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Last Updated : Jun 10, 2016 10:36 AM IST | Source: CNBC-TV18

Expect loan growth of 60% in FY17: Satin Credit

We are expecting a 75 percent growth in our profits for the fiscal year 2017, says HP Singh, Founder and MD of Satin Credit.

Satin Credit is targeting loan growth of 60 percent for the current fiscal year, said HP Singh, Founder and MD of the company. Not just this, the company is expecting a 75 percent growth in its FY17 profits, he told CNBC-TV18.

Having maintained a fairly good portfolio, the company's net NPAs are above 0.09 percent, Singh added.

Below is the verbatim transcript of HP Singh’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: Just wanted to understand from you what the credit growth for the company could look like over the next three to four years because this space has seen a lot of interest over the last couple of months?

A: We have given guidance of about 60 percent growth on our loan book for the next year. We have given the guidance for profit growth also of about 75 percent. This is predominantly going to be the way of our growth for the next few years as such.

Latha: You are saying that this is the rate of growth over the next two or three years the rates that you gave?

A: We have given the guidance but looking at the space where we operate in and I think this is fairly the rate of growth which probably will be there for the next few years as such.

Latha: 60 percent loan book you will be able to manage for a few years?

A: I said the guidance is for the next year but definitely the space where we working in there is a lot of demand for that. So, fairly over the next few years we can say that.

Latha: can you elaborate the spaces you working in? How much do you give in terms of microfinance credit? Do you also give small and medium-sized enterprises (SME), micro, small and medium enterprises (MSME) loans and what is your assets under management (AUM)?

A: For us it is predominantly a micro finance right now. As said we are present mainly in the Northern region. Uttar Pradesh consists about 40 percent of our portfolio. We just started SME this year and SME will grow also on our loan book. However, it is mainly going to be the micro finance which is going to grow over the next few years.

Sonia: Apart from Uttar Pradesh which are the other states that you are present and where does a major chunk of your business come in from and would you look to diversify further?

A: We work in about 16 states, but our major chunk besides Uttar Pradesh is in Bihar, Madhya Pradesh and Punjab.
We are also now growing our portfolio on the other states like Rajasthan, Gujarat and Maharashtra so these states will also probably take a predominant position in our growth for the next few years.

Latha: What is your cost of money and what is your source of money? Do you borrow from banks, do you nay private equity funding therefore what is the overall cost of money and how much do you make? You lend money at 20-25 percent?

A: We lend at about 24.50 percent so our cost of funds are about close to about 14.50 because as per RBI guidelines they are suppose to have 10 percent margins.
We borrow from public sector banks private banks and foreign banks. In fact even foreign institution funds who also have microfinance in the portfolio to look at.

Sonia: What the street really likes about your business is that for the last many years your asset quality has been extremely stable. Your gross nonperforming assets (GNPAs) are just about 0.50 percent odd or so tell us is this something that you can maintain or do you see some pressures as far as asset quality is concerned because you have seen a bit of a spike in provisioning in the recent quarters?

A: We have maintained fairly a good portfolio of quality. Our net NPAs are above 0.09 percent. We will maintain this portfolio quality across the years where we grow in. What we believe in is that the borrowings where the asset class of borrowers are probably one of the best Financially disciplined to do what and we fund rural women, so as gender specific as well as financially they are far more disciplined.

Latha: You didn’t think it worth your while to apply for a small bank license?

A: We did apply, we didn’t get the license.

Sonia: You said 60 percent loan book growth in FY17 there was one analyst that put out an expectation that your loan book could grow from Rs 3,000 crore currently in FY16 to Rs 12,000 crore by FY20 is that expecting too much or do you think it is realistic?

A: I can further a guess, the analyst would probably be more right in what he looks at it. We haven’t done a complete analysis for ourselves. The only thing which we would like to point out is that I think there is a sufficient demand at the bottom of the pyramid to actually look at that. Looking at the sector in itself this is possible.
First Published on Jun 10, 2016 10:33 am