Indian Non-Bank Lenders Now Accepting Paper Gold As Security

India continues to be the country where gold-backed borrowing is both spreading and innovating. Now, several non-bank lenders are accepting paper gold - including gold savings certificates - as security for loans.

"Gold funds have opened an entirely new avenue for offering loans to customers. We expect this segment to ramp up aggressively as investors start embracing this form of gold for future investments," said KV Srinivasan, CEO, Reliance Commercial Finance. Reliance Commercial is offering loans to investors of Reliance Gold Savings Fund, wherein, they can get up to 90% loan on value of gold units held up to [50 million rupees] and up to 3 years.

One wealth manager is quoted as saying the borrowers may get a better chance if they pledge physcial gold, though.