The ability of non-banks like Edelweiss to mobilise resources at adequate rates is expected to remain constrained over the near to medium term in the current operating environment. The investors are risk averse towards non-banks, particularly wholesale-oriented entities.
The Group has demonstrated its ability to maintain adequate reported asset quality. But, a prolonged slowdown in the real estate industry coupled with the liquidity crunch in the overall market could have an adverse impact on the same (asset quality).
The risks are, however, partly mitigated by the collateral cover maintained for such exposures coupled with the recent capital raise. The recent capital raise would help reduce the overall leverage and provide some cushion to absorb losses, if any, on the lending book.