Muthoot Finance CFO Oomem K Mammem is of the opinion that the new RBI guidelines for NBFCs won’t impact the gold loan market. Excerpts from an interview with Malyaban Ghosh.
Muthoot Finance has reported a dip in net profit. What are the reasons?
There have been a lot of adverse regulatory changes in the gold loan sector from 2012 onwards, resulting in customers shifting from NBFCs to the unorganised sector. The gold loan portfolio has come down to its lowest level of Rs 21,283 crore over the last 3-4 quarters from a 2013 peak of Rs 26,000 crore.
Why did the total income from operations decline?
When you have a low loan portfolio, the income from it will naturally come down. Over the last 3-4 quarters, our business was on a consistent decline, but, now, it has started to grow again.
Your take on RBI’s guidelines on NBFCs?
It’s too early too comment on prudential laws that are about to come out. The Usha Thorat committee’s recommendations are not gold-loan-specific. So, any change in the regulation based on its recommendations is not going to affect us. It is not going to restrict our business. There are already strong domestic tariff area regulations in place for the gold loan sector, on both the asset and liability sides.
What are the reasons for the recent uptick in the gold loan portfolio after a continuous decline?
We have taken several initiatives at the grassroot level and, this is why, our gold loan book increased by Rs 392 crore. We are trying to bring back customers who shifted to the unorganised sector.
What are your expansion plans?
Currently, we are focusing on our existing branches. But that does not mean that we are not going to expand to new territories. As of now, we are focused on the goal loan business. Apart from that, we do money transfer as well. We have the licence from RBI to run white-label ATMs. We are trying to get into other businesses too, but the main focus will be on gold loans.
Can you elaborate on your Employee Stock Option Plan?
We launched this scheme for our employees who have served the company for a long time and we have decided to repay them for their loyalty.
Any fundraising plans on the cards?
We keep coming with public issues of non-convertible debentures. We have just filed another offer document with Sebi for an issue size of Rs 400 crore. This is rated by Icra, So, hopefully, we will be able to launch it in a couple of weeks.
By Malyaban Ghosh