As China attempts to rein in its banks’ credit by raising borrowing costs, cutting off lending to risky clients and introducing tighter borrowing rules, the banks have increased their precious metals supply to lease more gold to customers, Bloomberg reported, citing various sources. According to Industrial Bank (60116.SHA), gold financing is an attractive substitute for money lending since it isn’t subject to loan caps and is considered off-balance sheet lending. “Gold-based financing has grown a lot in the past year,” Shanghai Leading Investment Management partner Duan Shihua said. “It’s clear from banks’ statistics that lots of companies in China still can’t get enough financing.”
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