Muthoot Finance Limited (NSE: MUTHOOTFIN) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
George Alexander Muthoot — Managing Director
Oommen Mammen — Chief Financial Officer
Analysts:
Rati Pandit — Analyst
Raghav Garg — Analyst
Mahrukh Adajania — Analyst
Shreepal Doshi — Analyst
Abhijit Tibrewal — Analyst
Digant Haria — Analyst
Parag Thakkar — Analyst
Shubhranshu Mishra — Analyst
Mona Khetan — Analyst
Rajiv Mehta — Analyst
Bhavik Dave — Analyst
Nischint Chawathe — Analyst
Jigar Jani — Analyst
Bunty Chawla — Analyst
Kamal Mulchandani — Analyst
Presentation:
Operator
Ladies and gentlemen, good evening, and welcome to the Finance Limited Q2 FY ’25 Earnings Conference Call, hosted by Nirmal Bang Equity Private Limited. [Opeator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Rati Pandit from Nirmal Bang Equities Private Limited. Thank you, and over to you, ma’am.
Rati Pandit — Analyst
Thank you, Sejal. A very good evening to everyone. On behalf of Nirmal Bang Institutional Equities, we welcome you all to the 2Q FY ’25 earnings conference call of Muthoot Finance Limited. We are pleased to host the management — we are — sorry, we are pleased to host the senior management of the company represented by Mr. George Alexander Muthoot, Managing Director; Mr. Alexander George, Whole Time Director; George M. Alexander, Whole Time Director; George M. George, Whole Time Director; George M. Jacob, Whole Time Director; Mr. Eapen Alexander, Executive Director; Mr. K.R. Bijimon, Executive Director; and Mr. Oommen Mammen, who is the CFO.
I now hand over the call to MD, sir, Mr. George Alexander Muthoot for his opening remarks, post which we can have the floor open for Q&A. Thank you, and over to you, sir.
George Alexander Muthoot — Managing Director
Good evening to all of you. I am George Alexander Muthoot, Managing Director. I have with me the senior team of Muthoot Finance because we just had our Board meeting. Everybody is around. So once again, good evening to all of you. Actually, we are pleased to announce that we have achieved the exceptional financial results for the first year of ’25. Our standalone assets under management has reached INR90,000 crores and the consolidated AUM has crossed INR1 lakh crore. We definitely — we feel at Muthoot, we are proud that we have crossed the INR1 lakh crore consolidated AUM mark. And definitely we are happy with that.
The standalone assets under management itself has grown to INR90,197, driven by a robust 28% year-on-year growth on our core gold loan portfolio. Our standalone profit after tax grew by 18% year-on-year and now stands at INR2,330 crores for this half year. This half year, we also saw the highest-ever gold loan disbursements to new customers of INR10,687 crores adding to 9,96,000 new customers. Among the peer NBFC Group, we have the highest average gold loan AUM per branch of INR17.75 crores. During this half year, our gold loan portfolio grew by 18% to INR13,285 crores.
On the back of these achievements, we wish to revise our earlier guidance for the financial year ’25 on gold loan growth from the earlier committed 15% to 25% plus. We are also encouraged by the progress in our non-gold loan portfolio with noticeable growth across the personal loans, home loans and strengthening our position as a diversified financial services congolamorate. Our branch network stands at — for a standalone Muthoot Finance, the branch network stands at 4,855. The gold loan outstanding standalone stands at INR86,164 crores and the credit losses is INR28.84 crores and the percentage of credit loss on the gross loan assets under management is 0.03%.
As I said earlier, the average gold loan per branch is INR7.75 — INR17.75 crores and the number of loan accounts is INR97 lakhs. The total weight of gold jewelry is 199 tons and the average ticket size has moved from INR79,000 to INR88,000 and the number of employees almost the same 28,000 to 28,500. The return on average assets has moved up from last quarter of 5.39% to 5.74% and the return on average equity has also moved up from 17.7% to 19.9%. The other subsidiaries have also done well Muthoot Home Finance, Belstar Microfinance has seen an increase in the loan AUM of 22% year-on-year at INR9,625 crores and increase in the total revenue 47% year-on-year to INR1,165 crores and the increase in profit after tax year-on-year to INR142 crores.
Home finance also increased its loan AUM and 55% growth year-on-year and now stands at INR2,441 crores. There is also an increase in the loan disbursement of 90% year-on-year at INR529 crores and the profit after tax has increased to 17%. Muthoot Money has seen an increase in the loan AUM increase has — there is year-on-year increase of INR2,265 crores and the increase in the total revenue to INR146 crores. Asia Asset Finance, the personal share of the loan at Sri Lanka has increased the net profit after tax year-on-year increase at Sri Lankan growth to INR30 crores and the branch network has increased now to 91 branches.
The other subsidiaries, the insurance subsidiary, etc., has done well. And overall, we feel that the environment is conducive for gold loan growth and we have been able to take advantage of that and that is what you see in the present scenario.
So with that, I would conclude my opening remarks and I leave the floor open for question and answers.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Raghav Garg from Ambit Capital. Please go ahead.
Raghav Garg
Sir, hi. Good evening. Thanks for the opportunity. I just wanted to ask what is the auction number for this quarter and if you can also tell the auction number for the first half?
Oommen Mammen
Yeah, auction for this quarter is INR250 crores and first half it is…
Raghav Garg
Sir, I think, you would have mentioned it in the last call, so I can pick it up from that.
Oommen Mammen
First-quarter it is INR69 crores. This quarter it is INR250 crores. So total put together, it will be around INR320 crores.
Raghav Garg
And what was it in the same period last year? I’m just trying to get a sense or an understanding of how much it has gone up versus last year.
Oommen Mammen
Compared to last year. Last year, it was…
George Alexander Muthoot
It is definitely much lower. The auctions are much lower. If you look at the numbers, maybe get back after a while, but otherwise…
Raghav Garg
Sure. My next question is, I also wanted to understand your option policy in the sense that how much time do you typically allow this NPA customer for repayment before you auction off their goal? My understanding is that you allow a substantial amount of time, but if you can give some numbers around that, what is your stated policy that will be useful?
George Alexander Muthoot
The stated policy is help the customer that is our stated policy, try not to auction the gold to the customer. That is our stated policy so that customer is not unhappy by having to forgo this valuable precious ornament. So what we look at is when customers come to our branch, ask or request our branch managers for more time when the interest has become and the period has gone across the threshold limits of time, they ask us for more time. And if the customer — the branch feels that he is a genuine customer and there is a chance of him releasing the gold after a while, then he gets a request from the customer and on that basis, we rather grant him more time. And that is why — that is how the question works.
And also it is to be ensured that we are in the money. So if you are in the money and the customer is seeking for time, we don’t mind giving him time to repay the loan. And that has always helped us in having more customers taking — having higher regard for Muthoot because their gold is not auctioned very quickly.
Oommen Mammen
First half auction INR347 crores, so almost similar.
Raghav Garg
Okay. Sir, just on the auction policy in terms of the timeline, would you say, I mean, do you end-up allowing, say, about six months, nine months, one year? See, the reason I’m asking is that you would be accruing overdue interest on the balance outstanding. Is that understanding correct?
George Alexander Muthoot
Actually it is not the time bound. We look at whether if you are in the money and the customer is genuine, we give him time, whether it’s three months, six months or nine months is immaterial in that respect.
Raghav Garg
Right. Sir, the point that I was trying to understand is that like I said that you would be accruing interest, you also mentioned that you need to be in the money, but does it so happen that the outstanding principal and the overdue both cumulative, they become more than 75% of the collateral that’s available to you, in which case there would be a breach of regulatory norms or how do you deal with such situations?
Oommen Mammen
So our — no regulatory requirement is 75% LTV at the time of origination. So we are complying to the LTV regulation. Beyond that, what we look at is the 12-month period. Normally we try — we do auctions after 12 months, but because the gold price has gone up and because sometimes customers pay interest even before the contractual due date, and we are in the money and customer is unable to pay the principal amount, we give some time provided the customer makes a request.
So in case there is a customer request like that, we hold on to the ornament. We avoid — try to avoid auction because if we auction it, customer loses the ornament and it is a destruction of value for the customer. So he’ll really get upset and we simply auction the ornament and try to refund a small portion of the surplus we receive because for him, it’s actual investment is lost because he is almost investing another 20%, 25% in terms of the making charges or the stones in there. So if there is a consent from the borrower, we give him more time so that he is able to retrieve the orderment. During that time, certainly, interest will be accruing.
Raghav Garg
And sir, what is the interest accrued outstanding on the balance sheet as of September?
Oommen Mammen
It’s around INR1,700 odd crores.
Raghav Garg
Okay.
Operator
Mr. Raghav…
Raghav Garg
Thank you. That’s all. Yeah. I am good. Thanks.
Oommen Mammen
INR1,740 crores.
Operator
Thank you. The next question is from the line of Mahrukh from Nuvama Wealth Management. Please go ahead.
Mahrukh Adajania
Yeah. Good evening, sir. Congratulations. So I had a few questions. Firstly, now that one competitor is back, have you seen any changes in your business or in your flows in the recent past? So that’s my first question. And secondly, it was possibly something similar was asked in the previous question also that if your LTV goes above the regulatory limit during the course of the loan, what do you do?
George Alexander Muthoot
You said four questions.
Mahrukh Adajania
Few questions, I said, not four, sir. Let’s make that two for now.
George Alexander Muthoot
So actually, we don’t look at competition, any competition in particular, competition — there will be competition in only businesses where there is potential, whichever business has potential for growth, there is lots of competition, whether 1% or 2%. So that is there. We have — we’ll see lots of competitors doing the same thing, similar things, but this is nothing new to us. Competitor may come, competitor may go, but our business will go along well.
The second question is about LTV, I think Mr. Oommen, answered this question correctly. Of course, it is in the time of giving the loan, the 75% is there. And afterwards, when the interest expenses are accrued and the time has elapsed and this is — again, just repeating the same thing which Oommen said.
Mahrukh Adajania
Okay, sir, is there any way to find out how much of your customers would also have MFI loans?
George Alexander Muthoot
We haven’t tried that. It maybe possible, but we have not tried.
Mahrukh Adajania
Okay, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Shreepal Doshi from Equirus Securities. Please go ahead.
Shreepal Doshi
Hi, sir. Congrats on a good set of quarter. Sir, my questions were pertaining to LTV norm other add in [Phonetic]. So as per the new regulation, would we be required to maintain the 75% LTV throughout the loan tenure or will it be only applicable to the — at the time of origination?
George Alexander Muthoot
What is the new regulation?
Shreepal Doshi
Sir, RBI recently had come out and said that like you need to follow this set of rules which were already prevailing. But so there is this — so just wanted a clarity that is it like 75% at the time of origination or 75% throughout the loan tenure.
Oommen Mammen
So as far as we are concerned, there is no change in regulations as far as LTV norms is concerned.
Shreepal Doshi
Okay. Okay. And just second part was on the auto-renewal. So for our existing customers at the time of maturity of the loan, we have — I think as a policy, we auto-renew the loan. So on that front also, would there be any regulatory change?
Oommen Mammen
So there is no auto-renewal on the loans. The customer has to sign the document.
George Alexander Muthoot
We don’t do any auto-renewal of loans. Probably it has been done by somebody else, but not Muthoot.
Shreepal Doshi
Okay. Got it, sir. And just one last question in line with the earlier participant. So since the — now the landscape becomes again competitive and in the last six months, we had tweaked our pricing as well as offer rate. So would we continue with our strategy on pricing or would we relook at it on making it more competitive?
George Alexander Muthoot
What is the competition? Did you understand what happened to the competition? Pricing and competition, we didn’t understand.
Shreepal Doshi
Sir, like I’m just saying that in the last six months, we had rolled back some of our offer rates as well as have also taken some price hikes. So would we continue to stick to that or would we look to revisit it because now one of the larger players is back in the landscape and they might deploy pricing-related strategy?
George Alexander Muthoot
I don’t know whether we have made any changes based on some competition. I don’t think we…
Oommen Mammen
In the last six months, I don’t think — see pricing changes is something quite normal in our system and different places, different schemes, which is quite common. We have not done any specific changes in the last six months. Probably we would have changed some of the pricing based on the increase in the cost of borrowing, but as we’re not active with anything.
Shreepal Doshi
Got it. And incrementally also we’ll really stick to that thought process.
George Alexander Muthoot
So the pricing is depending on the cost of funding. If the cost of funding goes up, we will increase our rate. If the cost of funding is coming down, we will reduce our rate.
Shreepal Doshi
Got it, sir. Got it. Thank you, sir. Good luck for the next quarter, sir.
Operator
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal Financial Services. Please go ahead.
Abhijit Tibrewal
Yeah. Good evening, everyone. Thank you for taking my questions. Sir, first of all, congratulations on a strong quarter. I had — I also had a few questions that I wanted to ask. Sir, first things first, I mean, on 30th September, as you’ll recall, RBI has come out with a circular on gold loans. So just trying to understand, are there any items from that circular which were relevant for us and where you are working with the regulator on some of those items?
George Alexander Muthoot
Yeah, yeah, we have gone through the regulations, the 11 suggestions they have given for gold loan companies, how to do business, etc. Generally it’s for all the gold loan companies who are doing business and for those who are not taking up some practices, they are supposed to do that and we have discussed that and we have discussed with the regulator.
Abhijit Tibrewal
Okay. Got it, sir. Sir, secondly, just trying to understand earlier on the trade, one of your gold loan peers reported their results and they had also shared in their earnings call that this week you had a meeting of your gold lending association with the regulator where you were planning to discuss some of the open items from that circular. So has that meeting happened? And any takeaways from that meeting in terms of clarifications from the regulator?
George Alexander Muthoot
I don’t think any such meeting has taken place. I don’t know, I’m not aware of such meeting.
Abhijit Tibrewal
Got it. And sir, lastly, just trying to understand while we have already said that I mean competition will be there in businesses where there is potential for growth. Just trying to understand, I mean, when kind of fair to infer that there has not been any significant change in the competitive intensity in the last two months. And sir, one question for Oommen, sir, as well. Sir, I mean, given that our NPAs have gone up and the last time it got to these levels, I think we went for auctions. So, I mean, how are we thinking about, I mean, given that our NPAs are going up, indeed, because we are giving more time to customers to come back, repay and take their gold jewelry. I mean, are there any covenants in place based on which you take these calls?
George Alexander Muthoot
I think we explained that in detail in the first call. The first analyst you asked us, we explained in detail that we give more time to the customer if they request that provided we are in the money and he has paid some interest and he is genuine customer. Genuinely he want to pay, we give more time. So sometimes the NPA numbers go up last time to 3.98%, today it is 4.3%. But since we are in the money and we are not losing any money on that, we are not very much concerned with that. And of course, we will try our best to ask the customers to pay the interest and renew the loan. That is definitely will be our side. We’ll ask him to pay the interest and maybe close the loan and take a new loan or something like that. We constantly try to do so that we can keep the NPA numbers also reasonable.
Abhijit Tibrewal
Got it. Okay. This is useful, sir. Thank you so much. And, Oommen, sir, I mean, how are we thinking about our cost of borrowings trajectory now?
Oommen Mammen
See, I think now for Q2, I think the cost of borrowing is around 9%. I think it will more or less remain in that level because I think we have already reached the peak and there is a lot of talk about further reduction. So, I think, we have already reached that peak level. I think we should see that coming down as we — as the benchmark rates are reduced.
George Alexander Muthoot
Oommen, when you said we, it is not Muthoot, it is the market.
Oommen Mammen
When the benchmark rates are reduced, we will see a reduction in the borrowing cost.
Abhijit Tibrewal
Got it, sir. This is very, very useful. Thank you so much and all the very best to you and your team.
Operator
Thank you. The next question is from the line of Digant from GreenEdge Wealth Services. Please go ahead.
Digant Haria
Yeah, hi, thanks for taking my question, and congratulations to everyone for this spectacular results. And sir, this comes at a time when regulatory is folding one or the other banks every day or every month. So congratulations on that. Sir, first question is actually not on gold loans. On gold loans, we have seen you for maybe 15 years and competition came, they disrupted, then they again withdrew, we have done very well on gold loans. But sir, even today after 10 years of diversification, 8% of our profits or maybe even lesser comes from the non-gold business. So if I have to think of next — say, next five, seven years, which will be our one more shining example like gold loans, like will it again be gold loans after seven years or some other product will get that push? Any thoughts on this, sir?
George Alexander Muthoot
Because as of now, we have gold loans where we are good at and we have a good portfolio on that and we see great potential there. Of course, we will keep trying new, new businesses. We will try our best to — actually what we try is try to give known gold loans to our gold loan customers if possible because we see these people borrowing home loans and vehicle finance and personal finance and lab, etc., for the elsewhere. We are trying to see whether we can give that to our customers, but of course, not very easy.
And we are in the process of building that only. So — but our main focus always would be on the gold loan where we are quite good at, I think.
Digant Haria
Yes, sir, not a question of number one product. I’m talking about the number two. Number one, I know that it will always be gold loans.
George Alexander Muthoot
Number two, it should be if you ask number two, it will be the home loan, sir. Number two, it will be the home loan.
Digant Haria
Okay. Okay, sir. Okay, sir. Thank you for that. Sir, second question is, if in general, like for the first time, I’m seeing that RBI is more and more spolding the banks and less in NBFCs. I have not seen this in 15 years of my career, but that’s happening now. So this — we have seen some yield improvement also after a pretty long time. So this whole competitive intensity, has it reduced, the same or what do you expect in the next six months?
Oommen Mammen
See, our yields have always been reasonable, though our maximum rate will be 24%, the average yield is around less than 18%. So I think, we are very reasonable because of the rebate scheme. We are offering a better yield to the customers based on his repayment. So we are very reasonable in terms of the — as a lending product. I think — I don’t think we are now charging everything more if that was our…
Digant Haria
No, no, Oommen, that was not the question. The question was that before three, six months in market, there are a lot of products giving loans at 9%, 10%. We just don’t see those 9%, 10% extremely low-yielding products that I think have gone out and maybe that would have contributed a little bit improvement. Is that true?
George Alexander Muthoot
Yeah, right.
Oommen Mammen
Especially there was some aggressive pricing by banks, etc. At that point of time, everybody tried to reduce the rate because we knew that those rates are not sustained, which has pulled down the average yield. But now those things are not there. So we are not offering those low yielding schemes. You remember the teaser rate. I think you might be asking about the teaser rates. Now it’s not required to be offered.
Digant Haria
Correct. No, no, thanks, thanks. And the last question is that I also read that a lot of these banks, especially in South India, they have done a lot of mischief in the PSL classification, the priority sector lending classification. Is — can that become an opportunity for us, like if those loans are not classified as gold loans and eventually, those customers companies or no, that is not a market because we are mostly urban. So I would assume that will not be a market for us, but any thoughts on this particular thing?
George Alexander Muthoot
Yeah, we have seen some banks try to do that. But of course, it is — we don’t know what to do on that context. But we feel that it is just part of the business. That’s all.
Digant Haria
Right. All right, sir. Thank you so much for your time and wish you all the best. [Operator Instructions] The next question is from the line of Parag Thakkar from Fort Capital. Please go ahead.
Parag Thakkar
Yeah. Hi, sir. Thanks a lot and congratulations for excellent numbers. I just wanted to ask that when you say — first of all, you have revised your guidance upwards from 15% to 25%, right? So I would like to ask the driving factor for that? That is my first question. And second question is from a regulatory perspective, where you say that you accommodate customer, which is right in your business that at the — you will try a level that customers will not lose his gold jewelry, but from RBI perspective and from the NPA provision perspective, whether your credit costs will go up because of that because now the regulator is very, very I would say, compliant and it forces you to be compliant, right, up till now, you were accommodating your customers by not selling his ornament. But is it possible to keep your credit cost as low as it was in the past after the regulatory overhang which has come? If you’re talking about the credit loss by keeping these loans in the non-auction, I said earlier also, we are in the money. So we’ll get back our money, if not today, after two months or three months or six months. We’re not in the loss — credit costs will not go up, sir, only thing notioning may be there for that I think we have some cushion for provisioning. And sir, just the reason for increasing our guidance from 15% to 25%.
George Alexander Muthoot
Yeah, because already, we have crossed 18% growth. So I cannot now come and say only 15% growth. We are seeing some good economic indicators, etc. Of course, the personal loan sector, the other current, etc., are getting this is more difficult for people that — we are also reading in the papers that personal loans, unsecured loans, etc., in difficult some of the NBFCs who are doing this fintech loans, etc., are not doing business itself. So people need money.
And I feel that Muthoot and the other gold companies are doing a good service to the society by giving credit to people when other — so it was something like which happened during the COVID like. During the COVID time people were not prepared, institutions, banks and NBFCs were not prepared to give loans for unsecured loans, etc. At that time, Muthoot was there we did good business, we did good growth, not only our growth, we did lot of [indecipherable].
So today also, I think we should — we feel that we are doing a good service to the people by giving them — being able to give them money with the collateral they are giving us. So that their needs can be met and at the time when they are not able to easily get unsecured loans as they were before. Definitely, there is a people are finding it a little difficult to get unsecured loans, not from banks alone, even from NBFCs as I said this fintechs also have almost stopped lending.
Operator
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Shubhranshu Mishra
Hi. Good evening, sir. Thank you for the opportunity and belated wishes for Onam this year. The first question is around the productivity that we have for brands. Now it’s increased to roughly around INR17 crores per branch. The branch would have a particular capacity for gold storage basis which we can derive the productivity. So what is the maximum capacity at a branch, which we can drive in terms of storage and productivity?
Also, when we have changed our guidance to 25%. That’s great. But then how do we decompose this growth number of 25%? How much would be the value growth, how much would be the volume growth, which geographies would be far more productive than the other — South India? If you can give some bit of decomposition and flavor to the growth? And the last question is a data keeping question. If you can give out the mix of proportion of the AUM of less than INR1 lakh, INR1 to INR3 lakh and more than INR3 lakhs. Thanks.
George Alexander Muthoot
Thank you. I think you have a right question when you say our average business of INR17 crores, etc. We have branches with maybe INR10 crores, INR12 crores, INR17 crores, INR25 crores, INR30 crores and INR40 crore, INR50 crores also. So it only means that a branch can take INR30 crores INR40 crores also. That’s almost double of what you’re having now. So to answer that question, there’s nothing like a storage capacity in a branch, which is almost always the same. It is about the strong rooms are on quite large corporate money or corporate gold. So in that respect, there is no — and our evidence also shows that there are branches with INR25 crores and INR30 crores etc., and INR35 crores also branches are there. So we can easily double our business with existing brand itself. Second question was about…
Oommen Mammen
Yeah, that I’ll come back later, Shubranshu. Sure, sure. The — okay.
Operator
Mr. Shabranshu, does that answer your question?
Shubhranshu Mishra
There’s one more question I think which I asked, which is pending. So the growth decomposition, so what is the value volume split?
George Alexander Muthoot
Thank you, sir. Remind me. Thank you. We see growth from every aspect. It’s not that it is growing in some geography, etc. We see as I was saying earlier, we feel that there is a — more than an opportunity, we feel that we are serving people by being able to give loans. So there is a demand coming from all over the country, everywhere, it’s not restricted to North, East, West exercises. From everywhere there is a good demand for a gold loan business now.
Shubhranshu Mishra
And what is the value volume split of this growth, the tonnage growth versus the…
George Alexander Muthoot
I think our tonnage is 200 tons.
Oommen Mammen
199 tons. 199 tons.
Shubhranshu Mishra
How much will it grow by what — in that 25%?
Oommen Mammen
We don’t give guidance on tonnage.
George Alexander Muthoot
How can we give guidance on tonnage sir?
Shubhranshu Mishra
Okay. Okay, sure, sir. I’ll come back. I’ll take this offline. Sure.
Operator
Thank you. The next question is from the line of Mona from Dolat Capital. Please go ahead.
Mona Khetan
Hello? Hello. Yeah, hi, sir, good evening.
George Alexander Muthoot
Yeah.
Mona Khetan
My question was on the standalone book. So I understand that apart of growth, that is a 4% to 5% of SME and PL book as well as part of the standalone book. So what would be the NPA there, if I could understand this quarter versus last quarter?
Oommen Mammen
Yeah. I’ll come back on that.
Mona Khetan
Okay. And just on the gold loan NPAs as well, I understand you’ve given a lot of clarity but if I look at the NPA ratios in the last few quarters, they’ve been a lot higher than what you’ve seen historically. Though I understand the credit risks are very low. So I’m just trying to understand if some of the price is coming from the non-gold portfolio? Or is it something that has changed, which is leading to higher NPAs on the ground? Just if you could give some color there?
Oommen Mammen
So last quarter, gold on NPA was INR3,262 crores. This has increased to INR3,686 crores. So that increase is about around INR400 crores plus. That is the primary reason for growth in NPA. On the non-gold in the standalone, last quarter, it was INR90 crores. This quarter, it is INR193 crores. So INR100 crores increase in the NPA book of the non-gold in the standalone, which is almost 100% provided for.
Mona Khetan
Got it. And any particular reason why — I understand lot of the rise in NPA ratio for standalone book is coming from gold, but any particular reason why the ratios are much higher than what we have seen historically? Historically, if I see it sub-3.5% today have been like close to 4% over the last couple of quarters. So any color there if you could highlight?
Oommen Mammen
See, historically, our peak NPA, I think it was almost 6% plus. That is the highest we have seen in gold loan book. Right now, it is 4.3%. We have explained to the reason why we are keeping these accounts in our books, even though it is an NPA. Just to accommodate the customers because, one, there is a request from the customers. Second, there is adequate collateral, and we are in the money. And it will — we are doing a great help to the customers if we avoid auctions and provide them more time so that they can retrieve ornaments. See, on the NPA book, the LTV is around 55% on the principal value. So you can imagine what customer is going to lose if we auction it.
Operator
Thank you. The next question is from the line of Rajiv Mehta from YES Securities. Please go ahead.
Rajiv Mehta
Yeah, hi, good evening. Congrats on strong numbers. Sir, I heard your comments and replies on various regulatory risk-related questions. So we don’t perceive any overhang or rates to any of our practices on the ground. That’s the current reading we have?
George Alexander Muthoot
On what?
Rajiv Mehta
I’m saying. I heard your comments and reply on various regulatory risk-related questions. And so it seems that we don’t perceive any overhang or risk to any of our practices on the ground at this point in time?
George Alexander Muthoot
Yeah. That’s always our desire and — or hope also. I think we should have a positive attitude of that, sir.
Rajiv Mehta
Okay. And sir, there has been significant uptick in new customer acquisition in the past two quarters. Would this hold up and why?
George Alexander Muthoot
Yeah. We did quite a bit of marketing activities, what should I say, sales, we also beefed up our call centers. We’ve beefred up our other online platforms, etc., and we are getting newer and newer customers today. That’s definitely, we have actually engaged a few big agencies also for that.
Rajiv Mehta
And just last thing on the second half, you require your gold loan portfolio to grow by 6%, 7% basis your guidance. Sir, this assumes what level of gold price because since if there is a sharp correction in the gold price, it can lower our incremental growth. It can also trigger a lot of options. So what have you assumed in terms of gold price for this guidance?
George Alexander Muthoot
So on gold price, actually, if we don’t assume anything and we don’t give any guidance based on gold price but of course, gold price can be a factor, but it is not a significant factor. See last one week after the U.S. elections, the gold prices has come down probably after sometime it may again work. So we’re not very much concerned with that because — more so because our new incremental loans are based on the current gold price. So the price is falling our new loans will be priced at a lower NPE.
So that is something which we all know for the past several years. So we don’t think — we are not very steady calculations on gold pricing. In otherwise, we see good uptick, I said earlier also, non-gold loans or unsecured loans are too difficult these days, the last two, three months. And that is definitely we are doing it. Although it is an opportunity for gold loan business, we see it a service which are giving to the people rather helping them in time of need when they really need money, and it is not forthcoming from unsecured loan — unsecured area. So we are definitely helping them out.
Operator
Thank you. The next question is from the line of Bhavik Dave from Nippon Mutual Fund. Please go ahead.
Bhavik Dave
Yeah, hi. Good evening, sir. Thank you for the opportunity.
George Alexander Muthoot
We can’t hear you sir.
Operator
Sir, I would request you to please use your handset.
Bhavik Dave
Yeah, am I audible now?
George Alexander Muthoot
Yeah.
Bhavik Dave
Yeah. Perfect. Sir, two, three questions. One is, on the gold loan itself, I just wanted to understand, after this — our competitor coming back into the market, have we seen any increase in attrition on the ground in our branches? Because they would have maybe gotten aggressive and that was a case earlier where the attrition levels were quite high for other players, they were taking away people. How is the attrition rate at the branches of gold loans?
George Alexander Muthoot
Yeah, I think we have got a 25,000 numbers — employees in branch, gold loan branch itself and there is always a pipeline, some people come, some people go. So to answer your question, we have not seen any significant attrition, etc.
Bhavik Dave
Sure, sure. And how would that number be like what is the kind of attrition rate that we see on the ground or on the gold loan rate?
George Alexander Muthoot
I don’t know the number, but of — we also know when there is a — nothing significant, nothing significant.
Bhavik Dave
Okay,. Perfect. Sir, second question is on your personal loan book. How big is this book? And how are we scaling it up? Like in the last one year, how would we have grown this business? And is it to existing gold loan customers who are maturing and maybe taking unsecured or is it to — new to Muthoot customers?
George Alexander Muthoot
So I think we had a — we had today INR1,200 crores personal loan. Probably a year back, it would have been about INR800 crores. And we actually wanted to give only to our existing gold loan customers only, but of course, we’re not able to do that. A part of it is given to our existing gold loan customers, not that when gold is released, all our gold loan customers, many of them have a personal loan elsewhere. So we are just trying to give the personal loan from Muthoot instead of taking from XYZ. That is the reason for the personal loan.
Bhavik Dave
This is not a new business.
George Alexander Muthoot
We are there for the last five years plus.
Oommen Mammen
Eight years.
Bhavik Dave
But we’ve scaled-up from INR800 crores INR4,200 crores in one year, right? And especially when unsecured has become a big challenge, I’m just trying to understand how is this playing out? And second is, because the LTV…
Oommen Mammen
This is because of hard work.
Bhavik Dave
I understood. All right. Because the problem — it’s like — my last question is on your home loan. You mentioned to one of the previous participants, that’s a second area where you can maybe scale business up. But when we’ve seen like last six, seven years, the business has been around this INR2,000 odd crore range. Any learnings from our past, like what went wrong, how are we — like have we changed the team? Have we done anything different to this time around scale this business up from this INR2,000 odd crores to INR5,000 crore, INR10,000 crores over the next three, four years. What are we doing? What are the investments?
George Alexander Muthoot
We would like to grow it. That’s what our desire is to grow the gold loan book gradually as — of course, we had a setback during the COVID. During the COVID time, actually, we went slow and actually we degrew our book also. But now we are back on track. And as you said, we have changed the team also. Maybe this is two years back.
Bhavik Dave
Understood. And this is — can we expect this book to be INR5,000 odd crores in the next two, three years time? Can this book double in three years?
George Alexander Muthoot
That’s our desire, sir. Definitely we would like it to be there.
Bhavik Dave
Okay, sir, that will be useful. Thank you so much.
Operator
Thank you.
Oommen Mammen
One point earlier Mr. Subranshu was asking on the ticket wise breakup. So about INR3 lakh, it’s 32% of the overall book and INR1 lakh to INR3 lakh is 36% range. Less than 1 lakh is 32% range.
Operator
Thank you. The next question is from the line of Nischint from Kotak Institutional Equities. Please go ahead.
Nischint Chawathe
Yeah, hi. Thanks for taking my question. This is again going back to the non-gold loans. So what you mentioned is that personal loans are around INR12,000 crores. But I think as I do the math, the other non-gold loans is around INR4,000 crores. So what is the balance?
Oommen Mammen
So personal loan — pure personal loan is about INR1,000 to INR1,125 crores. We have — we also give personal loans to our gold loan customers who have been dealing with us for a particular period of time. So that’s about INR1,015 crores. And we have a business loan of about INR600 crores and you also have SME loans. So that is both put together it is INR620 crores business loan and corporate loans of about INR86 crores and loan to subsidies about INR1,100 crores. That’s it.
Nischint Chawathe
Got it. And the big growth that we can see here is essentially in across segments or in specific segment that have grown so well in the last couple of quarters.
George Alexander Muthoot
That come from the gold loan, the growth is from the gold loan.
Nischint Chawathe
I see that. But I’m saying last year, second quarter, this book was around INR1,400 crores, now it’s INR4,000 crores.
Oommen Mammen
So that comes from the personal loan book.
Nischint Chawathe
Okay. And if I understand what you said is that NPAs in this INR4,000 crore book is around INR193 crores in this quarter versus INR90 crores in the first quarter. So that’s almost like a closer to 5% NPA in this segment. So how should one think about it?
Oommen Mammen
So it is fully provided for it. And the increase has also happened because of the increase in the loan to subsidiaries. That is about INR1,000 crores, which was probably not there last year.
Nischint Chawathe
No. But the point is if your NPAs have gone up by almost INR100 crores, I think that’s kind of accounting for almost half the credit cost for the quarter, right? So we’re just curious how to think about this business.
Oommen Mammen
So, Nischint, see, finally, we have a very firm policy in terms of writing off. We try to write off loans when it becomes overdue for 180 days. So there is a very standard possibly we follow irrespective of what is the status we write off. So that is an automatic process, which happens in terms of the personal loan book. That is the reason why it happens and subsidy gets recovered. So whatever recovery happens, it gets come in back gets recovered.
Nischint Chawathe
Sure. Got it. And any number you could quantify on the interest income that you could earn after these loans which were sold to ARC are sort of now kind of run-down because incrementally it will be early.
Oommen Mammen
This quarter we have added about INR35 crores.
Nischint Chawathe
Okay. And any quantum how much is there in the pool after this?
Oommen Mammen
So principal amount outstanding will be about INR160 crores.
Nischint Chawathe
Got it. Got it. Thank you very much and all the best.
Operator
Thank you. The next question is from the line of Jigar Jani from B&K Securities. Please go ahead.
Jigar Jani
Hi, thanks for taking my question and just one question.
Operator
Sorry to interrupt you, sir. I would request you to please use your handset.
Jigar Jani
Hello, is this better?
Operator
Yes. Please go ahead, sir.
George Alexander Muthoot
Your voice is breaking.
Operator
Sir, the current participant got disconnected. We’ll move on to the next participant. The next question is from the line of Bunty from IDBI Capital. Please go ahead.
Bunty Chawla
Thank you, sir. Thank you for giving me the opportunity and congrats on a good set of numbers. Sir, in the Belstar Microfinance, as we have seen in the industry also, there has been a good amount of increase in the NPA. So need to share your thoughts how the NPA pressure going in Q3, Q4, how is the situation on the ground as well as what we have seen more — how many of our customers have more than four lenders — four borrowers — sorry, four lenders, if you can share some bit of a data on that and your thought process on the MFI portfolio?
Oommen Mammen
I don’t have that information.
Bunty Chawla
Okay, sir. So your view on the MFI portfolio because it’s NPA’s Q-on-Q increase and how one should see this panning out in Q3 and Q4, how the asset quality has been?
George Alexander Muthoot
Yeah. So all the microfinance numbers are stressed now. Probably after a while it should ease out.
Oommen Mammen
See even during COVID times, just like everybody faced the challenge, we also faced the challenge, our profits dipped and subsequently came back. I think the microfinance business runs like that.
Operator
Thank you. The next question is from the line of Kamal Mulchandani from Investec Capital Services. Please go ahead.
Kamal Mulchandani
Hello, sir. Thank you for the opportunity. I just had one question. In a recent con call, one of your competitors said that in an inspection, the regulator had raised concerns about giving personal loan to their existing gold loan customers, but I can see that we have a portfolio of around INR1,500 odd crores, which we have given as personal loan to our existing loan customers. So has there been any interaction with the regulator on this? Or — I just wanted to understand if there could be any potential regulatory compliance issue on this.
George Alexander Muthoot
So what we — when we started the personal loan also, we look after — we give loans to anybody who ask and the data is from the customers who have gold loan with us also. Who has earlier taken a gold loan, who have gold loan with us. So that’s the data basically we are using. But we are having — it’s on underwriting norms, it’s not — they don’t have a gold loan with us. They might have had a gold loan earlier or they might be having a gold loan. That is immaterial with us, it’s just the customer data and these customers all have taken personal loans from elsewhere. It’s only based on that, that we give a loan.
Oommen Mammen
So the difference is no personal loan product, it is sourced from outside and the other loan is based on the track record of our existing customer in this business. He may not have an outstanding gold loan book right now.
Kamal Mulchandani
Okay. But there can be some overlap that the customer has taken a gold loan from you and a personal loan from you.
Oommen Mammen
That is not offered to all the gold loan customers, only the credit-worthy customers we assess and we give them. The product is EMI-based, not a bullet driven.
Kamal Mulchandani
Okay. Okay, understood. And just to ask like from how many branches are we sourcing personal loans? Like — and what is the proportion of the digital personal loans?
George Alexander Muthoot
Personal loans, we don’t source for branches.
Oommen Mammen
We don’t have digital personal loan.
George Alexander Muthoot
We don’t have digital personal loans, first of all. And second, personal loans are not — it is only the customer number they have so that they call them and see — ask whether they need a personal loan. It is only done through 40 branches. For personal loan, personal loan has its own branch, its own setup, its own people, not the Muthoot Finance branch does that to any gold loan branch only personal loans.
Kamal Mulchandani
Okay, got it. Thank you so much.
Operator
Thank you. The next question is from the line of Jigar Jani from B&K Securities. Please go ahead.
Jigar Jani
Yeah. Hi, am I audible?
Operator
Yes, sir.
George Alexander Muthoot
Yeah.
Jigar Jani
Yeah. So congratulations, firstly, on a great set of numbers. Just one question. What would be our guidance on credit cost because now over the last two quarters, we have seen about a 1% credit cost in the first half, significantly higher than what we have seen over several years. So would this continue or do you see that kind of normalizing in the second half overall?
George Alexander Muthoot
Our credit cost quarter-on-quarter would be around INR30 crores, I think that’s a rough number, it might be more, credit cost.
Oommen Mammen
So the write-off says for this quarter it is INR16 crores. First quarter it is INR12 crores. The rest is the ECL provisions.
Jigar Jani
So if the — if you continue to give more time to your customers, this elevated ECL, you will maintain the ECL at these levels, which is about 1.4% of the overall gross loan assets. Is that…
Oommen Mammen
Yes. So on the growth, roughly it is around 1 percentage. For the NPAs, it will come roughly around 10% on gold loan.
Jigar Jani
Okay, understood. Thank you so much for that color.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.
George Alexander Muthoot
So good evening, once again, and thank you all for participating in the call. Your support and your cooperation with us keeps us going. And as usual, we will do our best to see that all the stakeholders are taken care of, whether it is our customers, whether it is our bank, whether it is our shareholders, whether regulators, we will see — we will try our best and keep everybody happy and we will do everything in our power to see that our shareholders and other stakeholders are benefited by Muthoot. Once again, thank you all and we wish you a happy Christmas and New Year in advance.
Operator
[Operator Closing Remarks]