Budget 2024 expectations: Muthoot Finance urges govt to grant 'priority sector status' to gold loans

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Budget 2024 expectations: In anticipation of the upcoming Interim Budget 2024, Muthoot Finance highlights the importance of granting 'priority sector status' to gold loans and proposes the introduction of a 'Gold linked credit line via UPI' by NBFCs. George Alexander Muthoot, Managing Director of Muthoot Finance, in an email interview with Mint, has outlined key recommendations to leverage the idle gold holdings in Indian households.

Amidst the ongoing global slowdown, the World Bank sees India as the fastest-growing economy in the world. Amidst the resilience of the Indian economy, coupled with a pick-up in investment activity and favourable demographics of India, the demand for credit from small business owners and individuals is expected to remain high. We are further hopeful that the upcoming budget and RBI monetary policy will provide the much-needed impetus to providing last-mile credit facilities. In line with prioritizing financial inclusion and improving credit supply, we suggest the RBI and government allow NBFCs to initiate a ‘Gold linked credit line via UPI’ to help meet the credit needs of households/small business owners.

We believe that the ‘Gold linked credit line via UPI’ by NBFCs will revolutionize financial accessibility for households and small businesses. Unlike existing financial products (like credit cards, and personal loans), this innovation caters specifically to meet the common man's short-term finance needs. By extending the UPI linkage through NBFCs, this secured credit line ensures a lower interest rate (12%-18%) compared to credit cards which offer interest rates upwards of 30%. This product not only addresses immediate financial gaps but also promotes financial inclusivity by providing an