CRISIL upgrades gold loan lender Muthoot Fincorp's rating

Gold loan lender, Muthoot FinCorp on March 22 said rating agency CRISIL has upgraded its rating to “A+” (Stable) reflecting the company’s performance in the gold loan business and improvement in asset quality.

Muthoot FinCorp is part of the Kerala-based Muthoot Pappachan Group. The CRISIL rating upgrade also underscores a high degree of safety regarding the timely servicing of NCDs, the company said in a release.

Muthoot Fincorp’s gold loan business AUM (asset under management) grew 24 percent during the last three quarters of the current fiscal and is expected to grow by 28 percent for the FY 2020-21.

The company's gold loan portfolio accounted for about 67 percent of the group’s overall AUM as of December 31, 2020, and 87 percent of its profits.

Gross non-performing assets (GNPAs) have been retained at 1.0 -1.8 percent under the gold loan portfolio during the last five fiscals, the company said, adding, as of the end of December 2020, GNPA and credit cost stood at 1.3 percent and 0.2 percent, respectively.

“The rating upgrade by CRISIL is very significant in strengthening the confidence of our lenders and retail investors. The upgrade will also enable the company to widen its retail and corporate investor base,” said Thomas John Muthoot, Chairman & Managing Director of Muthoot Fincorp.

The four NBFCs under the Muthoot Pappachan Group are Muthoot FinCorp, Muthoot Capital, Muthoot Microfin, and Muthoot Housing Finance. The group is engaged in primarily gold loan business apart from two-wheeler loans, used car loans, housing loans, small business loans, and microenterprise loans.