Page 7 - Banking Finance December 2024

BANK UPDATE

said that the profits were driven by
containing operating expenses as well Gold loan outstanding of banks rises 43.4% in 1st
as by the increase in interest and non- half of FY25
interest income. Additionally, the spike Banks have reported a steep 43.4 per cent rise in gold loan disbursements
in employee costs seen last year was in the first six months (April-September) of the current financial year (2024-
not there this year. "Directionally, we 2025 or FY25) amid the sustained rally in gold prices and certain deficien-
are focusing on increasing our core in- cies in a loan segment flagged by the Reserve Bank of India (RBI) recently.
terest income with renewed focus on
the non interest income and contain- With customers queuing up to pledge gold to take advantage of high prices,
gold loan outstandings of banks jumped to Rs 147,081 crore as of Septem-
ing the operational expenses by bring-
ing operational efficiencies," Setty ber 2024 as against Rs 102,562 crore in March 2024, according to the lat-
said. est RBI data. If the gold loan assets of non-banking financial companies
(NBFCs) are also taken into account, gold loan book of banks and NBFCs
He added that retail loan growth was would have crossed the Rs 3 lakh crore mark. Gold loan assets under man-
projected at 14-16% despite a slow- agement of Muthoot Finance was at Rs 75,827 crore, and it holds 188 tonnes
down in unsecured loans because of of gold pledged by customers as of March 2024.
focus on asset quality. Corporate loans
Gold loan growth in 2022-23 was just 14.6 per cent, according to the RBI.
are anticipated to grow at a rate of
17-18%, supported by a strong pipe- The sudden jump in gold loans forced the central bank to ask gold loan fin-
line. The bank has received Sebi's ap- anciers to review policies, processes and practices while offering such loans.
proval to raise Rs 20,000 crore through The RBI's direction came after it found deficiencies in loans offered by su-
the issuance of infrastructure bonds. pervised entities (SEs) against pledge of gold ornaments and jewellery.
Some irregularities included shortcomings in the use of third parties for sourc-
SBI plans to open 300-400 ing and appraisal of loans, valuation of gold without the presence of the
branches a year in medium customer, inadequate due diligence, and lack of end use monitoring of gold
loans and lack of transparency during auction of gold ornaments and
term jewellery on default by the customer.

State Bank of India (SBI), the country's
largest lender, plans to add 300-400 Another bank executive said while vate lender HDFC Bank market capital
branches annually to its existing net- there is freedom in urban areas to was Rs 13.06 trillion ($ 154 billion),
work in the medium term to increase open and close branches depending on according to BSE data.
penetration of financial services in the
country, the bank's Chairman C S Setty requirements, in rural and semi-urban
said. areas, banks have to keep in mind as- Kotak Mahindra Bank to
pects like access to financial services
He said a large number of residential and priority sector lending. buy StanChart India's Rs.
colonies are coming up in India and are SBI branch count stood at 22,640 at 4,100-cr personal loan
in need of branches. The bank did an
extensive micro market survey this the end of September 2024, up from book
year (FY25) to find out areas, which are 15,870 in March 2014. Kotak Mahindra Bank announced that
yet to be covered. That is how 500 Referring to SBI's standing amongst it will be acquiring foreign lender Stan-
branches number came into picture, banks in the world, the SBI chairman dard Chartered Bank's Rs 4,100-crore
Setty said on the sidelines of the 11th said the bank is currently at the 17th personal loan portfolio for an undis-
SBI Banking and Economics Conclave position in terms of market closed sum. The bank will be picking up
2024 held in Mumbai. capitalisation worldwide and would like the entire quantum of the foreign
to be among the top 10 in three years.
He said that there is also a possibility lender's personal loans classified as
that some of the branches that were State Bank of India's market "standard advances" and the transac-
opened earlier and are not making capitalisation is Rs 7.26 trillion ($ 86 tion is expected to be completed in
progress may be relocated. billion) and the country's largest pri- three months, as per a statement.

BANKING FINANCE | DECEMBER | 2024 | 7