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Shriram Transport Fin may look at raising $250 mn via social bonds in Q4

MUMBAI: After raising $500 million through social bond issue earlier this month, non-banking financial company may look at raising another $250 million from such bonds before March, a top company official said.

As part of its $3 billion global medium term note programme, the deposit taking NBFC had raised $500 million at a coupon rate of 4.4 per cent.

As per the Reserve Bank of India (RBI) guidelines, eligible borrowers can raise external commercial borrowing (ECB) up to $750 million per financial year under the automatic route.

“It depends on international markets (conditions). We need to look for a very good window (to raise $250 million from social bonds). If there is a window available, we may raise it before March (2021),” the company’s managing director and CEO Umesh Revankar said.

In the quarter ended December 31, the company’s deposits grew by around 19 per cent (y-o-y) to Rs 14,335.36 crore from Rs 12,027.72 crore last year. On a sequential basis, the increase was close to 11 per cent.

Revankar said the company was earlier using corporate channels to mobilise deposits but has now started accepting deposits across all its branches, and that has resulted in good inflows.

“We feel a similar momentum to continue because right now deposit rates of banks are lower and so depositors are looking for better avenues. Also, inflows into mutual funds have reduced and it is getting shifted to banks, and a good part of it to non-banks. There is a big shift in our resource raising,” he said.

The NBFC offers an average interest rate of around 8 per cent on deposits.

Revankar said the company expects to mobilise deposits of around Rs 2,000 crore in the current quarter.

In the third quarter of the current financial year, the company’s profit after tax dipped 17 per cent to Rs 727.72 crore as against Rs 879.16 crore in the same period of the previous year.

Revankar attributed the drop in profit to lower net interest margins (NIM) and also on higher provisions of around Rs 220 crore related to COVID.

NIM stood at 6.88 per cent compared to 7.34 per cent.

As of December 31, 2020, additional expected credit loss (ECL) provision on loans assets on account of COVID – 19 stood at Rs 2,507.26 crore.

During the quarter, gross NPA improved to 5.33 per cent from 8.71 per cent. Net NPA eased to 3.22 per cent from 6.09 per cent.

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