Glitzy Loans

June 07, 2011 (LBO) – Sri Lanka’s Commercial Bank plans to extend ‘gold loans’ through its branches country-wide offering higher advances and lower rates to encourage use of gold to raise funds. The bank will offer up to 80 percent of the gold value, in the form of jewellery, biscuits or bars, and an interest rate of 14 percent a year (1.16 percent a month) on the advances, Commercial Bank’s Assistant General Manager (Personal Banking) Vimal Fernando said.

He pointed out that gold prices continue to appreciate, offering an opportunity for idle gold to be used to raise funds, while at the same time securing safe storage in the bank.

He said the bank was equipping an average of 18 new branches each month to offer gold loans, and had achieved a five-fold increase in the value of advances through this facility over the last two years.