Falling gold prices not a cause of worry: Federal Bank

Also allays fears regarding change in Saudi Arabia's immigration policy

Old generation private lender Federal Bank today sought to allay investor fears on any likely impact on the banks business on account of falling gold prices and recent changes in Saudi Arabia’s immigration policy.

This Kerala based lender has the significant exposure in both of these segments as it has the portfolio of Rs 6,200 crore of gold loan portfolio and 10-12% of its total deposits comes from Indians based in Saudi Arabia.

In a conference call hosted with the brokers today Shyam Srinivasan, managing director and chief executive said, “Recent drop in gold prices have taken banks loan to value (LTV) ratio to 77-78% from early 60% range.”

He however added that the bank is watchful about the portfolio and will take necessary steps warranted.

On Saudi Arabia issue the bank said that it’s currently a non issue for the bank as the number of people reportedly affected from the state of Kerala is very small at about 500.