India’s fascination for gold is well-known. It is estimated that the households of India have gold that values about half of the country’s nominal GDP. But the majority of this is locked in lockers. Gold is considered a good investment in India. Therefore, India maintains a top position in being the world’s largest gold importer. Gold is not only a savings instrument but also an asset with which one could get credit. But there is a myth attached deeply into the mind of Indians. When one sells their gold, others might think that he/she is so broke. People also find it insecure to store gold in their homes as it is not safe.
Indiagold is a startup that addresses some of the problems raised here. They help people put their gold into use. The company was able to raise funds worth $12million in its Series A funding. The round was led by Prosus’ PayU and Falcon’s Alpha Wave Incubation (AWI) fund. Other participants included Better Tomorrow Ventures, 3one4 Capital, Rainmatter Capital, and existing investor Leo Capital.
Indiagold was co-founded by two former executives of Paytm Nitin Misra and Deepak Abbot. The company assesses the creditworthiness of its customers using gold. The startup is basically a ‘gold-focused digital alternative credit platform’. They also offer APIs to banks and lenders to enter this market. As for now, the startup allows easy and affordable options for storing gold and also offers loans against gold as an asset. The agents will visit the customers’ houses to inspect and weigh the gold. If it is to be kept in a locker, they place the gold in a tamper-proof bag with an RFID sticker attached to it. The bag will be then placed in a steel box and will be locked by the customer’s fingerprint. The agent will provide live streaming to the customer until they reach the designated vault location. It establishes more trust in the minds of the customers on this service.
TechCrunch reports Gupta’s statement, “This whole business is built around trust.” The locker facility comes at a much affordable price than the traditional methods. The gold will also be insured. The customers will also get real-time values of the gold items on the Indiagold app. When customers want a loan, it will start processing the request within 30 seconds.
Gold held as collateral is very little compared to the amount of gold in Indian households. Analysts at Bernstein reports that “Despite the large gold reserves held by Indian household, the gold loan market has barely scratched the surface.”