A STUDY ON CUSTOMER PERCEPTION ABOUT GOLD LOAN:

A CASE STUDY AS KOTAK MAHINDRA BANK

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor in Commerce (Accounting and Finance)
Under the Faculty of Commerce

By
ANKITA JAGANNATH HALI
TYBCAF ROLL NO.18

Under the Guidance of

PROF.RINKY PANJWANI

Smt.Chandibai Himathmal Mansukhani College

Managed by Hyderabad (Sind) National Collegiate Board
Opp. Railway station, Ulhasnagar-421003, Dist.Thane

1
 March 2022
ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth
Is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Dr.Manju Lalwani Pathak for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Dr.CA Kajal Vadhrya and Dr.
Hitasha Rohra Ma’am, for her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

Prof.Rinky Panjwani whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.

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 SMT. CHANDIBAI
HIMATHMAL
MANSUKHANI COLLEGE
ULHASNAGAR -421003

CERTIFICATE

This is to certify that Ms Ankita Jagannath Hali has worked And duly completed
her Project Work for the degree of Bachelor in Commerce (Accounting & Finance)
under the Faculty of Commerce in the subject of “Principle of Management” and
her project is entitled,

“A STUDY ON CUSTOMER PERCEPTION ABOUT GOLD LOAN: A CASE

STUDY AS KOTAK MAHINDRA BANK” under my supervision.

I further certify that the entire work has been done by the learner under my guidance
And that no part of it has been submitted previously for any Degree or Diploma of
any University.

It is her own work and facts reported by her personal findings and investigations.

(Prof.Rinky Panjwani)
Date of submission: Name and Signature of Guiding Teacher

3
 DECLARATION BY LEARNER

I the undersigned Miss Ankita Jagannath Hali here by, declare that the work
embodied in this project work titled, “STUDY ON CUSTOMER PERCEPTION
ABOUT GOLD LOAN: A CASE STUDY AS KOTAK MAHINDRA BANK”,
forms my own contribution to the research work carried out under the guidance of
Prof. Rinky Panjwani is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or
any other University. Wherever reference has been made to previous works of others,
it has been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Certified by

Name and Signature of the Guiding Teacher Name and Signature of the learner

(Prof.Rinky Panjwani) (Ankita Jagannath Hali)

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 INDEX

Sr Content Page
No. No.
PRILIMINARY PAGES
Acknowledgement 2
Certificate 3
Declaration 4
List of Tables 7
List of Figures 7
1 CHAPTER 1: INTRODUCTION 8-35
About Gold Loan
1.1 History about Gold Loan 9
1.2 What is Gold Loan? 10
1.3 Advantages of Gold Loan 11
1.4 The rise and shine of Gold Loan business in India 14
1.5 The Role of Financial Institutions in the Gold Loan 15
Market
1.6 Contribution of Technology in Gold Loan business 15
1.7 Coronavirus and Gold Loan business 16
1.8 Key features of Gold Loan provided by Kotak Mahindra 18
Bank
1.9 How can customer apply for Kotak Mahindra Bank Gold 19
Loan
1.1 Documents required for Gold Loan 20
0
1.1 Eligibility criteria to get a Gold Loan 21
1
1.1 How much Gold Loan Amount customer can get? 21
2
1.1 Kotak Mahindra Bank Gold Interest Rates 22
3
1.1 Repayment Modes for Kotak Mahindra Bank Gold Loan 22
4
1.1 Kotak Mahindra Bank EMI calculator – How does it 22
5 work?
Company Profile
1.1 About Kotak Mahindra Bank 25
6
1.1 Merger and Acquisitions 26
7
1.1 Product and Services 26
8
1.1 Subsidiaries and Associates 28
9
5
 1.2 Success of Kotak Mahindra Bank 28
0
2 CHAPTER 2: RESEARCH METHODOLOGY 36-40
2.1 Objectives of the study 37
2.2 Limitations of the study 37
2.3 Significance of the study 37
2.4 Research Design 38
2.5 Data Collection 38
2.6 Sample Size 39
2.7 Sampling Method 39
2.8 Tools and Techniques used for research study 39
3 CHAPTER 3: REVIEW OF LITERATURE 41-54
3.1 Review of Research Papers 42
3.2 Review of Books 46
3.3 Review of Articles 47
4 CHAPTER 4: DATA ANALYSIS 55-73
4.1 Data Analysis 56
4.2 Findings of the study 72
5 CHAPTER 5: CONCLUSION & SUGGESTIONS 74-76
5.1 Recommendations 75
5.2 Conclusion 76
6 CHAPTER 6: BIBLIOGRAPHY 77-78
7 CHAPTER 7: ANNEXURE 79-86
7.1 Application form for Kotak Mahindra Bank Gold Loan 80
7.2 Questionnaire 85

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 LIST OF TABLES
Table No. Table Name
Table 1.1 Kotak Mahindra Bank Gold Loan
Table 1.2 Kotak Mahindra Bank Profile
Table 4.1 Gender of the respondents
Table 4.2 Occupation of the respondents
Table 4.3 Age of respondents
Table 4.4 Annual Income of the respondents
Table 4.5 Awareness about gold loan
Table 4.6 Any type of loan taken before
Table 4.7 Sources of Awareness
Table 4.8 Purpose of taking gold loan
Table 4.9 Problems faced while taking gold loan
Table 4.10 Different problems faced while taking gold loan
Table 4.11 Disbursement mode of gold loan
Table 4.12 Repayment Method of gold loan
Table 4.13 Opinion about interest rate
Table 4.14 Satisfaction towards transperancy in operations maintained
by bank
Table 4.15 Comparison between gold loan and personal loan
Table 4.16 Want to take gold loan in future

LIST OF FIGURES
Figure No. Figure Name
Figure 4.1 Gender of the respondents
Figure 4.2 Occupation of the respondents
Figure 4.3 Age of the respondents
Figure 4.4 Annual income of respondents
Figure 4.5 Awareness about gold loan
Figure 4.6 Any type of loan taken before

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Figure 4.7 Sources of awareness
Figure 4.8 Purpose of taking gold loan
Figure 4.9 Problem faced while taking gold loan
Figure 4.10 Different problems faced while taking gold loan
Figure 4.11 Disbursement mode of gold loan
Figure 4.12 Repayment Method of gold loan
Figure 4.13 Opinion about gold loan interest rate
Figure 4.14 Satisfaction towards transperancy in operations maintained
by bank
Figure 4.15 Comparison between gold loan and personal loan
Figure 4.16 Want to take gold loan in future

CHAPTER 1:
INTRODUCTION

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 INTRODUCTION
1.1 History about Gold Loan

Internationally, pawning of gold, gold articles or gold jewellery is a huge and

established market, the gold loan companies being typically known as pawn brokers.
For example the National Pawnbrokers Association of the UK and the National
Pawnbrokers Association of America provide the necessary support to the growing
network of responsible pawnbrokers in UK & USA, respectively. Similarly, in India
we have Association of Gold Loan Companies (India). In the history of pre-
independent India, pawn brokers have existed in plenty, which have forced the state
governments to pass money-lending laws (for e.g. Bengal Moneylenders Act, 1940,
Bombay Money Lenders Act, 1947 and the Kerala Money-Lenders Act, 1958 etc).
Over the years, Gold loan companies witnessed an increase in the Indian market
owing to pledging of gold ornament and other gold assets by the poor and middle
class in order to tide over the unforeseen contingencies. The jewellery bought in times
of prosperity was pawned or sold for cash in periods of distress and were even being
used as collateral (primarily by “pawning”) for borrowing in the informal market. At
times of emergency, gold ensured, and still ensures, a loan almost instantly and
without any lengthy or technical documentation process. Further, with the growth in
middle income classes and increase in the earning capacity of women, demand for

9
gold surged. Lending against gold has been one of the most popular instruments based
on gold, and it works well with the Indian rural population, which typically views
gold as an important savings instrument that is liquid and can be converted into cash
instantly to meet their urgent cash requirements. Moreover, traditionally gold owners
in southern India are more open than elsewhere in the country to accept and exercise
the option of pledging gold to borrow money.

1.2 What is Gold Loan?

Gold Loan is a form of secured loan where a customer keeps his/her gold ornaments
as collateral with a gold loan company. The company, in return, gives an amount
based on the market value of gold as a loan to the customer. It is very quick and
convenient way of satisfying one’s financial need as compared to the other loans. As
one of the oldest forms of secured loans, gold pawning has existed in India for
centuries. Given the easy liquidity status of gold,it helps both borrowers and lenders
to complete transactions faster than all other forms of financing.Traditionally known
as a local business, India’s gold loan Market has started attracting large investors for
the past 10 years. The country has seen the emergence of players who specialize in
gold Loan having high market valuation during this time. Today this product forms an
important part of all banks, NBFC’s and other financial services provider’s strategy.

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Gold loans now become a base for formation of new financial products as loans for
purchase of gold wherein gold is purchased on the date of acquiring the loan and held
as a pledge until the EMI are paid. The present paper simply tries to add identification
with the Mahindra Bank gold loan and also tries to identify the outlook of the
customers towards the Gold loans. The paper consumes both primary and secondary
sources for collecting the data. To know the mindset of the Customers, data has been
collected from respondents. In today’s world, India is the largest marketplaces for
gold and Gold loan. Indian peoples have an emotional affection for the use the gold
they own, which is usually in the form of ornaments or bars. As per the World Gold
Council, India is having 10 percent of world’s total gold stock, of which rural India
Accounts for 60 per cent of the total stock of gold. Gold ornaments provide enormous
consumer pleasure and also serves as An appreciating asset, rarely, it provides
socially worthful arrangement. There is usually a high demand for gold in India,
irrespective of prices. During 2001-20 the annual demand of gold remained relatively
stable at around 700 to 1000 tones

Despite the prices of gold are continuously raising during the last ten years. Though
gold is a highly liquid asset, consumers leveraged it effectively to meet their liquidity
needs. In comparison with the remaining world, in India, the gold loan Market is a
biggest business market. Based on the elaborate conceptual discussion, this study
aims to analyze the Consumer perception towards gold loan offered by Kotak
Mahindra banks in Ulhasnagar. Gold loan is an easy alteration of the practice used in
older age by the money lenders and it has been Institutionalized now by the banking
institutes. In this type of loan, one is to deposit his household gold in the form of
Jewellery with the bank or any financing agency and get a loan up to 80 per cent of
the deposited gold.The gold loan companies in India have emerged as important
contributors for the growth in Indian economic by Complementing the endeavors
taken by the banks and other financial institution.

1.3 Advantages of Gold Loan

1.Interest Rates

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Interest rates are much higher in the case of other loans, particularly personal loan.
For example, interest rates vary from 12.75 per cent to 19 per cent, while in the case
of gold loans the interest rate is as low as 12 per cent per annum.This makes gold
loans a much better proposition, when compared to other loans. If the amount is rather
large, the saving by way of lower interest rate can be enormous. It is therefore
advisable to take a gold loan.

2. Loan disbursement with an hour

In the case of personal loans, it could take as long as 48 hours to 72 hours to be

disbursed. As for gold loans, all you need to do is gather your gold which you would
like to pledge and your Aaadhar Card and chances are that you would come back with
the loan amount with a maximum of 1 hour.

This is particularly true when you walk into gold loan companies like Kotak
Mahindra Bank. So, it offers you the twin benefits of quick disbursal and also lower
interest rate.

3. fees

The processing fee in the case of gold loans is much lower and in some cases it is as
low zero. Most banks charge about 2.5 per cent on processing fee towards personal
loans. Even home loans and auto loans attract a decent processing fee charges.

4. No credit history needed

You also do not need a credit history. For example, when you take a personal loan, if
your credit history is not good, the bank could decline the loan. For gold loans, the
history does not come into the picture as gold is provided as a collateral.This makes it
far more advantageous.

5. No need of income proof

One of the other advantages of a gold loan is that it does not require income proof. An
auto loan, home loan and personal loan all require the applicant to show some form of
income or the other. It is almost impossible to get any other loan without an income
statement, bank statement, salary proof etc.

6. You can pay interest only

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In the case of gold loans, you can service only the interest every month. Let’s say you
took a gold loan interest at 12 per cent for an amount of Rs 1 lakh. What you can do is
pay just Rs 1,000 every month and the lumpsum of Rs1 lakh, when you want to
release the gold.

7. No charges for early closure

A gold loan does not attract any foreclosure charges. In the case of personal loans,
these charges can go as high as 4 per cent, which is rather high.

8.Avoids Debt Trap

A gold loan is settled either by repayment or, in case of default, by sale of the pledged
security. The cycle of non-payment and rollovers of the loan at escalating rates of
interest does not happen. In the worst case the borrower may lose his gold but there is
no debt trap.

Important Things to Consider While Taking a Gold Loan:

Listed below are a few things that customer should take into consideration before
applying for a gold loan in order to ensure that they have a good borrowing
experience:

1. Amount:

When customer avail a gold loan, the loan amount that they receive will be based on
the value of the gold that customer pledge. Lenders may have also specified a
minimum and maximum loan amount. Thus, if customer need to avail a particular
loan amount, should make sure that they have the required gold and ensure that it falls
within the limits specified by the lender.

2. Rate of Interest:

When compared to an unsecured loan, the interest rate charged for a gold loan is
lesser since the borrower will have to provide collateral. That said, the interest rate
charged will vary from lender to lender, and it is in customer’s best interest to
compare the interest rates charged by different lenders.

3. Applicable Charges:

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In addition to the interest rate, lenders may levy a number of other charges such as the
processing fee, documentation fee, appraiser fee, payment default fee, loan overdue
fee, etc. These charges, cumulatively, can increase the total cost of the loan. Thus,
ensure that borrower take the charges levied by the lender into account before
applying for a gold loan.

4. Tenure of the Loan:

The repayment tenure for gold loans can range between 3 months and 48 months.
Therefore,borrower should make sure to take their repayment ability into
consideration and opt for a gold loan with a suitable loan tenure.

5. Credibility of the Lender:

There are a number of banks and financial institutions that offer gold loans as part of
their product portfolio. Before submitting an application to a particular lender, make
sure that borrower check how credible the lender is. They should, thus, check the
safety measures that are undertaken by the lender to keep borrower’s assets safe,
online reviews, customer services channels offered, etc.

6. Repayment Schedule:

The repayment schedule for gold loans is quite flexible. Based on the lender that
borrower choose,they may be able to make repayments in the form of EMIs, pay the
principal and the interest at the end of the policy term, or pay the interest on a
monthly basis and pay the principal at the completion of the policy term. Hence,
borrower should consider which repayment structure suits them best and choose the
lender accordingly.

7. Comparison of Loans:

It is highly recommended that borrower compare the features, benefits, and terms and
conditions of the gold loans offered by different lenders before applying for a loan.

8. Eligibility Criteria:

To increase the chances of loan application getting approved, borrower should check
the lender’s eligibility criteria before applying for the loan.

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1.4 The rise and shine of Gold Loan business in India

The yellow metal or the Gold, is recognized as a universal currency and has been the
most reliable liquid asset traditionally. India, which is one among the largest market
of gold and is a country where gold is preserved traditionally. This magnificent metal
is considered as an auspicious asset in the country. Unlike the foreign countries,
Indians have the practise of preserving gold in the form of jewelry and presumed to be
a dependable resource during economic crunches.

Pawning or gold lending is a century old practice in India. That in the past,
unorganized gold lenders offered loans against gold as collateral security. Yet, until
recently, people did not leverage the opportunity effectually owing to several reasons
such as lack of transparency, unauthorized business practices, high interest and so on.

1.5 The Role of Financial Institutions in the Gold Loan Market

Nevertheless, with the entry of organized NBFCs and other financial sectors altered
the whole scenario by bringing in more awareness among the consumers. Today, the
NBFCs command more than 25 percentage of the gold loan market. Furthermore, the
scenario of organized gold loan sector has changed; where it has it has seen
tremendous growth of 40 to 50 percentage CAGR in the past decade.

Some of the real facts behind the growth of organized Gold loan lending practices are
below mentioned:

 Awareness among consumers

 Transparency in Transaction
 Reduce Gold Loan Interest
 Quick Processing
 Extensive Network,
 Fast Turnaround Time
 Apt Services Offered to Non-Bankable Patrons
 Advanced Loan-To-Value Ratios

15
  Involvement of Technology
 Implementation of New Product Features and Services
 Convenient working hours
 Both small loans/large loans are offered

Of late, NBFCs and other non-banking sectors have enhanced their services by
reducing interest charges, monitoring and scrutinizing of lending practices. With
outstanding feature of the business model, non-banking financial sectors and NBFCs
have out grown rapidly over the last decades.

1.6 Contribution of Technology in Gold Loan market

By “Unlocking the power of gold loan” by reliable NBFCs such as “Fedfina” the
organized gold loan market has seen a growth of 40% CAGR in last decade. NBFCs
have been contributing major force behind this increase.

The study conducted by significant agencies says that gold loan financiers have
shaped a strong scheme over banks with several benefits such as quicker sanctions,
easy accessibility, niche customer base, very good and prospective branch network
that deals with only gold loans, easy repayment schedules. Most importantly, the
digital world has a significant role in the gold lending market by offering the below-
mentioned benefits. Digital marketing technology has made the business to reach
huge audience in global level technology has offered scalability to gold lending
businesses, allowing quick roll-out of branches and well-organized penetration of the
non-bankable customer market.

Delivery of exact real-time information

Need based selling

Reduced turnaround time for loan disbursals

Reduced human intervention, which resulted in the approval, distribution and

repayment process easier and faster

Better obedience to lending regulations such as KYC, priority lending, and so on

Efficient tracking of accounts, process transparency and reduced operational costs

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1.7 Coronavirus and Gold Loan Business

With the pandemic hit, several jobs were lost and to meet the expenses, the
households started depending on pawning. As per the estimation of The World Gold
Council the Indian households have a $1.5 trillion hoard of gold, made up of jewelry
that families inherited from their ancestors and as savings. For this reason, the gold
baked loans are on higher side allowing families to get larger amount of loan against
gold.

During this coronavirus pandemic hit, lower middle-class families are depending on
gold lending market more than any other segments. The banking sector involvements
could help the gold loans market to grow by 20% to 25% this fiscal year as the small
businesses and agricultural customers have a lot of family owned gold. Once
normalcy returns, this make could expect big jump because of the capital requirement
of small business.

What Future of Gold Loan Lending market?

India being the largest market of gold with total of 65 percentage rural gold and 10
percent of total world gold stock as of 2010, our country has grown from 18,000 to
32, 000 million tons during the year 2002 to 2010. The researches show that India’s
gold loan market is about to touch Rs 4,617 billion by the year 2022 with a growth
rate of

13.4 per cent (KPMGreport). In the year 2018-2019, the gold loan lending market has
seen a tremendous growth owing to the wonderful expanding methods.

Coupled with focusing on optimizing assets and asset utilization, gold lending
companies are leveraging their present infrastructure of branches to make the most of
the branch-level AUM and customer outreach. Though many challenges were faced
by the gold loan markets such as gold price volatility and liquidity stress in NBFCs,
the market is now looking forward to a high growth through below-mentioned
methods.

The Online Gold Loan:

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With the intense competition faced by gold lending companies, a traditional way of
lending could affect their growth. For this reason, all the companies have started
digitalizing their operation with new-gen technology and innovative digital models

Unlocking the power of Gold in the Less Penetrated Market:

Generally speaking, the organized gold loan market in the country is played by
NBFCs, banks and so on. They cater to the needs of different customers in different
segments. To get more customers these multiple players are expanding their
geographic expansion by expanding their branches to all places across the country to
the unpenetrated market.

With aggressive marketing methods and strategies, they are expanding their business
where the gold market is expected to reach 4617 billion by 2022. The above-
mentioned reasons like online gold lending method and other new-fintech methods
offer their service at the door steps of the customer. The companies are investing
more and more in this segment to magnetize digitized and tech-savvy customers. In
this scenario, Fedbank has shown exponential growth by its virtue of values exhibited,
“Executional excellence, People development, Integrity and Customer centricity”
which has been the key drivers of success.

Agriculture Policies and Gold Loan Market

Furthermore, this segment is the newest class of assets, which has outgrown into a
huge market. With the latest proposal of lending restrictions on agriculture segment,
the gold loan market could see a boost in the market. With the current situation, the
government is seeing this market as an effective way to meet the micro-finance
demands in the country. To cope up with the raise of borrowing costs removal of
agriculture status on

loans will benefit the NBFCs. This will certainly develop farming policies to favour
gold lending segments of NBFCs.

For the above-mentioned reasons, the gold loan market is expecting for a high-growth
potential.

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1.8 Key Features Of Gold Loan Provided By Kotak Mahindra Bank

The first thing that you need to know that you can opt for this loan against your gold
ornaments as well as the gold coins minted by the bank. You just need to remember
that the gold ornament must be between 18 to 22 karats when it comes to the purity of
it and the gold coins must be of 24 karats.

Your gold ornaments, against which you want the loan amount, must not have more
than 50% part as the non-gold material as it will be deducted during the valuation.

To opt for a Kotak Mahindra Bank Gold Loan, it is not a must for an individual to be
an existing customer of Kotak Mahindra Bank. Anybody can avail of the loan
amount. However, such people can only get a maximum loan amount of INR 25 lakh,
while existing customers can avail of INR 50 lakh. The minimum amount of INR
20,000 remains the same for both types of customers.

Kotak Mahindra Bank disburses loans to your accounts by various methods. Some of
them are cash, Demand Draft, Fund Transfer in case the applicant has an existing
Kotak Mahindra savings bank account, NEFT and RTGS in case the applicant has
some other bank account.

For the repayment purpose, you can choose the tenure from 12 to 48 months
according to your convenience. You can choose from the Bullet Repayment Method
and Equated Monthly Installments (EMIs) method.

1.9 How can Customer Apply for Kotak Mahindra Bank Gold
Loan?

After coming to know about all the amazing features of the Kotak Mahindra Bank
Gold Loan, it will be of no use if you don’t know the methods by which you can
apply for it. The application method is quite easy and convenient and can be done by
any individual in a hassle-free manner. The amazing part is it can be done both online
and offline. You can choose anyone according to your convenience. If you want to
know about them, you can check detailed information about both these methods
below.

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 Online Method

To apply for Kotak Mahindra Bank Gold Loan online, you just need to follow a few
steps and your application will be processed.

First of all, you will need to visit the official website of Kotak Mahindra, and then go
to the Gold Loan section of it. On reaching there, you will see the Apply Now button.
On clicking that button, an application form will open before you. In this form, you
will need to fill a few basic details such as your name, mobile number, email id,
residing city, and CRN (Customer Relationship Number) if you are an existing
customer of Kotak Mahindra Bank.

After submitting the form, representatives from the bank will soon contact you
regarding the loan requirement and will explain everything about the loan facility.
You will need to visit the nearest branch to complete the loan process.

 Offline Method

If due to any reason you don’t want to apply online, you can opt for the offline
method of the application. The first thing you will need is to find the nearest Kotak
Mahindra Branch. After this, you just need to visit the branch with your gold
ornaments or coins along with the required KYC documents that you will need during
the loan process. You can know about the list of documents that you will require in
the next section of this page. After the gold valuation process and authentication, your
eligible loan amount will be disbursed. The whole process will take a maximum of 4
hours considering you present all the documents rightfully.

1.10 Documents Required for Kotak Mahindra Bank Gold Loan

Application method for Kotak Mahindra Bank Gold Loan, you will be required to
present a few documents before the lender to provide proof of your age, identity, and
address. Documentation is an integral part of any loan approval facility. Knowing
which documents you need to present gives you the time to collect all, hence it must
be taken with seriousness. If you happen to miss any of the required documents, it
may delay your whole process and your loan amount disbursal will affect.

20
 For Existing Kotak Customers –

Latest Address Proof as the bank already has the documents for your KYC ( Only if
there has been a change in the registered address with the Bank). PAN is a must,if the
annual income exceeds rupees 5 Lakhs as per regulatory guidelines.

 For New Customers who do not have any relationship with the Bank –

3 Passport Size Photographs

Identity Proof

Address Proof

Signature Proof

(KYC Documents such as Aaadhar Card/ Passport/ Driving License/ PAN Card)

1.11 What is the Eligibility Criteria to get a Kotak Mahindra Bank

Gold Loan?

Now, after knowing the list of documents that customer requires to get the Gold Loan
from Kotak Mahindra Bank, it is important for customer to know its eligibility
criteria. Every lender has this definite set of conditions known as the eligibility
criteria which each applicant has to fulfill. It is to ensure that the lender is giving the
loan amount to the right person.

So before applying for the gold loan, make sure you are eligible for it. For customer
knowledge, bank providing them below. Have a look at them.

Anyone who is above 18 years of age and below 75 years can apply for this loan.

The applicant must be an Indian Citizen.

The quality of good is a big factor in defining your eligibility. Customer’s gold
ornaments and bank-minted gold coins must have a purity of 18 to 22 karats and 24
karats respectively.
21
The applicant must have a stable source of income so that he or she can repay the
loan on time.

The applicant will not need any kind of guarantor to avail of this loan.

1.12 How much Gold Loan Amount Customer Can Get?

Kotak Mahindra offers a minimum loan amount of INR 20,000 to all types of
applicants. But it is the maximum amount which tends to vary according to the gold
customer have.

With the help of Kotak Mahindra Bank Gold Loan, customer can get a loan around
65% to 75% of the gold. Let’s understand this through an example. Suppose that
customer have gold ornaments. The total value of them is INR 10 lakh. So, according
to the LTV provided by Kotak Mahindra Bank Gold Loan, customer could get a loan
amount of INR 6.5 lakh to a maximum of INR 7.5 lakh. So, customer should know
this before applying for Kotak Mahindra Bank Gold Loan.

1.13 Kotak Mahindra Bank Gold Loan Interest Rate January 2022

Interest rate is certainly a crucial factor while availing for any kind of loan facility. A
lender will charge a certain interest on the given loan amount and it varies from one
lender to another. If customer are looking for a gold loan, the interest rate should be
the first thing that they check. In the case of gold loans, interest rates are a bit low as
this is secured in nature due to customer’s pledged gold against the loan amount.

Kotak Mahindra Bank Gold Loan Interest rates range from 10.50% to 17% per
annum. The final rate of interest for each customer may vary depending on his/her
overall profile and purpose of the loan. Customer’s eligible loan amount will also
affect their interest rates.

1.14 Repayment Modes for the Kotak Mahindra Bank Gold Loan

22
Customer can choose any of the two methods to repay the Kotak Mahindra Bank Gold
Loan – Interest Payment or Equated Monthly Installment (EMI) Payment

 Interest Payment Method

If customer opt for the interest payment method, will only need to pay the interest
amount at monthly, quarterly, half-yearly or yearly intervals.Customer can pay the
principal amount after the end of tenure. Customer can choose any interval according
to your convenience.

 Equated Monthly Installment (EMI) Payment Method

But if customer opt for the EMI payment method, will need to pay a fixed amount
which will consist of both principal and interest amount. So customer can choose any
of the two methods to repay the loan amount.

1.15 Kotak Mahindra Bank Gold Loan EMI Calculator — How does
It Work?

This can be calculated by an amazing tool known as Kotak Mahindra Bank Gold Loan
EMI Calculator. Customer just need to fill in a few basic details and the repayment
amount will be displayed instantly on the screen. To use this calculator, customer will
need to follow a few simple basic steps that bank have mentioned below. Do check
them!

1. The first thing that customer will need to enter is the Net Weight of Gold
excluding any kind of pearls, diamonds, copper, beads, etc.
2. After this, customer will need to feed the Karat of the Gold against which you
want to take the loan amount.
3. Now, feed the required loan amount. It can be a maximum of INR 50 lakhs if
an existing customer of Kotak Mahindra Bank.
4. Feed the repayment mode that customer want to choose from EMI, Monthly,
Quarterly, Half-yearly, and Yearly.
5. After the previous step, customer will need to put the rate of interest and
required tenure.

23
 6. After feeding these details into the calculator, Customer will get the required
amount that will need to repay.

Kotak Mahindra Bank Gold Loan information in tabular form:

Loan Aspects Details

Minimum Loan Amount INR 20000
Maximum Loan Amount INR 50 Lakhs for
Existing Customer
INR 25 Lakh for New
Customer
Interest Rate 10.50% to 17.00%
Minimum Tenure 12 months
Maximum Tenure 48 months
Loan-to-value ratio 65% to 75% of the gold
value
Processing Fee Upto 2% of the Maximum
Eligible Loan Amount +
Applicable GST charges
Penal Interest Charges 3% per month on the

24
 outstanding amount
Part prepayment Charges 2.25% of the foreclosed
Amount if the loan is
closed 1 month before the
tenure However, it can be
waived fully or partially
Documentation Charges Nil
Table 1.1: Kotak Mahindra Bank Gold Loan

COMPANY PROFILE

25
1.16 ABOUT KOTAK MAHINDRA BANK

Kotak Mahindra Bank Limited is an Indian banking and financial services company
headquartered in the city of Mumbai, India. It offers banking products and financial
services for corporate and retail customers in the areas of personal finance, investment
banking, life insurance, and wealth management. It is India’s third largest private
sector bank by assets and by market capitalisation as of November 2021. As of
February 2021, the bank has 1600 branches and 2519 ATMs.

In 1985, Uday Kotak founded what later became an Indian financial services
conglomerate. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group’s
flagship company, received a banking license from the Reserve Bank of India. With
this, KMFL became the first non-banking finance company in India to be converted
into a bank.

Kotak Mahindra Bank (the Bank) is the flagship company of the Kotak Group. It is
one amongst the fastest growing banks and the most admired financial institutions in
India. The Bank offers transaction banking operates lending verticals manages IPOs
and provides working capital loans. The principal business activities of the Bank are
organised into consumer banking commercial banking corporate banking treasury and

26
other financial services. The Bank along with its subsidiaries offers a comprehensive
range of financial products and services to its customers. The key businesses are
commercial banking investment banking stock broking vehicle finance advisory
services asset management life insurance and general insurance. The Bank addresses
the entire spectrum of financial needs of Non-Resident Indians (NRIs). Their tie-up
with the Overseas Indian Facilitation Centre (OIFC) as a strategic partner gives them
a platform to share their comprehensive range of banking & investment products and
services for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs). The
bank has overseas subsidiaries with offices in Mauritius London Dubai Singapore San
Francisco & New York. The overseas subsidiaries are mainly engaged in investment
advisory and investment management of funds equity & debt trading management of
GDR/ FCCB issuances broker & broker dealer activities and investments.

1.17 MERGER AND ACQUISITION

ING Vysya Bank

In 2015, Kotak Bank acquired ING Vysya Bank in a deal valued at ₹150 billion
(US$2.0 billion). With the merger completed, Kotak Mahindra Bank had almost
40,000 employees, and the number of branches reached 1,261. After the merger, ING
Group, which controlled ING Vysya Bank, owned a 7% share in Kotak Mahindra
Bank.

Ferbine

In 2021, the bank acquired a 9.99% stake in Ferbine, an entity promoted by Tata
Group, to operate a Pan-India umbrella entity for retail payment systems, similar to
National Payments Corporation of India

1.18 Product and Services

The bank offers complete financial solutions for infinite needs of all individuals and
non individual customers depending on the customer’s need – delivered through a
state of the art technology platform. Investment products like Mutual Funds,Life

27
Insurance, retailing of gold coins and bars etc are also offered.The bank follows a mix
of both open and closed architecture for distribution of the investment products.All
this is backed by strong, in house research on Mutual funds.

The bank’s savings account goes beyond the traditional role of savings,and allows us
to put aside a lot more than just money.The worry-free feature of Savings Account
provides a range of services from funds transfer,bill payments,2-way sweep through
our Active Money feature and much more.We can place standing instructions for
investment options that can be booked through internet or through phone banking
services, The saving account thus provides for attractive returns earned through a
comprehensive suite products and services that offer investment options,all delivered
seamlessly to the customer by well integrated technology platforms.

Apart from Phone banking and Internet banking, the Bank offers convenient banking
facility through mobile banking,SMS services,Nectard, Home banking and Bill Pay
facility among others.

The Depository services offered by the bank allows the customer to hold equity
shares, government securities, bonds and other securities in electronic or Demat
forms.The Salary to Wealth offering provides comprehensive administrative solutions
for Corporates with features such as easy and automated web based salary upload
process thereby eliminating the paper work involved in the process a dedicated
relationship manager to service the corporate account customized promotions and tie
ups and many such unique features.The whole gamut of investment products and
investment advisory services is available to the salary account holders as well.

For the business community, the bank offer comprehensive business solutions that
include the Current Account, Trade services,Cash Management Service and Credit
Facilities. The bank’s wholesale banking products offer business banking solutions
for long-term investments and working capital needs, advice on mergers and
acquisitions and equipment financing. To meet special needs of the rural market, the
bank has dedicated business offerings for agricultural financing and infrastructure. It’s
Agricultural Finance division delivers customised products for capital financing and
equipment financing needs of our rural customers.

For financial liquidity the bank offer loan that meet personal requirements with quick
approval and flexible payment options. To complete the personal financial offering

28
space, the bank now offers Kotak Credit Card which is a hassle-free, transperant
product that also happens to be the vertical credit card in the industry.

1.19 SUBSIDIARIES & ASSOCIATES:

Major subsidiaries of the Bank include:

 Kotak Mahindra Prime

 Kotak Mahindra Investments
 Kotak Securities
 Kotak Mahindra Capital
 Kotak Mahindra Life Insurance
 Kotak Mahindra General Insurance
 Kotak AMC
 Kotak Investment Advisors
 Kotak Capital Company

1.20 SUCCESS OF BANK

In the year 1994, the company formed Kotak Mahindra International in Mauritius
and opened an office in Dubai. They formed Kotak Mahindra (UK) with office in
London. In the year 1996, the car finance business was hived off into a separate
company, namely Kotak Mahindra Primus Ltd and Ford Credit took a 40% stake in
Kotak Mahindra Primus. In the year1998, they formed Kotak Mahindra Inc with
office in New York. In the year 2001, Kotak Securities Ltd became a subsidiary
company.

In February 2003, the company was given the license to carry on banking business
by the Reserve Bank of India (RBI). This approval created banking history since
Kotak Mahindra Finance Ltd is the first non-banking finance company in India to
convert them into a bank as Kotak Mahindra Bank Ltd. In March 2003, they
commenced banking operations. The Bank started their operations in New Delhi by
inaugurating a branch. They entered into ATM sharing agreement with UTI Bank
(now known as Axis Bank), in which the Bank customer’s were free to access around
800 ATM’s. They unveiled several home finance products options that include Home

29
Loan, Home Equity Loan, Home Loan Transfer and Home Improvement Loans. Also,
they launched online remittance services called FUNDS to HOME for Non-resident
Indians

In January 2005, the Bank opened 29th retail-banking branch at Mehsana in Gujarat.
In February 2005, they launched Rajajinagar extension counter in Bangalore and
launched free Mobile Banking facility. Also, they launched their branch at Chennai,
Tamilnadu. In February 23, 2005, they opened their retail-banking branch in the
business capital of Madhya Pradesh. In March 2005, they opened their eighth retail-
banking branch at Napean Sea Road in Mumbai.

In May 2005, the Bank opened new retail-banking branch at Parry’s Corner in
Chennai. In June 2005, they opened two retail-banking branches in Delhi at
Safdarjung Enclave and Punjabi Bagh. In October 4, 2005, the Bank acquired 40%
stake in Kotak Mahindra Primus Ltd (KMP) held by Ford Credit International (FCI)
thereby giving the Bank and

their subsidiary, complete ownership of KMP. Simultaneously, they also sold their
stake in Ford Credit Kotak Mahindra Ltd (FCKM) to FCI.

In September 2006, the Bank acquired 51% of the paid up Share capital of Kotak
Mahindra Securities Ltd (KMSL) by way of preferential allotment of shares by
KMSL to the Bank. In March 2007, the Bank entered into a subscription agreement
with International Finance Corporation, whereby the Bank will issue Upper Tier II
Subordinated Bonds by way of Debentures of the value of USD 45 million with the
final maturity of over 15 years.

During the year 2007-08, the Bank increased 73 new full-fledged branches & 179
new ATMs, taking the network size to 178 branches and 314 ATMs. They added new
products & services like Gold debit card, smart fee (a fee solution for Educational
Institutions), a GPRS based mobile banking, bill presentment and payment facility,
online term deposits etc to meet the needs of the customers.

During the year 2008-09, the Bank added 39 branches and 74 ATMs taking the total
network size to 217 branches and 387 ATMs (including 175 off site ATMs). They
introduced several new features like, Online password, two factor authentication,

30
improved features for security of fund transfers, e-tax payment facility, auto payment
of bills, PIN based IVR.

In June 2010, the Bank entered into an agreement with Sumitomo Mitsui Banking
Corporation, Japan for a preferential issue of 1.64 crore shares at Rs 833 per share
which amounts to approximately 4.5% stake on a post-issue basis for Rs 1,366 crore.

During the year 2010-11, the Bank added 72 branches and 246 ATMs and ended the
year with 321 Branches and 710 ATMs, and thereby increasing their presence to 183
locations. They also added over half a million new customers this year across core
banking products of savings and checking account, term deposits, overdrafts and non-
resident accounts.

During the year, the Bank’s Treasury started Correspondent Banking Division to build
and leverage on relationships with offshore banks for improving quality and
international reach for their customers. Also, the Bank entered into a strategic
arrangement with PVR Cinemas, one of the elite name in entertainment industry, to
distribute credit card products aimed at upmarket customers.

In August 2011, the Bank entered into business cooperation arrangement with CIMB
Group Sdn. Bhd., Malaysia (CIMB). In October 2011, Kotak Mahindra Capital
Company Ltd, a subsidiary of the Bank and Evercore Partners, global investment
banking advisory firm headquartered in New York, USA, entered into an exclusive
strategic partnership for cross-border M&A advisory services between India and the
United States, the United Kingdom and Mexico.

On 4 September 2012, Kotak Mahindra Bank Ltd. Announced that it entered into a
strategic alliance with Scotiabank, Canada’s most international bank to provide
financial services to people immigrating to Canada and to non-resident Indians (NRIs)
and People of Indian Origin (PIOs) seeking bank accounts and other banking services
in India. This alliance brings together the respective strengths of each bank to enable
referrals for customers in Canada and India, subject to local banking regulations.

On 5 February 2013, Kotak Mahindra Bank Ltd. (KMBL) announced that it acquired
a portfolio of approximately 6,000 business loans with a total loan outstanding of
about Rs 700 crore from Barclays Bank PLC, India Branch and Barclays Investment

31
and Loan (India) Ltd. The acquisition is in line with KMBL’s strategy to add value to
existing business lines as it strengthens business loans portfolio.

On 12 April 2013, Kotak Mahindra Bank Ltd (KMBL) announced that it has
accepted an offer from Heliconia Pte Ltd, an affiliate of Government of Singapore
Investment Corporation Pte Ltd (GIC), to subscribe to a preferential issue of 2 crore
equity shares of KMBL, amounting to approximately 2.6% shareholding in the bank
(as of 31 March 2013) on a post-issue basis. The proposed investment of Rs 1296
crore will be at a price of Rs 648 per share.

On 9 October 2013, the then Deputy Governor of Reserve Bank of India Dr. K. C.
Chakrabarty formally inaugurated Kotak Mahindra Bank’s (KMB) 500 th branch
located at Mumbai’s Western suburb of Kandivali and its 1,000 th ATM located at
Jayanagar, Bengaluru.

On 30 May 2014, Kotak Mahindra Bank Ltd (KMBL) announced that Kotak Trustee
Company Private Limited, a promoter group entity, has sold approximately 2.5 crore
shares amounting to around 3.24% shareholding in KMBL. Post the transaction, the
promoter holding in the KMBL dropped to 40.33%.

On 20 July 2014, Kotak Mahindra Bank Ltd (KMBL announced that it has entered
into a Share Purchase Agreement (SPA) to purchase 15% equity stake in Multi
Commodity Exchange of India Ltd (MCX), from Financial Technologies (India) Ltd
(FTIL), for a consideration of Rs 459 crore. On 25 November 2014, Kotak Mahindra
Bank announced its plan to foray into general insurance business.

On 29 January 2015, Kotak Mahindra Bank announced that it agreed to invest

19.9% in Airtel M Commerce Services Limited (AMSL), which is in process of
applying for Payment Bank License to Reserve Bank of India (RBI). AMSL is a
subsidiary of Bharti Airtel Limited.

On 3 May 2016, Kotak Mahindra Bank announced the launch of its International
Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City), district
Gandhinagar.

On 1 September 2016, Kotak Mahindra Bank announced a strategic partnership with

Biz2Credit, a leading US-based online marketplace for small business finance. Kotak

32
Mahindra Bank will start leveraging the Biz2Credit platform and alliances to increase
its Salaried Personal Loan book.

On 30 September 2016, Kotak Mahindra Bank announced that it has executed

binding share purchase agreement to acquire 99.49% of equity shares of BSS
Microfinance Private Limited (BSS), a Non-Banking Finance Company, classified as
a NBFC-MFI, from existing shareholders for an aggregate all-cash consideration of
Rs 139.2 crore. As of June 30, 2016, BSS has a networth of approximately Rs 73
crore and micro finance loans of Rs 483 crore in its books.

On 6 October 2016, Kotak Mahindra Bank announced that it has reduced its base
rate by 10 basis points to 9.4% p.a. with effect from 7 October 2016.

On 11 November 2016, Kotak Mahindra Bank announced that it has received

Reserve Bank of India’s approval to set up its first overseas branch in Dubai
International Financial Centre (DIFC), Dubai.

Kotak Mahindra Bank reduced its Marginal Cost of Funds based Lending Rate (K-
MCLR) by up to 45 basis points (bps) with effect from 1 January 2017 for various
tenors. The bank reduced its base rate by 10 basis points to 9.3% p.a. with effect from
6 January 2017.

On 29 March 2017, Kotak Mahindra Bank announced the launch of 811’, India’s
unique full-service digital banking ecosystem on mobile that will drive the bank’s
organic growth agenda. 811 offers a zero balance savings account with zero charges
for all digital transactions, where customers can earn up to 6% p.a. on their savings
account balances. 811 offer a completely digital and paperless account opening
experience across nearly 700 locations in India. It can be opened anywhere, anytime,
within 5 minutes, using Kotak’s mobile banking app.

The Board of Directors of Kotak Mahindra Bank (Kotak) at its meeting held on 30
March 2017 accorded its approval for fresh issue of up to 6.2 crore equity shares to
augment the bank’s capital base.

On 28 April 2017, Kotak Mahindra Bank announced that it has entered into an
agreement to purchase the entire 26% equity stake held by Old Mutual plc, UK (OM)
in Kotak Mahindra Old Mutual Life Insurance Limited (Kotak Life) for a
consideration of Rs 1292.7 crore. After the completion of the transaction, Kotak

33
Mahindra Group will hold 100% of the equity shareholding of Kotak Life. On 13
October 2017, the bank announced that it completed the transaction for acquisition of
26% equity stake held by Old Mutual plc, UK in Kotak Life.

On 18 May 2017, the Securities Issuance Committee of Kotak Mahindra Bank

approved allotment of 6.2 crores equity shares to eligible qualified institutional buyers
at issue price of Rs 936 per share aggregating to Rs 5803.20 crore. The QIP issued
opened for subscription on 11 May 2017 and closed on 16 May 2017.

The Board of Directors of Kotak Mahindra Bank at its meeting held on 18 May 2017
approved increase in ceiling limit on the total shareholding of Foreign Institutional
Investors (FIIs)/Foreign Portfolio Investors (FPIs) in the bank to 43% from 42%.

On 3 August 2017, Kotak Mahindra Bank announced that it kept interest rates on
savings accounts unchanged for most of the slabs except on savings accounts balance
above Rs 1 crore and up to Rs 5 crore. The interest rate on saving accounts balance
above Rs 1 crore and up to Rs 5 crore was cut by 50 basis points to 5.5% from 6%
with effect from 4 August 2017.

In August 2018, the Bank has issued and allotted 100 crore 8.10% Perpetual Non-
Cumulative Preference Shares (PNCPS) of Rs 5 each amounting to Rs 500 crores.

In March 2019, the Bank has issued and allotted 1500 Senior Unsecured Rated
Listed Redeemable Long Term Bonds in the nature of Non-Convertible Debentures
bearing a face value of Rs 10 lakh each aggregating to Rs 150 crore.

KMIL on 26th April 2019 sold off its entire equity stake of 19.77% held in Matrix
Business Services India Pvt. Ltd. An associate company of KMIL. Accordingly,
Matrix ceased to be an associate company of KMIL & consequently of the Bank from
that date.

As at 31st March 2019, the Bank has 4 associate companies comprising of Infina
Finance Private Limited, Phoenix ARC Private Limited, Matrix Business Services
India Private Limited, and ACE Derivatives & Commodity Exchange Limited, which
ceased to be an associate company with effect from 26th April 2019.

In August 2018, the Bank completed its issuance of Perpetual Non-Convertible

Preference Shares (PNCPS) resulting in dilution of promoter stake to 19.70% of the

34
paid-up capital of the Bank. However, the Reserve Bank of India (RBI)
communicated to the Bank that the PNCPS issuance does not meet their promoter
dilution requirement. The Bank has, by way of abundant caution, in December 2018,
filed a writ petition with the Hon’ble Bombay High Court to validate its position. The
writ petition is pending.

During the year 2019, Kotak Securities (KS) launched FIT (Free Intraday Trading), a
subscription based product, targeted at online customers. It also launched biometric
based account opening process during the year. These resulted in a higher customer
acquisition for the year. Besides, KS launched commodity brokerage services and
direct mutual fund platform during FY 2019.

During the year 2019, Kotak Investments Advisors Ltd., (KIAL) has received new
capital commitments of around Rs 50 billion. The aggregate domestic alternate assets
managed by KIAL as on 31st March 2019 were Rs10547 crore. It managed 15
domestic funds during the year. It also advised 5 offshore funds during the year.
During the year, KIAL successfully exited all investments in its Managed Account
Fund.

The Bank had 1,600 branches (excluding GIFT and DIFC) and 2,519 ATMs as on 31
March, 2020. As on 31 March 2020, the bank has 19 subsidiaries and 4 associate
companies under its roof.

Pursuant to the approval of the Board of Directors on 22 April 2020 and approval of
the shareholders by way of postal ballot on 25 May 2020, the bank undertook a
Qualified Institutions Placement. The object of the issuance is to augment the Bank’s
capital base and to strengthen its balance sheet, which would assist the Bank in
dealing with contingencies or financing business opportunities (which may either be
organic or inorganic), or both, which may arise pursuant to the economic events
driven by the outbreak of COVID-19 (which has been declared a pandemic by the
World Health Organization), or otherwise. On 30 May 2020, the bank allotted
6,50,00,000 equity shares of face value of Rs 5 each at an issue price of Rs 1,145 per
equity share thereby raising Rs 74,42,50,00,000.

The bank has received the award for Keya (AI-powered Voicebot and Chatbot) in the
category AI/Machine Learning at the BankTech Awards 2020. The bank also received
the award under categories – Best Cash Management Bank in India’ & Best

35
Productivity, Efficiency and Automation Initiative, Application or Programme –
Smart Collect’ at the Asian Banker Transaction Banking Awards 2019.

During the FY2020, Kotak 811 launches India’s first zero-contact, video KYC
savings account.

PROFILE OF COMPANY

Type Public
Traded as BSE: 500247
NSE: KOTAKBANK
BSE SENSEX Constituent
NSE NIFTY 50 Constituent

ISIN INE237A01028
Industry Financial Services
Founded February 2003
Founders Uday Kotak
Headquarters Mumbai, India
Key people Uday Kotak (Chairman,MD & CEO)

Products Banking, commodities, credit cards, equities trading,

insurance, investment management, mortgage loans,
mutual funds, private equity, risk management, wealth
management, asset management

36
Revenue ₹56,703crore (US$7.5 billion) (2021)
Operating Income ₹16,428crore (US$2.2 billion) (2021)
Net Income ₹9,903 crore (US$1.3 billion) (2021)
Total Assets ₹478,872crore(US$64billion)(2021)
Total Equity ₹83,345 crore (US$11 billion) (2021)

Number of 71,000 (2021)

Employees

Subsidiaries Kotak Mahindra General Insurance, Kotak Life

Insurance,Kotak Mutual Fund, Kotak Securities,
Kotak Mahindra Prime Ltd., Airtel Payments Bank
(9.99%)
Table 1.2: Kotak Mahindra Bank Profile

CHAPTER 2 :

RESEARCH METHODOLOGY

37
 RESEARCH METHODOLOGY

2.1 Objectives of the study

To understand Gold Loan and schemes of Gold Loan provided by Kotak Mahindra
Bank.

To understand the perception of customer about Gold Loan provided by Kotak

Mahindra Bank.

To know the reasons for availing gold loans by the respondents in Ulhasnagar City.

2.2 Limitations of the study

The study does not cover the entire population of people availing gold loan.

The results of the analysis are based on the data about the sample population of the
customer’s availing Gold Loan provided by Kotak Mahindra Bank in Ulhasnagar.

The study is limited to customer’s of Ulhasnagar City.

2.3 Significance of the study

38
The present study’s aim is to understand the perception of customers about Gold Loan
provided by Kotak Mahindra Bank and also find out the purpose of borrowing gold
loan through primary data which was collected by Questionnaire in the Ulhasnagar.
At present gold loans will be offered from public, private, and Co-operative banks,
this present study based on the customer attitude towards gold loan and purpose of
gold loan, in Ulhasnagar area to create awareness to householders regarding gold
loans and its purpose through my research study. The study also identifies the various
demographic factors like gender, age, income level, Occupation, and educational
background of the borrowers which Have an impact in opting for availing gold
loan.This present paper recognizes a variety of factors which are reflected by
borrowers while taking the gold loan.The gold loans have appeared as mostly used as
quick & short-term capital. Gold loans were chosen more than traditional Personal
loans due to less procedures, fast disbursement and easy EMI (Equated Monthly
Installment). The study depicts that the most of the respondents availed gold loans
from the bank and many respondents use this fund for their usual consumption and
many other purposes.

2.4 Research Design

Descriptive Research Design will be used for research. Descriptive research is

undertaken when the researcher desires to know the characteristics of certain groups
such as age, sex, occupation, income or education.

Descriptive studies are normally factual and simple. This type of studies are well
structured. In such studies, the researcher has to give adequate thought to framing
research questions and deciding the data to be collected and the procedure to be used
for this purpose. Descriptive research is useful for finding out views and attitude of
customers.

Descriptive research can be divided into two categories as follows:

Cross Sectional and Longitudinal studies

Cross-sectional study is a study involving a sample of elements from the population

of interest at a single point of time. It is a study concerned with a sample of elements
from a given population. Information or data on a number of characteristics are
39
collected from the sample elements. Such data are analysed for drawing conclusions.
Cross sectional studies include field studies and surveys.

2.5 Data Collection

 Primary Data

Primary data is used in the form of questionnaire which is filled by Respondents.

 Secondary Data

Data not originally collected for the use in the research project under consideration,
but rather use by some other person or some other project are called secondary data.

The secondary data were collected from journals, magazines, old research papers and
web-sites that offered information of gold loan market in India and demand for gold
loan in India.

2.6 Sample Size:

In this research, primary data cannot be collected from each and every customer as
this is time consuming. The better alternative is to select a representative sample and
to collect information from such selected individuals.

The sample sizes of 92 respondents of Kotak Mahindra Bank are taken.

2.7 Sampling Method

In this research, primary data cannot be collected from each and every customer as
this is time consuming. The better alternative is to select a representative sample and
to collect information from such selected individuals called sample. There are two
categories under sampling.

 Probability or Random Sampling Method

 Non-Probability or Non-random samplimg method

40
Non-Probability samplimg method is used for this study. Under that quota sampling
method is used. This method is useful in customer or marketing surveys.

2.8 Tools and Techniques used for research study:

The data collected in the research study is present in graphical manner.Pie chart and
bar diagram is used for graphical presentation of data.

 Pie chart:

Pie chart is a graphic data display in which sectors of a circle correspond in area to the
relative size of the quantities represented. The main use of pie chart is to show
comparison.

 Bar Graphs:

Bar graph is a mathematical representation of data. It uses bars to show comparisons

between categories of data. The bars can be either horizontal or vertical. In this study
horizontal bars are used. They show trends in data.

41
 CHAPTER 3:

REVIEW OF LITERATURE

42
3.1 Review of Research Paper

Impact Journal, Published: 29 Feb 2020

Customer Attitude and Perception: A Study For Gold Loan in Rajasthan

This paper was an empirical presentation of a research attempt to seek the consumer
temper and awareness towards gold Loan with reference to Pali city. This paper
recognised a variety of factors which are reflected by borrowers while taking the gold
loan. This study also revealed about the various demographic concerns like gender,
age, educational background of the borrowers, income level etc. which have an
impact in choosing financial institutions and NBFC’s for availing gold loan.The gold
loans have appeared as mostly used as quick & short-term capital. Gold loans were
chosen more than traditional Personal loans due to less procedures, fast disbursement
and easy EMI (Equated Monthly Installment). The study that the most of the
respondents availed gold loans from the banks, NBFCs and many respondents use this
fund for their usual consumption. Finally, this paper warned that a person should go
for the gold loans only if he is positive enough to repay his money otherwise it is not
cup of tea.

Thus, She conclude that for borrowers, gold loans have emerged as one of the best
means of raising quick, short-term capital. Gold loans were Preferred over

43
conventional personal loans due to less procedures, fast disbursement and easy
installments. The study showed that the respondents preferred gold loans from the
banks, and most of the respondents use the fund for their consumption smoothing. To
the end, it’s a friendly warning to all, please go for the gold loans only if you are
confident Enough to repay in future, otherwise it is not your cup of tea.This study
identified that Muthoot Finance Ltd. Has a very strong position in the gold loan
market when compared with other loan providers in the same segment. The study also
identified the various demographic factors like gender, age, income level, educational
background of the borrowers which have an impact in opting Muthoot Finance for
availing gold loan.

International Journal of Commerce, Published: 1.07.2019

A Comparative Study on Gold Loan Offered by Public Sector Banks and Non-
Banking Financing Companies,

This study was focused on the preference borrowers in availing the Gold loan, the
awareness level of borrowers about lending norms, factors influencing borrowers to
avail the gold loan, problems faced by the borrowers while availing gold loan and
satisfaction level of borrowers towards Public sector Banks and Non-Banking
Financing Companies in availing gold Loan. An attempt has been made to collect
information from 107 respondents from the borrowers of Gold loan from Public sector
Banks and Non-Banking Financing Companies in Madurai city. The data collected
using an appropriate questionnaire were analyzed and interpreted using statistical
techniques, and also the testing of the hypothesis was done, and conclusions arrived at
whether the Theories were accepted or rejected.

Thus it can be concluded that gold loan has become one of India’s fastest growing
businesses. It was obvious that the majority of people prefer Public Sector Banks
when compared to NBFCs irrespective of the attracting features followed by NBFCs.
This was because public sector banks ensures security for the gold ornaments
pledged, and the rate of interest charged is also less. But the preference towards
NBFCs in availing gold loan also was increasing as they provide an adequate amount
for the gold jewels pledged and the time taken to disburse the gold loan is even less.
Therefore the borrowers meet out their expenses at the time of emergency. Thus gold

44
loans offered by NBFCs and Public sector Banks help the marginal sections of society
in meeting their necessary fund requirements whenever required.

IRJA-Indian Research Journal, Issue: January, 2015.

A Study Of Gold Loan in Muthoot Finance Limited Prof. B. Shivraj

They concluded that the company was a “Systemically Important Non–deposit taking
NBFC” headquartered in the southern Indian state of Kerala. The company issue
secured non–convertible debentures called “Muthoot Gold Bonds” on a private
placement basis. Proceeds from the issuance of Muthoot Gold Bonds form a
significant source of funds for their Gold Loan business. It also relies on bank loans
and subordinated debt instruments as its sources of funds. The emergence of

organized retail undoubtedly gives consumers a wider choice of goods, more

convenience, and a better shopping environment, among other benefits. Organized
retail can appear small but spread in all local markets, social economic developments.
It was also true that presently, they are facing many internal and external challenges,
which are hindering their performance. Hence, there was a need to consider the above
listed challenges for another reform to improve the performance of the gold loan
particularly to meet the requirement of new and open improve the performance of the
gold loan particularly to meet the requirement of new and open competitive
environment.

PARIPEX – Indian Journal of Research, Issue: 5 May 2016

A Study On Awareness and Satisfaction Level of Gold Loan Credit Facility by

Non Banking Financial Companies At Coimbatore City S.Shankarii Assistant
Professor, Department of Management Sciences Hindusthan Institute of
Technology Coimbatore-32

The study is based on the awareness and satisfaction level of gold loan facility, The
various factors which are considered by borrowers while availing the gold loan and
the various reasons for opting gold Loan .The study also identifies the various
demographic factors like gender, age, income level, educational background of the

45
borrowers which have an impact in availing of gold loan.The respondents were
consumers from various selected gold Jewellery outlets in and also the level of
awareness and the general attitude of consumers towards gold as an investment. Gold
is rare among metals. But it can be seen everywhere, from jewellery to technology.
Unlike any other metals sometimes gold, the shiny precious yellow metal creates
some Emotional attachments among people. Gold also plays a huge position in the
economy of a country.

From the study it can be concluded that the demand for gold as an investment is
gaining momentum among consumers, The investment pattern shows that in the last
three months Gold was a major investment haven for consumers ,portrays The non-
risk taking behavior of consumers. ‘Price’ is the most important factor among
consumers when deciding to buy Gold. It is interesting to note that gold is purchased
in more quantity when price is slashed down. This makes it clear that Gold is price
sensitive at low prices but it is insensitive to price increase, As the investment pattern
is increased it is treated as liquidity for any emergency purpose of all levels of income
of people. This finding has a lot of implications when authorities formulate policies to
curb consumption of gold. The gold loan has to be limited and regulated by the
Reserve bank of India And the rural banks have to be monitored by the committee. As
one side the India was moving towards the investment and other moving towards the
creditability of that asset. A price insensitive customer was not influenced by the price
of a product when deciding whether or not to purchase it. This study was a slightly
different case of consumer behavior. People tend to buy gold regardless of its price
because it is an essential commodity; as opposed to the Indian Finance Minister’s take
on gold that it is a costly non-essential commodity.

Churiwal and Shreni (2012) In their study titled “Overview of Growing Gold
Loan Demands,”

They highlighted on various aspects of Gold Loan from traditional pawnbroker to

shifting of Gold Loan to NBFC. They analyzed important factors like rising In
borrowing costs due to the removal of agricultural sector status on loans. They finally
concluded that NBFCs are growing through Gold Loan compare to organize banks.

46
Dnyanesh Nair, N. (2012). Changing Consumer Perception Driving India’s
Organised Gold Loan Market. Mumbai: International Research Review, Page
No.47

Has discussed that the organized Gold Loan market has grown tremendously over a
period of time, owing to the changing consumer perception about gold loan and rising
loan . The perception of consumers towards Gold Loan has changed drastically. The
Author has discussed the changing consumer perception and rising loan requirement
of consumers. He has pointed out the growing demand of rising loan requirement.

Kumar, S., & Sharma, R. (2014). Performance Analysis of Top Indian Banks
Through CAMEL Approach. International Journal of Advanced Research in
Management and Social Sciences, 3(7), 81

Studied and analyzed the performance of the top 8 market capitalized banks by using
CAMEL approach during the period 2006-10. The study showed that SBI was top
performer followed by PNB and HDFC bank the top 8 market capitalized banks by
using CAMEL approach during the period 2006-10.

Malhotra, N., & Aspal, P. K. (2014). Performance Measurement of New Private

Sector Banks in India. The Indian Journal of Commerce, 67(2), 2642.

Studied the financial performance of the private sector banks in India by using the
CAMELS model during 2008-2012. The study identified no significant difference in
CAMELS ratios among the selected private sector banks. The study found that Kotak
Mahindra bank has better performance followed by Axis bank and lastly ICICI bank
in terms of performance.

3.2 Review of Book

(Indian Institute of Banking and Finance, 2010) Banking Products and Services.

Has been stated that the Banks and NBFCs have started attracting the borrowers by
providing Loans against the pledge of gold jewelry. The jewelry is weighed and its

47
purity is certified by Organized Financial Institution gold smith. The value of gold is
decided as per the extant market Price. The interest rate will be same as applied to
Personal Loan, but some institutions are Giving attractive interest rate on gold
pledged. The provision of the gold Control Act is also taken Into consideration. The
borrowers are required to repay the Loan in monthly installments. The Book’s
covered appropriate and complete information on Gold Loan and Personal segment.

Rosita (2010) has focused attention upon ‘Gold loan’ which served financial support
to the borrowers, noted that the loan meets urgent needs and gold is considered an
essential investment from a cultural, emotional and safety perspective. Gold loans
also known as gold deposits are loans given by Banks/ NBFCs by taking gold as a
security. In researcher opinion gold loans are not new to the Indian market. It existed
but in the unorganized sector where money lenders used gold as a security for
providing loans. Now banks have entered this space in a big way because the market
is very large considering the fact that most Indians tend to have sufficient investment
in gold. More importantly, with more and more women working in the family, people
have become broadminded. So the social stigma that was once attached to taking a
loan on gold is gradually being eliminated. Off Late, this product has become popular
because of the substantial rise in gold prices. The quantum of loan that one can get by
giving gold as security has increased tremendously making it an attractive loan
proposition.

3.3 Review of Articles

Harini Subramanian (2011) In her article Titled “Gold loan: A More Precious
Debt Option”,

She concentrated on finding whether there was any reason for borrowers to pledge
gold jewelry to offer as collateral for personal loan. Shewas able to see that the
amount of documentation and excessive verifications before borrowers’ credit gets
processed.Thus she concluded that if borrowers’ prefer gold loan, they can easily
avail gold loan from Bank before other loans.

48
Linda Mary Simon (2012) In her study titled“A Study on Customer Perception
towards “Gold loan: A More precious debt option”, Business standard
publication Services Provided by Public Sector Banking the Coimbatore region,” this
article focused on the most preferred financial institution as per the services provided
to customers. It revealed that NBFCs was providing better services to its customers
than the public sector Banks. Thus it was concluded that public sector banks had a
strong presence in the market, but in recent times they are facing stiff competition
from NBFCs in the range and quality of services offered.

(Sarika Malhotra, 2013): NBFCs were a favourite of private equity investors in

India

Malhotra in her article said that not so long ago, NBFCs were a favourite of private
equity investors in India. With the Indian economy on a roll, most PE funds wanted to
put their money In non-banking finance companies (NBFCs) specialising in gold
loans. But, today, gold loan companies Have lost their lustre because of a stricter
regulatory environment and a volatile gold market, pushing Funds to vehicle finance
companies instead. And with the economy in a slowdown, exits from gold loan
Lenders have also become much harder. For example, the vehicle financing company,
Au Financiers, has Been a virtual PE magnet the past few years. It first hit the jackpot
in 2008 when Motilal Oswal Private Equity invested INR 20 crore. Funds have been
pouring in since. Oswal invested another INR 20 crore in The company in 2010 and
International Finance Corporation (IFC) INR 35 Crore, followed by INR 150 Crore
by Warburg Pincus and INR 33 crore by IFC last year. Chrys Capital also invested
INR 120 crore in 2013. At the same time, the lender has also grown from strength to
strength: Au’s net worth has leapt to INR 500 crore from just INR 15 crore in 2008
while its valuation has galloped to INR 1,200 crore from INR 30 crore in the same
period. For Motilal Oswal too, the investment was worth its weight in gold. A Partial
exit in 2012 is reported to have translated into a five-fold return on investment, while
a further Stake sale took its returns up 10 times. Vehicle finance companies in
particular have been attracting more Funding. Quoting experts, the researcher says
they offer more stability than gold loan firms which are Subject to business risks such
as price fluctuations and quality of collateral. Gold players have been hit by Uniform

49
valuation methodology for jewellery and operating model changes suggested by the
RBI which Requires them to seek permission to open new branches and disburse
higher value loans through cheques. Also, PE funds believe in the business model of
lending against income-generating assets Commercial vehicle finance, as compared to
businesses operating in consumption-based lending. Vehicle loan companies get most
of their business from semi-urban and rural areas. Most people in urban areas, looking
to buy cars, go to banks for loans, but those seeking trucks, especially from smaller
towns, prefer vehicle finance NBFCs.

The Reserve Bank of India‟s (RBI‟s) new guidelines on lending against gold will
weaken the Competitive positions, growth prospects, profitability, and asset
quality of gold loan non-banking financial Companies (Moneycontrol.com, 2013)
(NBFCs).

In article stated that CRISIL expects the profitability of these NBFCs to decline by
nearly 75 basis points (bps), and their loan books to decline in the near term.
However, the new guidelines, issued on September 16, 2013, will promote orderly,
sustainable growth in the sector over the long term. Implementation of the RBI
guidelines will weaken the competitive positions of gold loan NBFCs vis-à-vis those
of banks and the unorganised sector. The introduction of uniform valuation
methodology for jewellery will limit the flexibility to offer loans at higher effective
loan-to-value (LTV) Ratios, and prompt customers to move to other lenders.
According to CRISIL Ratings, borrowers with limited stocks of jewellery will move
to the unorganised sector that will continue to offer loans at higher LTV ratios.
Interest-sensitive borrowers will shift to banks that offer loans at much lower costs for
similar or higher LTV ratios. The growth of the gold loan NBFC sector will also be
constrained by two stipulations in the new guidelines: that NBFCs take the regulator‟s
approval before opening new branches, and disburse higher-value (above INR 1 lakh)
loans through cheques. Moreover, intensifying competition will lead to reduced yield
for gold loan companies. The detailed norms on auctioning will also increase the
operational costs and challenges in auctioning gold. The desire to limit delinquencies
to avoid auctioning will lead to higher investments in collection systems. As a

50
combined impact of these developments, the gold loan NBFCs‟ return on assets
(RoA) is expected to decline by nearly 75 bps.

Ashish and Mehatha (2010) In article they said that Compared with the rest of the
world, in India, the gold loan market is a big business. Until a decade back, most of
the lending was in the unorganized sector through pawn brokers and money lenders.
However, this scenario changed with the entrance of organized sector players such as
banks and non-banking finance companies (NBFCs) which now command more than
25 percent of the market. NBFCs have been a major driving force behind this growth
given their extensive network, faster turnaround time, higher loan-to-value ratios and
the ability to serve non-bankable customers. Gold loans are among the newest class of
assets which have seen rapid growth in securitization. But, with the restriction on
agricultural sector status of gold loans by RBI, the pace of securitization of these
loans is slowing down as most of these securitizations focused on benefits accrued
through the use of agricultural sector status. Also, RBI‟s draft securitization
guidelines (Sept. 2011) had proposed minimum holding Period (MHP) of 12 months
for allowing securitization transactions. Given the short tenure of gold loans (a year
and lesser), securitization of the same will not be possible. The government views
gold loans as an effective means of meeting the demand for micro-finance in India.
This would encourage framing of policies favorable to the growth of the gold loan
market. Since more than 75 percent of the gold loan market is still with the
unorganized segment as of 2010, the organized segment has a huge potential for
growth through cannibalization of the unorganized segment.

(George, 2012) Emphasing on shifting from unogranized to organized gold loan

market. Economics Times, Page No.8.

The chairman of India’s largest gold company Muthoot Finance, gave his view on the
change in regulation and said, This move by the apex regulatory body will help the
cause of financial inclusion and is an acknowledgment of the growing significance of
gold financing NBFCs in fuelling micro-economies in the country. This will help the
un-banked rural and Semi-urban customers get more value against their assets and
prevent them from going back the unorganized sector. His statement emphasis on the

51
shifting of consumer from Unorganized to Organized Gold Loan. He also pointed out
the growing importance of gold financing.

Roong-ta, CEO, (Apnapaisa.com)

Said that with the current financing cost changes, choosing a gold loan as against an
individual loan is more worthwhile. Not exclusively are your general costs
diminished, this will spare a great deal of your time. “One of the significant focal
points is that the loan is handled very quickly, inside hours, even minutes at certain
Banks, with negligible documentation,” The Credit Information Bureau (India) Ltd
scores which mirror a person’s financial record are starting to assume a significant
part in procuring individual loans. In any case, a gold loan requires no such score.
While the imperative archives for a gem loan contrast across Banks, most ordinarily
require close to a proof of pay or address.

Ragoanil (2012) in his article “gold loan: making gold work for you” in “business
world”

Remarked that “this perception toward gold loan has gradually undergone a change
and individuals have started seeing the value of loan against gold as against availing a
personal loan. The gold loan market that was highly fragmented and dominated by
local jewellers has gradually seen the entry and growth of NBFCs and bank, a clear
indication of the viability of gold loans as an important loan product.”

Bureau (2012): article “gold loan firms setting up SRO as RBI tighten screws” in
“The economic time”

In his article concluded that “under the lens of the reserves Bank, leading gold finance
companies have decided to form a self- regulatory Organization (SRO) which will
frame fair business practices code for the industry.

Johnnevin (2012): article “and the RBI on lenders” in “business world”

52
In his article remarked that ,the stock market did not follow the centre banks
restrictions on the lone size of gold NBFCs to 60% of the loan to value (LTV) view.
The share price of Muthoot finance and Manappuram finance, the largest and second
player, fall 11.35% and 6.1% respectively, on 22 March, a day after the RBI
Announcement.

7 Dec 2021: Shivalik Small Finance Bank, Indiagold partner to launch India’s
first loan against digital gold in “The Economic Times e-newspaper”

Shivalik Small Finance Bank (SSFB) announced a partnership with fintech firm
Indiagold to launch a loan product against digital gold. Digital gold is an affordable
medium to own and save with gold without the trouble of physically handling and
storing the asset, SSFB said in a statement.

This collaboration will enable customers to use their digital gold balance to avail
instant and digital loans upto rupees 60000. On repayment of the loan, customers will
have an option to either renew the loan or get their gold home delivered, SSBF said in
a statement.

This alliance will enable customers to seamlessly access gold loans starting at a
monthly interest of just 1%, it said, adding customers can now access credit against
their gold assets without the hassle of branch visits, minimal documentation, instant
transfer and zero processing charges.

Being a progressive Indian Bank, Shivalik has a strong digital-first approach aimed at
customer convenience, and offers a range of services placing banking at the fingertips,
said Shivalik Small Finance Bank Chief Operating Officer Gaurav Mittal.

This association is yet another step in the direction of accelerating the access of secure
and affordable credit to customers looking for quick liquidity against their gold assets.

12 Oct 2021: Gold loan NBFCs set to clock 18-20% growth in current fiscal:
CRISIL in “The Economic Times”

Non-bank financial companies (NBFCs) specialising in gold loans could see assets
under management (AUM) rise 18%-20% to Rupees 1.3 lakh crore this fiscal, Crisil

53
Ratings said on that day. This would be despite a contraction in the pandemic-driven
lockdown measures hindered branch operations and kept potential borrowers away.

Gold loan disbursements have rebounded sharply in the second quarter of this fiscal
after a dismal first quarter,”said Krishnan Sitaraman, Senior Director and Deputy
Chief Ratings Officer, CRISIL Ratings.They expected the momentum to continue for
the rest of this fiscal. Gold loans will continue for the rest of this fiscal. Gold loans
will continue to be a sought-after asset class, while lenders would remain cautious
about growth in many other retail asset classes.

Demand for gold loans from micro enterprises and individual- to fund working capital
and personal requirements- has increased with the pick-up in economic activity and
the onset of the festive season, which coincides with the easing of lockdown
restrictions by several states. From a credit perspective, gold loans are a highly
secured and liquid asset class that generates superior returns with minimal credit
losses. Therefore, NBFC’S that offer them are better placed than those extending
loans to most other retail asset classes, especially in times of asset-quality pressure
spawned by the pandemic, the rating company said.

Historically, gold loan NBFC’S have seen negligible losses because of robust risk
management practices such as periodic interest collection and timely auctions of gold.
But sharp swings in the price of gold impacts both, the portfolio and disbursement as
it influences the cushion available with lenders. On the contrary, were less proactive,
so have seen a rise in delinquencies and faced challenges in rolling over a part of their
portfolio to 75% LTV after the 90% LTV dispensation ended in March 2021. For
banks loan against gold jewellery portfolio grew by nearly 80% in fiscal 2021.

“Gold loan NBFCs have been swift in calibrating disbursement LTV while also
implementing strong risk management practices to keep portfolio LTV in check,” said
Ajit Velonie, Director, CRISIL Ratings.

July 9, 2021: PK Krishnakumar Gold loan defaults rise after COVID-19 second
wave, drop in prices. (Money control)

54
Banks and non-banking finance companies are facing an increase in gold loan defaults
after the second COVID-19 wave and a 15 percent plunge in prices from last year
impaired the repayment ability of borrowers.

To stave off a crisis, big NBFCs are going the extra mile for customers unable to
make repayments by giving them more time or offering them new schemes to ease
their problems. This has helped them to prevent a rise in defaults.

Thiruvananthapuram said that they are liberally allowing customers to re-pledge the
gold after payment of interest arrears to provide them relief.

NBFCs and banks reaped the benefits as demand for gold loans escalated. The bank
interest rate on gold loans was slashed to below 8 percent from about 12 percent.

While a section of customers has requested additional time, another set of customers
has asked us to auction the gold.Since the outbreak of the pandemic last year, more
small traders and businessmen took gold loans to fund their operations because other
options in the unsecured loan market dried up. Now, with the second wave, they are
finding it difficult to repay the loans.

To help them, Muthoot Fincorp, a major gold loan NBFC, has come up with a scheme
allowing customers to renew loans at a lower interest rate.

NBFC’s encouraging digital payments and we regularly interact with the customers.
They heed to their requests for more time for payment and even postpone auctions for
their benefit. Consequently, they have been able to keep overdue loans to below 1
percent.The NBFCs are optimistic and expect 15 percent growth this year.

27 Oct,2021: Gold loan securitisation volume stands at Rs.4400 crore in H1

FY22: (The Economic Times)

Gold loan securitisation volumes were about Rs.4400 crore in H1 FY2022 (similar to
volumes seen in H1 FY2021) forming 10% of the overall domestic securitisation
volumes as compared to 6% seen in FY2020 (pre-Covid) said according to credit
rating agency.

55
Securitisation involves transactions where credit risks in assets are redistributed by
repackaging them into tradable securities with different risk profiles. It may give
investors of various classes an access to exposures which they otherwise might be
unable to access directly.

The credit rating agency expects the overall growth for gold loan NBFCs to remain
robust in the near to medium term which would support healthy volumes of gold loan
securitisation with its share in overall securitisation market being 8-10%.

11 Jan, 2022: Digital gold loan player Rupees doubles Loan book to Rs.7500
crore in 2021 (The Economic Times)

In a statement, Rupeek founder and Chief Executive Sumit Maniyar said the
company’s loan book has almost doubled in the last one year. “Between 2020 and
December 2021, the loan book has crossed the Rs.7500 crore mark.

He attributed higher growth to the tie-ups he has entered into with ICICI Bank,
Federal Bank, South Indian Bank and Karur Vysya Bank, apart from the geographical
reach that now touches 35 cities.

It offers doorstep gold loans to households/ individuals, and small businesses at a low
interest rate of 0.49% per month to 1.5% per month as against the industry pricing of
1-2 % monthly, a company spokesman told PTI.The spokesman added that it is
planning gold-backed credit cards, gold overdraft and gold teller machine service this
year.

56
 CHAPTER 4:

DATA ANALYSIS

4.1 DATA ANALYSIS

1.Gender Of the Respondents:

Gender No.of Respondents Percentage

Male 50 54.3%
Female 42 45.7%

57
Other 0 0
Total 92 100%
Table 4.1: Gender of the respondents

GENDER OF RESPONDENTS

Male Female Other

Figure 4.1: Gender of Respondents

ANALYSIS:

From the above Pie chart it is seen that the amongst all borrowers 54.3%
are Male i.e 50 are male borrowers and 45.7% i.e.42 are Female.

INTERPRETATION:

From the above chart the number of male borrowers is more than the
number of female borrowers.

2. Occupation of Respondents:
Occupation No.of Respondents Percentage
Salaried 55 59.8%

58
Self Employed 18 19.6%
Agriculrist 3 3.2%
Other 16 17.4%
Total 92 100%
Table 4.2: Occupation of Respondents

OCCUPATION OF RESPONDENTS

salaried self Employed agriculrist other

Figure 4.2: Occupation of Respondents

ANALYSIS:
From the above table and pie chart it’s seen that the number of salaried borrowers are
55 (i.e 59.8%), the self employed are 18 (i.e 19.6%), others are 16 (i.e 17.4%) and
remaining 3 (i.e 3.2%) are engaged agriculture work.

INTERPRETATION:

Hence, it’s concluded that the numbers of salaried borrowers are more among all of
the occupation.

3. Age of Respondents:

Age No.of Respondents Percentage

59
18-30 years old 70 76.1%
31-50 years old 19 20.7%
51-70 years old 3 3.2%
71-75 years old 0 0
Total 92 100%
Table 4.3: Age of Respondents

AGE OF RESPONDENTS

18-30 years old 31-50 years old 51-70 years old 71-75 years old

Figure 4.3: Age of Respondents

ANALYSIS:

From the above table it is seen that out of 92 respondents, the age group of 18-30
years old are 70 (i.e 76.1%), 31-50 years old are 19 (i.e 20.7%) and remaining are 3
(i.e 3.2%) respondents are between 51-70 years old.

INTERPRETATION:

Hence, it is concluded that the loan taken by age group of 18-30 years old are more
and after that the age group of 31-50 years old are also taken gold loan.

60
4. Annual Income of the Customers:

Annual Income (in Rs.) No.of Respondents Percentage

50000 to 350000 71 77.2%
350001 to 650000 13 14.1%
650001 to 950000 6 6.5%
Above 950001 2 2.2%
Total 92 100%
Table 4.4: Annual Income of the respondents

ANNUAL INCOME OF RESPONDENTS

Rs.50000 to Rs.350000 Rs.350001 to Rs.650000

Rs.650001 to Rs.950000 Above Rs.950001

Figure 4.4: Annual Income of the respondents

ANALYSIS:

From the above table it is seen that the 71 (i.e 77.2%) customers are taken gold loan
whose annual income is between Rs.50000 to Rs.350000. 14.7% ( i.e 13) of the
respondents having annual income is between Rs.350001 to Rs.650000. There are 6
(i.e 6.5%) respondents having their annual income is between Rs.650001 to
Rs.950000. Remaining 2 (i.e 2.2%) respondents annual income is above Rs.950001.

INTERPRETATION:

61
Hence it’s is concluded that the Majority of the respondents having their annual
income is between Rs.50000 to Rs.350000 and some having between Rs.350001 to
Rs.650000 and few having annual income above Rs.950001

5. Aware about Gold Loan:

Options No.of Respondents Percentage

Yes 50 54.3%
No 13 14.1%
Maybe 29 31.5%
Total 92 100%
Table 4.5: Awareness about Gold Loan

ARE YOU AWARE ABOUT GOLD LOAN ?

Yes No Maybe

Figure 4.5: Awareness about Gold Loan

ANALYSIS:

From the above table it’s seen that the out of 92 respondents 50 (i.e 54.3%) customers
are aware about gold loan and 13 (i.e. 14.1%) respondents are not aware about gold
loan policies.

INTERPRETATION:

62
Hence it’s concluded that the majority of the respondents are aware about gold loan
and very few are not that much aware about gold loan.

6. Taken any other type of the loan before:

Options No.of Respondents Percentage

Loan against Property 20 25%
Loan against Fixed 4 7.6%
Deposit
Loan against Insurance 5 6.5%
Policy
Personal loan 26 32.6%
Other 12 14.1%
Not taken 19 20.7%
Total 92 100%
Table 4.6: Any type of loan taken before

ANY TYPE OF LOAN TAKEN BEFORE

Loan against property Loan against Fixed Deposit Loan against Insurance Policy
Personal loan Other No, I haven't taken

Figure 4.6: Any type of loan taken before

ANALYSIS:

From the above it’s seen that the 26 (i.e 32.6%) respondents are taken personal loan
before taking gold loan and 20 (i.e 25%) are taken loan against Property. Remaining 4

63
(i.e 7.6%) and 5 ( i.e 6.5%) are taken loan against fixed deposit and insurance policy
respectively, 19 (i.e 20.7%) respondents not taken any above type of the loan before.
12 ( i.e 14.1%)respondents taken other type of loan.

INTERPRETATION:

Hence, it is concluded that the more people are taken personal loan and loan against
property before opting for gold loan.

7. Sources of Awareness:

Options No.of Respondents Percentage

Advertisement 25 27.2%
Friends and colleagues 23 25%
Internet 15 16.3%
Family and relatives 23 25%
Other 6 6.5%
Total 92 100%
Table 4.7: Sources of Awareness

SOURCES OF AWARENESS

Advertisement Friends and colleagues Internet

Family and Relatives Other

Figure 4.7: Sources of Awareness

ANALYSIS:

From the above table and chart it is seen that there are 25 (i.e 27.2%) respondents are
aware about gold loan because of advertisement & 23 (i.e 25%) respondents are get to

64
know about gold loan by their friends and colleagues. There are 15 (i.e 16.3%) and 23
(i.e 25%) respondents are aware about gold loan because of internet and family
relatives respectively. 6 (i.e 6.5%) respondents are aware through other source.

INTERPRETATION:

Hence, it’s concluded that the majority of customers are aware about gold loan
because of advertisement and then by friends and family. Few customers are aware
through other source.

8. Purpose of taking Gold Loan:

Options No.of Respondents Percentage

Agriculture 11 12%
Medical 13 14.1%
Business 36 39.1%
Education 17 18.5%
Other 15 16.3%
Total 92 100%
Table 4.8: Purpose of taking gold loan

PURPOSE OF TAKING GOLD LOAN

Agriculture Medical Business Education Other

Figure 4.8: Purpose of taking gold loan

ANALYSIS:

65
From the above table and chart it’s seen that the 36 (i.e 39.1%) customers are taken
gold loan for the business purpose. There are 17 (i.e 18.5%) and 13 (i.e 14.1%)
customers are taken gold loan for education and medical purposes respectively. 11 (i.e
12%) customers are taken for agriculture purpose. Remaining 15 (i.e 16.3%) are taken
for other purposes.

INTERPRETATION:

Hence it’s concluded that the majority of customers are taken gold loan for the
purpose of business and few customers are taken for agriculture purpose.

9. Problems faced while taking gold loan:

Options No.of Respondents Percentage

Yes 54 58.7%
No 19 20.7%
Maybe 19 20.7%
Total 92 100%
Table 4.9: Problem faced while taking gold loan

Figure 4.9: Problems faced while taking gold loan

PROBLEMS FACED WHILE TAKING GOLD LOAN

Yes No Maybe

ANALYSIS:

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From the above it’s clear that 54 (i.e 58.7%) customers are facing problems while
taking gold loan and 19 (i.e 20.7%) customers are not faced any problem. Remaining
19 (i.e 20.7%) customers are facing somewhat problem while taking gold loan.

INTERPRETATION:

Hence it’s concluded that the majority of customers are facing problems while taking
gold loan.

10. Different types of problems faced by customers while taking gold

loan:

Options No.of respondents Percentage

Delay in sanctioning loan 21 26.7%
Insufficient Loan 5 8.1%
Delay in disbursement of 6 9.3%
Loan
High rate of interest 19 26.7%
Other 30 29.2%
Total 81 100%
Table 4.10: Different problems faced by customers

Figure 4.10: Different problems faced by customers

DIFFERENT PROBLEMS FACED BY CUSTOMERS

Other

High rate of interest

Delay in disbursement of Loan

Insufficient Loan

Delay in sanctioning loan

0 5 10 15 20 25 30 35

Series1

ANALYSIS:

67
From the above table it is seen that out of 86 respondents 21 (i.e 26.7%) customers are
facing the problem of delay in sanctioning of loan. There are 5 (i.e 8.1%) and 6 (i.e
9.3%) customers are faced the problem of insufficient loan and delay in disbursement
of loan. 19 (i.e 26.7%) customers are facing the problem of high interest rate.
Remaining 30 are faced other problems.

INTERPRETATION:

Hence it’s concluded that majority of customers are facing problem of delay in
sanctioning of loan and other problems also.

11. Disbursement mode of loan:

Options No.of Respondents Percentage

Fund transfer to bank A/c 43 46.7%
NEFT 7 7.6%
RTGS 6 6.55%
Demand Draft 6 6.55%
Cash 30 32.6%
Total 92 100%
Table 4.11: Disbursement mode of gold loan

DISBURSEMENT MODE OF GOLD LOAN

Fund transfer to Bank A/c NEFT RTGS

Demand Draft Cash

Figure 4.11: Disbursement mode of gold loan

ANALYSIS:

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From the above table it’s seen that 46.7% i.e 43 customer’s disbursement mode of
loan is fund transfer to Bank A/c. There are 32.6% i.e 30 customer’s loan
disbursement mode is in cash mode. Remaining 7 ( i.e 7.6%) and 6 (i.e 6.55%)
customers got their loan by NEFT and RTGS mode. There are 6 (i.e 6.55%)
customer’s loan disbursement mode is demand draft.

INTERPRETATION:

Hence it’s concluded that the majority of customers got their loan in fund transfer to
bank A/c and in cash mode.

12. Repayment method of loan:

Options No.of Respondents Percentage

Interest Payment 67 72.8%
Method
Equated Monthly 25 27.2%
Instalment
Total 92 100%
Table 4.12: Repayment method of loan

Figure 4.12: Repayment method of gold loan

REPAYMENT METHOD OF GOLD LOAN

Interest Payment Method Equated Monthly Instalment

ANALYSIS:

69
From the above table and chart it’s seen that the there are two repayment method. Out
of 92 respondents 67 (i.e 72.8%) customers repay the loan amount by Interest
Payment Method and remaining 25 (i.e 27.2%) customers repayment method is
Equated Monthly Instalment.

INTERPRETATION:

Hence it’s concluded that majority of customers repay the loan amount by Interest
Payment Method. Few customers repay the loan by Equated Monthly Instalment.

13. Opinion about Interest Rates:

Options No.of Respondents Percentage

High 29 31.5%
Very High 7 7.6%
Reasonable 49 53.3%
Low 7 7.6%
Total 92 100%
Table 4.13: Opinion about interest rate

OPINION ABOUT INTEREST RATES

High Very High Reasonable Low

Figure 4.13: Opinion about interest rate

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ANALYSIS:

From the above table and chart it’s seen that the 49 (i.e 53.3%) customer’s opinion is
that the interest rate is reasonable and 29 (i.e 31.5%) customer’s opinion is that the
interest rate is high. Remaining 7 (i.e 7.6%) customer’s opinion is that the interest rate
is low. There are 7 (i.e 7.6%) customer’s opinion is that the interest rate is very high.

INTERPRETATION:

Hence it’s concluded that the majority of customers opinion is that the interest rate is
reasonable in this Bank. Few customer’s opinion is that the interest rate is very high.

14.Satisfaction towards transperancy in operations maintained by

Bank:

Options No.of Respondents Percentage

Satisfied 66 71.7%
Not satisfied 26 28.3%
Total 92 100%
Table 4.14: Satisfaction towards transperancy in operations maintained by bank

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 SATISFACTION TOWARDS TRANSPERANCY IN OPER-
ATIONS MAINTAINED BY BANK

Satisfied Not satisfied

Figure 4.14: Satisfaction towards transperancy maintained by bank

ANALYSIS:

From the above it’s seen that the out of 92 respondents 66 (i.e 71.7%) customers are
satisfied by transperancy in operations maintained by bank. Remaining 26 customers
are not satisfied by transperancy in operations maintained by bank.

INTERPRETATION:

Hence it’s concluded that the majority of customers are satisfied by transperancy in
operations maintained by bank.

15. Comparison between Gold loan and Personal loan:

Options No.of Respondents Percentage

Yes 50 54.3%
No 14 15.2%
Maybe 28 30.4%
Total 92 100%

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 Table 4.15: Comparison between gold loan and personal loan

Do you think gold loan is better than personal loan ?

Yes No Maybe

Figure 4.15: Comparison between gold loan and personal loan

ANALYSIS:

From the above it’s seen that the out of 92 respondents 50 (i.e 54.3%) customer thinks
that the personal loan is better than gold loan and 14 (i.e 15.2%) customers think gold
loan is better than personal loan. Remaining 28 (i.e 30.4%) customers are thinks that
the maybe personal loan is better.

INTERPRETATION:

Hence it’s concluded that the majority of customers thinks that the personal loan is
better than gold loan. Few are thinks that the gold loan is better than personal loan.

16. Want to take gold loan in future:

Options No.of Respondents Percentage

Yes 41 44.6%
No 18 19.6%

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Maybe 33 35.9%
Total 92 100%
Table 4.16: Want to take gold loan in future

Do you want to take gold loan in future again from this

Bank ?

Yes No Maybe

Figure 4.16: Want to take gold loan in future

ANALYSIS:

From the above table and chart it’s seen that the out of 92 respondents 41 (i.e 44.6%)
customers are in favour of dealing with a gold loan in future and 18(i.e 19.6%)
customers are not in favour. Remaining 33 (i.e 35.9%) customers maybe in favour of
dealing with gold loan in future again.

INTERPRETATION:

Hence it’s concluded that the majority of customers are in favour of future dealing.
Few are not in favour of future dealing with gold loan with this Bank.

4.2 FINDINGS OF THE STUDY

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 From the study it’s seen that the majority of the respondents are aware about gold
loan and very few are not that much aware about gold loan.
 In this study it was found that majority of male borrowers are availing gold loan
than females.
 From the research study it’s seen that the numbers of salaried borrowers are more
among all of the occupation.
 In the research study it’s analysed that the loan taken by age group of 18-30 years
old are more and after that the age group of 31-50 years old are also taken gold
loan.
 Majority of the respondents having their annual income is between Rs.50000 to
Rs.350000 and some having between Rs.350001 to Rs.650000 and few having
annual income above Rs.950001.
 Many people are taken personal loan and loan against property before opting for
gold loan.
 In this study it is found that majority of customers are aware about gold loan
because of advertisement and then by friends and family.
 From the research study it’s seen that the majority of customers are taken gold
loan for the purpose of business and few customers are taken for agriculture
purpose.
 It’s seen that majority of customers are facing problems while taking gold loan.
Majority of customers are facing problem of delay in sanctioning of loan and
other problems also.
 It’s found that the majority of customers got their loan in fund transfer to bank
A/c and in cash mode.
 Majority of customers repay the loan amount by Interest Payment Method. Few
customers repay the loan by Equated Monthly Instalment.
 In the study it’s seen that majority of customers opinion is that the interest rate is
reasonable in this Bank. Few customer’s opinion is that the interest rate is very
high.
 It is found that majority of customers are satisfied by transperancy in operations
maintained by bank.
 In the study it’s seen that the majority of customers thinks that the personal loan is
better than gold loan. Few are thinks that the gold loan is better than personal
loan.
75
 In the research it’s found that the majority of customers are in favour of future
dealing. Few Are not in favour of future dealing with gold loan with this Bank.

76
 CHAPTER 5:

CONCLUSION AND SUGGESTIONS

5.1 RECOMMENDATIONS

77
 The bank has provided proper training to new employees so that they can attract
customers easily.
 The bank can conduct seminars and workshops so that they can provide
information to the people and give answers to queries.
 The bank should increases the advertisement regarding the gold loan in national
TV.
 The bank should adopt some strategies to increase the business through existing
customers.
 The bank should create the awareness about the gold loan among the general
public. They should visit the jewellers, Businessman and other work places so that
they can guide them..
 Bank should use traditional ways of promotion in rural location.
 The company should come up with low interest rates for the age group of 61 and
above with no penalty on late payment of instalment, to encourage them to take
loans.
 The company should make customised scheme according to income, type of gold,
income of the customers, and reason of the taking loan.
 The company should focus on the procedures of the sanctioning gold loan.The
process should be faster for obtaining gold loan.

78
 5.2 CONCLUSION

Gold occupy a special place in the portfolio of Indian financial service provider’s
book. As one of the oldest forms of secured lending, gold pawning has been prevalent
in India for centuries. Given the liquidity it offers, gold helps both the borrower and
lender to complete transactions faster than all other forms of financing. Traditionally
known as a hyper local retail business, India’s gold loan market has started attracting
large investors since the last decade. India has seen emergence of gold loan specialty
players commanding high market valuation during this time. Today this product is an
integral part of all banks, NBFC’s and other financial services player’s strategy.

The study identifies the various demographic factors like gender, age, income level,
educational background of the borrowers which have an impact in opting Kotak
Mahindra Bank for availing gold loan.

Majority of the People’s is known about gold loan. And their perception is about gold
loan is that it is better than personal loan. Majorities are borrowing gold from the bank
and customers choose modes of payment for gold loan is easy Interest Payment
Method. And many factor affecting of taking gold loan but majority of respondent is
now a day takes a gold loan for some purposes.

This study it’s concluded that for borrowers, gold loans have emerged as one of the
best means of raising quick, short-term capital. Gold loans were preferred over
conventional personal loans due to less procedures, fast disbursement and easy
installments. The study shows that the respondents preferred gold loans from the bank
and most of the respondents use the fund for their business purpose.

79
 CHAPTER 6:

BIBLIOGRAPHY

80
 BIBLIOGRAPHY

1) www.kotak.com
2) Impact Journal, Published: 29.2.2020
3) Journal of Commerce, Published: 1.7.2019
4) Indian Research Journal
5) PARIPEX: Indian Journal of Research, 5.5.2016
6) International Research Review, Page no.47
7) International Journal of Advanced Research in Management and Social
Sciences
8) The Indian Journal of Commerce
9) www.economictimes.com
10) www.moneycontrol.com
11) Apnapaisa.com
12) www.fedfina.com
13) www.capitalmarket.com
14) eprajournals.com
15) www.impactjournals.com
16) Research and Methodology in Accounting and Finance-Michael Vaz

81
 CHAPTER 7:

ANNEXURE

82
7.1 GOLD LOAN APPLICATION FORM

83
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85
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 7.2 QUESTIONNAIRE

1) Name:

2) Gender:

a.Male b.Female c.Other

3) Occupation:

a.Salaried b.Self employed c. Agriculturist d. Other

4) Age:

A.18-30 years old b.31-50 years old c.51-70 years old d.71-75 years old

5) Annual Income:

A.Rs.50000 to Rs.350000 b.Rs.350001-Rs.650000

C.Rs.650001 to Rs.950000 d.above Rs.950001

6) Are you aware about Gold Loan?

a.Yes b.No c.Maybe

7) Have you taken any of the following type of loan before,if yes which loan you
taken from the following ?

A.Loan against Property b.Loan against Fixed Deposit

c.Loan against Insurance Policy d.Personal Loan e.Other f.No I haven’t taken

8) How did you get the information about Gold Loan?

a.Advertisement b.Friends c.Internet d.Family and Relatives e.Other

9) For which purpose you taken a gold loan?

a.Agriculture b.Medical c.Business d.Education e.Other

10) Have you faced any problem while taking gold loan?

a.Yes b. No c. Maybe

11) If yes, mention the problem while taking gold loan.

88
a.Delay in sanctioning gold loan b.Insufficient Loan

c.Delay in disbursement of Loan d.High rate of interest e.Other

12) What is Loan disbursement mode?

a.Fund transfer to Bank A/c b.NEFT c.RTGS d.Demand Draft e.Cash

13) Which method you made repayment of Loan?

a.Interest Payment Method b.Equated Monthly Instalment

14) What is your opinion about interest on gold loan charged by Bank?

a.High b.Very high c.Reasonable d.Low

15) Are you satisfied by transperancy in operations maintained by Bank?

a.Satisfied b.Not satisfied

16) You think gold loan is better than personal loan?

a.Yes b.No c.Maybe

17) You want to take gold loan in future again from this Bank?

a.Yes b.No c.Maybe

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90