Muthoot Finance sees good demand for gold loans in coming quarters

With the economy opening up, small businesses and MSMEs are starting their businesses. We expect the demand for gold loans will start rising in the next quarter and we would see good demand for gold loans in the coming quarters.

Profit is still up by six per cent for 2021-22 on a yoy basis. Assets under management have also grown 11 per cent. We would have done much better had it not been for the gold auctions in the third and fourth quarter. AUM would have grown by at least 15 per cent.  We remain optimistic about a growth of 12-15 per cent in gold loan AUM in the current fiscal as well.

We auctioned about ₹4,000 crore of gold in the third and fourth quarter of last fiscal. We supported customers during the  pandemic and gave them loans. Unfortunately, for some of them, their businesses did not fully restart and they had stress in repaying the loan.

We want to grow the business per branch. It has increased to about ₹12 crore from ₹9 crore in the last two years. We would like it to go up to ₹15 crore per branch. We are waiting for some more approvals to come from the Reserve Bank for new branches. We have asked for 100-150 branches and hope the approval will come shortly.

I wouldn’t say competition. They are also growing the business and getting new customers. With banks offering gold loans, there is probably a little more comfort and credibility for the business. The base is expanding. Today, just 20 per cent of the gold available with the public has been monetised for gold loans. The base can grow quite well. 

We have not been aggressive on home loans in the last six to seven quarters. But we have restarted the business and expect it to grow by ₹600 crore this fiscal. We are focussed on the affordable home loan segment. The idea is to offer home loans and loans against property to customers coming to Muthoot Finance for gold loans.

We have a good amount of bank borrowing and NCDs. We were going slow on retail NCD issue for the last two three years but our customer base kept asking us for a new issue. We raised ₹400 crore a few months back and now we are raising ₹300 crore. These are focussed at retail customers.  Going forward, we should have another two to three issues this year. Retail customers have a good option with NCDs with higher interest rates compared to fixed deposits.  

We had started it on a pilot basis in four cities, we will expand it to other cities. It will be focussed on large cities and we plan to take it to 50-60 more cities.