Higher borrowing cost may put margins under pressure: IIFL

Says their borrowing cost has increased by 200 basis points since the last one month due to liquidity crunch

India Infoline Finance Ltd, the NBFC arm of India Infoline Ltd, today said its margins in the current fiscal may come under pressure if the liquidity situation does not improve.

"Our borrowing cost has increased by 200 basis points since the last one month due to liquidity crunch. In this situation, we expect margins to come under pressure," IIFL Executive Director Mukesh Singh said.

"We, however, expect the situation to improve in the September quarterly monetary policy review of RBI," further said Singh at a roadshow here for the Rs 1,050 crore secured NCD issue.

"Our current net interest margin is seven per cent and if the liquidity crunch does not ease, it will get squeezed by close to one per cent," Singh said.

The company, which has remained optimistic about getting RBI nod to become a bank, hopes to grow its business despite difficult market conditions.

"We hope to grow both our mortgage and gold loan portfolio, that comprises almost 80 per cent of current total loan book of around Rs 10,000 crore," Singh said.

Speaking about the NCD issue, he said, it is a notch higher at AA from the last issue in 2012 at AA(-).

The issue of secured redeemable non-convertible debentures, to open on September 17, would have a maturity period of three years and five years with a coupon rate of 12 per cent.