Religare Finvest, a NBFC that is focused on providing debt capital to MSMEs, is eyeing a 18-20 percent compounded growth in its loan book over next three years, it’s Managing Director & CEO Kavi Arora has said.

This growth aspiration is significant as Religare Finvest’s loan book size had stayed almost flat between ₹ 12,000-₹ 12,800 crore in the last three years.

The optimism for 18-20 percent growth comes mainly from the positive economic outlook playing out after the Narendra Modi Government took over in June and also the likely push to infrastructure projects in the form of faster regulatory clearances, Arora told Business Line in an interview here on Friday.

Arora also felt that MSME financing will get a major push if the Modi-led Government were to modify the definition of Micro, Small and Medium Enterprises (MSMEs)—a long pending demand of industry.

India Inc has been making a case for changing the definition of MSMEs so as to get it in tune with the current economic realities.

NO LISTING FOR NOW

Religare Finvest, which is a subsidiary of listed firm Religare Enterprises, is not looking to list its shares in the bourses for now, Arora said.

But a listing could be pursued in the next three years as the balance sheet gets strengthened from increased retained earnings arising from the expected 18-20 percent growth in loan book.

“As of today, I don’t need any capital to fund business growth. I will only come to the market when I need capital. Moreover, the IPO market has to be very robust and buoyant”, he said.

Private equity firms Jacob Ballas (investment in January 2012) and Avigo capital (investment in November 2011) are currently invested in Religare Finvest with both of them together holding about 16 percent stake in this non banking finance company (NBFC).

LOANS AGAINST SHARES

Arora said Religare Finvest would continue with its existing business of lending against shares even after RBI’s move on Thursday tightening the rules for NBFC lending against shares.

The central bank has now forbidden NBFCs with asset size of ₹ 100 crore and above from lending more than 50 percent of the value of shares pledged with them. This move is seen as a step towards minimising volatility in the capital market,

Religare Finvest currently has a book size of about ₹ 1,700 crore in the ‘loan against shares’ business segment.

Arora did admit that the latest RBI diktat could affect the size of the loan book (lending against shares).

He said that loan against shares has now become a non-core activity for the company.

“Our core business activity now is only lending to MSMEs and lending against shares does not fit into that”. Till 2008, Religare Finvest was mainly into capital market related activities such as loans against shares.

srivats.kr@thehindu.co.in

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