Hi,
Please find below responses:
a) We do a diligence on the financial institution before onboarding them on Wint platform. This includes analyzing their financial health, systems, processes and operations. We prefer entities where 1) Financial leverage is on lower side(compared to industry) so that margin of safety is high for bondholders 2) Which are backed by Private equity funds and are not entirely promoter run 3) Have diversified existing lender base. Some of these points have been covered in our blog Which NBFCs Does Wint Wealth Choose to Work With? - Wint Wealth
b) No, we dont have direct control to which borrowers the money would be lent to. However, there are covenants placed in terms of asset quality that entity has to maintain which ensures that portfolio quality remains good. An example of such covenant is: If PAR 90 crosses 5% the bond would have to be prepaid.
c) Yes, all loans have collateral.
d) Yes, while investing you will have the details of the institution, the details of the underlying security cover etc
e) They have their internal risk policies and underwriting frameworks. This varies entity to entity and sector to sector. The framework can include details like fixed obligation to income ratio of the client, income levels, may be credit score, quality of collateral etc.
f) The funding isn’t happening towards development of any specific project. Rather money is being lent out to a financial institution. The information about entity is provided in the prospectus. You can also refer to the rating rationale. Link : https://www.acuite.in/documents/ratings/revised/27695-RR-20211011.pdf