Mr. Thomas J. Muthoot, Chairman and MD of Muthoot Fincorp, one of the top players in gold loan market is positive about the business. Mr. Muthoot believes despite the liquidity crunches, and regulatory and monetary pressures, the Keralite firm will find its way out.
The above inputs came after Mr. Muthoot was giving updates post the RBI's tightening the loan-to-value (LTV), which has resulted in a decline in loan volumes for NBFCs. The central bank also limited the access of the gold loan firms to bank funds.
The company follows the 60% LTV norm and plans to reduce its capital adequacy from 15% to 12% by FY 14.
"The LTV offered by banks may now be comparatively higher than that of NBFCs. But procedural delays associated with the latter are a deterrent for small borrowers. Given that most customers look at quick and easy disbursals as an important criterion, customers are attracted to us," Mr. Muthoot said.
He also added that the RBI's intervention would bring discipline in the industry. The 60% LTV and capital adequacy of 12% would benefit well managed long running company and also prevent undue competition brought in by new entrants.
The gold loans demand has gone up, despite the rising prices, and this keeps the company positive about the future.
The company understands the importance of customer service. Since it will help them to retain and add new customers. Better accessibility also made customers reach the company easily, Mr. Muthoot added.