Edelweiss Financial Services looks to strengthen business in retail credit segment through co-lending pacts with State Bank of India, Bank of Baroda, Central Bank of India and Punjab National Bank.
Edelweiss said the LP-GP (Limited Partners-General Partners) model, where NBFCs partner with capital providers like banks, global and domestic institutional investors will help the sector focus on key capabilities in origination, product innovation, underwriting and recoveries.
The company said it has executed the LP-GP model successfully in its ARC (asset reconstruction company) business and has employed own capital of about Rs 9,000 crore and manages additional assets of Rs 39,000 crore.
“Corporate credit opportunity will be captured in our asset management business with global funds. Retail credit opportunity will be captured through our co-lending agreements with 4 nationalised banks – SBI, BOB, CBI and PNB,” it said in its interim financial update.
The company said it continues to maintain liquidity at nearly 15-20 percent of balance sheet and expects that the strong well capitalised state banks will be key drivers of gradual liquidity transmission to NBFCs.
The company said festive season will be closely watched for signs of green shoots of returning consumer confidence and the slew of recent government measures will go a long way in restoring confidence.
“We expect the current dislocation will unwind gradually over the next three to four quarters led by easy liquidity. Banks have received fresh infusions of capital, we expect the Partial Credit Guarantee Scheme will be operational soon and big ticket recoveries via NCLT will also deliver fresh liquidity to the banks,” Edelweiss Financial Services said.