Gold loans surge in Kerala as households turn gold into cash

KOCHI: Kerala is rapidly emerging as a major market for gold loans, with households pledging idle gold with banks to raise money. With gold prices surging over the past two years, more people are using the opportunity to quickly convert their gold holdings into cash.

According to data from the State Level Bankers’ Committee (SLBC), gold loans issued by banks in Kerala reached Rs 1,47,948.91 crore as of June 30 this year, crossing the Rs 1 lakh crore mark for the first time. Agricultural gold loans also crossed Rs 1 lakh crore for the first time during this period. As per SLBC data, the total agricultural gold loans issued by private and public sector banks stood at Rs 1,06,726.41 crore as of June 30.

Gold loans issued by banks increased by Rs 45,294.31 crore (44.1 per cent) in two years. The total stood at Rs 1,02,654.60 crore as of June 30, 2024.

Non-agricultural gold loans also recorded strong growth during the period, rising 63 per cent from Rs 25,428.08 crore to Rs 41,222.55 crore.

When the Rs 1.48 lakh crore in loans provided by non-banking financial companies such as Muthoot Finance, Muthoot FinCorp and Manappuram Finance is also taken into account, Kerala has one of the country's largest gold loan markets.

Quick access to cash

The ease and speed of getting a loan without lengthy procedures have made gold loans popular. Financial institutions currently provide loans of around 70 to 80 per cent of the value of the pledged gold. Many people rely on gold loans for various needs, ranging from meeting daily expenses to paying hospital bills.

Leading banks in gold loans

SBI: Rs 28,623.32 crore
Canara Bank: Rs 25,828.92 crore
Federal Bank: Rs 12,202.39 crore
South Indian Bank: Rs 7,873.63 crore
Bank of Baroda: Rs 6,920.41 crore