India expanding gold loan market

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Practicing some of that old time tradition:

NEW DELHI: More than Rs 50,000 crore worth of gold is likely to be pleged this year to procure loans in a rapidly expanding gold loan market, allowing India's favourite hoarded asset to re-enter financial markets and provide a boost to the economy.

According to industry estimates, around 200 tonnes of gold have been used as collateral to raise loans by end November in 2011-12 fiscal.
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The rising trend of gold loans helps monetize this asset, which John Maynard Keynes once famously called a 'barbarous relic'.

"This (organized gold loans) could further support consumption since gold is no longer considered an asset to buy and hold that is, a 'dead' asset and is now being used as a collateral across income groups", said Rohini Malkani and Anushka Shah.

According to industry studies, since gold loans provide essential funds for investment or consumption purposes, they help generate additional aggregate demand in the economy. "Gold loans are mostly raised for personal uses. For instance, in rural areas gold loans are used for agricultural purposes or to finance consumption.
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More: http://economictimes.indiatimes.com...ar-to-rs-55000-crore/articleshow/11076047.cms