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Muthoot Finance Ltd, which hopes to secure a banking licence from the Reserve Bank soon, is going in for an image makeover — from a gold loan company to a ‘financial supermarket’.
“We are moving forward from being just a gold finance company to a financial supermarket where all kinds of financial services provided by major banks could be offered,” says K. P. Padmakumar, Executive Director of the company.
Padmakumar, a former chairman of Federal Bank, told Business Line that the financial services would include wealth management, insurance, foreign exchange and securities businesses.
Already, its recently-launched insurance initiative and foreign remittances business had made impressive performances. “We are no longer a single-product company.”
Muthoot Finance is one of the 26 companies that have applied to the RBI for banking licence.
The RBI shortlist is expected in a couple of months.
Rural focus
Padmakumar, who conceded that the image makeover move was part of its banking project, pointed out that around 70 per cent of Muthoot’s financing was in the rural areas.
About two-thirds of the 4,229 branches were in the rural regions.
“We are ahead of all the NBFCs in pushing financial inclusion by providing loans to the rural people,” he said.
“We are taking our financial products to the last mile.”
Padmakumar said the tough restrictions imposed by the regulators had hit gold loan financing.
Only 60 per cent of the value of the pledged gold could be advanced. “These regulations are a big setback to the gold financing sector,” he said. However, the rural penetration had helped the company weather the challenges in the market.
He said that in just three months, the company’s insurance initiative could secure three lakh people, mostly rural ones. The international remittances wing was now making about two lakh transfers every month — mostly from the Gulf countries to mainly Kerala and Andhra Pradesh.
Padmakumar claimed that Muthoot was best placed to set up a bank considering its branch network, the share of rural credit and the various financial services now being offered.
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