KOLKATA: Gold loan NBFCs may take a “sympathetic” view towards calamity-stricken residents of Kerala, who have fallen behind on their repayments. NBFCs whose core business is lending against gold such as Manappuram FinanceNSE 0.85 %, Muthoot FinanceNSE 0.42 % and comparatively smaller player Unimoni India are working on several initiatives that may offer respite to Keralites trying to re-build their lives wrecked by the worst floods to have hit the state in a century.

“We are coming up with grace period for EMIs missed during the flood,” Amit Saxena, MD at Unimoni India, told ET. Unimoni has an exposure of Rs 100 crore in gold loan business in Kerala, a state that has a large and competitive gold loan market. “We will certainly adopt a sympathetic approach but we are yet to make any announcement,” said VP Nandakumar, MD at Manappuram Finance. “Kerala accounts for 6.4% of our total gold loan portfolio.”

Manappuram’s gold loan portfolio in Kerala stands at a little over Rs 800 crore while the company’s country-wide gold loan portfolio is about Rs 12,600 crore. Nandakumar said he sees an uptick in gold loans in Kerala as residents may pledge or sell their gold ornaments to re-build homes or meet exigencies arising from the floods.

“But this may not sustain because once funds for rehabilitation and reconstruction start flowing in, the demand for labour and semi-skilled occupations will go up, leading to a period of higher income for this class, which make up a good chunk of our customer base,” he said. “We will be promoting loans with zero processing fees,” Unimoni’s Saxena said. He said the company may also offer longer interest frequency loans. “We are prepared to offer longer interest frequency loans like 90, 180 and 360 days with competitive loan to value ratios,” he said.

The Reserve Bank of India has barred NBFCs from offering a loan to value ratio exceeding 75%. So, if one mortgages gold jewellery worth Rs 1 lakh, he can at best get a loan of only up to Rs 75,000.

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