Buy / Sell Muthoot Finance share
Gold financing companies like Muthoot Finance and Manappuram Finance have seen their customer base decline over the last few quarters as customers are shifting from non-banking financial companies (NBFCs) to banks.
While speaking with CNBC-TV18, George Alexander Muthoot, MD, Muthoot Finance admitted that banks are getting managing to get a new set of customers as the market is widening. He further mentioned, that the customer base has not fallen but the active customers have come down a bit.
“That is because we have quite a lot of auctions in quarter four and quarter one of this year. That has been the reason why many of the accounts got marked away from the active accounts,” he explained.
On August 22, Manappuram Finance’s MD and CEO, VP Nandakumar, in an interview with CNBC-TV18, said that demand for NBFC customers at the lower end has come down but that there has not been a shift of customers to banks and that they are seeing new customer addition playing out as well.
Banks are able to offer a very low rate of interest to customers. “Banks have the advantage of a very low-interest rate. That is why the customers are going there,” Muthoot said.
In terms of interest rates, he further mentioned, “It is not the interest rates that the customer can come to us because we may not be able to compete with the banks on the rates but it is on the service part. Service has been the forte of NBFCs especially for Muthoot because we dispose of the customer in 5-15 minutes.”
The bigger customers, with requirements of Rs 5 lakh, Rs 10 lakh loans, are the ones who are going to the banks because of the difference in the rate of interest, he said.
However, Muthoot is optimistic about the gold loan business.
“In quarter one, we had degrowth of about 2 percent mainly because of auctions. In quarter two, you should see things stabilizing and in quarters three and four business should grow. We expect about 10 percent growth by the end of the year,” he explained.
For the full interview, watch the accompanying video