Indian Bank plans to grow its gold loan portfolio to over ₹1.5 lakh crore this financial year by focusing on higher loan volumes. The lender also reported a 10% rise in Q1 profit and successfully raised $400 million via overseas bonds to support its capital needs.
Indian Bank has announced plans to expand its gold loan portfolio to exceed ₹1.5 lakh crore during the current financial year. The lender, which currently holds a gold loan book of approximately ₹1.25 lakh crore, is shifting its growth strategy to prioritize higher loan volumes, or tonnage, rather than relying on the value of gold collateral as it did in the previous year.
The strategic shift comes as the banking sector manages recent fluctuations in gold prices. While the bank witnessed a 30% surge in its gold loan book last year, much of that growth was attributed to rising gold prices. For the current fiscal year, the bank is targeting a 20% growth rate in the gold loan segment, focusing on bringing in more borrowers and increasing the total quantity of gold pledged against loans.
Financially, Indian Bank reported a 10.09% year-on-year rise in net profit for the first quarter of FY27, reaching ₹3,273 crore. The bank also maintains a balanced loan mix, with the RAM segment—which covers retail, agriculture, and small business loans—accounting for 65% of the total loan book, while corporate loans make up the remaining 35%. Deposits have also shown stability, with low-cost CASA (Current Account and Savings Account) deposits making up about 40% of the total deposit base.
To manage its funding needs, Indian Bank has successfully raised $400 million through four-year bonds issued via its GIFT City branch. This is part of a larger effort to raise $1 billion from international markets by the end of 2026. Additionally, the bank has attracted $1.5 billion in Foreign Currency Non-Resident (FCNR) deposits, with a goal to reach $2 billion by August 31, reflecting strong interest from non-resident Indian investors.
Despite the positive outlook, investors should be aware of the specific risks associated with this expansion. The gold loan business is highly sensitive to price volatility. A sharp drop in gold prices can force the bank to manage Loan-to-Value (LTV) limits strictly, which may require margin calls or lead to asset quality concerns if borrowers cannot repay. Furthermore, the competitive landscape is intensifying as new, aggressive players enter the gold loan market, potentially putting pressure on interest margins.
Operational risks also remain a factor. Maintaining a large, country-wide physical branch network for gold loans requires significant security and logistics management. Looking ahead, investors should monitor the bank's ability to maintain its NIMs (Net Interest Margins) in a competitive environment, as well as the progress of its overseas funding targets and the consistency of its RAM segment growth.