Alternative Investments Gain Traction
As the stock market experiences a downturn, investors are exploring unconventional investment avenues beyond traditional bank deposits. A notable trend emerging in tier-II towns of South India, particularly in Tamil Nadu and Kerala, is the growing interest in fixed deposits offered by prominent jewelry chains.
Attractive Interest Rates
These jewelry chains are enticing depositors, predominantly smaller investors, with interest rates that surpass those of bank fixed deposits by 3-5%. This development is noteworthy, especially when compared to the skepticism surrounding similar offers from cash-strapped companies, including those in the real estate sector.
Trust: A Key Differentiator
Despite lacking regulatory oversight, big jewelers have successfully attracted investors by leveraging the inherent trust associated with their business. As elucidated by a manager at a Kochi-based jewelry chain that accepts such deposits:
“People perceive investments in deposits of jewelers as ‘safe’ because there is gold involved. Also, this business is all about ‘trust’. While manufacturing companies have defaulted in the past, you would not hear of any defaults from a jeweler.”
Demand Driven by Unaccounted Wealth and Real Estate Boom
The sustained demand for these deposits can be attributed, in part, to the presence of unaccounted money within the system, which has been partly fueled by the real estate boom across India.