Loans against gold jewellery by banks have grown by 50.4% in the first seven months of the current financial year. The sharp increase comes even as credit in every other personal loan segment grew in single digits.
Data on sectoral deployment of bank credit released by RBI on Friday showed gold loans outstanding as of Oct 18, 2024, at Rs 1,54,282 crore. At the end of March 2024, total gold loans outstanding stood at Rs 1,02,562 crore. The year-on-year growth was 56%, compared to 13% in October 2023.
Bankers said the spike in gold loans in the first seven months could be attributed to several factors, including a shift from NBFCs and a preference for secured loans over unsecured ones. Bank loans to NBFCs have shrunk by 0.7% to Rs 1.5 lakh crore during the first seven months of the year. Bankers also noted that the rise in gold loans could be due to the increase in its prices, which provides borrowers an opportunity to repay old loans and secure higher new loans. Some analysts view the growing demand for gold loans as a sign of financial distress.
SOURCE:TOI
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