The demand for gold loans has been on a steady rise, thanks to increasing interest from customers in rural areas.
Many banks are registering significant growth in their gold loans portfolio and are also focusing on attracting more customers.
“We have strong growth in our gold loan portfolio and expect it to go up further,” M. G. Sanghvi, Chairman and Managing Director, Syndicate Bank, told
The total gold loan portfolio of the Bangalore-based bank stood at Rs 5,511 crore as on December 31, 2013, up 54.4 per cent over the year-ago period.
For ensuring focussed growth and speedy processing of gold loans, Syndicate Bank has 108 exclusive Gold Loan Shopees within the branches.
While the rate of interest is currently in the 11.50-12.75 per cent range, the quantum of finance is Rs 2100-2150 per gram of gold.
Subhalakshmi Panse, Chairman and Managing Director of Kolkata-based Allahabad Bank, said there was a “noticeable” surge in demand for gold loans, especially from rural markets in South India.
People coming to banks for gold loans in rural branches should be a welcome trend as they could avoid going to moneylenders, Bhagavantha Rao, Managing Director, State Bank of Hyderabad, said.
“The kind of growth we are seeing in the portfolio is amazing,” he added.
Triggered by rising prices
The recent spurt in gold prices is also one of the factors driving demand for gold loans. As value is seen to be going up, there has been greater reluctance to sell or easily part with the yellow metal. So, in times of need, its mortgage is becoming a most preferred option, according to a senior State Bank of India official.
In a report released earlier this week, a panel of Reserve Bank of India suggested that banks should expand their gold jewellery loan portfolio to monetise the stocks of idle gold.
There should not be any curb or limits on advances against gold jewellery and gold coins by individuals, it added.