Gold auction notices by private lenders in regional dailies spread over more than a full page are becoming regular, which for the uninitiated may indicate the financial stress of the pandemic not just in the sections. economically weak, but also in the salaried class.
Main NBFC Muthoot Fincorp recently published a multi-page auction notice listing approximately 24,000 mortgage items for auction in July at its various branches because customers did not pay on time.
Legal notices
But the lender would not attach importance to the publicity and argued that “events of default continue to remain within acceptable limits”.
This is legal publicity, he said Activity area. Actual bids are just under one percent and are not of concern as 99 percent of customers either repay or renew their loans.
“We have to take these steps; otherwise, we would be violating Reserve Bank NPA standards, which will not be seen as good in the eyes of rating agencies, banks and the RBI. ”
Additional time to pay
Upon special request, the NBFC grants customers additional time to exchange their gold. “In fact, we would like customers to keep their gold. It is important for us too. Due to Covid, we have a special scheme for customers to renew their loan at 11.99%. Many of these actions are taken in a thoughtful manner. ”
In fact, John Muthoot noted that the gold loan portfolio experienced healthy growth in fiscal year 2020-21. Coupled with the rescheduling of previous auctions due to lockdowns, this had resulted in a higher number of loans being auctioned.
Overall, this is a small percentage compared to the total disbursements of 39,500 crore during the period, he said. But John Muthoot agreed that the second wave of Covid-19 and the resulting lockdown disrupted economic activities and compromised the financial situation of customers.
Element of uncertainty
“But if we compare it to the first wave of March 2020, the element of uncertainty is evident. The community has shown resilience and preparedness to deal with the situation. The lockdown has been relaxed in most states. Normality will allow the common man to return to work and resume his activities â€.
According to him, gold loans continue to experience healthy demand. “The common man is our customer and his financial needs continue to be our focal point. We are in constant contact with customers and our product research capabilities allow us to understand their needs. The demand for new loans increases after the lockdown releases, â€he added.
Regarding the business outlook for the next few quarters, Muthoot said: “We remain optimistic about the growth of the Indian economy. The Center as well as the Central Bank reiterated their commitment by announcing packages or capital investments to propel growth. As businesses reopen and operations resume, we are sure the economy will rebound. We expect 12-15% growth as demand increases.
