Press Release

SMFG India Credit Company Limited

July 10, 2023

Rating
Facilities/Instruments Amount (₹ crore) Rating1
Action

Long-term bank facilities 5,000.00 CARE AAA; Stable Reaffirmed

Long-term instruments – 1,000.00

CARE AAA; Stable Reaffirmed
Subordinate debt * (Reduced from 1,075.00)
Long-term instruments –
425.00 CARE AAA; Stable Reaffirmed
Subordinate debt
1,650.70
Non-convertible debentures ** CARE AAA; Stable Reaffirmed
(Reduced from 2,160.70)

Non-convertible debentures 2,340.00 CARE AAA; Stable Reaffirmed

Commercial paper 4,500.00 CARE A1+ Reaffirmed

Details of instruments/facilities in Annexure-1.
*₹75.00 crore is withdrawn on account of redemption on maturity of bonds.
**₹ 510.00 crore is withdrawn on account of redemption on maturity of bonds.

Rationale and key rating drivers

The ratings assigned to SMICC (erstwhile Fullerton India Credit Company Limited – [FICCL]) continue to derive strength from its
strong linkages with the parent Sumitomo Mitsui financial group (SMFG). CARE Ratings understands from the management that
the investment in SMICC by SMFG is long term in nature.

SMFG is a Japanese multinational banking and financial services institution with an asset size of ₹16.7 million crore. The group
operates in the retail, corporate, and investment banking segments worldwide. India remains one of the key target markets with
respect to SMFG’s multi-franchise strateg y in Asia. Hence, SMICC is strategically important to SMFG, as it will help SMFG tap
growth opportunities in India’s financial services segment, particularly in the mass market retail or small-to-medium enterprises
(SME) space. Therefore, support from SMFG to SMICC both, in terms of capital and managerial expertise, is expected to be
forthcoming as and when required. CARE Ratings also understands that the recent change in the name of SMICC from Fullerton
India Credit Company Limited to SMFG India Credit Company Limited also reflects strong association with SMFG. Furthermore,
the ratings continue to factor in SMICC’s diversified funding profile, adequate capitalisation, and comfortable liquidity position,
but remain constrained due to its moderate asset quality and higher proportion of unsecured lending.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors – Not applicable

Negative factors - Factors that could, individually or collectively, lead to negative rating action/downgrade:

• Material dilution in the ownership by, expected support from, and strategic importance to the SMFG Group.
• Deterioration in the credit profile of the parent, SMFG.
• Deterioration in the asset quality or profitability of the company on a sustained basis.

Analytical approach:

1Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

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The rating is based on the standalone assessment of SMICC along with factoring in its linkage and demonstrated support from
the parent SMFG.

Outlook: Stable
The ‘Stable’ outlook factors in the continued support from the promoter, the adequate capitalisation, and the diversified resource
profile going forward.

Detailed description of the key rating drivers:

Key strengths:
Strategic importance to and strong managerial and capital support from the parent SMFG
SMFG owns 74.9% stake in SMICC as on March 31, 2023, and the residual is held by Fullerton Financial Holdings (FFH), which is
a wholly owned subsidiary of the Temasek group. SMFG sees various growth opportunities in India’s financial services segment,
particularly in the mass market retail or SME space, and therefore, SMICC is expected to play a strategically important role in
furthering SMFG’s objective in the near term. SMFG , other than buying FFH stake, had not infused any equity till March, 2023.
However, SMFG has provided external commercial borrowings (ECBs) totalling to USD 500 million. Further, it has indicated that
it will infuse capital in the company to support growth operations.
SMICC has leveraged SMFG’s vast network for funding in domestic and international markets. Synergies are also being explored
on the assets side in terms of cross selling of products, expanding reach, etc. There has been active involvement of the parent in
the various functions in SMICC at regular interval s (e.g., monthly risk call, ALCO meeting, etc). Strong representation of the
promoters on the board is reflective of the oversight and strategy support.

Experienced management team

SMICC has an experienced top management team from banks and other financial services companies. Shantanu Mitra is the Chief
Executive Officer and Managing Director of SMICC and has over 40 years of experience in the financial services, with over 20
years at Standard Chartered Bank and Citibank, where he had stints in India, Singapore, and Thailand. Ajay Pareek is the Chief
Business Officer of Fullerton India and has more than 24 years of experience in the financial services sector. Pankaj Malik is the
Chief Financial Officer and Head of Strategy Execution and has over 20 years of experience in various capacities across finance
and allied functions. In September 2022, Dhananjay Tiwari was appointed as the Chief Risk Officer of the company, who was
previously the Chief Risk Officer of SMHFC.

Adequate capitalisation
SMICC has seen multiple rounds of capital infusion worth ₹1,800 crore from FY19 to FY22 from its previous promoter, Temasek,
and is expecting the same support from SMFG in the coming years . The tangible net worth (TNW) is at ₹4684 crores as on March
31, 2023, as against ₹3732 crore in FY22. The overall gearing has increased to 6.12x as on March 31, 2023, as against 4.65x as
on March 31, 2022, primarily due to the increase in borrowing to support growth in operations with no additional capital infusion.
Care Rating expects the gearing to remain around 6x – 6.5x, going forward. Considering the strategic importance of the company
to the parent SMFG to increase its footprint in India, CARE Ratings expects the support to be forthcomi ng in the managerial and
capital aspects , as and when required .

Diversified resource profile

SMICC’s resource profile remains diversified, with term loans constituting the maximum proportion at 50%, followed by non-
convertible debentures (NCDs) and ECBs at 23% and 13%, respectively. The company has large public, private sector banks
along with non-banking financial companies (NBFCs ) and foreign banks as its lenders and continues to diversify its borrowing

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profile. The company has raised an additional ₹21,116 crore (including securitization) of borrowings in FY23. Due to the strong
brand image of the group, the company has been able to avail funds from reputed institutions at competitive rates.

Improved earning and profitability

Key weaknesses:
Moderate asset quality
Although the company’s asset quality has improved with the gross net performing assets (GNPA) reducing to 3.83% in FY23 as
against 6.57% in FY22, it continues to remain moderate. The improvement was primarily due to write-offs amounting to ₹1,217
crore and no significant slippages in the recently acquired book. CARE Rating expects the GNPA to remain in the similar range,
going forward , as the company has taken various measures to make the underwriting process stronger and is opting for more
granular exposure to reduce concentration.

Higher proportion of unsecured lending and exposure to borrower class having vulnerability to economic cycles
SMICC continues to grow at a fast pace, with disbursements increasing from ₹12,738 crores in FY22 to ₹25,203 crores in FY23,
which is a 98% growth over the period. The same is true for the asset under management (AUM) as well, showing a 44% growth
from FY22 to FY23. SMICC’s book is characterised by a high proportion of unsecured book (personal loans, group loans, digital
lending) at 60% - 65% of the total AUM as on March 31, 2023. The unsecured book remains vulnerable to the volatility in the
cash flows of the underlying borrower segment. However, CARE Ratings also takes cognisance of the management’s focus on de -
risking the overall book by adopting various strategies, such as increasing secured lending in rural segment, focusing on low-
ticket micro –loan-against-property (LAP) in the urban segment, high-ticket legacy LAP book (₹5 crore+ ticket) being put on run
down, focusing more on the salaried segment for personal loans than the self-employed segment. The company targets to have
a secured book of 40% - 50% of the AUM in the medium term on consolidated basis .
SMICC’s ability to increase its scale of operations with improved asset quality matrix will be a key monitorable.

Liquidity: Strong
As on March 31, 2023, the company had cash, bank and fixed deposits (FD)s balance of ₹2,660 crore and liquid investments in
the form of T-Bills and certificate of deposit of ₹2,418 crores, totalling to ₹5,078 crore, against which it has contracted repayments
of borrowings to the tune of ₹3,328 crore for the next three months. Additionally, the company maintains a committed line of
credit from various banks by paying a commitment fee, which provides additional liquidity buffer. As on March 31, 2023, the
company had unutilised lines of ₹1765 crore. Furthermore, comfort is derived from SMICC’s financial flexibility as a subsidiary of
SMFG to obtain additional funding from the banks.

Applicable criteria
Policy on default recognition
Financial Ratios - Financial Sector
Criteria for Non-Banking Financial Companies
Rating Outlook and Credit Watch
Policy on Withdrawal of Ratings
Factoring Linkages Parent Sub JV Group
Criteria for rating of Short-Term Instruments

About the company and industry

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Industry classification
Macro-Economic Indicator Sector Industry Basic Industry
Financial Services Financial Services Finance Non-Banking Financial Company
(NBFC)

SMFG India Credit Company Limited (SMICC) (erstwhile Fullerton India Credit Company Limited ) is registered with the Reserve
Bank of India (RBI) as a non-deposit accepting NBFC (NBFC-ND-SI) with operations since 2007. In FY22, Sumitomo Mitsui
Financial Group, Inc. acquired 74.9% stake in SMICC from Fullerton Financial Holdings (FFH). Prior to this , SMICC was owned by
Temasek Holdings Private Ltd Singapore (Temasek), indirectly through its investment arm - Fullerton Financial Holdings Pte,
Singapore (FFH) (step -down subsidiary of Temasek). The company’s name has recently been changed from Fullerton India Credit
company Limited (FICCL) to SMFG India Credit Company Limited (SMICC), showing strong support and commitment from the
parent, SMFG.
SMICC offers a range of secured and unsecured products across rural and urban markets with presence across 23 st ates through
729 branches and an employee strength of 16,545 people. Its services constitute a secured lending portfolio consisting of LAP to
retail customers and SMEs, commercial vehicle (CV) loans and secured rural loans such as two -wheeler loans. The unsecured
portfolio comprises personal loans to salaried and self -employed individuals and group loans in the rural area. The percentage of
the s ecured and unsecured portfolio stood at 35% and 65% as on March 31, 2023.

Brief Financials (₹ crore) March 31, 2021 (A) March 31, 2022 (A) March 31, 2023 (A)

Total income 4,758 3,591 5,028

PAT -1,157 58 670

Adjusted total assets* 22,916 22,665 34,954

Net NPA (%) 2.58 3.06 2.00

ROTA (%) -4.47 0.25 2.33

A: Audited. Note: The above results are latest financial results available.
*Adjusted Total Assets: Total assets adjusted for Deferred Tax assets and Intangible assets

Status of non-cooperation with previous CRA:

None

Any other information:

Not applicable

Rating history for the last three years: Please refer Annexure-2

Covenants of the rated instruments/facilities: Detailed explanation of the covenants of the rated instruments/facilities is
given in Annexure-3

Complexity level of the various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

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Rating
Size of the Assigned
Name of the Date of Coupon Maturity
ISIN Issue along with
Instrument Issuance Rate (%) Date
(₹ crore) Rating
Outlook
Commercial
Paper INE535H14IN1 09-Sep-22 7.30% 30-Aug-23 400.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IM3 09-Sep-22 7.30% 07-Sep-23 50.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IL5 27-Feb-23 8.20% 25-Aug-23 25.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IL5 28-Feb-23 8.20% 25-Aug-23 100.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IL5 28-Feb-23 8.20% 25-Aug-23 100.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IL5 10-Mar-23 8.20% 25-Aug-23 5.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IR2 20-Mar-23 8.17% 18-Mar-24 100.00 CARE A1+
(Standalone)
Commercial
Paper INE535H14IL5 25-Aug-22 7.05% 24-Aug-23 100 CARE A1+
(Standalone)
Commercial
Paper INE535H14IK7 15-Jul-22 7.07% 14-Jul-23 250 CARE A1+
(Standalone)
Commercial
Paper
- - - - 3370.00 CARE A1+
(Standalone)
(Proposed)
Debentures -
Non-
INE535H07AC5 28-Dec-17 8.00% 28-Dec-22 00.00 Withdrawn**
Convertible
Debentures
Debentures -
Non-
INE535H07BD1 04-Nov-19 8.10% 04-Nov-22 00.00 Withdrawn**
Convertible
Debentures
Debentures -
Non- CARE AAA;
INE535H07AH4 17-Apr-18 8.4% 17-Apr-24 70.00
Convertible Stable
Debentures
Debentures -
Non- CARE AAA;
INE535H07AO0 10-Aug-18 9.2% 08-Aug-25 50.00
Convertible Stable
Debentures
Debentures -
Non- CARE AAA;
INE535H07BN0 02-May-22 7.3% 02-May-25 350.00
Convertible Stable
Debentures
Debentures -
Non- CARE AAA;
INE535H07BS9 15-Nov-22 8.3% 15-Nov-32 75.00
Convertible Stable
Debentures

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Debentures -
Non- CARE AAA;
INE535H07BU5 02-Jan-23 8.3% 31-Dec-32 50.00
Convertible Stable
Debentures
Debentures -
Non- CARE AAA;
INE535H07BW1 27-Jan-23 8.1% 22-Mar-24 650.00
Convertible Stable
Debentures
Debentures -
Non- CARE AAA;
INE535H07BS9 06-Mar-23 8.1% 15-Nov-32 50.00
Convertible Stable
Debentures
Debentures -
Non-
CARE AAA;
Convertible - - - - 2695.70
Stable
Debentures
(Proposed)
Debt-
Subordinate INE535H08645 13-Oct-15 9.40% 13-Oct-22 00.00 Withdrawn*
Debt
Debt-
Subordinate INE535H08660 25-Feb-16 9.30% 25-Apr-23 00.00 Withdrawn*
Debt
Debt-
CARE AAA;
Subordinate INE535H08579 28-Oct-13 NA 27-Oct-23 50.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08587 26-Dec-14 9.6% 26-Dec-24 50.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08595 10-Jun-15 9.5% 10-Jun-25 25.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08637 13-Oct-15 9.5% 13-Oct-25 100.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08678 25-Feb-16 9.3% 25-Feb-26 25.00
Stable
Debt
Debt-
Subordinate CARE AAA;
INE535H08686 23-Mar-16 9.3% 23-Mar-26 25.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08694 03-May-16 9.3% 30-Apr-26 21.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08702 27-Oct-16 8.8% 26-Apr-24 25.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08710 27-Oct-16 8.8% 25-Apr-25 25.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08728 12-Jun-18 9.3% 08-Jun-28 50.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08728 27-Jun-18 9.5% 08-Jun-28 65.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08728 13-Jul-18 9.5% 08-Jun-28 60.00
Stable
Debt

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Debt-
CARE AAA;
Subordinate INE535H08736 20-Jul-18 9.5% 20-Jul-28 25.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08736 28-Sep-18 9.6% 20-Jul-28 20.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08744 16-Aug-18 9.3% 26-Apr-29 150.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08728 13-Dec-18 9.8% 08-Jun-28 50.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08785 25-Apr-22 7.7% 23-Apr-32 50.00
Stable
Debt
Debt-
CARE AAA;
Subordinate INE535H08793 29-Mar-23 8.4% 23-Dec-32 100.00
Stable
Debt
Debt-
Subordinate CARE AAA;
- - - - 509.00
Debt Stable
(Proposed)
Fund-based -
CARE AAA;
LT-Term - - - - 2760.50
Stable
Loan^
Fund-based -
CARE AAA;
LT-Term Loan - - - - 2239.50
Stable
(Proposed)
* ₹75.00 crore is withdrawn on account of redemption on maturity of bonds.
** ₹ 510.00 crore is withdrawn on account of redemption on maturity of bonds.
^ As on 26th July, 2023.

Annexure-2: Rating history for the last three years

Current Ratings Rating History

Date(s) Date(s)
Name of the Date(s)
Sr. and Date(s) and and
Instrument/Bank Amount and
No. Rating(s) Rating(s) Rating(s)
Facilities Type Outstanding Rating Rating(s)
assigned assigned in assigned
(₹ crore) assigned in
in 2023- 2021-2022 in 2020-
2022-2023
2024 2021
1)CARE AAA;
1)CARE AAA;
Stable
Stable 1)CARE
(09-Dec-21)
Debentures -Non CARE (06-Oct-22) AAA;
1 Convertible LT 1650.70 AAA; - Stable
2)CARE AAA (CW
Debentures Stable 2)CARE AAA; (07-Oct-
with Developing
Stable 20)
Implications)
(07-Jul-22)
(07-Jul-21)
1)CARE AAA;
1)CARE AAA;
Stable
Stable 1)CARE
(09-Dec-21)
CARE (06-Oct-22) AAA;
Debt-Subordinate
2 LT 1000.00 AAA; - Stable
Debt 2)CARE AAA (CW
Stable 2)CARE AAA; (07-Oct-
with Developing
Stable 20)
Implications)
(07-Jul-22)
(07-Jul-21)

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1)CARE AAA;
1)CARE AAA;
Stable
Stable 1)CARE
(09-Dec-21)
CARE (06-Oct-22) AAA;
Fund-based - LT-
3 LT 5000.00 AAA; - Stable
Term Loan 2)CARE AAA (CW
Stable 2)CARE AAA; (07-Oct-
with Developing
Stable 20)
Implications)
(07-Jul-22)
(07-Jul-21)
1)CARE A1+ 1)CARE A1+
1)CARE
Commercial Paper- (06-Oct-22) (09-Dec-21)
CARE A1+
4 Commercial Paper ST 4500.00 -
A1+ (07-Oct-
(Standalone) 2)CARE A1+ 2)CARE A1+
20)
(07-Jul-22) (07-Jul-21)
1)CARE AAA;
Stable
CARE (06-Oct-22)
Debt-Subordinate
5 LT 425.00 AAA; - - -
Debt
Stable 2)CARE AAA;
Stable
(07-Jul-22)
1)CARE AAA;
Stable
Debentures -Non CARE (06-Oct-22)
6 Convertible LT 2340.00 AAA; - - -
Debentures Stable 2)CARE AAA;
Stable
(07-Jul-22)
*Long term/Short term.

Annexure-3: Detailed explanation of covenants of the rated instruments/facilities

Not applicable

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level

1 Commercial Paper-Commercial Paper (Standalone) Simple

2 Debentures -Non Convertible Debentures Simple

3 Debt-Subordinate Debt Complex

4 Fund-based - LT-Term Loan Simple

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any
clarifications.

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Phone: +91-22-67543404
E-mail: [email protected] Shweta Sumeet Agrawal
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Phone: 022- 6754 3528
E-mail: [email protected]

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise capital
and enable investors to make informed decisions. With an established track record of rating companies over almost three decad es,
CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise, backed by the
methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in developing bank debt
and capital market instruments, including commercial papers, corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any e rrors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not respo nsible for any errors and states that it has
no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the
terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

For the detailed Rationale Report and subscription information,

please visit www.careedge.in

9 CARE Ratings Ltd.