large scale image
LCP Image

Back to TSCFM News

Banks gain an edge in gold loan rush

April 13, 2023

Banks gain an edge in gold loan rush
Traditional gold lending companies, such as Muthoot Finance and Manappuram Finance, are struggling to maintain their market share which seems increasingly to be heading towards traditional banks, which have the theoretical cost advantage in because of an established, low-cost deposit. base. 

Historically, a rise in gold prices has led to faster gold loan growth for these two southern-based financiers, but the scenario appears to be slightly different this time around. Consequently, investor interest also remained subdued. 

Gold lending for Muthoot Finance and Manappuram Finance, India’s two largest gold finance NBFCs, grew 5% and contracted 9% respectively over the year. December quarter. By comparison, gold lending for CSB Bank, Canara Bank, SBI, HDFC Bank and Federal Bank, which have a strong presence in southern markets, soared in the range of 19-54%. 

Industry experts told ET that increased focus, faster turnaround times and better lending rates seem to have tipped the balance in favor of traditional banks. 

Of the lenders, CSB Bank looks best positioned and represents the best bet for investors buying into the gold lending theme and benefiting from the current gold cycle. 

First, the bank aggressively increased its gold loan book, which grew 60% in the December quarter. Second, gold lending represents a significant share of the overall portfolio 45% compared to 20% three years ago.

Important Links:

Recommended for you ...

Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services
Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services

February 12, 2024

Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices
Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices

February 12, 2024

Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices
Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices

February 12, 2024

Enquire Now
REQUEST A CALLBACK
Chat on WhatsApp