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Banks gain an edge in gold loan rush
April 13, 2023
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.
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- 4-IN-1 Professional Diploma in Banking, Financial Services & Insurance (PDBFSI): https://tscfm.org/courses/4-in-1-professional-diploma-in-banking-financial-services-insurance-pdbfsi/