Muthoot Finance was originally incorporated as a private limited company on March 14, 1997 with the name “The Muthoot Finance Private Limited” under the Companies Act. Subsequently, by fresh certificate of incorporation dated May 16, 2007, its name was changed to “Muthoot Finance Private Limited”. The company was converted into a public limited company on November 18, 2008 with the name “Muthoot Finance Limited” and received a fresh certificate of incorporation consequent upon change in status on December 02, 2008 from the RoC.
The company is the largest gold financing company in India in terms of loan portfolio. It provides personal and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements. The company’s Gold Loan portfolio as of March 31, 2010 comprised about 2.8 million loan accounts in India that it serviced through 1,605 branches across 20 states and two union territories in India. According to the IMaCS Industry Report 2009, as of March 31, 2010 its branch network was the largest among gold loan NBFCs in India. It has since increased its branch network to 1,921 branches as of August 31, 2010, and used its branch network to serve an average of 53,989 customers per day in the month of August 2010. As of August 31, 2010, the company employed 12,220 persons in its operations.
The company is a “Systemically Important Non-deposit taking NBFC” headquartered in the southern Indian state of Kerala. The company issue secured non-convertible debentures called “Muthoot Gold Bonds” on a private placement basis. Proceeds from the issuance of Muthoot Gold Bonds form a significant source of funds for their Gold Loan business. It also relies on bank loans and subordinated debt instruments as irs sources of funds. As of March 31, 2010, it had Rs 2,719.25 crore in outstanding Muthoot Gold Bonds and Rs 2,561.27 crore in other borrowings. The company also raises capital by selling a portion of its loan receivables under bilateral assignment agreements with various banks that purchase their portfolio primarily for meeting their priority sector lending commitments.
The company’s customers are typically small businessmen, vendors, traders, farmers and salaried individuals, who for reasons of convenience, accessibility or necessity, avail of its credit facilities by pledging their gold jewellery with it rather than by taking loans from banks and other financial institutions. It provides retail loan products, primarily comprising Gold Loans. The company also disburses other loans, including those secured by Muthoot Gold Bonds. The company’s Gold Loans have a maximum 12 month term and its average disbursed Gold Loan amount outstanding was Rs 26,183.0 per loan account as of March 31, 2010. In the year ended March 31, 2010, the company’s retail loan portfolio earned, on average, 1.67% per month, or 19.94% per annum.