Gold loan growth at Muthoot Finance continues to remain strong at around 50% year-on-year, but underlying trends show a decline in gold tonnage and a sequential fall in active loan accounts for the second consecutive quarter. According to management, the growth is increasingly being driven by higher gold prices rather than expansion in the customer base or physical gold pledged.
Explaining the trend in tonnage, George Alexander Muthoot, MD, Muthoot Finance said that the movement is largely structural due to the short tenure of gold loans and frequent portfolio churn. He said, “Gold tonnage depends on price and churn. Loans are very short term.” He further added that with rising gold prices, the amount of gold required for the same loan value has reduced significantly, stating, “A Rs 1 lakh loan earlier needed 10 grams; now it needs only 6 grams due to price movement.”
