Gold loans had boomed over the past year as small businesses tried to revive themselves
Indian companies that lend against gold are cutting tenors and seeking more collateral to protect against the plunge in prices of the precious metal. Market leader Muthoot Finance has been offering discounts on interest rates and other incentives to borrowers who chose to repay monthly or more frequently. Rival Muthoottu Mini Financiers is mostly lending for 90 days now versus 270 previously, and most large firms are disbursing amounts well below regulatory limits, which was 75 per cent of the metal s value for shadow lenders and 90 per cent for traditional banks through March 31.