Gurgaon-based Satin Creditcare Network is looking to hive off its SME finance portfolio into a wholly-owned subsidiary company. The NBFC-MFI has already applied to the Reserve Bank of India for licence.
According to HP Singh, Chairman and Managing Director, the total loan book under SME finance currently stands at around ₹100 crore, but it has the potential to grow ‘exponentially’.
“We want to demerge SME finance from the business and create a separate subsidiary. We applied to the RBI about two to three months back, and hope to receive the nod by the end of this fiscal,” Singh told BusinessLine .
The subsidiary would be named Satin Finserv, and is expected to grow its loan book to around ₹300 crore by March 2020. The company’s SME operations are currently restricted to Delhi NCR, Haryana, Punjab and Maharashtra. However, the subsidiary, once operational, will look at expanding to other geographies.
Satin currently has two subsidiaries: Satin Housing Finance caters to the affordable housing segment, and Taraashna Services offers business correspondent services.
Realigning growth target
Keeping in view the developments across various industries, including the recent crisis in the NBFC sector, Satin has realigned its growth plans for this fiscal. The company, which had initially set a growth target of 40 per cent this fiscal, has ‘curtailed’ it, bringing it down to 30 per cent.
“We had given a guidance of 40 per cent growth for this year; but now, we are being cautious and going for controlled growth,” he said.
For the quarter ended September 30, 2018, its consolidated assets under management (AUM) stood at ₹6,191 crore, a 38 per cent growth over the ₹4,493 crore in the same period last year.
MFI loans at around ₹5,456 crore account for nearly 88 per cent of its total AUM, with the remaining (around ₹735 crore) coming in from non-MFI lending, which includes business correspondent business, in partnership with IndusInd Bank (₹603 crore), housing loan (₹26 crore) and SME finance (₹105 crore).
The recent crisis which gripped the NBFC sector had affected the liquidity position of a number of companies, including MFIs. However, this has had little or no impact on the company, he claimed.
The company raised capital worth ₹5,000 crore so far during this fiscal, and will require an additional ₹1,500 crore. “Of this, we have already tied up with lenders for close to ₹1,000 crore and raising another ₹500 crore will not be an issue,” he said.
Responding to a query about the possible impact of the recent announcements of loan waivers on repayments and collection efficiency, Singh said there is no possibility of a deterioration in asset quality.
“The only time we were concerned about asset quality was the period following demonetisation. But I do not see any deterioration in asset quality in the coming quarters,” he said. “However, it is important to sensitise borrowers to ensure timely repayments,” he added.
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