Love for gold: A sales woman wearing a face shield and a mask arranges gold bangles at a jewelry showroom in in Kolkata, India. The World Gold Council estimates that Indian households are sitting on a US$1.5 trillion hoard of gold, the biggest of its kind, largely made up of jewelry, which families often inherit or are gifted at weddings. — Reuters
NEW DELHI: Indian families, sitting on the world’s biggest private stash of gold, are rushing to borrow against their jewelry as the precious metal rallies to records and the coronavirus pandemic fuels an economic downturn. Now, financial firms and banks are using that demand to lure more customers from pawnbrokers and money lenders.
The added competition could lower borrowing costs for Indian consumers, who in desperate moments of financial stress often pay exorbitant rates to informal lenders to use gold as collateral. Firms like HDFC Bank Ltd. and Federal Bank Ltd are expanding the loans they make against the precious metal.
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