According to Mr. Pratip Chaudhuri, Chairman of State Bank of India, sliding gold prices will not have much impact on SBI's gold loan portfolio, which currently stands at Rs 35,000 crore.
Gold loans have been taken majorly by farmers for agriculture purposes. Generally, the bank has been lending only up to 70 per cent of the peak value of the gold. "We have the security of the crop or farm. Generally, we keep 30 per cent margin and we will have to review that valuation. So, loan-to-value ratio of 70 per cent may come down."
"We would be revising our advisory for gold loans with the valuations. So, as of now there is no immediate impact of the drop in gold prices.... If it further falls then it might be an issue," said Mr. Chaudhuri.