Muthoot Finance Ltd, one of the country’s largest gold loan companies, plans to venture into the insurance sector. “We have applied for the licence, but are yet to decide on whether (it should be) life insurance or general insurance,” said George Muthoot Jacob, Senior Vice-President, Muthoot Group.
Currently, the company is evaluating various options. “Also, we are on the lookout for a suitable overseas partner for the proposed venture,” he said. According to him, the initial investment would approximately be ₹300 crore.
He said since the company was already in the insurance brokerage business, “an own insurance business is only a natural extension”.
Jacob was in Chennai to launch the company’s new gold loan scheme, Asha, designed exclusively for women.
The new product is a flexible scheme where the rate of interest is directly linked with the ‘rate per gram’ at which customers pledge their jewellery.
For example, if a customer borrows at the rate of 65 per cent per gram of gold, the interest rate will be proportionately lower. Thus, the lowest possible interest rate under the scheme is 12 per cent. However, one can borrow a maximum of Rs 50,000 at this rate, he explained. According to him, the normal interest rate is between 14–24 per cent, under various other schemes. With this product, the company hopes to expand its reach further in the semi-urban and rural markets. Muthoot Finance has 4,500 branches across the country with Rs ₹26,387 crore worth asset under management – in its gold loan portfolio.
Luxury resortIn another development, the Muthoot Group recently acquired a 26-room luxury resort in Costa Rica. The company’s leisure and hospitality venture – Raxa Collective — has five properties in Kerala with a total inventory of 100 rooms.
“We are in the business of niche boutique hotels, and the Costa Rica property fits well with our model,” Jacob said.