IIFL Finance Limited CC-Jun24.pdf · 2024-08-07
Thanks, Abhijit. So, gold loan, proposal is evaluated, but then we discovered that banks have a little longer process to appoint BC which starts with RFP and then you submit a proposal and then there's evaluation. So, we have started participating, I mean, we will participate in it. But we have all along been engaging with RBI and we believe that if in a short term we are going to restart our lending and co -lending, then it may be unwarranted distraction to the resources as well as process . B ecause once you start a BC, then obviously banks will expect certain commitment in the volume. And from a commercial point of view, that may not be as viable for our cost structure as the other proposals are, because of the BC structure you get a fee, and the banks probably typically will keep the entire interest income and the margins. So, that is the first question that you had. The second question is about LAP. So, that was linked to MFI, because a significant part of our LAP was also done by our microfinance Company. So, the LAP which have a very small ticket is done by HFC as well as MFI. But as I said , the MFI in particular has faced relatively higher resistance from banks in terms of opening of credit lines. In fact, after this embargo, most of the banks have basically frozen the credit lines, even the existing ones. And there has been a few trickles here and there. But in case of HFC, we have a higher capital adequacy and also the co- ending and the DA is continuing. And that basically is making sure that we do not have the constraint there as much . B ut the LAP is also impacted a little bit. Okay, t he first part is seasonally slack quarter in the last quarter when you are comparing with Q-on-Q is a significantly better quarter. But they are part of the LAP business, the micro-LAP what we do through MFI has also been impacted. The third question about CRE and the S Rs valuations in the provision. Yes, we have actually transferred a couple of large CRE cases to ARC. And what our experience is that from a long- term point of view that may be a better way to manage these exposures , probably because 90- day income recognition norm for real estate developer and projec t becomes difficult. Because even once they default, t hen it goes into NPA and then it's very difficult to do the incremental loan and sustain the project. Now, unlike banks, we really cannot have a DSRA or a debt service reserve account. And therefore , these exposures will be better managed through an ARC structure. In terms of SR provision, the way SRs are valued, and this is the industry practice in line with the standard accounting is , there is a valuation done every quarter by the ARC. And that’s a fair value based on the realizable value of the SR s, and that's the value that we take in our books. So, there is an increase or decrease, that comes into fair value line item in the profit and loss account. Yes, I think I just responded to all three questions. Can we move to the next line, Abhijit, do you have something more?
Also, we have relatively lesser exposure to Punjab, which has been more impacted.