Muthoot Finance
How do the rising gold prices impact your business?
The emotional value associated with the household jewellery (gold) holds back people from selling them to meet their immediate financial needs. As an alternative, people pledge their ornaments as collateral and secure short term loan. The relative ease in obtaining a loan approval by NBFCs at lower rate of interest than the local moneylenders and comparable with the commercial banks has boosted the popularity of gold loans and the relevance of NBFCs in this segment. With the enormous scope for growth of gold loan business, the rise in gold prices would have an impact on both, lenders and borrowers. The borrowers will pledge lesser quantity of gold as collateral and be eligible for higher amount of money, while as lenders the risks on our loans given tend to reduce as the prices of collaterals held by us increases. Another trend that we witness with the increase in prices of gold is more people bringing their jewellery to market to meet their financial needs.
How is your microfinance and vehicle finance business contributing to growth in revenues and profitability?
We hold 70.01% equity share capital in microfinance NBFC Belstar Investment and Finance Private Limited. Its loan portfolio grew by 62% to 1842 crore in FY19 with profit after tax of 73 crore as against PAT of 27 crore.
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