According to Thomas John Matut, defaults on gold loans are within acceptable limits



Private lenders’ gold auction announcements in regional daily newspapers that span more than one full page are becoming regular, which for the uninitiated may indicate financial stress caused by the pandemic, not only among the economically disadvantaged, but also among employees.

Leading company NBFC Muthoot Fincorp recently posted a multi-page auction announcement listing some 24,000 mortgages that were auctioned in July this year at its various subsidiaries because customers were unable to pay on time.

Legislative advertising

But the lender did not attach any importance to the advertisement and said that “cases of default continue to be within acceptable limits.”

He said that this is an official advertisement. Business line… Actual auctions are just under one percent and are not a concern as 99 percent of customers buy back or renew their loans.

“We must take these steps; otherwise, we will violate the NPA norms of the Reserve Bank, which will not be clearly visible to the rating agencies, banks and RBI ”.

Extra time to pay

Upon special request, NBFC provides customers with additional time to repurchase their gold. “In fact, we would like customers to save their gold. This is also important for us. Thanks to Covid, we have a special scheme for clients, according to which a loan can be extended at 11.99%. Many of these steps are taken thoughtfully. ”

In fact, John Matut noted that the gold loan portfolio showed significant growth during the 2020-2021 fiscal year. Combined with the postponement of previous auctions due to blocking, this resulted in more loans being put up for auction.

Overall, this is a small percentage compared to the total payments of Rs 39,500 over the period, he said. But John Matut agreed that the second wave of Covid-19 and the related isolation did indeed disrupt economic activity and jeopardize the financial situation of clients.

The element of uncertainty

“But if you compare this with the first wave in March 2020, the element of uncertainty is clear. The community has shown resilience and willingness to confront the situation. The lockdown has been eased in most states. Normality will allow the average person to return to work and resume activities. ”

According to him, demand for loans for gold continues to grow. “The average person is our client, and his financial needs continue to be our focus. We are in constant contact with customers and our product research capabilities allow us to understand their needs. The demand for fresh loans is growing after the relaxation of the quarantine, ”he added.

On the business outlook for the next few quarters, Matut said: “We remain optimistic about the growth of the Indian economy. The Center, as well as the Central Bank, reaffirmed their commitment by announcing investment or capex packages to spur growth. We are confident that as businesses resume and operations resume, the economy will recover. We expect 12-15% growth as demand rises. ”


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