Vijay C Roy
Tribune press service
Chandigarh, September 3
After entering into a strategic co-loan partnership with Dhanvarsha Finvest to offer a loan for gold in Madhya Pradesh, public sector lender Central Bank of India is looking for similar links to increase its gold loan portfolio. Currently, the bank’s gold loan portfolio is worth Rs 10,000 crore and it has grown by 10% in 2020-2021 compared to the previous fiscal year. Amid the Covid pandemic, there has been a significant increase in gold lending over the past year. The demand comes from individuals, traders and small businesses.
“We recently partnered with Dhanvarsha Finvest, which has a significant presence in the western region, to offer gold loans. Currently, we are running a pilot project in Madhya Pradesh and depending on the response, we may have similar links with other platforms to strengthen our reach across the country, ”said Rajeev Puri, Executive Director of the Central Bank of India, in an interaction with La Tribune.
The participation of the two entities in this co-loan agreement will result in further expansion of the portfolio by the Central Bank of India and Dhanvarsha Finvest, a non-bank finance company with a significant presence in Maharashtra and Madhya Pradesh.
In accordance with the agreement, Dhanvarsha Finvest will create and process loans against gold ornaments in accordance with the jointly formulated credit parameters and eligibility criteria and the Central Bank of India will take 80% of the gold loans in its book according to mutually agreed terms. Gold loans are often the first choice of borrowers because the interest rate is lower than personal loans. It is also a preferred option for a borrower who has an average to low credit rating.
The gold loan would be offered in the priority sector at competitive rates, subject to compliance with applicable law (s), including applicable guidelines issued by the RBI.
Asked about the focus areas, Puri said, “Our focus would be retail, agriculture and MSMEs. Currently, these three sectors constitute 65% of our total credit portfolio. We aim to increase it to 70% by the end of this fiscal year. He said that to extend the reach, especially in rural and semi-urban areas, the bank plans to double its correspondent bank network from 7,000 to 15,000.