MICROCAPITAL BRIEF: Muthoot Fincorp of India to Offer $19m in Non-Convertible Debentures to Fund Continued Diversification from Gold Loans to Microfinance

Muthoot Fincorp Limited, an Indian non-banking finance company (NBFC), recently announced plans to sell INR 1 billion (USD 18.6 million) in non-convertible debentures (NCBs) to fund its expansion into the small and medium-sized enterprises (SMEs) and microfinance as a means of diversifying away from gold loans. Muthoot Fincorp reportedly plans to double its microfinance portfolio of INR 3 billion (USD 56 million) by the end of the 2013-2014 fiscal year. In keeping with its focus on microfinance and SMEs, Muthoot recently acquired Panchratna Securities, an Indian finance company, and has applied to the Reserve Bank of India, the country’s central bank, to register this new subsidiary as an non-banking finance company-microfinance institution (NBFC-MFI).

Muthoot Fincorp is a member of Indian financial services group Muthoot Pappachan Group (MPG). The company operates 3,300 branches as of 2012 and reported total revenue of INR 15 billion (USD 279 million) and a net profit of INR 3 billion (USD 56 million) for the 2011-2012 fiscal year. It does not accept deposits.

By Nicole Boyd, Research Associate

About Muthoot Fincorp Limited
Muthoot Fincorp Limited is an Indian non-banking finance company (NBFC) and a member of Indian financial services group Muthoot Pappachan Group (MPG). Muthoot Fincorp focuses on serving customers unable to access mainstream commercial banking services. Its products include gold loans, auto loans, investment products and insurance and advisory services. The company operates 3,300 branches as of 2012 and reported total revenue of INR 15 billion (USD 279 million), a microfinance portfolio of INR 3 billion (USD 56 million) and a net profit of INR 3 billion (USD 56 million) for the 2011-2012 fiscal year. It does not accept deposits.

Sources and Additional Resources:

Times of India. “Muthoot Fincorp to launch Rs 100cr NCB issue,” http://timesofindia.indiatimes.com/business/india-business/Muthoot-Fincorp-to-launch-Rs-100cr-NCB-issue/articleshow/19623482.cms

MicroCapital. May 5, 2011, “MICROCAPITAL BRIEF: Investor in Microfinance, Education, Health, Infrastructure, Matrix Partners India Raises $300m,” https://www.microcapital.org/microcapital-brief-investor-in-microfinance-education-health-infrastructure-matrix-partners-india-raises-300m/

MicroCapital. December 13, 2010, “MICROCAPITAL BRIEF: Muthoot Fincorp, ACCION International Join to Increase Microfinance Lending in India,” https://www.microcapital.org/microcapital-brief-muthoot-fincorp-accion-international-join-to-increase-microfinance-lending-in-india/

MicroCapital Universe Profile: Muthoot Finance Limited https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Muthoot+Finance+Limited

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