Satin Creditcare Says It Has Enough Liquidity To Service 6-7 Months Of Liabilities

Satin Creditcare Network Ltd. can cater to liabilities for the next 6-7 months, assuming a scenario of zero collections due to the Covid-19 pandemic, the microfinance lender said on Tuesday.

According to the company, its liquidity position—Rs 1,600 crore as on March 31, 2020—is one the highest in the country's microfinance institutions. In addition, it had undrawn sanctions of Rs 900 crore at the end of the last fiscal year.

The lender has “raised Rs 6,426.6 crore during the year (ended March 31, 2020), of which about Rs 400 crore was raised since the nationwide lockdown—this includes Rs 50 crore of subordinated debt (Tier II capital) from a foreign investor," Satin Creditcare said in a regulatory filing.

The microfinance firm said that with the current levels of liquidity, the company is comfortably placed for serving all its outside liabilities for next 6-7 months, assuming there are zero collections due to the pandemic.

The Gurugram-headquartered company will also offer moratorium to all the existing borrowers across India. They can choose to either pay or avail moratorium. If the borrower avails moratorium, the incremental interest and the increase in the loan tenure would be explained to the borrower, the company said.

Rural Play

According to Satin Creditcare, which caters to 391 districts in 22 states, 97 percent of the districts have less than 1 percent exposure.

"Nearly 80 percent of our portfolio is in rural areas where there is no major impact of the pandemic. Majority of our portfolio has not been impacted as it is lent to borrowers engaged into activities of animal husbandry and agriculture allied services,” said the microfinance firm. “Recoveries from these borrowers (engaged in essential services) are expected to be much faster.”

Also Read: Govt, RBI Offer Relief To Microfinance Lenders Amid Covid-19 Crisis

As a strategy, once the lockdown opens partially/fully "we are open to support our customers by giving emergency loans to kick start their business". The firm has also launched digital collections, which has seen a “tremendous traction and scale”.