Muthoot Finance, the non-banking finance company has been constantly in the news for reports of robbery in its various offices across the country. In the wake of the robbery here on Friday, a few anxious customers gathered outside the firm for information on their valuables. The latest incident has raised questions over the security at non banking finance firms (NBFCs) that hold valuable assets of the borrowers, especially the rural poor.
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In 2015, Bank of Baroda at Kundarapalli panchayat here in Krishnagiri was robbed of 6,000 sovereigns of gold jewellery in a midnight heist. This forced the police to hold consultations with nationalised and private banks to step up safety measures, including placement of CCTVs, burglar alarms, appointment of security guards and shuttering of ATMs in rural areas by 9 p.m. However, NBFCs such as Muthoot Finance had escaped scrutiny.
Friday’s robbery has also red-flagged the lack of safety protocols including the absence of a burglar alarm in the office. According to Superintendent of Police Bandi Gangadar, there was a dysfunctional burglar alarm. “They operate within the regulations of the Reserve Bank of India (RBI), but the necessary safety protocols to safeguard the mortgaged property are not there. Ideally, a burglar alarm would also be linked to the local police station,” Mr. Gangadar said.
Even as Muthoot Finance has made inroads into rural areas, becoming a ready lender against gold for the rural poor, the recurrent reports of burglary have also come to threaten the meagre gold assets of the poor kept in the custody of the financier. While the RBI laid guidelines for asset protection of NBFCs in terms of financial prudence, the lack of safety infrastructure in their various branches exposes them to easy burglaries.
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