Mumbai, Jun 3 (PTI) Mid-size non-banking financial firm Centrum Capital, which has stopped fresh lending since the lockdown-driven moratorium announcement, expects a quick recovery in loan demand.
Centrum Capital does fully-secured lending and has completely stopped fresh disbursals since the Reserve Bank of India announced a moratorium on March 27 to help individuals and businesses tide over the difficulties caused due to the coronavirus-induced nationwide lockdown imposed on March 25.
Initially announced for three weeks till April 14, the lockdown was extended thrice till May 31 and, the RBI also extended three-month moratorium by another three months to August 31.
'Our current focus is on collections only and the same will continue till the moratorium is lifted. Accordingly, we have completely stopped fresh lending,' Centrum Group Chairman Jaspal Bindra told PTI.
Bindra, who had spent most of his times with multinational lenders before joining the group, also expects loan demand recovery to be faster for his credit business, which is fully secured lending with low ticket size -- Rs 20,000 in the microfinance institution (MFI) vertical to Rs 10-12 lakh in affordable housing to Rs 2 crore in micro, small and medium enterprises (MSMEs).
'There is no dearth for credit demand. While lenders that are into big-ticket loans will take time to see demand recovery, considering our consumer target, I am confident my type of lending will witness a faster demand recovery,' Bindra said, adding that his optimism comes from the faster resumption of repayments since May.
'Overall connection/repayment is better now. Our MFI business saw repayment falling to under 10 per cent in April, this has gone up to 20-30 per cent in May. I expect it to be over 50 per cent in June due to the relaxations in the lockdown.
'Similarly, in the affordable housing vertical, the repayment is over 60 per cent now and in MSMEs, which are the worst hit, it is at 25 per cent now. And, all our supply chain-focused MSME customers have been repaying during the lockdown months. So, broadly, it's getting better and normalising faster for us. I see near-normal repayments from July,' he added.
Going forward, Bindra said they would focus on growth sectors like e-commerce and supply chains.
'We have to identify more such growth sectors, which we will finalise after normalcy turtles back,' he said, adding that 'I am not worried about demand at all. Also, more than 60 per cent of the home loan market was unaffected by the lockdown.' Meanwhile, he said that during the last financial year, they stopped large-ticket lending (Rs 5-25 crore loans) which had grown to Rs 500 crore. That book is closed now and as a result, the 2019-20 loan book would only be around Rs 2,000 crore. PTI BEN HRS