Under the lens of the Reserve Bank, leading gold finance companies have decided to form a self-regulatory organisation (SRO) which will frame a fair business practices code for the industry.

The move is being spearheaded by industry leader Muthoot Finance's Managing Director, Mr George Alexander Muthoot, and has Manappuram Finance, Muthoot Fincorp, Sriram Citi Union and Kosamattam Financiers as members, among others.

“We feel that the RBI has not been comfortable with the fast growth of our industry, which led the regulator to tighten norms on banks' exposure to this industry in April and also bring down loan-to-value ratio,” Mr Muthoot told PTI from Kochi over the phone.

“We want to send out a message to the regulator that we are complying with all its regulations. We are giving them (RBI) time to understand our business model,” he added.

Mr Muthoot expressed hope that the proposed SRO, under the banner of the Association of Gold Loan Companies, will represent the sector better at the RBI.

The SRO will represent about 85 per cent of gold loan portfolio, he added.

Mr Muthoot said his company has seen its volume sliding by over 5 per cent following RBI's tightening and said same would be case with other players.

This year, he is expecting a tempered growth of 10 to 25 per cent. “But we expect the pace to pick up steam by Q3,” he said.

Muthoot Finance has also decided to curtail its expansion this year. The company which has 3,700 branches will be opening only 250-300 branches this year, Mr Muthoot said, adding that he expects consolidation in the industry as general slowdown in volumes will hit the margins.

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