With the Reserve Bank of India (RBI) tightening regulations for gold loan non-banking finance companies (NBFCs), loan growth at Muthoot Finance, according to George Alexander, MD, will be around 10-15% this year. That’s slower than 55% increase to R24,673 crore last year.
?RBI is concerned that gold loans of NBFCs are growing too fast. The new regulations will see flat to negative growth in the first two quarters, following which growth should pick up,? he said. The firm’s profits grew 80% to R892 crore last year.
RBI had last year introduced a series of regulations like the capping of loan to value (LTV) ratio at 60%, de-recognizing gold loans originated by NBFCs as priority sector loans and reducing the cap for banks’ exposure to gold loan companies, all of which, Muthoot says, is constraining growth.
