India’s fintech and digital lending industry is one of the fastest-growing segments in the financial sector, with a projected market size of $720 billion by 2030. The gold loan industry along with India’s fintech and digital lending industry has been providing innovative and accessible credit solutions to millions of consumers and businesses, especially in rural and underserved areas, through digital platforms, aggregator platforms, and technologies. Within the fintech segment, the gold loan industry exhibits substantial growth prospects.
Addressing challenges and growth in the gold loan market
As per a Systematix report, the organised gold loan market witnessed substantial expansion, reaching 72,289.15 million USD in FY22, and subsequently rising to an estimated 84,337.34 million USD in FY23 (estimates based on the Bank and NBFCs Gold loan AUM till Mar’23). However, the industry encounters challenges like regulatory uncertainty, data privacy, cyber fraud, and customer awareness. Consequently, it anticipates significant measures in the interim Union Budget, 2024.
The fintech and digital lending industry has two key expectations from the Budget. Firstly, a clear regulatory framework is sought for legal recognition, licensing, and supervision, ensuring a level playing field with traditional lenders and building trust among customers and investors. Secondly, the industry anticipates a favourable tax framework with incentives and exemptions tailored for startups, aiming to lower capital costs and enhance profitability.
Tech-driven gold loan sector’s vision for interim budget 2024
Moreover, a robust digital infrastructure is desired for seamless integration with existing systems, improving efficiency, convenience, and security. Lastly, the industry seeks a supportive innovation ecosystem to foster research, collaboration, and incubation of emerging technologies like AI, blockchain, and cloud computing to address evolving customer needs.
In conclusion, the fintech, digital lending industry along with the gold loan industry in India has been playing a vital role in the growth and development of the economy, especially in the wake of the COVID-19 pandemic and wars, which have disrupted the traditional financial channels.
The gold loan industry looks forward to a focused financial inclusion agenda, which will leverage the potential of digital lending aggregator platforms to reach out to the unbanked and underbanked segments of society and provide them with affordable and customised credit solutions by utilising their asset i.e. Gold. This will also help in achieving the social and economic objectives of the government, such as financial inclusion, rural development, and women empowerment. The industry thus hopes that the Union Budget 2023–24 will recognize and reward its contributions, address its challenges and aspirations, and pave the way for a more vibrant and resilient digital lending ecosystem in the country.
Anuj Arora, Co-founder & COO at SahiBandhu Gold Loans
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Published: 26 Jan 2024, 10:25 AM IST
