Moolah is no longer a worry when you are thinking of buying jewellery, with banks offering easy loans to buy gold, making shopping for the yellow metal hassle free.
Loan against gold deposits may soon become a passe, with large number of banks offering loans purely for the purchase of gold jewellery, bankers say.
Such schemes have lot of potential to generate profits especially during marriage season, known for big budget wedding purchases, they say.
"These days banks are offering loans for almost all consumer durables available in the market but the concept of banks providing loans for purchasing gold is relatively new and it is yet another segment which has immense scope to grow in a gold craving market like India," says T S Hariharan of Corporation Bank, one of the first banks in the country to offer gold-purchase specific loan scheme.
Although most banks have personal loans where advances are made irrespective of the end use of the loan amount, it is mainly banks in south India, which are offering these loans for specifically purchasing gold.
"The inclination of banks based in southern India towards such a scheme is obvious as that segment accounts for more than 45 per cent of country's overall gold consumption, but several banks in different parts of the country are also contemplating such gold jewellery schemes," says a banking expert.
Targetted mainly at women buyers, whether working or unemployed housewives, loans for gold are designed to suit the growing middle class segment in the country.
Elaborating about the scheme, Hariharan says, "If we look at the clientele of the gold retailers, large chunk of it consists of women customers. So in a bid to make inroads of loan schemes in this segment, schemes like gold-purchasing loan offer excellent prospects."
"The loans are available not just for working women but even for unemployed housewives. In case of the latter, the banks use the income proof of their spouses for loans by making them co-applicants," Hariharan adds.
The loan carries an interest rate between the range of 10-12 per cent and in most of the schemes available presently one can get up to Rs 300,000 as loan.
Gold can be purchased either from a jeweller or directly from the bank. "The banks offering this scheme have agreement with reputed jewellers giving customer the advantage of buying the jewellery directly from them. The bank settles the payment directly with the retailer," says Hariharan.
About the response of public towards the scheme, Hariharan says, "Its early days to gauge the success of the scheme. Moreover, only limited number of banks are offering it, so it may take sometime to catch general public attention in a big way."
"Although the gold loan scheme was launched before the onset of the marriage season this year, customers have not shown much enthusiasm towards this financing option," says Deepak Mehra, director, AKM Mehrasons Jewellers, New Delhi.
Explaining the possible reason for the lukewarm response towards the scheme, Mehra says, "Gold has always been thought of as a safe investment for hard times, and people generally buy gold according to their budget and savings. The option of taking a loan for buying gold will take sometime to get accepted among the masses."
"Also the interest rate on the loan is another major factor proving as a deterrent," Mehra adds.
However, bankers feel that with the help of proper advertising strategy and onset of gold futures and hedging, such financing instruments could take off in a big way.