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Rising Frauds of Gold Loans

By SiliconIndia | Tuesday, 21 February 2012, 23:57 Hrs | 1 Comments

Bangalore: The gold companies these days are wrestling with crisis of borrowers assuring forgery and even stolen metal to meet their funding necessities as frauds are turning out to be a big headache. Muthoot Finance is the major player in this speedily growing business, but it had to write off gold worth around

4 crore when discovered that borrowers had pledged assets that were stolen.

George Alexander Muthoot , MD, Muthoot Finance, said, "We are dealing in a commodity which is only becoming more attractive. We often come across such instances where people pledges fake gold, stolen or low quality gold with us. Whenever possible, we recover the amount, otherwise we just have to bear the losses," as reported by The Economic Times.

The number of institutions offering gold loans is pitching up and the companies feel this results in proportionate rise in possibilities of fraud as bigger crowd is now aware of gold loans. Unnikrishnan Manappuram, MD, Manappuram Finance, another well-known player in the gold loan business said, "Earlier if there was one case of fraud in the 30,000 people we gave loans to, today it is one in every 10,000 cases that we see discrepancies