Bangalore: Recently Gold loan business in India has flourished a lot, and this is the reason why Indian Banks now want to step into the Gold Loan Business, which is a strong suit for the Non-Banking Financial Companies (NBFCs) and a few southern banks yet, says Somasroy Chakraborty.

Lately the interest rates are high and ever deteriorating investments has made people to retrieve from borrowing. This made the banks to think about the gold loan business, as more people are interested in getting a loan. Financing through gold mortgage is much secured form of lending. This loan process has higher margins and these are the major reasons why banks are vying to indulge in this yellow metal business.

The gold loan sectors are becoming more popular. This has also made the banks more attracted to this, especially the private sector banks as many are unable to reach their goal of lending targets in 2010-11. According to RBI, 18 out of 26 Public Sector Banks, including the five associated banks of State Bank of India have missed the agricultural lending targets.

HDFC Bank had started the gold loan business three years ago and it has nearly doubled it during the last one year. The bank, which is the second largest private sector bank, has claimed to acquire a good amount of market share. “We are well placed in terms of market share among the new age private banks. We have doubled our portfolio this financial year and expect the growth to accelerate, as more branches start offering this product,” said a senior HDFC Bank executive who requested for anonymity. Presently the bank offers gold loans through 70 percent of its branches in the country, both in rural and urban markets.