Through its operative mechanism and functioning principles, the gold loan has carved out a place for itself as one of the principal instruments of economic growth orientation in the societal structure of India contributing to the growth of economic independence and ensuring that the loan facilities provided are simultaneously utilized and maximized to their full potential so that they can be further exercised as a viable option of growth. Gold Loan have also contributed as a reliable lending function in the economy as it helps in determining the liquidity position of the asset which is kept as collateral security and thus maintains the regulation capacity which enhances the market value and productivity of the asset class which is kept as a collateral security deposit to the private commercial banking institution from which the borrower has taken the loan and the borrower might also have a personal account in that Canara bank gold loan organization from which the loan is being availed.
Thus gold loans have functioned as a viable instrument of credit creation and credit institutions in the economic environment thereby lending a respectable financial opportunity for the borrower to exploit and therefore ration his needs and aspirations according to the valid terms and conditions which are mentioned as criteria-fulfillment options for the gold loans. Through the adoption of the following measures, gold loans have functioned as one of the most efficient means of credit diversification and growth in the economic structure thereby encouraging borrowers to integrate work operations and lending respectability to the financial position of a credit-lending facility in the market structure.
Creation of Credit Leveraging Opportunity in the Economy: The foremost importance that lending gold loans command in society is the creation of credit structure in the economic perspective leading to the growth of lending options and encouraging the reviewing of the economic environment in the country. Firstly we need to understand how gold loan functions so that we can later talk about its credit leveraging facilities that it commands in the economy.
Gold Loans are secured loans that function when the borrower deposits a current asset to the bank in the form of a collateral security deposit. The current asset that is deposited to the private commercial banking institution may be in the form of liquid gold jewelry, ornaments, and other bond certificates that command a high resale value in the society and could thus secure the monetary amount for the borrower if kept with the private commercial banking institution. Thus when the equivalent monetary amount is provided as a gold loan to the borrower, the borrower can use this amount to make conscious and informed consumption decisions that would inject an environment of investment capability in the production processes of the economy thereby encouraging the existing framework of systems to adopt this technique and thereby determine how fast the credit options would grow. As credit liquidity grows, the recessionary trends operating in the economy get diminished and a favorable psychological environment of growth and diversification prevails. Thus credit creation is extremely important for determining the credit liquidity in society.
Helps in putting locked-up assets to use : When you take out the locked-up assets and use them to your benefit you are sure to reap dividends as their continued investment into economic processes and careful analytical function enables the borrower to earn a handsome amount of money which the borrower has the consideration to pay within a significant period. Moreover, the loan tenure offered by banking institutions also allows the consumer the necessary time-frame to enhance the liquidity position of the borrower sentiment.
Conclusion: Thus borrowers must integrate financial resources and acknowledge the impact that gold loans have had on the growth of the economic environment.