ider eco#o&y. I#dia has the !orldBs lar0est stoc" of pri5ately held 0old ra#0i#0 fro& *:$))) /()$ ))) to##es of 0old, he# this 0old is "ept idle i# our loc"ers a#d 5aults$ it is a hu0e dra0 o# the I#dia# eco#o&y. It has the effect of "eepi#0 4illio#s of dollars i# sa5i#0s out of the fi#a#cial syste&, This is a hu0e su& that other!ise could ha5e 4ee# le#t out to i#dustries a#d for 4uildi#0 i#frastructure, he# people 4orro! a0ai#st 0old 2tech#ically called @&o#etisatio#3$ the i&pact is to set i# &otio# a !hole #e! chai# of eco#o&ic acti5ity 4oosti#0 de&a#d a#d co#su&ptio# e1pe#diture i# the eco#o&y,

54


3#12 CRITICAL SUCCESS FACTORS FOR GOLD LOAN COMPANIES

55


3#13 CHANGING CONSUMER PERCEPTION DRI4ING INDIAS ORGANIED GOLD LOAN MARET

I#dia is ha5i#0 the hi0hest 0old stoc" i# the !orld a#d the de&a#d for 0old is i#creasi#0 co#ti#uously i# the cou#try$ 4ac"ed 4y the traditio# of !eari#0 0old i# !eddi#0s$ festi5als$ a#d 5arious other occasio#s, -eople are also 4uyi#0 0old as the 5alue of 0old assets is risi#0 co#ti#uously, Report$ “G)/ L)$' M$!,<( "' I'/"$” re5eals that the or0a#i?ed 0old loa# &ar"et has 0ro!# tre&e#dously o5er a period of ti&e$ o!i#0 to the cha#0i#0 co#su&er perceptio# a4out 0old loa# a#d risi#0 loa# reuire&e#ts, O5er a period of ti&e$ the perceptio# of co#su&ers to!ards 0old loa# has cha#0ed drastically, I# the earlier ti&es$ 0old o!#ed 4y I#dia# fa&ilies !as rarely liuidated u#less i# e1tre&e fi#a#cial #eed, I# additio#$ the 0old loa# or loa# a0ai#st or#a&e#ts !as ta"e# 4y the local pa!#4ro"ers a#d &o#ey le#ders, Due to hi0h 0old stoc" a#d hi0h co#su&ptio# of 0old i# Souther# I#dia$ the prese#ce of &o#ey le#ders !as hi0hest i# that re0io#, Si&ilarly$ or0a#i?ed 0old loa# &ar"et ori0i#ated fro& the South I#dia a#d ha5e lar0est share of al&ost three/fourth of the total 0old loa# &ar"et, I# Souther# I#dia$ 0old loa# is 5ery &uch preferred as co&pared to other loa#s a#d has 4eco&e the culture as the le#ders do #ot accept a#y other collateral a0ai#st loa#, A #e! tre#d of 0old fi#a#ci#0 for purchasi#0 has also 4ee# o4ser5ed i# the i#dustry, It !as o4ser5ed that the co#su&er outloo" is cha#0i#0 as people are i#creasi#0ly sorti#0 to 0old loa#s 56


i# order to &eet their short/ter& #eeds, Further it is o4ser5ed that the or0a#i?ed players are e1plori#0 the pote#tial$ a#d e1pa#di#0 their #et!or"s i#to North$ East a#d est re0io#s,

57


CHAPTER 6

58


6#1

INDIAINFOLINE  A 4IEW

6#1#1 C)!-)!$(< %(!*(!"'=:

The co#te#t ser5ices represe#t a stro#0 support that dri5es the 4ro"i#0$ co&&odities$ &utual fu#d a#d portfolio &a#a0e&e#t ser5ices 4usi#esses, Re5e#ue 0e#eratio# is throu0h the sale of co#te#t to fi#a#cial a#d &edia houses$ I#dia# as !ell as 0lo4al, The co#te#t ser5ices represe#t a stro#0 support that dri5es the 4ro"i#0$ co&&odities$ &utual fu#d a#d portfolio &a#a0e&e#t ser5ices 4usi#esses, Re5e#ue 0e#eratio# is throu0h the sale of co#te#t to fi#a#cial a#d &edia houses$ I#dia# as !ell as 0lo4al, 6#1#2 I'/"$"')"'< +"%")':

To 4e the &ost respected co&pa#y i# the fi#a#cial ser5ices space

59


6#2

MILESTONES

1>

I#corporated as a# i#depe#de#t euity research a#d co#sulti#0 fir& 1

Lau#ched i#ter#et portal !!!,i#diai#foli#e,co& 2000

Co&&e#ced distri4utio# of life i#sura#ce a#d &utual fu#ds 2006 • •

Acuired co&&odities 4ro"i#0 lice#se Lau#ched portfolio &a#a0e&e#t ser5ices

200 • •

Lau#ched retail fi#a#ce 4usi#ess Acuired DGCX &e&4ership

200>

Listed o# 7SE a#d NSE Recei5ed R7I lice#se for u#derta"i#0 N7FC acti5ities 2007

Co&&e#ced i#stitutio#al euities 4ro"i#0 4usi#ess For&ed Si#0apore su4sidiary IIFL 2Asia3 -te, Ltd 200

Lau#ched !ealth &a#a0e&e#t ser5ices u#der the IIFL ealth 4ra#d Recei5ed i#sura#ce 4ro"i#0 lice#se fro& IRDA 200

Acuired re0istratio# for housi#0 fi#a#ce 4usi#ess fro& N7 O4tai#ed 5e#ture capital lice#se 60


2010

7eca&e the first I#dia# e#tity to recei5e &e&4ership of the Si#0apore Stoc" E1cha#0e a#d Colo&4o Stoc" E1cha#0e 2011 • •

Lau#ched IIFL 'utual Fu#d 'aide# NCD issue

2012 • •

Lau#ched Real Estate Fu#d Recei5ed re0istratio# for distri4utio# of N-S fro& -FRDA

61


6#3

SER4ICES

EQUITIES AD4ISORY AND BROING

IIFL offers o#li#e a#d offli#e 4ro"i#0 a#d ad5isory ser5ices i# cash a#d deri5ati5es se0&e#ts to retail a#d i#stitutio#al clie#ts, Co&pa#y ser5es close to o#e &illio# retail i#5estors throu0h its 4ra#ches spread o5er &ore tha# :)) cities a#d to!#s across I#dia, IIFLBs i#stitutio#al euities 4usi#ess has top/tier ra#"i#0s !ith leadi#0 i#stitutio#al i#5estors i# I#dia a#d has esta4lished leadership i# 4loc" place&e#ts, IIFL is also a# acti5e &e&4er of the Colo&4o Stoc" E1cha#0e for stoc" 4ro"i#0, The I#5est&e#t 7a#"i#0 tea& is led 4y professio#als ha5i#0 o5er () years of e1perie#ce i# the 4usi#ess, The tea& is !ell placed to le5era0e IIFLBs i#/depth research capa4ilities$ i#stitutio#al place&e#t capa4ilities$ !ide retail reach a#d relatio#ships !ith 4oth issuers a#d i#5estors, A5era0e daily tur#o5er i# euities se0&e#t !as  :(,= 4illio# i# FY*( as co&pared !ith  :+,< 4illio# i# FY**, 7ro"i#0 yields !it#essed pressure due to cha#0e i# product &i1 i# fa5our of futures a#d optio#s se0&e#t Euity &ar"et share i# NSE !as at +,>J i# FY*( The Co&pa#y recei5ed t!o successi5e a!ards duri#0 the year. • •

7est 7ro"er 8 I#diaB 4y Fi#a#ceAsia Cou#try A!ards$ u#e ()** 7est 7ro"i#0 ouse !ith Glo4al -rese#ceB 4y D97 Euity 7ro"i#0 A!ards$ Octo4er ()**

ey stre#0ths •

A!ard/!i##i#0 research tea& !hich 0i5es i#/depth a#alysis o# 4oth tech#ical a#d fu#da&e#tal side of the 4usi#ess, e ha5e i#depe#de#t tea&s cateri#0 to the i#stitutio#al

•

se0&e#t a#d retail 0roup, -rese#t i# o5er +))) 4usi#ess locatio#s !hich i#clude a 5ast #et!or" of o!# 4ra#ches a#d

•

fra#chisees across the cou#try Stro#0 i#/house de5eloped tech#olo0y for i#ter#et$ &o4ile tradi#0 a#d 4ac" office

Future road&ap

62


•

• • •

7e a fi#a#cial pla##er for custo&ers a#d pro5ide research 4ased ad5ice o# assets 4ased o# e5ery clie#tsB ris" profile Co#ti#uously e#ha#ce custo&er deli0ht 4y offeri#0 the 4est custo&er ser5ice sta#dards Focus o# creati#0 a# e&ployee frie#dly !or" e#5iro#&e#t to retai# tale#t Stre#0the# our i#5est&e#t 4a#"i#0 4usi#ess to positio# oursel5es fa5oura4ly to capture #e! e&er0i#0 opportu#ities

I#dustry o5er5ie! ith the rapid 0ro!th i# optio#s 5olu&es$ the share of the F9O se0&e#t i# o5erall &ar"et 5olu&es i#creased to 6)J of total 5olu&es i# ()**/()*( leadi#0 to further pressure o# yields, Gi5e# the pre5aili#0 #e0ati5e se#ti&e#ts i# the 0lo4al a#d I#dia# e#5iro#&e#t$ I#diaBs i#5est&e#t 4a#"i#0 fee pool ca&e u#der serious pressure last year, The euity raised throu0h the capital &ar"ets i# the last fi#a#cial year !as  =)< 4illio# as a0ai#st  6=6 4illio# i# the pre5ious year, -ri5ate euity co#ti#ued to 4e a# acti5e a#d alter#ate pool of capital a#d the deal 5alue !as US *),* 4illio# i# CY** as a0ai#st US >,* 4illio# last year, Gi5e# I#diaBs o5erall &acro eco#o&ic 0ro!th story$ lo#0/ter& pote#tial of euities a#d co&&odities tradi#0 is 0ood o# 4ac" of lo! pe#etratio# a#d retur# 0e#erati#0 pote#tial of these asset classes, COMMODITIES AND CURRENCY

IIFL offers o#li#e a#d offli#e ser5ices i# the co&&odities se0&e#ts to retail clie#ts i# 'CX a#d NCDEX, IIFL custo&ers ha5e access to hi0h uality research o# co&&odities a#d 4est i# class Trader Ter&i#al to e#a4le the& to trade i# co&&odities$ o#li#e or o5er the pho#e, IIFL custo&ers ca# also trade i# the curre#cy se0&e#ts of NSE a#d 'CX SX, IIFL custo&ers ha5e access to research a#d top uality ser5ice throu0h a Relatio#ship 'a#a0er for all their i#5est&e#t #eeds, IIFLBs a5era0e daily tur#o5er i# co&&odities dou4led to  *<,> 4illio# i# FY*( fro&  ;,< 4illio# i# FY** Co&&odities &ar"et share o# 4oth e1cha#0es 2'CX a#d NCDEX3 i#creased to (,+J

63


fro& *,6J i# ()*)/** Total tur#o5er i# FY*( i# the curre#cy se0&e#t !as  ($:+) 4illio# as a0ai#st  *6) 4illio# i# FY** ey stre#0ths •

ast distri4utio# #et!or" !ith a prese#ce i# o5er +$))) 4usi#ess locatio#s across :)) cities

•

a#d to!#s across I#dia Our proprietary soft!are$ Trader Ter&i#al offers the facility to trade o#li#e a#d o# &o4iles i#

•

curre#cies a#d co&&odities A!ard/!i##i#0 research tea& e#sures &o#thly updates$ special reports$ pre/&ar"et reports a#d tradi#0 strate0ies i# the co&&odity a#d curre#cy se0&e#ts

Future road&ap • •

7uild upo# features o# IIFL Trader Ter&i#al to i&pro5e tradi#0 e1perie#ce of custo&ers De5elop research capa4ilities to e#sure top uality ad5ice to clie#ts

I#dustry o5er5ie! Co&&odities &ar"ets ha5e 4ee# e1perie#ci#0 hu0e 0ro!th, The pro&isi#0 #ature of these &ar"ets has &ade the& a# attracti5e i#5est&e#t a5e#ue for i#5estors 0lo4ally, Co&&odity &ar"ets ha5e a hu0e pote#tial i# the I#dia# co#te1t particularly 4ecause of the a0ri/4ased eco#o&y, Tradi#0 5olu&es i# the I#dia# co&&odity e1cha#0es rose :=; 4illio# i# ()*)/** to  *;+$=6= 4illio# i# ()**/*(, Curre#cies perfor&ed !ell i# FY*($ !ith a co#tract 5olu&e of ;<=$):; co#tracts +:(J 0reater tha# ()**, I#dia# rupee futures surpassed pre5ious &o#thly a#d daily records$ achie5i#0 a# a5era0e daily 5alue of US *,*; 4illio# a#d a &o#thly 5alue of US (=,>( 4illio#, CREDIT AND FINANCE

IIFL offers credit a#d fi#a#ce facilities throu0h its su4sidiaries$ I#dia I#foli#e Fi#a#ce Li&ited 2a 6>,>(J su4sidiary of IIL3 a#d I#dia I#foli#e ousi#0 Fi#a#ce Li&ited, Your Co&pa#y offers a !ide ra#0e of secured loa# products that i#clude ho&e loa#s$ loa# a0ai#st property 2for i#di5iduals a#d corporates3$ loa#s a0ai#st capital &ar"et i#stru&e#ts$ healthcare euip&e#t fi#a#ci#0 a#d loa#s a0ai#st 0old, The Co&pa#yBs loa# 4oo" 0re! fro&  +(,6 4illio# i# ()*)/** 64


to  =;,: 4illio# i# ()**/*(, The di5ersified product portfolio$ ro4ust credit a#d ris" &a#a0e&e#t processes coupled !ith efficie#t collectio# &echa#is& has resulted i# o5erall N-As of less tha# *J, I# FY*($ ho&e loa#s a#d loa#s a0ai#st property co#tri4uted to <<,>J of the total loa# 4oo", Loa#s a0ai#st capital &ar"et products reduced si0#ifica#tly fro& +:,(J i# ()*)/** to **,>J due to hi0h 5olatility a#d a do!#tur# i# the stoc" &ar"ets, Gold loa# 4oo" si?e sa! a co#sidera4le i#crease a#d #o! co&prises <*J of our total loa# 4oo", IIFL successfully co&pleted I#itial -u4lic Offeri#0 of Secured Redee&a4le No#/Co#5erti4le De4e#tures 2@NCDs3 a00re0ati#0 to  ;$:)) &illio#, The issue recei5ed a# o5er!hel&i#0 respo#se, These NCDs are listed a#d traded o# NSE a#d 7SE, 'o#eyli#e Credit Li&ited$ a stepdo!# N7FC su4sidiary$ !as &er0ed !ith I#dia I#foli#e Fi#a#ce Li&ited, This has e#a4led co#solidatio# of all le#di#0 a#d i#5est&e#ts 4usi#esses 2e1cept housi#0 loa#s3 to e#sure 4etter operatio#s a#d co#trol, ey stre#0ths •

This 4usi#ess le5era0es the 4ra#d #a&e a#d e1isti#0 custo&er portfolio of the pare#t

•

co&pa#y Tea& of e1perie#ced professio#als !ith !or" e1perie#ce at 0lo4ally respected fi#a#cial houses -a#/I#dia #et!or" a#d a stro#0 distri4utio# !ith !idespread prese#ce i# Tier/II a#d

•

III cities -rese#ce of a proprietary loa# processi#0 syste& that e#a4les stri#0e#t credit chec"s$ faster loa# processi#0$ e1te#si5e data capture a#d hi0her accuracy

Future road&ap • •

•

E1pa#d prese#ce i# Tier/II a#d Tier/III cities Co#ti#uously i#5est i# tech#olo0y a#d trai#i#0 to e#sure ro4ust credit a#d ris" &a#a0e&e#t processes Deli0ht the custo&er !ith superior ser5ice

I#dustry o5er5ie!

65


I#dia is !it#essi#0 i#creasi#0 ur4a#isatio#$ !hich !ill fuel de&a#d for ho&es a#d co&&ercial space, There is a hu0e de&a#d supply &is&atch for d!elli#0 u#its !hich &ea#s de&a#d for loa#s !ill re&ai# ro4ust i# the lo#0 to &ediu& ter&$ irrespecti5e of hi0h i#terest rates, The or0a#ised 0old loa# &ar"et is pe00ed at US > 4illio# a#d has 0ro!# at <)J CAGR si#ce ())(, Despite this$ a &ere *,:/(J of I#diaBs 0old stoc" of *>/()$))) to##es reaches the or0a#ised sector, Accordi#0 to the orld Gold Cou#cil$ de&a#d for 0old i# I#dia is e1pected to 0ro! +)J i# real ter&s$ !hich ope#s up a hu0e opportu#ity for the sector,

FINANCIAL PRODUCT DISTRIBUTION

66


IIFL is a pa#/I#dia distri4utor of fi#a#cial products i#cludi#0 life i#sura#ce$ &utual fu#ds$ 4o#ds a#d de4e#tures$ a&o#0 others, Your Co&pa#y today distri4utes a !ide product 4as"et to suit e5ery i#5est&e#t #eed for di5erse a0e 0roups$ prefere#ces a#d 4ac"0rou#ds, Of these products$ the do&i#a#t product cate0ory is life i#sura#ce a#d the 4usi#ess is co#ducted throu0h I#dia I#foli#e I#sura#ce 7ro"ers Ltd, It &ai#tai#s a prude#t 4ala#ce 4et!ee# e#do!&e#t$ ULI-s a#d retire&e#t products to suit the ris" appetite of i#5estors, IIFL has adopted a# ope# architectureB &odel to distri4ute products of &aor i#sura#ce co&pa#ies i#cludi#0 Relia#ce Life I#sura#ce$ ICICI -rude#tial Life$ DFC Life$ 7irla Su# life$ Life I#sura#ce Corporatio#$ 'a1 Ne! Yor" Life I#sura#ce a#d others, I#sura#ce pre&iu& 2A-I3 0re! ()J to reach  +,+ 4illio# I#itiated a# o#li#e custo&er i#5est&e#t portal to e#a4le faster tur#arou#d ti&e a#d uality ser5ice Recei5ed co#se#t for re0istratio# as a# A00re0ator u#der Natio#al -e#sio# Syste& fro& -FRDA ey stre#0ths • • •

Stro#0 relatio#ships !ith Life I#sura#ce a#d 'utual Fu#d &a#ufacturers -rese#ce of a di5erse product portfolio to suit i#5est&e#t #eeds of 5aryi#0 custo&er profiles Ro4ust &ulti/cha##el sales #et!or" co&prisi#0 sales tea&$ tele/calli#0 tea& a#d a !ide 4ra#ch #et!or"

Future road&ap •

-ro5ide trai#i#0 to the sales tea& to e#sure hi0h le5els of custo&er satisfactio# 4y pro5idi#0 the ri0ht product 4ased o# custo&er reuire&e#ts a#d ris" profile usi#0 fi#a#cial pla##i#0

•

tools Le5era0e o# the e1isti#0 4ra#ch #et!or" a#d euity clie#t relatio#ships to cross/sell

•

i#sura#ce a#d &utual fu#d products Focus o# uality a#d persiste#cy i# the i#sura#ce 4usi#ess

I#dustry o5er5ie!

67


The i#sura#ce as !ell as &utual fu#d i#dustry is faci#0 sectoral head!i#ds 4ecause of re0ulatory cha#0es, The I#dia# i#sura#ce sector !it#essed a de/0ro!th of *+J i# ()**/*(, LIC$ !ith a &ar"et share of ;*J$ !it#essed a =J decli#e i# #e! 4usi#ess pre&iu& i# FY*( !hereas the pri5ate sector !it#essed a decli#e of *;J, The 'utual Fu#d i#dustry faced a do!#tre#d a#d sa! its asset &a#a0e&e#t 4ase shri#" &ar0i#ally i# fiscal year ()**/*(, The i#dustry lost o5er ),; &illio# folios duri#0 the si1 &o#ths e#ded 'arch ()*( to e#d !ith <=,< &illio# folios, The retail cate0ory !as the 4i00est loser i# ter&s of folios$ especially i# euity, This !as &ai#ly 4ecause of the 5olatile &o5e&e#t of the euity &ar"et, o!e5er$ retail i#5estors i#creased their prese#ce i# de4t/orie#ted &utual fu#ds$ !hich &ay 4e attri4uta4le to i#5estors loo"i#0 at alter#ate asset classes post the do!#fall i# the do&estic euity &ar"ets i# ()**, WEALTH MANAGEMENT • •

ide prese#ce i# thirtee# &aor cities of I#dia a#d si1 i#ter#atio#al locatio#s All i#ter#atio#al locatio#s fully re0ulated u#der their respecti5e urisdictio#s 8 Ne! Yor" 2SEC3$ Lo#do# 2FSA3$ Du4ai 2DIFC3$ Si#0apore 2'AS3$ 'auritius 2FSC3$ Ge#e5a 2SRO3

•

a#d o#0 o#0 2SFC3, A you#0$ dy#a&ic a#d dedicated tea& co&prisi#0 &ore tha# *=) ad5isors 4ri#0 to the ta4le

•

!ide ra#0i#0 !ealth &a#a0e&e#t e1perie#ce, A proprietary tech#olo0y syste& that stre#0the#s 4ac"/office operatio#s a#d processes 4y auto&atio# a#d i#troductio# of !or"/flo! co5eri#0 e1ecutio#$ ris" a#d reports,

Future road&ap •

Focus o# trai#i#0 to de5elop 4est/i# class !ealth &a#a0ers E#ha#ce the e1isti#0 tech#olo0y platfor& i#corporati#0 tra#sactio# processi#0$ 4usi#ess

•

i#telli0e#ce$ uery resolutio# a#d CR' -ro5ide a differe#tiated ser5ice 4y opti&ally usi#0 tech#olo0y a#d e#sure that it is a5aila4le

•

across &ultiple platfor&s i#cludi#0 s&art pho#es a#d ta4lets, I#dustry o5er5ie!

68


The !orldBs populatio# of hi0h #et !orth i#di5iduals 2NIs3 i#creased &ar0i#ally 4y ),>J to **,) &illio# i# ()**$ 4ut NIsB a00re0ate i#5esta4le !ealth as &easured 4y asset 5alues fell *,;J to US<(,) trillio# If 5arious esti&ates are to 4e 4elie5ed$ Ultra i0h Net !orth households 2N3 are slated for a three/fold i#crease i# the #e1t fi5e years fro& a# esti&ated >*$))) 2()**/*(3 to (>=$))) 2()*=/ *;3, The total #et !orth of I#dia# ultra Ns$ is e1pected to reach  +*> trillio# i# ()*=/*; fro& a# esti&ated  =: trillio# i# ()**/*(, This 0ro!th i# #et !orth !ill 4e dri5e# predo&i#a#tly 4y 0ro!th i# the #u&4er of ultra Ns a#d the retur#s o# !ealth, IIFLBs -ri5ate ealth 4usi#ess has a00re0ated o5er  (<) 4illio# of Assets u#der Ad5ise 2AuA3 o# a clie#t 4ase e1ceedi#0 +$))) fa&ilies, IIFL has a# e1hausti5e product platfor& !ith ad5isory ser5ices for fi1ed i#co&e$ euity$ real estate a#d co&&odities, Our fi1ed i#co&e practice coupled !ith a lar0e 4o#d des" allo!s -ri5ate ealth clie#ts direct access to so5erei0#$ corporate a#d collateralised de4t, The 4o#d des" has 4ee# i#stru&e#tal i# !i##i#0 so&e of the lar0est corporate &a#dates for treasury &a#a0e&e#t$ i# additio# to 4ei#0 ad5isors to so&e lar0e corporate treasuries, 'aor hi0hli0hts$ ()**/*( Lau#ched ealth 7a#"B ser5ices to help fa&ily office clie#ts sy#chro#ise their !ills !ith their #o&i#atio#s Lau#ched H'S 2Huery 'a#a0e&e#t Solutio#3$ a o#e/clic" tech#olo0y platfor& for clie#ts a#d ad5isors ali"e A 0roup of Se#ior Ad5isors successfully cleared a full/ti&e &i#i/'7A pro0ra&&e 4y NYU Ster# U#i5ersity i# 'u&4ai Or0a#ised successful clie#t co#fere#ces i# 'u&4ai a#d -u#e PROPERTY SER4ICES AND REAL ESTATE FUND

-rese#ce of &ultiple touch poi#ts 5ia 4ra#ches$ call ce#tres a#d the !e4 -rese#ce of a hi0hly ualified tea& of e1perts !ho thorou0hly u#dersta#d the real estate sector to efficie#tly 0uide clie#ts Ro4ust real estate i#dustry #et!or"s to source opportu#ities suiti#0 fu#d &a#date -roprietary structures that create 5alue for i#5estee co&pa#ies  proects 69


Future road&ap •

I#crease 0eo0raphical reach to &ore cities a#d to!#s i# I#dia Focus o# cross/selli#0 8 4ri#0 the product offeri#0 to IIFL Fi#a#ce$ IIFL ealth a#d 7ro"i#0 custo&ers across the cou#try

•

Cha#0e product &i1 to i#clude &ore of resale$ co&&ercial a#d re#tal tra#sactio#s E1pa#d structures offered to i#5estors a#d i#5estees throu0h the lau#ch of su4seue#t series

I#dustry o5er5ie! •

The real estate i#dustry is o#e of the fastest/0ro!i#0 i#dustries i# our eco#o&y !ith a co&pou#ded a##ual 0ro!th rate of arou#d +)J, I#crease i# the sta#dard of li5i#0 &a"es !ay for hi0her de&a#d i# the reside#tial sector, There is a# esti&ated reuire&e#t of >) &illio# housi#0 u#its o5er the #e1t fiftee# years a#d ()) &illio# s, ft, of office space o5er the #e1t

•

fi5e years, SE7I has i#troduced AIF 0uideli#es creati#0 a disti#ct space a#d operati#0 e#5iro#&e#t for real estate fu#ds a#d si&ilar pooled i#5est&e#t 5ehicles, There co#ti#ues to 4e si0#ifica#t de&a#d for capital i# the real estate sector$ further ope#i#0 up the space for such fu#ds,

P!)-
7uy$ sell$ lease$ i#5est 8 our property ser5ices co5ers all custo&er se0&e#ts i#cludi#0 retail$ i#5estors$ corporate a#d i#stitutio#s, Our ser5ices i#clude ad5isory ser5ices for la#d a#d !holesale tra#sactio#s spa##i#0 acuisitio#$ sale$ leasi#0$ proect use a#d pla##i#0 4ro"i#0 ser5ices for retail tra#sactio#s spa##i#0 de5eloper sales$ resale a#d re#tals, R<$ E%($(< F'/

IIFL Group successfully lau#ched IIFL Real Estate Fu#d 2Do&estic3 Series * i# Dece&4er$ ()** u#der I#dia I#foli#e e#ture Capital Fu#d 2IIFL CF3$ the 5e#ture capital ar& of IIFL Group, The Fu#d !as fully su4scri4ed to its issue si?e of  : 4illio# 4y its i#itial closi#0 i# a#uary ()*(, The Fu#d has 4ee# i#corporated to focus o# the real estate sector i# I#dia 4y i#5esti#0 i# euity$ de4t a#d Euity Li#"ed I#stru&e#ts of pro&isi#0 real estate a#d co#structio# co&pa#ies i#5ol5ed i# proects or 5e#tures that ha5e si0#ifica#t 0ro!th pote#tial, The Fu#d !ill focus o# 70


i#5esti#0 i# &ai#ly reside#tial real estate proects !ith si0#ifica#t 0ro!th pote#tial$ de5eloped 4y leadi#0 players i# the top se5e# cities across I#dia, -rese#ce of a stro#0 distri4utio# #et!or" spa##i#0 se5e# "ey locatio#s across I#dia !ith leadership positio#s i# &ar"ets li"e 'u&4ai a#d Che##ai Lau#ched IIFLpropertysolutio#s,co& portal a#d call ce#tre operatio#s Ad5isory a#d I#5est&e#t Co&&ittees Reside#tial Supply,

6#6 INDIAINFOLINE COMMODITIES LTD 71


I#diai#foli#e Co&&odities -5t Li&ited is e#0a0ed i# the 4usi#ess of co&&odities 4ro"i#0, Our e1perie#ce i# securities 4ro"i#0 e&po!ered us !ith the reuisite s"ills a#d tech#olo0ies to allo! us offer co&&odities 4ro"i#0 as a co#tra/cyclical alter#ati5e to euities 4ro"i#0, I'/"$"')"'< M$!,<("'=  S
I#diai#foli#e 'ar"eti#0 a#d Ser5ices Li&ited is the holdi#0 co&pa#y of I#dia I#foli#e I#sura#ce Ser5ices Li&ited a#d I#diai#foli#e I#sura#ce 7ro"ers Li&ited, EK"("<%

I#diai#foli#e pro5ided the prospect of researched i#5esti#0 to its clie#ts$ !hich !as hitherto restricted o#ly to the i#stitutio#s, Research for the retail i#5estor did #ot e1ist prior to I#diai#foli#e, I#diai#foli#e le5era0ed tech#olo0y to 4ri#0 the co#5e#ie#ce of tradi#0 to the i#5estorBs locatio# of prefere#ce 2reside#ce or office3 throu0h co&puteri?ed access, I#diai#foli#e &ade it possi4le for clie#ts to 5ie! tra#sactio# costs a#d led0er updates i# real ti&e, M)!(=$=<%

Duri#0 the year u#der re5ie!$ I#diai#foli#e acuired a ;:J sta"e i# 'o#ey tree Co#sulta#cy Ser5ices to &ar" its foray i#to the 4usi#ess of &ort0a0es a#d other loa# products distri4utio#, The 4usi#ess is still i# the i#5esti#0 phase a#d at the ti&e of the acuisitio# !as prese#t o#ly i# the cities of 'u&4ai a#d -u#e, The Co&pa#y 4ri#0s o# 4oard e1pertise i# the loa#s 4usi#ess coupled !ith e1isti#0 relatio#ships across a #u&4er of pri#cipals i# the &ort0a0e a#d perso#al loa#s 4usi#esses, I#diai#foli#e #o! has pla#s to roll the 4usi#ess out across its pa#/I#dia# #et!or" to pro5ide it !ith a truly #atio#al scale i# operatio#s, C)..)/"("<%

I#diai#foli#e e1te#sio# i#to co&&odities tradi#0 reco#ciles its strate0ic i#te#t to e&er0e as a o#e/stop solutio#s fi#a#cial i#ter&ediary, Its e1perie#ce i# securities 4ro"i#0 has e&po!ered it !ith reuisite s"ills a#d tech#olo0ies, The Co&pa#yBs co&&odities 4usi#ess pro5ides a co#tra/ cyclical alter#ati5e to euities 4ro"i#0, The Co&pa#y !as a&o#0 the first to offer the facility of co&&odities tradi#0 i# I#diaBs you#0 co&&odities &ar"et, A5era0e &o#thly tur#o5er o# the co&&odity e1cha#0es i#creased fro& Rs ),+< 4# to Rs (),)( 4#, The co&&odities &ar"et has

72


se5eral products !ith differe#t a#d #o#/correlated cycles, O# the !hole$ the 4usi#ess is fairly i#sulated a0ai#st cyclical 0yratio#s i# the 4usi#ess, I'+<%( O'"'<

I#diai#foli#e has &ade i#5esti#0 i# 'utual fu#d a#d pri&ary &ar"et so effortless, All you ha5e to do is re0ister !ith us a#d thatBs all, No paper!or" #o ueues a#d No re0istratio# char0es, I'%!$'*<

A# e#try i#to this se0&e#t helped co&plete the clie#tBs product 4as"et co#curre#tly$ it 0raduated the Co&pa#y i#to a o#e/stop retail fi#a#cial solutio#s pro5ider, To e#sure &a1i&u& reach to custo&ers across I#dia$ !e ha5e e&ployed a &ulti pro#0ed approach a#d reach out to custo&ers 5ia our Net!or"$ Direct a#d Affiliate cha##els, Follo!i#0 the ope#i#0 of the sector i# *666/ ()))$ a #u&4er of pri5ate sector

i#sura#ce ser5ice pro5iders ha5e co&&e#ced operatio#s

a00ressi5ely a#d helped 0ro! the &ar"et, M($ '/

I#diai#foli#e offers you a host of 'utual fu#d choices u#der o#e roof$ 4ac"ed 4y i#/depth research a#d ad5ice fro& research house a#d tools co#fi0ured as i#5estor frie#dly,

W<$( M$'$=<.<'( S
I&a0i#e a fi#a#cial fir& !ith the heart a#d soul of a t!o/perso# or0a#i?atio#, A !orld/leadi#0 !ealth &a#a0e&e#t co&pa#y that sits do!# !ith you to u#dersta#d your #eeds a#d 0oals, e offer you a dedicated 0roup for 0i5i#0 you the &ost perso#al atte#tio# at e5ery le5el, R<%<$!*

Sou#d i#5est&e#t decisio#s depe#d upo# relia4le fu#da&e#tal data a#d stoc" selectio# tech#iues, I#diai#foli#e Euity Research is proud of its reputatio# for$ a#d !e !a#t you to fi#d the facts that you #eed, Euity i#5est&e#t professio#als routi#ely use our research a#d &odels as i#te0ral tools i# their !or", They choose Ford Euity Research !he# they ca# clear your dou4ts, P)!()") M$'$=<.<'( S

I#diai#foli#e -ortfolio 'a#a0e&e#t Ser5ice is a product !herei# a# euity I#5est&e#t portfolio is created to suit the i#5est&e#t o4ecti5es of a clie#t, I#diai#foli#e i#5est resources i#to stoc"s fro& differe#t sectors$ depe#di#0 o# clie#t ris"/retur# profile, This ser5ice is particularly ad5isa4le for i#5estors !ho ca##ot afford to 0i5e ti&e or do#Mt ha5e that e1pertise for day/to/day &a#a0e&e#t of their euity portfolio,

74


6#> BUSINESS STRATEGY P)%"(")'"'=:

'ar"et positio#i#0 state&e#ts of I#diai#foli#e are @At I#diai#foli#e !e 0i5e you si#0le !i#do! ser5ice a#d @e also e#sure your co&fort, So$ I#diai#foli#e focus o# the co#su&ers !ho prefer al&ost all i#5est&e#t acti5ities at sa&e place 4y pro5idi#0 #u&4er of 5arious fi#a#cial ser5ices, At I#diai#foli#e a perso# ca# purchase or sell shares$ de4e#tures etc, a#d at the sa&e place also de&at it, I#diai#foli#e also pro5ides other i#5est&e#t optio# to the sa&e perso# at sa&e place li"e 'utual Fu#d$ I#sura#ce$ Fi1ed Deposit$ a#d 7o#ds etc, a#d help the perso# i# desi0#i#0 his portfolio, 7y this !ay I#diai#foli#e pro5ides co&fort to its custo&ers, T$!=<( M$!,<(:

I#diai#foli#e uses de&o0raphic se0&e#tatio# strate0y a#d se0&e#t people 4ased o# their occupatio#, I#diai#foli#e uses selecti5e speciali?atio# strate0y for &ar"et tar0eti#0, Tar0et perso# for the I#diai#foli#e Stoc" 7ro"i#0 a#d I#dia I#foli#e I#5est&e#t Ser5ice are perso#s !ho ca# !or" as su4/4ro"er for the co&pa#ies, Co&pa#ies focus o# Ad5isors of I#sura#ce a#d post office$ Ta1 co#sulta#ts a#d CAs for &a"i#0 su4/4ro"er C$''< S%(<.:

I#diai#foli#e uses o#e le5el &ar"eti#0 cha##el for i#5est&e#t product distri4utio#, Su4/4ro"ers !or" as i#ter&ediary 4et!ee# co#su&er a#d co&pa#y, Co&pa#y has 4oth for!ard a#d 4ac"!ard flo! of acti5ity throu0h cha##el, Co&pa#y distri4utes statio#ery$ 4ro"era0e$ a#d i#for&atio# for!ard to its su4/4ro"er, The su4/4ro"ers se#d filled for&s$ ueries$ a&ou#t of i#5est&e#t etc, 4ac" to the co&pa#y, T!$"'"'= C$''< M<.?
I#diai#foli#e pro5ides trai#i#0 to the su4/4ro"ers 4ecause they !ill 4e 5ie!ed as the co&pa#y 4y the i#5estors, The e1ecuti5es of I#diai#foli#e e1plai# 5arious #e! sche&es of i#5est&e#t to the su4/4ro"ers !ith its o4ecti5e$ ris" factors a#d e1pected retur#, Co&pa#y also periodically arra#0e se&i#ar to 0uide su4/4ro"ers, A/+

The o4ecti5e of ad5ertisi#0 of I#diai#foli#e is to create a!are#ess a4out ser5ices of I#diai#foli#e a&o#0 i#5estors a#d su4/4ro"ers, I#diai#foli#e also pu4lishes its !ee"ly Stoc" 'ar"et Ne!sletter 'ar"et 'a#traB,

76


77


FUNDAMENTAL RESEARCH SER4ICES: T< S'/$ W<<, R<-)!(:

This !ee"ly report is the ace of all reports, It offers a co&prehe#si5e &ar"et o5er5ie! a#d li"ely tre#ds i# the !ee" ahead, It also prese#ts fe! top pic"s 4ased o# a# i#/depth a#alysis of tech#ical a#d fu#da&e#tal factors, It 0i5es short ter& a#d lo#0 ter& outloo" o# these scripBs$ their price tar0ets a#d tradi#0 strate0ies, A#other u#iue feature of this report is that it pro5ides a# updated 5ie! of a4out ;) pro&i#e#t stoc"s o# a# o#0oi#0 4asis, T< I'/%(! W$(*:

This report pro5ides a# i#/depth a#alysis of specific i#dustries !hich are li"ely to outperfor& others i# the eco#o&y, It a#aly?es their stre#0ths a#d !ea"#esses a#d ascertai#s their future outloo", The fi#al 5ie! is arri5ed at after thorou0h i#teractio# !ith i#dustry e1perts, Also co¶ti5e perfor&a#ces of 5arious co&pa#ies i# the sector are e5aluated a#d top pic"s are reco&&e#ded, S()*, A'$%"%:

I#diai#foli#e stoc" research has perfor&ed 5ery !ell o5er the past fe! years a#d the I#diai#foli#e 'odel -ortfolio has co#siste#tly outperfor&ed the 4e#ch&ar" i#dices,

The

fu#da&e#tals of select scrips are thorou0hly a#aly?ed a#d a# actio#a4le ad5ice is pro5ided alo#0 !ith i#5est&e#t ratio#ale for each scrip, F$% N<&%.

ey de5elop&e#ts a#d si0#ifica#t #e!s a##ou#ce&e#ts that are li"ely to ha5e a# i&pact o# &ar"ets  scrips are flashed li5e o# tradi#0 ter&i#als, Flash #e!s "eeps the &ar"et participa#ts updated o# a# o#li#e 4asis a#d helps the& to reshuffle o# their holdi#0s, 6#1# T<*'"*$ !<%<$!* %

Nifty Futures is the &ost traded i#stru&e#t !ith hi0hest 5olu&es i# F 9 O a#d e1celle#t liuidity, The tea& trac"s the Nifty Future a#d 0e#erates calls 4ased o# u#iue tradi#0 syste& !hich is a result of their focused research o5er the past fe! years, The o4ecti5e is to 0e#erate positi5e retur#s for traders !ho are loo"i#0 for a hi0h ris"  hi0h re!ard product, O'"'< C$!(:

A# o#li#e foru& to help clie#ts$ specifically day traders i# ud0i#0 the directio#s of the &ar"et a#d stoc"s !hich are i# the li&eli0ht, I'(!$/$ C$%:

For day traders$ i#diai#foli#e pro5ides i#tra/day calls !ith e#try$ e1it a#d stop loss le5els duri#0 &ar"et hours, These calls are flashed o# their ter&i#als, Their a#alysts co#ti#uously trac" the calls a#d pro5ide reco&&e#datio#s accordi#0 to the &ar"et &o5e&e#ts, P)%"(")' C$%:

I#diai#foli#e @-ositio# Tradi#0 Calls are 4ased o# thorou0h a#alysis of the price &o5e&e#t i# select scripBs, These calls are for a *)/*: day ti&e spa# !ith stop loss a#d tar0et le5els, These calls are flashed o# their ter&i#als duri#0 &ar"et hours, D
Their a#alysts ta"e 5ie! o# the Nifty a#d select stoc"s 4ased o# the deri5ati5es data a#d tech#ical tools,

Suita4le @Deri5ati5e Strate0ies are de5ised$ !hich are flashed o# their

ter&i#als a#d pu4lished i# their reports, F(!<% C$%:

A custo&i?ed product for NIs to help the& trade !ith le5era0ed positio# !herei# clie#ts are ad5ised o# the stoc"s !ith e#try$ e1it a#d stop loss le5el for short ter& 4e#efits, O5er a#d a4o5e this$ fi#a#cial status of the calls is &o#itored at all ti&es,

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6#6

BUSINESS MODEL

80


6#>

INDIA INFOLINE FINANCIAL LIMITED

I#dia I#foli#e Fi#a#ce Li&ited is a su4sidiary of I#dia I#foli#e Li&ited 2@IIFL3, It !as i#corporated o# uly ;$ ())< as a pri5ate li&ited co&pa#y @I#dia I#foli#e I#5est&e#t Ser5ices -ri5ate Li&ited, The Status of co&pa#y !as cha#0ed to a pu4lic li&ited co&pa#y o# 'ay *:$ ()); a#d #a&e !as cha#0ed to @I#dia I#foli#e I#5est&e#t Ser5ices Li&ited, Further the #a&e of the Co&pa#y !as cha#0ed to @I#dia I#foli#e Fi#a#ce Li&ited pursua#t to Fresh Certificate of I#corporatio# dated No5e&4er *>$ ()**, The co&pa#y is a syste&ically i&porta#t #o#/deposit ta"i#0 N7FC focusi#0 o# 'ort0a0e Loa#s$ Capital 'ar"et Fi#a#ce$ Gold Loa# a#d ealthcare Fi#a#ce, The le#di#0 a#d other fi#a#cial products of the co&pa#y i#clude$ Z

'ort0a0e Loa#s$ !hich i#cludes ousi#0 Loa#s a#d Loa#s a0ai#st -roperty Capital 'ar"et Fi#a#ce$ !hich i#cludes Loa#s a0ai#st Securities$ -ro&oter Fu#di#0$ 'ar0i#

Z Z

Fu#di#0$ I-O fi#a#ci#0 a#d other structured le#di#0 tra#sactio#s, Gold Loa#s$ !hich i#cludes fi#a#ce a0ai#st security of &ai#ly used 0old or#a&e#ts, ealthcare Fi#a#ce$ !hich i#cludes fi#a#ce for &edical euip&e#ts a#d proect fu#di#0 i#

•

the healthcare sector, The -ro&oter of the co&pa#y$ IIFL is a fi#a#cial ser5ices or0a#i?atio# ha5i#0 prese#ce across I#dia, The 0lo4al footpri#t e1te#ds across 0eo0raphies !ith offices i# Ne! Yor"$ Lo#do#$ Ge#e5a$ o#0 o#0$ Si#0apore$ Du4ai$ 'auritius a#d Colo&4o, It is listed o# 7SE a#d NSE, IIFL GroupBs ser5ices a#d products i#clude retail 4ro"i#0$ i#stitutio#al euities$ co&&odities a#d curre#cy 4ro"i#0$ !ealth ad5isory$ credit 9 fi#a#ce$ i#sura#ce 4ro"i#0$ asset &a#a0e&e#t$ fi#a#cial products distri4utio# 9 i#5est&e#t 4a#"i#0, The product ser5ices portfolio of IIFL caters to the di5erse i#5est&e#t a#d strate0ic reuire&e#ts of retail$ i#stitutio#al$ corporate a#d afflue#t clie#ts, As o# 'arch +*$ ()*($ IIFL has prese#ce i# o5er <))) 4usi#ess locatio#s !hich i#clude o5er *$6)) 4ra#ches a#d o5er ($+)) re0istered fra#chisees$ spread across 6:6 cities i# (> states a#d u#io# territories i# I#dia, I#dia I#foli#e Fi#a#ce Li&ited le5era0es e1te#si5ely o# the i#frastructure$ distri4utio# #et!or" a#d i#si0hts of IIFL Group i#to &ar"et a#d custo&er #eeds,

81


As of 'arch +*$ ()*($ I#dia I#foli#e Fi#a#ce Li&ited has a total of *$+(+ 4ra#ches 8 +< 4ra#ches for 'ort0a0e Loa#s a#d ealthcare Fi#a#ce distri4utio# #et!or" of !hich +( 4ra#ches are co/located !ith the 4ra#ch #et!or" of IIFL Group a#d a total of *(6; 0old loa# 4ra#ches out of !hich **>) are e1clusi5e Gold Loa#s 4ra#ches, As of 'arch +*$ ()*($ the co&pa#y has a# access to o5er ($6)) sales e1ecuti5es fro& the retail tea&s a#d o5er *() sales e1ecuti5es fro& the !ealth tea&s of IIFL for Capital 'ar"et Fi#a#ce 4usi#ess, The co&pa#yBs e&ployee stre#0th as o# 'arch +*$ ()*( !as =$)6<, As o# 'arch +*$ ()*($ 'ort0a0e Loa#s accou#ted for <<,;)J of Loa# 7oo"$ Capital 'ar"et Fi#a#ce accou#ted for **,>=J of Loa# 7oo" a#d Gold Loa#s accou#ted for <*,);J of Loa# 7oo", C).-<("("+< S(!<'=(%:

Z E1te#si5e 4e#efit fro& -ro&oter, Z Secured Loa# 7oo" a#d Stro#0 Asset Huality, Z Adeuately capitali?ed to fu#d to 0ro!, Z Access to cost effecti5e fu#di#0 sources, Z ell Defi#ed -rocesses, Z Access to E1te#si5e Distri4utio# a#d 7ra#ch Net!or", Z E1perie#ced 'a#a0e&e#t Tea&, Z Tech#olo0y$ A#alytics a#d Credit 4ureau usa0e, S(!$(<=:

Z Focus o# retail a#d secured le#di#0, Z E#ha#ci#0 the product 4ouuet, Z ide#i#0 the Distri4utio# Net!or", Z 7uildi#0 a ro4ust IT i#frastructure a#d IT syste&s Z Stre#0the# the operati#0 processes a#d ris" &a#a0e&e#t syste&s,

82


R"%,% $'/ C)'*
A#y i#crease i# the le5els of #o#/perfor&i#0 assets 2@N-A3 o# loa# portfolio$ for a#y reaso#

•

!hatsoe5er$ !ould ad5ersely affect 4usi#ess a#d results of operatio#s, IIFLBs reported asset uality i#dicators ha5e so far re&ai#ed co&forta4le despite &ar0i#al i#crease !ith Gross N-A a#d Net N-A of ),=*J a#d ),<
• •

• • • •

Spreads to decli#e a#d co#seue#tly affect profita4ility, Cha#0es i# the 5alue of Rupee a#d other curre#cy cha#0es U#a#ticipated tur4ule#ce i# i#terest rates or other rates or prices the perfor&a#ce of the fi#a#cial a#d capital &ar"ets i# I#dia a#d 0lo4ally Cha#0es i# political co#ditio#s i# I#dia The rate of 0ro!th of loa# assets The outco&e of a#y le0al or re0ulatory proceedi#0s Cha#0es i# I#dia# a#dor forei0# la!s a#d re0ulatio#s$ i#cludi#0 ta1$ accou#ti#0$ 4a#"i#0$ securities$ i#sura#ce a#d other re0ulatio#s cha#0es i# co&petitio# a#d the prici#0

•

e#5iro#&e#t i# I#dia a#d re0io#al or 0e#eral cha#0es i# asset 5aluatio#s, A#y cha#0es i# co##ectio# !ith policies$ statutory pro5isio#s$ re0ulatio#s a#dor R7I directio#s i# co##ectio# !ith N7FCs$ i#cludi#0 la!s that i&pact le#di#0 rates a#d a4ility to e#force collateral

E&er0e#ce of #e! co&petitors •

Occurre#ce of #atural cala&ities or #atural disasters affecti#0 the areas i# !hich Co&pa#y

•

has operatio#s The perfor&a#ce of the fi#a#cial &ar"ets 0lo4ally 9 perfor&a#ce of the I#dia# de4t a#d

•

euity &ar"ets A4ility to attract a#d retai# ualified perso##el

F"'$'*"$%:

The Co#solidated I#co&e fro& Operatio#s a#d -rofit after Ta1 2-AT3 for the fi#a#cial year e#di#0 'arch +*$ ()*( is Rs, 6)><,:> &illio# a#d Rs, *):+,>* &illio# respecti5ely, The Co#solidated I#co&e fro& Operatio# a#d -rofit after ta1 has 0ro!# at a CAGR of :<,++J a#d <<,>:J respecti5ely o5er the last four years, The Loa# 7oo" has 0ro!# at a CAGR of =+,>(J o5er the last four years, 83


6#6 IIFL GOLD LOAN

84


Gold loa# or loa# a0ai#st 0old is the easiest a#d uic"est !ay for ser5ici#0 o#eBs fi#a#cial #eeds, To a5ail a 0old loa#$ all you #eed to do is pled0e your 0old or#a&e#ts !ith IIFL a#d they !ould pro5ide you !ith a loa# a&ou#t as per the &ar"et 5alue of your 0old, U#li"e other loa#s$ 0old loa# does #ot reuire you to pro5ide a#y i#co&e or salary proof, 'oreo5er$ it has co¶ti5ely lo!er i#terest rates reuires lesser docu&e#tatio#$ a#d he#ce is processed i# lesser ti&e, IIFL pro5ide &a1i&u& loa# a0ai#st your 0old at lo!est i#terest rates, It has stro#0 prese#ce -a#/I#dia a#d has ser5iced a lar0e #u&4er of custo&ers i# a 5ery short spa#, They offer differe#t types of sche&es as per reuire&e#t a#d co#5e#ie#ce, Follo!i#0 are the &ai# features of our loa#s./ •

Loa# a&ou#t ra#0es fro& &i# Rs :$))) to &a1 Rs *)$))$)))

•

Te#or for loa#s ra#0es fro& + &o#ths to *( &o#ths

•

Loa# ca# 4e paid 4ac" o# a &o#thly or uarterly 4asis

•

I#terest  Loa# A&ou#t due ca# 4e paid at a#y of our Gold Loa# 4ra#ches pa#/I#dia

•

'i#i&al a&ou#t of paper!or" a#d docu&e#tatio# is reuired

•

Loa# 0ets processed i# as lo! as : &i#utes

•

ariety of sche&es are a5aila4le to chose fro&

•

Gold is i#sured a#d secured safely !ith us i# fire a#d 4ur0lary proof 5aults

85


6#6#2 W IIFL )! =)/ )$' •

'i#i&al paper !or" a#d docu&e#tatio#

•

ery ery lo! processi#0 pr ocessi#0 ti&e 2fe! &i#utes3

•

ero processi#0 fee

•

Lo! I#terest Rate

•

I#sta#t dis4ursal of loa#

•

Security a#d I#sura#ce of Gold -led0ed

86


CHAPTER >

87


>#1 RESEARCH  STUDY R<%<$!* .<()/))=:

Research is a structured e#uiry that utili?es accepta4le scie#tific ðodolo0y to sol5e pro4le&s a#d create #e! "#o!led0e that is 0e#erally applica4le, Scie#tific ðods co#sist of syste&atic o4ser5atio#$ classificatio# a#d i#terpretatio# of data, Althou0h !e e#0a0e i# such process i# our daily life$ the differe#ce 4et!ee# our casual day/ to/day 0e#erali?atio# a#d the co#clusio#s usually reco0#i?ed as scie#tific ðod lies i# the de0ree of for&ality$ ri0orous#ess$ 5erifia4ility a#d 0e#eral 5alidity of latter, R<%<$!* )?@<*("+<:

To u#dersta#d i#creasi#0 tre#d of 0old loa# R<%<$!* H-)(<%"%:

Ho:

Indian gold loan market trends is not on expansion mode

H1:

Indian gold loan market is on expansion mode

R<%<$!* $!<$:

'u&4ai R<%<$!* %$.-< %"<:

*)) respo#de#ts R<%<$!* (-<:

E1ploratory research

88


R<%<$!* "."($(")': • •

O#ly *)) respo#de#ts !ere 4ei#0 sur5eyed duri#0 research Respo#de#ts ha5i#0 0old loa# !ere 4ei#0 sur5eyed

>#2 FINDINGS  ANALYSIS INDUSTRY ANALYSIS 8>0 !<%-)'/<'(%9 H)& /) ) !$(< I'/"$' =)/ .$!,<( "' (< -!<+"<& ) =)/ ?"'= • • • • •

ery Good Good A5era0e -oor ery poor

4
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6

4 Very good 10

Good Average Poor Very poor

26

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Yes No

38

91


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12 Internationa !ar"et press#re Indian Govern!ent poi$ies %$ar$ity o& God Iega reg#ation in god trading

6

20

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in No 4

Yes No

46

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• • • •

East est North South

E$%(

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'ast (est Nort) %o#t)

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Yes No

40

I% =)/ )$' .$!,<( '<& () I'/"$ )! "( -!<+$"
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N<&

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48

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in No 5

Good rise Average

45

hat are the tre#ds do you 4elie5e has lead to de5elop&e#t of 0old loa# &ar"etQ • • • •

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20

,an"ers oo"ing &or aternatives to reg#ar oan

13

-ar"et de!and %a&est oan ter! &or .an"s

12

I% =)/ )$' %$<%( "'%(!.<'( )! ?$',% • •

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in No 11

Yes No

39

W$( $!< (< (!<'/% ($( <$/ *)'%.
Risi#0 co&&odity prices Facilitates liuidity !ithout a#y pressure or ris" Easy to o4tai# a#d repay ousehold pressure

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I#creasi#0 Curre#tly sta0#a#t

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In$reasing #rrenty stagnant

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12 Very Good Good Average Poor Very Poor

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15 3

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50

W$( "% *!!<'( <%(".$(")' ) =)/ )$'"'= .$!,<( 8O-<' <'/
100052000 CR

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10000 

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in No 3 5 10002000 + 20005000 + 500010000 + 10000 +  10

32

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Yes No

47

If yes 2!hy3 • • • •

Cheaper i#terest rate Good i#stall&e#t sche&e Faster loa# processi#0 Less docu&e#tatio#

If No 2!hy3 • •

Security issues LIC loa# is cheaper

>#3 CASE STUDY MUTHOOT SMART PLUS GOLD LOAN • • • • •

The 4e#efit of payi#0 4ac" i# Euated 'o#thly I#stall&e#ts The E'I is apportio#ed such that the lar0er a&ou#t 0oes to!ard repayi#0 the pri#cipal No foreclosure char0es -art release a#d repled0e is allo!ed Re4ates o# pro&pt pay&e#t

120


M())( S.$!( -% G)/ L)$' D)*.<'(% O!"="'$ -!)) ) "/<'(""*$(")': A' ) (< ))&"'= $!< $**<-($?<: •

-assport

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Go5t of I#dia electio# ID card !ith address proof

•

-AN card !ith address proof

•

Dri5erBs lice#se

•

A#y depart&e#tal ID card SMART  GOLD LOAN

@S'ART + 'INUTE GOLD LOAN Sche&e is a# i##o5ati5e + 'i#ute Gold Loa#

•

Sche&e !ith the added 4e#efit of repayi#0 the loa# i# Euated 'o#thly I#stall&e#ts, •

Custo&ers ca# choose a#y te#ure of =$*($(< a#d += &o#ths

•

Ca# 4e offered to all custo&ers 4ut !ill 4e &ost 4e#eficial to the salaried class,

•

The i#terest rate effecti5ely !or"s out to *+,<;J o#ly for a *( &o#ths Sche&e,

•

Loa# up to 6)J of the total 5alue of 0old is 0ra#ted, No additio#al docu&e#tatio# or char0es are ta"e# for a5aili#0 loa#,

•

•

U#li"e 4a#"s$ there are #o security cheues to 4e 0i5e# a#d #o ad5a#ce E'I collected,

•

Repay&e#t of i#stall&e#ts ca# 4e do#e fro& a#y 4ra#ch

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*) ))) (: ))) :) ))) *) )))) () )))) :) )))) *) )))))

 M)'(

*;> = <<= < >6( ; *;> :+ +:; )= >6( =+ *;> :(=

12 M)'(

6 <= ( +=< < ;(> 6 <:= * >6*( < ;(>) 6 <:=)

1 M)'(

==> *== > +++ = ==; * *++ <* +++ :( ==; )+

121

26 M)'(

: (6 * +(( ( =<< : (>> * ):;: ( =<+= : (>;(

30 M)'(

<<; ***; ((+ + <<= : >6+ ) ((+ (: < <= :)

3 M)'(

+ 6+ 6 >* * 6=( + 6(< ; ><; * 6=*; + 6( ++


< <$(!<% $'/ B<'<"(% ) S.$!( -% G)/ L)$' •

Loa# ca# 4e pre/closed a#y ti&e !ithout a#y pre/closure char0es a#d calculatio# of i#terest !ill 4e si&ilar to #or&al Gold Loa# Sche&e,

•

Grace period of + days is allo!ed for E'I re&itta#ce,

•

For default i# repay&e#t$ pe#al char0es at the rate of (J for the first &o#th a#d +J for the #e1t : &o#ths are applica4le,

•

A co#ti#uous = &o#ths default i# repay&e#t !ill result i# auctio# of pled0ed or#a&e#ts,

•

The E'I a&ou#t recei5ed is apportio#ed i# such a &a##er that the lar0er a&ou#t 0oes i#to repay&e#t of the pri#cipal e5ery &o#th

•

-ri#cipal -ri#ci pal a&ou#t is also 0etti#0 repaid !hile ser5ici#0 the i#tere i#terest$ st$ there4y reduci#0 the 4ala#ce outsta#di#0,

•

-art Release is allo!ed 4y doi#0 Re/-led0e !ith #e! E'I Schedule,

•

A re4ate of (J is 0i5e# for pro&pt repay&e#t$ paya4le at the e#d of the te#ure of the loa# loa#,,

>#6 CASE STUDY GOLD LOAN 5 A BETTER DEBT OPTION

If you ha5e 0old e!ellery to offer as collateral for perso#al loa#$ procedural hassles are &i#i&al a#d 4a#"s do#Mt chec" your credit score, The a&ou#t of docu&e#tatio# a#d the e1cessi5e 5erificatio#s 4efore your perso#al loa# 0ets processed ca# 4e a #i0ht&are, ere is !here your e!els ca# le#d a ha#d$ specifically 0old,

122


ith the curre#t i#terest rate fluctuatio#s$ opti#0 for a e!el loa# as a0ai#st a perso#al loa# is &ore lucrati5e, Not o#ly are your o5erall costs reduced$ this !ill sa5e a lot of your ti&e, O#e of the &aor ad5a#ta0es is that the loa# is processed al&ost i&&ediately$ !ithi# hours$ e5e# &i#utes at so&e of the N7FC 5i?, 'ANA--URA' FINANCE$ !ith &i#i&al docu&e#tatio#, The Credit I#for&atio# 7ureau 2I#dia3 Ltd scores !hich reflect a# i#di5idualMs credit history are 4e0i##i#0 to play a# i&porta#t role i# acuiri#0 perso#al loa#s, o!e5er$ a e!el loa# reuires #o such score, hile the reuisite docu&e#ts for a e!el loa# differ across le#ders$ &ost #or&ally reuire #o &ore tha# a proof of i#co&e or address, The cli#cher. the i#terest rates 4et!ee# a e!el loa# a#d a perso#al loa# ca# differ 4y as &uch as :/> per ce#t for the sa&e a&ou#t loa#ed, So&e le#ders char0e a #o&i#al fee for processi#0 a#d others a s&all fee as closi#0 char0es, Co/operati5e 4a#"s reuire you to 4e a &e&4er$ char0es for !hich$ a0ai#$ ca# 4e as lo! as Rs :, e!el loa#s ca# 4e a5ailed of at co/operati5e 4a#"s$ pu4lic sector 4a#"s$ pri5ate sector 4a#"s a#d other pri5ate le#ders, So&e 4a#"s$ ho!e5er$ offer it o#ly i# certai# re0io#s$ the o#ly disad5a#ta0e, hile pri5ate le#ders process the loa# i# less tha# a couple of hours$ so&e co/ operati5e a#d pu4lic sector 4a#"s &ay ta"e up to a day to issue the loa#, 'ANA--URA' FINANCE is e1ceptio#al i# this re0ard as it ser5es the custo&er !ith &a1i&u& a&ou#t at &i#i&u& ti&e i,e,$ less tha# + &i#utes, I# a#y case$ the ti&e is &uch less tha# the &i#i&u& three days of processi#0 ti&e for a perso#al loa#, Loa# to 5alue or the &a1i&u& ratio of a loa#Ms si?e to the 5alue of the asset$ for a e!el loa# is o# par !ith that of a perso#al loa#, The Reser5e 7a#" of I#dia has #o strict policy o# e!el loa#s, I# late ()*($ the R7I had issued a #otificatio# !hich per&itted 4ullet repay&e#t 2a lu&p su& pay&e#t of the pri#cipal at &aturity3 of 0old loa#s, Su4ect to specific 0uideli#es fro& the ape1 4a#"$ each 4a#" &ay fi1 its rate for 0old$ reflecti#0 the &ar"et price at that poi#t of ti&e, Care should 4e e1ercised if you ha5e defaulted o# a loa# earlier$ 4e it perso#al or a#y other, Your e!els &i0ht #ot 4e retur#ed at the e#d of the loa# te#ure if you approach the sa&e 4ra#ch, Approachi#0 a#other 4ra#ch or 4a#" i# this case !ould 4e o#e solutio#$ as they !ould #ot ha5e 123


a#y record of your default history, A State 7a#" of I#dia official$ ho!e5er$ cautio#ed that so&e ti&e i# the #ear future$ they !ould start loo"i#0 at Ci4il scores 4efore appro5i#0 a e!el loa#, The loa# te#ure is #ot u#ifor& across 4a#"s, ith pri5ate le#ders li"e DFC 7a#" a#d so&e co/ operati5e 4a#"s$ the te#ure is a##ual, No#/4a#"i#0 fi#a#cial co&pa#ies li"e 'a#appura& Fi#a#ce ha5e a o#e/&o#th te#ure, 7ut$ a# ad5a#ta0e !ith &o#thly re#e!als is that the loa# 5alue also i#creases e5ery &o#th !ith the appreciatio# of 0old, At S7I$ the i#di5idual &ust repay so&e a&ou#t of the pri#cipal alo#0 !ith the i#terest e5ery &o#th$ as #o#/repay&e#t for a co#ti#uous period of three &o#ths !ill re#der the loa# a #o#/ perfor&i#0 asset, Co#sideri#0 the ad5a#ta0e a e!el loa# offers i# ter&s of a re#t/free loc"er$ a little 4it of u00li#0 ca# e5e# help you sa5e re#ti#0 a loc"er for your e!els,

>#6 RATIO ANALYSIS M$''$-!$ .

IIFL

M())( "'$'*<

M$! 12

M$! 12

M$! 12

Retur# O# Capital E&ployed 2J3

*+,=*

;,:>

(),*

Retur# O# Net orth 2J3

*>,((

<,6:

+),<>

124


Curre#t Ratio

),6;

*,)+

*,)(

Huic" Ratio

*:,+(

*

<,=+

De4t Euity Ratio

(,>+

),)*

:,(6

//

(,)(

*(,(;

Asset Tur#o5er Ratio

<,;>

),+6

),(6

Di5ide#d -ayout Ratio Net -rofit

*>,<

;6,=(

*6,+;

Di5ide#d -ayout Ratio Cash -rofit

*=,:

:+,*6

*>,=>

Ear#i#0 Rete#tio# Ratio

>*,=*

/(,><

>),=+

Cash Ear#i#0 Rete#tio# Ratio

>+,:*

+;,+=

>*,+(

De4tors Tur#o5er Ratio

125


CHAPTER 

#1 RISS TO BORROWERS AND LENDERS Si#ce le#ders ta"e possessio# of the 0old assets i# a loa# tra#sactio#$ i# case of a theft they &ay #ot ha5e sufficie#t fu#ds to co&pe#sate all the 4orro!ers for their loss i# its e#tirety, This is &ore i&porta#t for loa#s placed i# the u#or0a#i?ed sector 4a#"sN7FCs usually ha5e 4etter security a#d i#sura#ce co5era0e, Further&ore$ fi#a#cial pac"a0es ca##ot co&pe#sate for the perso#al attach&e#t a 4orro!er has !ith the 0old assets, 'oreo5er$ a sharp decli#e i# 0old prices i#creases the ori0i#al LT, A le#der &ay reuire a# i&&ediate reco5ery of a#y a&ou#t that e1ceeds the ori0i#al LT ratio$ 4ut the 4orro!er &ay 4e 126


u#a4le to pay this a&ou#t, Restructuri#0 of the loa# &ay 4e reuired i# these cases, Additio#ally$ if the 5alue of the pled0ed asset decli#es$ a 4orro!er &ay 4e &ore !illi#0 to default o# the loa#, This poses a serious co#ce#tratio# ris" to the le#der$ especially to the N7FCs that ha5e a hi0h e1posure to 0old loa#s a#d le#d at hi0h LT ratios, The i#crease i# 0old prices o5er the last fe! years$ coupled !ith the sur0e i# 0old loa# 4orro!i#0s duri#0 this period$ could create a 0old 4u44le !hich could 4urst i# the e5e#t of a si0#ifica#t correctio# i# 0old prices, 7a#"sN7FCs !ith si0#ifica#t e1posure to 0old loa#s could face !idespread defaults$ !hich could ad5ersely i&pact the eco#o&y, The or0a#i?ed sector today &a#a0es these ris"s throu0h 5arious ðods such as e#ha#ced security$ i#sura#ce co5er$ 4uyi#0 0old futures$ etc,

#2 REGULATORY EN4IRONMENT hile there are #o &ea#s of co#trolli#0 the u#or0a#i?ed sector$ the or0a#i?ed sector of 4a#"s a#d N7FCs co&e u#der the pur5ie! of the Reser5e 7a#" of I#dia 2R7I3 !hich has #or&s to re0ulate the 0old loa# &ar"et, N7FCs had 4ee# traditio#ally dis4ursi#0 0old loa#s throu0h fu#ds recei5ed fro& 4a#"s u#der priority le#di#0 for the a0ricultural sector, The loa#s u#der this cate0ory e#oy a# i#terest rate discou#t of appro1i&ately ()) 4ps o5er the #or&al i#terest rates char0ed 4y 4a#"s, 7ut to reduce the ris" i# the syste&$ the R7I ruled i# Fe4ruary ()*( that 4a#" credit to N7FCs for le#di#0 a0ai#st 0old e!elry !ill #ot 4e treated as e1posure to the

127


a0ricultural sector, The resulti#0 hi0her i#terest rate for fu#ds is e1pected to pro&ote 4etter le#di#0 practices 4y N7FCs to credit!orthy 4orro!ers, ith the co#ti#ued rapid 0ro!th of the 0old loa# &ar"et i# I#dia$ R7I has started e1a&i#i#0 le#ders$ especially N7FCs$ for possi4le co#ce#tratio# ris"s 2i,e,$ ris"s due to a sharp decli#e i# the prices of 0old for a le#der !ith a lar0e e1posure to 0old assets pled0ed a0ai#st the loa#s3, All le#ders are reuired to adhere to the YC #or&s, N7FCs alle0edly ha5e #ot strictly follo!ed this re0ulatio# a#d he#ce ha5e 4ee# u#der the R7IBs sca##er for so&e ti&e #o!, Curre#tly$ N7FCsB 0old loa#s are re0ulated 4y R7I, o!e5er$ so&e state 0o5er#&e#ts reuire co&plia#ce !ith rele5a#t state &o#ey le#di#0 statutes, If the state 0o5er#&e#ts succeed i# e#forci#0 this re0ulatio#$ the profit &ar0i# of N7FCs !ould 4e further suee?ed, There ha5e 4ee# rece#t co&plai#ts re0ardi#0 hi0h i#terest rates a#d pe#alty rates char0ed 4y N7FCs, This has cau0ht the atte#tio# of re0ulators a#y re0ulatory &o5e i# this re0ard !ould i&pact the profit &ar0i# of N7FCs, R)< ) T<*'))=

I#for&atio# tech#olo0y has played a# i#creasi#0ly i&porta#t role i# the rapid 0ro!th of the 0old loa# &ar"et, •

Tech#olo0y pro5ides scala4ility to 0old loa# 4usi#esses$ e#a4li#0 uic" roll/out of 4ra#ches a#d efficie#t pe#etratio# of the u#derser5ed &ar"ets, Z -ro5isio# of accurate real/ti&e i#for&atio# has led to faster decisio# &a"i#0 a#d reduced Z

tur#arou#d ti&e for loa# dis4ursals, Tech#olo0y has si0#ifica#tly reduced hu&a# i#ter5e#tio# a#d there4y$ the appro5al$ dis4ursal a#d repay&e#t processes ha5e 4eco&e &uch faster$ si&pler a#d &ore ro4ust, 7etter adhere#ce to le#di#0 re0ulatio#s 2YC$ priority le#di#0$ etc,3$ co#so#a#ce i# fir&/!ide le#di#0 acti5ities$ efficie#t trac"i#0 of 4orro!er accou#ts$ process tra#spare#cy a#d &i#i&i?atio# of operatio#al costs are so&e of the &aor 4e#efits reali?ed throu0h the use of tech#olo0y,

128


Gold loa# fir&s use #e0li0i4le or s&all/scale proprietary IT syste&s, These are pro5i#0 to 4e i#adeuate 0i5e# 0old le#dersB stro#0 0ro!th, e#ce$ fir&s are i#creasi#0ly loo"i#0 to le5era0e tech#olo0y for further 0ro!th, They are e#0a0i#0 e#terprise solutio# pro5iders to pro5ide i#te0rated solutio#s for loa# ori0i#atio#$ ser5ici#0 a#d collectio#s,

#3 CONCLUSION Gold has al!ays 4ee# a 5alued co&&odity, -articularly i# I#dia$ it is co#sidered as auspicious$ a#d used i# the for& of e!elry$ coi#s a#d other assets, Due to their hi0h 5alue$ people ha5e 4ee# ta"i#0 loa#s a0ai#st 0old or#a&e#ts for ce#turies, Till a4out a decade a0o$ &ost of such le#di#0 acti5ities used to ta"e place i# the u#or0a#i?ed sector throu0h pa!#4ro"ers a#d &o#ey le#ders, o!e5er$ the sce#ario has cha#0ed !ith the e#try of or0a#i?ed players, e accept hypothesis * that 0old loa# &ar"et is o# e1pa#sio# &ode, For 4orro!ers$ 0old loa#s ha5e e&er0ed as o#e of the 4est &ea#s of raisi#0 uic"$ short/ter& capital, For le#ders$ 0old 129


loa#s are &ore ad5a#ta0eous co&pared !ith ho&e a#d car loa#s 4ecause of the shorter te#ures$ lo!er processi#0 ti&e a#d cost$ a#d 0reater retur#s due to hi0her i#terest rates, These factors$ alo#0 !ith appreciatio# i# 5alue of 0old$ ha5e led to a# e1plosio# i# the 0old loa# &ar"et, ith e5eryo#e !a#ti#0 a piece of this actio#$ the or0a#i?ed sector is challe#0i#0 the lar0e u#or0a#i?ed 0old loa# &ar"et do&i#ated 4y pa!#4ro"ers a#d &o#eyle#ders$ !ith N7FCs leadi#0 the pac" due to si&pler appro5al a#d dis4ursal processes$ fle1i4le products a#d 4etter accessi4ility, A# e1a&i#atio# of these tre#ds &a"es clear that 4a#"sN7FCs that are#Bt yet i#to the 0old loa# &ar"et &i0ht fi#d it attracti5e, This is due to the follo!i#0 factors. • • • •

7etter ROI due to lo!er cost$ hi0her i#terest rates a#d stro#0 collateral A4ility to co&pe#sate for lo!er off/ta"e of car ho&e loa#s Scope for cross/sell opportu#ities i# future i#cludi#0 other 0old/4ased products Opportu#ity to capture the 0ro!i#0 u#derser5ed a#d u#der/pe#etrated &ar"et

ith appro1i&ately =:J of the &ar"et i# rural areas$ fir&s #eed to de5elop strate0ies to tar0et this se0&e#t effecti5ely a#d pro5ide 4etter accessi4ility to 4orro!ers, he# e1pa#di#0$ fir&s #eed to e#sure co#so#a#ce of ser5ices a#d operatio#s throu0hout the #et!or", Fir&s #eed to &a#a0e ris"s related to possi4le sharp fall i# 0old prices a#d #o#/adhere#ce of re0ulatory #or&s a#d also #eed to e#sure that physical assets are properly 5alued$ stored a#d docu&e#ted, Fir&s #eed to i#5est i# tech#olo0y to 4etter &a#a0e the i#creasi#0 5olu&es a#d to reduce ris"s, ith appro1i&ately =:J of the &ar"et i# rural areas$ fir&s #eed to de5elop strate0ies to tar0et this se0&e#t effecti5ely a#d pro5ide 4etter accessi4ility to 4orro!ers, he# e1pa#di#0$ fir&s #eed to e#sure co#so#a#ce of ser5ices a#d operatio#s throu0hout the #et!or",

130


#6 BIBLIOGRAPHY •

Gold loa#s as a# asset class / IF'R Capital

•

Gupta$ R, S, 2()**$ 'arch *>3, Or0a#i?ed 0old loa# 4i? &ay dou4le this fiscal, Retrie5ed

• • • • •

• •

April =$ ()**$ fro& Eco#o&ic ti&es The Role of Gold i# I#dia$ orld Gold Cou#cil$ Septe&4er$ !!!,0old,or0 'uthoot Fi#a#ce$ NCD -rospectus$ Au0 ()** http.!!!,#eytri,co&0old/loa#s/!hat/you/&ust/"#o! http.the0old!atcher,4lo0spot,co&()**):i#dia#/0old/loa#/&ar"et/e1pa#di#0,ht&l http.articles,eco#o&icti&es,i#diati&es,co&()**/)6/)=perso#al/ fi#a#ce+)**6(=+%*%0old/loa#s/#4fcs/ perso#al/loa# http.!!!,ap#apaisa,co&loa#0old/loa#/i#diarates,ht&l http.o#li#e,!s,co&articleS7*)))*<(<):+***6)<(=::)<:;=:=;;>)+(<<=*++(,ht&l 131


• •

• •

• • • • • • • • • • • •

• •

• •

http.!!!,thehi#du,co&4usi#essEco#o&yarticle(+;==:),ece http.4a#"i#0,co#tify,co&story&a#appura&/fi#a#ce/si0#s/*)/yr/&ulti/&illio#/dollar/deal/ !ith/i4&to/re5a&p/it/syste&/()**/);/*: http.!!!,i4&,co&#e!si#e#()**);(;o+=;::6?>>+:;5:*,ht&l http.teleco&tal",i#fo&uthoot/fi#corp/i#troduces/&o4ile/loa#/po!ered/4y/ato&/ tech#olo0ies(=);; http.!!!,&uthootfi#a#ce,co&ser5ices0old/loa#,ht&l http.!!!,state4a#"oftra5a#core,co&I#terest%Rate%Loa#,ht& http.!!!,southi#dia#4a#",co&i#terestRatei#terestRateDetails,asp1QirtID]; http.!!!,southi#dia#4a#",co&i#terestRatei#terestRateDetails,asp1QirtID]> http.!!!,io4,i#Rates%at%a%0la#ce,asp1 http.!!!,io4,i#CCC%e!ellery,asp1 http.i#dia#/4a#",co&rate%loa#%perso#al%4ase,php http.i#dia#/4a#",co&rate%loa#%a0ri%4ase,php http.!!!,&uthootfi#corp,co&fa%0oldloa#,ht&l http.!!!,&uthootfi#corp,co&fa%s&artplus,ht&l http.!!!,capital&ar"et,co&c&edit-ri#tStory,aspQSNO]<=6*=:9Co5era0eID] http.!!!,asia#tri4u#e,co&#e!s()**)=)6sri/la#"a/co&&ercial/4a#"/ta"e/0old/loa#s/ cou#try!ide http.!!!,the#atio#al,aelifestyleperso#al/fi#a#ceu#loc"/the/euity/4ehi#d/your/0old http.!!!,?erohed0e,co&#e!srussia#/ce#tral/4a#"/offer/0old/4ac"ed/loa#s/or/!hy/ spa&/sta#dardco&i#0/ e#d http.!!!,thehi#du4usi#essli#e,co&i#dustry/a#d/eco#o&y4a#"i#0article(;**>6=,ece

132


#> ANNE;URE QUESTIONNAIRE 8COMPANY9

Dear Sir'ada&$ I a& ROGERY, -ETER$ fro& 7irla Colle0e$ alya#, As a part of &y acade&ic proect$ I a& studyi#0 tre#ds that lead to i#crease i# 0old loa# sce#ario i# I#dia, Follo!i#0 are so&e uestio#s i# the sa&e re0ards, I reuest you to help &e fill the uestio##aire, -lease tic" 2^3 !here5er applica4le, Na&e. %%%%%%%%%%%%%%%%%%%%%%%%%%% Desi0#atio#. %%%%%%%%%%%%%%%%%%%%%%%%%% Occupatio#. • • •

Salaried I#di5idual 4usi#ess -rofessio#al

*, o! do you rate I#dia# Gold &ar"et i# the pre5ie! of 0old 4uyi#0Q ery Good •

133


• • • •

Good A5era0e -oor ery poor

(, Do you feel that there is a shift i# 4uyi#0 of Gold fro& co#su&erQ Yes No • •

+, Do you feel that Gold phe#o&e#o# has 4eco&e sta0#a#t i# I#dia too due to co#ti#uous rise • •

i# Gold pricesQ Yes No

<, hy there is co#sta#t rise i# Gold pricesQ I#ter#atio#al &ar"et pressure I#dia# Go5er#&e#t policies Scarcity of Gold Ille0al re0ulatio# i# 0old tradi#0 • • • •

:, Is I#dia top Gold co#su&ptio# cou#tryQ Yes No • •

=, hich re0io# has hi0hest Gold co#su&ptio#Q East est North South • • • •

;, Does the situatio# of Gold 4uyi#0 &ar"et ha5e led to a rece#tphe#o&e#o# of Gold Loa#Q Yes No • •

>, Is Gold Loa# &ar"et #e! to I#dia or it pre5ailed earlierQ Ne! -re5ailed • •

134


6, hat is your perceptio# to!ards I#dia# Gold Loa# &ar"etQ Good rise A5era0e • •

*), hat are the tre#ds do you 4elie5e has lead to de5elop&e#t of Gold Loa# &ar"etQ Risi#0 prices a#d pressure o# co#su&er 7a#"ers loo"i#0 for alter#ati5es to re0ular loa# 'ar"et de&a#d Safest loa# ter&s for 4a#"s A#y other 2%%%%%3 • • • • •

**, Is Gold Loa# safest i#stru&e#t for 4a#"sQ Yes No • •

*(, hat are the tre#ds that lead co#su&er 0oi#0 for Gold Loa#Q Risi#0 co&&odity prices Facilitates liuidity !ithout a#y pressure or ris" Easy to o4tai# a#d repay ousehold pressure • • • •

*+, Is Gold Loa# the 4est loa# a5aila4le todayQ Yes No • •

*<, Do you see tre#d i# Gold Loa# i#creasi#0 or at sta0#a#tQ I#creasi#0 Curre#tly sta0#a#t • •

*:, Do you see a#y ris" i# curre#t tre#d i# Gold Loa# 'ar"etQ Yes No • •

*=, Gold Loa# 8 is there a#y ris"Q Yes •

135


•

No

*;, Is there a#y policy for Gold Loa# fra&ed 4y the Go5er#&e#tQ Yes No • •

*>, o! do you rate 'a#appura& 5s other Gold Loa# Co&pa#iesQ ery 0ood Good A5era0e -oor ery poor • • • • •

*6, Do you see future of Gold Loa# &ar"etQ Yes No • •

(), hat is curre#t esti&atio# of Gold Loa# &ar"etQ 2ope# e#ded3

THAN YOU

QUESTIONNAIRE

Dear Sir'ada&$ I a& ROGER Y, -ETER$ fro& 7irla Colle0e$ alya#, As a part of &y acade&ic proect$ I a& studyi#0 tre#ds that lead to i#crease i# 0old loa# sce#ario i# I#dia, Follo!i#0 are so&e uestio#s

136


i# the sa&e re0ards, I reuest you to help &e fill the uestio##aire, -lease tic" 2^3 !here5er applica4le, *, Do you ha5e Gold Loa#Q Yes No • •

(, Fro& !hich of the 4elo! cha##el ha5e you purchased Gold Loa#Q 'a#appura& 'uthoot fi#a#ce 7a#"s A#y other %%%%%%% • • • •

+, Is this your first Gold loa# or a#otherQ First A#other • •

<, o! &uch a&ou#t you ha5e ta"e# as loa#Q [* Lac * Lac 8 : Lac \ : Lac • • •

:, hat is i#terest J you are payi#0 o# Gold Loa#Q \ >J >J / *)J *)J / *(J *(J / *
=, Is the i#terest you are payi#0 o# Gold Loa# is 0reater tha# other type of loa#Q Yes No • •

;, Do you thi#" that 0etti#0 Gold Loa# is faster tha# a#y other type of Loa#Q Yes •

137


•

No

>, Do you thi#" that procedures related to Gold Loa# are less co&plicated tha# a#y other type • •

of Loa#Q Yes No

6, Do you #eed to pro5ide a#y "i#d of 0uara#tee 2e1cept 0old3 !hile o4tai#i#0 Gold Loa#Q Yes No • •

*), hich of the follo!i#0 Gold Loa# Co&pa#y pro5ides 4etter ser5ices related to Gold Loa#Q 'a#appura& 'uthoot fi#a#ce 7a#"s A#y other %%%%%%% • • • •

**, Is Gold Loa# the 4est a#d easy loa# a5aila4le todayQ Yes No • •

*(, Do you see 0ro!th i# the Gold Loa# tre#dQ Yes No • •

*+, Do you prefer Gold Loa# a0ai#st other optio#sQ Yes No • •

*<, If Yes$ hy 2ope# e#ded3 *:, If No$ hy 2ope# e#ded3

138

Project on -A Study of Increasing Trend of Gold Loan by Manthan Jogani

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