Private lenders in south India have nearly doubled their gold loan portfolios over three years, driven by rising bullion prices and persistent demand for secured credit, with Federal Bank leading the surge.
Gold lending has become one of the sharpest growth stories in south Indian banking, as a group of private lenders have almost doubled their combined portfolios in three years on the back of higher bullion prices and steady demand for secured borrowing.
According to disclosures compiled by ETBFSI, the five banks – Federal Bank, CSB Bank, South Indian Bank, Karur Vysya Bank and City Union Bank – expanded their aggregate gold-loan book by 91.2% to ₹1.40 lakh crore by June 2026 from ₹73,248 crore in June 2023. The latest year was particularly strong, with the lenders adding ₹36,986 crore between June 2025 and June 2026, more than the ₹30,162 crore added in the previous two years combined.
Federal Bank emerged as the largest player in the group, with its gold-loan portfolio almost doubling to ₹41,476 crore. Karur Vysya Bank’s book rose 85% to ₹31,368 crore, while South Indian Bank recorded a 72% increase to ₹24,930 crore. City Union Bank’s portfolio climbed 92% to ₹20,715 crore, and gold loans now account for about 31% of its advances, according to the disclosures.
CSB Bank saw the sharpest proportional rise, with gold loans up 53% and now making up 54% of its total loan book, ETBFSI reported. Separate company updates reviewed by other financial outlets showed deposits at CSB rising 26% year on year to ₹45,415 crore by June 30, 2026, while the bank has said it wants to reduce its reliance on gold lending to below 30% by 2030 as it broadens wholesale and retail lending and strengthens its liability base. Industry data cited in those reports also pointed to pressure on margins, highlighting the trade-off facing lenders that have leaned heavily on gold-backed credit.
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