In a candid interview, the MD of Muthoot Finance, George Alexander Muthoot broke that the gold loan business is ever-giving. It has high prospects, so even if there are aspiring banks, they can get their business too and Muthoot can continue with their business too. In fact, Muthoot had estimated a growth of 15% in the next quarter of FY22, however, they have already recorded a growth of 14%. According to the board, Muthoot Finance Gold loan has already planned new products and innovations for the coming quarters.
However, considering the pandemic, there is not much of a marginal year on year growth. However, consider the FY21, there is significant growth from quarter to quarter. Other than that, there is a drastic stoop in the borrowing cost. The debentures are one of the most preferred investment options when it comes to gold receivables.
Nearly 10 years ago, the Muthoot Finance gold loan did an issue of Rs 2,000 crore, which was subscribed in a day itself by the people. Moreover, the MD, Mr. Muthoot does not reflect any skepticism regarding borrowing and funding in the future. In fact, there is a 1.5-2% incremental cost reduction. The current interest rate is floating around 10-10.5%
Muthoot retains accounts for around 70-80% of customers that are repetitive, which means they are loyal to the bank. That means, they pledge the gold jewelry, pay the loans off, and come back after two months to pledge it again. They are the reason for Muthoot’s consistent growth as well. Not just the gold sector. Overall the company has optimum growth, in fact, it is not scared of any grey clouds that might occur in the future.