November, 23, 2020
Going from strength to strength, Pan Asia Bank has consistently pioneered products and services to fulfill needs of customers over its 25 successful years in existence. Pioneering yet another innovation in Sri Lanka’s banking industry, Pan Asia Bank has launched a superior Gold Loan product in partnership with a reputed global bank, which is a unique solution to protect the asset value of customers in fluctuating market conditions. Along with its global banking partner, Pan Asia Bank has devised this new product to take away the risk of asset devaluation due to market fluctuations. As a Truly Sri Lankan bank, Pan Asia Bank understands the customer point of view which is why it is offering this unique product proposition for the first time ever in Sri Lanka.
Gold loans have traditionally been a preferred mode of accessing loans by a wide swathe of customers but the volatility in gold prices in recent years has made this a risky proposition for both borrowers and lenders. Pan Asia Bank’s new proposition stabilizes uncertainty in gold prices, enabling the Bank to offer a higher value to customers whilst also protecting the asset value of their gold. With this unique Gold Loan product, Pan Asia Bank synergizes its decades-long experience in the industry and in-depth knowledge of consumers with the expertise of the leading global bank for a product that has been absent in the market, thereby effectively rendering gold loans a safe haven product.
Pan Asia Bank’s new gold loan is the first such product in the history of Sri Lanka’s banking sector. This innovative solution is also in line with the regulator’s vision to see local banks using more derivative options.
Elaborating further, Richie Dias, Deputy General Manager (Head of Treasury) at Pan Asia Bank says: “Introduced in Sri Lanka for the very first time, our new product offers key benefits for our gold loan customers. Very often this mode of financing is used by consumers and the SME sector to fulfill urgent financing requirements, purchase equipment or seed capital, and our new product allows them to borrow more against their existing gold holding than before and not be forced to sell their gold assets to get more liquidity, thereby making a vital contribution to the national economy. Increasing the Loan-to-Value (LTV) on gold loans from the current 75% will be a huge relief to these customer segments who have been struggling to secure loans in the current lending market scenario.”
Adding further, Mr. Dias says, “Pan Asia Bank’s new product allows our customers to obtain a much higher loan amount for a longer tenor, in line with their business cycle due to the fact that we along with our global banking partner are managing the risk with our joint expertise. As a result, soaring gold prices unlock huge value for idle gold lying with families that can now raise a higher loan amount to meet short term financial constraints.”
One of the key reasons why Pan Asia Bank launched this new product is to support gold loan customers. The new solution clearly differentiates its product from the rest of the industry such that any volatility in global gold prices will not affect the customer or the bank.
This new product also ushers in greater stability for Pan Asia Bank. In the pre-gold crisis era prior to 2013, the total gold loan portfolio of licensed commercial banks was approximately close to Rs. 500 Bn accounted for 25% of the total lending portfolio of licensed commercial banks. With the massive slide in gold prices in 2013, licensed commercial banks had to absorb massive write downs in the absence of a mechanism to hedge the downside price risk. Gold loan portfolios held by commercial banks shrunk considerably consequent to this gold price debacle. In order to mitigate this price risk, gold loans were thereafter granted for very shorter periods than the typical one year period. Pan Asia Bank’s new solution mitigates all these concerns for banks and facilitates customers to walk in with their gold assets and walk out with cash in no time with minimum procedure.
The need for this product is even more pronounced during the time of a global pandemic and economic stress, empowering customers to leverage their gold assets as collateral to acquire urgent financing.
Photo 1 Caption: Mr Richie Dias, Deputy General Manager (Head of Treasury) and Mr Nilanga de Silva, Chief Dealer at Pan Asia Bank is seen handing over the agreement of the partnership to Director/CEO of Pan Asia Bank Mr Nimal Tillekeratne
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