Credibility of gold financing biz up with entry of banks: MFL

AHMEDABAD: With more number of banks foraying into gold-based financing, the credibility of the business has increased tremendously, Managing Director of India's largest gold loan lender, Muthoot Finance Ltd's (MFL), George A Muthoot, said here today.

Muthoot was here to announce launch of the MFL's initial public offer (IPO) that opens April 18, and is expected to raise up to Rs 900 crore.

"Earlier, business of giving loan against gold was perceived as only meant for poor man who was desperately in need of cash," Muthoot told reporters here.

"But now with more number of banks, especially, the new age banks, offering gold financing, the credibility of the business has increased tremendously," he said.

Muthoot said that it has worked to MFL's advantage which is the largest gold financing company in the country.

"Now gold loan business is no longer only for the poor in need of money. Loans are now being taken by common people and businessmen mainly as bridge loan or a stop-gap arrangement," he said, adding that its business had increased 100 per cent last year.

MFL's IPO issue is priced in a band of Rs 160-175 per share, would see the company issuing 5.15 crore fresh equity shares or 13.85 per cent dilution of the promoters holding.

The company with nationwide presence with 2,611 branches spanning 25 states barring the Northeast states, has outstanding advance of Rs 13,000 crore as of November last.