Not too worried about RBI regulating gold loans: Manappuram

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Not too worried about RBI regulating gold loans: Manappuram

CNBC-TV18 caught up with chairman and managing director of Manappuram General Finance & Leasing, VP Nandakumar, to get his view on the curbs that RBI is trying to enforce on the gold loan segment.

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The RBI barred Manappuram Finance earlier this week from accepting public deposits. It said that acceptance of deposits either by Manappuram Finance or by Manappuram Agro Farms (MAGRO) is punishable with imprisonment. The stock reacted sharply correcting 20% immediately, and is down 7% since.

CNBC-TV18 caught up with chairman and managing director of Manappuram General Finance & Leasing, VP Nandakumar, to get his view on the curbs that RBI is trying to enforce on the gold loan segment.

He says that he is not too concerned about RBI regulating gold loans. "Fall in interest rates going ahead will aid overall loan growth," he says.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: How restrictive could it be for your business if indeed the kind of regulations that RBI is talking about come into place?

A: I don't know if RBI is talking on that at all. What information we get from the RBI circle is they have remained silent on all these things, so I am not able to tell whether anything is there. Unless and until I see something, I cannot comment upon that.

Q: Indications are though that there will be a check both in terms of imposing higher margins and regulating interest rates as well. How would it impact a company like yours?

A: We have higher margins and yields that will be applicable to all. I don't have any worry about that. It might impact the growth negatively, and other thing is the margins as a percent may comes down, but the scope is for the volume to increase. When the interest rate comes down, there is of course very good scope for the business to grow. So it will get balanced in one-two years' time.

Q: Last we heard there where indications that you had sought a meeting with the RBI to resolve some of the issues and the RBI has said no to you. Is that meeting on, where are things with your conversations with RBI at this point?

A: The RBI has asked us to do certain things which we are implementing. Just to take a formal call on that, our body is meeting today, that's all.

Q: What would be the biggest problem according to you - is it the higher margins, is it the loan to value that might change from here on, is it the penalties that might come now from the RBI?

A: Unless I know what is the regulation, I cannot tell whether there is a problem or not. If there is a problem, on the other side there could be some advantage also. If there is a non-due value, if that is brought down, then the scope is there to attract more customers and the volume increase can be there. So in that way, in a few months' time, it will get balanced.