2019-11-11_Bloomberg_Businessweek

◼ BUSINESS Bloomberg Businessweek November 11, 2019

20

DHIRAJ SINGH/BLOOMBERG (2); NORDSTROM: BRENDAN MCDERMID/REUTERS.

DATA:

WORLD

GOLD

COUNCIL

WhenVijayMhatreneededcashtomakeupa

shortfallforhisson’sengineeringschooltuition,

hepledgedhiswife’snecklaceandbangles.Instead

ofgoingtothenearestpawnbrokerorbank,the

55-year-oldcalledRupeekFintechPvtLtd.,sum-

moninga representativeoftheonlinegoldlender

tohis650-square-footMumbaiapartmentandside-

steppingtheignominyofbeingseenpawningthe

familyjewelry.

A motorcycle-borneloanagentfromthestartup

arrivedwithinthehour.Heuseda computervision-

aidedtestingkittoappraisethemetal’spurity.A

team 600 milesawaycruncheddatatocomplete

thebackgroundcheckandprocesstheloanelec-

tronically.About 30 minuteslater,200,000rupees

($2,800)hadbeendepositedinMhatre’s bank

accountbyoneofRupeek’spartners,anIndian

privatelendercalledFederalBank.Thestartup’s

24/7controlroomturnedontherisk-monitoring

systemtotracktheagent,ensuringhesecurely

depositedthejewelryatthebank’snearestvault.

Indianshavea particularattachmenttogold;

ruralfarmersandtheurbanworkingclassalike

investtheirsavingsinthepreciousmetaland

flauntjewelryatweddings.Gold,witha pricethat’s

spikedalmost18%thisyear,is bothaninsurance

policyanda retirementplanina countrythatlacks

robustsocialwelfaresystemsorwidespreadaccess

toformalcredit.“Wedon’thavea lotofgold,”says

Mhatre,whoworksasa cashierata financial-

servicescompany.“Igiftedthesegoldornaments

tomywifefiveyearsago.I wanttogetthisgold

backtomywifeintwoyearsbyrepayingtheloan.”

Indiansstockpilemoreofthepreciousmetal

than citizensofanyothercountry,andtheir

hoardisseventimestheamountofgoldmined

globallyin2018.Now,Bangalore-basedRupeekis

givingthecenturies-oldbusinessofgoldlending

aninternet-aided makeover to help Indians cash

in on the 25,000 tons of the metal the World Gold

Council estimates they’ve stashed away. Backed by

two of Silicon Valley’s most powerful venture cap-

ital firms, Sequoia Capital and Accel, the startup

allows people to borrow money against their gold,

often built up from wedding gifts or inherited from

theirfamilies.“Indianshavea mind-boggling$1tril-

lionworthofgoldsittingintheirhomes,several

timesthegoldinFortKnox,”saysSumitManiyar,

Rupeek’sfounderandchiefexecutiveofficer.

It’sessentiallya deadassetthat’sa dragonthe

country’seconomy,Maniyarsays:“Monetizing

evena thirdofthegoldstashcouldadd2%tothe

GDPgrowthrate.It couldbethehiddenleverto

aidthegovernment’svisionofmakingIndiaa

$5trillioneconomyby2025.”

Rupeek startedmaking theloans in 2016.

Borrowerspayannualinterestratesof10.6%to

20%.That’shigherthanthe10.5%to12%interest

a bankmightchargeinIndia,butitshomeservice

andquickpayoutsremovethestigmaofpawning

familygold.Rupeekalsodoesn’tchargeappraisal

feesthata bankmightordeductthesortofupfront

feesa pawnshopmight.

Fornow,Rupeekis theonlyapp-based,home-

pickupcompany for goldloans.It’s aided by

India’slargebanks,whichlacktheresourcesorthe

creativitytochaseborrowersbutareeagertodiver-

sifytheirloanportfoliosbytappinggoldlending.At

thesametime,theinformallendingsectorhasbeen

hitbya creditcrunchaftera 15-monthshadowbank-

ingcrisishaschokedcreditlinestosmallandweak

borrowers.Thishasmadealternativeplayerssuchas

Rupeekmoreimportant.“There’sanunprecedented

demandforgoldloans,”saysGayathriParthasarathy,

a partnerandnationalfinancial-services head at

KPMG India Pvt Ltd. “People are struggling for credit

◀ After being appraised

on-site, jewelry is

packaged and taken to

a vault for safekeeping

▼ Rupeek agents

process a gold loan at

a borrower’s home in

Mumbai

● A fast-growing startup offers a discreet,

in-home way to monetize family heirlooms

Tapping India’s

$1 Trillion Gold Stash

● Consumer demand

for gold in 2018

China

994 metric tons

India

760

Other

1,225

U.S. 158

Germany 107

Iran 91