Non-banking finance company Manappuram Finance is expecting a rise in its collections with the announcements of further relaxations in the lockdowns, said VP Nandakumar, MD and CEO of the company.
The company reported a weak set of numbers for the first quarter as the non-gold business impacted the earnings negatively and the microfinance institution (MFI) segment reported a loss.
“In the consolidated portfolio, over 70 percent is gold loan. Non-gold comprises less than 30 percent. In the microfinance business and in all other businesses, our collections are at par with the best in the industry. This month in microfinance, we are aiming at 70 percent but it will be 1-2 percent less during this year because of the lockdown. Whenever the lockdown is removed, we see an increase in the collection, said Nandakumar.
"I hope during the month of August, the lockdown relaxations in many parts will be furthermore. So our collections are expected to be better. Collections are remaining good," he added.
On gold loan, Nandakumar said, “For gold loans, our contract period is only three months; after three months, customers have the option to renew it. Our accrued interest in the gold loan is only 2.5 percent. So there is no change in it..."
The company also offers the facility of online gold loans in which the customer can transact from anywhere. This gives the customer a facility of free safe custody of his gold. The customer can also operate this as an overdraft in a bank.
"During the last two years, ever since we have introduced this online gold loan, it has steadily grown, it is around 63 percent now. It is growing at a rate of 2 percent quarter-on-quarter (QoQ),” he added.
When asked about the roll-over loans, he replied, “We are getting a roll-over from the banks at a lower rate than the previous one. Then also we are able to raise NCDs for 2 years from the market at a comfortable rate. Even though we have replaced our low-cost commercial paper (CP) with a relatively higher cost long-term deposits, still our overall borrowing cost during this quarter has come down by 7 days. We expect that will further go down in next quarter.”