Gold Loan Portfolio To Surpass Rs 1.5 Lakh Crore by FY27-End: Indian Bank MD

Chennai: Public sector lender Indian Bank expects its gold loan book to cross Rs 1.5 lakh crore in the current financial year, supported by robust demand for the product.

“Gold loan is safe lending for banks…it is not a consumption loan, but mostly it is income-generating and also helps small businesses to grow. Last year, we saw very significant growth of 30 per cent in the segment due to a jump in gold prices. It will be slower this year as there is a 30 per cent decline in gold prices,” Indian Bank MD and CEO Binod Kumar told PTI in an interaction.

This growth would come from tonnage, he said, adding that the gold loan segment is likely to grow about 20 per cent.

Currently, the gold loan portfolio is around Rs 1.25 lakh crore, and the book should exceed Rs 1.5 lakh crore during this financial year at the anticipated growth rate, he said.

Kumar further said that RAM (Retail, Agriculture, and MSME) constitutes 65 per cent of the overall loan book while the remaining 35 per cent is from corporate.

The bank wants to maintain the ratio going forward, he said, adding that RAM has huge capacity for growth with a lot of opportunity in agriculture and MSMEs.

On the liability side, Kumar said the bank has witnessed CASA growth at 15.30 per cent, with savings deposits growing by 13.54 per cent and current account deposits by 26.33 per cent during the first quarter of the current financial year.

The bank’s low-cost deposits, CASA (Current Account and Savings Account), are around 40 per cent.

“CASA remains a challenge, but with the support of our staff, we expect to maintain progress. One encouraging development is the increased participation of branches.

“During the corresponding period last year, only around 25-27 per cent of branches achieved their targets. This quarter, 51 per cent of branches achieved their targets. That is a good sign that branches have started participating more actively,” he said.

Indian Bank has mobilised USD 400 million by issuing four-year bonds to global investors through its GIFT City Branch. The bank issued notes on August 18.

This is part of the bank’s plan to raise USD 1 billion from the overseas markets by the end of 2026 using the special regulatory window to boost dollar inflows. It is likely to mobilise the remaining USD 600 million of the target in the third quarter.

On Foreign Currency Non-Resident (Bank) or FCNR (B) deposits, he expects the bank to garner about USD 2 billion by August 31.

“Indian Bank has already raised USD 1.5 billion from FCNR(B) deposits…we have seen good demand from NRIs. They are willing to put their money in such a product as it provides attractive returns…we hope it would touch USD 2 billion,” he said.

Better-than-expected FCNR(B) flows have been there, which is why the RBI halted the concessional swap facility much ahead of the scheduled deadline of September 30, 2026, he added.

Earlier this month, the Reserve Bank prematurely closed the window for mobilising FCNR(B) deposits under its special USD-INR forex swap facility, citing the encouraging response and strong forex inflows generated through the scheme.

The Reserve Bank on Saturday said its concessional swap facility, introduced to encourage foreign currency inflows, has attracted USD 72.848 billion till August 21.

Of the total inflows, the FCNR (B) deposits accounted for USD 65.397 billion, while Overseas Foreign Currency Borrowings (OFCBs) contributed USD 4.86 billion and External Commercial Borrowings (ECBs) amounted to USD 2.591 billion.

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