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

The Economic Times - - Commodities Plus -

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.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.