‘Moratorium imposed by govt on loan repayments hitting us hard’

Industry & Lockdown

Jalandhar-based PKF Finance Ltd has been getting less than 25 per cent recoveries of its loans. The owner of Rs500-crore group, Alok Sondhi, talks about the strategies adopted by the finance sector to deal with the crisis due to the Covid-19 breakout. In an interview with Deepkamal Kaur, he throws light on measures being taken to provide relaxation to the loanees. Excerpts:

How has been the business since the Covid-19 outbreak?

The business has suffered a lot. Being in the finance sector, we are facing a double-edged sword. While the government imposed moratorium on us in terms of accepting back the loan amount, but there is no relaxation for us for paying back the money to banks. On our payment side, there is moratorium on us and we are not supposed to accept money, but we have to pay back to the banks. Single-track action cannot happen, but luckily we have strength to bear it all.

The business has suffered a jolt. Being in the finance sector, we are facing a double-edged sword. While the government imposed moratorium on us in terms of accepting back the loan amount, but there is no relaxation for us for paying back the money to banks. On our payment side, there is moratorium on us and we are not supposed to accept money, but we have to pay back to the banks. — Alok Sondhi, owner, PKF Finance Ltd

Have things improved in the past one month?

Profitability has been badly hit. In fact, we are calculating how much loss we have already incurred this year. April has been completely washout. But things have started picking up and we have recovered by 25 to 30 per cent as of now. On the investment side, there are not many takers. Our recoveries are not even 25 per cent and it is not a healthy situation.

How do you see the coming days for the business?

Well, it is difficult to predict anything, but I think the entire situation may take at least four months or so to get back on track. In this grim scenario, the most interesting part is that though we have reduced the rate of interest on deposits, people are still coming to us for deposits as they have faith in us and don't like to depend on banks. But we are planning to reduce the rate of interest further and discourage any further deposits as there is no lending. Our lenders, including transporters, are in a bad position.

How are you dealing with the issue of paying salaries to employees?

We have about 200 people on roll, mostly professional accountants. Though our pay date is 7th of the month, we have paid full salary on the 1st itself so that they can buy ration and other essential items. But now some senior employees have voluntarily agreed to 15-20 per cent pay cut. Those with lesser salaries have had to face smaller cuts. For the staff, we have introduced interest-free loans for buying tablets for their children attending online classes. Interest-free loan has also been offered for the purchase of two-wheelers, including second-hand vehicles.

How many employees are coming to the office?

In Punjab, almost entire staff are coming to the office. In Delhi and Gurgaon, we have told our staff that they can come conveniently, but who were coming by metro or their houses in containment zones have been asked to work from home. In Bilaspur (Himachal Pradesh), our office is in the containment zone. So, it has been lying shut at the moment.

What changes have you made to keep the faith of the clientele?

We have cut our rates on default by 50 per cent. We want to pay only as much as is our cost, so that they can all survive. In the business, we believe that our customer is God. So if they will survive, then we will survive. We are lending to industrialists for generators, medical equipment and agriculture tools.

Do you believe that the Centre's financial package will help people come out of the crisis?

It was a nice talk by the government, but the RBI and banks have not cooperated with the Finance Minister on the issue. Not a single penny has been announced for MSMEs or microfinance. The government should start lending directly rather than going through banks. We held a video-conferencing with the Finance Minister three days ago. I made three points - giving money at cheaper rates, seeking relaxation from the RBI for reverting on NPA norms for finance companies, providing 180 days of default time instead of 90 days and doing away with rating requirements for finance companies. As the general secretary, Punjab and Haryana Finance Companies Association, I need to raise concerns for the whole sector. We are also going to put up all points through the national body of the Finance Industry Development Council.

How do you see the future of companies in the finance sector?

I guess 80 per cent of the companies will vanish. Only those who were in the trade for 10 years or more and were doing the business ethically while keeping a good amount of financial reserve will survive.