Feedback from meetings/calls with NBFC
CRISIL LAP head
- Earlier LTVs were 45-50% but it has gone up to 60-70%
- Delinquencies have increased to 1.9% (with higher end at 3.9% for some company) but nowhere closer to 5%
- LAP has faced risk in geography like Punjab, Andhra, TN (drought), Kerala (repatriation)
- Companies like Sundaram Home Finance and Chola have seen business specific risk
- Avg tenure has increased to 4-5 years (vs. 3 years earlier) as refinance has come down
Risk
- Surrogate model used by NBFC; asset quality would be driven by cash flow as business is cash driven; they can run out of material and entire chain would be affected.
- Concerns on high ticket LAP players like Religare, Reliance Capital
- There's increase in proportion of commercial LAP and specialized commercial LAP (hospitals, education institutions)
- Pvt banks are getting aggressive and yields are becoming competitive
- SME gets rated once; no follow up is done; No one monitor the end use
- Clients who have got their portfolio graded is done by specialized SME rating team and is not comparable to credit rating which is only for large and Mid corp.
LTFH
MFI
- EMI is just 1300 rs; hence don't see problem in collection for December month; Collection for Nov already being done
- Will slow disbursement and intend to go complete cashless by January
2W
- EMI is 2500 and cash collection is only for delinquent customers
- Every cash collection in first bucket costs me 7% of EMI; improvement in banking habits would help us lower the cost
Farm
- Farm Installments are 55K-60K
- 50% of farmers' cheques gets passed and remaining we collect through cash
- Collection would be an issue but maintain March asset quality target.
- Govt doesn't tax this segment; hence money is white
- Disbursements are likely to decline as people have to pay margin money
LAP
- LTV is less than 50% and Self-occupied is more than 80%; Ticket size is 41 lacs
- Business will slowdown in short term but people will borrow more if supply goes down
- LTV should go up as the price would be more real
- We will be even more selective now given Govt targeting benaami properties
Builder
- Loan appraisal already account for delay in sales
- We control the escrow A/c. with demonetization; it would only strengthen
- Any temporarily delay in payment; we can dip in Escrow and manage for 3-6 months
Wholesale
- Liquidity will improve; Govt fiscal deficit will go down; will help Infra
HDFC Bank:
HDFC Bank says that sales in 2W/3W and CVs have dried as customer do not have cash to pay downpayment to dealers. He said currency issue is just a logistic issue and ATM calibrization has already started but difficult to comment on when the normal currency situation would resume
Can Fin homes
Demonetisation will make home buying more affordable and lower interest rates would also help the growth; growth guidance for current year remained intact at 30% YoY
Indusind Bank
- CV: Disbursements in CV could face some pressure; however if the currency supply normalize in 10-15 days; the asset quality in CV should be in an issue
- Diamond business: Gives credit to supply chain companies where rough diamond get polished. Not seeing major impact. Don't give to jewelers.
- MFI: Govt may give some relief to MFI
Mahindra Finance
- MMFS expects cash flow of its customers to be temporarily impacted as the business growth slowdown and realizations are delayed till currency situation stabilizes.
- Farmer's cash flow could be temporarily impacted as they are waiting to sell their crops and realization could be delayed. However, it would not impact the Rabi crop as farmers have already bought the seeds and fertilizers as per management.
- With 70% of its collections in the form of cash, there could be some impact on collections in the short term; however MMFS is not looking to reschedule the contract and is focusing on higher repossessions in overdue contracts.
- Management does not expect cost ratios to increase much if the situation stabilizes in 10-15 days but if it continues it could lead to increase in cost asset ratio by 0.5%
Equitas
- Cash collection has been prolonged while the company have stopped cash disbursements for a week.
- While Equitas Bank can collect the money, MFI has stopped collection since last week.
- With 70% MFI disbursement through cash; it has been impacted due to lack of supply from RBI
Ujjivan
- Cash collection has been prolonged while the company have stopped cash disbursements for a week.
- They have started collections from today - 14th November. The collections are in small currencies as MFIs customer cannot deposit old 500 and 1000 notes.
- MFIN has petitioned the RBI to accept old currency, but decisions in this regard are being made by ministry of finance. There is a concern on misuse of provision of conversion through the MFI route. So, this means only MFIs have been singled out for collection purposes.
- The company is watchful If the cash flow problem is not solved in 1-2 weeks, earnings potential of its borrowers will be impacted. The economies in urban and rural areas are different. For example - a vegetable vendor in rural area is able to sell on credit as people know each other - an urban vendor on the other hand has impersonal customers and thereby is not able to make sale. If the situation continues, collections can be adversely impacted.
Manappuram
- 50% disbursement are through cheque
- Collection will be slow; but gold price to provide some cushion
- Company expects normal business to resume after a week or 10 days
- Have not made any collection in MFI business
- The management believes that the government's de-monetisation scheme will lead unorganised gold loans to shift towards the organised segment
Shriram Transport Finance
- Productive time is being lost for customers as they have to stand in queues.
- This action could lead to unemployment and would impact business volumes in the short term; which in turn would impact the business of fleet operators
- Have given company's bank account details to our customers and have asked them to pay d[truncated by WhatsApp]
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