New Liquidity Framework Will Help Bring Down Rates
Coordinated policy action on fiscal, monetary fronts was the highlight of last year. This will push down rates
ECL Finance plans to attain business growth through a combination of loan expansions and advisory businesses, says Ravi Bubna, Managing Director of the company. In an interview with ET’s Saikat Das, he says that loan origination is the company’s forte. Edited excerpts: Can you detail your loan book? Our current credit portfolio at Edelweiss is .₹ 18,000 crore, which includes mortgages and retail finance. This growth has been achieved while maintaining bad loans at well below standard norms. Our major product offerings include structured credit and real estate financing which are collateralised through assets and or cash flow. In which geography are you the most active lender? Right now, focus is on West and South India. We are active in Mumbai, Chennai and Bengaluru. How are placed to face increasing competition in the loan market? We welcome the competition. It always opens up the market. We prefer to stay in the upper end of the NBFC credit market which consists of large and medium players. Edelweiss as an NBFC has solid capability to offer various asset management structures for different credit products along with the ability to distribute effectively. What is your unique selling proposition? The biggest USP is our solution-based approach. We normally deal with corporates’ problems and try finding credit solutions. The second is the turnaround time along with our robust underwriting capability. This is our forte area. Third, we have large loan origination capability which helps us in distribution and sell down. Who are your borrowers? Normally we deal with borrowers, who are rated as AA, A+, A. We do not offer unsecured loans. We accept collaterals, which are about 2x-2.5x higher than the loan value. The idea is that it should be difficult for a borrower to deal adversely. Our Net NPA ratio is 0.39%, which is better than industry average. How are you different from other Normally, we have a mixed pool of borrowings. We take bank loans while we also raise funds via bond issuances. The rest is mopped up through other avenues like commercial papers, overdraft facilities. We aim to raise more funds by tapping the corporate bond market. Besides, we are also looking into raising funds via quasi-equity instruments. How are your future business growth plans? We will attain business growth through a combination of loan expansions and advisory businesses. We will originate loans and distribute it too. We have a well-established and sizable distribution and advisory business which comprises fixed income markets, debt restructuring and resolution, real estate advisory practice, overall syndication and capital market funding advisory. There will be overall growth for assets under management. We are shifting our focus from pure loan book to AUMs. For example, we will go to markets and syndicate loans with like-minded risk conscious investors and other non-banking finance companies. Do you have any plan to list your company as a separate entity? Not immediately. As we ascend over the next few years we may evaluate. Is the current regulatory environment conducive? The regulators have brought significant change. With the focus on stress resolution, it will foster an environment of healthy corporate balance sheets. The proposed bankruptcy code is one such step in this direction. The RBI has been a major contributor to overall macroeconomic stability by building forex reserves to nearly $360 billion, controlling inflation and fiscal deficit and facilitating a healthy balance of payments situation. Coordinated policy action on the fiscal and monetary fronts has been the highlight of the last year and I believe this will push rates lower in FY17 as well. While the accommodative stance of the RBI is expected to be a continuing theme, the refined liquidity framework will play a bigger role in transmitting past rate cuts as well as bringing down lending rates.