Synopsis: Manappuram Finance assures investors that the RBI's advisory on limiting cash disbursal of loans won't significantly impact their business operations. The company emphasizes its commitment to compliant practices and expresses confidence in continued customer engagement despite market reactions.
In response to the Reserve Bank of India's (RBI) recent advisory limiting cash disbursal of loans, Manappuram Finance Ltd assured investors that it wouldn't significantly impact their operations. The RBI directive, issued after concerns were raised by certain large gold loan-providing Non-Banking Financial Companies (NBFCs), emphasized adherence to Income Tax Act provisions, stipulating that no NBFC should disburse loan amounts exceeding Rs 20,000 in cash.
V.P. Nandakumar, Managing Director & CEO of Manappuram Finance, emphasized the company's commitment to compliant practices. He highlighted that their popular product, the Online Gold Loan, which constitutes 50% of their gold loan book, already employs a fully paperless application and disbursement process. Additionally, he noted that even for branch-originated loans, most customers prefer direct transfers. Nandakumar expressed confidence that customers would continue to avail gold loans without any deterrents, given their adherence to regulatory guidelines.
Following the RBI advisory, shares of Manappuram Finance and Muthoot Finance experienced a downturn of up to 8%. Manappuram Finance closed 7.36% lower at Rs 166.85 apiece on the Bombay Stock Exchange (BSE). Despite the market reaction, Nandakumar reiterated the company's stance on promoting transparency and compliance with regulatory norms.
The RBI's advisory underscores its efforts to maintain transparency and minimize potential disputes in the financial sector. It serves as a precautionary measure to ensure that cash disbursals align with legal provisions and regulatory expectations. The communication was specifically directed at gold loan financiers like Muthoot Finance and Manappuram Finance, as reported by CNBC-TV18.
Related Answers
1. How does Manappuram Finance respond to RBI's advisory on cash disbursal limits?
Manappuram Finance assures investors that the RBI's advisory on limiting cash disbursal of loans won't significantly impact their business operations.
2. What impact did the RBI advisory have on the shares of Manappuram Finance and Muthoot Finance?
Following the RBI advisory, shares of Manappuram Finance and Muthoot Finance experienced a downturn of up to 8%.
3. How does Manappuram Finance ensure compliance with regulatory norms?
Manappuram Finance emphasizes its commitment to compliant practices, ensuring adherence to regulatory norms in all operations.
4. What prompted the RBI to issue the advisory on cash disbursal limits?
The RBI issued the advisory on cash disbursal limits in response to concerns raised by certain large gold loan-providing NBFCs, emphasizing compliance with Income Tax Act provisions.
5. How did the shares of Manappuram Finance and Muthoot Finance perform post the RBI advisory?
Following the RBI advisory, shares of Manappuram Finance and Muthoot Finance experienced a downturn of up to 8%.
