Indian Bank Targets ₹1.5 Lakh Crore Gold Loan Portfolio by FY27-End on Robust Demand

Public sector lender Indian Bank expects its gold loan book to cross ₹1.5 lakh crore in the current financial year, supported by steady demand for the product.

Binod Kumar, MD and CEO of Indian Bank, stated that gold loans represent safe lending for banks. He noted that these are predominantly income-generating loans that assist small businesses in growing, rather than being consumption loans. Last year, the segment experienced a 30 per cent growth driven by a jump in gold prices. However, growth is expected to moderate to about 20 per cent this year amid a 30 per cent decline in gold prices, with expansion coming primarily from tonnage.

Currently, the bank's gold loan portfolio stands at approximately ₹1.25 lakh crore and is projected to exceed ₹1.5 lakh crore during the current financial year at the anticipated growth rate.

In the broader portfolio, RAM (Retail, Agriculture, and MSME) constitutes 65 per cent of the overall loan book, while the remaining 35 per cent is from the corporate segment. The bank intends to maintain this ratio, noting significant growth potential within agriculture and MSMEs.

On the liability side, Indian Bank recorded a CASA growth of 15.30 per cent during the first quarter of the financial year. Savings deposits grew by 13.54 per cent, and current account deposits rose by 26.33 per cent. Low-cost CASA deposits currently hover around 40 per cent. Branch participation has also improved, with 51 per cent of branches achieving their targets during the recent quarter compared to 25 to 27 per cent during the corresponding period last year.

Additionally, the bank successfully mobilised $400 million through four-year bond issuances to global investors via its GIFT City branch on August 18. This forms part of the lender's broader plan to raise $1 billion from overseas markets by the end of 2026, with the remaining $600 million likely to be mobilised in the third quarter.

Regarding Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, the bank expects to garner about $2 billion by August 31. The institution has already raised $1.5 billion through FCNR(B) deposits due to strong demand from Non-Resident Indians (NRIs) seeking attractive returns.

The Reserve Bank of India recently closed the window for mobilising FCNR(B) deposits under its special USD-INR forex swap facility ahead of the scheduled September 30, 2026 deadline, citing encouraging responses and strong forex inflows. The concessional swap facility attracted $72.848 billion globally up to August 21, with FCNR(B) deposits accounting for $65.397 billion, Overseas Foreign Currency Borrowings contributing $4.86 billion, and External Commercial Borrowings amounting to $2.591 billion.

"Indian Bank's focused approach on RAM sectors, particularly gold loans and MSME credit, highlights a resilient growth strategy rooted in secured lending. Their active mobilization of international capital through GIFT City bonds and FCNR(B) deposits demonstrates strong liquidity management. For entrepreneurs and small businesses, steady institutional credit availability in retail and agriculture remains critical for sustained economic expansion." — Dr. Shishir Gupta, Founder & CEO, StartupLanes