Muthoot Finance has said that it will achieve the earlier guidance of 15% growth in the current fiscal despite concerns from Covid-19 and competition. The gold loan company with more than four thousand branches was closed till April 23 and expects to regain the lost business by the end of July.
George Alexander Muthoot, Managing Director, Muthoot finance, told FE, “We are seeing good growth in gold loans and 90 % of our portfolio is in gold loans.
Customers of banks who have availed moratorium on existing loans cannot get new loans and gold loan is the only option. Our advances and releases are happening as usual. What business we lost in April, we will make it up in July. In the initial days after reopening releases of loan were on the higher side, but after two weeks new loans started increasing.”
During the last quarter of FY20 gold loan portfolio of the NBFC increased by Rs 3,113 crores to Rs 41,611 crore.
“We grew by 14-15 % in FY19 and by 22 % in the last fiscal. This year we have given a guidance of 15 % and we will achieve that by the end of the year. We are today competing with the biggest banks in the gold loan sector,” he added.
The gold loan company reported a standalone net profit of Rs 3018 crore in FY20 as against Rs 1972 crore in the previous fiscal, a growth of 53 %.
Customers are also topping up existing loans with loan-to-value (LTV) decreasing with the price of gold on the rise. “When they took the loan 3-4 months back they were only eligible for Rs 50,000 and now for the same gold they can avail loans up to Rs 65,000.Average ticket size of gold loans has also increased to Rs 50,000 from Rs 45,000 seen in the last fiscal,” Muthoot said.
During the lockdown, the NBFC managed to map the back account of nearly 10 lakh customers with their loan account, making it convenient for customers to transact most of the loan process online.
The lender added that it has seen a four-fold jump in quantum of loan disbursals via its digital platforms to the tune of Rs 224 crore in June, 2020 compared to February, 2020. Interest collection through the digital route has surged by 2.5 times to Rs 139 crores in June. The NBFC also recorded a 73% growth of unique customers transacting on its digital platforms in June compared to February, 2020.
The lender has also introduced a new product called ‘Gold UNLOCKER’ which will help customers unlock the value of their idle gold lying in bank lockers or home safes through an overdraft facility for their gold jewellery.
“India has about 25,000 tonne of gold and from that only 2000 tonne is held by the organised sector. The rest of the gold of 23,000 tonne is with the public and we are trying it make it useful for them by unlocking the real value,” he said.
The finance company which also operates a home loan, microfinance and insurance broking subsidiaries said that no new lending is happening in the subsidiaries and focus is on collection.