Navi Finserv has withdrawn its planned bond sale, which was scheduled for bidding later today, according to five merchant bankers who spoke to Reuters. This decision comes just days after the country’s financial regulator barred the non-bank finance company (NBFC) from issuing new loans.
The company had intended to raise Rs 1 billion (nearly $12 million) through two-year and three-month bonds, offering a coupon of 10.40%, payable quarterly, the bankers told Reuters.
On October 17, the Reserve Bank of India (RBI) took action against four NBFCs, including Navi Finserv, citing material supervisory concerns and instructing them to cease the sanction and disbursement of loans. The other companies affected were Asirvad Micro Finance Ltd., Arohan Financial Services Ltd., and DMI Finance.
The RBI's notification highlighted concerns regarding the pricing policies of these firms, particularly their Weighted Average Lending Rate (WALR) and the interest spread charged over their cost of funds, which were deemed excessive and not compliant with regulations.
Shobhit Agarwal, Head of Lending, Navi Finserv said, "Navi Finserv maintains a healthy liquidity position, and after careful consideration, we determined that there was no immediate need for external funding at this point, leading to this development."
According to one banker, "There is no sense in borrowing funds," given that lending has been stalled. Additionally, bankers are keeping an eye out for any potential rating downgrades on existing bonds issued by the firm.
As of March, Navi Finserv's loan book stood at Rs 80.37 billion, with its bonds rated A by Crisil.
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