Gold carries a special significance for Indian consumers, but the process of unlocking its value can be difficult – partly because many Indians do not have a credit rating and there is also social stigma associated with visiting a pawnbroker – but two Delhi-based entrepreneurs believe they have found a solution with a new digital app.
The potential market is huge, with the World Gold Council estimating that Indians own around 25,000 tons of gold worth more than $1.4 trillion. Analysts believe that monetising even a third of the total could add 2% to GDP growth and boost consumer spending.
How does it work?
Deepak Abbot and Nitin Misra, two former executives at Indian financial startup Paytm, told TechCrunch that many Indians keep their gold and other precious items in a bank safety deposit box. But they can be charged as much as $65 a month for this service, there is no insurance and there is also a deposit to be paid.
Abbot and Misra say consumers can get a better deal by going digital. Their company, indiagold, offers a similar locker service for as little as $1.36 a month, including full insurance coverage.
Consumers sign up to the indiagold app, an agent visits their home to weigh the gold and, once deposited in a safe box, the app displays the real-time value of their property alongside an offer of a line of credit that can be accessed within seconds.
Customers can also borrow against the value of their deposits at a maximum interest rate of 1%.
“We think this is the only way this huge market can really be addressed, and now we are beginning to scale our efforts” – Nitin Misra, co-founder of indiagold.