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The Reserve Bank of India's directive that loans given against jewellery as collateral would no longer be eligible for priority sector lending will not have much of an impact on NBFC Manappuram General Finance and Leasing, according to a top official of the company.
“Our current loan portfolio or assets under management is around Rs 7,000 crore; of this, Rs 3,200 crore is funded as agricultural indirect lending by banks at 10.5 per cent. We are getting this at just 1 per cent lower than our commercial loans,” Mr V.P. Nandakumar, Chairman, Manappuram Group, told Business Line . The rest is funded through commercial loans, commercial papers (CP), NCDs, capital, and so on.
The NBFC has available limits for CP of Rs 2,000 crore, he said. Of this, only Rs 400 crore has been availed. “The rest can be availed any time, at a rate equal to or slightly lower than agri loans. There would probably be a 0.25 per cent advantage for us,” he added. Hence, the overall impact would be around 0.3 per cent. This would also be compensated by the focused reduction in non-interest operational expenses.
“For the last few quarters, our non-interest operational expenses, which have been consistently coming down, stood at 6.7 per cent during the last quarter. This quarter, we are expecting a further reduction of 0.75 per cent, and that itself would take care of the additional burden of 0.3 per cent,” Mr Nandakumar said.
Additional capacity
The company has also created additional capacity in its branches, which has resulted in higher business volumes, he said. The average portfolio in a branch now stands at Rs 3.6 crore. “By fiscal-end, it will further improve to Rs 4 crore. That's how we have been able to reduce our non-interest operational expenses,” he said. The company's net interest margin is now at 15 per cent.
Though there is a limit for CP available, the company would not use it for now, he said. “The rate change in interest from agri loan to commercial loan would happen only if we sign a fresh contract. The portfolio buyout tenure will be over in April 2011. So there is no immediate urgency for replacement,” he added. The company also has plans to raise Rs 1,500 crore to Rs 2,000 crore through NCDs, for which it has already initiated action.
It is looking to grow its loan book by 70-80 per cent in the next fiscal, on the back of improved branch network. “With 2,000 branches, we can achieve Rs 14,000 crore in 12-15 months,” he said.
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