Muthoot Finance is planning to increase its non-gold loan mix to 20% in the next 3-5 years from 15% currently, managing director George Alexander Muthoot said. In an interview with Ajay Ramanathan, he further said there’s a need to unify practices between Kerala-based and non-Kerala based gold financiers.
The RBI has imposed a cash disbursal limit of Rs 20,000 for gold loan customers. How has this impacted your business?
Actually, that has not impacted us at all. Firstly, all the NBFCs are doing the same thing. Secondly, those who specifically want to avail cash disbursements and are not happy can only go to the local money lender. Even money lenders have limitations on how much they can give. Also, our systems are integrated with the Unified Payments Interface. So there is no issue at all.
NTPC Green IPO to fetch over `8,000 cr, says CMD
Hyatt to open 8 new hotels, 1,200 new keys in 2024: Sunjae Sharma
TCIL may sell remaining stake in Bharti Hexacom after tariff hike
Q4 Results 2024 Updates: ABB India, Bank of Baroda, Cipla, Tata Motors, Kalyan Jewellers, Aarti Industries more announced earnings
I think the environment for gold loan is quite good now. People need money and they need purchasing power. People can get credit quickly by availing a gold loan. I think the prospects for the gold loan business is good. The government, and regulator should encourage gold loan businesses.
Do you think there is a need to realign some practices across gold loan financiers?
I think most of the gold loan companies are concentrated in Kerala. But companies that operate from outside Kerala are, for instance, not controlled by the central bank’s Thiruvananthapuram office. They may have indulged in some wrong practices. I think RBI should definitely bring in some unification of the practices in Kerala with those outside Kerala. All these things should encourage more business in the gold loan sector. Some entities may have indulged in wrong practices and that should be corrected.
Many NBFCs have launched digital apps? What is your focus and strategy with iMuthoot?
The iMuthoot app is mainly for the lead generation. If the customer wants a top-up loan, wants to repay a loan, or wants to pay interest, he can use the iMuthoot app. But he needs to come to the branch to pledge the gold and release it.
All these apps can only attract a customer or maybe generate a lead. Finally, the customer has to come to a branch with the gold. We have more than 5,000 branches and the customer can come to the branch. So somebody who does not have a branch can maybe disburse a personal loan through the app. However, gold loans require branches.
What is your product pipeline on the non-gold loan portfolio?
Apart from the around `10,000-crore portfolio of subsidiary Belstar Microfinance, the non-gold portfolio should be around `3,500 crore. These other verticals are vehicle finance, personal loans, small business loans, and housing loans. We would like to develop these other verticals. Today, the other verticals contribute around 15% of the overall assets. In the next three-to-five years, these will probably comprise 20% of the overall assets.
How do you see your net interest margin shaping up?
Our net interest margins have been constant for the last two years. While it was a bit higher 3-4 years ago, we will be able to maintain it at 9-10%.
What are your borrowing plans for FY25?
We plan to grow our gold loan book by 15% this financial year, and so, we will have to raise debt to that extent. We will do a public issue of bonds in June or July and the private placement of non-convertible debentures will be done on a more regular basis. We plan to do around four issues this year, and each of them will be around `500 crore. Private placement will depend on the prevailing market conditions.
From: financialexpress
Financial News
