Significant dependence on microloans and the microfinance sector.
Over the last three years, more than 85% of the advances were unsecured.
High operating expenses.
Dependency on ESMACO for promotion and new business.
Dependency on business correspondents for sourcing and servicing of customers for microloans.
Inability to comply with the applicable laws, regulations, and norms.
Inability to control the level of NPAs in its portfolio effectively or improve its provisioning coverage as a percentage of gross NPAs.
Impact of volatility in interest rates causing the net interest margin to decline.
An ongoing criminal investigation against an individual promoter – Kadambelil Paul Thomas.
Negative publicity about the brand, third parties who use the “ESAF” brand, including the corporate promoter, and third parties whose products ESAF distributes.
Failure to enforce its intellectual property rights or inability to renew its trademark licensing agreement.
Geographical concentration in southern India.
Inability to secure funding on acceptable terms and at competitive rates when needed.