Gold loans rising; so is competition

The cooperative banks are targeting most of the gold loan processing to be done digitally

Shantanoo Joshi, Vice Chairman, the Akola Urban Co-operative Bank; Alka Shrivastava, Chairperson, Lakshmibai Mahila Nagrik Sahakari Bank and Vasant Kulkarni Deputy CEO, Sharad Bank, provide insightful updates in the gold loan business of their respective banks.

Mehul Dani: What are the tenures of gold loans, what are product features in the gold loans of your bank in the current FY?

Shantanoo Joshi: We have 3 products under gold loan. The shortterm loan is for a period of 1 year, wherein the repayment is permitted to be made as bullet payment i.e. the principle and interest for the whole year is payable on the due date.

The other product is for a tenure of 3 years, wherein the repayment is to be made in 36 EMIs. In this product, the repayment capacity of the borrower is to be considered.

Off late, we have introduced another product, wherein the borrower is sanctioned a limit to a running account. The borrower can operate his account within the limit sanctioned as per the valuation of the gold pledged by the borrower. This limit is reviewed every year and is renewed once in 3 years.

Alka Shrivastava: Tenure for gold loans of Lakshmibai Mahila Nagrik Sahakari Bank up to ₹1 lakh is 1 year and loans above ₹1 lakh are term loans. In this, the loan term and instalment will depend on the borrower’s income and ability to repay the loan. Loan is given up to 70% of the purity and valuation of gold. Gold loans are given by our bank at 9.5% interest.

Vasant Kulkarni: The maximum tenure for gold loan of Sharad Bank is 36 months. For loans up to ₹2 lakhs, loan period is 12 months with bullet payment and for loans above ₹2 lakhs period is 36 months but with EMIS.

What is the value and volume of gold loans of your bank in the last 3 FYs?