Friday, September 12, 2008

Edelweiss plans to set up asset reconstruction unit



Financial services firm Edelweiss Capital Ltd plans to set up an asset reconstruction firm and apply for regulatory approval in the next six months, a top official said on Friday.

Asset reconstruction firms buy bad loans in a pool format at a discount and recover the money from the borrowers subsequently. Loan growth of nearly 30 percent in India over the past few years has resulted in creation of non-performing assets, an opportunity which is luring several state-run and private sector banks as well as financial institutions.

Under the deal, Edelweiss would offer advisory services on wealth management products to customers of the bank with an average net worth of over 1 million rupees each, Shah said. Several banks such as ICICI Bank, HDFC Bank , ABN Amro and Kotak Mahindra Bank have increased their focus on wealth management as wealthy Indians demand specialised advisory services.

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