An advertisement for Muthoot Finance Ltd., one of India’s leading providers of gold-based loans, is displayed on a wall in a branch in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Muthoot Finance Aims To Treble Housing Portfolio In Three Years

Muthoot Finance Ltd. expects its housing finance’s asset under management to reach Rs 5,000 crore in three years.

“The segment has a portfolio of Rs 1,620 crore as on June 30,” Managing Director George Alexander Muthoot told BloombergQuint in an interaction. The company expects its microfinance AUM, which has a portfolio of Rs 1,300 crore, to reach Rs 1,900 crore by March, he said.

Key highlights from the interaction:

Gold Loans

  • Witnessed muted growth in the last four to five quarters.
  • Gold loans saw double-digit growth in the June quarter.
  • Pick-up in economic activity over the last three months aided growth.
  • Expect credit offtake in all branches across the country.

Gold Auctions

  • Gold auctions have been less in the last two quarters.
  • Have been trying to put in new methods and new systems where all customers are contacted and persuaded to pay and renew their loans; this is giving us good results compared to gold auctioning.
  • Expect lesser auctioning in future for recovery of loans.

Digital Business For Gold Loans

  • We are encouraging customers to go digital.
  • Many customers now pay interest and also part of the principal physically.
  • We have enabled for customers to take loans digitally 24/7.
  • Several customers are paying interest and principal digitally.

Asset Quality

  • NPAs of gold loan companies are of no consequence to losses.
  • Recognition of NPA was only a lapse in time period of gold loan.
  • Security for loans stood at 100 percent.
  • Lower NPAs were due to IND-AS provision for segregating NPAs from other associated loans for a single customer.

Segment Growth

  • Home finance has a portfolio of Rs 1,620 as on June 30.
  • Will be allocating Rs 100-150 crore to both home finance and microfinance segments to meet capital adequacy ratios.

Watch the full conversation here: