Indian Startup Quickly Monetizes Gold And Collects Interest On It

Who can honestly say the metal isn’t money? Who can honestly say it doesn’t pay interest?

by Chris Powell of the Gold Anti-Trust Action Committee (GATA)

Who can honestly say the metal isn’t money? Who can honestly say it doesn’t pay interest?

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A Startup Is Cashing In on India’s $1 Trillion Gold Stash

By Suvashree Ghosh and Saritha Rai
Bloomberg News
Wednesday, November 6, 2019

When Vijay Mhatre needed cash to make up a shortfall for his son’s engineering school tuition, he pledged his wife’s necklace and bangles. Instead of going to the nearest pawnbroker or bank, the 55-year-old called Rupeek Fintech Pvt Ltd., summoning a representative of the online gold lender to his 650-square-foot Mumbai apartment and sidestepping the ignominy of being seen pawning the family jewelry.…

A motorcycle-borne loan agent from the startup arrived within the hour. He used a computer vision-aided testing kit to appraise the metal’s purity. A team 600 miles away crunched data to complete the background check and process the loan electronically. About 30 minutes later, 200,000 rupees ($2,800) had been deposited in Mhatre’s bank account by one of Rupeek’s partners, an Indian private lender called Federal Bank. The startup’s 24/7 control room turned on the risk-monitoring system to track the agent, ensuring he securely deposited the jewelry at the bank’s nearest vault.Indians have a particular attachment to gold. Rural farmers and the urban working class alike invest their savings in the precious metal and flaunt jewelry at weddings. Gold, with a price that has spiked almost 18% this year, is both an insurance policy and a retirement plan in a country that lacks robust social welfare systems or widespread access to formal credit. “We don’t have a lot of gold,” says Mhatre, who works as a cashier at a financial-services company. “I gifted these gold ornaments to my wife five years ago. I want to get this gold back to my wife in two years by repaying the loan.” …

Rupeek started making the loans in 2016. Borrowers pay annual interest rates of 10.6 to 20%. That’s higher than the 10.5 to 12% interest a bank might charge in India, but its home service and quick payouts remove the stigma of pawning family gold. Rupeek also doesn’t charge appraisal fees that a bank might or deduct the sort of upfront fees a pawnshop might. …

… For the remainder of the report:…

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