Ujjivan Small Finance Bank is focused on expanding its presence in India's gold loan market. This move could help the bank increase its customer base and drive growth in the upcoming fiscal year. However, the bank will also need to keep an eye on interest rates and deposit mobilisation to ensure its success in the long run.

Gold loans are a type of secured loan that uses gold as collateral. These loan products have gained popularity in recent years due to their lower interest rates and ease of access. Ujjivan Small Finance Bank is looking to capitalise on this trend by expanding its presence in the gold loan market.

In an interview with CNBC-TV18, Ittira Davis, MD and CEO of the bank said that the intention is to increase penetration in gold loans and market gold loans to its own customer base.

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He said, “We are now ready to go into it with a larger business. We are looking initially at our own customer base because right now, since we do not offer it, many of our micro-banking customers are going to other people and banks and getting those loans. We try to get them back and we will offer that product to them. And as we then build up, we will be looking at new customers.”

“Our reach across the country will help us in that regard. We have about 629 branches now and will be adding another 100 branches during this financial year,” Davis added.

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However, Davis also acknowledged that if interest rates increase from current levels, deposit mobilisation could become a challenge for the bank. This is because higher interest rates would make it more attractive for customers to deposit their money in other financial institutions.

The growth rate of Ujjivan Small Finance Bank in the coming fiscal year will depend on how things pan out in Q1FY24. The first quarter of the fiscal year is typically a crucial period for banks as it sets the tone for the rest of the year.

Also Read | This banker believes gold loans are set to keep pace in 2023

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(Edited by : C H Unnikrishnan)