The loan against the gold jewellery portfolio of banks exhibited a strong year-on-year growth of 26% in comparison to the outstanding balance as of July 1, 2022, reaching a total of ₹95,347 crore.
Indian banks are witnessing a notable increase in loans secured by gold jewellery (LAGJ), and it is projected that the portfolio will surpass ₹1 trillion in the upcoming months. This surge in LAGJ loans is propelled by robust year-over-year (YoY) growth.
The alluring yields provided by LAGJ loans, even though the pledged gold retains high liquidity, have played a significant role in fuelling the increasing fascination with this industry. Despite being supported by valuable assets, the interest rates for versatile gold loans commence at approximately 11 per cent, rendering them a compelling choice for borrowers. As a result, there has been a substantial upswing in gold loans across the sector.
Regarding bank loans doled out instead of gold investments, data from the Reserve Bank of India (RBI) reveal, “As of June 30, 2023, the banks' LAGJ portfolio demonstrated a robust 26% Y-o-Y growth compared to the outstanding on July 1, 2022, reaching ₹95,347 crore.”
Source:livemint.com
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