Standalone Profile Drives Ratings: MFIN’s ratings reflect its moderate franchise in semi-urban and rural consumer lending, particularly in gold-backed loans, which constitute 56% of the consolidated portfolio. The ratings also reflect steady asset quality from the liquid collateral and generally stable funding access. This is balanced by a shifting business mix that reflects a high risk appetite and a history of regulatory compliance findings.
Improved Sector Risk Operating Environment (SROE): Fitch has revised the SROE score for Indian finance and leasing companies (FLCs) to ‘bb+’, from ‘bb’, reflecting improved governance, risk and liquidity management frameworks, due partly to regulatory strengthening in the past few years, and the easing of Covid-19 and commodity shocks on medium-term growth prospects, despite lingering global growth and inflation risks. We expect resilient GDP expansion (financial year ending March 2024 (FY24): 6.3%, FY25: 6.5%) to provide adequate headroom for FLCs to expand profitably in the medium term.
Subscribe To Our Free Newsletter |