Non-banking finance company Indostar Capital is planning to exit from corporate lending business by March 2022. The announcement has been made by R Sridhar, Executive Vice Chairman and Chief Executive of the company. Against the backdrop of its plan, over the past two years, Indostar has, in fact, been reducing its corporate book. From a portfolio size of around Rs 6000 in 2018, the corporate book has been reduced by over 60 per cent. “By March 2022, the wholesale and corporate book will become zero,” said Sridhar.
While the NBFC will soon be withdrawing itself from corporate lending business, it will continue to focus on and expand its retail segment, which makes for over 73 per cent of its total book. It has been involved in vehicle finance, small and medium enterprises and affordable housing finance as a part of its retail business. On the other hand, the corporate segment contributes to over 27 per cent of its balance. However, the company is now looking forward to expanding its services in the commercial vehicle segment as well and finance passenger vehicles, construction and farm equipment.
Earlier in March 2020, Indostar has ring-fenced its balance sheet in advance for any potential credit loss over the next few quarters due to which around 97 per cent of provision coverage ratio was achieved to cover for the financial losses created by the pandemic. This positions the company in a secure spot to seek growth opportunities.
Indostar Capital has recorded an improvement of around 0.9 per cent in its gross non-performing assets during the end of the third financial quarter. On the other hand, its net non-performing assets stood at around 2.1 per cent compared to 3 per cent in the month of September last year.