Promising gold is no longer a taboo: CSB Bank MD

Pralay Mondal, MD and CEO, CSB Bank

Mondal’s comments come amid rapid growth in banks’ gold loan portfolio. If business line Earlier this month, lenders’ net portfolio growth in the loans against gold jewelery (LAGJ) segment reported crossing the ₹1 lakh crore mark for the first time in H1FY26. This portfolio rose by around 43 per cent (or by ₹44,519 crore) in H1FY25.

“Banks’ gold loan portfolio has increased in the last two quarters. There are two to three factors behind this. One is that unsecured loans, especially business loans, have faded into the background. And some borrowers who are not taking these loans due to higher interest rates are using their jewelry, which is useless,” Mondal said.

“Second, gold is not becoming as sentimental as it is now about working capital for business growth. These are businessmen; their sentiment is about profits and returns on investment. So if they get a gold loan at a lower rate than an unsecured loan, some of them probably don’t mind. We are also seeing some profiles of gold loan borrowers changing and that is the reason the ticket size is also going up, at least for us. Third, the price of gold has been rising till the last month,” he says. said, adding that banks prefer to make gold loans due to lower risk weights and higher collateral, even though the operating costs of the product are slightly higher.

Business growth

CSB Bank aims to grow its total lending by 25-30 percent in FY26, the CEO said. If deposit mobilization continues at the same pace, growth could be even higher. However, liquidity has suddenly turned negative to neutral, and this, according to Mondal, can only be resolved with a little more stabilization of the currency and with foreign inflows.

If market liquidity does not improve despite expected gains from cash reserve ratio (CRR) cuts, he said, it will be a challenge as banks are already saying deposit rates will not fall further. Overall, the bank expects deposit growth of 20 to 25 percent in FY26.

On the net interest margin (NIM), Mondal said transmission from repo rate to marginal cost of funds-based lending rate (MCLR) will start meaningfully from the third quarter and therefore NIM will remain within a range of 3.7-3.9 percent. If the regulator makes further repo cuts, the outlook for margins could change. The bank expects asset quality to remain stable and credit costs to fall below 50 basis points (bps) in FY26, compared to 53 basis points in the second quarter.

Published on November 11, 2025