Banks' gold loans start to taper

THE SHARP GROWTH seen in the gold loan portfolio of banks has started to moderate due to growing competition from gold loan companies and fintechs, and higher gold prices eroding individuals' purchasing power to buy the yellow metal.

- SACHIN KUMAR

The year-on-year growth in loan against gold jewellery of banks has declined to 15% in February from 26% in June 2023, according to the Reserve Bank of India data.

"Due to the sharp rise in the prices over the last one year, individuals are now purchasing less gold. This means they have less quantity to pledge," head of consumer banking of a private bank told FE.

"Banks are facing competition from gold loan companies and fintechs especially in semi-urban and rural areas," he added.

Gold prices have seen a sharp rally in past one year mainly driven global factors such as expectation of a rate cut by the US Fed and increased buying by global central banks.