Have not seen much increase in loan loss: Muthoot Finance

Following the sharp correction in gold prices, Muthoot Finance , the gold financer is seeing more borrowers abandoning gold jewelleries; however this has not caused much increase in loan loss, Managing Director George Alexander Muthoot told CNBC-TV18 today.

"For us NPA (non performing assets) are loans which technically have become NPAs because of elapse of time, these are not loans where somebody has not paid 13-14 installments. So for us loan losses are important and not the NPA. Loan losses which we write off in the book have not increased and I think it must be 0.1% of total advances," Muthoot said.

Also read: 15-20% price change unlikely to hurt biz: Gold Loan body

He further stressed that although instances of borrowers abandoning gold has increased, its not very significant. It may go up to 2 percent from earlier 1 percent of total outstanding loans in current quarter. The NBFC also has an option of auctioning the abandoned gold, however certainly auction value has reduced after fall in yellow metal prices. Muthoot Finance is seeing more demand for gold loans as not only individuals but even banks holding huge quantities are looking to encash their investments. Gold prices had corrected nearly 8-10 percent in April.

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