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Top gold loan rates and comparison, BFSI News, ET BFSI

December 5, 2021 root Personal Finance

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To take care of a financial emergency, an individual has various options. These include taking a personal loan or redeeming their investments in financial instruments like the provident fund, mutual funds etc.

When it comes to borrowing from a financial institution, other than availing a personal loan, one can also opt for a gold loan. If you are planning on taking a gold loan (or a loan against gold), here is what you need to know.

What is a gold loan?
A gold loan is a loan against gold. It is a secured loan where gold articles such as gold jewellery, ornaments etc. are taken as collateral by the lending bank/NBFC. The loan is given to the borrower against this gold as collateral.

Where to avail gold loan?
Apart from banks such as SBI, ICICI Bank, HDFC Bank etc., non-banking finance companies (NBFCs) also offer gold loans to individuals. NBFCs which offer gold loans include Muthoot Finance, Manappuram Finance etc.

Minimum and maximum gold loan amount
The amount of loan that an individual can get against a gold article will vary from lender to lender. For instance, ICICI Bank offers gold loans between Rs 10,000 and Rs 1 crore. Whereas the State Bank of India (SBI) offers gold loans between Rs 20,000 and Rs 20 lakh. While Muthoot Finance offers gold loans starting from a minimum amount of Rs 1,500 with no maximum limit.

Tenure of gold loan
The tenure of the gold loan will also vary from lender to lender. For instance, HDFC Bank offers gold loans with tenures between three months and 24 months. Maximum period of repayment of an SBI gold loan is 36 months. Muthoot Finance offers different types of gold loan schemes that come with different tenures.

Interest rate on gold loan charged by bank and NBFC

Bank / NBFC	Gold Loan Interest Rate	Processing Fee
Bank of Maharashtra	7.00%	Rs.500 to Rs.2000 + GST.
SBI	7.00% to 7.50%	0.50% + GST
Punjab & Sind Bank	7.00% to 7.50%	Rs.500 to 10000 max
Union Bank	7.00% to 9.90%
Canara Bank	7.35%	Rs.500 to Rs.5000
Indian Bank	7.50% to 8%	0.56% of the limit sanctioned
South Indian Bank	8.00% – 21.87%
Karnataka Bank	8.49% to 8.79%
Uco Bank	8.50%	Rs.250 to 5000 max
Federal Bank	8.50% onwards
HDFC Bank	8.50% to 15.97%	1% of disbursal amount
Punjab National Bank	8.75% to 9%	0.75% of loan amount
Bank of Baroda	9.00% to 9.15%	Applicable charges + GST
ICICI Bank	9.00% to 19.76%	1% of loan amount
Central Bank of India	9.05%	0.75% of loan amount
City Union Bank	9.50%	Nil
Karur Vysya Bank	9.50% to 10.00%	0.50% (inclusive of Appraisal charges)
Dhanlaxmi Bank	9.65% (Fixed)	1% + GST
J & K Bank	10.00%	Rs 500 + GST
Indusind Bank	10.00% to 16.50%	1% of loan amount
Kotak Mahindra Bank	10.00% to 17.00%	Upto 2% + GST
Bandhan Bank	10.99% to 18.00%	1% + GST
Axis Bank	13.50% to 14.50%	0.5% + GST
Muthoot Finance	22% p.a. with 4% rebate if 100% interest is paid monthly
AU Small Finance Bank	Up to 24%	1% or Rs. 500 whichever is heigher

All data sourced from Economic Times Intelligence Group (ETIG)
Interest rate on gold loan sorted based on increasing order of maximum interest rate charged by bank/NBFC
Interest rate data as on December 4, 2021What are the documents required?
To avail a gold loan, the bank or NBFC will ask you to provide various documents. Documents normally required include your proof of identity such as PAN, Aadhaar etc. and proof of address like Aadhaar, passport, Voter-ID card etc, and your photograph. Any additional documents required would vary from lender to lender.

What are the charges?
For loans like home, auto and personal loans, the borrower is usually required to pay processing charges/fees to avail the loan. While taking a gold loan, apart from processing fees, an applicant may be asked to pay for valuation of gold which will be used as collateral by the lending institution. For instance, HDFC Bank charges Rs 250 as valuation fees for loan up to Rs 1.5 lakh and Rs 500 for loan over Rs 1.5 lakh.

Apart from processing fees and valuation charges, a bank can also charge documentation and foreclosure charges.
Therefore, you should check with the bank and/or NBFC for all the charges that will be levied before availing the loan.

Disclaimer: The data/information given above is subject to change, hence before taking any decision based on it, please check terms and conditions with the bank/institution concerned.

For any queries or changes, please write to us on etigdb@timesgroup.com or call us at 022 – 66353963

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Cost of funds has not bottomed out, still room for lowering

November 22, 2021 root Personal Finance

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We have an adequate CRAR of 32-34% and we think we can leverage it more.

Manappuram Finance reported an 8.8% year-on-year decline in its consolidated net profit for the second quarter despite consolidated assets under management increasing 5.7% YoY to Rs 28,421.63 crore. VP Nandakumar, MD & CEO, talks to Rajesh Ravi on the company’s performance and future outlook. Excerpts:

Net profit has declined YoY despite AUM reporting an increase?

The loan portfolio declined during the first quarter and we started growing only after the first half of the second quarter. Secondly, we lowered our pricing when targeting large ticket sizes. Earlier, it was uniform pricing for all loans. To ensure sustained growth, we changed our strategy. Cost also increased as employees are back and travelling. We also increased our publicity expenses and incentives.

Do you mean that there will be margin compression going forward due to competition?

Competition is seen only in larger ticket sizes of Rs 5 lakh and above. We were losing in that segment due to competition. With the new pricing strategy, we are gaining ground, but our yield may come down by 2%. This will be compensated with higher branch efficiency. We have an adequate CRAR of 32-34% and we think we can leverage it more.

What is the outlook for the quarter and the fiscal?

We are giving guidance of 20% in AUM and 20% in Return on equity (ROE). The decline in profitability is a temporary phenomenon and our ROE may go slightly below 20% for a while before bouncing back. We aim not only for profitability but also growth and this ensures the sustainability of the company. Profitability will improve in one or two quarters.

NPA has increased during Q2.

NPA has moved up and we have provided for it in anticipation. There was no surprise. NPA will come down going forward.

How is new customer acquisition? There is a tight competition in the gold loan sector.

Demand is good and we are able to achieve growth every day due to the new strategy. The collection is also improving even in the non-gold sector. Acquisition of new customers is back to the pre-pandemic level.

What about the cost of funds? Do you feel that it has bottomed out?

No, it has not bottomed out. Still, there is room for lowering the cost of fund. Our legacy NCD cost is around 10%, while our average borrowing cost is below 8%. For incremental borrowing, our cost will come down further.

Average LTV of your gold loan portfolio?

The average LTV of our portfolio is 64% according to current gold price.

How are your non-gold businesses doing? Will the share of non-gold businesses increase in coming quarters?

In microfinance, collections are seen improving and it has reached 93% in Q2. It may touch 96% in Q3. The resilience of the microfinance industry is evident despite the pandemic. In one or two years, we may have to raise capital for growth. Some of the segments which we wish to grow are affordable home lending and commercial vehicle financing.

What about the expansion of branches?

We have given application for opening 100 new branches. We are strong in south, and there are ample opportunities in north, east and western parts of the country.

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Manappuram Finance Q2 net profit declines at Rs370 crore

November 14, 2021 root Banking & Finance

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Manappuram Finance Ltd has reported a consolidated net profit of ₹370 crore for the second quarter of FY 22. The profit is lower by 8.8 per cent compared to ₹ 405.44 crore reported in the year-ago quarter.

However, the company’s consolidated assets under management (AUM) grew by 5.7 per cent to ₹28,421.63 crore from ₹26,902.73 crores a year ago, and by 14.8 per cent in comparison to ₹24,755.99 crore reported in the preceding quarter (Q1).

Net profit for the standalone entity (which excludes subsidiaries) was at ₹355.00 crore against ₹405.56 crore in the year-ago quarter. Total consolidated operating income for the quarter amounted to ₹1,531.92 crore compared to ₹1,565.58 crores in the year ago quarter.

The Board approved payment of interim dividend of ₹ 0.75 per share with face value of ₹2.

V P Nandakumar, MD & CEO, Manappuram Finance Ltd said, “The key takeaway is the robust growth recorded during the quarter in our business volumes, be it gold loans, microfinance, or our home and vehicle loans portfolio. It reflects the emerging recovery in the rural and unorganized sectors of the economy and going forward we expect to sustain the growth along with improved profitability.”

The company’s gold loan portfolio stood at ₹18,719.53 crores, registering a strong growth of 13.2 per cent over ₹16,539.51 crores in the preceding quarter. The number of live gold loan customers increased from 24.1 lakh to 25.1 lakh in this period.

The subsidiary, Asirvad Microfinance ended the quarter with an AUM of ₹7,162.49 crore, a sharp increase of 44.1 per cent in comparison to ₹4,971.03 crore in the year ago quarter. The home loans subsidiary, Manappuram Home Finance Ltd., reported an AUM of ₹732.19 crore (₹620.62 crore in Q2 of FY2021) while its Vehicles & Equipment Finance division posted an AUM of ₹1,267.08 crore (₹1,062.28 crore in Q2 of FY2021). In aggregate, the company’s non-gold loan businesses account for a 34 per cent share of its consolidated AUM.

Average borrowing costs for the standalone entity declined by 67 basis points to 7.94 per cent during the quarter. The gross NPA (standalone) stood at 1.59 per cent with net NPA reported at 1.30 per cent The company’s consolidated net worth stood at ₹7,967.90 crores as of September 30, 2021. The book value per share was at₹94.14 and its capital adequacy ratio (standalone) stood at 31.84 per cent.

On a consolidated basis, the total borrowings of the company stood at ₹25,024.14 crores while the total number of live customers was 52.11 lakh as of September 30, 2021.

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Manappuram Finance Q2 net profit declines 8.8% to Rs 370 crore

November 14, 2021 root Banking & Finance

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NBFC Manappuram Finance on Saturday reported a 8.8% year-on-year (y-o-y) decline in its consolidated net profit for the second quarter at Rs 369.88 crore. The non-banking financial company (NBFC) had posted a consolidated net profit of Rs 405.44 crore in Q2 of FY21.

However, the company’s consolidated assets under management (AUM) grew by 5.7% to Rs 28,421.63 crore from Rs 26,902.73 crore a year ago, and by 14.8% in comparison to Rs 24,755.99 crore reported in the preceding quarter (Q1).

The Kerala-based lender, which also operates a home loan, microfinance and commercial vehicle-leasing subsidiary, has reported a standalone net profit of Rs 355 crore, a decline of 12.47% from Rs 405.56 crore reported in the year-ago quarter. In aggregate, the company’s non-gold loan businesses account for a 34% share of its consolidated AUM.

Sharing the results with the media, V P Nandakumar, MD & CEO, said, “The key takeaway is the robust growth recorded during the quarter in our business volumes, be it gold loans, microfinance, or our home and vehicle loans portfolio. It reflects the emerging recovery in the rural and unorganised sectors of the economy and going forward, we expect to sustain the growth along with improved profitability.”

The company’s gold loan portfolio stood at Rs 18,719.53 crore, registering a strong growth of 13.2%, over Rs 16,539.51 crore in the preceding first quarter. The number of live gold loan customers increased to 25.1 lakh from 24.1 lakh in the first quarter.

The gross non-performing assets (standalone) stood at 1.59% with net NPA reported at 1.30%.

Average borrowing costs for the standalone entity declined by 67 basis points during the quarter, to 7.94%.

The board also appointed Shailesh Jayantilal Mehta as the chairperson of the company.

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S&P upgrades credit ratings of Manappuram Finance

October 28, 2021 root Banking & Finance

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International rating agency S&P has upgraded the long term issuer credit rating of Manappuram Finance Limited from “B+” to “BB-” with stable outlook. The rating agency also affirmed the ‘B’ short-term issuer credit rating on the company.

According to the Rating Rationale released by S&P, the gold-based lending business of the company has proved to be an effective counterbalance to weakness in India’s micro finance segment. Manappuram Finance is expected to continue to outperform its non-gold NBFC peers over the next 12 months in terms of asset quality and profitability, which would be reflected in the company’s lower credit costs, above-average profitability and strong capitalisation.

Also see: ‘Microfinance lenders should not put profit above social objectives’

V P Nandakumar, MD & CEO, Manappuram Finance, said, “The upgrade reflects the overall recovery in the economy and better prospects for growth. With the unorganised sector also getting back on its feet, we expect improved growth in gold loans and micro finance, as well as our other business verticals.”

High stress likely

S&P also noted that Manappuram’s gold-based lending model with a three-month tenor allows it to recognise asset quality stress early. However, stress will likely remain high in Manappuram’s non-gold portfolio, especially in the micro finance business. Manappuram’s funding profile is also improving with a shift towards longer tenor debt though material exposure to short-term wholesale funding remains.

The agency expects Manappuram’s risk-adjusted capital ratio to stay above 30 per cent over the next 12 months, one of the highest among its rated peers. Core earnings are likely to remain at more than 5 per cent of its average managed assets during this period.

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Top gold loan rates and comparison, BFSI News, ET BFSI

September 11, 2021 root Banking & Finance

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Interest rate on gold loan charged by bank and NBFC

Bank / NBFC	Gold Loan Interest Rate	Processing Fee
SBI	7.00% to 7.50%	0.50% + GST
Bank of India	7.40%	Rs.125 to Rs. 300 per lakh
Canara Bank	7.35% RLLR
Bank of Maharashtra	RLLR + 0.20%	Rs.500/- exclusive of GST.
Uco Bank	8.50%
Indian Bank	7 % Floating
Punjab National Bank	RLLR + 1.95%	0.75% of loan amount
Central Bank of India	MCLR + 0.25%	NIL
Punjab & Sind Bank	7.50%
Federal Bank	8.50% onwards
United Bank	1 Year MCLR (9.35%)
Dhanlaxmi Bank	Starting 9.65% (Fixed)
J & K Bank	One Year MCLR + Spread = 10.00% p.a
Karur Vysya Bank	9.50%
Indusind Bank	10.00% to 16%	Processing Fee – 1%
Kotak Mahindra Bank	10% to 17%	Upto 2%
HDFC Bank	8.85% to 17.10%	1.50% + GST
Bandhan Bank	Competitive rates of interest	1% + GST
ICICI Bank	9% to 19.76%	1% of loan amount
South Indian Bank	1 Year MCLR + 1.60% to 1 Year MCLR + 2.60%
Muthoot Finance	24% to 26%
Axis Bank	14.50%	1% + GST
AU Small Finance Bank	Up to 24%	1% of loan amount
Manappuram Finance	Max 29%
City Union Bank	9.50%
Union Bank	MCLR+0.40% to MCLR+ 2.65%
Bank of Baroda	1 year MCLR+S.P+3%	0.50% + GST
Karnataka Bank	8.49% to 8.79%

All data sourced from Economic Times Intelligence Group (ETIG)
Interest rate on gold loan sorted based on increasing order of maximum interest rate charged by bank/NBFC
Interest rate data as on September 11, 2021What are the documents required?
To avail a gold loan, the bank or NBFC will ask you to provide various documents. Documents normally required include your proof of identity such as PAN, Aadhaar etc. and proof of address like Aadhaar, passport, Voter-ID card etc, and your photograph. Any additional documents required would vary from lender to lender.

Disclaimer: The data/information given above is subject to change, hence before taking any decision based on it, please check terms and conditions with the bank/institution concerned.

For any queries or changes, please write to us on etigdb@timesgroup.com or call us at 022 – 66353963

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Leave a comment gold loan, interest rate, interest rate on gold loan, manappuram finance, muthoot finance, Provident Fund, secured loan

Gold loan business shines as economic stress grows amid pandemic, BFSI News, ET BFSI

August 17, 2021 root Personal Finance

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If you have noticed retail shops and restaurants closing down in your locality and brightly lit jeweller’s shop opening in its place off late, there is a business booming in the middle of the pandemic.

While it is not about people flocking to buy gold, but pawning and selling gold in the time of widespread economic distress brought about by Covid.

It’s not just the local jewellers that are expanding, but the organised ones are on growth mode too.

What gives?

RBI data showed that at the end of FY21, the total value of gold loans outstanding was nearly Rs 60,500 crore — up 82% on the year.

Loan demand has picked up from the beginning of July as Covid-19 cases are declining and economic activities are on the upswing with many states easing restrictions. Gold loan non-banking finance companies (NBFCs) said customer walk-ins have increased during the month.

The average ticket size of loans that customers are opting for is Rs 55,000-60,000, which are rising for many lenders, showing growing signs of distress.

Gold loan NBFCs are seeing more competition in the gold loan business in the current financial year as the special allowance given by the Reserve Bank of India to banks to take an LTV (loan-to-value) exposure against gold loan was valid till March 31, 2021. Banks had witnessed a significant growth in gold loan business due to this special allowance. On the contrary, gold loan NBFCs are allowed an LTV exposure of 75%.

Gold auctions

Mannapuram Finance auctioned Rs 404 crore in the fourth quarter, which shot up to Rs 1,500 crore in the June quarter. The auctions happen when borrowers are unable to redeem their gold and the lenders auction it to recover their loans. Mannapuram had auctioned just Rs 8 crore worth of the yellow metal in the first three quarters of FY21.

Manappuram Finance sees business picking up in the second quarter of the fiscal with the gradual unlocking of the economy. It sees a slight decline in the portfolio in the first quarter before the pick-up.

The expansion

Muthoot FinCorp has expanded its physical network by more than 100 new branches, mainly in the north, east and west regions of India, most of which were in rural and semi-urban areas. The NBFC had opened 70 branches in FY20.

Muthoot’s gold asset under management (AUM) grew at a compound annual growth rate of 12% between FY15 and FY20. In FY21, the portfolio grew 27%.

Pune-based Bajaj Finance has increased its gold loan branches from 480 to 700 in the last financial year and plans to add 100 plus branches this fiscal.

Its loan book grew 52% last year to Rs 2,300 crore while it saw an increase in ticket sizes from Rs 75,000 to Rs 85,000 last year.

Bengaluru-based Rupeek Fintech Private Ltd’s disbursals grew 2.5 times during the calendar year 2020. It has added its presence in 17 more cities, from 10 at the end of 2019.

Shriram City Union Finance is also looking to ramp up its gold financing business this financial year, changing its strategy of focusing on other loan portfolios.

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Asirvad microfinance raises ₹262 crore worth securitised loans

June 23, 2021 root Banking & Finance

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Asirvad Microfinance, India’s fourth largest NBFC-MFI and a subsidiary of Manappuram Finance, has securitised (by direct assignment) microfinance loans worth ₹262 crore in a deal with a leading public sector bank in India.

In a press release, the Chennai-based MFI said that the transaction comes at a time when the microfinance sector in India has faced higher stress from lockdowns imposed after the onset of the second wave of the pandemic.

“This deal, following closely on the heels of an ECB transaction with the US based WorldBusiness Capital, reaffirms the confidence that leading lending institutions have in India’s microfinance sector and its prospects for growth,” Raja Vaidyanathan, MD, Asirvad Microfinance was quoted in the release.

In May 2021, Asirvad raised a $15 million loan from US-based WorldBusiness Capital Inc.

The proceeds from the securitised loan will enable Asirvad to expand its business of providing small loans to low-income women business owners in rural areas to start and expand their income-generating business.

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Manappuram Finance Q4 net rises 18% to Rs 468 crore

May 26, 2021 root Banking & Finance

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For the whole of FY21, the company reported a consolidated net profit of Rs 1,724.95 crore, against Rs 1,480.30 crore in the year-ago period.T

NBFC Manappuram Finance on Wednesday reported a 17.62% year-on-year (y-o-y) increase in its consolidated net profit to Rs 468.35 crore for the fourth quarter of FY21.

The Kerala-based gold loan lender, which also operates a home loan, microfinance and commercial vehicle leasing subsidiary, has reported a standalone net profit of Rs 457.95 crore for the fourth quarter of last fiscal, an increase of 34.79% from Rs 339.76 crore reported in the year-ago quarter.

However, sequentially, the lender reported a 1.58% fall in the net profit, from Rs 465.29 crore in Q3 of FY21. The gold loan portfolio also declined quarter-on-quarter (q-o-q) by 5.61% to Rs 19,077.05 crore in Q4, from Rs 20,211.58 crore reported in Q3FY21.

For the whole of FY21, the company reported a consolidated net profit of Rs 1,724.95 crore, against Rs 1,480.30 crore in the year-ago period.The NBFC’s operating income for the year stood at Rs 6,330.55 crore, up 15.83% from Rs 5,465.32 crore recorded in the previous year.

VP Nandakumar, MD & CEO, said, “Our performance is particularly satisfactory given the multiple challenges faced throughout this pandemic-affected year. Despite all disruptions due to lockdowns, the consequent slowdown in economic activity and consumption and volatility in gold prices, we have succeeded in posting our best-ever full-year results, with significant growth in business and profitability.”

The company’s consolidated assets under management (AUM) stood at Rs 27,224.22 crore, up 7.89% in comparison to Rs 25,234.03 crore in the previous year. Growth was led by gold loans which grew by 12.44% to reach Rs 19,077.05 crore.

The capital adequacy ratio (standalone) is reported at 28.88%. The net NPA position stood at 1.53%, and gross NPA at 1.92% as of March 31, 2021.

The board of directors approved payment of an interim dividend of Rs 0.75 per share of the face value of Rs 2.

Madhu Mohan, general manager, has been re-appointed the chief risk officer for a period of one year with effect from July 17, 2021, the company said in a regulatory filing.

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Manappuram Finance gold loan portfolio may de-grow in Q4

March 12, 2021 root Personal Finance

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Manappuram’s weighted average LTV stands at Rs 2,963 per gram or 63% of the current gold price.

The gold loan portfolio of Manappuram Finance is likely to de-grow in the fourth quarter on account of a decline in gold prices. However, the NBFC expects to achieve a growth of 20% in the current fiscal and is targeting a growth of 10-15% in the gold loan AUM during the next fiscal.

In the third quarter, the company’s gold loan AUM, which constitutes 73.1% of consolidated AUM, increased 24.43% to Rs 20,211.58 crore, from Rs 16,242.95 crore in the year-ago quarter.

The Kerala-based lender, which also operates a home loan, microfinance and commercial vehicle leasing subsidiary, expects the share of non-gold loan business to increase in the coming quarters.

VP Nandakumar, MD & CEO of Manappuram Finance, said gold prices are likely to come down further. “Many vaccines are in the pipeline and the pandemic is seen coming down. There will be a short-term impact on business due to the decline in gold prices. The gold loan portfolio will come down in Q4. Even then, we will achieve the projected growth of 15% in gold loans and a consolidated growth of 20%.”

According to him, the demand for gold loans is stable at around 10-15% despite stiff competition from banks. He said banks are likely to come under pressure on gold loans with higher loan-to-value (LTV) becoming a problem when gold prices fall.

Manappuram’s weighted average LTV stands at Rs 2,963 per gram or 63% of the current gold price. For the standalone entity, the average borrowing cost during the quarter decreased 18 bps to 8.95%. Gold loan customers stood at 26.24 lakh in Q3 – a net increase of 67,000.

Nandakumar said lending is back to normal in the microfinance, home loan, and vehicle financing subsidiary. “Coming to the microfinance business, Asirvad MFL’s AUM stands at Rs 5,358 crore, up by 7.8% QoQ. The collection efficiency from the MFI business was at 99% in December and the disbursement during the quarter was Rs 1,306 crore. We are confident that COVID impact is largely behind us and we foresee improved performance for Asirvad in the coming quarters.”

Nandakumar said the NBFC had approached the RBI a year back for sanction to start an insurance company, but there has been no response so far.

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