Tag: nbfc

Authum Investment to buy Reliance Commercial Fin in ₹1,629-cr deal

Banking & Finance

[ad_1]

Read More/Less


Authum Investment and Infrastructure is set to acquire Anil Ambani-led Reliance Commercial Finance (RCFL) on completion of the resolution process under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019.

Lenders have approved the ₹1,629 crore bid placed by Authum in the meeting held on Thursday and letter of intent was issued in favour of the company’s bid.

The resolution will result in overall debt reduction of Reliance Capital by over Rs 9,000 crore.

Authum’s RP chosen for Reliance Commercial Finance

RCFL offers a wide range of products including loan against property, MSME/SME loans, infrastructure financing, education loans and micro financing.

Authum Investment and Infrastructure, a Non-Banking Finance Company has over 15 years of presence and net worth of about ₹2,360 crore as of June-end.

Authum is currently managed by a team of professionals with significant investment experience in domestic, public and private equity. Authum’s investment strategy is long term value creation through investments in listed companies, providing growth capital to unlisted companies, acquisition of financial assets, real estate investments and debt investments.

Further, the proposed acquisition of Reliance Commercial Finance strengthens business portfolio and enables to develop a single platform across multiple financial products and services in the NBFC sector, it said.

The acquisitions offer a growth opportunity with a blend of commercial finance, MSME/SME, affordable housing, loan against properties, retail and consumer finance along with strong digital and technology play to generate higher yields.

Voting on Reliance Commercial Finance’s debt resolution underway

These segments are major drivers of the economy with significant unfulfilled demand, it said.

Authum is geared up to meet its financial commitment to the lenders of RCFL under the LoI.

The company will leverage on RCFL customer base, employees, processes, licenses, branch network and digital platform with an aim to create a niche lending platform, it said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Bandhan Bank appoints Kamal Batra to lead the commercial banking strategy, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Bandhan Bank has appointed Kamal Batra as Executive President and Head – Assets, on Wednesday.

Kamal will assume the responsibility for growing the Bank’s Commercial Banking (comprising SME lending and NBFC lending) business and Retail Assets (comprising Gold Loans, Personal Loans, Auto Loans, among others) portfolios. Kamal will be based out of the Bank’s headquarters in Kolkata and will report to the MD & CEO.

The growth of these verticals will help the Bank capitalise on its robust liabilities franchise and cater to the needs of all Indians through an entire suite of offerings spanning deposits, business and retail loans, and third party products such as mutual funds and insurance, across physical and digital banking.

Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank said, “I am pleased to welcome Kamal to Bandhan Bank and wish him the best for his new role. Commercial Banking and other Retail Assets are key pillars of growth for the Bank and I hope Kamal’s leadership will enable the creation of a diversified and high-quality assets franchise”.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Growth expectations of NBFCs moderated in Q1 FY22

Banking & Finance

[ad_1]

Read More/Less


Growth expectations of Non-Banking Financial Companies (NBFCs) have moderated vis-à-vis the expectations six months earlier in view of the possible impact of Covid 2.0 on business in Q1 (April-June) FY2022, according to an ICRA survey.

The survey expects the asset quality related pain to persist in the current fiscal as well.

As per the survey across NBFCs, covering over 65 non-banks, constituting about 60 per cent of the industry assets under management (AUM), 42 per cent of the issuers now expect growth of more than 15 per cent in the AUM in FY2022, much lower than 56 per cent earlier.

The survey includes Micro Finance Institutions (MFIs), NBFCs, and housing finance companies (HFCs), excluding infrastructure finance companies and Infrastructure Debt funds.

ALSO READ NBFC-MFIs: Sector sees nearly 25% decline in FY21

Manushree Saggar, Vice-President, Financial Sector Ratings, ICRA, said: “While 42 per cent of the issuers (by number) are expecting a more than 15 per cent growth in AUM in FY2022, the proportion based on AUM weights is much lower at 8 per cent; indicating that larger players in the segment expect a relatively moderate growth in FY2022.

“With most of the lenders (74 per cent; in AUM terms) indicating an up to 10 per cent AUM growth, we expect the growth for the overall industry to be about 7-9 per cent for FY2022.”

The agency emphasised that within the non-bank finance sector, segments such as MFIs, SME-focused NBFCs and affordable housing finance would continue to record much higher growth than the overall industry averages; supported by good demand and lower base.

Notwithstanding the optimism on AUM growth, the non-bank finance companies are expecting the asset quality related pain to persist in the current fiscal as well, opined ICRA.

The agency said said overall, 87 per cent of issuers (by AUM) expect reported gross stage-3/NPAs to be either same or higher than March 2021 levels, which in turn will keep the credit costs elevated.

This is also reflected in over 90 per cent of lenders (by AUM) expecting the credit costs to remain stable or increase further over FY2021 levels.

ALSO READ RBI links NBFC dividend payout to capital, NPA norms

Restructuring

On the restructuring front, while lenders are expecting marginally higher numbers as compared to the last fiscal, the overall numbers are expected to be low, the agency said in a note.

Almost 73 per cent of lenders (in AUM terms) have indicated an incremental restructuring of up to 2 per cent of AUM and another 21 per cent are expecting a restructuring between 2-4 per cent of the AUM, under Restructuring 2.0.

Within the non-bank finance sector, relatively higher impacted segments such as MFIs, SME lending and vehicles are expected to undergo larger share of restructuring compared with the industry average., according to the note.

The housing portfolio is likely to remain largely resilient, in line with the trend seen in FY2021.

Raise capital

The agency assessed that 80 per cent of the issuers are expected to maintain or increase on-balance sheet liquidity to take care of market volatility. Further, despite the pressure in the operating environment, 94 per cent of the issuers expect higher or stable profitability in FY2022 vis-à-vis FY2021.

The number of issuers expecting to raise capital almost doubled to 56 per cent this year compared with earlier survey results.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Gold loan defaults within permissible limits, says Thomas John Muthoot

Banking & Finance

[ad_1]

Read More/Less


Gold auction notices by private lenders in regional dailies spread across more than one full page are becoming regular which, to the uninitiated, may point to the pandemic-induced financial stress among not just the economically weak sections but also the salaried class.

Leading NBFC Muthoot Fincorp recently ran a multi-page auction notice listing about 24,000 mortgage items for auctioning this July across its various branches since customers failed to pay up in time.

Statutory advertisements

But the lender would not attach significance to the advertisement and maintained that the “default cases continue to remain within acceptable limits”.

This is a statutory advertisement, he told BusinessLine. The actual auctions amount to just less than one per cent and is not a matter of concern since 99 per cent of customers redeem or renew their loans.

“We have to take these steps; otherwise, we would be breaching the NPA norms of the Reserve Bank which will not be seen good in the eyes of rating agencies, banks and the RBI as well.”

Extra time to pay up

On special request, the NBFC grants customers extra time to redeem their gold. “We would in fact want customers to save their gold. This is important for us, too. Because of Covid, we have a special scheme for customers to renew their loan at 11.99 per cent. Lot of these steps are being taken thoughtfully.”

In fact, John Muthoot noted that the gold loans portfolio witnessed healthy growth during FY 2020-21. Coupled with rescheduling of earlier auctions due to lockdowns, this had resulted in a higher number of loans going into auction.

Overall, this is a small percentage compared to the total disbursements of ₹39,500 crore during the period, he said. But John Muthoot did agree that the Covid-19 second wave and resultant lockdown did disrupt economic activities and compromised the financial position of customers.

Element of uncertainty

“But if we compare it with the first wave in March 2020, the element of uncertainty is evident. The community demonstrated resilience and preparedness to face the situation. The lockdown has been relaxed in most states. Normalcy will enable the common man to return to work and resume activities”.

According to him, gold loans continue to witness a healthy demand. “The common man is our customer and his financial needs continue to be our focal point. We are in constant touch with customers and our product research capabilities enable us to understand their needs. The demand for fresh loans is picking up post-relaxations in lockdown,” he added.

On business outlook for the next few quarters, Muthoot said: “We remain bullish on the growth story of Indian economy. The Centre as well as the Central bank has reiterated the commitment by announcing packages or capital investments to propel the growth. As businesses reopen and activities restart, we are sure that the economy will rebound. We expect to grow by 12-15 per cent as higher demand unfolds”.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

India has huge potential for growth of alternative lending: Study

Banking & Finance

[ad_1]

Read More/Less


India has a strong growth potential along with highest opportunities for alternative lending as compared to other countries in South and South-East Asia, according to a latest research by Singapore-based Robocash Group — provider of robotic financial services in the field of alternative lending and marketplace funding.

The analytical centre of international holding Robocash Group did a study to understand the growth prospects and opportunities for alternative investment in individual sub-region of Asia, Africa, Latin America – South, South-East, Central and West Asia, Latin America, and the Caribbean, North, South, East, West, and Central Africa.

The study does not include North America, Europe, Australia and Oceania, and East Asia. It also excluded Europe and other macro regions since these regions are already developed and have a low demand for alternative lending. The study said, likewise, China and the US require separate consideration as they hold a dominant presence in the macro region dynamics.

Alternative lending

The study evaluated each region on the single scale from 0 to 1. This indicator reflects multiple factors: the region’s specific traits, the attractiveness for alternative lending, as well as the current state of its development.

“Across the whole range of characteristics, South-East Asia shows the highest need for alternative lending, which is already being addressed, run a close second by South Asia,” the report said.

Alternative lending refers to any loan that is secured outside of a traditional banking channel. It includes P2P lending, Fintech among other platforms and are mostly sought after by individuals, small businesses and start-ups.

Opportunities for India

Drilling down deeper into country level data, the report said, “India features strong potential for growth of alternative lending (needs of 0.5 on a scale of 0 to 1), along with the highest opportunities across all countries analysed. India takes the largest share of the alternative lending market in South Asia – 81.3 per cent in 2018.”

The study considered population (characterised by informal employment and/or lack of access to banking services), average income in the region, and internet and smartphone penetration as the key indicators that drive the growth opportunities for alternative lending.

“Understandably, the country’s (India) characteristics are representative of the entire region. The strong potential for non-bank finance is partially realised in the previous years but remains untapped due to persistently high demand. The large pool of internet users (624 million or 29.9 per cent of users analysed across all regions) and high smartphone penetration (600.9 million, or 42 per cent of the total population of India in 2021) ensure the development of the market, both currently and in the future. Due to these factors, India takes a leading position among the countries in the considered part of the world,” it added.

The report also added that Vietnam as another country that stands for development opportunities for alternative lending due to the higher level of the internet and smartphone penetration.

“That said, India will remain the undisputed frontrunner as the opportunity for growth of non-bank financing greatly outpaces that of other countries,” it added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

MFI portfolio at Rs 2,59,377 Crore in FY21, MFIN sees steady progress towards normalcy, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


The microfinance industry serving 5.93 crore borrowers with 10.83 loan accounts saw the industry portfolio at Rs 2,59,377 crore as of March 31, 2021.

According to MFIN’s micrometer report, Microfinance loan disbursals during Q4 20-21 jumped 53.8 per cent to INR 91,516 crores as compared to the previous quarter (INR 59,508 crores). Similarly, the number of loans disbursed during Q4 20-21 increased to 2.30 crores from 1.79 crores in Q3 20-21, signifying steady progress towards normalcy.

The overall microfinance industry currently has a total Gross Loan Portfolio (GLP) of INR 2,59,377 crores. Gross loan portfolio (GLP) as on March 31, 2021, showed an increase of 11.90 per cent YoY over INR 2,31,787 crores as on March 31, 2020. 13 Banks hold the largest share of the portfolio in micro-credit with a total loan outstanding of INR 1,13,271 crores, which is 43.67 per cent of total micro-credit universe.

NBFC-MFIs are the second largest provider of micro-credit with a loan amount outstanding of INR 80,549 crores, accounting for 31.05 per cent to total industry portfolio. SFBs have a total loan amount outstanding of INR 41,170 crores with a total share of 15.87 per cent. NBFCs account for another 8.36 per cent, and other MFIs account for 1.05 per cent of the Universe



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Credit guarantee scheme for facilitating MFIs loans announced, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


New Delhi, The government on Monday announced a new credit guarantee scheme that will facilitate loans to 25 lakh people through micro finance institutions (MFIs).

The announcement was made by Finance Minister Nirmala Sitharaman as part of economic relief package provided to spur investment climate in the country affected by the Covid pandemic.

As per the new scheme, guarantee will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs for on lending up to Rs 1.25 lakh to approximately 25 lakh small borrowers.

Interest Rate on Loans from banks will be capped at MCLR plus 2 per cent.

Maximum loan tenure 3 years, 80 per cent of assistance to be used by MFI for incremental lending, interest at least 2 per cent below maximum rate prescribed by RBI.

The focus of the scheme will that lending would be for new activities and not repayment of old loans. Loans to borrowers to be in line with extant RBI guidelines such as number of lenders, borrower to be member of JLG, ceiling on household income and debt.

All borrowers (including defaulters upto 89 days) will be eligible for guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs till March 31, 2022 or till guarantees for an amount of Rs 7,500 crore are issued, whichever is earlier.

Guarantee upto 75 per cent of default amount for up to 3 years through National Credit Guarantee Trustee Company (NCGTC) which will also not charge any guarantee fee.

–IANS

sn/kr



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Asirvad microfinance raises ₹262 crore worth securitised loans

Banking & Finance

[ad_1]

Read More/Less


Asirvad Microfinance, India’s fourth largest NBFC-MFI and a subsidiary of Manappuram Finance, has securitised (by direct assignment) microfinance loans worth ₹262 crore in a deal with a leading public sector bank in India.

In a press release, the Chennai-based MFI said that the transaction comes at a time when the microfinance sector in India has faced higher stress from lockdowns imposed after the onset of the second wave of the pandemic.

“This deal, following closely on the heels of an ECB transaction with the US based WorldBusiness Capital, reaffirms the confidence that leading lending institutions have in India’s microfinance sector and its prospects for growth,” Raja Vaidyanathan, MD, Asirvad Microfinance was quoted in the release.

In May 2021, Asirvad raised a $15 million loan from US-based WorldBusiness Capital Inc.

The proceeds from the securitised loan will enable Asirvad to expand its business of providing small loans to low-income women business owners in rural areas to start and expand their income-generating business.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Seven ways RBI’s new uniform framework will affect microfinance sector, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The proposed uniform regulatory framework for the microfinance sector by Reserve Bank would help the sector expand, become competitive yet safeguard the borrowers from the debt trap.

Under the new proposed rules, microfinance institutions (MFIs) can provide collateral-free loans to households at interest rates determined by their boards. They will get the freedom to set rates and end regulatory cap on interest rates

The RBI has proposed a debt-income ratio cap so that the loans should be given in such a way that the payment of interest and repayment of principal for all outstanding loans of a household at any point of time should not cross 50 per cent of the household income.

Here’s how the changes will impact the sector, companies and the borrowers

The proposed regulations provide more flexibility to non-banking finance companies-microfinance institutions (NBFC-MFIs) in the pricing of loans. The removal of the interest rate ceilings is expected to increase competition on loan pricing.

A uniform regulatory framework for the microfinance sector will ensure a level playing field among all regulated players.

Capping the borrowers’ indebtedness at 50% of household income may impact the overall credit growth in the microfinance industry. With a cap on the fixed obligation to income ratio at 50%, the maximum permissible indebtedness of rural microfinance borrowers could be lower than the current levels

The RBI’s recommendations can ensure responsible lending in the microfinance space. A misuse of flexible pricing guidelines for NBFC-MFIs may not be possible because the pricing of loans would be market-driven on the back of competitions.

Bandhan Bank and Ujjivan Small Finance Bank may be the hardest hit, given the high ticket size of their loans. Unlike in the past when no more than two MFIs could lend to the same borrower, this limit will now apply to all lenders.

With the onus of assessment of household income shifting to lenders, they will need a board-approved plan for the same. The stipulation for the assessment of household income may lead to an increase in borrowing costs for customers. Each NBFC-MFI would need to adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances.

The lifting of the interest rate cap would benefit MFIs as their margins will not be under pressure, but put the onus of fair pricing on MFIs

Key proposals

The key proposals of ”Consultative Document on Regulation of Microfinance” include a common definition of microfinance loans for all regulated entities, capping the outflow on account of repayment of loan obligations of a household to a percentage of the household income, and a board-approved policy for household income assessment.

It also suggests no requirement of collateral and greater flexibility of repayment frequency for all microfinance loans.

As per the consultative paper by the RBI, a microfinance loan would mean collateral-free lending to households with an annual income of Rs 1.25 lakh in rural areas and Rs 2 lakh at urban and semi-urban centres.

The entities engaged in microfinance lending will be required to display board-approved minimum, maximum and average interest rates charged on loans. They will also be required to disclose pricing related information in a standard simplified fact-sheet.

There will be no prepayment penalty, said the consultative paper on which the RBI has invited comments from the stakeholders by July 31.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

NBFC-MFIs: Risk of protracted delinquencies remains, says CRISIL

Banking & Finance

[ad_1]

Read More/Less


A hit to the collection efficiency of microfinance institutions (NBFC-MFIs) owing to protracted Covid-19 curbs will increase asset-quality pressures in the sector, with loans in arrears for over 30 days likely to cross the surge in the aftermath of demonetisation (DeMon), cautioned CRISIL Ratings.

With loans in arrears for over 30 days – or the 30+ portfolio at risk (PAR) mounting, the MFI sector is expected to resort to restructuring of loans to a larger extent than last fiscal as this is perhaps the only practical option to support borrowers and not let accounts slip into the non-performing bucket, the credit rating agency said in a note.

CRISIL Rating assessed that the 30+ PAR could rise to 14-16 per cent of portfolio this month from a recent low of 6-7 per cent in March. This number had surged to 11.7 per cent in March 2017, in the aftermath of demonetisation.

“But unlike last fiscal, when loan moratorium helped keep delinquency increases at bay, more MFIs are likely to opt for permitting restructuring under the Reserve Bank of India (RBI)’s Resolution Framework 2.0 announced last month, and continue with higher provisioning,” CRISIL Ratings said.

Ground level challenges

Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings, observed that the medical impact of the second wave of the pandemic has been much worse than the first wave, and afflictions have percolated to the rural areas too.

“Ground-level infrastructural and operational challenges, as well as restrictions on movement of people, have impinged on the MFI sector’s collection efficiency.

“Though overall collection efficiency is expected at 75-80 per cent in May, compared to 90-95 per cent in March, pressure on asset quality would be higher as borrowers do not have a blanket moratorium this time, while their cash flows have been impacted by the second wave,” opined Sitaraman.

Considering the current ground-level challenges, the note emphasised that encouraging collections through the digital mode is imperative for MFIs – the way they have transitioned to cashless disbursements.

Restructuring, Delinquencies & Provisioning

With 30+ PAR mounting, CRISIL Ratings is of the view that the demand under restructuring 2.0 could be in high-single digits compared to 1-2 per cent seen during restructuring 1.0 for the overall sector.

“Yet, the risk of protracted delinquencies eventually leading to credit costs staying elevated, remains.

“For one, borrowers’ track record of repayment ability is yet to be established for already restructured portfolios. Two, lack of prudence is also a possibility,” the note said.

CRISIL estimates that close to half of the total assets under management (AUM) of NBFC-MFIs of about ₹80,000 crore as on March 2021, were generated from December 2020 onwards.

Given the relatively vulnerable credit profiles of borrowers and the fact that local economic activity is yet to normalise, sustainability of collections, especially for the recent disbursements, will be the key monitorable in the coming quarters, it added.

Ajit Velonie, Director, CRISIL Ratings, said: “To be sure, NBFC-MFIs have created provisions (including a special Covid-19 provision in the fourth quarter last fiscal) estimated at 3-5 per cent of the AUM as on March 2021.

“Considering the likely rise in delinquencies and restructuring, higher-than-normal provisioning is warranted even in the first half of this fiscal to absorb the shocks.”

NBFC-MFIs with adequate liquidity, lower leverage, or those backed by strong parentage, will be better placed to withstand the current situation, he added.

According to CRISIL Ratings, large MFIs rated by it are either backed by strong parentage with access to capital, or have comfortable capitalisation with gearing at about 3-3.5 times, which should allow them to withstand the stress.

They also have the liquidity to cover over two months of debt repayments – even after assuming nil collections – because disbursements have been low, too, which has helped conserve cash.

Nevertheless, the trajectory of recovery, access to incremental funding and capital position will bear watching, especially of the smaller MFIs, the agency said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,
1 … 6 7 8 9 10 … 14