Money & Banking

Muthoot FinCorp’s microfinance arm expanding into 2 more States

Satyanarayan Iyer Mumbai | Updated on April 22, 2013

Muthoot Mahila Mitra, the microfinance subsidiary of Muthoot FinCorp, is planning to foray into Maharashta and Gujarat in the current fiscal.

Further, to get bank loans at a cheaper rate as mandated under the priority sector guidelines, Muthoot FinCorp, which is a gold loan company, is planning to hive off Muthoot Mahila Mitra into a separate entity.

If the separate entity has 85 per cent of its assets as microfinance assets then bank loans to it will get the priority sector tag.

The MFI is currently present in Kerala, Tamil Nadu and Karnataka.

“While being within the group company, we are looking to move the entire microfinance portfolio into a new entity.

“For this, we have acquired Mumbai-based, Pancharatna Securities. We look forward to move our entire microfinance portfolio into this entity, once we get NBFC-MFI approval from the Reserve Bank of India,” Sadaf Sayeed, Chief Operating Office, said.

The company, which has also applied for a name change, expects to get the NBFC-MFI approval from the RBI in three-four months.

Since there is a margin cap of 10-12 per cent on the interest rate that an NBFC-MFI can charge above the bank lending rate, customers will benefit if the company gets the NBFC-MFI recognition.

In the current fiscal, the microfinance company will also start lending to micro and small enterprises (MSEs).


Published on April 22, 2013

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