Mumbai, July 8: Sahara India parivar has been granted certificate of registration by the Reserve Bank of India (RBI) for its residuary non-banking company (RNBC), the Sahara India Financial Corporation Ltd (SIFCL), the only RNBC to be granted the certificate. Peerless General Finance and Investment Company Ltd, India's largest RNBC, is yet to get the RBI nod in this regard."SIFCL, which was formed in 1987, has grown from a deposit base of Rs 2,182.01 crore as on March 31, 1987 to about Rs 3,475 crore mobilised in 1998-99 (provisional figures). We intend to cross Rs 5,000 crore deposit mobilisation within two years," SIFCL's investments controller, Pallav Agarwal, said while addressing a conference in Mumbai on Thursday.
"SIFCL's investment portfolio has crossed Rs 3,000 crore as on March 31, 1999," Agarwal said, adding that RBI has laid out stringent investment norms governing an RNBC's investments but has not prescribed any ceiling on the amount of deposit mobilised by it.
He also said that SIFCL'sannual results for 1998-99 will be declared within two weeks. "However, the RNBC will not be declaring any dividend this year," Agarwal added.
As per the prevailing RBI guidelines, an RNBC has to invest at least 80 per cent of its aggregate deposits in securities such as government securities and government guaranteed bonds (minimum 10 per cent), fixed deposits and certificate of deposit of scheduled commercial banks or public financial institutions (minimum 10 per cent), and other specified securities having a credit rating of `AA+' or above (maximum 60 per cent).
"The remaining 20 per cent of the funds only may be invested as per the discretion of the company subject to the condition that it does not not exceed five times the net owned fund of the company," Agarwal said, adding that in light of more than 80 per cent directed investment, the apex bank has not made it mandatory for an RNBC to seek credit rating nor has it linked the deposit mobilisation to any criteria like the net-owned funds(NoF).
"The average cost of funds for SIFCL is around 12.5 per cent, so we have to invest in instruments which offer higher returns. SIFCL has therefore not invested any funds in IDBI's flexibond-VII issue which offers an annualised return of 12.5 per cent only," Agarwal said, adding that SIFCL's gross non-performing assets (NPAs) will be in the region of Rs 30 crore (for 1998-99), which is less than one per cent of its risk-weighted assets.
"As of March 31, 1999 SIFCL's capital adequacy ratio is expected to be around 16 per cent and its NoF will cross Rs 300 crore," Agarwal said.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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