Fullerton India Credit Co Ltd, a Temasek-owned non-banking finance company, will rehaul its lending strategy to pare the share of unsecured credit to about 30 per cent from the present 65 per cent in the loan book in three years.
The consolidation process is complete with rationalisation of the distribution structure. There is a shift in stance to book more and more secured credit business, said Shantanu Mitra, its chief executive officer and managing director. Fullerton’s operations in India were hit hard by economic slowdown due to the financial crisis in 2008. The company, which had a significant loan book of unsecured credit like personal loans, booked a huge loss of Rs 717 crore in 2009-10.
Going forward, the company will not want to get caught in vulnerable segments.
The small and medium enterprises, commercial vehicles and retail are some of the segments, where Fullerton will expand business, Mitra said.
At present, the share of unsecured credit is about 65 per cent and that of secured credit 30-35 per cent. “We want to reverse the situation in three years”, Mitra said.
The assets under management are expected to grow by 20 per cent in the current financial year. While the present capital base is comfortable at 11.88 per cent, it might need an equity capital injection to ensure adequate base for medium term growth.
It will seek capital infusion of about Rs 150 crore in the current financial year from the parent, he said.
Fullerton India Credit is a wholly owned subsidiary of Fullerton Financial Holdings, Singapore, a subsidiary of Temasek. Temasek is investment arm of the Singapore government.
Post FY11 onwards, the company entered the growth phase. The portfolio size increased to Rs 3,616 crore at end of March 2012 from Rs 2,969 crore at end of March 2011. The portfolio was Rs 2,667 crore at end 2009-10, according to rating agency.
After writing off old delinquent accounts and healthy incremental asset quality, the gross non-performing assets declined to 2.25 per cent in Fy12 from 4.35 per cent at the end of March 2011.