Bharosa Gold Loan launched for Rural Markets by HDFC BANK.

The salient objectives

are: To Reach Out To 10000 Villages Through 1300 branches in 6 months . To Offer Loan Up to 140% Of Gold Valuation, First in Industry . Unique 3 way sealing to ensure safety of gold

Bharosa Gold Loan, a product tailor-made for the rural customer. This is an important step in the Banks mission to provide, viable Finance to the millions of underprivileged who do not have access to credit lines offered by organized finance channels. HDFC Bank has weaved in the most secure processes into Bharosa Gold Loan drawing from customer insights and its experience in handling the widest repertoire of sophisticated financial products in the country to ensure that the customer gets the right valuation and his gold is safe. In a first in the industry, the product will offer a loan amount of up to 140% of golds valuation. Over the next six months, the Bank will take , Bharosa Gold Loan to 1300 branches in over 950 locations across the country. A vast majority of this expansion will take place in semi urban and rural regions. The objective is to cater to 5 lakh potential rural and underprivileged customers in 10,000 villages, aiming to meet their credit needs and help move into mainstream banking. As part of the process, the customer is given a detailed valuation certificate mentioning a) the itemized description of Gold, b) weight and c) amount lent. This is then signed by the customer and the Bank to ensure complete transparency. Every customer is met by a bank officer to ensure customer education on the loan prior to taking the funds. Finally, the jewellery is sealed in a three-layered tamper-proof manner and put in a vault, in line with the best safety standards. Further, the bank contacts the customer on maturity to help the customer renew the loan or repay. This communication ensures customers do not miss their maturity date and risk sale of their gold in the custody of the bank. It is estimated that Indian households have privately held gold stocks of 18000 tonne. However till now, the lions share of this was either lying idle or being pawned to moneylenders at exorbitant rates. With the entry of organized sector into Gold Loan, consumers have begun to seek Gold Loans from Banks and NBFCs rather than from traditional moneylenders. As this shift gathers momentum, the Gold Loan market is set for strong growth.

Strategy Adopted:
Use gold loans to bring more customers into mainstream banking, particularly in smaller, developing regions of the country.