Profitability of gold finance companies improves, says Crisil

Companies reach peak levels after fall witnessed since regulatory tightening in 2012

Profitability of gold loan financiers has surged back to the peak levels seen before the regulatory tightening starting 2012, according to ratings agency Crisil.  

The current financial year saw the return on assets rise to over 4 per cent, from around 2.5 per cent for FY14. The gold financing industry that comprises of players like Manappuram Gold Finance and Muthoot Gold Finance, had seen low profitability since 2012.

The profitability levels were on the rise since early 2014 due to players revamping their business models through the periodic collection of interest on loans and the lowering of product tenures. Earlier,