Muthoot Fincorp eyes 30-32 per cent AUM growth in FY25

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Gold loan focused non-banking finance company (NBFC) Muthoot Fincorp expects to report 30-32 per cent growth in its assets under management (AUM) during the current financial year, CEO Shaji Varghese, told businessline.

“Our growth momentum is good as we have created capacities for that. Conventionally, gold loans were only done via the walk-in model, but our customers can now call us, or use our app to book an appointment, following which our officers visit their homes, complete the KYC and loan applications, with disbursement done in the customer’s premises itself,” he said. The NBFC has started this service in 50 cities initially. It has 2,000 on-ground officers who generate loan leads, and it allows borrowers the option to top-up loans after partial repayment.

Muthoot Fincorp’s consolidated AUM rose 29 per cent year-on-year (YoY) to ₹39,257 crore as of June-end, whereas its standalone AUM was up 32 per cent YoY at ₹24,892 crore. The consolidated figures include the business generated by the NBFC’s microfinance and housing finance subsidiaries.

Varghese said the Reserve Bank of India’s recent clarification that gold loan lenders must not disburse more than ₹20,000 in cash, will make the loan appraisal and sanctions process much smoother.

“It will play positively for lenders. We will not have the hassle of dealing in cash. Speed, accuracy and efficiency of disbursals will improve as cash goes down. Immediately, it may cause a little inconvenience to customers, but UPI instant transfer negates that issue,” he said.

The RBI had, in March, barred IIFL Finance from gold loan sanctions due to a serious violation of norms, including disbursing and collecting large sums of loan in cash. The central bank on September 19 lifted the restrictions after IIFL Finance took corrective action.

“As a group, we have been doing this business for several years. These processes are evolved over a period of time and audited for decades…We have been setting 75 per cent LTV (loan to value) ratio for many years, so any regulation and clarity helps us grow stronger,” he said.

Varghese said that as gold loan consumers’ requirements have enhanced, the NBFC is looking to launch products that meet the lifecycle requirement of customers. Currently, it offers gold loans and loans against property, which are predominantly business loans, and is a small and medium enterprises offering. Its housing finance subsidiary offers home loans, while another group company, Muthoot Capital Services, offers two-wheeler and used car loans.

It recently started a pilot on digital lending in partnership with wallet major PhonePe, and is disbursing ₹100 crore per month.