Dalal Street Investment Journal — July 10-23, 2017

52 DALAL STREET INVESTMENT JOURNAL I JULY 10 - 23 , 2017 DSIJ.in^

Cover Story

George Alexander Muthoot

Managing Director, Muthoot Finance

How is GST expected to affect

the pricing of your services and

how do you see demand for

your services getting impacted?

Our pricing will be based on the

stipulations of GST rules. Considering

the market conditions, demand for gold

loans will continue to rise. Proposed tax

rate under GST for gold is 3 per cent as

against 5 per cent VAT in Kerala and 1

per cent VAT in other states. For gold

ornaments, most of the jewellers in

Kerala are paying VAT at 1.50 per cent

under compounding system. Hence, the

price of gold ornaments is poised for an

increase throughout the country.

How is Muthoot embracing

digitisation?

The transformation to digitisation started

a few years back and the pace has

increased drastically in the last two years.

As a result, every aspect of our business

functions and operations is now almost

completely digitised. An enhancement to

this is a continuous process.

Customer-focused digitisation was the

company’s motto from Day-1 and, as a

result, we have a complete web and

mobile solution for our customers'

convenience, which is enhanced almost

on a daily basis. Hence, we are able to

communicate and connect effectively

with our customers and this digital

strategy is enabling us to bridge the gap

in reaching out to new target segments

faster than ever before.

Spend on digitisation is need-based,

which is current and future envisaged.

We leave no stone unturned to ensure the

best possible user experience to maintain

and increase our high level of customer

satisfaction.

What trend do you see in Gross

NPAs and Net NPAs for Muthoot

Finance in the upcoming

quarters?

Asset quality has never been a concern

for the company as the loans have 100

Ashutosh Khajuria,

Executive Director & CFO, Federal Bank

What is your outlook on NBFC

sector in India?

With the regulatory supervision over

NBFCs and their reach in the nooks and

corners of the country, NBFCs bring

diversity to the financial sector. They have

already become an integral part of the

economy and have ample scope for

further growth in the coming years,

provided a robust and well-supervised

credit risk management policy is put in

place.

In your view NBFCs are

grabbing market share from

traditional banks like yours?

Yes, banks have an edge in terms of their

ability to raise CASA and comparatively

lower cost retail term deposits from the

public additionally, but it comes with

regulatory costs in the form of Cash

Reserve Ratio, Statutory Liquidity Ratio

and the directed lending to priority sector,

agriculture, micro and weaker sections at

regulated rates. There is no question of

grabbing of market share by NBFCs. They

function on a relatively different platform

and we would like to see them as agents

complementing our efforts. NBFCs

would, in fact, aid in initiation of these

un-banked or under-banked population

to formal banking system.

What is the outlook on vehicle

finance and LAP products at

Federal bank? Which segment is

growing the fastest for you?

LAP has traditionally been our strong

area. We continue to focus on it

considering the opportunity available in

the market. We have tailor-made and

well-priced products both in SME and

retail sectors in LAP. There are some

sectors like vehicle finance where

NBFCs are gaining share from

commercial banks, but we are seeing our

share quite stable. We have got into

agreements with a number of dealers for

inventory financing and retail business,

which is why we have not only stood our

ground but have grown significantly too

in this sector.