THE FUNDAMENTAL OF LOAN

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower.
Ina loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender at
a later time. Typically, the money is paid back in regular installments, or partial repayments; in
an annuity, each installment is the same amount.
TYPES OF LOANS
SECURED
A secured loan is a loan in which the borrower pledges some asset e.g. a car or property!
as collateral.
A mortgage loan is a very common type of debt instrument, used by many individuals to
purchase housing. In this arrangement, the money is used to purchase the property. The
financial institution, however, is given security " a lien on the title to the house " until
the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have
the legal right to repossess the house and sell it, to recover sums owing to it.
#
UNSECURED
$nsecured loans are monetary loans that are not secured against the borrower%s assets.
These may be available from financial institutions under many different guises or
marketing packages&
credit card debt
personal loans
bank overdrafts
credit facilities or lines of credit
corporate bonds may be secured or unsecured!
Interest rates on unsecured loans are nearly always higher than for secured loans, because an
unsecured lender%s options for recourse against the borrower in the event of default are
severely limited. An unsecured lender must sue the borrower, obtain a money 'udgment for
breach of contract, and then pursue e(ecution of the 'udgment against the borrower%s
unencumbered assets. In insolvency proceedings, secured lenders traditionally have priority
over unsecured lenders when a court divides up the borrower%s assets. Thus, a higher interest
rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible.

)
OVERVIEW OF LOAN INSTRUMENTS IN INDIA
*ne of the reasons for boom in Indian economy is that now a days loans are easily available and
the rate of interests at which they are available are very reasonable. +anks are giving loan for and
loan against any and every thing. ,overnment too is encouraging people to take loans for certain
purposes.
-ome of the loan instruments available are&.
I] HOME LOANS
/eal estate is currently one of the fastest growing sectors in India. +anking sector is also
registering profitable business since the last few decades, with the growth of real estate. 0a'ority
of the banks are also offering easy home loans at attractive rates to their customers. 1ow that
getting a home loan is so easy, it seems everyone can fulfill his 2 her long cherished dreams of
purchasing lands, building their houses and e(panding their homes. 3ifferent types of home
loans are tailored to suit the heterogeneous requirements of the customers.
Home Purchae Loan! This is the basic home loan for the purchase of a new home.
Home Im"ro#emen$ Loan! These loans are given for implementing repair works and
renovations in a home that has already been purchased by you.
Home Con$ruc$%on Loan& This loan is available for the construction of a new home.
Home E&$en%on Loan! This is given for e(panding or e(tending an e(isting home. 4or
instance, you may apply for a loan for the addition of an e(tra room in your home and for
similar cases etc.
II] PERSONAL LOANS
5ersonal loan is a lump sum amount that you take either from a bank or building society or
another lender. -uch loans help you to take care of your immediate requirements without much
6
of a hassle. In fact, personal loan is one of the quickest ways of borrowing money. Also, no
questions regarding the end use of the loan are asked. 7ou can use the loan amount for any
purpose such as home renovation, marriage e(penses, medical e(penses, holidays, consumer
durables, higher education etc. 8hile applying for the loan, the lender usually conducts a credit
worthiness check, before giving the loan. 5ersonal loans are repayable in equal monthly
installments 90Is! and the loan tenure varies from # to : years.
The ma(imum amount of personal loan for which you are eligible depends upon your take.home
salary. The e(act loan amount depends on your eligibility and takes into account many other
things as well, like your credit rating, 'ob security, residential location and the ability to repay the
loan amount in time.
As personal loans are given without any security and involve a high risk, the interest charged is
usually more as compared to other loans, usually varying from #) to );<. Apart from this,
interest processing fee is also charged from the borrowers.
III] AUTO LOANS
8ith a plethora of auto loan opportunities available in India these days, it is now possible for one
to buy your dream car within a matter of days. 1o need to save up money for making complete
down payment at the time of buying. =ust gather enough amount for the initial payment and pay
the rest in easy installments, by taking up a loan. The best part about auto financing is that, apart
from the new cars, loans are available for old cars as well.
After undertaking a thorough research of each and every scheme, one will need to pick the one
that suits the most, in terms of interest rate, monthly installments, duration, and so on. The si>e
of the loan will depend upon the cost of the vehicle and its type standard or premium!, along
with the percentage financing one want or are being offered.
In case of a new car, up to ?@< of cost of the car is finance, while the percentage gets reduced to
A@< in case of old car.

;
IV] LOAN A'AINST SHARES
The main purpose of taking loans against shares is to preserve investment, apart from taking care
of personal needs. 5eople also resort to such a loan to meet their contingencies and get liquidity
without actually selling the shares. It is advisable to take loan against equity shares B
debentures! only when e(pecting a certain sum of money a few months down the line and need
some funds in the interim. If one is reinvesting the loan amount, ensure that the benefits you
derive are more than the cost you have to incur which includes interest and processing fee!.
Carefully consider the risk involved in such a move.
Loan against shares is available in the form of an overdraft facility against the pledge of financial
securities like shares2units2bonds. After you submit the loan application with all the share
certificates and other relevant documents, a current account is opened in your name. 7ou can
then withdraw up to the amount sanctioned and interest will be charged only for the number of
days you use the amount. The loan amount that can be sanctioned depends on two factors& the
e(tent of funding on a particular stock and the price called the base price! considered by the
lender for calculating the value of the shares.
:


HISTORY( )**) In+%a econom%c cr%%
In #?A:, India had started having balance of payments problems. +y the end of #??@, it was in a
serious economic crisis. The government was close to default, its central bank had refused new
credit and foreign e(change reserves had reduced to such a point that India could barely finance
three weeksD worth of imports. India had to airlift its gold reserves to pledge it with International
0onetary 4und I04! for a loan.
The crisis was caused by currency overvaluation; the current account deficit and investor
confidence played significant role in the sharp e(change rate depreciation.
The economic crisis was primarily due to the large and growing fiscal imbalances over the
#?A@s. 3uring mid eighties, India started having balance of payments problems. 5recipitated by
the ,ulf 8ar, IndiaDs oil import bill swelled, e(ports slumped, credit dried up and investors took
their money out. Large fiscal deficits, over time, had a spillover effect on the trade deficit
culminating in an e(ternal payments crisis. +y the end of #??@, India was in serious economic
trouble.
E
The caretaker government in India headed by 5rime 0inister Chandra -ekhar%s, immediate
response was to secure an emergency loan of F).) billion from the International 0onetary
4und by pledging EG tons of India%s gold reserves as collateral The /eserve +ank of India had to
airlift ;G tons of gold to the +ank of 9ngland and )@ tons of gold to the $nion +ank of
-wit>erland to raise FE@@ million. 1ational sentiments were outraged and there was public
outcry when it was learned that the government had pledged the country%s entire gold reserves
against the loan. The move helped tide over the balance of payment crisis, 'olting the country out
of an economic slumber.
WHY INDIANS TA,E TO 'OLD--
#! 'ol+ % con%+ere+ an e.u%#alen$ /or l%.u%+
cah& ,old is highly liquid and portable as a
-ecurity or Asset. It can be converted to cash
anytime when an emergency arises and is
considered a friend in need.
)! 'ol+ % con%+ere+ a S$a$u
S0m1ol! 9specially in India gold symboli>es
wealth. In Indian weddings the gold the bride
brings in show her family%s status and wealth and forms part of the dowry given to bride. It is
believed that a bride wearing );k gold on their wedding to bring luck and happiness throughout
the married life.
6! 'ol+ % a #er0 2oo+ %n#e$men$& ,old is an asset which has consistently increased in value
and thereby considered as a safe and secure investment. ,old is considered an effective
diversifier which helps to reduce portfolio risk.
;! 'ol+ % con%+ere+ a a 2oo+ 2%/$ %$em& It%s precious and worthy across all cultures and times.
The gold 'ewelry is given as gifts during weddings, festivals and other special occasions.
:! 'ol+ ha 2rea$ rel%2%ou %2n%/%cance& ,old is the symbol of the Hindu ,oddess Lakshmi
and considered highly auspicious. ,old is brought or presented on festivals like 3hanteras and
G
Akshaya Tritiya. Toe rings are never made of gold as it represents the goddess of wealth and
should not be soiled by touching a human%s feet.
E! 'rea$ Ornamen$al Value& 8ho can resist gold *rnamentsI 8omen of every age and time
have always loved wearing gold ornaments. 0oreover, ,old *rnaments are never out of fashion.
It also may be remembered that 8edding rings are also traditionally made of gold to mark a long
lasting relationship.
G! 'rea$ #alue a He%rloom& ,old 'ewelry is something which can be passed down from one
generation to the other as ancestral property.
IsnDt this why people say ,old is foreverI
,EY FEATURES OF 'OLD LOAN
-ecured Loan is borrowed against the gold deposited by the applicant.
0ulti.purpose The loan can be used for any purpose, as long as it is not for any
illegal activity or speculation in the stock market. 1+4Cs place even
fewer restrictions on the use of loan.
Low disbursal
times
1+4Cs and the unorgani>ed sector disburse loans at a much faster
pace as low as three minutes to a few hours! as compared with banks
which may take a few days.
High loan.to.value
LTJ! ratios
8hile banks would typically not give more than G:< of the gold
value as loan, 1+4CsD lending could go as high as ?:< in case of
high.purity gold.
-horter loan
tenures
There is no minimum period for the loan and, if need be, one can
return the loan amount the very ne(t day. The average tenure of the
loan is about ?@ to #@@ days.
Jaried interest rates
A
The interest rate depends on the tenure and amount of loan. It varies
from #)< to #A< in the case of banks, while for 1+4Cs, it could
reach );<. The interest rates charged by the unorgani>ed segment are
much higher and can range from 6@< to :@<. /easonable rates of
interest are especially applied if the loan to value LTJ! does not
e(ceed :@.E@<.
0ultiple repayment
options
/epayment can be structured as 'ust interest amount with principal
being repaid at the end of the period in one lump sum. /epayment
through 90I, covering interest as well as principal, can also be an
option.
INDIAN MAR,ET AT A 'LANCE
A LOO, AT THE N3FC SECTOR
The Indian 1+4C sector can broadly be segregated
into&.
#! Infrastructure 1+4C segment,
)! The Housing 4inance 1+4C segment and
6! The /etail or Consumer 4inance 1+4C segment.
The Indian 1on +anking 4inance Companies 1+4Cs! accounts for a critical part of the
countryDs overall financial system. It is estimated that the 1+4Cs as a whole account for ?.#< or
/s. ; trillion of assets of the entire financial system in India
?
RATIONALE 3EHIND 'OLD LOAN
As the name suggest its loan against ,old. ItDs the most convenient way to receive cash in no
time from any 1+4C2+ank by pledging your gold Coins2bars29(change traded funds 9T4s2 -+I
gold certificates etc., this is one loan product which comes with minimal documentation B no
processing time
5roduct is designed in a way it ensures hassle free process for the customer B loan availed can
be put to any use.
Loan amount eligibility is evaluated basis on the ,old value banks usually fund G@.A@< of the
gold market value B on repayment of the loan
gold deposits are returned back to the customer.
This loan comes much cheaper than personal
loan as itDs a secured product B rate of interest
ranges between ##.:.);< per annum.
/ate of interest is decided on two factors risk
criteria.&
#. 8hat < of market value of ,old you are
availing loan. If its ?@< of the ,old market
value then interest charged will be higher B vice a versa for lower loan amount as compared to
gold value! B
). Customer relationship with the bank.
#@
CHALLEN'ES FACED 3Y N3FC4
The beginning of the last decade was very challenging for 1+4C as they had to starve off
issues such as high cost of funds, low asset profile, intense competition, positioning
difficulties, slow economic and industrial growth and a high degree of 15As.
The largely institutionally funded 1+4C industry struggled in an era of where credit
confidence was ebbing away. Loss of employment, deterioration in asset quality and lack
of liquidity were some of the standout characteristics of 1+4Cs during that phase.
The /+I came to the rescue of the 1+4Cs by providing a range of measures such as
opening up a special repo window under the Liquidity Ad'ustment 4acility, creation of an
-5J for liquidity support, deferring higher CA/ norms for 1+4Cs and reducing risk
weights on bankDs e(posure to 1+4Cs.
##
SCOPE FOR N3FC4
The Indian 1+4C sector plays a very important role in financial intermediation in the
country, accounting for around ?.#@< of the total financial assets in the system and their
fundamental importance to the countryDs development is set to continue. However going
forward the situation is likely to be a lot more challenging as the 1+4C sector seeks to
grapple with the twin issues of K
o 3iminishing competitive advantages weaker barriers to entry! and
o ,reater regulatory pressures.
,oing forward one is likely to see a greater influ( of banking players within the 1+4C
territories and unless the 1+4C players can diversify their product offerings and tap
newer markets their competitive advantages will diminish.
The /+I is looking to bridge the regulatory gap between banks and 1+4Cs and non
deposit taking 1+4Cs and deposit taking 1+4Cs and this increasing cost of regulation
will affect profitability and impose constraints on the business model of 1+4Cs.
#)
'OLD LOAN SECTOR IN INDIA
THE REAL VALUE OF 'OLD
The Indian gold market is a market that has grown at an impressive pace and is still currently
brimming with opportunities. 8hile since 47@) till 47#@ the gold stock in India is estimated to
have grown at a CA,/ Compounded Annual ,rowth /ate! of 6:.;@< It is estimated that in
47## alone the country imported ?@@.#@@@ tonnes of gold! there is every reason to believe that
these rates can be sustained or even bettered going forward. The 8orld ,old Council believes
that gold demand in the country will continue to grow at 6@< in real terms driven by
urbani>ation, rapid ,35 growth, burgeoning middle class incomes and a sustained and
potentially rising savings rate of 6:.;@<
,old Loan -ector
#6
Gold Loan
Sector
Organized
sector
Unorganized
sector
'ol+ Pr%ce %n In+%a 5 67 Year H%$or0
,old has always fascinated us Indians but do you know how prices of ,old have varied in India.
I happen to visit /+I website which publishes lots of reports including weekly ,old prices.
-o here it is ;@ 7ears price history of ,old.
#;
OPPORTUNITY FOR OR'ANI8ED SECTOR
India is estimated to possess #@< of the total gold stock in the world at #A@@@. )@@@@
tonnes.
The opportunity for gold loan players lies in the fact that only #@< of this gold stock has
been pledged as gold and only #.)< is captured by the organi>ed segment. ,reater
professionalism, standardi>ation and the ensuing goodwill and trust can help channel the
gold stock to the broader gold loan segment with particular reference to the organi>ed
segment.
8hile the potential si>e and the scope of the gold loan market are very admirable, that
alone is not enough. There has to be an undercurrent of strong demand to lend
credence to the scope and even on this count there is much to be optimistic. In fact
there has been a radical shift in the perception of gold loans by the average Indian.
9arlier while pledging gold for loans was frowned upon and was largely looked upon
as a last resort, these days gold loans are being taken even for the most elementary
reason or as bridge loans!, such that they have come to be known in common
parlance as 9$he loan o/ con#en%ence:
,reater word.of.mouth, perception changes and the increasing share of the organi>ed
segment in the total gold loan market can help bring the idle old gold stock to the gold
loan market.
-trong consumerism levels have only contributed to the boom of gold loans. In
addition to that while initially the gold loans were only taken by the rural class, these
days a broader class of people encompassing office goers in metros and semi urban
places, the elderly and the youth have all embraced this product.
#:
COMPETITIVE ED'E 5 N3FC4
The gold loan players are broadly divided into the
o unorgani>ed segment pawn brokers, fund
brokers, money lenders!,
o the organi>ed gold 1+4C players and
o organi>ed banks.
It is estimated that G@< of the gold loan market is unorgani>ed with only 6@< accounting
for the organi>ed segment. The greater influ( of the organi>ed sector is responsible for
bringing a degree of standardi>ation to the gold loan market and this has helped stoke
demand.
#E

The organi>ed gold loan 1+4C segment is better positioned than their organi>ed banking
counterparts and the broader unorgani>ed segment as they have a standardi>ed gold loan
process, an abundance of gold appraisers, charge optimal rates that are lower than the
rates charged by the unorgani>ed segment and possess a strong sense of e(pediency in the
disbursement of loans relative to the banks.
#G
THE SPAR, FOR INTEREST
Contrary to the popular notion, gold loans are soaring not because of the ongoing rally in gold
prices, but because of relatively low competition from organi>ed lenders like banks. And having
a tangible, super.secure commodity like gold for collateral can only add shine to the story.
#A
CHAPTER ;
LITERATURE REVIEW
#?
'OLD MAR,ET AND THE 3OOM OF 'OLD LOAN SE'MENT
India is one of the largest markets for gold, accounting for appro(imately #@< of the total world
gold stock as of )@#@. /ural India accounts for E:< of this gold stock. Though gold prices have
increased at more than #?< CA,/ from )@@) to )@#@, gold stock in India has grown at ))<
CA,/ during the same period to #A,@@@ tons /s. 6),@@@ billion! as depicted in 4igure #. The
demand for gold has followed a regional trend with southern India accounting for ;@< of annual
demand, followed by the west ):<!, north )@.):<! and east #@.#:<!.
The organi>ed gold loan market has grown at ;@< CA,/ from )@@) to )@#@. 1+4Cs have been
a ma'or driving force behind this growth given their e(tensive network, faster turnaround time,
higher loan.to.value ratios and the ability to serve non.bankable customers. *f late, banks have
improved their gold loan product features and services. Coupled with comparatively lower
interest rates and charges, banks stand to gain market share at the e(pense of 1+4Cs in the near
future.
)@
4igure ; depicts the gold loan portfolio si>e for key organi>ed sector players, again highlighting
the rapidly growing dominance of 1+4Cs e.g., 0uthoot 4inance, 0anappuram and 0uthoot
4incorp!
)#
CHAPTER <
Com"an0 "ro/%le

))
In$ro+uc$%on $o IIFL
II4L is the institutional equities division of India Infoline Ltd. +loomberg& II4L I1!, a listed
multi.services financial company with a market capitali>ation of $-F;@@ million. 8ith a team
of ): research analysts, full.fledged sales and trading team, and an e(perienced investment
banking team, II4L is rapidly emerging as one of the premier institutional equities houses in
India. Headquartered in 0umbai, II4L has overseas offices in -ingapore and 3ubai.
Amongst its other businesses, India Infoline is one of the leading players in the retail broking
and insurance distribution, and is currently in the process of scaling up its non.banking
financial services and wealth management franchises. The group has over E@@ branches located
all over India.
In+%a In/ol%ne 'rou"
8e are a one.stop financial services shop, most respected for quality of its advice,
personali>ed service and cutting.edge technology.
V%%on S$a$emen$ !
*ur vision is to be the most respected company in the financial services space.

In+%a In/ol%ne 'rou" u1%+%ar%e!
India Infoline 0edia and /esearch -ervices Limited
India Infoline Commodities Limited
India Infoline 0arketing B -ervices
India Infoline Investment -ervices Limited
II4L Asia! 5te Limited
)6
H%$or0
The India Infoline ,roup was originally incorporated on *ctober #A, #??: as 5robity
/esearch and -ervices 5rivate Limited at 0umbai under the Companies Act, #?:E with
/egistration 1o. ## ?6G?G. The India Infoline ,roup commenced its operations as an
independent provider of information, analysis and research covering Indian businesses,
financial markets and economy, to institutional customers. 8e became a public limited
company on April )A, )@@@ and the name of the Company was changed to 5robity
/esearch and -ervices Limited. The name of the Company was changed to India
Infoline.com Limited on 0ay )6, )@@@ and later to India Infoline Limited on 0arch )6,
)@@#.
In #???, The IndiaInfoline ,roup identified the potential of the Internet to cater to a mass
retail segment and transformed our business model from providing information services to
institutional customers to retail customers. Hence we launched our Internet portal,
www.indiainfoline.com in 0ay #??? and started providing news and market information,
Independent research, interviews with business leaders and other speciali>ed features.
In 0ay )@@@, the name of our Company was changed to India Infoline.com Limited to
reflect the transformation of our business. *ver a period of time, we have emerged as one
of the leading business and financial information services provider in India.
The India Infoline ,roupDs broking services was launched under the brand name of
:paisa.com through its subsidiary, India Infoline -ecurities 5rivate Limited
andwww.:paisa.com, the e.broking portal, was launched for online trading in =uly )@@@. It
combined competitive brokerage rates and research, supported by Internet technology
+esides investment advice from an e(perienced team of research analysts, This group also
offers real time stock quotes, market news and price charts with multiple tools for
technical analysis.
);
):
M%le$one
#??:
Incorporated as an equity research and consulting firm with a client base that included
leading 4IIs, banks, consulting firms and corporate.
#???
/estructured the business model to embrace the internet; launched
archives.indiainfoline.com mobili>ed capital from reputed private equity investors.
)@@@
Commenced the distribution of personal financial products; launched online equity trading;
entered life insurance distribution as a corporate agent.
)@@;
Acquired commodities broking license; launched 5ortfolio 0anagement -ervice.
)@@:
Listed on the Indian stock markets.
)@@E
Acquired membership of 3,CL; launched investment banking services.
)@@G
Launched a proprietary trading platform; inducted an institutional equities team; formed a
-ingapore subsidiary; raised over $-3 6@@ mn in the group; launched consumer finance
business under the M0oney lineD brand.
)@@A
Launched wealth management services under the MII4L 8ealthD brand; set up India Info line
5rivate 9quity fund; received the Insurance broking license from I/3A; received the
venture capital license; received in principle approval to sponsor a mutual fund; received
M+est broker. IndiaD award from 4inance Asia; M0ost Improved +rokerage. IndiaD award
from Asia money.
)@@?
/eceived registration for a housing finance company from the 1ational Housing +ank;
received M4astest growing 9quity +roking House . Large firmsD in India by 3un B
+radstreet.
)@#@
/eceived in.principle approval for membership of the -ingapore -tock 9(change
/eceived membership of the Colombo -tock 9(change
)@##
Launched II4L 0utual 4und
INDIA INFOLINE FINANCE LTD
India Infoline 4inance Limited is a subsidiary of India Infoline Limited II4L!. The Company
was originally incorporated on =uly G, )@@; as a private limited company under the provisions of
the Companies Act, #?:E as India Infoline Investment -ervices 5rivate Limited. The Company
was converted to a public limited company with effect from =uly #@, )@@G.
The Company has obtained a certificate of registration dated 0ay #), )@@: bearing registration
no.. #;G6E: issued by the /+I to carry on the activities of a 1+4C under section ;: IA of the
/+I Act, #?6;.
The Company is engaged in the activity of mortgage financing, loan against securities, gold
loans, margin funding and other consumer financing products.
India Infoline 4inance Ltd. is professionally managed and shares the professional values and
ethos of its parent company, II4L and has acquired and maintained a reputation for reliability,
transparency of operations and absolute integrity. A steady growth rate validates the trust that
industry has reposed in the Company.
)E
M%le$one
#??:
Incorporated as an equity research and consulting firm with a client base that included
leading 4IIs, banks, consulting firms and corporate.
#???
/estructured the business model to embrace the internet; launched
archives.indiainfoline.com mobili>ed capital from reputed private equity investors.
)@@@
Commenced the distribution of personal financial products; launched online equity trading;
entered life insurance distribution as a corporate agent.
)@@;
Acquired commodities broking license; launched 5ortfolio 0anagement -ervice.
)@@:
Listed on the Indian stock markets.
)@@E
Acquired membership of 3,CL; launched investment banking services.
)@@G
Launched a proprietary trading platform; inducted an institutional equities team; formed a
-ingapore subsidiary; raised over $-3 6@@ mn in the group; launched consumer finance
business under the M0oney lineD brand.
)@@A
Launched wealth management services under the MII4L 8ealthD brand; set up India Info line
5rivate 9quity fund; received the Insurance broking license from I/3A; received the
venture capital license; received in principle approval to sponsor a mutual fund; received
M+est broker. IndiaD award from 4inance Asia; M0ost Improved +rokerage. IndiaD award
from Asia money.
)@@?
/eceived registration for a housing finance company from the 1ational Housing +ank;
received M4astest growing 9quity +roking House . Large firmsD in India by 3un B
+radstreet.
)@#@
/eceived in.principle approval for membership of the -ingapore -tock 9(change
/eceived membership of the Colombo -tock 9(change
)@##
Launched II4L 0utual 4und
3oar+ o/ D%rec$or
Mr= A= ,= Pur>ar ?Non E&ecu$%#e Cha%rman@
0r. 5urwar is currently the Chairman of India Jenture Advisors 5vt. Ltd., investment manager to
India Jenture Trust K 4und I, the healthcare and life sciences focused private equity fund
sponsored by the 5iramal ,roup. He has also taken over as the Chairman of IL B 4- /enewable
9nergy Limited in 0arch )@@A and India Infoline 4inance Ltd in 1ovember )@@?.
He is working as Independent 3irector in leading companies in Telecom, -teel, Te(tiles, 5ower,
Auto components, /enewable 9nergy, 9ngineering Consultancy, 4inancial -ervices and
Healthcare -ervices. He is an Advisor to 0i>uho -ecurities in =apan and is also a member of
Advisory +oard for Institute of Indian 9conomic -tudies II9-!, 8aseda $niversity, and Tokyo,
=apan.
Awards received& NC9* of the yearN Award from the Institute for Technology B 0anagement
)@@;!; N*utstanding Achiever of the yearN Award from Indian +anks% Association )@@;!;
N4inance 0an of the 7earN Award by the +ombay 0anagement Association in )@@E.
Mr= N%rmal Aa%n ?D%rec$or@
0r. 1irmal =ain is the founder and Chairman of India Infoline Ltd. He is a 5,30 5ost
,raduate 3iploma in 0anagement! from II0 Indian Institute of 0anagement! Ahmedabad, a
Chartered Accountant and a rank.holder Cost Accountant.
His professional track record is equally outstanding. He started his career in #?A? with Hindustan
Lever Limited, the Indian arm of $nilever. 3uring his stint with Hindustan Lever, he handled a
variety of responsibilities, including e(port and trading in agro.commodities.
He founded 5robity /esearch and -ervices 5vt. Ltd. later re.christened India Infoline! in #??:;
perhaps the first independent equity research Company in India. His work set new standards for
equity research in India. 0r. =ain was one of the first entrepreneurs in India to sei>e the internet
opportunity, with the launch of www.indiainfoline.com in #???. $nder his leadership, your
Company not only steered through the dotcom bust and one of the worst stock market
downtrends but also grew from strength to strength.
)G
Mr= R= VenBa$araman ?D%rec$or@
0r. / Jenkataraman, Co.5romoter and 9(ecutive 3irector of India Infoline Ltd., is a +.Tech
electronics and electrical communications engineering, IIT Oharagpur! and an 0+A II0
+angalore!. He 'oined the India Infoline +oard in =uly #???. He previously held senior
managerial positions in ICICI Limited, including ICICI -ecurities Limited, their investment
banking 'oint venture with = 5 0organ of $-, +P8 and Taib Capital Corporation Limited. He
was also the Assistant Jice 5resident with , 9 Capital -ervices India Limited in their private
equity division, possessing a varied e(perience of more than )@ years in the financial services
sector.
Mr= N%leh V%Bame0 ?In+e"en+en$ D%rec$or@
0r. 1ilesh Jikamsey K +oard 0ember since 4ebruary )@@: . is a practicing Chartered
Accountant for ): years and -enior 5artner at 02s Ohim'i Ounver'i B Co., Chartered
Accountants, a member firm of HL+ International, a world.wide organi>ation of professional
accounting firms and business advisers, ranked amongst the top #) accounting groups in the
world.
He is elected member of the Central Council of Institute of Chartered Accountant of India
ICAI!, the Ape( decision making body of the second largest accounting body in the world,
)@#@K)@#6. He is Chairman of its /esearch Committee, Jice Chairman of its Corporate Laws B
Corporate ,overnance Committee and member of its various other committees.
He is member of /eview, /eforms B /ationali>ation Committee I0C!, 0ember of Legal
Affairs Committee of +ombay Chamber of Commerce and Industry +CCI!, member of
Accounting and Auditing Committee of +ombay Chartered Accountant -ociety +CA-! and also
on its Core ,roup, Corporate 0embers Committee of The Chamber of Ta( Consultants CTC! B
a /egular Contributor to 8I/C Annual /eferencer on N+ank +ranch AuditN.
0r. Jikamsey is also a 3irector of India Infoline 4inance Limited, /odium /ealty Limited, ICAI
Accounting /esearch 4oundation B few 5rivate Limited companies and Trustee in -ayagyi $ +a
Ohin 0emorial Trust Jipassana International Academy! B a few Trusts focusing on 9ducation.
)A
Mr= M N S%n2h ?In+e"en+en$ D%rec$or@
0r. -ingh =oined the %Indian 5olice -ervice% in #?EG. He has worked as the chiefs of the crime
branch of 0umbai 5olice, -tate CI3 and Anti.Corruption +ureau.
M= Pra$%ma Ram ?Whole$%me D%rec$or C Ch%e/ E&ecu$%#e O//%cer@
5ratima /am has held senior management positions in -tate +ank of India, where she had
e(tensive e(perience in Corporate and International +anking. Her last assignment with the +ank
was that of Country Head of -+IDs $nited -tates *perations based in 1ew 7ork. 5rior to this, she
was C9* of -outh Africa *perations, based in =ohannesburg. -he also headed 0ergers B
Acquisitions at -+I Capital 0arkets.
)?
Su1%+%ar%e
Company has following step.down subsidiaries&
4. India Infoline Distribution Company Limited (distribution of retail loan products)
India Infoline 3istribution Company Limited is in the business of distribution of financial
products.
5. Money line Credit Limited (consumer finance)
0oney line Credit Limited is engaged in the business of loans. 0oney line Credit
Limited%s product bouquet includes unsecured and secured personal loan and loan against
property.
6. India Infoline Housing inance Limited (!ousing finance)
India Infoline Housing 4inance Limited is the housing finance arm of the group. It is
registered with the 1ational Housing +oard 1H+!. It is engaged in the business of
housing and related loan activities.
Pro+uc$
0ortgage Loans , which includes Housing Loans and Loans against 5roperty.
Capital 0arket 4inance, which includes Loans against -ecurities, 5romoter 4unding,
0argin 4unding, I5* financing and other structured lending transactions.
,old Loans , which includes finance against security of mainly used gold ornaments.
Healthcare 4inance , which includes finance for medical equipments and pro'ect funding
in the healthcare sector.
6@
IIFL 'ol+ Loan
,old loan or loan against gold is the easiest and quickest way for servicing your financial needs.
To avail a gold loan, all you need to do is pledge your gold ornaments with us and they would
provide you with a loan amount as per the market value of your gold. $nlike other loans, gold
loan does not require you to provide any income or salary proof. 0oreover, it has comparatively
lower interest rates; requires lesser documentation, and hence is processed in lesser time.
They at II4L provide ma(imum loan against your gold at lowest interest rates. 8e have a strong
presence 5an.India and have serviced a large number of customers in a very short span. 8e offer
different types of schemes as per your requirement and convenience. 4ollowing are the main
features of our loans&.
Loan amount ranges from min /s :,@@@ to ma( /s #@,@@,@@@
Tenor for loans ranges from 6 months to #) months
Loan can be paid back on a monthly or quarterly basis
Interest 2 Loan Amount due can be paid at any of our ,old Loan branches pan.India
0inimal amount of paperwork and documentation is required
Loan gets processed in as low as : minutes
Jariety of schemes are available to chose from
7our ,old is insured and secured safely with us in fire and burglary proof vaults
Loan D%1uremen$ Proce+ure
6#
Cu$omer
Customers are typically small businessmen, vendors, traders, farmers and salaried individuals,
who for reasons of convenience, accessibility or necessity, avail of our credit facilities by
pledging their gold 'ewellery with them rather than by taking loans from banks and other
financial institutions.
Pla0er %n $he 'ol+ Loan In+u$r0
6)
The key players in the Indian gold loan market include the unorgani>ed sector, banks K
public2private2cooperatives and 1+4Cs.
8hile the unorgani>ed sector, comprising local pawnbrokers and moneylenders, has
traditionally dominated the gold loan market for many decades and still commands nearly
G:< of the market, the organi>ed sector, led by 1+4Cs, is catching up fast.
The organi>ed sector has grown at a rapid pace of ;@< CA,/ from )@@) to )@#@and is
e(pected to grow by 66< to ;#< CA,/ in )@##. And in doing so, these companies are
challenging the dominance of the large unorgani>ed sector.
L%$ o/ nom%na$e+ 1anB
66
#. Allahabad +ank
). +ank of 1ova -cotia
6. +ank of India
;. Canara +ank
:. Corporation +ank
E. 3ena +ank
G. H34C +ank Ltd.
A. ICICI +ank Ltd.
?. Indian *verseas +ank
#@. IndusInd +ank Ltd.
##.*riental +ank
#) 5un'ab 1ational +ank
#6 -tate +ank of India
#; $nion +ank of India
L%$ o/ MaDor N3FC
0uthoot 4inance
0annapuram ,old loan
0uthoot 4incorp
/eliance capital
Oarvy ,old Loan
Unor2an%Ee+ Sec$or
0oneylenders
0arwadis =ewelers!
5awnbrokers
6;
CHAPTER 6
Reearch Re"or$
6:
O3AECTIVE OF THE STUDY
To find out the competitors operating in the ,old Loan 0arket.
To find out the awareness level of II4L providing loan against gold
To find out the occupation and the income group who prefers gold loan
To find out the perception of the people regarding loan against gold
To find out the preference of people for ,old banks or 'wellers
To find the futuristic scope of gold loan market
To give recommendations to II4L for better marketing activities and strategic planning.
HYPOTHESIS
Hypothesis . #
6E
Ho& 5eople are not aware about the ,old Loan.
Ha& 5eople are aware about the ,old Loan
Hypothesis K )
Ho & 5eople prefer ,old banks or 1+4CDs for ,old Loans.
Ha & 5eople prefer =wellers for ,old Loans.
RESEARCH METHODOLO'Y
6G
The methodology section is the blue print for researcher activity and specifies bow the
investigator intents to study the people or describe social settings. In other words the
methodology section make e(plicit the study desire and constitutes the Qhow to do itR phase.
/esearcher has put his best possible effort to do this research and collect the necessary
information to learn about this topic thoroughly.
Reearch De%2n!
3escriptive /esearch& 3escriptive research is also called -tatistical /esearch. The main goal of
this type of research is to describe the data and characteristics about what is being studied. The
idea behind this type of research is to study frequencies, averages, and other statistical
calculations. Although this research is highly accurate, it does not gather the causes behind a
situation. 3escriptive research is mainly done when a researcher wants to gain a better
understanding of a topic for e(ample, a fro>en ready meals company learns that there is a
growing demand for fresh ready meals but doesnDt know much about the area of fresh food and
so has to carry out research in order to gain a better understanding.
Sam"l%n2 De%2n
)= Sam"le S%Ee&
The sample si>e of my pro'ect is #@@. *ut of which only G@ people attempted all the
questions. *ther 6@ have not taken gold loan attempted only : questions.
;= Sam"le Un%$!
,old =ewelers, 5eople who have taken loan against gold
<= Sam"le Me$ho+!
6A
The sample is selected in a non probability convenience sampling, irrespective of them
taken gold loan or not or availing the services or not. It was collected through mails and
personal visits to the known as well as unknown persons, by formal and informal talks
and through filling up the questionnaire prepared.
Da$a ource!
/esearch is totally based on primary data. -econdary data can be used only for the reference.
/esearch has been done by primary data collection, and primary data has been collected by
interacting with various people. The secondary data has been collected through various 'ournals,
websites and some special publications.
Da$a Collec$%on Me$ho+!
-urvey 0ethod& The -urvey method is the technique of gathering data by asking questions to
people who are thought to have desired information. A formal list of questionnaire is prepared.
,enerally a non disguised approach is used. The respondents are asked questions on their
demographic interest opinion.
Da$a Collec$%on Tool!
The questionnaire was prepared and administered to collect the relevant primary data. The data
collection method was based on Suestionnaire.
6?
Anal0%CF%n+%n2
;@
)= T0"e o/ Loan a#a%le+ 10 Peo"le
4indings&. ,raph shows the general preference of loan taken by people. 5ersonal
loans scored high followed by gold loan with home loan trailing far behind.
;#
;= A>arene Dr%#er
4indings&. TJ advertisements have the largest impact in creating awareness amongst the masses
followed by good publicity.
;)
<= MaDor Fac$or $ha$ a//ec$ Loan
4indings&. 0a(imum loan amount is of paramount importance while choosing a loan instrument
followed by convenience B interest rates.
;6
6= Mo$ l%Bel0 Ae$ $o 1e Ple+2e
4indings&. This shows that gold is the most convenient collateral that is pledged whereas home is
hesitantly parted
;;
F= Reaon /or no$ $aB%n2 'ol+ Loan
4indings&. This shows sentimental attachment of people for gold ornaments who do not wish to
pledge gold.
;:
G= Pre//ere+ 'ol+ Ple+2%n2 Ou$le$
4indings&. =ewelers were most preferred by people for taking gold loan followed by 1+4CDs and
lastly banks.
;E
H= Pre//er+ /or A>eller
4indings&. Trust and the ease of getting a loan coupled with a good value for gold were the
reasons 'ewelers scored.
;G
I= Pre/erence /or N3FC4
4indings&. A combination of competitive interest rates, short disbursal times and a high LTJ ratio
were the favorite factors.
;A
*= 'ro>$h Inh%1%$%n2 /ac$or /or N3FC4
4indings&. Lack of awareness was the ma'or spoke in the wheel inhibiting business growth of
1+4CDs.
HYPOTHESIS TESTIN'
;?
Hypothesis .#

Ho & 5eople are not aware about the ,old Loan.
Ha & 5eople are aware about the ,old Loan.
4rom the analysis done above, it could be easily seen that ma'ority of the responds are aware
about the ,old Loan.
This could be easily reflected from question #,) and ;.
4rom question # we came to know that around ;:< of peoples are aware about the ,old Loan.
4rom question ) we came to know that around )A< of peoples knows about ,old Loan by the
information spread through word of mouth.
4rom question ; we came to know that around E;< people use their ,*L3 to avail the Loan
Conclu%on!
Hence the researcher /e'ects the 1ull hypothesis.
Thus it is proved that people are aware about the ,old Loan.
Hypothesis .)
:@
Ho & 5eople prefer ,old +ank or 134CDs for ,old loan
Ha & 5eople prefer =wellers for ,old Loan.
4rom the analysis done above , it could be easily seen that 5eople prefer =wellers to avail the
,old Loan.
4rom question E we came to know that around E;< people use =wellers to avail the ,old Loan.
4rom question G we came to know that around 6E< people use =wellers for ,old Loan because
of their QC/93I+ILIT7R.
Conclu%on!
Hence the researcher /e'ects the 1ull hypothesis.
:#
1+4CDs growth rates in the last two years are
astronomically high with loan growth at more
than ##@< and /*9s of :#< plus. These levels
are not sustainable. +esides the companies have
been adding large number of branches every year
and unless they can sustain solid business, some
of these branches could struggle operationally.
FLUCTUATION IN PRICE AND DEMAND OF 'OLD!( 0uch of the 1+4CDs business
is dependent on the favorable perception of gold. 8ere gold prices to crash it could affect
demand for gold loans and 'eopardi>e the margin ratios of the companies.
THREAT OF R3I RE'ULATIONS!( There is a lot of talk about the /+I potentially taking
a lot of measures to curb the rapid growth seen in gold loan companies. /egulatory measures
that have been mooted include higher margin ratios and a cap on branch e(pansion.
RISE OF COMPETITORS!( /ecent influ( of a large number of banks and 1+4Cs into the
gold loan market.
INTE'RITY OF EMPLOYEES!( 1+4CDs place a great deal of importance on the integrity
of its employees who are in a position to take advantage of their position by accepting
fraudulent gold or stealing the gold. +esides unless security measures are up to the mark, the
1+4C branches run the risk of being burgled.
CHAN'IN' SCENARIO
:)
As we enter the )#
st
century, several opportunities and events have led to the sculpting of
the socio.economic landscape of India.
India is endowed with a large percentage of youth population, which presents interesting
opportunities and edgy risks for todayDs 1+4CDs.
Considerable shift from conservative to a more liberal lifestyle, 'ob profiles and
opportunities have increased the spending power of youth multifold. This empowers them
to lavishly spend money whilst fulfilling their latent desires of a lu(urious lifestyle.
The generation is impatient, willing to spend at the drop of a hat to gain gratification
and flaunt audaciously. -uch sentiments offer new insights and a chance for the 1+4CDs
to multiply their business by slightly tweaking their strategies.
9mphasis on education, pursuing higher degrees, elite medical facilities are the
aspirations of todayDs modern Indians. However, these require generous monetary influ(
at the right time. This need should be identified and dealt with by the 1+4CDs.
:6
RECOMMENDATION
C
CONCLUSION
Reccomen+a$%on
:;
CREATE AWARENESS 5 USE MASS MEDIA

+ringing to the attention of people that private companies are also involved in gold loan
is of prime importance.
This awareness drive can be initiated by .&
Airing TJ commercials e(plaining the product and concept,
3istributing prints and pamphlets
Airing on radio stations
Installing hoardings.
-T/*1, +/A13I1, *4 TH9 CHAI1. +rand ambassadors in the form of
famous celebrities can be employed to instill confidence in the brand.
CONCLUSION
4or borrowers, gold loans have emerged as one of the best means of raising quick, short.term
capital. 4or lenders, gold loans are more advantageous compared with home and car loans
because of the shorter tenures, lower processing time and cost, and greater returns due to higher
::
interest rates. These factors, along with appreciation in value of gold, have led to an e(plosion in
the gold loan market.
4rom the research done above , it has been seen that Inspite of many +anks and 1+4CDs people
prefer =wellers for ,old Loan. It has been seen that the main reason for this purpose is the
QT/$-TR and QC/93IILIT7R they provide.
Hence to fetch this opportunity 1+4CDs should start targeting the people who goes to =wellers
and should made them understand about the policies and benefits provided by +anks and
1+4CDs
3%1l%o2ra"h0
We1%$e!
:E
www.indiainfoline.com
http&22www.neytri.com2gold.loans.what.you.must.know2
http&22www.muthootfinance.com2services2gold.loan.html
http&22thegoldwatcher.blogspot.com2)@##2@:2indian.gold.loan.market.
e(panding.html
Re/erence!
Indian ,old Loan 0arket K Cogni>ant
The 9conomic Times
0annapuram ,eneral Leasing 4inance Limited )@##
:G