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Muthoot Finance Aims To Treble Housing Portfolio In Three Years

Muthoot Finance’s housing finance has a portfolio of Rs 1,620 crore as on June 30, George Alexander Muthoot said.

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)
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 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: