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Gold finance company Muthoot Finance hopes to record a turnaround this financial year. After witnessing a sharp fall in its loan book in 2013-14, owing to tight regulatory norms, it expects to increase its portfolio to Rs 26,000 crore in 2014-15.
"The Reserve Bank of India (RBI) revised the norm for loan-to-value ratio in the fourth quarter of 2013-14. It was too late in finance to reverse the trend in a short span. This year (FY15), the company plans to expand its loan portfolio by winning back customers who left us and approached money lenders," said Chief Financial Officer Oommen Mammen.
In January this year, RBI had eased the norms to extend loans against gold jewellery - it allowed non-banking financial companies to offer loans up to 75 per cent of the value of gold, against the previous limit of 60 per cent.
Between March 2013 and December 2013, Muthoot Finance's gross retail loan book declined from Rs 26,386 crore to Rs 22,588 crore. Now, the company would reactivate work at branches and return to a Rs 26,000-crore loan book by March 2015, Mammen said. The expansion in loan book is expected to improve profitability. For this financial year, the company is eyeing return on asset of 3.25 per cent and an interest margin of nine per cent.
