Slow Burning Gold Crisis – The New Indian Express


Express news service

THIRUVANANTHAPURAM: Four days ago Siby Paulose got a call from a private finance company where she had pledged her gold. She was unable to repay the loan amount and the company is now threatening to sell its gold at auction. She pawned it during the first wave of Covid.

Siby is the sole breadwinner in her family after her husband lost his job due to the pandemic. She has several gold loans, all she took to get through the crisis. “It was shocking. This gold was the saving of our life. I pledged it as a last resort. When the pandemic made daily life difficult, I couldn’t imagine having to repay the loans, ”says Siby, from Piravom. She now has four days to pay the interest and renew the loan, and if she doesn’t, her gold will be auctioned off.

Siby’s is not an isolated incident. She represents a large majority of common people who have been severely affected by the economic crisis induced by Covid. The large advertisements announcing the auction of gold jewelry by non-bank financial companies show the severity of the financial crisis in many households.

Household crisis
In Kerala, gold represents prosperity. Giving up is the last resort for many. Siby suggests the need for immediate government intervention to extend the loan repayment period. “People cannot repay the interest because they cannot go out and work due to the pandemic. People deserve help, ”says Siby, who has worked in the social field for 21 years.

Besides day workers, small entrepreneurs and traders are also in the throes of a deep crisis, says SS Manoj, Secretary of State of Kerala Vyapari Vyavasayi Ekopana Samith. “Gold and property are two assets traders use to get loans when they are in trouble. With the pandemic, no one has been able to go to work. The market has been closed for over 15 months and although we worked for a month in between, it didn’t improve things, ”Manoj explains.

Organized looting?
Consumer rights activist Dijo Kappen says the recent gold lending crisis is a form of organized looting. With nationalized banks not providing enough gold loans and limited banking deadlines, people are rushing to private financial institutions to pledge their gold. “All the gold auctioned is bought by private finance companies and they make a profit. The government must find a way to control this. It should issue directives to extend the period of interest payment, ”he said.

Express bank loans
Rajan PS, CEO of Kerala Bank, said his organization offers express gold loans at much lower interest rates than private financial companies. “At our bank, the gold loan is granted quickly and at lower rates. They have a year to pay it off and we very rarely do auctions. Most people rely on private financial companies to try to get loans faster, and that’s how they end up losing their assets when they can’t pay off the big interest, ”Rajan said. , insisting that the public should rely more on national banks.

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