How is Muthoot Finance capitalizing with a gold loan?
Post Covid-19 is expected to bring considerably
opportunities to expand the gold markets in India. At the time when
conventional borrowing methods will be a failure due to liquidity issues and
availability of funds in the banks, the gold loans are likely to fill the gap
for the need for funds despite the increase in the gold price rate.
Why is the demand for gold loans expected to rise?
The entire country has been under the lockdown from the last
two months, which has impacted the livelihood of most of the people. People
have either faced the salary cuts or loss of employment in severe cases. The
small businesses are on the verge of a complete shutdown due to heavy losses.
Thus, the need for gold loans is undoubtedly going to boom in the nearby future.
People can also get a broader view of Muthoot Gold Loan by reading this
blog.
Another reason why gold markets are expected to expand is
because of the exploration of digital gold markets. The availability of easy
and secure gold options online has also increased the demand for gold loans,
which is yet to be strengthened in the coming time.
Why has Muthoot Finance seen a positive trend in the gold markets?
Muthoot Finance is undoubtedly one of the largest gold loan
providers with the most extensive portfolio of gold loan products. As the CFO
of the company, Oommen K Mammen, puts out "Last year, the company achieved
about 18% growth. This year, in nine months, it achieved 12% growth, and for
the last 12 months, consolidated loan assets have gone up by 21%, standalone
has increased by about 19%".
As Muthoot Finance is sure about the possibilities of an
increase in the demand for gold loans, it has thus raised funds from the global
markets to capitalize on the rise in gold loans by strengthening and
diversifying its sources of funds. Recently, it has raised $550 million in a
fixed-rate senior secured note issued for a three-and-a-half-year tenor at 4.4
percent. It is the second bond issued from the global firm; the previous one
was raised in the last year in October.
An overview of Muthoot Finance gold loan markets:
Various gold loan products: Muthoot Finance has a wide range
of gold loan products. Some of the gold loan schemes offered by Muthoot Finance
are as follows:
- Muthoot one percent loan
- Muthoot ultimate loan
- Muthoot delight loan
- Muthoot high-value loan
- Muthoot advantage loan
In-house gold evaluation:
Muthoot Finance Limited also provides the facility of in-house gold loan
evaluation. Banks and financial institutions offer loans after evaluating the
value and purity of the gold.
Online gold facility: To explore the online gold markets, it
allows the borrowers to fill the application form for the loan online. The bank
representatives then visit the house for further processing of loans. Thus, you
don't need to go to the bank to take a gold loan.
Muthoot Finance gold loan rates and eligibility criteria:
Interest rates: The gold loan rates for Muthoot Finance
starts at 12% and can range up to 27% along with a processing fee of 0.25% to
1% of the loan amount. There are no prepayment charges on the gold loan.
Loan Amount: You can get a minimum loan amount of Rs 1500,
and there is no maximum limit you can avail as a gold loan from the Muthoot
Finance.
Loan Tenure: The loan tenure ranges from 7 days to 6 months.
There is a duly attested prospect which states that the
investor is fully and 100 % responsible for the investment or any loan he is
taking. In the case of pledging of gold, an event of payment or nonpayment or
any risk-bearing act is fully on the prospect.
Consumers are thereby held to rely on their examination and
research.
Thus, Muthoot Finance is capitalizing on the gold loan markets
by diversifying and expanding its gold loan markets. It is also exploring
digital means to provide loans at attractive interest rates and with its
quick disbursal process.
Moreover, the fund gathering of Muthoot is done by secured
assets, followed by fast borrowers. Also, Muthoot has seen loss from unsecured
creditors as compared to the secured creditors.
The bank, on the other hand, also has encountered cases of
burglary, staff fraud, spurious gold. But the company is trying to make its
effort to make the debt on a negotiable basis by practicing strict rules.
People need to keep their gold pure and original. Avoid any
work or furnishing on the gold. Higher the value of gold, the higher will be the
returns. Also, there is no chance of fraud or bluff possible due to strict
rules.
As per the management plan, the gold loans gather a major proportion of the companies loan portfolio as people are showing a positive trend towards the gold loans.
