Gold loan GNPA up 18% in banks, upper and middle layer NBFCs from March-June 2024

The gross non-performing assets (GNPAs) pertaining to gold loans in scheduled commercial banks (SCBs) and upper and middle-layer non-banking financial companies (NBFCs) have increased by 18.14% from March 2024 to June 2024, the Finance Minister Nirmala Sitharaman informed while replying to DMK leader Kanimozhi Karunanidhi during Question Hour.

She added that gross gold loans GNPAs in SCBs have increased by 21.03% during the same period.  Further, as of June 30, 2024, the gross NPA ratio pertaining to gold loans in SCBs was 0.22% and that of upper-layer and middle-layer NBFCs was 2.58%.

The data was shared by the Finance Minister in response to questions by Kanimozhi Karunanidhi on the rapid increase in gold auctioning by non-banking gold loan lenders.

However, to this, the Finance Minister Sitharaman had responded that for going on an auction, there are very well laid-out procedures. "It cannot be done outside of the district; it cannot be done without the presence of the person; it cannot be done unless the valuation is done; and it is also not done at a random rate. There is a benchmark rate that the NBFC has to fix, and that will not be lower than 80 per cent, I think, over the last three or four months of gold rate," the Finance Minister said.

“The gold rate is not determined by the NBFC. It is determined by the Bombay Bullion Association, I think, who gives out the rate every day. Therefore, it cannot be lower than that rate. So, these are well-laid tight processes,” she added.

I would rather have more information if these processes are violated, and if they are violated, indeed it is for us to act on, she said. "But the processes are very much in detailed fashion written down and followed by the banks."

More to come…