Gold lending services inaugurated by Muthoot Finance's Microfinance division, following relaxation of regulatory standards by the Reserve Bank of India.
Muthoot Finance, a leading financial services company, has experienced a remarkable surge in its profits, reporting a 90% increase in profit after tax at ₹2,046 crore in Q1FY26 compared to ₹1,079 crore in Q1FY25. This growth can be attributed to a variety of factors, including the easing of regulatory norms by the Reserve Bank of India (RBI) and a booming gold loan market.
The RBI's recent decisions have been particularly beneficial for gold loan Non-Banking Financial Companies (NBFCs) like Muthoot. The regulatory body has reduced the qualifying asset threshold for MFIs from 75% to 60%, allowing them to diversify their asset base. This move has created a more favorable environment for expanding the gold loan segment, which Muthoot has capitalized on.
In the first quarter of FY26, Muthoot Finance saw about 40% year-on-year growth in gold loans, driven by an 8% increase in gold tonnage and a growing customer base. This growth momentum is supported by rising gold prices and steady demand for secured credit. Muthoot is prioritizing expansion in the gold loan portfolio while gradually growing non-gold businesses as well.
Muthoot's Managing Director, George Alexander Muthoot, has praised the final guidelines, stating that they are beneficial to the gold loan business, supporting both customers and lenders, and giving a boost to regulatory certainty and growth prospects.
In addition to the growth in gold loans, Muthoot Finance has also strengthened its financials through recoveries from asset reconstruction company (ARC) transactions. This approach, which allows customers to avoid auctioning gold and aids them in retaining collateral, has effectively enhanced asset quality and interest collection.
Looking ahead, Muthoot Finance plans to sustain strong growth in gold loans, with standalone assets under management (AUM) projected to grow at a Compound Annual Growth Rate (CAGR) of about 20% during FY25-27. The company also plans for its loan book to continue growing upwards of 15% in the current fiscal.
The RBI's easing of MFI regulations has indirectly benefited Muthoot by fostering a friendly regulatory environment for gold loans, enabling robust growth fueled by higher gold prices, a bigger customer base, and strategic operational activities such as ARC recoveries and branch expansions.
Meanwhile, the RBI has not yet meaningfully transmitted the repo rate cut to MCLR-linked loans by banks. However, Muthoot Finance expects the transmission of the repo rate cut to happen over the next 1-2 quarters.
Elsewhere, Belstar Microfinance, a company backed by Muthoot Finance, has started opening gold loan branches. As of June end 2025, Belstar Microfinance's overall loan book stood at ₹7,706 crore. In Q1, Belstar Microfinance launched 10 gold loan branches and plans to add 50 more in Q2.
In other financial news, corporate bond issuances have surged 86% to ₹2.9 lakh crore in Q1 FY26 as interest rates move lower. Punjab National Bank has migrated to the secure 'bank.in' domain. The Reserve Bank of India (RBI) has also announced the re-issue of government securities worth ₹36,000 crore; the auction is scheduled for August 22.
Muthoot Finance also plans to raise $750 million via external commercial borrowing (ECB) this fiscal to diversify its liability base.
[1] Source: Business Standard [2] Source: Moneycontrol [5] Source: Livemint
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