Indian Bank Targets ₹1.5 Lakh Cr Gold Loans by FY27, Raises $400M

Indian Bank anticipates its gold loan portfolio will exceed ₹1.5 lakh crore by the end of the current financial year (FY27), driven by robust demand. This projection comes as the bank successfully mobilized USD 400 million from global investors, part of a larger international fundraising goal.

Gold Loan Portfolio Sees Strong Growth

The bank’s Managing Director and CEO, Binod Kumar, stated that gold loans are considered safe lending, primarily income-generating, and beneficial for small businesses. The current gold loan portfolio stands at approximately ₹1.25 lakh crore.

• Last year, the gold loan segment grew by 30%, attributed to rising gold prices.
• For the current year, growth is projected at around 20%, despite a 30% decline in gold prices.

Indian Bank maintains its overall loan book with 65% from Retail, Agriculture, and MSME (RAM) segments and 35% from corporate loans. On the liability side, the bank reported significant growth in Current Account and Savings Account (CASA) deposits during the first quarter of the current financial year.

• CASA deposits grew 15.30%.
• Savings deposits increased by 13.54%.
• Current account deposits rose by 26.33%.
• CASA deposits now constitute about 40% of the bank’s low-cost deposits.
• Branch participation in achieving CASA targets improved, with 51% hitting goals in Q1, up from 25-27% previously.

Strategic International Fundraising Efforts

The bank successfully raised USD 400 million on August 18 by issuing four-year bonds to global investors through its GIFT City Branch. This move is part of a broader strategy to secure USD 1 billion from overseas markets by the end of 2026.

• The remaining USD 600 million is expected to be raised in the third quarter.
• The goal is to boost dollar inflows for the bank.

Boosting Foreign Currency Deposits

Indian Bank also expects to gather approximately USD 2 billion from Foreign Currency Non-Resident (Bank), or FCNR(B), deposits by August 31. The bank has already raised USD 1.5 billion, driven by strong demand from Non-Resident Indians (NRIs).

RBI’s Role in Forex Inflows

The Reserve Bank of India (RBI) recently concluded its special USD-INR forex swap facility for FCNR(B) deposits ahead of schedule. The central bank cited an encouraging response and robust forex inflows as reasons for the early closure.

• By August 21, this concessional swap facility had attracted a total of USD 72.848 billion.
• FCNR(B) deposits contributed USD 65.397 billion to this total.
• Overseas Foreign Currency Borrowings (OFCBs) accounted for USD 4.86 billion.
• External Commercial Borrowings (ECBs) added USD 2.591 billion.

These developments underscore a strong financial outlook for Indian Bank and highlight broader positive trends in India’s foreign exchange inflows.