![\"IPO-bound](\"https:\/\/static.toiimg.com\/thumb\/msid-131178206,imgsize-474719,width-400,height-225,resizemode-4\/-.jpg\")
<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\nMumbai: <\/span>IPO-bound Muthoot Fincorp sees increased duty on gold adding to loan growth as higher prices post the hike expand borrowing headroom, even as the company has begun tracking end-use of loans from April in line with Reserve Bank of India norms and finds that a majority 70% are for productive purposes rather than consumption.Explaining the impact of rising gold prices, Shaji Varghese, CEO of Muthoot Fincorp, said, \u201cHigher gold prices increase the loan value customers can avail, which can support AUM growth. It makes gold loans more attractive compared to other borrowing options.\u201dThe company has also operationalised new regulatory requirements on tracking loan usage from April 2026. \u201cIt\u2019s early days, but based on past experience and internal estimates, about 70% of loans are for productive purposes. The remaining 30% is for emergencies, education, and similar needs. Many borrowers are shopkeepers, retailers, and farmers.\u201dOn the proposed public issue, Varghese clarified that there is no fixed dilution target beyond regulatory requirements. \u201cThe board has only approved an Rs 4000 crore equity raise, and valuations are not in place. No shareholders are selling, and there is no OFS\u2014it is entirely primary issuance,\u201d he said. \u201cThere is a regulatory requirements, which mandate a minimum public shareholding of 10%. Beyond that, dilution will depend on valuation closer to listing.\u201dAddressing concerns around geographic concentration and external risks, he said the company\u2019s footprint has broadened significantly. \u201cWe are now a nationally present company with growth coming from the north, west, and east. Our dependence on the south, especially Kerala, has reduced significantly,\u201d he said, adding that the state now contributes \u201ca single digit\u201d share. He also downplayed the impact of NRI-linked exposure. \u201cNRI exposure is not a major factor for us.\u201dOn asset quality, Varghese said there are no signs of stress. \u201cNot at the moment. Our loan-to-value ratio is below 60%, so even if there is some stress, the portfolio is well protected unless there is a sharp correction in gold prices.\u201d The company currently holds around 62.4 tonnes of gold as collateral.Muthoot Fincorp has also been diversifying its funding mix alongside equity plans. \u201cWe have been diversifying our liability profile. Earlier we relied heavily on bank borrowings, but now we have expanded into capital markets, mutual funds, foreign currency borrowings fully hedged, and NCDs,\u201d he said.On sector dynamics, Varghese maintained that competition from banks is expanding the market rather than compressing margins. \u201cNo, this is more a market expansion than a market share battle,\u201d he said. \u201cThere could be some pressure from cost of funds, but scale efficiencies should offset that. Margins are unlikely to shrink significantly.\u201d He said return on assets stands at about 4.16% while net interest margins are around 10.31%, with stability aided by operating leverage.The CEO also underscored the structural growth opportunity in gold loans. \u201cThe environment is favourable. Regulation is stable, unsecured lending has slowed, and gold loans are gaining acceptance as a mainstream product,\u201d he said, noting that only about 40% of the segment is formalised. \u201cThe real competitor is the informal sector. Formalisation will drive growth.\u201dOn timelines for the IPO, Varghese indicated that the process is at an early stage. \u201cIt is too early to give timelines. We have just received board approval and will now appoint bankers and lawyers and begin preparing the DRHP. The process is subject to regulatory approvals and market conditions, so timelines are not fully in our control,\u201d he said. <\/div>\n