Poonawalla Finance eyes 35% growth in loan book in FY21 despite poor Q1

Poonawalla Finance, aims to grow its loan book by at least 35 per cent this fiscal despite losing the first quarter to coronavirus-induced lockdowns

Poonawalla Finance, the NBFC arm of the Cyrus Poonawalla family that owns the world's largest vaccine maker Serum Institute of India, aims to grow its loan book by at least 35 per cent this fiscal despite losing the first quarter to coronavirus-induced lockdowns.

The Pune-based firm, which began operations in April 2019, closed fiscal 2020 with a loan book of Rs 1,500 crore, of which Rs 1,150 crore is outstanding now.

In July, the loan book expanded by Rs 250 crore and the company hopes to cross the Rs 2,000-crore mark for outstanding loan this fiscal, Poonawalla Finance Managing Director and Chief Executive Abhay Bhutada told PTI.

The company follows a relationship-based lending model, and does not charge foreclosure fees for its business loans to MSMEs, personal loans and loans to professionals like doctors, chartered accountants, engineers, and architects, among others.

It follows fully-digital lending and its entire loan book is unsecured, but has zero delinquencies, although 25 per cent of the loan book is under moratorium now, Bhutada said.

Poonawalla Finance has been profitable from the first month of operations, he said, adding that the company closed fiscal 2020 with a pre-tax profit of Rs 42 crore, and hopes to grow the bottomline, reflecting the topline growth.

The over USD 11.4-billion Cyrus Poonawalla Group, which fully owns the firm, has infused Rs 850 crore equity into the company and is ready to infuse more to drive growth, he said.

A part of the growth capital will come from banks which have already sanctioned a credit line of Rs 1,000 crore, Bhutada added.

He said the company has ample liquidity of around Rs 650 crore now, helping it lend cheap as its cost of funds is a low 7 per cent.

Meanwhile, the company has signed an agreement with the apex chartered accountants (CAs) body ICAI, and has sanctioned Rs 150 crore in loans to 1,500 of the 4,000 CAs who applied within one month of launch of a scheme for CAs.

Under the scheme for CAs, the firm offers a flat 10 per cent interest rate on loans, and aims to tap over 3 lakh CAs across the country.

Bhutada said the special loan scheme is an answer to the prevailing market scenario when access to credit is a challenge because of the pandemic.

Poonawalla Finance offers only collateral-free loans and demands no guarantors. Its maximum ticket size is Rs 30 lakh, with a tenor of maximum three years, but the average tenure is two years, he added.

"Offering credit support to MSMEs and professionals like CAs and doctors for business development will further strengthen entrepreneurial ecosystem and boost economic growth," chairman Adar Poonawalla was quoted as saying in a statement.