Manappuram Finance Ltd stated on May 9 that the recent advisory from the Reserve Bank of India (RBI) regarding the limitation of cash disbursal for loans would not negatively impact the company’s operations.
This clarification came after the RBI issued instructions to non-banking financial companies (NBFCs) to strictly adhere to the Income Tax Act provision on cash disbursement, specifying that no NBFC should disburse loan amounts exceeding Rs 20,000 in cash.
V.P. Nandakumar, the Managing Director & CEO of the company, mentioned, “Our widely used product, the Online Gold Loan, constituting 50% of our gold loan portfolio, follows a fully paperless application and disbursement process. Even for loans originating at branches, most customers prefer direct transfers. Furthermore, our staff is trained to encourage customers to opt for digital transactions as it facilitates smoother operations.”
The advisory issued by the RBI had led to a decline in the shares of Manappuram Finance and Muthoot Finance by up to 8% on May 9. Manappuram closed 7.36% lower at Rs 166.85 apiece on the BSE.
Nandakumar continued, “We believe that the RBI issued the advisory to promote transparency and prevent potential disputes, which we fully support. We have always followed compliant processes and will continue to do so. We do not anticipate this advisory dissuading customers from availing gold loans.”
The advisory was prompted by inquiries from certain major gold loan-providing NBFCs seeking clarity on cash disbursals. It was specifically directed to gold loan financiers like Muthoot Finance and Manappuram Finance by the RBI’s Department of Supervision, as reported by CNBC-TV18.
