Mumbai: In the pre-lockdown days, 29-year-old Heena Waghela, who works as a house help, used to barely earn Rs 10,000 a month while her husband brought in another Rs 8-10,000 by doing odd jobs. Whatever they earned sufficed for their family of four, including two kids, but they barely managed to save anything. Being forcibly confined to their home for the last two months, as many housing societies have barred entry to domestic help in the lockdown, they have run out of resources.
Now the lockdown is being slowly eased but tragically, several of her former employers do not want to have a household help around for fear of getting infected with Covid-19. Her husband too is yet to find an assignment. So dire is the situation that Heena is now being forced to mortgage her gold to make ends meet.
She is not alone. There are many others like her, forced to opt for gold loans, just to survive, mostly people from the lower middle class, residing in slums and chawls, with little savings. Income has stopped but the same cannot be said for expenses -- property tax, electricity and mobile bills and so on -- in addition to those incurred in running a house daily.
"The lockdown, which lasted for over 70 days, has made a huge hole in people's pockets. Now, there is so much uncertainty over the future. People have no other recourse but to take drastic steps like these, to keep going," said a market expert.
"We have seen a rise in demand for gold loans, from small entrepreneurs and the common man. Most of them are looking for business revival or to meet their short-term cash needs. A gold loan is the most prefered source of finance in the current scenario, as the loan is disbursed fast and gold is used as collateral. Besides, the value of gold has increased,which matters at this time, " said Saurabh Kumar, Head, Gold Loans, IIFL.
"We see demand coming back to pre-Covid days in June, as we are operating at near full capacity, " he added.
People receive 80-85% of the value of gold, whose price has crossed Rs 47,000 per 10 grams. The interest rates for a gold loan are comparatively high, at 15-20 per cent annually, while small jewellers charge as much as 30 per cent. Most of the time, a short-term gold loan is obtained, which makes it a viable option, according to experts.
