While reports are doing the rounds that the Reserve Bank of India (RBI) has undertaken a probe on Muthoot Finance, one of the leading non banking finance company (NBFC) dismisses the buzz. George Alexander Muthoot, the company’s managing director says the alleged ‘probe’ is only ‘a routine audit inspection’ that is conducted by the RBI over the past years of its existence. Further, he also dismisses any questions being raised by PSU banks on the methods adopted to raise funds by the company.
Below is a transcript of George Alexander Muthoot's interview with CNBC-TV18.
Q: Would you clarify or confirm RBI’s probe into your company?
A: There is only a routine inspection by the RBI. In the last ten years of the company’s existence, about five or six time the RBI has done inspections, audits etc. There is nothing like a probe, it is just a routine inspection which has been done and it is over about three weeks back.
Q: Can you clarify that this probe is not with respect to any kind of irregularity and a general audit?
A: There is no irregularity and it was just a routine audit that usually RBI does periodically. It’s a routine RBI audit.
Q: There was a mention of using non-convertible debentures?
A: We have been using non-convertible debentures for last ten years. All NBFCs use this non-convertible secured debentures, these are non-convertible secured debentures and these are done on private placement basis. This is not done or sold to any broker, neither done through invitation, it is only given directly to customers who come and ask. Only customers who come to our office are given the opportunity and they subscribe to these. This is a route for getting money for the company.
Q: There are mentions questions being raised on the methods of raising money through gold bonds by a couple of competitors including some PSU banks. Is there some truth to that and could you clarify on that?
A: Gold bonds are just secured, non-convertible debentures. I have not heard any PSU banks questioning. We have been doing this all along, for last ten years. Moreover, most of all PSU banks lend to Muthoot. They provide loans of Rs 200-500-600 crore each to Muthoot.
Q: Do you completely deny the fact that there is any probe by the RBI?
A: Definitely, it’s only a routine audit. There has never been any probe. RBI has done a routine audit in few other NBFCs as well.
Q: Could you tell us how is business shaping up?
A: Business has been shaping up well. We have paid our advance tax today and we are doing fine.
Moneycontrol
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