New Delhi (IANS) The gold loan business of Muthoot Finance has returned to normal amid the pandemic backed by the need for working capital by small businesses and shops, George Alexander Muthoot, the Managing Director of Muthoot Finance.
Speaking to IANS, Muthoot said the company’s operations were largely halted during the initial phase of the nationwide lockdown till April, but as restrictions were eased in May, demand for gold loan also increased.
“We have seen a lot of people availing gold loans now also. Our loans are mainly driven to small business people, shopkeepers for their working capital requirement,” he said.
He added that as shops and establishments are opening up now and “they need money quickly, probably to buy stock, to pay their debtors or probably for any other business working capital”.
He also said that the company’s gold loan business is likely to witness a 15 per cent growth in the current financial year bucking the slowdown which other non-banking financial companies (NBFC) are facing.
He noted that due to the lockdown the business in April was impacted but the company was able to make it up in May and June.
“We are back to normal now,” said the MD.
Further, the recent surge in gold prices to record levels has also helped the gold loan providers, he noted, as it makes their collaterals stronger and gives the loan giver a good margin for the gold price.
That has also been a positive for the gold loan NBFCs including the Kochi-headquartered Muthoot Finance.
Muthoot further told IANS that in a strategic move the company will focus more on the digital front and around 40 per cent of its customers have already taken to online transactions.
On the question of likely change on business operations or strategy post the pandemic, the Muthoot Finance MD said: “Our business model is intact but customers having to walk to our branches will not be as easy as before, that’s why we are encouraging more online business. That a strategic change we are making, more of an online business.”
According to the company, it has recorded strong traction on its ‘iMuthoot Mobile App’ as well as the online portal in the months following Covid-19 pandemic and the company has seen a four-fold jump in quantum of loan disbursals on its through digital platforms to the tune of Rs 224 crore in June, 2020 from that in February.
It has witnessed a 73 per cent growth of unique customers transacting on its digital platforms in June when compared to February.
On the outlook for the sector Muthoot seemed optimistic and said that demand for gold loans is only going to rise from here on.
“All businesses require money and that is where gold loans come in. As long as people require quick money, gold loan will be the best product.”