Gold is emerging as a safe investment at the time when all other assets are losing their value. World Gold Council (WGC) is engaging banks to have gold as collateral for personal loans.

WGC has already joined with HDFC Bank for extending personal loans to gold buyers in India and the service is expected to commence within a few days.

Ajay Mitra, MD, India Sub-continent, WGC said, "HDFC has taken the initiative to provide personal loans at almost 16 percent interest. The security is arranged in such a way that the bank will keep the gold on behalf of the customers till they pay the entire cost in trenches beginning three months from the date of purchase. This is a unique service to be launched first time in India."

Banks that are interested in connecting with WGC for this purpose are most welcomed said Mr. Mitra during a meeting on investment consultants. The meeting was conducted by the theme ‘Gold as an asset class for investment' by WGC and Financial Planning Standards Board, India.

Mitra also believes that "Such services would surely attract investors towards gold with potential of savings."

Indian Overseas Bank and Corporation Bank also offer loans to purchase gold and platinum jewellery.

WGC, in the meanwhile, is penetrating in rural markets where gold is perhaps the only secured investment asset with 70% of consumption.

The board has also set up retail shops of gold jewellery items across the country with the name ‘Lucky Laxmi'. It has tied up with Tata's subsidiary which is engaged in retail jewellery sales since 2005-06.

"WGC mainly focuses on semi-urban gold jewellery consumers in Tier-III and Tier-IV cities where general households have no alternate options but to invest in gold. For rural customers, we are conducting education programme to attract small and retail customers towards gold," Mitra added.

Despite reports of poor jewellery buying due to global financial downturn, WGC has indicated that gold sales in India during the July-September quarter remained robust against the previous year.

Mitra added that "The official data for July-September from WGC is yet to be released, but from the surveys conducted, gold buying from rural and semi-urban areas has been very good."

WGC is a gold body funded by global mining companies to promote gold sales across the world.