fbpx
Connect with us
RJI

Daily News

In a sign of distress, gold loans soar 77% in 12 months up to July

Published

 on

In a sign of distress, gold loans soar 77% in 12 months up to July
RJI

Credit offtake by India Inc and the services sector remained subdued over the last 12 months, but retail loans, driven by gold loan and credit card business, have shown a significant uptick. Retail or personal loans — which account for 26 per cent of total bank credit — jumped 11.2 per cent over 12 months till July 2021 compared with 9 per cent over the previous 12 months.

Within retail loans, the gold loan outstanding soared by 77.4 per cent, or Rs 27,223 crore, to Rs 62,412 crore by July 2021 on a year-on-year basis. SBI, the largest bank, reported a 338.76 per cent growth in gold loans as of June 2021. “The total gold loan book of the bank was Rs 21,293 crore,” said an SBI official.

But the huge jump in the gold loans business is also an indicator of Covid-19-induced distress following a national lockdown, job losses, salary cuts and higher medical expenses. “People find it easier to get loans by pledging gold. Seeing an opportunity, banks stepped up lending since recovery in this business is not cumbersome,” said an official of a nationalised bank, who did not wish to be named.

Credit card outstanding also jumped 9.8 per cent (Rs 10,000 crore) to Rs 1.11 lakh crore during the 12-month period ending July 2021. While this suggests a pick up in discretionary spending, it also points to consumers resorting to high cost borrowing to meet their needs. In the previous 12 months ending July 2020, credit card outstanding had grown 8.6 per cent.

Courtesy: Indian Express

Continue Reading
Advertisement

Latest News

RJI