Demand for gold loan surging: Muthoot Finance

NBFC Muthoot Finance said the demand for gold loan is consistently rising. Managing director George Alexander Muthoot told FE the company is adding new customers to its gold loan business on a daily basis with small businesses and traders preferring it for a quick loan.

“We have a customer base of 2-3 crore, and at this point of time, we have more than 60 lakh active loan accounts. The number of people taking a loan on any day is more than the number of people closing a loan account. The number of active customers has been increasing for the last three-four months. Our quick loans are helping many to restart their businesses,” he said.

Muthoot said its gold loan business is likely to grow by more than 15% in the next three years.

He said raising capital for business expansion has become easy and the incremental borrowing rates are seen coming down. The average yield of the NBFC is 19% and it is likely to fall with the cost of funds coming down.

Muthoot exited its white label ATM business in December 2020 as the venture was not making money. He said digital transactions are increasing and more than 60% of customers do some digital transactions.

The company, which also operates home loan, microfinance and insurance broking subsidiaries, has plans to open 150-200 branches a year, adding to its existing 5,330 branches.