Leading non-banking finance company and gold loans player Muthoot Fincorp has welcomed extension of Sarfaesi Act provisions to registered NBFCs as announced in the Union Budget.

“This was something that was in our wish list. This has happened now,” said Thomas John Muthoot, Chairman and Managing Director, Muthoot Fincorp.

The reference here is to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi Act).

The Act was enacted to enable banks and FIs to realise long-term assets; manage problem of liquidity and asset-liability mismatches; and improve recovery.

They could achieve this by exercising powers to take possession of securities and sell them. They could hope to reduce non-performing assets by adopting measures for recovery or construction.

On gold monetisation, Muthoot said that all three related announcements in the Budget are towards bringing out ‘locker gold’ into the formal system.

Monetising gold

This would facilitate transparency in the recycling sector and also reduce the dependency on imports. It is a very welcome move.

“We will have to wait for the details to come out in regards to these announcements as well as proposed guidelines issued for implementation of the same.”

The company already has a Muthoot Gold Point initiative in this regard, which would benefit not just consumers but also the larger economy through recycling that will over time reduce imports, Muthoot said.

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