IndoStar Capital Finance plans to focus exclusively on retail lending and is gradually exiting the corporate lending business.

“Our peak portfolio in 2018 was ₹6,000 crore, which we brought down by aggressive collection in the last two years to ₹2,900 crore as of June 2020. In the next 10 to 15 months, it will be zero,” said R Sridhar, Executive Vice-Chairman and CEO, IndoStar Capital Finance.

It will then become a 100 per cent retail financing company and focus on commercial vehicle finance and lending to small and medium enterprises and affordable housing, he told BusinessLine.

Also read: IndoStar Capital Finance appoints Deep Jaggi as Chief Business Officer

The move comes after the company faced headwinds after the IL&FS crisis when raising funds became an issue for NBFCs. The corporate loan book had been contributing about ₹450 crore of profit before tax until 2018-19.

“Retail business will be our main business. The corporate lending business is facing a lot of headwind. We wanted to have about 20 per cent of the total in corporate lending. Now, having seen the impact of real estate and corporate lending, we decided to make it zero,” he said.

Also read: Canada’s Brookfield Asset Management to acquire IndoStar Capital for ₹1,450 crore

Sridhar is also confident of growth prospects and expects normal business from April 2021.

“From October, with the start of the festival season, there was an improvement in sentiment and demand. The rural sector is also doing well. All this is pointing towards a recovery,” he said, adding that the company has now slowly started loan disbursements as well.

“In the second quarter, we used the emergency credit which the government has given and made some disbursements through it. September has given us confidence that things are normalising and we have started our disbursements in October,” he said.

Collection efficiency has also improved for the company, reaching 90 per cent by September.

IndoStar had, in May this year, completed equity raise of ₹1,225 crore from Canadian private equity major Brookfield.

Related Topics