Share
Despite scanty rains in south India, gold loan NBFCs like Manappuram Finance and Muthoot Fincorp, who have a major presence in the region, are expecting 10-20 per cent growth in their assets under management (AUM) as the rural economy is gradually recovering from demonetisation and other parts of the country, which have received good rains, are showing better gold loan offtake.
Rising gold prices is also helping the NBFCs to attract borrowers and keep defaults under check. Gold prices have appreciated by 7 per cent since the beginning of the year and on Wednesday the price of gold was hovering around Rs 29,700 per 10 gm in the local market.
VP Nandakumar, CEO, Manappuram Finance said "We are seeing indications of a pick-up in demand for gold loans but our reading is that this is more about the rural economy recovering from the impact of demonetisation. No doubt, a good monsoon will brighten pros pects, especially in south India which had been facing acute water scarcity." He added that the NBFC's Q1 performance was subdued mainly because the unorganised sector was still getting back on its feet after demonetisation and the drought-like conditions in large parts of south India had affected off-take of gold loan. "Our consolidated AUM stood at about Rs 13,400 crore and over the rest of the year, we are looking at a growth of 10 per cent," he said.
Thomas George Muthoot, director, Muthoot Fincorp, said his company is aiming at a 20 per cent growth in AUM this fiscal. "Gold loan is showing good growth in north, west and eastern parts of the country," he said.