SBI’s gold loan portfolio crosses Rs 1 lakh crore, positioned to grow well, says chairman

State Bank of India’s gold loan portfolio is seeing good traction and has crossed the Rs 1 lakh crore mark last week, the lender’s chairman said on July 1.

“We are seeing a good traction in this (gold loan) segment in the current scenario,” Dinesh Kumar Khara said at a virtual event. “During inflationary conditions, gold is a preferred asset class. In the first quarter of this year (April-June) we saw decent traction, much better than in the same quarter of the last year. This segment is positioned to grow well.”

Khara did not elaborate on the targets of the bank in terms of the gold loan portfolio for this financial year. The bank has 24 percent market share in gold loans across the industry, he said.

When asked if there is any pain or stress in the portfolio, Khara said SBI’s non-performing assets in the gold loan segment were around 0.29 percent of the book. “We don’t see any pain; we will create good value for customers,” he said.

India’s retail inflation stood at 7.04 percent in May from April's near-eight-year high of 7.79 percent. The rate-setting Monetary Policy Committee has hiked key interest rates by a total of 90 basis points in May and June. During inflation when the interest rate edges higher, the opportunity cost of holding gold also goes up.

According to latest data from the Reserve Bank of India (RBI), banks issued loans of up to Rs 73,752 crore during May against gold jewellery.

Further, retail loans continue to be a growth driver for the bank in terms of credit, Khara said today. The bank will be in a position to cater to all credit growth requirements of the economy, he added.

SBI has also announced the introduction of WhatsApp banking for customers. It is also planning to introduce Application Programming Interface, or API, banking for aggregators and corporates, Khara said. The bank has revamped the contact centre and is constantly open to customer feedback, he added.