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State-owned pawnshop operator PT Perum Pegadaian said it plans to start selling gold bars on installment plans in April to reach customers who want to invest in the metal but lack the necessary cash.

Wasis Djuhar, Pegadaian’s director of business development, said on Friday that the new business will be run better than its predecessor, a gold coin business that was closed in early 2000.

“The business is meant to provide a channel for people who want to invest in gold but do not have enough cash. They can buy gold through a down-payment and several installments,” Wasis said.

Wasis said the gold business will operate under the company’s Shariah division and it will be available to customers at all Pegadaian outlets.

Gold bars are currently sold in jewelry shops for around Rp 350,000 per gram. The bars, which can be bought in weights as small as one gram, are a popular investment in Indonesia because the precious metal is seen as being insulated from domestic inflation.

“We are also considering expanding the gold business by providing storage for customers who want their gold investments kept safely,” Wasis added. “The potential is good because safety is a significant issue when investing in gold.”

On Thursday, Chandra Purnama, president director of Pegadaian, said that the company has been looking for new ways to expand its business because it was unlikely to be able to resume its stock pawning service.

He said a regulation prohibited the company from accepting securities such as stocks and bonds as collateral for loans.

Pegadaian started the stock pawning service in July 2007 but it was halted in November 2008 due to the global financial crisis.

The total value of securities pawned at Pegadaian at one point reached Rp 500 billion ($54 million) but dropped to Rp 75 billion when the service was halted temporarily.

“When we earlier planned to re-open the service this year, we wanted to expand the service by including bonds and US dollar bank notes,” Chandra said. “However it turns out that there is a regulation that prohibits us from taking securities as collateral, so it seems we are not going to provide the service again. But we are still going to open the dollar service since it is not a security.”

Under the dollar service, people can keep use their greenbacks as collateral to borrow rupiah notes.

Pegadaian plans to expand its lending from Rp 49 trillion last year to Rp 75 trillion this year. If the company reaches that mark, the company’s gross profit would rise to Rp 1.45 trillion from Rp 1.2 trillion in 2009.