“The trickle effect… will take maybe a quarter or two,” he said, explaining that the company’s borrowings, through bank loans and non-convertible debentures, are not repriced instantly.
Muthoot also noted that the company does not expect a significant boost to profitability from the rate cut. “We maintain our net interest margins (NIMs) at maybe 11% and spread at 9%,” he said, adding that any decline in funding costs will be passed on to customers.
While the RBI has also allowed higher gold loan limits for small-ticket loans—permitting banks and non-banking finance companies to lend up to 85% of the gold’s value—Muthoot clarified that the new rules will take effect only from April 2026.
Until then, Muthoot Finance will continue to offer loans at a maximum of 75% of the gold’s value, with the average on its books around 58%.
Importantly, the 85% limit includes both the principal and interest, which may restrict the actual disbursal customers receive.
Despite rising compliance costs, Muthoot Finance continues to expand, targeting 100-200 new branches annually. The company has already secured licences for 115 new outlets.
On the increasing competition from banks, Muthoot said the market itself is growing. “The pie is increasing… more people are seeing gold loans as a smart route,” he said.
The company is maintaining its guidance of 15% loan growth for now but may revise it upwards depending on first-quarter trends.
Also Read: RBI’s new gold loan rules: 8 changes borrowers should know about
Also Read: Muthoot Finance a likely rally candidate over Manappuram after new gold loan norms: Morgan Stanley
Muthoot Finance has a market capitalisation of ₹1,01,353.57 crore. Its shares have gained nearly 44% over the past year.
For the entire interview, watch the accompanying video
