Muthoot Finance Sees ‘Good Demand’ In Q1 Making Up For Lockdown Loss

Muthoot Finance Ltd. is confident that large reserves of gold in Indian households and lack of capital at the moment will aid the gold loan financier’s business after the lockdown to tackle the coronavirus pandemic is lifted.

Indians are in need for cash in hand and have large amounts of gold at home, said George Alexander, managing director at one of India’s largest gold loan company. “Muthoot or gold loan companies are the best to monetise this and put purchasing power in the hands of people. They need purchasing power today,” he told BloombergQuint in an interview.

The novel virus outbreak has temporarily stalled businesses and the International Monetary Fund has declared a recession. India went into the world’s biggest lockdown as the number of cases of infection rose to more than 13,000, including over 450 deaths.

Business in the first two months of the ongoing quarter of the financial year ending March 2021 should make up for the 15 days of business lost in April, Alexander said, if the branches start functioning by the beginning of May. He plans to re-open 5,000 branches gradually, depending on the local situation, starting April 18.

About the three-month moratorium to delay loan repayments and EMIs, Alexander said it would not impact Muthoot Finance at all. The non-bank lender does not work on an EMI system and its clients can repay loans anytime in 12 months. For those who have crossed the 12-month period, usually 3-5 percent of all loan takers, another three months will be granted. That too, will not make a difference since the swollen prices of gold in the firm’s possession gives it enough “elbow room”, he said.

Watch the full conversation here: