Following a surge in demand for gold loans, Muthoot Finance has raised its assets under management (AUM) growth guidance for the fiscal to 40%, from 25-30% earlier.
Last week, the country’s largest gold loan lender said its gold loan AUM had crossed Rs 1 lakh crore. As of the December quarter, gold loan AUM stood at Rs 92,964 crore, a 34.3% year-on-year rise.
ALSO READTop 5 cheapest silver ETFs in 2025
Speaking to FE, managing director George Alexander Muthoot attributed the strong demand to tightening credit in the unsecured and microfinance segments, along with a sharp rally in gold prices. “People need money for consumption. If they don’t get it, the next option is to monetise the gold they have,” he said.
Banks and financial institutions have been reducing exposure to unsecured loans after the Reserve Bank of India flagged concerns over rising delinquencies. The microfinance sector is also facing high delinquencies and over-leveraging. The industry is enforcing tighter guardrails by limiting the number of lenders per client and capping total exposure, making it harder for small borrowers to access credit.
Muthoot noted that the strong rally in gold prices is fuelling the loan demand. “People now feel they have something valuable that can be monetised.”
Gold prices have been scaling new peaks in recent days amid geopolitical tensions in the West Asia, global trade uncertainties, and speculations over the US Federal Reserve’s monetary policy.
Meanwhile, Muthoot Finance on Wednesday said S&P Global Ratings has upgraded its long-term issuer credit rating from ‘BB/B’ to ‘BB+/B’ with a ‘Stable’ outlook. The rating agency said the upgrade reflects its expectation that Muthoot will maintain “excellent capital and earnings” over the next 12 months.
Cabinet approves incentive scheme for low-value UPI transactions – Check details
“We expect some stress in the asset quality of Muthoot’s microfinance subsidiary, in line with the industry. That said, we expect the company to maintain overall asset quality, thanks to the dominance of its highly-collateralised gold loan portfolio,” S&P added.
Shares of Muthoot Finance on Wednesday rose over 4% to close at Rs 2,420 on the NSE.
» Read More
