Mumbai: Deep Pockets banks Eating up a market that was once a feeding ground with low cost of funds NBFC to like Muthoot And Manappuram in the monoline business of lending against gold, thanks to the high yields they enjoyed. But things have changed. state Bank of India, HDFC bank And axis Bank Gaining market share in this secured lending business.

State Bank Of India The personal gold loan portfolio registered a growth of 21% over the previous year, while it has the lowest bad loans in the segment at 0.16%. In the September quarter, the public sector bank disbursed Rs 11,300 crore of farm gold loans. for its partners Bank of Baroda, gold loan grew by 27.8% to ₹33,502 crore over the previous year.

Private sector banks are also not far behind. HDFC Bank has started gold loan processing through 2,960 branches. It added 900 branches in the second quarter alone. The bank has reported a 16.3% year-on-year growth in such loans and plans to expand gold loan servicing to 5,000 branches.

Vikas Pandey, business head, HDFC Bank, said, “As a bank, we are getting very aggressive about gold loans. We are expanding our distribution to around 5,000 branches. “It is a safe product, has minimum NPAs (non-performing assets). We were never so strong in this segment, but we have changed gears.”

Axis Bank reports 26% YoY growth in gold loans and IDFC First BankThe gold loan portfolio has doubled over the last year. Looking at the growth registered by other banks, RBL Bank Last month revived its gold loan product.

Gold loan is a high-yielding business with many banks and non-banks charging interest rates as high as 10-15%. For banks, this is fast becoming a lucrative segment as the cost of funds is around 7% and returns are high.

Kunal Shah said, “Banks with better focus on loan rate leverage are increasing the market share in gold as compared to non-bank lenders. Gold loans grew at over 31% CAGR (Compound Annual Growth Rate) over a period of two years increased from.” with analyzer ICICI Securities,

Loans against gold jewelery disbursed by banks increased from Rs 46,791 crore at the end of September 2020 to Rs 72,111 crore by September 2021 and Rs 80,617 crore by September 2022, according to Reserve Bank of India data.

At the same time, non-bank lenders are feeling the heat from banks. Traditional Gold Loan NBFCs like Manapuram Finance and Muthoot Finance His standalone yield has seen a sharp decline due to the introduction of teaser rate plans, which he later discontinued. Muthoot reported 3% on-year loan growth in the September quarter, Manapuram’s growth was flat.