Belstar Microfinance Limited IPO

Microfinance borrowers in India generally does not have access to other forms of organised lending and 99.93% of its gross loan portfolio are unsecured as of December 31, 2023. As a result, the company may experience increased levels of NPA (for which its as of December 31, 2023 is at 1.88%) and related provisions and write-offs that may adversely affect its business, financial condition and results of operations.

The company credit monitoring and risk management policies and provisions may not be adequate to control its Non-Performing Assets which could adversely affect the company's financial conditions and results of operations.

If the company is unable to manage its growth effectively, its business and reputation could be adversely affected. Furthermore, the company may not be able to sustain the growth rates the company has had since its inception.

As of December 31, 2023, 48.46% of its gross loan portfolio is derived from loans originating from Tamil Nadu, and any adverse developments in this region may have an adverse effect on its business, results of operations, financial condition and cash flows.

Changes in the tenure of its loan products could result in asset liability mismatches and expose it to interest rate and liquidity risks, which may adversely affect its business, financial condition, results of operations and cash flows.

Negative publicity and public perception of the interest rates and terms of its microfinance loans may adversely affect the company reputation and the growth and market acceptance of its products and services.

For the nine-month period ended December 31, 2023, 67.88% of its collections from customers is in cash, exposing the company to operational risks. Furthermore, its may be subject to regulatory or other proceedings in connection with any unauthorized transactions, fraud or misappropriation by its representatives and employees, which could adversely affect its business.

Any failures or material weakness of its internal control systems could cause significant operational errors, which would adversely affect its reputation and profitability.

The company faces various risks associated with its large number of rural and semi-urban branches and widespread network of operations, which may adversely affect its business, financial condition and results of operations.

COVID-19 has had an adverse effect on its business, results of operations and financial performance.