Muthoot Fin lowers growth estimate to 20% from 40%

Written by RajeshRavi | Kochi | Updated: Mar 9 2013, 06:10am hrs
Gold financing company Muthoot Finance estimates the market to grow a moderate 20-30% in the coming year against 40% in the past few years. Regulatory restrictions imposed on gold loan NBFCs by RBI had resulted in a de-growth in assets under management for such companies during the first quarter.

Muthoot Finance has been able to register a growth of R1,969 crore in its assets under management in the third quarter against a de-growth of R1,337 crore in the first quarter and a growth of R405 crore in the second quarter, said George Alexander Muthoot, the managing director of Muthoot Finance. The company is also considering the possibility of becoming a bank under the new guidelines laid out by the Reserve Bank of India (RBI) favouring NBFCs. The decision would be taken by the board of directors at their next meeting.

A series of regulatory steps by RBI in the February-April period had raised concerns on the growth of the gold-loan NBFCs. RBI feels gold loans have been growing rapidly and there was a concentration risk. A KPMG report says gold loan NBFCs have recorded significant growth in recent years in terms of both their balance sheet and physical presence. These NBFCs have increased their books by a little more than 50% year-on-year over the past two years, while banks registered growth of only 32-37 %. To meet their growth objectives, the NBFCs have increased their dependence on public funds, including bank finance and non-convertible debentures issued to retail investors.