BHEL, GE India in JV for water-treatment solutions

State-owned power equipment maker Bharat Heavy Electricals Ltd (BHEL) today said it would join hands with GE India Industrial Pvt Ltd for manufacturing water-treatment equipment.

"BHEL and GE India Industrial, a 100% owned subsidiary of GE, USA, will jointly engineer and supply water treatment solutions for the Indian market," the company said in a statement.

According to the terms of the agreement, the joint venture will help BHEL acquire the capability to develop large water-treatment systems based on GE Products, on its own, it said.

Experts peg the domestic water treatment market during 2011-15 in power generation, potable water and waste water treatment at approximately Rs18,000 crore. Out of this, the power sector alone would require water treatment systems worth Rs8,000 crore.

On Monday, BHEL gained 0.64% to Rs2,271 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.90% up at 19,957.59 points.


Tata Power plans to invest Rs5,000 crore in wind energy

Tata Power Ltd, which aims to produce at least 25% of its total power generation from clean sources by 2017, will invest around Rs5,000 crore in wind-energy. The company has targeted around 8,000MW of power to be generated from renewable energy resources.

Tata Power, which at present has a little over 200MW of wind capacity, plans to give thrust on wind-energy, as "it is the most commercially viable and established form of renewable energy," Tata Power's executive director (strategy and business development) Banmali Agrawala said.

The Ratan Tata-led firm is in the process of rolling-out 150MW of capacity, and another 750-800MW will be added at the rate of around 100-150MW annually through to 2017.

According to Agrawala, it costs around Rs6 crore to set up a facility to generate 1 MW of wind-power. In the solar segment, the company aims to have 300-400MW capacity by 2017. The first step will be taken by this year-end with the commissioning of a 3MW plant at Mulshi in Maharashtra, he said.

On Monday, Tata Power gained 2.25% to Rs1,342.45 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.90% up at 19,957.59 points.


Gold loan companies and their murky underbellies

If you thought loans against gold were the best thing to happen to mankind since sliced bread, think again. We made trips to various branches of companies which profess to offer ‘quick’ loans against the yellow metal and this is what we unearthed

Over the past few months, advertisements on gold loans have been visible everywhere, from companies like Muthoot Finance, Muthoot Fincorp and Manappuram Finance. These advertisements make pawning gold as easy as eating a piece of cake.

They appeal to all those who need money but only have assets like a house and gold jewellery. Our homes are our most important asset, and gold comes in as a close second. Since pawning a house is tough, pawning gold seems like the easiest option. India is a country which worships gold. Therefore, loans against gold have a mass appeal. At a time when gold is retailing at Rs18,000 for 10 grams, it is easy for people to pledge their gold and raise money. No wonder gold loans are doing roaring business.

A few of these companies are so profitable that they have been able to attract private equity investments. Manappuram is listed on the Bombay Stock Exchange - its shares have shot up from Rs13 in April 2009 to Rs113 (on 12th August), thanks to vigorous growth in turnover and profits. In the June quarter of this fiscal, income surged 177% to Rs18,607 crore while net profits zoomed 225% to Rs4,615 crore.

All the three companies mentioned above have their origins in Kerala, but now have massive nationwide operations. However, it is hard to figure out if their self-proclaimed growth numbers are authentic. Muthoot Fincorp claims that it has a simple and uncomplicated procedure that ensures that you have your loan in 3 minutes depending upon the documents.

Moneylife visited all these companies (their Mumbai branches). More on that later.

At the Muthoot Fincorp branch, the sales assistant that we spoke to said that it would take at least 10 to 15 minutes to grant a loan. Such claims are also made by other companies, with Muthoot Finance saying that it would take 5 minutes to get the loan against gold on its website. Not so, in fact it would take 30 minutes and that too if we came in the morning, said its sales assistant. While Manappuram says you'll get the gold loan within a minute, its sales assistant says that you may get it probably in 15 minutes.

But how solid are these gold loan companies? They function as non-banking financial companies (NBFCs) but how closely are they regulated by the Reserve Bank of India (RBI)? Where do they get the money to loan you? If it's borrowed money, could they suffer from an asset-liability mismatch under financial stress? How robust are their business models? Are they reliable? Is your gold safe with them? If gold prices fall, would they sell your gold and recover their money? If not, would they resort to strong-arm tactics? What are the social implications of a failure of these schemes as gold loan companies get larger and larger?

When we started looking at these questions, we discovered to our utter surprise that there has been no thinking along these lines so far. So, Moneylife started to investigate all these issues. The result of this is a three-part investigation. The first part, which follows, is an actual description of how the branches of these three companies lending gold actually function. They all have their branches in Andheri, a bustling suburb of Mumbai. The second part, to be followed a few days later, will examine the financial model of Manappuram Finance whose financial data is available since it is a listed company. The third part will examine the quality of supervision of these NBFCs given that they have become so ubiquitous and large that their failures will cause a lot of turmoil.

Last week, our correspondent Aaron Rodrigues made a trip to the Andheri branches of these three gold loan companies. His first stop was Muthoot Finance. Located very close to Andheri station, its office is on the second floor of Jyoti Estate. The Muthoot Finance branch is surrounded by a clutch of residential buildings, but unlike the other branches of these financial companies, it wasn't deserted. Here is our correspondent's first person report.

The Muthoot Finance branch is small and cramped. At 3:15pm, a few customers were inside the office, either to give some gold or take some of their gold back. The sales assistants are busy and you can hear one customer grumbling loudly; he feels cheated. "I didn't ask for so much of a loan, and what is this rubbish of paying the interest and the principal. It's like I have given more money, then taken (less) money," he says. It's chaotic, at first sight.

Finally I get a chance to speak to a sales assistant. She explains to me how the scheme works. The company will take my gold, give me some money and charge me an interest of 2% per month, making it an annual rate of interest of 24%. The loan is branch-specific. If you give gold to one branch then you can redeem it only from that branch. This is contrary to what most of these companies say in their websites - that the customer can redeem the gold from any of their branches.

Under the scheme, you hand over the gold to the branch and the outlet will provide you with cash. If you have gold worth Rs50 lakh and above, then you are given cheques.

She wants to know how many grams of gold I have. I ask her if gold prices were to drop, would that have any impact on my interest amount and principal amount. Her answer is short, "No. Nothing changes when you have taken the loan. Sir, how much grams of gold do you have?" I ask her if I can't repay the loan amount then what? Again, she tells me with her reassuring smile, "Sir, if you can't pay your interest for nearly 18 months, we will put up your gold for auction."

This branch doesn't look all that secure - there is just one guard at the door, there aren't any other security personnel and no camera that I could spot. Is it really safe to have your gold stored here?

The sales assistant again wants to know how many grams of gold I have. I tell her I have 200 grams of gold. But why is she asking me how many grams of gold do I have and not how may carats worth? I tell her, "I have 200 grams of gold and they are all 24 carat worth."

"So you have 200 grams of gold. That should give you a loan of nearly Rs3 lakh," she replies. "I don't need that high a loan, all I need is Rs2 lakh for my sister's operation. So how much gold would I need to give?" I ask. After using the calculator, she replies, "Ok, so you would need to get nearly 150 grams of gold as we measure it (the loan amount) as 1 gram of gold being equal to Rs1,430."

I ask what about the quality of gold? Doesn't that affect the value and the loan amount? It doesn't; the loan value depends on weight. Another key factor is that any gold below 22 carats is not taken for consideration when it comes to a gold loan.

I move to other branches. Unlike Muthoot Finance, these were deserted and were at odd locations. Take Muthoot Fincorp. Its branch is at an industrial estate.

Others occupiers there are mechanics and grain suppliers. When I reached Muthoot Fincorp, it was nearly 4:30pm. Almost time to shut shop. However, I have made my way inside, requesting the guard that I need some details. From what I saw there only three persons were in the branch office, aside from the guard. I walk down to meet the sales assistant, who tells me to sit down and starts explaining the Muthoot Fincorp scheme. The scheme is similar in many ways to that of Muthoot Finance. The only difference is that this scheme gives you the option to pay your interest in a monthly, quarterly, half-yearly or yearly basis - all with different interest margins.

Again, your gold will not be auctioned before 24 months. But what scares you is the location of the branch - and the lack of security.

As per their scheme, the customer is charged 2% per month. Again here the weight of the gold is paramount. I tell her that I have 24 carats of gold. Her reply is that her company evaluates the gold on the basis of its weight (not its purity). Only if you have a gold coin, will the gold amount be measured on the basis of the purity of the yellow metal. For example, if you have a 24-carat gold coin, the loan amount will be based on the (24 carat) purity.

However, for gold jewellery the loan depends on the size of the ornament. If you have a gold ring or earring worth 22 carats, the loan amount that Muthoot Fincorp will give you would be Rs 1,350 for a gram. But for larger-size jewellery like a gold bangle, the amount would be Rs 1,450 per gram. If you are carrying along 24-carat gold for a loan, then you better have a gold coin. This will enable you to get a loan amount of Rs1,700 per gram.

Manappuram's branch is located on the Western Express highway, but it is isolated. The building is rundown. All the stores in the building are shut, except for a solitary ATM. As you enter, there is a very dim light guiding you to the office. The guard sitting at the door tells me that the servers are not working. I request him to let me in as I just want details.

The moment you enter, you see a very different office from the ones you have seen before. There are fans running, but no air-conditioning. Some windows are broken and there are paan stains on its walls. There is a room, (actually with a lock). I wonder if it may be the room where the gold is stored.

The usual questions were asked. The person I first spoke to didn't have any knowledge of the schemes, so his colleague intervened. And this is a listed gold loan company.

The loan amount would depend upon the weight of the gold. Manappuram values loan against gold per gram at Rs1,400. However, they only consider 90% of the total weight of gold being submitted for a loan. This would mean your actual loan amount is Rs1,260. The total monthly interest you will pay under this scheme would be 1%.

However, if you want a higher amount of loan against your gold, there are a few more schemes (which charge you higher interest). For a monthly interest of 2.17%, Manappuram will provide you a loan of Rs1,450 per gram (after deducting a margin of 10% as explained above). The interest payout is similar to that of Muthoot Fincorp. You can pay your interest on a monthly, quarterly, half-yearly or yearly basis - which will obviously impact the actual interest that you are paying out.

Again, on 14th August, I made a trip to Muthoot Finance's Mahim branch. The branch is at Ram Mahal Co-operative Housing Society, opposite the railway station. It is near an HSBC ATM machine. I enter the branch by 9:45am. It has just opened. There's a solitary customer in the branch, apart from the staff and a security guard.

As usual, I ask the same questions. Unlike in the Andheri branch (where I was informed that the rate of monthly interest on the loan would be 2%), here they tell me it's 2.04%.

After all the formalities I tell them that I would visit the next day, a Sunday, with my gold. I am told that the Mahim branch is closed on Sundays. This seemed odd, because when I had visited the Andheri branch, I saw a poster stating that they were open on Sunday. A sales assistant confirmed that their branch was open on Sunday. Now why should the Mahim branch be shut on Sunday? The Mahim sales assistant tells me, "It's as per company rules and all branches are not open (on Sundays)."

(In the second part of this three-part series, we will examine the financial model of Manappuram Finance whose financial data is available, since it is a listed company)




3 years ago

At last a got loan from this God fearing agency called merchant loan:via:[email protected]

Have a Nice Day


4 years ago

India is a country that worships gold and it is easy to make money by placing gold as collateral. Lots of companies offer cheap;>Interest Rates on Gold Loan. It is the simplest way to make money in times of need. It is a handy option to acquire cash at low rates.


4 years ago

it is really scary, they have so many offices and no organisation and no reassurance for the customer, it is better to sell your gold and be at peace, because the mental agony of regular changes can be too much


4 years ago

I received money from manapuram gold loan. i start a business very loss. i enough money my gold how many days life


N Bhargav

In Reply to Jerald 3 years ago

Sorry Gerald. I didn't understand the last part of your comment. That is "i enough money my gold how many days life". What does that mean?

Sunil M S

5 years ago

"This is to inform that Manappuram does not check the ownership of the gold ornaments. A thief can also pledge gold with them as it has happened in a case in Mumbai.....Mind you stolen gold may find place in Manappuram."

Reserve Bank's Know-Your-Customer (KYC) guidelines are applicable to Manappuram, Muthoot, etc., like any other player in the financial sector. ID proof and address proof are the main requirements of KYC guidelines. Anyone who submits the KYC documents can avail himself of a gold loan from these companies. As to ownership of the ornaments, the application form contains a declaration to that effect. Once the applicant signs that declaration, the company accepts it. This is the standard procedure among banks even. If the declaration is not obtained, it will be a lapse and the officials concerned at the bank or gold loan company may be liable to be accused of colluding with the thief.

When anybody realizes that his gold ornament has been stolen, the first thing he should do is to file a petition with the police. If the police traces the ornament to a bank (or a gold loan company), they, the police, will issue an order, duly signed by an appropriate police authority, take the ornament into custody, and issue to the bank (or the gold loan company) a proper receipt for the ornament.

The bank can recover the dues under the loan from the borrower, i.e., the accused. In case all their attempts to recover the dues from the borrower fail, the bank can claim the dues from the insurance company, which has given the bank the insurance coverage. Ditto, for the gold loan companies.

"When the lady through her legal counsel asked for details and inspite of narrating her plight was replied arrogantly by Mr. Sarathlal that the Company cannot give details to third parties."

Financial institutions are legally bound to maintain secrecy of their client's accounts and deals. In case any financial institution violates this rule, and the violation is proved, the client can legally seek and obtain damages. Here too, the bank will have to abide by an order and furnish details if the order is issued by an appropriate police or other authority.

"It is high time RBI takes notice of such rogue elements."

This is the result of a lack of understanding of the legalities involved.

"Chit funds originated from Kerala and the middle class got looted of their earning in the 60s and 70s."

If the implication is that Manappuram and Muthoot are no better than those chit funds which cheated investors, nothing can be far from the truth. The Manappuram General Finance And Leasing Ltd appears as the 286th while the Muthoot Leasing & Finance Ltd appears as the 326th in the "All India list of NBFCs including RNBCs, to whom Certificate of Registration under Section 45 IA of RBI Act, 1934 have been issued by the Reserve Bank of India to hold / accept deposits from public. (Position as on July 31, 2004)", as per the RBI's website. The URL is: Every financial institution has to display its licences prominently in their places of business, for all to see.

"Manpower supply to Gulf originated from Kerala who brought human trafficking in the 80s....."

A large number of Keralites are employed in various countries in the Gulf. They send part of their earnings to their dear ones back home. The inflow of funds from these Non-Resident Indians (NRIs) has been one of the economic pillars of Kerala. As to human trafficking, if anyone has reliable information about any human-trafficking out of Kerala, I would suggest the details to be conveyed to the Kerala Police. They do have a website, too, just the post the details on it.

" it is the gold loan."

All the Kerala-based banks have been granting gold loans for more than 50 years now. (Gold Loans are not common in the North Indian states.) For banks, gold loans are just one of the forms of credit they give. But Manappuram and Muthoot open branches mainly for granting gold loans. Seeing the success of Manappuram and Muthoot through gold loans, some of the banks have started opening mini-branches exclusively for gold loans. The rates of interest which Manappuram and Muthoot charge under some of their gold loan schemes stand good comparison with banks'. However, the rates of interest under some other schemes may be high. So far as I understand, the longer the loan-period, the lesser the rates of interest, and the shorter the loan-period, the higher the rates of interest. When the loan period is shorter, the borrower gets more amount per gram, and when the loan period is longer, the borrower gets lesser amount per gram. All these schemes are transparent and the details are available at all their branches. There are no hidden costs.

"Beaware your gold is not safe here."

Manappuram and Muthoot have all the security and safety measures often bank-branches have, and even more. Some of their branches even have full time remote surveillance. Gold ornaments pledged with Manappuram and Muthoot are as safe as, or even safer than gold ornaments pledged with banks.

"Read about muthoot and Manappuram more. Invest cautiously or you may end losing all your gold....."

If the advice is about investing in these companies' shares, study the results, track record of the shares in the stock market, gold-market, and various factors affecting economy, etc., and so on; such study has to be essentially done before investing in any share for that matter, be it Reliance, ICICI Bank, or any other.

"...and find such stolen gold with these companies."

This point has already been explained.

I do not have any relations with either Manappuram or Muthoot. I just happen to be familiar with the financial sector in Kerala.



In Reply to Sunil M S 5 years ago

Dear Sunil,

Thanks for your valient support to the cause of Mutoot and Manappuram. Lets see who is having the last laugh. Only Time will say. What a way to support these companies by a person who is "only just happen to be familiar with the financial sector in Kerala".

Sunil M S

In Reply to bsian 5 years ago

I was a part of the largest Kerala-based private sector bank for a long time and have thus been familiar with the financial sector in Kerala in general and gold loans in particular. Ever since the gold loan companies started growing fast, and captured a lot of financial space inside and outside the state, I have been interested in them too. Even otherwise, most people in Kerala are familiar with gold loans. In case you have any issues with the Kerala-based gold loan companies or banks, please feel free to write to me; my email ID is [email protected]. Having been experienced in the sector, I might be able to give you the right advice. Free of cost, of course.


In Reply to Sunil M S 5 years ago

Tnx for your noble gesture for troubling yourself to give free advice. We have already began the legal proceedings and have established to Manappuram without doubt that these gold ornaments have been stolen. It is seen that a large quantum of such stolen gold is finding itself into mutoot, Manappuram and karvy finance. One can only pray that it does not go like the Harshad Mehta scandal. Talking of chit funds many have got cheated with star of cochin, sudharshan chit funds, Nedungady chits etc in Mumbai. Personally even my family has lost in the chit fund of Star of Cochin in 1970s. Hope there are tighter laws to secure.


5 years ago

This is to inform that Manappuram does not check the ownership of the gold ornaments. A thief can also pledge gold with them as it has happened in a case in Mumbai. The man pawned the gold ornaments of his wife and mother inlaw with manappuram- Aurangabad branch and got money. When the lady through her legal counsel asked for details and inspite of narrating her plight was replied arrogantly by Mr. Sarathlal that the Company cannot give details to third parties. Mind you stolen gold may find place in Manappuram. It is high time RBI takes notice of such rogue elements. Chit funds originated from Kerala and the middle class got looted of their earning in the 60s and 70s. Manpower supply to Gulf originated from Kerala who brought human trafficking in the 80s now it is the gold loan. Beaware your gold is not safe here. Read about muthoot and Manappuram more. Invest cautiously or you may end losing all your gold and find such stolen gold with these companies

Raja Verma

6 years ago

I am a customer of Muthoot Finance. The staff is very cooperative. You say that it takes 30 mins to get a loan. In which bank do you get loan so quickly? Besides if i do not pay the interest it the co. which is losing. The gold in Muthoot Finance is insured. Next time before commenting kindly be sure of the facts.


6 years ago


Sunil M S

6 years ago

“…and their murky underbellies….and this is what we unearthed”

The sensational heading and the first paragraph had promised a coup of some sort in the article that followed. I eagerly lapped it up, but was disappointed. Nothing in it was sensational let alone murky. I had the opportunity to view ‘Manappuram’ from close proximity. True, their rates of interest are higher than banks’; that is a serious disadvantage but that, perhaps, is the only disadvantage. But then, banks like ICICI Bank and HDFC Bank are more usurious when it comes to personal loans.

Once I witnessed the disbursement of a gold loan at a Manappuram branch. The customer came in, handed over the ornaments to the appraising official (who immediately started testing them), the ID proof and address proof to another official (who immediately scanned and uploaded them onto their network) and, then, signed the application form. The next moment, he received payment from the cashier, and, on his way out, collected the loan-token (computer printout) & IDs. All this must have been over in less than three minutes. Release of gold ornaments could be even faster. In short, gold loan companies like Manappuram are generally faster than banks.

That is only one of several advantages. There is another one, somewhat psychological. A bank has two kinds of customers, mainly: depositors and borrowers. Since depositors are bank’s source of funds, they may get a better attention than borrowers. On the contrary, gold loan borrowers are the customers for companies like Manappuram and do not have to wait.

Further, the gold loan companies give more amount than banks for the same ornament. Many branches of Manappuram are open on all seven days of the week. As to safety, some of the gold loan companies are installing surveillance systems with which they can, sitting at HO, do live monitoring of branches in other states and sensitive areas, and take immediate measures whenever needed.

Words like “murky”, “unearthed,” used in the article, are out of place.

Amit Pal Singh

6 years ago

I have suffered at the hands of M/s. MUTHOOT FINANCE LTD. (The Gold Loan Company) & now I have accumulated quite some knowledge as regards their modus operandi & their dealings? The whole information can be mailed to you if you like.

Amit Pal Singh
New Delhi


Mr Vicky

In Reply to Amit Pal Singh 6 years ago


rufus john

In Reply to Amit Pal Singh 6 years ago

hi could you mail me the information

sunil date

In Reply to sunil date 6 years ago

No reply Mr AP Singh ?

Sunil Date

6 years ago

Mr D Basu & Mr A Rodrigues. Pl see my comments and the replies by Mr R Nandakumar. I am still unable to understand the risk for the "BORROWER", if the Gold loan company goes bust or vanishes. Can you please clarify.

Sunil Date

6 years ago

I go to a bank and take a loan against my FD. I go to a bank and pledge my shares and take a loan. I go to a gold loan compny and take a loan against my gold. How does it matter to me if the co goes bust. I have got say 70-80% of my gold value as a loan. So the risk is for the 20 to 30 % only. It is the gold loan company which carries the risk that I may not pay back. If the gold prices fall & I don't pay they are in trouble. Your article says that thay take loans from Pvt equity firms for their funding. These pvt eqty firms should be worried. Why should I worry ? Can any one explain ?


R Nandakumar

In Reply to Sunil Date 6 years ago

When one conglomerate has lorry loads of money it is worried about inflation especially when the official rate itself touches 16%. (Generally any central govt would be reluctant to admit any inflation figure of more than 10%.). Gold is one of the best bets at the time of inflation. So they collect Gold from you which is appreciating and give you paper money that is depreciating faster. This conglomerate by this devise not only ensures safety of its money but also makes an handsome profit of minimum 15%. And they are controlled least because they are NBFCs.

Sunil Date

In Reply to R Nandakumar 6 years ago

When does one pledge gold ( ornaments) ? When one is in dire need of money and other avenues like bank etc are closed. At that point does it matter to the borrower, if the gold loan co goes bust ?
I agree that if it is a loan taken for repaying some other loan or for gambling etc it is not a prudent way. But the question in the article is not about whether it is right or wrong to obtain money in this way. The article is about the risk of the gold loans co going bust or vanishing.

R Nandakumar

In Reply to Sunil Date 6 years ago

Kindly note that RBI unless brings out stringent laws on these methods of money distribution there are bound to be scams. The comments in these coloumns only reflect the fervant hopes of the writers that another scam should not happen and gullible public should not suffer.


6 years ago

I guess, the plan of these companies is to BUY Gold at cheaper rates around 1300/gm against market rate of Rs.1750, earn big money in form of interest and Vanish one fine day.


6 years ago

In North India pledging gold is considered a taboo, a last resort during bankrupctcy, while gold loans are common in South India- the cultural reason why Kerala promoted companies are leading. It would be interesting to see their profile of customers, are they also predominantly South Indian. The business model seems simple like lending against pledge of shares.

How these NBFC manage operational and fraud risk is important. Do they declare to the regulator where the gold inventory is placed and what are loans against this inventory?, When are margin calls issued?, Is the gold insured?,

Ramesh Sopan

6 years ago

for the"freedom" we can say JAY HIND & celebrate Independence day.... Just enjoy the spirit of freedom with dignity & pride.

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