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IndoStar focuses more on retail loans

“We aim to move to a mix of 25 per cent corporate and 75 per cent retail early next year,” said R Sridhar, MD of IndoStar Capital.

, ET Bureau|
Oct 21, 2019, 07.51 PM IST
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IndoStar reduced the corporate and real estate loan book to Rs 3,500 crore currently from a peak of Rs 6,000 crore earlier.
IndoStar Capital Finance, a nonbanking finance company, has more than halved its corporate loan portfolio as its retail segment surged.

Corporate and real estate loans were estimated at 34 per cent of its portfolio during the quarter ended September, while retail advances accounted for 66 per cent, according to a top company official.

“We aim to move to a mix of 25 per cent corporate and 75 per cent retail early next year,” said R Sridhar, MD of IndoStar Capital. “As a policy, we have actively used pre-payments and sell-down to reduce our corporate and real estate portfolio. This was also helped by the acquisition of the CV (commercial vehicle) finance business from IIFL and significant reduction in the corporate lending business.”

IndoStar reduced the corporate and real estate loan book to Rs 3,500 crore currently from a peak of Rs 6,000 crore earlier. Company loans were as high as 80 per cent of the book two years ago.

IndoStar acquired IIFL’s entire CV assets under management for Rs 3,620 crore along with its employees and 161 branches.

“The asset quality on the acquired portfolio of CV loans from IIFL, too, has stabilised and started showing signs of improvement,” Sridhar said.

Net non-performing assets in the organically generated portfolio in commercial vehicles and affordable housing were 0.7 per cent and 0.3 per cent, respectively, at the end of June. Such bad loans in the SME finance business were at 3.3 per cent in June.

Since September 2018, when Infrastructure Leasing and Financial Services defaulted, triggering a crisis of capital, nonbanking finance companies have been facing tight liquidity conditions. However, IndoStar navigated the crisis and its capital adequacy ratio, a gauge for capital strength, is pegged at 25 per cent, consisting only of tier-1 capital.

“We have ensured that we have enough capital to grab any opportunities for growth,” Sridhar said. “We have a positive ALM (asset liability management) for the next 18 months with cash and cash equivalent of about Rs 1,000 crore as on September 30.”
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