How gold holdings can ease credit flows

If gold held by the top 30% of Indian households can be mobilised, it can be used for dollar swaps, while depositors could be provided low-cost credit for longer tenures

In 2019-20, Indian non-bank finance companies (NBFCs) engaged in extending loans against gold as collateral were a hit with international investors. Muthoot Finance raised $550 million via dollar bonds at a coupon rate of 4.4 per cent, following the $450 million it raised in 2019. Interestingly, the bond issue was actually launched at 4.75 per cent, but owing to international investors’ interest, the company got a lower yield. Mannapuram Finance at the same time raised $300 million at 5.9 per cent, compared with the initial offer of 6.25 per cent, while Rupeek, an online lending platform, has raised nearly $60