Raising funds via external commercial borrowings and non-convertible debentures helped Muthoot Finance Ltd. overcome a liquidity crunch in India, its Managing Director George Alexander Muthoot has said.
“We weren't able to get additional funding from banks last quarter as gold-loan companies were also bracketed with other non-banking lenders,” Muthoot told BloombergQuint in an interview. “Now we have raised external commercial borrowings worth $450 million and non-convertible debentures worth Rs 450 crore recently.”
The company seeks to raise a similar amount through NCDs next week, he said.
According to Muthoot, non-performing assets of gold-loan firms never translate into loan losses as they can recover the dues by auctioning the gold deposited as collateral. “You see a rise in NPAs in the books as we had postponed a few auctions as a customer-friendly measure.”
Shares of the Kochi-based gold-loan firm rose as much as 9.48 percent to Rs711.75, the highest since listing, a day after declaring its September quarter results. Its net profit rose 76.70 percent year-on-year to Rs 899.80 crore on the back of net interest income that rose 35.10 percent to Rs 1,631.50 crore.
WATCH | George Alexander Muthoot on Muthoot Finance's Q2 Results 2019-20
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