A man passes by the sign of World Bank Group September 2000 outside the World Bank headquarters in Washington. (Alex Wong/Newsmakers) Coming as a shot in the arm for the Modi government’s efforts to unlock the value of idle gold in Indian households and bring a large part of it to India's formal financial system, the International Finance Corporation (IFC), a member of the World Bank group, will be investing $35 million in Manappuram Finance Ltd (MFL), reports The Economic Times.
In a maiden such investment in a gold finance company, the IFC is attempting to tap the Indian gold loan market and is expected to help create opportunities for the rural and poor households to transition from informal to formal forms of credit.
The investment will last for a period of three years as a secured loan from IFC to Manappuram Finance Ltd. During this course the IFC is also expected to provide advisory services to bring global best practices to MFL's risk management systems.
It should be noted that India has an estimated 23,000 tons of gold with an estimated value of $1 trillion according to the World Gold Council, while Indian banks and Non-Banking Financial Companies (NBFCs) have a gold loan market of just $19.6 billion which leave a wide scope for expansion.
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