Demand for gold loans slows down after recording a good growth in the second quarter: CSB Bank chief

The demand for gold loans has slowed down after recording a good growth in the second quarter, CSB Bank MD and chief executive CVR Rajendran said on Friday. The Thrissur based lender said its gold loan portfolio grew by Rs 1,100 crore in the second quarter, an increase of 30% quarter-on-quarter and 47% year-on-year.

The RBI’s relaxation on LTV norms has helped the bank increase its gold loan portfolio, which currently accounts for 35% of the total loan book. CSB had earlier said average LTV of the gold loan portfolio is 71% and the yield on gold loans improved from 12.22% in Q1 to 12.53% during Q2, which indicates that the growth has been achieved without compromising on the yield.

Rajendran said the bank is currently focusing on collateralised lending, and is not aggressive on other products. “We have not relaunched mortgage loans and housing loans. We have not completely stopped them, but we are going slow. Currently, we are focusing on MSME, gold loans, agriculture, microfinance and two-wheeler loans. These are small ticket loans.”

Rajendran said advances are growing more than the industry average of 5% but deposits are seen growing at a faster rate and are likely to impact the balance sheet. “NRI deposits are growing for all banks and currently it is a burden because we cannot deploy them. We deploy them in the RBI and we are now working on a negative spread on NRI deposits.”

He said the moratorium has spoiled the repayment culture and bringing the customers who have slipped in repayments may take some time.

The bank said the moratorium book as on September 30, was around Rs 2,000 crore, which constituted 15% of the total loan book. CSB is holding COVID provisions of Rs 60 crore and expects Rs 60-70 crore of the exposure to be restructured after discussion with clients. The provision coverage ratio is around 90% if the additional COVID provision is added.