from Gold Money
Loans backed by physical gold appear to be increasing again in India, as shown by quarterly data and statements from the management of Muthoot Finance, one of the biggest lenders in the country?s non-bank sector. This past spring India?s central bank tightened regulations affecting firms in the growing non-bank financial sector. These measures were partly aimed at minimising the risks associated with gold-backed loans.
According to Oomen Mammen, Chief Financial Officer at Muthoot Finance, in the past two months demand for so-called gold credits has risen significantly. In spring the Reserve Bank of India (RBI) requested that commercial banks reduce from 10% to 7.5% credit granted to financial firms in the non-banking sector. These measures were mainly aimed at avoiding a flood of margin calls triggered by possible further price drops in gold and other precious metals.
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Source: http://financialsurvivalnetwork.com/2012/09/indian-gold-loans-on-the-rise-again/
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