The Hindu Business Line : Peerless to seek easing of curbs on investment pattern

PEERLESS General Finance & Investment Company (Peerless) will make representation to the Reserve Bank of India for relaxation of its policy clamping new restrictions on the company's investment pattern.

According to RBI, Peerless will be required to totally phase out the discretionary category limit of 20 per cent of deposit liability by March 2006.

Giving this information to shareholders at the company's 71st annual general meeting here on Tuesday, Mr D.N. Ghosh, Chairman of Peerless, pointed out that RBI had imposed further restrictions by increasing the risk weight assigned to investments by non-banking finance companies (NBFCs) and residuary non-banking finance companies (RNBCs) in fixed deposits/ certificate of deposits and bonds of public financial institutions to 100 per cent from the present 20 per cent.

"In the present volatile capital market, with interest on fixed income yielding investments from approved categories having fallen steadily over the years, the above stipulations, given our committed return to certificate-holders, will put extreme pressure on margins and capital adequacy ratio," he observed.

Despite a steady fall in interest rates, the company was able to achieve an overall return of 11.23 per cent on investment portfolio through efficient and judicious liquidity and treasury management, he said.

In 2003-04, the company's collection reached Rs 999.30 crore, registering 10 per cent improvement over the previous year. The new collection posted six per cent growth. The company made a profit of Rs 158.79 crore and the shareholders approved the company's dividend of 25 per cent on the equity share of the company.

The net-owned fund as on March 31,2004, amounted to Rs 381.9 crore as compared to Rs 224.9 crore in the previous year. The capital adequacy ratio was 23.4 per cent (14.56 per cent in 2002-03) as against RBI stipulation of 12 per cent.

The maturity payment during the year was at an all time high at Rs 2376 crore.