Bank promoted housing finance company (HFC) currently has a corporate debt book of Rs 6,006 crore, which could be reduced by Rs 1,000 crore by December, Hardayal OfferingThe Managing Director and Chief Executive Officer of Finance said.
The loan book declined by 45 per cent in the first quarter of 2022-23 as compared to the year-ago period due to sell-offs and accelerated prepayments.
On CRAR (Capital to Risk Weighted Assets Ratio), the company sits comfortably at 23.9 per cent as on June 30, 2022, as against 21.4 per cent in the year-ago period (June 2021) and 23.4 per cent in the preceding quarter. ended in March 2022. CRAR is a measure of a company’s available capital and is important for ensuring a unit’s ability to absorb losses.
The company has consistently improved its CRAR from 18 per cent at the end of March 2020 to 18.7 per cent at the end of March 2021.
“My exposure to corporate loans right now is Rs 6,006 crore and these are strong loans other than NPAs. It may come down by another Rs 1,000 crore by December.
“We still haven’t decided to go ahead with corporate loans, but at some point, we will. The reason I stopped this business is because this type of loan carries a 100 percent risk weight and if you have 100% Percentage risk, so I need more capital.
“If I start doing this, I will consume the capital that could have gone into retail credit. What we are saying is that despite the fact that we have increased our CRAR, we will not do it until Would like to do it until we get the capital.” Prasad told PTI in an interview.
The company expects to get Rs 500 crore from the rights issue
by December this year and the rest from other shareholders.
It closed one corporate account worth Rs 353 crore in Q1FY23, sold one account worth Rs 187 crore to ARC (Asset Reconstruction Company), and wrote off two corporate accounts worth Rs 425 crore among others.
It faced headwinds last year to raise much-needed growth capital, when it had to withhold Rs 4,000 crore equity capital from a group of investors, including a current shareholder. Carlyle Group and former respected Aditya Puri.
apart from this Reserve Bank It also refused permission to PNB to infuse equity in the company, which has finally been granted this time.
“We will need approval from SEBI for the rights issue. The draft proposal is in the final stages which we will submit to SEBI as soon as possible. And once we have the capital, we will be in a position to go ahead and actually Start doing business in the U.S. where the risk weight is 100 per cent, be it corporate debt, loan against property (LAP) or other such loans. This is where we will head… and all these are high yielding loans ,” said the officer.
The company’s focus is to accelerate retail loan growth, with assets under management (AUM) at 91 per cent at the end of the quarter ended June 2022, as against 85 per cent a year ago. This was up from 89 per cent as compared to the March 2022 quarter.
Its retail loan asset size stood at Rs 50,295 crore at the end of the first quarter of FY23, up 1.7 per cent from the year-ago period. While the total AUM is Rs 64,850 crore.
PNB Housing saw a marginal decline in its net profit at Rs 235 crore in the April-June quarter of 2022-23 as against Rs 243 crore in the year-ago period, mainly on account of a seasonally weak quarter.
Prasad said that the company’s entire focus is on the retail segment. Retail distribution more than doubled to Rs 3,395 crore in the June quarter from Rs 1,652 crore in Q1FY22.