Muthoot Finance eyeing 15-25% growth this fiscal

Muthoot Finance, which grew over 100 per cent two years ago, looks at a slower growth this fiscal.

“This year is one of consolidation, both for growth of assets under management and branch expansion,” Mr George Alexander Muthoot, Managing Director, Muthoot Finance, told Business Line. The NBFC is looking at 15-25 per cent growth in 2012-13.

In 2010-11, its AUM grew over 100 per cent to Rs 15,000 crore, while in 2011-12 it grew about 50 per cent to Rs 24,000 crore. “The lesser growth is also due to our base growing over the years,” he said.

The company will go slow on its branch expansion plans too.

“During the last two years, we opened 900 branches in each year.

This fiscal, we plan to open only 250-300 branches,” said Mr Muthoot.

The consolidation plans come at a time when the RBI has also asked banks to reduce their exposure to gold-loan companies such as Muthoot Finance from 10 per cent to 7.5 per cent of their net-owned funds.

On this directive, Mr Muthoot pointed out that his company was dealing with about 30 banks, and “none of the banks has reached the 7.5 per cent level of funding yet”. There was enough elbow room, he added.

Lending rates

On the RBI's concerns on NBFCs' high lending rates, he said the rates increased to 22 per cent in 2011-12 from 19 per cent in 2010-11 consequent to banks increasing their lending charges. “Going forward, if we get bank funding at cheaper rates, we will also bring down our lending rates,” added Mr Muthoot.

The RBI's move to bring down the loan-to-value ratio to 60 per cent is a concern, as it would “force some customers to go back to moneylenders,” he said. The company will approach the RBI for a re-look at this aspect, and Mr Muthoot also hoped that the K.U.B. Rao Committee will look into this.

anju@thehindu.co.in