Rating agency CRISIL has downgraded the rating on long-term facilities of IDF Financial Services, a Bangalore-based finance company in the micro-finance space, to BB- from BB on a significant dip in asset quality in 15 months.
Its portfolio at risk (greater than 90 days) was 5.3 per cent in June 2012, compared with 1.7 per cent as on March 31, 2011.
The company’s asset quality has deteriorated due to the drought conditions prevalent in several districts of Karnataka, where IDF has considerable presence. Unethical practices of member representatives of self-help groups (SHGs), acting as collection agents, compounded the problem.
The rating also factors in IDF’s healthy capitalisation level, adequate systems and processes, and extensive experience of its promoters and senior management.
Its portfolio size declined to Rs 50.3 crore as on June 30, 2012, from Rs 721 million on March 31, 2011.
The rating downgrade also factors in moderation in IDF’s resource profile due to unavailability of low-cost funds from SHG federations.
