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Expect to start mutual funds business in 6 months, says Muthoot Finance

The Muthoot Finance stock is gaining in trade after reporting its highest loan growth in 11 quarters. There is also news that the company plans to enter the mutual fund and vehicle finance industry to lower their dependence on the gold loan business.
George Alexander Muthoot, MD, Muthoot Finance said with regards to mutual fund business they have received in-principle clearance and have six months’ time to start it and they are sure of starting it within that timeframe.
Mutual Funds would be a good fit for their current business, said Alexander.
With regards to vehicle finance business, he said they already have started it in a new subsidiary called Muthoot Money, which will become a 100 percent subsidiary of Muthoot Finance in next month. The business will be initial in the states of Telangana and Andhra Pradesh.
The subsidiary already has a Rs 50 crore portfolio, adding that going forward after it becomes a 100 percent subsidiary it is likely to reach Rs 3000 crore of portfolio over next 3-4 years, said Alexander.
He said, new & used cars, commercial vehicles and construction equipment will be financed in vehicle financing business.
With regards to their core business, he said they expect gold loan portfolio to grow at 20-25 percent in FY19.
Talking about Kerala flood impact on their business, he said the gold loan business in Kerala is comparatively low at around 5.8 percent although they have 600 branches.
However, going forward expect people to come up with gold as collateral for loans to rebuild their homes he said. Moreover, for gold loans there no EMIs that could be impacted, customers follow only bullet payment system and have 12 month period, he added.