Muthoot Finance to offer loans against gold ETF units

Muthoot Finance Ltd, the largest gold financing NBFC in India, has launched a scheme to offer loans against the security of gold Exchange Traded Funds (ETFs).

Launching the service, George Alexander Muthoot , managing director, Muthoot Finance Ltd said that through loan against gold ETF Muthoot Finance plans to service the financial requirements of newer customer segments.

The new scheme that would be available to the customers by the end of July 2011 would enable them to avail finance against their gold ETF units to the extent of 85% of the net asset value of ETFs.

ETFs are mutual fund units issued by asset management companies against physical gold deposited with a SEBI registered custodian. Gold ETFs are listed and traded on stock exchanges. It can be bought and sold like stocks on a real-time basis. By enabling investors to invest in gold without holding it in physical form, gold ETFs offer an important investment opportunity to investors.

Gold ETF has seen a major growth in the country over the past two to three years. The total investments under the scheme is Rs 5000 crore, as on June 2011, while the number of investors is around 3,20,000 investors.

Source: EconomicTimes