The government’s latest measures to enhance the flow of credit to MSMEs and boost consumer demand will increase Poonawalla Fincorp’s disbursements by 15-20%, said its managing director Abhay Bhutada.
“It is clear from the current budget that the government is focusing on infrastructure and digitisation. Overall government spending and more money into the hands of consumers will automatically benefit the nation and lenders because consumption will be more and capital expenditure will be more,” he said.
Automatically, it matches our product range wherein we target two sectors–micro, small and medium enterprises (MSMEs)–and the consumer segment, the MD added.
He said most of their customers fall under the formal income segment, who are paying taxes on time. “Considering all this, I think it is very beneficial for Poonawalla Fincorp because we do not lend to new to credit customers. Also, those who are paying taxes can avail the tax exemptions under the new tax regime. We are specifically targeting this middle class segment,” he added.
After approving the sale of its housing finance business Poonawalla Housing Finance to Perseus SG Pte in the December quarter, the Pune-based lender is now focusing on the consumer and MSME segment.
It has various products in its suite like digital consumer loans, machinery loans, digital equipment loans, supply chain finance, medical equipment loans among other categories.
The Pune-based lender disbursed loans worth Rs 3,369 crore in the December quarter. Assets under management (AUM) rose 28% year-on-year (y-o-y) to Rs 13,929 crore as on December 31.
The company’s monthly disbursal run rate is more than Rs 1,200 crore.
Around 56% of the company’s loans are secured while the remaining is unsecured.
It expects its AUM to grow at 35-40% in the next three years and intends to maintain a return on assets of 4-4.5%.
It also expects gross non-performing asset ratio to be at 1.3-1.8% in the next three years. It expects net non-performing asset ratio to be at 0.5-0.9%.
“As of now, our current monthly growth is already in line with these projected numbers. We are coming out of the legacy book, which is now only Rs 800 crore. That rundown is there. We are cleaning up all the existing legacy issues, branches, consolidation of manpower and loan book. On the basis of the technology and installed capacity that we have, we are confident that we will be able to achieve that number,” he said.
The company expects consumer loans to constitute 25-30% of overall loan portfolio in next two to three years, with a majority of disbursements coming in the less than one-year tenure.
The company will also launch a co-branded credit card.
“We are looking at many good options in the public sector and the private space where there is a customer-centric approach. We have evaluated two to three banks and discussions are on,” Bhutada said.