Banks Enhance Gold Loan Capabilities Amid Rising Demand
CHENNAI/MUMBAI: Indian banks are ramping up their gold loan services in response to rising demand, directly challenging the dominance of non-banking financial companies (NBFCs) in the sector. They are enhancing branch-level capabilities by increasing the number of appraisers, investing in testing equipment, and digitizing loan processing. This shift comes as the gold loan market is projected to grow significantly, with banks aiming to capture a larger share.
Indian Bank has designated 725 branches as Gold Shoppe locations, equipped with dedicated staff and improved customer service facilities. In the past six months, the bank has added 982 empanelled appraisers, bringing the total to 3,538. The bank’s streamlined processes have reduced loan approval times to approximately 15 minutes, aided by system-driven due diligence and automated validations.
Union Bank of India is also expanding its gold loan operations, reporting an annual growth rate of about 30%. The bank employs dedicated jewellers at branches that handle numerous proposals daily. Customers at its 1,671 gold loan points typically receive loans within 30 minutes. Indian Overseas Bank has increased its panel of empanelled appraisers to 2,910 and implemented digital controls for valuation and document communication, allowing for a similar processing time of around 15 minutes when all documents are in order.
Federal Bank, with a gold loan portfolio of about Rs 40,000 crore, has developed in-house appraisal capabilities across its network. The bank claims to be the largest in the gold loan sector, attributing its success to its robust appraisal framework. According to Reserve Bank of India data, gold loans have surged 105% year-on-year as of May, reaching approximately Rs 5.2 lakh crore.
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