George Alexander Muthoot said earlier that the pie of gold loans was slowly increasing. Providing gold loans is the staple of Muthoot Finance. Considering this, it might be a difficult time for the company, with various banks also stepping up to provide gold loans. However, Muthoot does not seem to be worried. In a recent interview, he went on to mention that banks will lose their interest in providing gold loans which will make them stop it eventually. They will then, look for some other opportunity.
On being asked how he copes with banks giving gold loans at interest rates of 7.50%, he said that banks have the tendency of becoming very aggressive occasionally. This will lead them to lose interest in them. He believes that even NBFCs (Non-banking Financial Companies) will look into this new and exciting venture of gold loans, before forgetting about them and moving forward with something else.
However, Muthoot says that he is also very attentive to the competition. Muthoot was also asked if the demand for gold loans was decreasing the capacity of his company to handle business. To this, he retorted that his branches have never had any problems at handling online transactions and he is sure that his branches will be able to handle any increase in business.
He further stated that he was incapable of adding any branches in the first quarter. In fact, the number of branches in Kerala, the business’s home state has subsequently decreased. Right now, Muthoot Finance is on the verge of increasing the number of branches in all other states, except Kerala.
Muthoot also said that people have been taking gold loans for higher interest rates post-pandemic. They have also started a loan at home service where they send experts to the customer’s home to encourage them to take loans.