Muthoot Finance sees ‘no significant issue’ from RBI cash disbursal guidelines; Stock recovers
Summary
Muthoot Finance also highlighted that while some customers in rural areas may go to unorganised lenders, they do not see that as a challenge.
Muthoot Finance Ltd., the gold financing company told CNBC-TV18 that the RBI norms on cash disbursals is not a significant challenge, as 80% of its customers have migrated to non-cash channels.
Managing Director George Alexander Muthoot said that the RBI advisory is applicable to all NBFCs and not just to gold financiers in specifics.
Muthoot also said that the numbers are not significant when it comes to cash loans which are worth more than ₹20,000. He further added that any loan above ₹2 lakh is fully online.
“Those numbers are very miniscule, and we will have no difficulty there. I do not have any numbers but nothing significant,” he said.
Shares of Muthoot Finance, which at one point had declined as much as 8% on Thursday, recovered significantly from the day’s low and were trading 0.7% lower at ₹1,647 at the time of writing this.
CNBC-TV18 reported on Wednesday citing sources that the RBI has asked NBFCs to strictly adhere to the Income Tax Provisions on cash disbursements. The central bank said that no NBFC should disburse a loan in excess of $20,000 in cash.
Muthoot Finance also highlighted that while some customers in rural areas may go to unorganised lenders, they do not see that as a challenge. Muthoot further said that the company deals with “very secured assets.”
Earlier in March, the central bank had barred IIFL Finance Ltd. from disbursing gold loans, for violation of cash disbursal norms, among other issued.
Muthoot alluded to the IIFL Finance issue without taking the company’s name, saying that the events that transpired two months earlier, may have prompted this action.
Shares of Muthoot Finance are trading 1.5% lower at ₹1,633.5. However, shares of Manappuram Finance continue to trade near the day’s low, down 6%.
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