Muthoot Finance has reduced gold loan interest rate to 12 per cent from November 2. According to press release provided at Kochi, loans up to Rs 1 crore are available under this scheme at all Muthoot Finance branches numbering more than 1,300 in 21 States.
With many banks curtailing their personal loan portfolio and gold prices soaring, finance companies have started moving into the space vacated by banks with their gold loan offerings. Finance companies have witnessed 80-100% growth in their gold loan business as borrowers have increasingly started looking at gold jewellery as collateral for loans, mainly because of the bullish price trend in the case of gold.
R Manmohanan, chief executive officer, Muthoot Capital Services Ltd, “The curtailing of personal loans by commercial banks might have helped NBFCs engaged in disbursement of gold loans. They have carved out a niche in the financial services arena and specialise in that particular line of business and derive their strength from hassle-free and expeditious disbursement of loans.”
The Muthoot Group, which claims to be the country’s largest lender against gold claimed that the company would increase its gold loans portfolio to over Rs 4,000 crore in the next 2 years.
But they would be giving a very low amount per gram of loan.