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State Bank of Travancore awaits the banking regulator's nod for opening specific ‘gold loan branches'.
Sharing this information with Business Line , SBT's Managing Director, Mr P Pradeep Kumar, said the bank has sought permission for opening 15 specific gold loan branches, 14 of which is expected to be located in the district headquarters in Kerala and the last at Nagercoil in Tamil Nadu.
These 15 branches would be among the 100 new branches which the bank proposes to add to its network, subject to RBI's clearance and the proposal is to have these in place before end March 2012.
To a query on the need for specific gold loan branches, Mr Pradeep Kumar said, “we want to beat the NBFCs operating in the gold loan space in their game. Since it is not possible to focus only on a single product (such as gold loan) in a branch, we decided on this focused approach.”
But why only in Kerala in a big way and how do you plan to ensure business? “We realised that the desire to buy gold is rather high in Kerala compared to any other State. To ensure that individuals who seek such support are able to buy gold ornaments, we are in talks with select retailers, with whom we intend to ink agreement.”
This decision on opening of specific gold loan branches has come in the wake of an RBI notification, which stated that bank credit to NBFCs giving loans to individuals and other entities against gold jewellery would not be treated as exposure to the priority sector.
While the move has increased the borrowing cost for these NBFCs , it has impacted banks as well, for a good number of them find that their priority sector lending targets would now plunge way below the 18 per cent mark (agricultural lending).
SBT's exposure in priority sector (agriculture) lending has slipped to 11.5 per cent, the Managing Director said.
ICRA Management Consulting Services findings show that till December 2010, the NBFCs in the gold loan space had grown their books by 72 per cent compared to bank's growth rate of 32-37 per cent.
On sale of gold coins, Mr Pradeep Kumar maintained that the bank would like to distribute the ‘SBI Gold Coins'. “We are awaiting clearance from the RBI on this as well.”
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