Even as bank finance seems to be getting costlier with rising interest rates, more and more consumers have started turning towards loan against gold to meet their short term financial requirements. It is evident from the fact that leading gold loan player Muthoot Finance Limited is looking to increase its presence in Gujarat market from the current 115 branches to 130 soon.
The non-banking finance company (NBFC), Muthoot is present in urban as well as rural markets in 24 states of the country.
"We are present across the country with branches in all major cities of Gujarat. Now we will soon be setting up new branches in semi-urban areas to take the total number of branches at 130 branches in state," said George Alexander Muthoot, managing director, Muthoot Finance. The company, currently has about 3000 branches spread across India. In Gujarat Muthoot has about 115 branches at present, while it is looking to add more branches in smaller towns of the state.
"Of our nationwide branch network, nearly 2000 branches are located in southern market, while 1000 are in northern, eastern and western regions of the country," he said.
While gold loan portfolio of Muthoot grew by Rs 2000 crore to Rs 80,000 crore in June quarter, it is hopeful to achieve similar growth in the September quarter too.
"With continued increase in our branch network, we are hopeful to post a growth of about Rs 2,000 crore in the current quarter to our total gold loan portfolio. Our client-base include middle class, upper middle class in urban areas and rural population," said Muthoot.
Southern markets have been prominent markets for the company's business generation, while it lacks strong presence in the north-eastern regions.
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"From a perspective of business generation, Tamil Nadu is the biggest contributor, followed by Delhi. Gujarat holds about 5 per cent share to our total loan portfolio," Muthoot informed.
In Gujarat, Surat and Vadodara seem to have greater acceptance of the concept of loan against gold even more than Ahmedabad. "Some pockets in Gujarat are bringing good business to us like Surat and Vadodara. In Ahmedabad too we are gearing up our efforts to get larger business," added Muthoot.
With gold prices staying volatile in past few weeks, there had been concerns about the gold loan businesses in India.
Rejecting any adverse impact on the company's business, Muthoot informed that the company has maintained enough room for gold price fluctuations, hence a short term volatility would not hamper company's profitability.