Indian Bank bullish on gold loans, expects portfolio to cross Rs 1.5 lakh crore
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, as reported by The Economic Times and The Hindu Business Line.
In an interaction with PTI, Indian Bank MD and CEO Binod Kumar said, "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."
Kumar explained that last year the segment saw "very significant growth of 30 per cent due to a jump in gold prices," but this year growth will be slower "as there is a 30 per cent decline in gold prices." He added that growth would come from tonnage, with the gold loan segment 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.
RAM focus and CASA growth
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 this ratio going forward, he added, noting that RAM has "huge capacity for growth with a lot of opportunity in agriculture and MSMEs."
On the liability side, Kumar said the bank witnessed CASA growth of 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) are around 40 per cent.
"CASA remains a challenge, but with the support of our staff, we expect to maintain progress," Kumar said, highlighting one encouraging development: increased branch participation. 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, a sign that branches have started participating more actively.
Overseas fundraising and FCNR(B) inflows
Indian Bank has mobilised USD 400 million by issuing four-year bonds to global investors through its GIFT City Branch, with notes issued on August 18. The bank plans to raise USD 1 billion from overseas markets by the end of 2026 and is likely to mobilise the remaining USD 600 million of its target in the third quarter.
The bank also expects to garner about USD 2 billion from FCNR(B) deposits by August 31, having already raised USD 1.5 billion from these deposits.
RBI halts concessional swap facility
The Reserve Bank of India (RBI) halted its concessional swap facility ahead of the September 30, 2026 deadline, citing encouraging response and strong forex inflows. The facility attracted USD 72.848 billion till August 21, with FCNR(B) deposits accounting for USD 65.397 billion, Overseas Foreign Currency Borrowings (OFCBs) contributing USD 4.86 billion, and External Commercial Borrowings (ECBs) amounting to USD 2.591 billion.