The share of non-banking financial companies (NBFCs), which have been lending against gold for several decades, is now declining. On the contrary, banks are rapidly increasing their business in this area. While there was a sharp decline in the credit growth of Muthoot and Manapuram from 2019-20 to 2021-22, there was a sharp rise in the credit of HDFC and Canara Banks during the same period.
Bhavendra Kumar, Chief General Manager (CGM) Gold Loans, Canara Bank said, “The credit growth of banks is because their interest rates are lower than that of NBFCs. Banks are offering 7.4 percent while NBFCs are offering between 12 and 24 percent.
Loan growth of Manapuram-Muthoot decreased
The credit growth of large NBFCs is declining. In the financial year 2019-20, the asset under management (AUM) of Muthoot was 40,800 crores. It was Rs 51,900 crore, up 27 percent in 2020-21. 57,500 crore, up only 11 percent in 2021-22. Manapuram's business grew 31 percent to Rs 17,000 crore in 2019-20, 12 percent to Rs 19,100 crore in 2020-21, and only four percent to Rs 19,900 crore in 2021-22.
HDFC Bank's loan increased by 40 percent
HDFC Bank's gold loan business stood at 8,800 crores as of March 2022. It was Rs 6,200 crore in March 2021. It has increased by 40 percent. The bank will set up a separate cell for gold loans in all branches in the next year. Canara Bank's gold loan doubled in 3 years to Rs 56,788 crore as of March 31, 2020. There was a growth of 26 percent from January to June this year, compared to an increase of 18 percent in the previous year.
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