MUMBAI : Alternative asset manager Brookfield and private equity player Everstone have promoted non-bank finance firm IndoStar Capital Finance plans to exit corporate lending altogether by March 2022, its vice-president said. executive chairman and chief executive officer R. Sridhar.
The company has reduced its portfolio of securities over the past two years and has reduced its portfolio by almost ₹3,500 crores.
“From a portfolio of ₹6,000 crore in 2018, the company book fell to ₹2,500 crore so far, which is about a 60% reduction (we have collected ₹3,500 crores). By March 2022, the wholesale and corporate ledger will be zero, ”Sridhar told PTI in an interaction.
The company will continue to focus on and expand its retail segment, he said.
At present, the retail segment contributes 73% of the company’s total portfolio, while the balance of 27% comes from the corporate segment.
In retail, the company focuses on vehicle finance, small and medium-sized enterprises (SMEs) and affordable housing finance.
In March 2020, it accelerated provisioning and proceeded with aggressive write-offs in corporate and personal finance activities to close its balance sheet in the event of a possible credit loss that could arise in the coming quarters, said Sridhar.
“The conservative approach taken has strengthened IndoStar’s position and ideally places it to take advantage of future growth opportunities. We are now looking to the future to grow our retail business over the next three to five years,” did he declare.
A provision coverage ratio of 97% has been achieved to cope with the impact of the pandemic, he added.
In September, the company’s collection efficiency improved to 93% and reached 100% in October.
“We started disbursements from November 2020. We are gradually increasing disbursements to grow our retail business in a highly scalable manner from April 2021,” he said.
With the recovery of the rural economy, the lender is also expanding its products in the segment of commercial vehicles. It plans to finance passenger vehicles, construction and agricultural equipment, he said.
During the quarter ended September 30, 2020, the consolidated profit after tax of IndoStar Capital decreased by 36% to reach ₹32 crores ₹49.4 crore over the same period of the previous year.
Its gross non-performing assets (NPAs) improved to 2.9% from 3.8%, while net APMs stood at 2.1% from 3% in the September quarter of the previous year.
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