Asset finance company Magma Fincorp on Thursday said it has decided to exit the gold loan business with immediate effect.
The Kolkata-based company said it was winding up the gold loan business as there was no synergy between this kind of business and its other businesses. Further the current regulatory framework for the gold loan made this business unviable for the company. “Thus, we are winding up this business from immediate effect. Currently, our gold loan business constitutes just 0.5% of our loan book,” V Lakshmi Narasimhan, CFO, Magma Fincorp, told FE.
“The board of directors of the company at its meeting has decided to exit the line of business comprising of the gold loans originated by the company which line of business involves the grant of terms loans to individuals and/or small businesses against the security of gold,” the company said in a BSE filing. “The board further authorised the Management Committee of the board of directors of the company to do all such acts, deeds and things as may be necessary or expedient to implement the above decision,” it added.
Meanwhile, the company reported a more than 31% year-on-year jump in consolidated net profit to Rs 42.23 crore for the quarter ended September 30, from Rs 32.16 crore in the same period a year ago.
The company’s total income during the second quarter grew over 14% y-o-y to Rs 572.43 crore against Rs 500.50 crore in the corresponding period last fiscal, it said.