Capital India Finance will provide corporate guarantee for Rs 15 cr.
To secure the financial facility used or used by Capital India Home Loans, a major subsidiary of the company, Capital India Finance has given its approval to provide a corporate guarantee up to Rs 15 crore in favor of TATA Capital Financial Services.
The Indian economy has a large latent demand for credit generated by a massive self-employed population that is underserved by banks. Traditional banking and the current banking system are in trouble due to the special characteristics of credit demand. High levels of bad debts limit Indian banks’ willingness to take risks and will affect their ability to expand credit 05 04
By expanding asset-backed lending, lending against equity and microfinance, NBFCs have benefited unbanked customers. They want to become a one stop shop for all financial products. It is reasonable to expect that non-bank financing will grow even faster than credit, which should generally increase when economic growth picks up.
India’s GDP of $2.1 trillion is expected to grow by an average of 7.3% over the next few years. In the long term (2015 to 2030), GDP growth is projected to be 6.4%, reaching $5.3 trillion by then. Strong GDP growth will increase demand for credit from consumers and businesses. 03 02 01. Rapid wage growth, a growing middle class, increasing urbanization and industrialization have contributed to credit growth.
Consumption and production demand will be driven by the income group of the largest family group by 2020, which will have an income in the range of USD 2,000 to 7,500 per year (about 64% of the total population ). Incomes in rural India have steadily increased, generating a large market for financial products. In India, credit penetration is lower than in other countries, and non-banking finance is much weaker.
Due to growing demand from Tier 2 and Tier 3 cities, rising consumer incomes, interest rate subsidies and tax benefits on home loans, the demand for individual home loans has increased. Deeper financial penetration, increased affordability and a latent desire for affordable housing will be key drivers of growth. Growth of housing units in Tier 2, 3, and other smaller cities, urbanization, greater transparency through new regulations, and heavy government focus will contribute to the prospects for range tilt growth from products to higher yielding assets.
An NBFC with two decades of experience, Capital India Finance Limited (formerly Bhilwara Tex-Fin Limited), is listed on the Bombay Stock Exchange. Since taking over the company in November 2017, the current management has considerably improved its institutional and commercial functioning. A license to operate as a home finance company has been applied for by Capital India Home Loans Ltd, a wholly owned subsidiary of Capital India. In June 2018, INR 250 crore was raised through preferential equity allocation.
Through a rights issue, an additional Rs 250 crore is being raised, and this process is expected to be completed by November 2018. Acuity Ratings, formerly SMERA, has an A- rating for debts up to INR 500 crore. Plans to raise additional equity and Tier II capital in accordance with the financing plan for business expansion. We are a wholesale oriented lending company that primarily caters to the cash flow and development needs of Indian corporations and businesses. We have no preference for one industry over another and want to build a diversified portfolio. We primarily offer financing options where there is sufficient collateral to secure the loan, avoiding unsecured or partially secured loans.
Mr. and Mrs. Narvar are the partners of the Limited Liability Company (LLP) known as Capital India Corp. Mr. Narvar has extensive experience in the Indian construction and infrastructure sectors. Under his leadership, Trident Realty Group has completed real estate projects totaling 7 million square feet of residential and industrial space in Mumbai and 2.5 million square feet of residential area in the NCR.
On Wednesday, the non-bank financial institution Capital India Finance announced its intention to issue debt securities to acquire up to Rs 1,000 crore. At its meeting on Wednesday, the Board of Directors approved the increase to Rs 1,000 crore in Indian or foreign currency through the issuance of non-convertible debentures/bonds, intermediate notes and other corporate bonds , Capital India reported in a regulatory filing.
It also disclosed its financial statements for FY21, showing a drop in total net profit of around 56% to Rs 6.08 crore from Rs 13.86 crore the previous year.
Most of the Rs 15,000 crore set aside for capital injection into public banks for the current financial year will go to weak public sector institutions like the Central Bank of India and Punjab & Sind Bank. These public sector banks (PSBs) will be able to comply with the regulations thanks to this.
As the RBI had some reservations regarding the fair value of these securities, sources said that the real currency of Rs 15,000 crore would mainly go to banks which had received funding through interest-free bonds in the previous year. .
According to the RBI, the sources said that because the zero-coupon bonds were issued at a discount, their net present value is significantly lower than their face value.
Adequate levels of Tier 1 capital for banks could be lower than declared by a range of 50 to 175 basis points, according to Jodhpur and Research, if the capital that banks Government of India (GoI) invested in five PSOs through zero coupon bonds is valued at fair value.
Punjab & Sind Bank’s board approved earlier this month for the bank to issue preferred shares to the state to raise equity capital worth Rs. 4,600 crores.
This would help the bank raise the capital to the necessary level and prevent it from falling within the scope of the APC for prompt corrective action. Like other banks, sources said, the quantum decision would be made in March, and the funds would then be pumped.
Because they bear no interest, zero-coupon bonds can have nearly 50% lower net worth at the end of FY22 than government documents of similar maturity in the market, according to India Ratings. , who also noted that the illiquidity and non-traceability of these securities could increase the discount.
Article reviewed and published by Gauri Malhotra.