We are working to sustain 20% loan asset growth: Sudhin Choksey, Gruh Finance

The supply situation should start improving during the second half of the current financial year or the next financial year, Sudhin Choksey, MD, Gruh Finance, tells ET Now.

Edited excerpts:

In last two quarters, growth has slowed down and disbursements are growing at 2% year on year. Is there a conscious call that you want to slow down right now?

I would not say that there is a conscious call to slow down. Last year, in first quarter, we had a very strong disbursal growth post demonetisation and pre-GST announcement. There was quite a strong demand and the disbursal was up almost 30%. So, when you compare this quarter with the same quarter year before, obviously growth looks lower compared to that. So far, we have not indulged into irrational pricing and have been able to sustain growth in an intensively competitive environment.

Since you are in the Rs 10-12 lakh category, what is your understanding of demand there?

Potential demand has always been there. The issue at the bottom of the pyramid is in respect of the supply. Post budget, we have been expecting the supply situation to improve as the developers have been given an incentive. If everything goes according to schedule, the supply situation should start improving during the second half of the current financial year or the next financial year.

What is the outlook for disbursement growth in a rising rates scenario?

We have been focussing on the loan asset growth which has been in the vicinity of 20%. We are still working on that and expect to be able to sustain that kind of growth.

You managed to grow without raising capital. For how many quarters more will you be able to grow with your cash generation because everyone is curious why you are not raising capital when your book value is at historic high?

Our capital adequacy ratio is more than required. It is around 17% plus as against regulatory requirement of 12% and therefore we see there is no need at the moment to raise any further capital infusion. On past few years, all the regulatory changes came in our favour because the risk weight was reduced from 100% to 35%. These changes enabled us to sustain it for a little longer period of time than the others.

Given the vision that you have and given the kind of landscape that you are currently dealing with, what is your outlook on asset quality, margins and overall growth that you have projected or set as internal targets for FY19?

We have been working internally on the loan asset growth of 20%. As far as quality of the loan asset is concerned, it has been pretty satisfactory even when this year we adapted the IndAS accounting system, where we have to consider the estimated credit losses over the complete tenure and not on a particular date.