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RBI's cap on loan-to-value at 60% for gold loan has hit NBFCs, according to their first quarter results. The gold loan assets of major financiers like Muthoot Finance and Manappuram Finance have dropped. The companies are going slow on expansion and are planning cost cutting measures.
Muthoot Finance, the largest gold loan company in the country, has recorded a 5% dip in the gold loan assets for the first quarter. The gold loan outstanding stood at Rs 23,082 crore for the quarter ended June 30, 2012 -- down from Rs 24,417 crore in the same period previous year. Manappuram Finance had gold loan assets worth Rs 10,739 crore for the quarter, a drop of nearly 7% from the previous year.
The companies were lending almost 80-85% of the value of gold till the RBI directives in March 2012. Though the average loan interest was 12-13%, higher value had entailed interest up to 20-21%. Though the income and profit of the NBFCs have registered growth in the quarter, the RBI restriction is nibbling away the assets under management of these companies.
Muthoot Finance chairman MG George Muthoot has said that the company is entering into a consolidation phase in the current year. This means, the company will open fewer branches. Compared to its annual addition of around 1,000 branches, the company will limit it to 250 branches this fiscal year.
It is also planning a freeze on new recruitment and is redeploying the existing staff to newer branches. The company has 3,780 branches spread over the country with an employee size of over 25,000.
Manappuram Finance has started 63 branches during the quarter, taking the national network to 2,971 branches. "We are unlikely to add more branches in the current year. We expect the growth in the gold loan assets under management to remain flat," said I Unnikrishnan, executive director and deputy CEO, Manappuram Finance.
"The RBI restriction has driven customers more to the unorganised sector than to banks because of the time factor in getting loans," said George Muthoot, director of Muthoot Fincorp, another leading gold loan company, which has experienced flat growth in assets in the quarter.
The company has frozen the expansion of branch network at the current level of 2,700 for the year.
However, the banks for which the restrictions are not applicable are taking steps to expand the gold loan operations. State Bank of Travancore managing director P Nanda Kumaran said its gold loan income stood at Rs 7,300 crore - 14% of its total loan income.
Source: EconomicTimes
Muthoot Finance, the largest gold loan company in the country, has recorded a 5% dip in the gold loan assets for the first quarter. The gold loan outstanding stood at Rs 23,082 crore for the quarter ended June 30, 2012 -- down from Rs 24,417 crore in the same period previous year. Manappuram Finance had gold loan assets worth Rs 10,739 crore for the quarter, a drop of nearly 7% from the previous year.
The companies were lending almost 80-85% of the value of gold till the RBI directives in March 2012. Though the average loan interest was 12-13%, higher value had entailed interest up to 20-21%. Though the income and profit of the NBFCs have registered growth in the quarter, the RBI restriction is nibbling away the assets under management of these companies.
Muthoot Finance chairman MG George Muthoot has said that the company is entering into a consolidation phase in the current year. This means, the company will open fewer branches. Compared to its annual addition of around 1,000 branches, the company will limit it to 250 branches this fiscal year.
It is also planning a freeze on new recruitment and is redeploying the existing staff to newer branches. The company has 3,780 branches spread over the country with an employee size of over 25,000.
Manappuram Finance has started 63 branches during the quarter, taking the national network to 2,971 branches. "We are unlikely to add more branches in the current year. We expect the growth in the gold loan assets under management to remain flat," said I Unnikrishnan, executive director and deputy CEO, Manappuram Finance.
"The RBI restriction has driven customers more to the unorganised sector than to banks because of the time factor in getting loans," said George Muthoot, director of Muthoot Fincorp, another leading gold loan company, which has experienced flat growth in assets in the quarter.
The company has frozen the expansion of branch network at the current level of 2,700 for the year.
However, the banks for which the restrictions are not applicable are taking steps to expand the gold loan operations. State Bank of Travancore managing director P Nanda Kumaran said its gold loan income stood at Rs 7,300 crore - 14% of its total loan income.
Source: EconomicTimes
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