Muthoot Finance , a leading non-banking financial company (NBFC), has received a tax demand order from the Kerala State GST Department, totaling Rs 1.52 crore. The company plans to contest the order, asserting that the allegations are untenable.

Breakdown of the Tax Demand

The GST demand comprises:

Reason for the Demand

The tax authority alleges that corporate guarantees provided by Muthoot Finance to its subsidiary are taxable under the GST Act. The company's objections regarding misclassification, valuation principle, and non-utilization of the guarantee were rejected by the tax department.

Muthoot Finance's Response

Muthoot Finance strongly disputes the allegations raised in the order. The company has stated its intention to file an appeal against the demand. In a disclosure to the stock exchanges, Muthoot Finance emphasized that there would be no material impact on its financial, operational, or other activities due to this order.

Official Disclosure

According to the LODR (Listing Obligations and Disclosure Requirements) filing, the order was passed by the Office of the Deputy Commissioner, Adjudication-1, Ernakulam, State Goods and Service Tax Department, Kerala.

Legal Stance

Muthoot Finance maintains a firm view that the allegation raised in the order is not tenable. The company is in the process of filing an appeal to contest the tax demand.

Financial Impact

Despite the sizeable demand, Muthoot Finance has assured its stakeholders that there is no material impact on the company's financial, operational, or other activities due to this order.

The development highlights the ongoing challenges faced by financial institutions in interpreting and complying with GST regulations, particularly concerning inter-company transactions and guarantees. As Muthoot Finance prepares to appeal the order, the case may set an important precedent for similar situations in the financial services sector.

Muthoot Finance , one of India's leading non-banking financial companies (NBFCs), has disclosed significant insights into its loan portfolio structure. George Alexander, a key executive of Muthoot Finance, has revealed that over 80% of the company's loans are below ₹2.5 lakhs in value.

Loan Portfolio Composition

The revelation by George Alexander sheds light on Muthoot Finance's business strategy and target market:

• Small Loan Focus: More than 80% of loans are under ₹2.5 lakhs
• Target Market: Indicates a strong focus on serving individuals and small businesses
• Risk Management: Suggests a diversified loan book with a large number of smaller loans

Implications for Muthoot Finance

This loan portfolio composition has several potential implications for the company:

1. Broader Customer Base: The focus on smaller loans likely translates to a larger and more diverse customer base.
2. Risk Mitigation: By spreading risk across numerous small loans, Muthoot Finance may be better positioned to manage default risks.
3. Operational Efficiency: Handling a large volume of small loans may require robust systems and processes for efficient management.
4. Market Positioning: This strategy aligns with serving the financial needs of a broader segment of the population, potentially including those underserved by traditional banking institutions.

Industry Context

Muthoot Finance's loan portfolio structure reflects broader trends in the NBFC sector:

• Financial Inclusion: Focus on smaller loans contributes to greater financial inclusion, especially for those with limited access to traditional banking services.
• Competitive Landscape: This approach may differentiate Muthoot Finance in the competitive NBFC market, especially among gold loan providers.

While specific financial figures are not available at this time, the revelation about Muthoot Finance's loan portfolio provides valuable insights into the company's operational strategy and market focus. As one of the leading players in the NBFC sector, particularly in gold loans, Muthoot Finance's business model continues to evolve in response to market demands and regulatory environments.

Investors and market watchers will likely keep a close eye on how this loan portfolio structure impacts Muthoot Finance's performance and growth in the coming quarters.