Banks’ gold loan portfolios have surpassed one lakh crore.

The loan against the gold jewelry portfolio of banks increased by 26% year on year compared to the outstanding balance as of July 1, 2022, reaching a total of 95,347 crore.

Loans secured by gold jewelry (LAGJ) are increasing significantly in Indian banks, and the portfolio is expected to exceed $1 trillion in the next months. This increase in LAGJ loans is being driven by strong year-over-year (YoY) growth.

Even while the pledged gold keeps high liquidity, the attractive rates supplied by LAGJ loans have played a crucial role in fueling the growing infatuation with this industry. Despite being backed by valuable assets, interest rates on adaptable gold loans start at around 11%, making them an appealing option for borrowers. As a result, there has been a significant increase in gold loans across the sector.

According to data from the Reserve Bank of India (RBI), “as of June 30, 2023, the banks’ LAGJ portfolio demonstrated a robust 26% year-on-year growth compared to the outstanding on July 1, 2022, reaching 95,347 crore.”

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