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Interview: Muthoot Finance Dy MD Alexander George says, “Monthly customer transactions double to 8.25 lakh”

In an interview with TechGraph, Alexander George Muthoot – Deputy Managing Director of Muthoot Finance, said: “We have witnessed doubling of monthly customer transactions (loan renewal, top-ups, interest payment), touching 8.25 lakh in the month gone by.”

Here’s an excerpt:

TechGraph (TG): Muthoot Finance recently launched digital products for the customer. Can we know more about them?

Alexander George Muthoot: I am glad to share that we have recently launched Muthoot Loan@Home Service through which customers can avail gold loans from their home itself. This is further powered by a video KYC feature that has also been launched to reduce turnaround time for onboarding customers. 

Further, customers can also avail online interest payment and top-up functionalities using our iMuthoot Mobile App and Muthoot Online services. In addition to this, for boosting our digital usage further, we have also started incentivizing our customers with a cash-back scheme who service interest payments on our web portal Muthoot Online. 

This service will also be available on our iMuthoot Mobile App by July-end. We also have a robust ChatBot on our website and mobile platforms which helps us address customer queries instantaneously. 

TG: These newer segments still have room to grow. And considering your commitment towards building them, will it affect the Muthoot Finance profitability runway?

Alexander George Muthoot: Digital transactions definitely bring about higher efficiency in fund management for both customers and us. The reduced footfalls at branches bring down operational costs. We are driving our customers to increasingly adopt all our range of digital channels to improve ease of servicing and reduce dependency on a physical visit to branches. 

These digital services are helping both loan disbursals and loan and interest repayments in a secure environment, thereby offering customer convenience on both ends of servicing. 

TG: Talking about the core gold business, what is the AUM growth that you are targeting for FY21?

Alexander George Muthoot: During the year gone by i.e. FY19-20, we achieved a book size growth of 22%. For the current financial year FY20-21, we are targeting for 15-20% growth in AUM. 

TG: In FY20, profit growth was at 51% high. What was the reason behind this high performance? Was this one-off or would that continue?

Alexander George Muthoot: In FY20, our revenues from operations grew 28% over last year. Our collections were also better in absolute terms in FY20. More and more customers are switching towards adopting digital modes of servicing which is bringing cost efficiencies. 

In the current financial year FY21, we are aiming for an AUM growth of 15- 20%. We intend to sustain the momentum created in FY20 into FY21. With increasing gold prices, the pledged asset just gets stronger and we see favorable prospects for improved growth in our loan book. 

Further, the need for credit will witness an increase across families and businesses. With a robust marketing campaign currently live titled “Gold Loan is Good” and “Sunheri Soch”, we strongly feel we should be able to sustain the momentum. 

Further, our associations with Shri Amitabh Bachchan Ji and Chennai Super Kings have also contributed to our business growth in a big way. We are confident that these partnerships will help us grow even further in the current year.   

TG: The past few months have been challenging for the businesses, how did you deal with collecting and disbursing of loans during this phase?

Alexander George Muthoot: The last few months have certainly been challenging for everyone, including us. However, new challenges also bring with them newer opportunities. With the introduction of several digital offerings, we have seen encouraging uptake in our digital services. 

We have seen a four-fold jump in the quantum loan disbursals via our digital platforms, to the tune of ₹224 Crore in June compared to February. Moreover, customers are increasingly keen to service interest payments on our Mobile App and Website, which has driven a 2.5x surge in digital interest collections, at ₹139 Crores last month.

Besides, we have witnessed doubling of monthly customer transactions (loan renewal, top-ups, interest payment), touching 8.25 lakh in the month gone by. All this was made possible by efficient and highly scalable systems, which is reflected in the 73% growth of unique customers transacting on our digital platforms in June when compared to February.

During the Lockdown period, we ran a specialized and customized marketing campaign for customers to adopt our digital platforms. Educational videos explaining digital processes were shared with our customers and employees. 

Our dedicated team of 40,000+ staff members has also done a great job in educating and onboarding our customers to adopt these newer modes of digital disbursements and payments. 

TG: Talking about the recovery, how do you see the recovery of loans during the COVID-19 pandemic?

Alexander George Muthoot: Quite as expected, in Q1, we did face some lockdown related challenges. However, collections picked up gradually as more and more number of branches started functioning, as per the Ministry of Home Affairs (MHA) Guidelines for NBFCs. 

Presently, with approximately 95% of our branches currently operating, our collections have significantly improved in June and July. The process of Unlocking and opening-up has also helped notably. Also, in the case of gold loans, requests for a moratorium are minimal which is also contributing to better recoveries. 

On the other hand, being an emotional and value appreciating asset, customers always have a greater tendency to renew their loans. Rising gold prices will also encourage customers to release their gold after their loan purpose is achieved. 

TG: What is your position when it comes to liquidity?

Alexander George Muthoot: We are quite comfortable with our present liquidity position and do not see any challenges in meeting our growth projections during FY 21. Further, in Oct 2019 and Feb 2020 we raised nearly $450 million and $550 million respectively in the international bond markets which are also available as a cushion in case of growing demand. 

Additionally, our collections have shown significant improvement in recent months and we expect it to remain so in times to come. Considering all this, we find our liquidity position quite comfortable. 

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