Dhanlaxmi Bank peggybacks on gold loan growth

KOCHI: The loan growth in the Thrissur-headquartered Dhanlaxmi Bank during the past calendar year has been exclusively driven by its gold loan portfolio.

Of late, banks which had not been that keen to grow their gold loan portfolio until a few years ago, have started showing a renewed enthusiasm in embracing this particular business segment.

While the gross advances of Dhanlaxmi Bank since January 1, 2023, grew by Rs493 crore or 11.93 per cent, the gold loan portfolio alone expanded by Rs591 crorem, growing from Rs2084 crore to Rs2675 crore representing an increase of 28.36 per cent.

This shows that but for of the gold loan book, the bank’s total advances have de-grown during the one-year period from January 1, 2023 to December 31, 2023.

Total deposits of Dhanlaxmi Bank have grown by 10.60 per cent from Rs12,939 crore to Rs14,310 crore during the said one-year period.

CSB Bank

The story of CSB Bank is also no different as most of the loan growth of this bank during the past one year has also been contributed by the gold loan.

In the case of CSB Bank, another Thrissur-headquartered bank, while the gross advances expanded by Rs4213.08 crore or 22.59 per cent, gold loan growth at Rs2064.25 crore, from Rs8772.48 crore to Rs10,836. 73 crore, has contributed almost half the growth in CSB Bank’s gross advances during the said calendar year.

Total deposits of CSB Bank during the period under review grew from Rs22664.02 crore to Rs27,344.83 crore, increasing by 20.65 per cent.

Banks are said to be readying themselves to expand their gold loan portfolio as demand for the same has increased substantially since Covid.

More importantly, banks in general have improved their turnaround time in processing gold loans, which used to be a main deterrent to the gold loan growth among banks.

Moreover, banks stand a better chance to offer gold loans at a much competitive rate compared with the ubiquitous branches of gold loan companies.