Kotak Mahindra Bank’s senior officials on Thursday said that it aims to grow its gold loan book faster than the industry.
Speaking to the media, Manish Kothari, president and head of commercial banking, indicated that there is significant scope for them to expand their gold loan book in India since the market is currently dominated by an unorganised sector, which is charging usurious rates to lower-income groups.
Shripad Jadhav, president of retail agriculture and gold loans, said there is a scope for the bank to expand the gold loan book since the Reserve Bank of India’s rule does not require banks to assign any capital on these loans. Besides, the maximum permissible loan to value is 75% of the value of the gold, and since the gold prices have risen, the credit cost is negligible.
Quoting the World Gold Council’s report, Jadhav said that Indian households have 27000 tonnes of gold, and a small portion is borrowed against it. He further added that CIBIL data shows that as of December 2023, gold loan advances stood at Rs 7.15 lakh crore, and it has grown at 19% over the last three years.
The officials said that the bank would provide a fixed rate loan of 0.88% per month, translating to 10.56% annually, and the minimum ticket size would be Rs 20,000.