The lender through an exchange notice dated August 29 said that although large majority of its employees are not part of this strike, they are unable to open branches because of the threats or forcible closure.
By Shashank Nayar
Gold-loan major Muthoot Finance has temporarily discontinued few of its gold loan schemes citing increased cost of funds, according to a company document assessed by FE. The document indicated that the gold loan lender, effective August 20, has temporarily discontinued eight of its gold loan schemes having very low interest rates and high loan-to-value (LTV) ratio.
“It is noted that cost of finance from banks and other sources are moving up due to various reasons. As a prudent measure gold loan schemes with lower interest rates and high LTV are being deactivated,” the document stated. Muthoot’s High Value Loan, Super Saver Scheme, and Muthoot Mahila loan are a few examples of the discontinued schemes.
An e-mail query sent to Muthoot Finance on Tuesday remained unanswered till the time of going to press. The Kerala-based lender has been facing a strike from a section of its employees. Members of a trade union have reportedly created tussles, not allowing the lender to function across many of its branches.
The lender through an exchange notice dated August 29 said that although large majority of its employees are not part of this strike, they are unable to open branches because of the threats or forcible closure. “Our staff is being threatened for life if they open branches. These threats are made by CITU workers, which is the affiliate of CPI-M, the current ruling party in Kerala,” the company said.
Analysts at Kotak Institutional Equities believe that while gold loan branches in Kerala constitute 14% of Muthoot Finance’s overall branch network, the contribution of these branches to overall gold AUM is just 4.5%, owing to the low business per branch.