Allahabad Bank, which has mobilised 30 kg of gold in one month under its gold deposit scheme, will formalise its gold lending scheme by June, following which it will start gold lending activity.
After the permission from the Reserve Bank of India (RBI) to banks to lend gold to other nominated banks in the recently-announced credit policy, the Calcutta-based public sector bank expects to initiate this later this year.
In order to provide more deployment avenues within the country and at the same time to exploit the synergy between the lending expertise of a few banks with the vast branch network of others, the RBI has permitted banks to deploy the gold mobilised under the gold deposit scheme by lending it to other nominated banks for similar use. At present, specific deployment avenues have been outlined for the gold mobilised.
Allahabad Bank recently discussed the modalities of its gold lending scheme with the State Bank of India (SBI), country's largest commercial bank, which has almost finished formulating its own scheme.
"We welcome the RBI directive allowing us to lend gold to other nominated banks. This involves less risk and gives us more deployment avenues within the country," said a senior official in Allahabad Bank. But the bank will start lending gold to other banks later this year after being able to mobilise a substantial amount of gold. The nine to ten banks in the country, which are into gold trading include SBI, Allahabad Bank, Corporation Bank, Canara Bank and ABN Amro.
