 "Religare Finvest reduces corporate loan exposure to tackle rising slippages")
Non-banking financial company Religare Finvest, a unit of Religare Enterprises, has reduced its corporate loan book to help tackle rising slippages.
The share of corporate loans in Religare Finvest’s overall loan portfolio declined from 16 per cent in March to 12 per cent by the end of September. In the medium term, the company would cut these loans further.
Religare Finvest primarily lends to small and medium enterprises, as well as in the mortgage segment. In 2012-13, the company had stepped out of the commercial asset finance segment, owing to the negative outlook on the sector and asset quality concerns, rating agency Icra said. As of September-end, Religare Finvest’s total loans due stood at Rs 11,974 crore. The share of gross non-performing assets rose from 0.85 per cent in March 2012 to 1.85 per cent in June.
The rating agency said the company’s liquidity profile had improved, with significant reduction in reliance on short-term funding sources and a rise in the share of long-term liabilities.
The share of short-term borrowings in overall borrowings declined from 44 per cent in June 2012 to 23 per cent in June 2013. The company’s reliance on financing from bank channels — term loans and cash credit lines — has increased.
Icra said it expected the company to maintain adequate liquidity. It has maintained a negative outlook on the company’s long-term rating, owing to vulnerability associated with focus on small and medium enterprises.
The share of corporate loans in Religare Finvest’s overall loan portfolio declined from 16 per cent in March to 12 per cent by the end of September. In the medium term, the company would cut these loans further.
Religare Finvest primarily lends to small and medium enterprises, as well as in the mortgage segment. In 2012-13, the company had stepped out of the commercial asset finance segment, owing to the negative outlook on the sector and asset quality concerns, rating agency Icra said. As of September-end, Religare Finvest’s total loans due stood at Rs 11,974 crore. The share of gross non-performing assets rose from 0.85 per cent in March 2012 to 1.85 per cent in June.
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Icra said considering the lumpiness of the loan book and a weak business environment, delinquencies could continue to increase and be volatile. Close monitoring by the management, strong relationships with customers and moderate loan-to-value ratios in the mortgage book could aid recoveries in overdue accounts and cut losses, it added.
The rating agency said the company’s liquidity profile had improved, with significant reduction in reliance on short-term funding sources and a rise in the share of long-term liabilities.
The share of short-term borrowings in overall borrowings declined from 44 per cent in June 2012 to 23 per cent in June 2013. The company’s reliance on financing from bank channels — term loans and cash credit lines — has increased.
Icra said it expected the company to maintain adequate liquidity. It has maintained a negative outlook on the company’s long-term rating, owing to vulnerability associated with focus on small and medium enterprises.