The Gold Loan market is one of the fastest-growing markets in India currently. Keeping this in view, The Reserve Bank of India has now made gold loans more accessible and profitable for their customers. In a recent statement, the bank said that for non-agricultural purposes, various banks can offer a loan amount of up to 90% of the market value from March 2021. This new relaxation as RBI mentioned is only for the banks and not any private financers like Muthoot or Manappuram. RBI is also confident that with the increase in gold rates and the revised gold loan rates, the economy of the country in terms of gold is sure to flourish. This news of the increase in market value has been treated with a lot of fervour and acceptance by the customers. The banks are all set to make changes in their Gold loan policy documents and get more customers registered in their books.
City Union Bank on talking about Gold loans mentioned that for their bank, Gold loans are the most profitable and garner maximum customer coverage. The Bank’s Managing Director and CEO, N Kamakodi, said that in the last month alone, their profits rose by 15% in addition to their pre-existing 25% growth rate. He also said that the City Union Bank Gold Loan portfolio has doubled from their monthly Rs. 15 crores to now Rs. 25-30 crore recently. He also mentioned that due to easy liquidity, it is the preferred form of loan for their customers. The maximum benefit will be drawn by Micro-enterprises, which demand short-term liquidity.
All the banks have gracefully accepted RBI’s order of giving up to 90% market value for the gold left as collateral by the customer. City Union Bank, gathering maximum benefits from gold loans, is confident that this new rate will help them attract more customers, thereby increasing their profit margin.