Muthoot Finance Takes Funding Route To Duck Liquidity Crisis In India
Muthoot Finance wasn’t able to get addtional funding from banks in second quarter as it was bracketed with other NBFCs, says MD.
Raising funds via external commercial borrowings and non-convertible debentures helped Muthoot Finance Ltd. overcome a liquidity crunch in India, its Managing Director George Alexander Muthoot has said.
“We weren’t able to get additional funding from banks last quarter as gold-loan companies were also bracketed with other non-banking lenders,” Muthoot told BloombergQuint in an interview. “Now we have raised external commercial borrowings worth $450 million and non-convertible debentures worth Rs 450 crore recently.”
The company seeks to raise a similar amount through NCDs next week, he said.
According to Muthoot, non-performing assets of gold-loan firms never translate into loan losses as they can recover the dues by auctioning the gold deposited as collateral. “You see a rise in NPAs in the books as we had postponed a few auctions as a customer-friendly measure.”
Shares of the Kochi-based gold-loan firm rose as much as 9.48 percent to Rs711.75, the highest since listing, a day after declaring its September quarter results. Its net profit rose 76.70 percent year-on-year to Rs 899.80 crore on the back of net interest income that rose 35.10 percent to Rs 1,631.50 crore.
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