By Amriteshwar Mathur
The yellow metal, gold, which is trading close to its all-time record levels of Rs 85,000 per 10 grams for 24-carat in Mumbai has also resulted in considerable boost in business for banks and NBFCs. And that’s because gold loan portfolio of banks rose 71 % on a y-o-y basis to Rs 1.72 lakh crore by 27 December 2024, according to data from the RBI.
In the case of NBFCs too, growth in gold loans has been strong although slower than the growth reported by banks. For instance, in the case of Kochi-based Muthoot Finance, its standalone gold loans under management amounted to Rs 92,963.6 crore at the end of the December 2024 quarter, a rise of 34 % y-o-y.
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Similarly, in the case of Thirussur-based Manappuram Finance, its standalone gold loan portfolio amounted to Rs 23,700 crore at the end of the third quarter of FY25, a rise of nearly 19 % y-o-y.
However, NBFCs held a significant 59.9 per cent share of the total gold loans disbursed by banks and NBFCs combined as of March 2024, according to RBI.
Investors have been bullish on the growth prospects of Muthoot Finance. The stock price of Muthoot Finance in intra- day Friday trade at Rs 2,265 and not too far from its 52-week high of Rs 2,335.
Apart from gold loan growth, of equal importance is the net interest margin (NIM) for players like Muthoot Finance. It was 5.04 % in the December 2024 quarter vis-à-vis 7.23 % a year. And while it has come under pressure for Muthoot Finance, it is better than NIMs of leading banks.
For SBI, NIM in its domestic operations was 3.15 % in the third quarter of FY 25 vis-à-vis 3.34 % a year earlier while for HDFC Bank it was 3.62 % on interest earning assets in the December 2024 quarter vis-à-vis 3.6 % a year earlier.
Change in psychology
The yellow metal has been a traditional savings avenue for Indian households with nearly 25,000 to 27,000 tonnes held in the country and valued at a few trillion dollars, as per various estimates.
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