Indian Bank targets ₹1.5 trillion gold loan portfolio by FY27

Indian Bank is positioning itself to expand its gold loan portfolio to exceed ₹1.5 trillion by the end of the current financial year, riding on consistent customer demand for the low-risk lending product. The public sector lender's Managing Director and Chief Executive Officer Binod Kumar said the projected growth would materialise through increased transaction volumes rather than price appreciation.

"Gold loan is safe lending for banks," Kumar noted, underlining the segment's appeal to financial institutions. The loans are predominantly used for income-generating activities and business expansion by small enterprises rather than consumer spending, he added, citing the product's stability as a credit instrument.

The gold loan segment witnessed exceptional growth of 30 per cent in the previous financial year, buoyed by surging bullion prices. However, this year's expansion is expected to moderate to approximately 20 per cent following a significant 30 per cent decline in gold valuations, according to the bank executive. The portfolio currently stands at around ₹1.25 trillion.

Retail, agriculture, and MSME customers account for 65 per cent of Indian Bank's overall loan book, reflecting the lender's focus on priority lending segments. The bank's emphasis on gold loans aligns with its broader strategy to serve small businesses and individual borrowers across these categories.