Pandemic leads to trust deficit between pawn brokers and customers

Pawn brokers, the most sought-after people for the working class in times of financial crises, say they now find themselves in a predicament of turning down requests of long-time customers for money in lieu of jewels to meet their day-to-day expenses.

Despite the lockdown restrictions, the working class, mostly comprising workers in small-scale industries, restaurants, malls, and construction sites, who face extreme hardship, continue to call up the pawn-brokers over phone to pledge their jewels, it is learnt.

“We feel sad about not being able to comply with the request of our long-time customers with whom the transactions are mostly based on mutual trust. But then, we also face the problem of cash liquidity, as the cash flow is constant only when business is carried on unhindered,” said Shankar, who runs a pawn-shop at Ariyamangalam.

There are some who avail themselves of the utility of jewel loans forwarded by banks at attractive interest rates, but not all are comfortable with going through the procedure starting from establishing identity, producing proof of residence, and making separate payments to appraisers.

“Banks, in general, are indeed not suitable for those who require small amounts of money as jewel loans,” a branch manager of a nationalised bank said.

The pawn-brokers, on the other hand, forward loans on pledged jewels, irrespective of the amount, on the basis of two to three percent interest per month, and give customers one-year time to redeem their valuables. The usual practice is to deduct the interest amount upfront and hand over the remaining amount as loan against the pledged jewels. After a year, the customers redeem the jewels.

But, over the last one year, the process has not been that smooth. A good number of customers need to be reminded twice or thrice after a year, and they come around after much coaxing and, at times, even goading, Subramani, another pawn broker said.

Fear in the minds of the pawn-brokers now is that there could be an erosion in their customer base, which they had been nurturing assiduously over decades, due to the tough situation caused by the pandemic.

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