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Maybe Indians buy so much gold because their currency is so crappy
Why Do Indians Spend So Much on Gold? RBI to Study
By the Press Trust of India
via The Times of India, Mumbai
Thursday, August 4, 2016
http://timesofindia.indiatimes.com/business/india-business/Why-Indians-s...
MUMBAI -- The Reserve Bank of India has set up a committee to study Indian household financing patterns and why Indians spend large sums on gold.
The panel will look at various facets of household finance in India and to benchmark India's position vis-a-vis both peer and advanced countries, the RBI said in a statement on Thursday.
The panel, headed by Tarun Ramadorai, professor of financial economics at the University of Oxford, will have representation from financial sector regulators SEBI, IRDAI, and PFRDA apart from the RBI.
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It will consider "whether, how, and why the financial allocations of Indian households deviate from desirable financial allocation and behaviour (for example, the large household allocation to gold)."
The committee has also been asked to benchmark the current depth of household financial markets in India vis-a-vis those in other major world markets and to identify areas of priority for growth and change.
To characterize and evaluate households' demands in formal financial markets (for assets such as pensions as well as liabilities such as home loans) over the coming decade is another key term of reference given to it.
The RBI further said that the panel will evaluate the "design of new systems and the redesign of existing systems" of incentives and regulations to encourage and enable better participation by households in formal financial markets.
The terms of reference also include assessing the role of new financial technologies and products (robo-advising, automatically refinancing mortgages) in the cost-effective provision of high-quality and suitable financial products to Indian households while containing risks.
The committee is expected to submit its report by the end of July 2017.
The demand for formal financial market investment product like pensions as well as liability products like home loans from the Indian household was discussed during the meeting of the Subcommittee of Financial Stability and Development Council held in April.
It was decided that a committee should be set up to look at various facets of household finance in India and submit a report, the RBI said.
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