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EARNINGS UPDATE Q1FY19
BHARAT FINANCIAL INCLUSION LIMITED(Formerly known as ‘SKS Microfinance Limited’)BSE: 533228 ● NSE: BHARATFIN
Corporate Identity No. L65999MH2003PLC250504
www.bfil.co.in
This presentation is solely for viewing. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from BHARAT Financial Inclusion Limited.
JULY 2018
CONTENTS
Particulars Slide No.
Update on Merger 3
Executive Summary 7
Investment Hypothesis 9
Company Overview 12
Clarity on Major Uncertainties Post AP MFI Crisis 17
Growth Anatomy 22
Future Strategy 28
Pilot on Retail Distribution And Service Points (RDSP) 32
Update on Cashless and E-KYC 36
Loans for Housing Improvement & Two-Wheeler (Pilot) 39
Q1FY19 Performance Highlights 43
Industry Update On Credit Quality 54
Review of Financials 56
Financial Architecture 74
Risk Management 79
Capital Structure 81
Annexures 83
With effect from 1st April ,2018 , the company has adopted Indian Accounting Standards (Ind AS). Accordingly FY18 numbers
have been restated from previous GAAP to Ind AS to make them comparable.
Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary.2
3
UPDATE ON MERGER
3
RATIONALE FOR MERGER FOR BFIL
4
Access to savings &
deposits products▪ Enhanced relationship with customers
▪ Competitive edge with significant head start vis-a-vis SFBs
Retail Distribution Service
Point Rollout (RDSP)
▪ Cashless collections > Customer analytics > Consumer finance loan
▪ Cross-sell opportunity to Non-MFI customers – Ex: Solar, Mobile,
Sewing machines, etc.
Create a robust Secured
lending platform
▪ Banks expertise in 2-wheeler financing coupled with extensive
distribution network of BFIL creates a significant opportunity
▪ Similarly, home improvement loans can be scaled up
▪ Cashless collections > Time saved in center meeting > Improved
Sangam manager productivity > Improved cost to Income ratio
Reduced impact of Political
Risk
▪ Propensity to default by customers reduces in case of political events.
e.g. In the 5 pilot branches, customers with RD(Recurring deposit) had
lower overdues (>4 weeks at 0.08%*) vis-a-vis non-RD customers ( >4
weeks at 4.3%*)
* As on 30th Sep 2017
TRANSACTION STRUCTURE
5
1. BFIL to merge into IBL under a Scheme of
Arrangement
2. BFIL shareholders to receive IBL shares as
consideration
3. IBL to transfer the employees and
operations into a wholly owned subsidiary*
making it a captive Business
Correspondent
* Subsidiary to be incorporated post RBI approval
Issue of shares by IBL to shareholders
of BFIL
BFILShareholders
BFILIndusind Bank
Ltd.1
Wholly Owned Subsidiary
3 Subsidarisation of BC Operations
2
Merger of BFIL into IBL
Board ApprovalRegulatory Filings
& Approvals
NCLT Filings &
Approval
ROC Filings &
Share Issuance
▪ Valuation / Swap
Ratio
▪ Approval of
‘Scheme’, matters
therein and other
legal documents
▪ RBI
▪ CCI
▪ SEBI and Stock
Exchanges (NOC)
▪ Filing of Scheme
▪ NCLT approval:
Shareholders
approval, Creditors
approval, other
approvals
▪ ROC Filing
▪ Allotment of
shares to BFIL
shareholders
4-6
months1 month
Date of Announcement
14th Oct’ 2017
STATUS ON MERGER – CCI,RBI,SEBI AND STOCK EXCHANGES APPROVAL RECEIVED
6
EXECUTIVE SUMMARY
7
8
136 244
377
641
848
1,276
232
363
FY13 FY14 FY15 FY16 FY17 FY18 Q1FY17Q1FY18
2,016 2,837
4,171
7,677 9,150
12,575
9,629
13,832
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Jun-17 Jun-18
Overview AUM Growth (Non-AP portfolio) Growing Net Interest Income
Financial Metrics Balanced Geographical mix Diversified Shareholding
Marginal cost of borrowing# 8.3%
Cost to income 51.2%
Return on Asset^* 3.7%
Return on Equity* 17.6%
EXECUTIVE SUMMARY
• Largest microfinance company in India
with gross loan portfolio of INR 13,832
Cr., 78 Lakhs members in Non-AP states
and 1,639 branches
• Sub 20% lending rate
• Company’s non-AP Portfolio grew by
44% (YoY) to INR 13,832 Crs. as of
June 30, 2018
• Profit after tax for Q1FY19 of INR 142
Crs (Previous GAAP Rs. 190 Crs)
Note: Shareholding as of June 30, 2018
Net worth (INR Cr.) 3,310
Capital Adequacy 30.6%
Cash & Cash equivalent
(INR Cr.)
1,236
Note: Portfolio as of June 30, 2018
Strong Balance sheet and liquidity
Efficiency and Profitability
INR Cr.INR Cr.
NII = Interest income on Portfolio loans +Net gain on
derecognition of loans sold under assignment transaction
+ BC Fee – Financial Cost
Note: Above Data for Q1FY19
Non-AP = excluding states of AP and Telangana
# includes on and off b/s borrowings (excluding processing fees) for Q1FY19
^Assets includes securitized, assigned and managed loans
Odisha 16%
Bihar 14%
West Bengal 13%
Karnataka 11%
Maharashtra 10%
Uttar Pradesh
8%
Kerala 6%
Rajasthan 7%
Jharkhand 5%
Madhya Pradesh
4%
Others 6%
2.8%
2.8%
2.9%
3.1%
3.2%
3.3%
3.6%
3.6%
4.8%
6.7%
Tree Line
Birla Sun Life Mutual Fund
Blackrock
Amansa Capital PTE Limited
DSP Blackrock
East Bridge Capital
Wellington
Kotak Mutual Fund
Route One
Reliance Mutual Fund
Top 10 Shareholders
Figures rounded off to the nearest digit across the presentation
9
INVESTMENT HYPOTHESIS
9
INVESTMENT HYPOTHESIS
BFIL is the most efficient and one of the low cost lender (interest rate at sub 20%)
Impeccable track record of meeting financial obligations in a timely manner even during the black swan event of AP-MFI Crisis
Diversified earnings stream with cross-sell / Non-Loan revenue contributing 8.0% to PAT for Q1FY19
Pan-India presence with no unbalanced geographic sectoral exposure
Strong solvency (Capital Adequacy of 30.6% as on 30th June 2018) and sufficient liquidity
Steady state RoA of 4% is the highest among financial services play
Favorable Macros
Unmatched leadership
There is a huge demand/ supply gap for microfinance
Entry barriers and supervisory standards are significantly enhanced thwarting future competition
No credible alternative for microfinance emerges even after 7.9 years of AP MFI Act
Regulatory Clarity
RBI’s comprehensive regulatory framework mitigates political and regulatory risks
RBI and MoF acknowledge microfinance as a key component of financial inclusion
PSL requirement of banks to enhance funding availability and value of the franchise
10
11
Segment -1
70 mn households in India
with some assets (INR
90/day PPP)
Segment -2 (BPL)
80 mn households in India
with no assets (INR 55/day
PPP)
THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE
Assumptions
• Target households: 150 mn
•Basis: World Bank poverty statistics, India
• Avg. credit requirement: per household Rs. 45,000 (2015), adjusted with inflation on per
household Rs 20,000 (Year 2005)
•Basis: EDA Rural Systems, World Bank, Access to Finance
• Adjustment for service difficulties: 20%
•Basis: adjustment made to reflect inaccessible poor in rural areas (~7%) and half of
underserved urban poor (0.5 x 26% = 13%)
Source: World Bank; Sa-Dhan Bharat Microfinance reports
38,558 59,860 72,345
52,447
24,017
27,582 37,286
38,781
FY14 FY15 FY16 FY17
MFIs SHG
Micro-Credit Demand In India
covered in part by
moneylenders and
informal sources,
but largely untapped
*Disbursement in INR Crs.
Demand
Rs. 2,40,000
* *
Rs.87,442
Rs. 62,575
Rs. 5,40,000
Year 2005
Year 2015
*
Rs. 1,09,631 Rs. 91,228
*
INR crore
12
COMPANY OVERVIEW
12
13
Survey a village Recruit members
Deliver doorstep service Provide training
BFIL USES GRAMEEN MODEL TO PROVIDE UNSECURED CREDIT AT THE
DOORSTEP OF LOW INCOME RURAL WOMEN
Put loan
officers pic
1,484
2,875
3,503
FY 12 FY 13 FY 14
Drawdowns
AP exposure of Rs. 1,360
crore written off
Q3FY11 Q4FY14 Var.
Branches 2,403 1,255 -48%
Other Opex (INR crore)
51 21 -60%
Headcount 25,735 8,932 -65%
Personnel Cost (INR crore)
89 43 -52%
3,526
1,185
2,837
Q3FY11 Q3FY12 Q4FY14
Non–AP Gross Loan Portfolio
(13.6) (3.0)
70
FY12 FY13 FY14
Return To Profitability
Bn Bn
INR crore
BUILDING BLOCKS OF TURNAROUND POST AP MFI CRISIS
Balance Sheet Cleansed Supply-side Shock Managed Credit Growth Resumed
Cost Structure Optimization
14
12.6%
8.7% 8.4%
FY14 FY18 Q1FY19
Marginal Cost of Borrowing#
74.5%
49.0% 51.2%
FY14 FY18 Q1FY19
Cost to Income
2000 2014 -152012Yrs
14%
8%1,229
Oct’10 June’12 Mar’18
28,300
14,600
Non-AP Portfolio Outstanding
3,945
BFIL
Others
INR Crs.
▪ Net worth - Rs. 3,310 crs
▪ CAR - 30.6% (RBI Requirement
15%)
# On and Off balance sheet borrowings (excl. Managed Loans)
including processing fees 2015 -16
*Mar’18 Includes data for NBFC-MFIs & SFBs (source: MFIN)
16%12,594
78,113
DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (1/2)
Market Share Regained
Technology Upgraded
Capital Reinforced
Efficiency Gains
Installed Computers at all branches with In-House lending system
All branch connectivity with daily data receipt (1,215 remote locations)
Refactoring of In-house lending system
Equipped Loan Officers with tablets
Instant Credit Bureau check, E-KYC and cashless Disbursements done
2017 - 18 15
*
Retail
Distribution
& Service
Points &
Cashless
Collections
29.25%
24.55%23.55%
22.00%20.75%
19.75%
Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15
4.8% reduction since Oct’14
GLP: Gross Loan PortfolioTerm loan and cash credit facilities
Interest rate on income generation loans
74%
53%
Mar-13 Jun-18
Share of borrowing from top 5 banks
53%
43%
Sep-10 Jun-18
Top three states share in GLP
Political Risk Mitigation through interest rate reduction
Reduced Borrowing Dependence Lower State Concentration
DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (2/2)
16
CLARITY ON MAJOR UNCERTAINTIES
POST AP MFI CRISIS
17
WHAT DOESN’T KILL YOU, MAKES YOU STRONGER - POSITIVE DEVELOPMENTS POST AP MFI CRISIS
Will there be multiple
regulators?
▪ Regulatory clarity – RBI to be the sole regulator
Funding uncertainty?
▪ Priority sector status continues
▪ MFIs are the only indirect priority sector dispensation
Will there be contagion?
▪ No contagion
▪ Since past 7.9 years no other state has followed suit
Has the operating model
been challenged?
▪ Collection efficiency maintained despite disbursements being a fraction
of collections during the wind-down mode i.e. Oct’2010 to June’2012.
▪ No alternative credit delivery model has gained currency.
What will be the economics
under regulated interest
rate regime?
▪ RoA of 3-4% on a steady-state basis
Concerns Clarity
18
OPERATING MODEL VAILIDITY ESTABLISHED
3,942 3,526
2,706
2,101
1,635
1,185 1,320 1,229
Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13
Collection efficiency of 97% during wind-down mode dispels ever greening myth
Non-AP
Loan
Portfolio
No. of non-AP borrowers who repaid on-time
during this period5.2
No. of non-AP members who availed loans
during this period3.3
No. of non-AP members who didn’t
receive any incremental credit from BFIL
during this period
1.9
in Millions
1.9 million borrowers repaid loans
without incremental lending
INR crs
Internal generation -- and not incremental debt --
aids prompt repayment
MFI Industry non- AP Portfolio Outstanding (Rs Cr)
Oct’10 28,300
June’12 14,600
19
Sector outstanding
Non-AP Portfolio
Oct ’10 – 28,300
Mar’14 – 24,615
Mar’15 – 40,138
Mar’16 – 50,534
Mar’17 – 61,623
Mar’18– 78,113#
Market Share Dynamics
3rd, 4th and 5th largestMFI players with 33%Non-AP market sharewent under CDR.
Institutional Infrastructure
Credit Bureaus-
- Equifax & Highmarkare functional
- 95% of MFIs now use CB reports for disbursements
COMPETITIVE LANDSCAPE CHANGES TO BFILS’ ADVANTAGE
INR crore
• No. of loan records - 30.8 Crore
• No. of borrower records – 8.9 Crore
• No. of loan records (live) – 7.1 Crore^
• No. of borrower records (live) – 4.0 Crore^
• No. of MFIs reporting – 173
Snapshot of Equifax Credit Bureau*:
* Source: Equifax (as on May’18), Excluding A.P and Telangana
# as per MFIN; Mar’18 - Includes data for NBFC-MFIs & SFBs
^ 0-179 DPD.20
6.7
6.4
1.0
2.7
4.4
21.20
STEADY-STATE ROA OF 4% CAN BE TARGETED
RevenueProfitTaxesProv. &
Write-off
Operating
cost
Financial cost
▪ Marginal Cost of borrowings
for Q1FY19: 8.4%.
▪ Portfolio funded by debt: 80%
Tax Rate @ 34%
21
Interest Income
(EIR) #
*interest rate charged is 19.75% for new loans effective from 7th Dec’15
#Processing fee is calculated based on weighted average portfolio mix of 48% IGL (1 Yr. loan) , 23% LTL (2 Yr. loan) and 28% MTL
(1.5 Yr. loan)
GROWTH ANATOMY
22
3,942
1,185 1,320 2,016
2,837
4,171
7,677
9,135
12,575
Sep'10 Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18
BFIL GLP
28,300
14,600 16,740
24,499
38,386
50,535
61,623
78,113
Oct'10 Jun'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18
Industry GLP
7.5 YEAR CAGR FOR THE SECTOR AND BFIL ARE 14% AND 17% RESPECTIVELY
^Industry portfolio includes NBFC-MFIs and SFBs only
Source: MFIN Micrometer (Mar’13,Mar’14, Mar’15, Mar’16,Mar’17 & Mar’18 data)
23
^
^
20%
57%
33%
80%
43%
67%
0% 20% 40% 60% 80% 100%
BFIL- June'18
MFI Industry -Mar'17*
MFI Industry-Mar'13^
Urban Rural
INDUSTRY GROWTH SKEWED TOWARDS URBAN, WHEREAS WE REMAIN RURAL FOCUSED
Industry growth skewed
towards urban
We are rural
focused
Source: ^Sa-Dhan Report 2013,*MFIN Micrometer
24
AUM GROWTH IS PRIMARILY LED BY CUSTOMER ACQUISITION OVER THE LAST DECADE
25
150%
-13%
44% 42%
124%
-15%
19%25%
13%
2%
21%14%
FY 07 - 10 FY 10 - 13 FY 13 - Q1FY19 FY 07- Q1FY19
Gross loan portfolio Active Borrowers Gross loan portfolio/ Active Borrowers
CAGR %
*
*Enterprise figures^ Excluding states of A.P and Telangana
^ ^ *
CREDIT BUREAU DATA
13%
16%18%
22% 23%
FY-17 FY-18 Q1-FY18 Q4-FY18 Q1-FY19
22%
27% 26%
37% 36%
FY-17 FY-18 Q1-FY18 Q4-FY18 Q1-FY19
Rejection rate for Long Term loansRejection rate for All Products
88% 89% 94% 89% 91%
FY17 FY18 Q1-FY18 Q4-FY18 Q1-FY19
Hit rate^ for all products
Hit rate = % of loan applications with matching record in credit bureau
Rejection Reasons – Q1FY19 % Mix
26
Reasons
IGL 1 &
IGL 1 +
MTL 1
>IGL 1 or > MTL
1 (excl. IGL1 +
MTL1)LTL
Q1FY191st Apr to
9th June
10th to
30th June
1st Apr to
9th June
10th to
30th June
Loans from=>2MFIs 33% 46% - 54% -
Loans from > 2 MFIs or Other lending
entity- - 48% - 54%
=>2MFIs and Outstanding Balance
>60K19% 31% - 29% -
=>2MFIs or other lending entity and
Outstanding Balance >80K- - 20% - 10%
Outstanding Balance>60K 17% 10% - 6% -
Outstanding Balance>80K - - 21% - 26%
=> Default History (club all type of
defaults)10% 9% 4% 7% 1%
Eligibility < Min Ticket Size 22% 4% 7% 3% 9%
Total 100% 100% 100% 100% 100%
*Note:
Rejections are done based on data input from Credit bureau. Rejection data is
calculated based on unique clients basis.
* *
*
Pre Post#RBI
Guidelines
MFIN
Guidelines^^
Indebtedness
limit (INR)60,000 80,000
Maximum No. of
Lenders2 3
Note:
▪ The revised guidelines pertains to JLG loans and does not
apply to first time customers (IGL1).
▪ Guidelines continue to remain same for IGL1 customers
Revised BFIL Guidelines#
^^MFIN guidelines revised to 3 lender norms in Sep’17 and indebtedness
to INR 80,000 in Apr’18
# With effect from 10th June’18
✓
✓ ✓
✓
State SHG Exposure* BFIL Exposure*
Andhra Pradesh 28% -
Telangana 20% -
Karnataka 13% 11%
Tamil Nadu 10% -
West Bengal 8% 13%
Kerala 5% 6%
Odisha 3% 16%
Maharashtra 3% 10%
Uttar Pradesh 2% 8%
Bihar 3% 14%
Madhya Pradesh 1% 4%
Assam 1% -
Rajasthan 1% 6%
Jharkhand 0.5% 5%
Gujarat 0.4% -
Chhattisgarh 0.6% 2%
Haryana 0.3% 2%
Punjab 0.1% 2%
Tripura 0.2% -
Himachal Pradesh 0.2% 0.1%
Others 0.5% 0.3%
BFIL HAS NIL EXPOSURE IN SHG CONCENTRATED STATES
SHG Exposure <=5%
SHG Concentrated
States
*SHG Data as on Mar’17 (Source: NABARD Status of Microfinance in India-2017), BFIL data as on June1827
FUTURE STRATEGY
28
UNMATCHED LEADERSHIP
Unique
Operating Model
Extensive Reach
Low Cost
Producer
External
endorsements
Parameter
▪ Interest rate
▪ No. of districts
▪ No. of customers
▪ Group Lending
▪ Rural customer base
▪ Rating/Grading
Status
▪ 100%
▪ ~80%
▪ Sub 20% lending rate
▪ 354
▪ 7.8 Mn
▪ Highest MFI grading “MFI 1”
▪ Highest Code of Conduct
Assessment Grading “C1”
▪ Corporate Governance rating at
“CGR2+”
▪ Highest safety Short-term rating at
“A1+”
29
THE MOST EFFICIENT MFI IN THE GLOBE
10
Metric
▪ Sub-20
Interest
Rate to
Borrower
▪ Cost to
Income
Ratio
▪ Balance sheet
strength
▪ Stellar
repayment
record
▪ Judicious
sources mix
▪ Technology
initiatives
▪ Scale
▪ AUM
growth
▪ Operating
leverage
▪ Non-Loan
revenue
Drivers
▪ Marginal
cost of
Borrowing
▪ Cumulative
next 2
years salary
increase to
field staff
Target %
▪ Annualised
earnings
growth
Medium Term Strategic Priorities:
20 30 40 50
▪ Low marginal
cost of borrowing
▪ Scale &
Efficiency
▪ Productivity &
Efficiency
Status –
Q1FY198.4* 19.75 - 51.2% 195%
*on and off b/s loans (including processing fees)
30
CREATIVE DISTURBANCE TO ASSET-REVENUE-EARNING CORRELATION
10%
90%
Revenues
5%
95%
Assets*
15%
85%
Earnings
*Note: Core microfinance will continue to be more than 95% of credit assets
Medium-Term Targets
MFI
Non - MFI
Non-MFI Actuals – Q1FY19
3.5%
0.9%
31
8.0%
PILOT ON RETAIL DISTRIBUTION
AND SERVICE POINTS (RDSP)
32
WE MEET OUR BORROWERS 52 TIMES A YEAR
Door Step Delivery
We meet 7.8 mn customer through 3 lacs centre meeting every week across the country
Center Meeting
Unique Distribution Channel
Convenient Day:
Monday to Friday
Convenient Timings:
Between 7 AM to 11 AM
Providing Financial &
Non-Financial Products
…AND WE UTILISED THIS CHANNEL FOR FACILITATION OF MULTIPLE FINANCIAL AND NON
FINANCIAL PRODUCTS.
33
DIGITAL AND PROCESS INITIATIVES HAVE HELPED REDUCE CENTER MEETING DURATION
EARLIER CENTER MEETINGDURATION
45 mins
WITH TAB AND PAPERLESS
35 mins
WITH CASHLESS AND RDSP
20 mins
• More time for value added activities at center meeting
• More center meetings per SM per day
Deposits and withdrawals point
Bill payments and recharges
Allied and OTC financial services
Cross sell and e-commerce
RDSP CREATES A PARADIGM SHIFT IN CLIENT CONNECT AND PRODUCES MULTITUDE OF OPPORTUNITIES
34
Customer
Cu
rre
nt*
Wit
h R
DSP
80% of our members travel for electricity bill payment. Travels 2-5 km, spending up to 1 hour
88% of our members visit Kirana store for ration items, travels less than 0.5 km, spending up to 15 minutes
Travels
to
99% of our members visit electronics store for DTH / mobile recharge, travels 1-5 kms, spending up to 30 minutes
51% travel to Municipality office for water bill payment, travels 1-5 kms, spending up to 30 minutes
Bank/ATM for cash deposit and withdrawal, travels 5-8 kms, spending up to 2 hours
Online shopping, only 5% customer reported access to this
1
2
3
4
5
6
Customer
Travels
to
RDSP
Single window for all requirements
< 0.5 km
1
RDSP CAN PROVIDE ACCESS TO THESE SERVICES AT THE SHORTEST DISTANCE THUS REDUCING MULTIPLE VISITS AND SAVES TIME FOR MEMBERS
*Source: 5,456 customers surveyed across Karnataka, Odisha and UP
Cashless Coll., RDSP
RDSP PILOT
35
Leveraging distribution
strength
Last mile for leading retailers
THE MODEL IS PROVEN THROUGH CENTER MEETINGS
IMMENSE E-COMMERCE POTENTIAL WITH RDSP IN PLACE EXISTING PARTNERS POTENTIAL BUSINESS OPPORTUNITY
OVER 68 LAKH NON FINANCIAL
UNITS FACILITATED*
*Cumulative units facilitated of non financial products as of Jun’18
RDSP
• E Commerce
• Railway ticketing
• OTC insurance
0.022
0.090
0.43
0.7
1.7
1.9
3.0
4.0
27
30
0 10 20 30 40
Two wheelers
Refrigerator
Water purifiers
Cooking stoves
Cooker
Cycles
Sewing machines
Mixer grinders
Solar Lamps
Mobile Phones
U N I T S I N L A K H S
UPDATE ON CASHLESS AND E-KYC
36
90%97% 98%
0%10%20%30%40%50%60%70%80%90%
Q1FY18 Q4FY18 Q1FY19
CASHLESS PROCESS
CASHLESS DISBURSEMENT PROCESS
Center
meeting
Proposal on
TABE- KYC Instant Credit
Bureau
ABPS based
Loan
disbursal
Confirmati
on to
Customer
Customer
Consent
37
Sangam
Manager
checks the
willingness for
a new loan in
the center
meeting
Loan details
are recorded
in the proposal
screen on the
tab
Customer
consent is
taken and the
biometric
details are
captured
E-KYC is done
using online
UID data
check. This
happens
instantly in the
center meeting
Parallel CB
check
happens and
the customers
eligibility for
the loan and
the loan
amount gets
determined
Loan amount
is approved
and loan
proposal is e-
signed
Disbursement
is done on the
same day in
the Aadhar
linked bank
account
through ABPS
Customer gets
the
disbursement
confirmation
through an
SMS
E-sign
98% CASHLESS DISBURSEMENTS IN Q1FY19
E-KYC, E-SIGN AND INSTANT CB ROLLED OUT ACROSS ALL BRANCHES
38
Benefits
•Digitized Loan Application
•Saves CM by reducing signature on Loan Application
•Step Forward to Paper Less
•Minimize the risk of theft and robbery.
•Minimize the risk of high volume cash carrying and transactions
•Instant Approval.
•Reduced Loan Processing TAT
• Increased Business Volume
•Immediate member authentication
•Eliminates risk of fake borrowers
E-KYC Instant CB
E-signCashless Disbursement
• Time saving in center
meeting and at the
back office.
• Better competitive
advantage.
LOANS FOR HOUSING IMPROVEMENT
& TWO-WHEELER (PILOT)
39
Assumptions
• Rural households: 166 mn
•Basis: Census 2011
• Adjustment : 46 mn
• For service difficulties: 20%
• For rented houses: 5% (source:
NSSO survey)
• For HHs with no house: 4 mn
(Source: NSSO survey)
• Addressable HH: 120 mn
• Annual no. of HH : 14 mn
• % of HHs having spent on
construction in last 1 yr (Source
NSSO survey): 12%
• Avg. credit requirement: Rs 100,000
per household
40
HUGE UNMET DEMAND FOR RURAL HOME IMPROVEMENT/EXTENSION LOANS
*FY15 disbursement of PSBs Rs.5,231 Crs and HFCs Rs.3,146 crs (< Rs.5 lacs ticket size)
Source:(NHB Report on Trend & Progress of Housing in India 2015 )
Dollar Exchange rate for 27th April 2017 Rs. 64/-
Annual Disbursement Annual Demand
Gap filled by:
Own funds - 66%;
Family, Friends &
Money Lenders - 34%.
Rs. 1,40,000 Crs. ($22bn)
Rs. 8,377 Crores ($1.3 bn) *
NO FORMAL LENDER DUE TO OPERATING
CHALLENGES IN THIS SPACE
41
Metro Urban Semi Urban Rural
Salaried Very High High Moderate No Competition
Professionals High Moderate Low No Competition
Self Employed Moderate Low Very Low No Competition
No Rural Focused Player
Operating Challenges in Rural
Purpose Home improvement and
extension
Eligibility Criteria • Should have completed at
least 3 IGL loan cycles
• Age between (18 to 55 years)
Ticket size Rs. 1,00,000 to Rs. 3,00,000
Loan Tenure 3 to 5 years
LTV (Loan to
Value Ratio)
Maximum 50% of the property
value or 75% of the work estimate
whichever is lower
Repayment
Frequency
Monthly
Our Product Offering
PILOT DETAILS
Lack of title deeds
High Transaction
costs
Lack of skilled
manpower for technical
and legal assessment
Note: Portfolio outstanding as on 30th June’18 Rs. 1.2 Crs (no. of outstanding loans 53) . The Pilot is currently rolled in 55 branches.
LOANS FOR TWO WHEELER
Product Details
Purpose Purchase of Two Wheeler
Eligibility ▪ Member of Joint Liability Group
▪ Minimum Two IGL Loan cycle completed
▪ Should not have availed IGL/MTL/LTL in last 12
weeks
▪ Exposure to borrower capped to Rs. 1 Lac across
all the lenders
Ticket Size Rs. 33,044 to Rs. 54,950
Loan Tenure 104 Weeks
Loan To Value Maximum 88.5% of on road price of the vehicle
(subject to a maximum amount of Rs. 54,950)
Repayment Frequency Weekly
42
Note: Pilot resumed from April’17Portfolio outstanding for Two wheeler loans as on 30th June’18 Rs. 8.8 Crs (no. of outstanding loans 2,103)The Pilot is currently rolled in 323 branches.
Q1FY19
PERFORMANCE HIGHLIGHTS
43
Operational
Efficiency
Financial
Efficiency
P&L Impact
Key Balance
Sheet Figures
▪ As per previous GAAP, PBT for Q1FY19 is Rs.245 Crs against Q4FY18 of Rs. 210 Crs and loss of Rs. 37 Crs in Q1FY18.
▪ As per Ind AS, PAT stood at Rs. 142 Crs in Q1FY19 as against Rs. 213 Crs in Q4FY18 and Rs. 48 Crs in Q1FY18, primarily on
account of:
1. Upfront income recognition of Rs. 123 Crs on assignment transactions in Q4FY18 vis-à-vis no assignment transactions in Q1FY19.
2. Tax expense of Rs. 41 Crs in Q1FY19 compared to Rs. 2 Crs in Q4FY18. Tax expense of 22% considered for Q1FY19, based on
FY19 estimated tax expense percentage.
▪ Marginal cost of Borrowings* reduced to 8.4% in Q1FY19 ( 8.6% in Q4FY18)
▪ Weighted avg. cost of borrowing** at 9.2% in Q1FY19
▪ Incremental drawdowns of Rs.3,913 Crs (including securitization transactions) in Q1FY19 (growth of 183% YoY). BFIL also originated
Rs.1,367 Crs under managed portfolio in Q1FY19
▪ Completed two Securitisation transactions of Rs. 1,366 Crs in Q1FY19
▪ Healthy addition of 10.6 lacs customers in Q1FY19
▪ Loan disbursements^^ grew by 68% YoY and 9% QoQ to Rs. 6,260 Crs (Rs. 5,738 Crs in Q4FY18 and Rs. 3,734 Crs in Q1FY18)
▪ Non-AP Gross Loan Portfolio^^ grew by 44% YoY and 10% QoQ to Rs.13,832 Crs as of June 30, 2018
▪ AUM^^ of Rs.13,832 Crs as on June 30, 2018
▪ Networth of Rs.3,310 Crs as on June 30,2018 (Higher by Rs. 94 Crs compared to Previous GAAP Networth)
▪ Capital adequacy at 30.6% as of June 30, 2018
▪ Cash & Cash equivalent^ of Rs.1,236 Crs as of June 30, 2018
▪ Deferred tax asset has been recognised on the balance sheet in Q1FY19.
▪ Deferred tax asset of Rs 30 Crs and MAT Credit of Rs. 285 Crs as on June 30, 2018.
44
* Includes on and off balance sheet borrowings and including amortised processing fees. **Includes on and off balance sheet (Quarterly average) including amortised processing fees.
^ Excluding security deposit.. ^^Includes On balance sheet, securitised, assigned and managed loans
HIGHLIGHTS OF Q1FY19
Credit Quality▪ Cumulative Collection efficiency of 99.8% for loans disbursed amounting to Rs. 28,634 Crs between 1st Jan’17 to 30th Jun’18
▪ Net NPA at 0.1%
NETWORTH IS HIGHER BY RS.94 CRS WITH Ind AS (CONTD.)
45
S no. Particular Previous GAAP Ind AS Impact on Net worth*
1 Loan Provisioning Company’s policy subject to RBI
compliance
ECL (Expected Credit
Loss)Rs. 8 crs
2Income recognition on
balance sheet assets
Straight line amortisation of
processing fees
EIR (Effective interest
rate) amortisation of
processing fees
Rs. 28 crs
3 Financial expenses Processing fees on borrowings
recognised upfront
EIR -amortisation of
processing fees on
borrowings
Rs. 10 crs
4 Valuation of assetsLoans were booked as at
principal outstanding amount
Fair valuation
approachRs. 51 crs
5Securitisation assets
recognitionRecognised as off-balance sheet
Recognised as on-
balance sheet-
6Income recognition on
assignment dealsRecognised over loan contract
Recognised on
transaction dateRs. 57 crs
7 Others Items Rs. 3 crs
8Tax impact on above
items(Rs. 63 crs)
Net worth
(As on June 30,2018)Rs. 3,216 Crs (A) Rs. 3,310 Crs (B) Rs. 94 Crs (B-A)
* Note: There could be negative variances between Previous GAAP and Ind AS while comparing for a particular period for the
above items, but on overall basis the net effect of Ind AS Net worth is positive by Rs 94 Crs. as of 30th June, 2018.
…..NETWORTH IS HIGHER BY RS.94 CRS WITH Ind AS
46
Profit After Tax As Per Previous GAAP Profit After Tax As Per Ind AS
INR Crs.
Net Worth As Per Previous GAAP Net Worth As Per Ind AS
(37)
119 163
211 190
455
Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 FY18
2,447
3,216
Q4FY17 Q1FY19
48
135 192 213
142
589
Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 FY18
2,448
3,310
Q4FY17 Q1FY19
KEY PARAMETERS – Ind AS vs PREVIOUS GAAP
47
* Net interest income(Ind AS) = Interest income on Portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee – Financial Cost
* Net interest income(GAAP) = Interest income on Portfolio loans + Excess interest spread on assignment/securitization + BC Fee – Financial Cost
INR Crs.
Particulars
Ind AS GAAP
Q1FY18 Q1FY19 YoY% Q4FY18 QoQ% Q1FY18 Q1FY19 YoY% Q4FY18 QoQ%
Gross Loan Portfolio 9,629 13,832 44% 12,575 10% 9,631 13,850 44% 12,594 10%
Net Interest Income* 232 363 56% 417 (13%) 213 361 69% 326 11%
Operating expenses 147 211 44% 199 6% 149 214 43% 198 8%
PBT 93 183 96% 215 -15% (37) 245 - 210 17%
PAT 48 142 195% 213 -33% (37) 190 - 211 (10%)
Net worth 2,515 3,310 32% 3,141 5% 2,420 3,216 33% 2,999 7%
OPERATIONAL HIGHLIGHTS
48
HEALTHY ADDITION OF 10.6 LACS CUSTOMERS IN Q1FY19 VIS-À-VIS 4.8 LACS IN Q1FY18
Particulars Jun-17 Jun-18 YoY% Mar-18 QoQ%
Branches 1,408 1,639 16% 1,567 5%
Centers (Sangam) 2,86,259 3,56,685 25% 3,35,070 6%
- Centers in non-AP States 2,37,372 3,07,798 30% 2,86,183 8%
Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii) 15,284 17,415 14% 16,021 9%
▪ Field Staff (i) + (ii) + (iii) + (iv) + (v) 14,546 16,808 16% 15,418 9%
– Sangam Managers* (i) 9,251 10,380 12% 10,208 2%
– Sangam Manager Trainees(ii) 1,000 1,588 59% 556 -
– Branch Management Staff (iii) 2,831 3,183 12% 3,077 3%
– Area Managers (iv) 271 322 19% 282 14%
– Regional Office Staff (v) 1,193 1,335 12% 1,295 3%
▪ Central Processing Unit and Member helpline (vi) 374 191 -49% 195 -2%
▪ Head Office Staff (vii) 364 416 14% 408 2%
Members in non-AP States (in '000) 6,847 7,808 14% 7,270 7%
− Members added (in the quarter) (in ‘000) 416 1,065 - 1,145 -7%
Active borrowers in non-AP States (in '000) 5,152 6,425 25% 6,188 4%
− Active borrowers added (in the quarter) (in ‘000) 478 913 91% 938 -3%
No. of loans disbursed (in '000) 1,894 2,862 51% 2,768 3%
Disbursements (for the quarter) (INR Crs.) 3,734 6,260 68% 5,738 9%
Gross loan portfolio – Non-AP (INR Crs.) (A+B+C+D) 9,629 13,832 44% 12,575 10%
• Loans outstanding (A) 7,707 10,574 37% 9,528 11%
• Securitized (B)^ 517 - - 42 -
• Assigned (C) 759 1,234 63% 1,971 -37%
• Managed loans (D) 647 2,024 213% 1,034 96%
Operational Efficiency – Non-AP :
Off-take Avg (Disbursements/ No of Loans disbursed) (INR) 19,717 21,875 11% 20,735 5%
Off-take Avg Excluding Cross Sell 24,037 26,820 12% 25,852 4%
Gross loan portfolio/ Active Borrowers (INR) 18,689 21,530 15% 20,320 6%
Gross loan portfolio/ No. of Sangam Managers (Rs. '000) 10,968 13,895 27% 12,866 8%
Active borrowers / No. of Branches 4,041 4,266 6% 4,315 -1%
Active borrowers / No. of Sangam Managers 587 645 10% 633 2%
*Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Jun’18, we had 9,955 SMs in Non-AP States
^ Securitised portfolio originated on or before 31 March, 2017, All securitization deals originated from 1st April, 2017 are being recognised as financial
asset on balance sheet as per Ind AS 49
50
INR crore
1,148 1,684 1,538
2,489 2,369
2,657 2,974
4,062 3,769
4,016
2,981
3,902 3,734
4,288 4,712
5,738 6,260
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Disbursement
% for the year 17% 25% 22% 36%
FY16 - Rs. 12,063
Q1FY19 DISBURSEMENT IS IN LINE WITH HISTORICAL TREND OF SEASONALITY (EXCEPT FY17)
FY15 - Rs. 6,860 FY18 - Rs. 18,472FY17 - Rs. 14,667
20% 22% 25% 34% 26% 27% 20% 27% 20%
Note: Demonetisation distorted the historical trend of seasonality in FY17
23% 26%
FY19 - Rs. 26,000*
31% 24%
*Guidance
IMPROVING OPERATING COST AND FINANCIAL EFFICIENCY
Best before
AP MFI crisis
Worst during
AP MFI crisisFY14 FY15 FY16 FY17 FY18 Q1 FY18 Q4FY18 Q1FY19
Productivity – Non-AP:
Borrowers/ SM 489* 287 721 787 733 615 633 587 633 645
Gross Loan Portfolio/ SM ('000) 3,640* 1,320 6,275 8,994 12,141 10,574 12,816 10,968 12,866 13,895
Offtake Avg. 10,299* 9,237 11,849 12,273 15,024 18,676 20,316 19,717 20,735 21,875
Offtake Avg. (Excl Cross-sell) 10,383* 11,021 12,277 14,149 18,102 21,491 24,922 24,037 25,852 26,820
Cost Efficiency:
Financial cost / Avg. Gross Loan Portfolio 6.6% 9.8% 8.3% 8.3% 8.5% 7.3% 6.8% 7.5% 6.3% 6.0%
On B/S daily Wt. Avg. Cost of borrowings % 10.3%^ 16.0%^ 13.9%# 13.5%# 12.0%# 10.9%# 9.6%## 10.0%## 9.3%## 9.4%##
Opex/ Avg. Gross Loan Portfolio % 10.4% 21.7% 9.6% 9.5% 7.1% 6.5% 6.6% 6.3% 6.6% 6.4%
Cost to Income Ratio 52.4% 275% 74.5% 61.1% 48.3% 50.0% 49.0% 53.2% 43.4% 51.2%**
Credit Quality - Non-AP:
Gross NPA% 0.20%* 5.5% 0.1% 0.1% 0.1% 6.0% 2.2%^^ 5.9% 2.2%^^ 0.3%^^
Net NPA% 0.16%* 2.9% 0.1% 0.1% 0.04% 2.7% 0.1% 0.2% 0.1% 0.1%
*Enterprise figures includes figures from AP state
^Cost of borrowing for Best before AP MFI crisis and Worst during AP MFI crisis calculated on monthly averages and daily Wt. Avg. Cost of borrowings % Includes processing
fee for on and off balance sheet funding for the said periods,
# Includes processing fee for on b/s funding only, for FY 14 Rs. 13 Crs, FY15 Rs. 14.3 Crs, FY16 Rs.10.5 Crs, FY17 Rs. 10.4 Crs
^^ Rs. 17.7 Crs , Rs. 190.0 Crs and Rs. 176.6 Crs write offs in Q3FY18, Q4FY18 and Q1FY19 respectively.
** Cost to income based on previous GAAP nos is 47.0%, ## based on quarterly Avg and includes amortised processing fees
Note: FY18 and Q1FY19 nos are based on Ind AS51
PORTFOLIO MIX CONCENTRATION NORMS
Metric % Cap on Disbursement* POS % Cap of Networth*
State ▪ <15%
▪ 17.5% for Bihar & Odisha
▪ 75%
▪ (100% for Odisha)
District ▪ <3 %
▪ 4% for Bihar & Odisha
▪ 5%
▪ (Only 5% of total operating
districts can go up to 10% of
Networth)
Branch ▪ <1 %
▪ 1.25 % for Bihar & Odisha
▪ 1%
▪ (Only 5% of the total
operating branches can go
up to 2% of Networth )
NPA▪ No disbursement to a
branch with NPA > 1 %
Collection
efficiency
▪ No disbursement to a branch
with on- time collection
efficiency of < 95%
15% Cap on portfolio outstanding for each state (17.5% for Bihar and Odisha)
*Subject to tolerance limits
Note: Portfolio percentage are based on proportion of
gross loan portfolio of respective states.
State %
0.1%
0.1%
0.6%
1.6%
1.5%
1.6%
3.7%
4.5%
5.9%
4.6%
6.4%
10.6%
11.9%
12.8%
15.3%
18.8%
0.1%
0.1%
0.2%
1.7%
2.0%
2.1%
4.1%
4.9%
6.0%
6.4%
8.2%
9.8%
11.2%
12.9%
14.3%
16.1%
Himachal Pradesh
Delhi
Uttarakhand
Chattisgarh
Punjab
Haryana
Madhya Pradesh
Jharkhand
Kerala
Rajasthan
Uttar Pradesh
Maharashtra
Karnataka
West Bengal
Bihar
Odisha
GLP Q1FY19
GLP Q1FY18
52
*As of June’18
VINTAGE OF NON-AP BRANCHES IS 7.3 YEARS PORTFOLIO OUTSTANDING BY ECONOMIC ACTIVITY
StateNo. of
Branches
Wt. Avg. Vintage
(in Yrs.)*
Bihar 196 6.6
Odisha 193 8.0
Karnataka 182 9.7
Uttar Pradesh 166 6.7
West Bengal 158 7.7
Maharashtra 154 7.8
Rajasthan 93 6.4
Madhya Pradesh 85 8.2
Kerala 74 5.6
Jharkhand 71 6.1
Chhattisgarh 51 4.9
Haryana 34 4.7
Punjab 31 5.4
Uttarakhand 11 8.1
Delhi 2 5.5
Gujarat 1 10.5
Himachal Pradesh 2 3.6
Tamil Nadu 1 0.1
Tripura 1 -
Total 1,506 7.3
Purpose % Mix
Livestock 42%
Agriculture 14%
Grocery stores and other retail outlets 9%
Tailoring, Cloth weaving 8%
Vehicle repairs 6%
Trading of vegetable & fruits 6%
Trading of agri. Commodities 3%
Masonry, painting, plumbing,
electrician, carpenter and related3%
Garments & footwear retailing 3%
Eateries 2%
Bangles shop 0.3%
Trading of utensils, plastic items 0.3%
Other income generating activities 4%
53
INDUSTRY UPDATE ON CREDIT
QUALITY
54
0.7%
0.5%
30+ DPD 60+ DPD
92% OF BORROWERS HAVE LOANS FROM <= 2 LENDERS
% Borrowers - Indebtedness
Portfolio Quality *
% Borrowers - Loans from Lenders
55
72%
20%
6%2%
1 lender 2 Lenders 3 Lenders 4 Lenders
Source : Equifax on Microfinance database as on Apr’18.
Includes data reported by Banks under Microfinance database.
91%
7% 2%
<60K 60K to 100K >100K
RBI Guidelines - 2 NBFC MFIs RBI Guidelines - 100K for NBFC MFIs
Note: Lenders include NBFC-MFIs and Banks
* Loans disbursed from May ‘17 to April’18 – Portfolio data as on April’18
INR
REVIEW OF FINANCIALS
56
STRONG SOLVENCY AND SUFFICIENT LIQUIDITY
INR Crs.
Capital AdequacyNetworth
Cash and Cash Equivalent^Drawdowns*
^ Excluding security deposit
15.0%
RBI Requirement
Q1FY19
30.6%
1,384
3,771 3,913
Q1FY18 Q4FY18 Q1FY19
2,515
3,141 3,310
Q1FY18 Q4FY18 Q1FY19
*Excluding Managed Loans
1,703 1,860
1,236
Q1FY18 Q4FY18 Q1FY19
57
3,734
5,738 6,260
Q1FY18 Q4FY18 Q1FY19
48
213
142
Q1FY18 Q4FY18 Q1FY19
147
199
211
Q1FY18 Q4FY18 Q1FY19
DISBURSEMENTS FOR THE QUARTER GREW BY 68% YoY
58
PATOperating Cost
Net Interest Income*
* Net interest income = Interest income on Portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee – Financial Cost
Disbursements Non-AP Gross Loan Portfolio
INR Crs.
9,629
12,575 13,832
Q1FY18 Q4FY18 Q1FY19
44%
YoY
232
417
363
Q1FY18 Q4FY18 Q1FY19
93
215
183
Q1FY18 Q4FY18 Q1FY19
PBT
Particulars Q1FY18 Q1FY19 YoY%
Q1FY19
As % of Total
Revenue
Q4FY18 QoQ%
Interest Income (A) 384 553 44% 91% 480 15%
Interest income on Portfolio loans 354 529 49% 87% 466 13%
Interest on deposits 29 24 -18% 4% 14 73%
Net gain on derecognition of loans sold under assignment transaction (B) 38 (2) -105% - 123 -102%
Fee Income (C) 29 57 95% 9% 41 39%
BC Fees 16 35 120% 6% 17 105%
Facilitation fees from Cross-sell 13 21 65% 3% 23 -9%
Other Fee income 0.3 0.4 18% 0% 0.3 21%
Recovery against loans written off (D) 1 3 - 1% 2 52%
Other income (E) 0.1 0.1 -5% - 1 -91%
Total Revenue (F) = (A+B+C+D+E) 452 611 35% 100% 647 -5%
Financial expenses (G) 176 199 13% 33% 189 5%
Personnel expenses 109 159 46% 26% 150 6%
Operating and other expenses 35 49 41% 8% 45 10%
Depreciation and amortization 3 3 -1% - 4 -30%
Total Operating Cost (H) 147 211 44% 35% 199 6%
Impairment on financial instruments (I) – ECL 36 18 -49% 3% 44 -59%
Total Expenditure(J)= (G+H+I) 358 428 20% 70% 432 -1%
Profit before Tax = (F-J) 93 183 96% 30% 215 -15%
Current Tax (I) 13 147 - 24% 3 -
Deferred Tax (II) 45 (106) - -17% 2 -
MAT Credit Entitlement (III) (13) - - - (4) -
Total Tax Expense (I+II+III)* 45 41 -9% 7% 2 -
Profit after Tax 48 142 195% 23% 213 -33%
Other Comprehensive income 9 (0.04) - 1% 2 -102%
Total Comprehensive income for the period 57 142 148% 23% 215 -34%
INR Crs.
59
P&L STATEMENT
*Tax expense is arrived based on estimated tax rate for FY19
Q1FY19 Ind AS VS PREVIOUS GAAP
60
Ind AS / Previous GAAPInd AS
(A)
IGAAP
(B)
Variance(
A-B)Remarks
Interest income 553 503 50
Interest income on portfolio loans/
Interest income on portfolio loans and Loan
processing fee
529 479 50
Under IndAS
• Securitisation portfolio is recognised as on balance sheet portfolio and
hence income is also recognised under interest income
• Interest on loans is calculated using Effective interest rate
Interest on deposits 24 24 -
Net gain on derecognition of loans sold under
assignment transaction /
Excess interest spread on securitization and
Assignment
(2) 72 (74)
Under IndAS
• Income from securitisation portfolio is recognised in interest income
• Total gain from the Assignments on the contract will be recognised on
transaction date
Fee Income 57 57 -
BC fees 35 35 -
Facilitation fees from Cross-sell 21 21 -
Other fee income 0.4 0.4 -
Recovery against loans written off 3.2 3.2 -
Other Income 0.1 0.1 -
Total Revenue 611 635 (24)
Financial expenses 199 180 19
Under IndAS
Interest expense on securitisation transactions to be included in financial
expenses
Amortisation of processing fees on borrowings
Personnel expenses 159 162 (3) Actuarial adjustments reclassified in other comprehensive income
Operating and other expenses 49 49 -
Depreciation, amortization and impairment 3 3 -
Total Operating Cost 211 214 (3)
Impairment on financial instruments/
Provisions & Write-offs18 (3) 22 Under IndAS ECL methodology is used to arrive at impairment of loans
Total Expenditure 428 390 38
Profit before Tax 183 245 (62)
Current Tax 147 142 5
Deferred Tax (Asset)/ Liability (106) (87) (19)
Minimum Alternate Tax credit entitlement - - -
Profit after Tax 142 190 (48)
Other Comprehensive income (0.04) - (0.04) Includes actuarial adjustments on gratuity and Fair value impact on assets
Total Comprehensive income for the period 142 190 (48)
INR Crs
Q4FY18 Ind AS VS PREVIOUS GAAP
61
Ind AS / Previous GAAPInd AS
(A)
IGAAP
(B)
Variance(
A-B)Remarks
Interest income 480 457 23
Interest income on portfolio loans/
Interest income on portfolio loans and Loan
processing fee
466 443 23
Under IndAS
• Securitisation portfolio is recognised as on balance sheet portfolio and
hence income is also recognised under interest income
• Interest on loans is calculated using Effective interest rate
Interest on deposits 14 14 -
Net gain on derecognition of loans sold under
assignment transaction /
Excess interest spread on securitization and
Assignment
123 89 34
Under IndAS
• Income from securitisation portfolio is recognised in interest income
• Total gain from the Assignments on the contract will be recognised on
transaction date
Fee Income 41 41 -
BC fees 17 17 -
Facilitation fees from Cross-sell 23 23 -
Other fee income 0.3 0.3 -
Recovery against loans written off 2.1 2.1 -
Other Income 0.8 0.8 -
Total Revenue 647 590 57
Financial expenses 189 181 8
Under IndAS
Interest expense on securitisation transactions to be included in financial
expenses
Amortisation of processing fees on borrowings
Personnel expenses 150 149 1 Actuarial adjustments reclassified in other comprehensive income
Operating and other expenses 45 45 -
Depreciation, amortization and impairment 4 4 -
Total Operating Cost 199 198 1
Impairment on financial instruments/
Provisions & Write-offs44 1 43 Under IndAS ECL methodology is used to arrive at impairment of loans
Total Expenditure 432 380 52
Profit before Tax 215 210 5
Current Tax 3 3 -
Deferred Tax (Asset)/ Liability 2 - 2
Minimum Alternate Tax credit entitlement (4) (4) -
Profit after Tax 213 211 3
Other Comprehensive income 2 - 2 Includes actuarial adjustments on gratuity and Fair value impact on assets
Total Comprehensive income for the period 215 211 5
INR Crs
Q1FY18 Ind AS VS PREVIOUS GAAP
62
Ind AS / Previous GAAPInd AS
(A)
IGAAP
(B)
Variance(
A-B)Remarks
Interest income 384 389 (5)
Interest income on portfolio loans/
Interest income on portfolio loans and Loan
processing fee
354 359 (5)
Under IndAS
• Securitisation portfolio is recognised as on balance sheet portfolio and
hence income is also recognised under interest income
• Interest on loans is calculated using Effective interest rate
Interest on deposits 29 29 -
Net gain on derecognition of loans sold under
assignment transaction /
Excess interest spread on securitization and
Assignment
38 44 (6)
Under IndAS
• Income from securitisation portfolio is recognised in interest income
• Total gain from the Assignments on the contract will be recognised on
transaction date
Fee Income 29 29 -
BC fees 16 16 -
Facilitation fees from Cross-sell 13 13 -
Other fee income 0.3 0.3 -
Recovery against loans written off 1.0 1.0 -
Other Income 0.1 0.1 -
Total Revenue 452 463 (12)
Financial expenses 176 175 1
Under IndAS
Interest expense on securitisation transactions to be included in financial
expenses
Amortisation of processing fees on borrowings
Personnel expenses 109 112 (3) Actuarial adjustments reclassified in other comprehensive income
Operating and other expenses 35 35 -
Depreciation, amortization and impairment 3 3 -
Total Operating Cost 147 149 (3)
Impairment on financial instruments/
Provisions & Write-offs36 176 (140) Under IndAS ECL methodology is used to arrive at impairment of loans
Total Expenditure 358 500 (142)
Profit before Tax 93 (37) 130
Current Tax 13 13 -
Deferred Tax (Asset)/ Liability 45 - 45
Minimum Alternate Tax credit entitlement (13) (13) -
Profit after Tax 48 (37) 85
Other Comprehensive income 9 - 9 Includes actuarial gains/losses on gratuity and Fair value impact on assets
Total Comprehensive income for the period 57 (37) 94
INR Crs
FY18 Ind AS VS PREVIOUS GAAP
63
Ind AS / Previous GAAPInd AS
(A)
IGAAP
(B)
Variance(
A-B)Remarks
Interest income 1,774 1,734 40
Interest income on portfolio loans/
Interest income on portfolio loans and Loan
processing fee
1,694 1,654 40
Under IndAS
• Securitisation portfolio is recognised as on balance sheet portfolio and
hence income is also recognised under interest income
• Interest on loans is calculated using Effective interest rate
Interest on deposits 80 80 -
Net gain on derecognition of loans sold under
assignment transaction /
Excess interest spread on securitization and
Assignment
248 234 15
Under IndAS
• Income from securitisation portfolio is recognised in interest income
• Total gain from the Assignments on the contract will be recognised on
transaction date
Fee Income 128 127 1
BC fees 61 61 -
Facilitation fees from Cross-sell 66 66 -
Other fee income 1 0.4 1
Recovery against loans written off 5 4.8 -
Other Income 1 2.0 (1)
Total Revenue 2,156 2,102 54
Financial expenses 727 710 17
Under IndAS
Interest expense on securitisation transactions to be included in financial
expenses
Amortisation of processing fees on borrowings
Personnel expenses 525 526 (1) Actuarial adjustments reclassified in other comprehensive income
Operating and other expenses 162 162 -
Depreciation, amortization and impairment 13 13 -
Total Operating Cost 701 702 (1)
Impairment on financial instruments/
Provisions & Write-offs68 235 (167) Under IndAS ECL methodology is used to arrive at impairment of loans
Total Expenditure 1,496 1,647 (151)
Profit before Tax 660 455 206
Current Tax 78 78 -
Deferred Tax (Asset)/ Liability 72 - 72
Minimum Alternate Tax credit entitlement (79) (79) -
Profit after Tax 589 455 134
Other Comprehensive income 7 - 7 Includes actuarial adjustments on gratuity and Fair value impact on assets
Total Comprehensive income for the period 597 455 141
INR Crs
PAT RECONCILIATION OF PREVIOUS GAAP VS Ind AS
64
Particulars Q1FY18 Q1FY19 Q4FY18 FY18 Remarks
Profit After Tax as per previous GAAP (37) 190 211 455
Ind AS adjustments increase /(decrease) profit
Expected Credit Loss Impact 140 (22) (43) 167 Provisioning based on ECL methodology
Effective Interest Rate impact on financial assets (0.2) 10 (0.5) 4 Change from Straight line amortisation of processing fees to EIR
Effective Interest Rate impact on borrowings (1) (4) 3 3 Amortisation of processing fees on borrowings
Assignment transactions impact 9 (51) 48 70Total gain from the assignment deals recognised on the
transaction date and derecognised in subsequent periods
Securitisation transactions impact (20) 2 (2) (39)
Total gain on securitisation deals prior to transition date
recognised on the transaction date and derecognised in
subsequent periods
Actuarial gain/(loss) on gratuity 3 3 (1) 1 Reclassification in other comprehensive income
Others (0.2) - (0.04) (0.5)
Deferred Tax impact on above items (45) 19 (2) (72)
Current Tax impact - (5) - -
Profit After Tax as per Ind AS 48 142 213 589
Other comprehensive income (Net of tax) 9 - 2 7Actuarial adjustments on gratuity and Fair value impact on
assets
Total Other Comprehensive Income after tax
as per Ind AS57 142 215 597
INR Crs
IMPACT ON NET WORTH ON TRANSITION DATE
65
Particulars 1-Apr-17 Remarks
Net worth as per previous GAAP 2,447
Ind AS adjustments increase /(decrease) Net worth
Expected Credit Loss Impact (137) Provisioning based on ECL methodology
Effective Interest Rate impact on financial assets 13 Change from Straight line amortisation of processing fees to EIR
Effective Interest Rate impact on borrowings 11 Amortisation of processing fees on borrowings
Assignment transactions impact 37 Total gain from the assignment deals prior to transition date recognised
Securitisation transactions impact 41Total gain on securitisation deals prior to transition date recognised on the
transaction date
Fair value gain on financial assets 36
Others 0.4
Tax impact on above items (0.5)
Net worth as per Ind AS 2,448
INR Crs
QoQ REVENUE VARIANCE ANALYSIS (1/2)
66
ParticularsQ4FY18
(A)
Q1FY19
(B)Variance(B-A) Comments
Interest income on portfolio loans 467 529 62 Increase in income by 13% on account of Portfolio increase QoQ by 11%
(Rs. 10,574 Crs as on Q1FY19 and Rs. 9,528 Crs as on Q4FY18).
Interest on deposits 14 24 10Income from investments increased by 73% on account of daily Avg. interest
yielding investments increasing by 69%
Net gain on derecognition of loans
sold under assignment transaction122 (2) (124)
Upfront income realised in Q4FY18 on account of 3 assignment deals vis-à-vis no
assignment deals in Q1FY19
Loss of income on past assignment deals on account of pre-payment and death
cases
BC Fees 17 35 18Monthly Average managed portfolio increased to Rs. 1,492 Crs in Q1FY19 from
Rs. 814 Crs in Q4FY18.
Facilitation fees from Cross-sell 23 21 (2)No of units facilitated in Q1FY19 is 5.8 Lacs units vis-a-vis 6.0 Lacs units in
Q4FY18
Recovery from write-offs 2 3 1
Other income 1 0.5 (0.5)
Total 647 611 (36)
INR Crs.
ParticularsQ4FY18
(A)
Q1FY19
(B)
Variance
(B-A)Comments
Finance costs 189 199 10
• Increase in Avg. quarterly borrowings cost from 9.33% in Q4FY18 to
9.36% in Q1FY19.
• Increase in Avg. quarterly borrowings (Rs. 8,007 in Q4FY18 and
Rs. 8,461 in Q1FY19)
~ Rs. 10 Crs = (9.36% * 8,461– 9.33% * 8,007) / 4
Personnel expenses 150 159 9 • Increase in employee headcount QoQ by 9%
Other Operating expenses 49 52 3
Impairment of financial assets (A+F) 44 18 (26)
Provisions (A= B+C+D+E) (149) (159) (10)
Stage I Provisions (B) 49 10 (39) ECL Methodology is used to arrive at impairment of loans
Stage II Provisions (C) -2 -0.3 2 ECL Methodology is used to arrive at impairment of loans
Stage III Provisions (D) -200 -180 21 Reversal in provision on account of write-offs wrt. Demonetisation
Managed Loans Provisions (E) 4 10 6 1% provisions on incremental managed portfolio
Losses & Write-offs (F = G+H+I) 193 177 (16)
Loss on Managed (G) 0.2 0.5 0.3 Losses settled against managed portfolio
Loss on Securitisation (H) 3.0 - (3) Losses on securitisation deals prior to April 1 , 2017
Stage III Write-offs (I) 190 177 (13)
QoQ EXPENSES VARIANCE ANALYSIS (2/2)
67
INR Crs.
EXPECTED CREDIT LOSS APPROACH
68
Expected Credit Loss (ECL): probability weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected
life of the financial instrument.
ECL Calculation = Probability of Default (PD) (Adjusted for Discount factor (Df)) * Loss Given Default(LGD) * Exposure at Default(EAD)
Forecast of Probability of Default (PD):
• Forecasted values of the chosen Macro economic variable
• Sensitivity of the historical Probability of Default (PD) data to the chosen macro economic variable
Computation of Loss Given Default (LGD):
• LGD is % of Exposure that the firm expects to lose at the time of default.
• LGD is computed as {1-Recovery Rate (RR)} where Recovery Rate indicates % of Recovery post default.
IGL
Probability of Default (PD) –A
Df (B) LGD (C)EAD
(INR Crs) (D)
ECL (E= A*B*C*D)
Weighted Average of
Scenarios
ECL% = E/DBase
(68%)*
Best
(11%)*
Worst
(21%)*
Stage I
(Current -30)0.16% 0.12% 0.21% 82% 92% 3,418 4 0.1%
Stage II
(31-60)66.32% 65.09% 67.54% 82% 92% 65 33 50.2%
Stage III
(>60)100% 100% 100% 100% 92% 247 228 92.0%
Total 3,731 265 7.1%
As on 31 March, 2017
ECL CALCULATION FOR IGL
As on 30 June, 2018
IGL
Probability of Default (PD) -A
Df (B) LGD (C)EAD
(INR Crs) (D)
ECL (E= A*B*C*D)
Weighted Average of
Scenarios
ECL% = E/DBase
(68%)*
Best
(11%)*
Worst
(21%)*
Stage I
(Current -30)0.15% 0.11% 4.30%* 82% 70% 4,835 28 0.6%
Stage II
(31-60)66.81% 65.54% 68.06% 82% 70% 3 1 38.5%
Stage III
(>60)100% 100% 100% 100% 70% 17 12 70.0%
Total 4,856 42 0.86%
Management overlay : Qualitative assessment of the portfolio based on historical observations.
* Weights
69
Period -> 31-Mar-18Pre-write offs
(30-Jun-18)
Post-write offs
(30-Jun-18)
Asset Classification:Amount
OutstandingProvision
Amount
Outstanding*Provision
Amount
Outstanding*Provision
Stage I (Current -30) 9,330 62 10,553 73 10,553 73
Stage II (31-60) 7 3 6 2 6 2
Stage III (>60)* 211 203 210 200 33 23
Total 9,547 268 10,769 275 10,592 98
INR Crs
Stage 3 assets & provision thereon
reduced from ₹ 200 Cr to ₹ 23 Cr due to
write-offs of ₹ 177 Cr
*Amount not adjusted against fair valuation of loans and EIR
On-Balance Sheet Off-Balance Sheet
Stage I
Provisions
Stage II
Provisions
Stage III
ProvisionsWrite-offs Loss Provisions Total
Adjusted against Net worth on
Transition date (1st Apr’17)
(Difference between Previous
GAAP and Ind AS)
(137)
Q1FY18 11.1 (40.6) 49.6 - 79.4 (63.8) 35.6
Q2FY18 (6.8) (11.0) (7.4) - 21.9 1.8 (1.6)
Q3FY18 (6.1) (4.9) (28.0) 17.7 10.6 1.2 (9.4)
Q4FY18 49 (2.3) (200.1) 190.0 2.8 4.2 43.6
Q1FY19 10.3 (0.3) (179.5) 176.7 0.5 10.4 18.0
FY18 47 (58.7) (186.0) 207.7 114.6 (56.6) 68.2
DETAILS OF CREDIT COSTS Ind AS – EXPECTED CREDIT LOSS METHODOLOGY
GUIDANCE VS ACTUALS FOR FY18 AND GUIDANCE FOR FY19
FY18 FY18 FY19
Guidance Actuals Guidance
Incremental debt requirement 14,500 11,167 18,500
Disbursement 19,500 18,472 26,000
Gross Loan Portfolio 13,500 12,594^ 18,000
PBT 435 455 900
PAT (Incl. MAT Credit) 435 455 620
INR Crs.
^ INR 208 Crs written off in FY18
70
Note: All the above numbers are based on previous GAAP
TAX IMPACT UNDER Ind AS
71
As per Ind ASAs on 1 April, 2017
(Transition date)As on 31 March, 2018 As on 30 June, 2018
MAT Credit Entitlement 206 285 285
Deferred Tax asset/ (Liability) (0.5) (76) 30
Total 206 209 315
INR Crs
Particulars As on 31 March, 2018 As on 30 June, 2018
ECL impact (10) 44
EIR impact on assets (6) (5)
Income recognition on assignment deals on transaction
date and securitisation deals prior to transition date (38) (28)
EIR impact on borrowings (5) (4)
Impact on Fair valuation of loans (17) (18)
Impact of ESOP disallowance - 34
Others (0.4) 7
Total (Deferred Tax asset/ (Liability) (76) 30
Note:
As per Ind AS, PAT stood at Rs. 142 Crs in Q1FY19 as against Rs. 213 Crs in Q4FY18 and Rs. 48 Crs in Q1FY18, primarily on account of:
1. Upfront income recognition of Rs. 123 Crs on assignment transactions in Q4FY18 vis-à-vis no assignment transactions in Q1FY19.
2. Tax expense of Rs. 41 Crs in Q1FY19 compared to Rs. 2 Crs in Q4FY18. Tax expense of 22% considered for Q1FY19, based on FY19 estimated
tax expense percentage.
STRONG CAPITAL BASE AND ROBUST LIQUIDITY DRIVE BFIL BALANCE SHEETParticulars Q1FY18 Q1FY19 YoY% Q4FY18 QoQ%
Equity share capital 138 139 1% 139 -
Other Equity 2,377 3,171 33% 3,002 6%
Total Equity 2,515 3,310 32% 3,141 5%
Borrowings 6,846 8,628 26% 8,294 4%
Interest accrued but not due on borrowings 24 17 -26% 43 -60%
Employee benefits payable 15 17 18% 33 -47%
Payable towards securitisation/assignment transactions 168 444 - 329 35%
Expenses & other payables 56 37 -34% 21 79%
Provision for gratuity and leave benefits 33 31 -7% 28 8%
Provision for Fraud Theft & Burglary 2 2 42% - -
Provision for Managed Portfolio 2 19 - 9 119%
Current tax liabilities (Net) 1 113 - 0.1 -
Statutory dues payable 8 12 45% 13 -4%
Unamortised fee income 1 1 34% 2 -22%
Liabilities 7,155 9,322 30% 8,771 6%
Total Liabilities and Equity 9,671 12,632 31% 11,912 6%
Cash and bank balances 2,101 1,599 -24% 2,173 -26%
Receivables 29 6 -78% 11 -43%
Loans 7,707 10,574 37% 9,528 11%
ECL provisioning (485) (98) -80% (268) -63%
Investments 0.2 0.2 - 0.2 -
Interest accrued but not due on portfolio loans 11 23 108% 20 12%
Interest accrued and due on portfolio loans 1.5 0.2 -85% 0.3 -30%
Interest strip on securitisation transactions 21 - - 0.3 -
Interest strip on loan assignment transactions 36 45 27% 88 -49%
Unbilled revenue - 30 - 7 -
Security deposits 4 4 15% 4 4%
Insurance deposit receivable 4 4 4% 4 -1%
Advance to vendor (cross-sale) 11 10 -10% 12 -16%
Claims Outstanding Receivable from Insurance Company 6 22 - 13 66%
Loans to BFIL Microfinance Employees Benefit Trust 2 - - - -
Current tax assets (Net) 23 42 82% 41 2%
Deferred tax assets (Including MAT Credit) 169 315 87% 209 51%
Fixed assets 16 17 6% 16 5%
Intangible assets 6 5 -21% 5 -10%
Other Assets 10 34 - 45 -24%
Total Assets 9,671 12,632 31% 11,912 6%
Note:1 Non-AP Securitised^/Managed/Assigned Portfolio 1,922 3,258 70% 3,047 7%
2. Non-AP Gross Loan Portfolio 9,629 13,832 44% 12,575 10%
INR Crs.
72^Securitised portfolio originated on or before 31 March, 2017, All securitization deals originated from 1st April, 2017 are being recognised as financial asset on balance sheet as per Ind AS
ROA OF 3.7% AND ROE OF 17.6% FOR Q1FY19
Particulars Q1 FY18 Q4 FY18 Q1 FY19
Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio)
Gross Yield (I) 19.3% 21.6% 18.5%
Portfolio Yield* (a) 17.4% 20.2% 17.0%
Financial Cost (b) 7.5% 6.3% 6.0%
NIM on portfolio (a-b) 9.9% 13.9% 11.0%
Operating Cost (c) 6.3% 6.6% 6.4%
Provision and Write-offs (d) 1.5% 0.36% 0.5%
Taxes (e) 1.9% 0.0% 1.2%
Total Expense II = (b+c+d+e) 17.2% 13.3% 14.2%
Return on Avg. Gross Loan Portfolio (I) - (II) 2.1% 8.3% 4.3%
Efficiency:
Cost to Income 53.2% 43.4% 51.2%
Asset Quality – Non-AP:
Gross NPA 5.9% 2.2% 0.3%
Net NPA 0.2% 0.1% 0.1%
Gross NPA (INR Crs.) 456.6 210.9 33.1
Net NPA (INR Crs.) 18.3 8.1 9.9
Leverage:
Debt : Equity 2.7 2.6 2.6
Debt : Equity (Incl. Assigned & Managed Loans) 3.5 3.6 3.6
Capital Adequacy: 31.8% 33.2% 30.6%
Profitability:
Return on Avg. Assets (Incl. Assigned & Managed Loans) ** 1.6% 6.1% 3.7%
ROE ** 7.8% 28.3% 17.6%
EPS - Diluted (INR) (Not Annualized) 3.5 15.2 10.1
Book Value (INR) 182.2 225.4 237.4
*Portfolio Yield = (Int. income on portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee ) /Avg. GLP
** Calculated based on Quarterly Average73
FINANCIAL ARCHITECTURE
74
Q1FY18 % Mix Q4FY18 % Mix Q1FY19 % Mix
Term Loan 5,869 66% 7,416 64% 7,095 58%
Managed Loans 584 7% 955 8% 1,926 16%
Securitisation 550 6% 813 7% 1,743 14%
Asset
Assignment
841 10% 2,173 19% 1,454 12%
CC 38 0.4% 0.6 0.01% - -
CP 698 8% - - - -
NCD 250 3% 200 2% - -
Total 8,829 100% 11,558 100% 12,218 100%
On Balance Sheet* Q1FY18 Q4FY18 Q1FY19
IndusInd Bank 1% 8% 14%
Yes Bank 6% 5% 11%
SIDBI 7% 11% 11%
ICICI Bank 6% 6% 9%
Axis Bank 2% 4% 8%
HSBC Bank 4% 5% 7%
Bank of India 10% 7% 6%
RBL Bank 4% 6% 5%
Standard Chartered Bank 5% 5% 5%
Dena Bank 8% 5% 3%
IDFC Bank 5% 4% 3%
Mudra 2% 3% 3%
Citi Bank 2% 3% 3%
Union Bank of India 3% 3% 2%
State Bank Group 7% 3% 2%
Mahindra & Mahindra
Financial Services Ltd1% 2% 2%
IDBI Bank 6% 2% 1%
Others 3% 15% 2%
Total 5,907 7,417 7,095
Lenders Mix* Devoid Of Dependence Risk
* Includes Term loan and cash credit facilities
FINANCIAL ARCHITECTURE
Diversified Source Mix
Investor Mix (Off B/S) Broad-based
INR Crs.
75
Securitised / Assigned Q1FY18 Q1FY19
HDFC Bank 6% 30%
State Bank Group 55% 24%
Kotak Mahindra Bank 3% 16%
IndusInd Bank - 12%
Yes Bank 11% 9%
Bank of India 5% 6%
Vijaya Bank - 4%
DCB Bank 2% -
ICICI Bank 1% -
IDBI Bank 16% -
Total 1,391 3,197
SUB 9% MARGINAL COST OF BORROWING
* processing fees is amortized for marginal cost calculation.# Excluding Managed Loans. ** amortised processing fees for FY18 and Q1FY19 nos under Ind AS
Metric FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19
Marginal
Cost of
Borrowings
on and off b/s loans
(excluding
processing fees)
12.2% 11.7% 10.1% 9.4% 8.6% 8.9% 8.5% 8.3%
on and off b/s loans
(including processing
fees)*
12.6% 11.9% 10.2% 9.4% 8.7% 8.9% 8.6% 8.4%
on b/s loans
(excluding
processing fees)
12.9% 12.3% 11.0% 9.8% 8.8% 9.1% 8.6% 8.6%
on b/s loans
(including processing
fees)*
13.6% 12.6% 11.1% 9.9% 8.9% 9.2% 8.7% 8.6%
Monthly
Average
(Quarterly
Avg for
FY18 and
Q1FY19)
Wt. avg.
cost of
borrowing#
on and off b/s loans
(including processing
fees )**
13.0% 12.2% 11.1% 10.1% 9.0% 9.4% 8.8% 9.2%
on b/s loans
(including processing
fees)**
13.7% 12.8% 11.6% 10.7% 9.6% 10.0% 9.3% 9.4%
Loan Processing Fees (INR Crs.) 17.3 16.9 11.6 10.4 14.9 2.2 5.7 1.2
Drawdowns (INR Crs.) 3,503 5,020 7,317 6,900 9,977 1,384 3,771 3,913
Financial Cost^ 8.3% 8.3% 8.5% 7.3% 6.6% 7.5% 6.0% 5.4%
Funding Cost Analysis
^ Financial expenses to quarterly Avg. Gross Loan Portfolio.
76
POSITIVE ALM MISMATCH BENEFIT CONTINUES
56%39%
57% 46% 45% 39% 45% 41%
44%61%
43%54% 55% 61% 55% 59%
FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19
Floating Fixed
* Excludes managed loans
ALM data includes Securitized/ Assigned loans
ALM
4.9 5.7 6.2 6.3 6.1 6.3 6.1 6.2 6.3
9.2 10.2
9.6 9.0 9.5 9.0 8.8
FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19
Avg maturity of assets
Avg maturity of liabilities
No. of months
Interest Rate Mix of Borrowings*
77
EXTERNAL ASSESMENT
Rating Instrument Rating/Grading Rating AgencyRating Amount Limits (Rs. Crs.)
Q4FY18 Q1FY19
MFI Grading MFI 1 CARE Ratings N/A N/A
Code of Conduct Assessment C1 ICRA Limited N/A N/A
Corporate Governance Rating CGR2+ ICRA Limited N/A N/A
Bank Loan Rating (Long-term facilities) CARE A+ CARE Ratings
7,000 7,500
Bank Loan Rating (Short-term facilities) CARE A1+ CARE Ratings
Long-term Debt (NCD) CARE A+ CARE Ratings 400 400
Short-term Debt (CP/NCD) CARE A1+ CARE Ratings 200 200
Long-term Debt [ICRA] A+ ICRA Limited
750^ 750^
Short-term Debt [ICRA] A1+ ICRA Limited
Securitisation Pool
CARE AA (SO) CARE Ratings 575 244*
ICRA AA (SO)#
Provisional ICRA AA (SO)#ICRA Limited 1,402 2,237*
78
^Subject to Long-term borrowings limit of ₹300 Cr.
*Amount aggregates to 1 transaction rated by CARE Ratings and 4 transactions rated by ICRA
# Two transactions are rated as AA(SO) and two transactions has provisional rating of AA (SO).
RISK MANAGEMENT
79
KEY RISKS AND MANAGEMENT STRATEGIES
Management
Strategy
Key Risks
Risk Management
Political Risk
Responsible lending and fair
pricing
Concentration Risk
Geographic & dependence
norms
Operational Risk
Cash management system and
process controls
Liquidity Risk
Liquidity metrics
▪ Low cost lender
▪ Voluntary Cap on
RoA from core
lending
▪ Robust Customer
grievance redressal
(CGR) Mechanism
with Ombudsman
▪ Calibrated Growth
▪ Geographic
concentration
norms
- Disbursement
Related Caps
- Portfolio
Outstanding
Related Caps
▪ Borrowing
dependence norms
- Cap on borrowing
from any single
credit grantor (15%
of funding
requirement)*
▪ Integrated cash
management system
▪ Product and process
Design
▪ ISO Certified Internal
audit
▪ Well defined metrics
for
- Cash burn
- Optimal liquidity test
- Liquidity cap
80* Cap for Indusind Bank at 25%.
CAPITAL STRUCTURE
81
CAPITAL STRUCTURE AS ON 30TH JUNE 2018
Excludes no. of Outstanding ESOPs 0.6 Crs.
Note: The Investment under different accounts by a fund are clubbed
under their respective names 82
33.4%
1.0%
1.0%
1.1%
1.2%
1.2%
1.3%
1.3%
1.3%
1.3%
1.5%
1.5%
1.6%
1.6%
1.7%
1.9%
1.9%
2.3%
2.4%
2.7%
2.8%
2.8%
2.9%
3.1%
3.2%
3.3%
3.6%
3.6%
4.8%
6.7%
Others
Shivanand Shankar Mankekar
SIDBI
Copthall Mauritius Investment Limited
Vanguard
Vanguard Emerging Markets Stock Index…
Societe Generale
Kotak Offshore
Smallcap World Fund
Kismet SKS II
SBI Life Insurance
OHM Stock Broker Pvt Ltd.
Kismet Microfinance
L&T Mutual Fund
BNP Paribas Arbitrage
Ishana Capital Master Fund
Goldman Sachs Asset Management
American Century World Mutual Funds
MIRAE Asset
Alliancebernstein
Tree Line
Birla Sun Life Mutual Fund
Blackrock
Amansa Capital PTE Limited
DSP Blackrock
East Bridge Capital
Wellington
Kotak Mutual Fund
Route One
Reliance Mutual Fund
No. of shares -13.9 Crs.
SHAREHOLDING PATTERN
FII, 7.9%
Domestic MFs,
Insurance co's & FIs ,
28.4%
Foreign Corporates,
4.0%
FPI, 47.7%
Domestic Individuals,
8.5%NRI, 1.5%
Domestic Corporates,
2.1%
ANNEXURES
83
OUR PROVISIONING POLICY
RBI norms for NBFC-MFIs BFIL Policy (Earlier) BFIL Policy ( As per Ind AS)#
Asset
Classification
Standard Assets 0-90 days 0- 8 weeks Stage I 0- 30 days
Sub-Standard
Assets
91-180 days > 8 to 25 weeksStage II 31-60 days
Loss Assets >180 days >25 weeks and
> 8 weeks expired
contractsStage III (GNPA) >60 days
Provisioning
Norms
(On-balance
sheet^)
Standard Assets
1% of overall Portfolio
reduced by Provision for
NPA (If provision for NPA
< 1% of overall Portfolio)
0.4%-1% depending on
NPA or as stipulated by
RBI, whichever is higher
Stage I
ECL Methodology is usedSub-Standard
Assets
50% of instalments
overdue*
50% of outstanding
principal*Stage II
Loss Assets100% of instalments
overdue*
100% of outstanding
principal/ write-off* Stage III (GNPA)
Provisioning
Norms for
Managed loans
1% of overall Portfolio
subject to the maximum
guarantee given in respect
of these arrangements.
1% of overall Portfolio subject to the maximum
guarantee given in respect of these arrangements.
* The aggregate loan provision will be maintained at higher of 1% of overall portfolio or as per company’s provisioning policy.
^ Securitised portfolio is recognised as financial asset (on-balance sheet) as per Ind AS# As per Ind AS 109, Expected credit loss method should be used to forecast future expected credit loss 84
UPDATE ON DEMONETISATION
85
CUMULATIVE COLLECTION EFFICIENCY OF 99.8% FOR LOANS DISBURSED BETWEEN 1ST JAN’17
TO 30th JUN’18
State Disbursements
Gross Loan
Portfolio
(30-Jun-18)
Cumulative Collection
Efficiency
Odisha 4,734 2,204 99.8%
Bihar 4,396 1,964 99.8%
West Bengal 3,872 1,780 99.8%
Karnataka 3,170 1,514 99.8%
Maharashtra 2,545 1,248 99.7%
Uttar Pradesh 2,198 1,126 99.8%
Rajasthan 1,740 877 99.9%
Kerala 1,717 819 99.9%
Jharkhand 1,372 678 99.7%
Madhya Pradesh 1,161 570 99.8%
Haryana 567 290 99.7%
Punjab 533 280 99.7%
Chattisgarh 510 229 99.7%
Uttarakhand 65 28 99.8%
Delhi 31 15 99.9%
Himachal Pradesh 22 10 99.9%
Total 28,634 13,633 99.8%
DATA FOR LOANS DISBURSED BETWEEN 1st Jan’17 to 30th Jun’18
Constitutes 98% of Gross Loan
Portfolio as on 30th Jun’18 i.e. 98% =
(Rs. 13,633/13,850 Crs)86
Note: Above numbers are based on Previous GAAP
ANNEXURES - OPERATIONS
87
GROUP UNDERWRITING AT WORK
61%
45%
32% 35%39% 41% 39% 37% 34%
27%48% 42%
42% 40% 43% 48% 51%
14%
11%
7%8%
7% 6% 6%6% 5%
IGL - 2 IGL - 3 IGL - 4 IGL - 5 IGL - 6 IGL - 7 IGL - 8 IGL - 9 IGL - 10
Conversion from IGL to IGL Conversion from IGL to LTL Conversion from IGL to MTL
LOAN CONVERSION TO NEXT CYCLE
75%
87%84%
87% 88% 88% 90% 91%
83%
Note:The above data is as on 30th Sep’16 (Pre demonetisation period).Active IGL loans disbursed during Jan’15 to Mar’15 have been considered as base and loans disbursed in subsequent cycles over the next 1.5 yrs i.e. till Sep’16 have been taken and cycle wise conversion has been arrived. Only the next first loan taken by customer is taken into consideration for conversion. 88
JLG MODEL ENSURES EFFECTIVE CONTROL ON AVERAGE INDIVIDUAL EXPOSURE, IRRESPECTIVE OF ACTUAL LOAN ELIGIBILITY
26,84529,579 29,579 29,579 29,579 29,579 29,579 29,579 29,579 29,579
44,650
54,950 54,950
25,234 27,014 26,965 26,465 25,184 24,934 24,708 24,986 25,195 25,105
39,439
46,402 47,960
-5,000
5,000
15,000
25,000
35,000
45,000
55,000
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10 Cycle 1 Cycle 2 Cycle 3
Income Generating Loan
Eligibility Amount (INR) Avg. Offtake Long Term Loan
Q1
FY
19
12,000
24,000
36,00042,000
50,000 50,000 50,000 50,000 50,000 50,000
10,20015,120 16,920 18,060 18,500 19,000 19,500 21,000 22,000 21,000
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10
^ Note: Maximum Offtake eligibility for IGL (1 year Tenure) : June-11 to Dec’15 – Rs. 15,000; Dec’15 – IGL 1 Rs.20,000 , IGL 2 Rs.30,000, Mar’17 for – IGL 1 is Rs. 24,800 and IGL 2 is Rs. 29,800 and currently for IGL 1 is Rs. 26,845 and IGL 2 is Rs. 29,579
Q2
FY
11
(P
RE
-CR
ISIS
)
^^
89
24,780
29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995
21,53326,105 24,749 24,077 24,359 24,250 24,469 24,461 24,406 24,659
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10
Mid Term Loan
Income Generating Loan
CYCLE WISE NON-AP LOAN BORROWERS
Cycle Wise Q1FY18 Q4FY18 Q1FY19
IGL 1 33% 38% 42%
IGL 2 21% 18% 15%
IGL 3 7% 9% 9%
IGL 4 2% 3% 3%
IGL 5 1% 1% 1%
IGL 6 1% 1% 1%
IGL 7 1% 1% 1%
IGL 8 1% 1% 1%
IGL 9 0.4% 1% 1%
Total IGL Borrowers 68% 72% 72%
LTL 1 19% 11% 12%
LTL 2 3% 5% 6%
Total LTL Borrowers 21% 17% 18%
MTL 1 7% 7% 6%
MTL 2 2% 2% 2%
MTL 3 1% 1% 1%
MTL 4 0.5% 0.6% 0.4%
MTL 5 0.3% 0.3% 0.2%
MTL 6 0.2% 0.3% 0.2%
Total MTL Borrowers 11% 11% 9%
Cross Sell 0.2% 0.4% 0.2%
Total IGL + LTL + MTL + Cross Sell 100% 100% 100%
Note:
▪ Customers having IGL & MTL loans, have been grouped under respective IGL loan cycle
▪ Customers having LTL & MTL loans, have been grouped under respective LTL loan cycle
▪ MTL clients represents borrowers with only MTL loans
▪ Cross-sell clients represents borrowers with only cross-sell loans 90
DIFFERENCES IN LENDING MODEL BETWEEN SHG & JLG
SHG JLG (BFIL)
ModelSavings led (Members collectively save
money for 6 months to avail credit)
Credit led (No savings required, members have
an access to the finance as per the requirement)
Borrowers Segment Women/Men Women
Lending Methodology Group (Size 10-20 members) Group (5 members)
Loan Processing time 4 Months 1 week
Repayment frequency Monthly Weekly
Credit DecisionGroup leader decides the quantum of
loan for the member
Entire group and the center decides the quantum
of loan
Credit Bureaus Reporting
Not much information available (RBI
mandated the SHGs to share data from
July 2016)
Weekly sharing of the data with CICs
Top 5 States % Mix in Portfolio (Mar-17) Portfolio O/S (Mar-17) INR Crs.
Andhra Pradesh 28% 17,406
Telangana 20% 12,053
Karnataka 13% 8,149
Tamil Nadu 10% 6,047
West Bengal 8% 4,842
Others 21% 13,084
Total 100% 61,581
SHG Concentration:
Source: NABARD91
IGL MTL LTL
Other product
offerings^^
Loan portfolio (INR
Crs) / (% Mix)6,629 (48%) 3,907 (28%) 3,164 (23%) 140 (1.0%)#
Ticket size rangeINR 7,750 to
INR 29,579
INR 7,185 to
INR 29,995^
INR 30,900 to
INR 54,950
INR 1,310 to
INR 6,906
Avg. Ticket Size (INR)
For Q1FY1925,812 22,614 41,545 2,194
Eligibility*
▪ Completion of CGT /
GRT
▪ Age limit 18 years to
58 years
▪ Maximum limit of
INR. 26,845 for
IGL 1
▪ With IGL - Between
19th to 44th week
▪ With LTL – Between
19th to 94th week
▪ Maximum limit of
INR. 24,780 for MTL1
▪ Minimum One IGL
Loan cycle completed
▪ Maximum limit for LTL
1 post IGL 1 - INR.
35,190**
▪ Maximum limit for LTL
1 post IGL 2 - INR.
44,650**
▪ With IGL – Between
4th to 44th week
▪ With LTL – Between
4th to 94th week
▪ With MTL – Between
4th to 71st week
Tenure 50 weeks 75 weeks^ 104 weeks 25 weeks
Annual effective
interest rate
19.75%
(w.e.f 7th Dec’15 for new loans) ▪ 19.60% - 19.70%
Processing fee (Incl.
Good & Service Tax)
▪ 1.18% for Non-BC branches
▪ For BC Branches
- 1.18% for Loan amount >Rs, 25,000
- Zero processing fee for loans <Rs. 25,000 for BC branches
▪ 0.7% -1.18%
* Eligibility criteria over and above the criteria prescribed by the RBI
^^Loans for Mobile Phones, Solar lamps, Sewing Machines, Bicycle , Bio-Mass Stove, Water-purifier(Excluding Two wheeler loans, Loans for home improvement and loans for
refrigerator which are in pilot stage).# Portfolio Including Two wheeler loans pilot of Rs.8.8 Crs, for loans for Home improvement Rs. 1.2 crs & Loans of Rs. 2.8 crs for Refrigerator .
^w.e.f Aug, 2016 Tenure has been changed from 50 weeks to 75 weeks and ticket sizes are changed.
** With effect from 27th November 2017
PRODUCT OFFERINGS
92Note: Above numbers are based on Previous GAAP
PRODUCT WISE - DISBURSEMENT, PORTFOLIO OUTSTANDING AND TICKET SIZE
93
IGL LTL MTL Others* Total
Q1FY18
No. of Loans Disbursed in '000 857 108 557 371 1,894
% Mix 45% 6% 29% 20% 100%
Amount of Loan Disbursed (In Crs.) 2,056 414 1,191 74 3,734
% Mix 55% 11% 32% 2% 100%
Portfolio Outstanding (In Crs.) 4,223 1,881 3,457 70 9,631
% Mix 44% 20% 36% 1% 100%
Avg. Ticket Size INR 23,979 38,227 21,368 1,983 19,717
Q4FY18
No. of Loans Disbursed in '000 1,355 241 568 604 2,768
% Mix 49% 9% 21% 22% 100%
Amount of Loan Disbursed (In Crs.) 3,397 976 1,221 145 5,738
% Mix 59% 17% 21% 3% 100%
Portfolio Outstanding (In Crs.) 6,337 2,507 3,605 146 12,594
% Mix 50% 20% 29% 1% 100%
Avg. Ticket Size INR 25,081 40,448 21,495 2,394 20,735
Q1FY19
No. of Loans Disbursed in '000 1,299 287 695 580 2,862
% Mix 45% 10% 24% 20% 100%
Amount of Loan Disbursed (In Crs.) 3,354 1,194 1,572 140 6,260
% Mix 54% 19% 25% 2% 100%
Portfolio Outstanding (In Crs.) 6,629 3,164 3,907 150 13,850
% Mix 48% 23% 28% 1% 100%
Avg. Ticket Size INR 25,812 41,545 22,614 2,417 21,875
*Cross sell products
Note: Above numbers are based on Previous GAAP
LEVERAGING THE DISTRIBUTION STRENGTH
FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19
Total Total Total Total Total TotalMobile
Phone
Solar
lamp
Sewing
MachineCycle Others^ Total
No. of Units Facilitated
(in Lacs)8.4 15.6 11.6 18.5 3.7 6.0 1.1 2.1 0.2 0.02 2.4 5.8
Gross Fees (after
service tax) INR Crs.28.3 49.7 42.7 66.4 12.8 23.3 3.8 9.6 0.8 0.1 6.8 21.2
Less: Incentives INR
Crs.4.6 13.8 9.6 15.7 1.3 5.4 0.9 1.7 0.2 0.02 2.0 4.9
Net Fees INR Crs.* 23.7 28.3 26.0 39.9 9.1 14.1 2.1 5.5 0.5 0.03 3.3 11.4
Loan Portfolio INR Crs. 58.3 101.9 32.4 145.0 70.0 145.0 26.5 33.7 8.4 1.1 53.6 123.3
Net Fee Income as %
of PAT**12.6% 9.3% 13.5% 6.8% 18.8% 6.6% 1.4% 3.9% 0.3% 0.02% 2.3% 8.0%
Loan Portfolio Mix 1.4% 1.3% 0.4% 1.2% 0.7% 1.2% 0.2% 0.2% 0.1% 0.01% 0.4% 0.9%
*Net fee post the incentive payout and sans transfer pricing of other operating cost and Post MAT adjustment
^Loans for Bio-Mass Stove, Water-purifier, Solar Fans, Two Wheelers, Mixer Grinder and Refrigerator
** PAT before MAT credit entitlement of Rs.97 Crs as on 31-Mar-16 for FY17.
Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 7.8 mn for last 5.3 years is 43.5%
Frequen
cy of
Loans
(for the
period)
FY14 FY15 FY16 FY17 FY18 Q1FY19
Cumulati
ve past
5.3 years
#1 1.6% 5.5% 9.5% 10.2% 18.4% 7.2% 30.8%
#2 0.1% 0.5% 1.3% 0.5% 2.0% 0.1% 8.4%
#3 - - 0.1% - 0.1% 2.7%
#4 - - - - - 1.0%
#5 - - - - - 0.5%
Total 1.7% 6.0% 11.0% 10.7% 20.6% 7.3% 43.5%
Penetration Based On Total No. Of Loans Frequency of Loans Based On Current Member Base
FY14 FY15 FY16 FY17 FY18 Q1FY19
Cumulative
past
5.3 years
Solar Lamp 0.9% 5.0% 6.8% 7.8% 10.2% 2.7% 33.4%
Mobile Phone 1.6% 5.7% 9.1% 5.0% 7.8% 1.4% 30.5%
Mixer Grinder 0.0% 0.0% 3.3% 1.8% 5.1%
Sewing
Machine1.7% 0.9% 0.8% 0.3% 3.7%
Bicycle 0.0% 1.4% 0.8% 0.2% 0.0% 2.4%
Pressure
Cooker0.0% 0.0% 1.0% 1.2% 2.2%
Others 0.4% 1.0% 0.1% 0.1% 0.1% 1.7%
Total 2.5% 11.0% 19.9% 14.7% 23.4% 7.4% 78.9%
94
BFIL FINANCIAL INCLUSION COVERAGE…
Doorstep Service Financial literacy Dedicated customer service
Doorstep delivery (i.e. at Center
meetings)
2 day process consisting of hour-long
sessions designed to educate clients
on BFIL processes and credit
discipline.
Toll-free helpline number with seven
different vernacular languages
Strong reach in under-banked areas Weaker & Minority section coverage
68% of BFIL branches are in RBI
under-banked district list
BFIL covers 68% of below average &
low financial districts identified by
CRISIL
20096 175
SKS 296 districts RBI 375 districts*
68%
68% of SKS branches are in RBI under-banked districts list SKS covers 68% of below average & low financial inclusion districts identified by Crisil
CRISIL level of financial inclusion
SKS Coverage of thosedistricts
High 18%
Above average 15%
Below average 51%
Low 16%
Grand Total 100%
68%
Weaker & Minority section coverage
16%
71%
100%
Minority
Economically Weakersection
Women
…. IS SUPPORTED BY ROBUST CUSTOMER CENTRIC PRACTISES
* Source: RBI under-banked districts data
[1] Source: CRISIL Inclusix: An index to measure India’s progress on Financial Inclusion, June 2013
95
WHAT ARE CLIENTS DOING POST THE ANDHRA PRADESH MFI CRISIS?
Interest rates charged by informal sources (in the
absence of MFIs)
Willingness to repay
Data relates to Andhra Pradesh & Telangana
Source: “What are Clients doing post the Andhra Pradesh MFI Crisis?”, MicroSave, 2011
59%
37%
22%
12%
29%
0%
10%
20%
30%
40%
50%
60%
70%
Money Lender SHG Pawn Broker Bank DFC
Sources of Credit (in the absence of MFI Loans) Reasons for not repaying MFI loans
96
ANNEXURES - FINANCIALS
97
CASH AND CASH EQUIVALENT BALANCES
INR Crs.
FY18 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19
Interest Yielding^ 929 1,532 978 610 594 1,240
Non Interest
Yielding^^429 406 324 433 514 504
Total 1,358 1,938 1,302 1,043 1,108 1,744
^fixed deposits, excluding margin money deposits.
^^Includes current account and cash balances
Note: Daily Average figures
98
ANNEXURES - TECHNOLOGY
99
Initiatives SolutionTechnology Partner Benefits
Mobility driven
Jandhan/Aadhaar compliant
(JAM)
Lending Management
Software (LOS & LMS)
TABLETS’ - Hand held device
for field staff
Migrated from on-premises
email system to hosted
exchange
Data Centre– Migration to
Cloud
ERP Implementation
In-House Team SKS SMART
Enterprise Mobility
Office 365
Data Centre Hosting
ERP
▪ Enhances Productivity of SMs- Reduced
time spent at both center meeting and back
office
▪ Paper less transaction - Pre-printed loan
application form.
▪ Enhanced email security, 99.99% uptime,
On mobile office 365 access.
▪ Additional products such as One-Drive,
Enterprise Skype etc. for easy access of
data and better communication.
▪ On-demand capacity scale-up.
▪ Business Continuity Plan.
▪ A robust framework that encompasses
workflow/reporting and analytic engines
▪ Works in online/offline mode to mitigate
connectivity challenges.
▪ ERP - Automation of financial
accounting/ investment management,
procurement and payment process.
TECHNOLOGY ADVANCEMENTS DRIVEN BY INDUSTRY LEADING PARTNERSHIPS
100
JAM Compliant Agent
Banking for Cash less
transactions and Cross-Sell
In-House Team SKS SMART Agent▪ A Mobile, Jan-Dhan / Aadhar compliant door
step banking solution with full eco-system is in
place
ANNEXURES – HR
101
Member ServicesAvg. Vintage (Yrs.)
As on June-18
Senior Management 9.3
Middle Management 9.4
Branch Management* 7.6
Sangam Managers 2.5 (3.4^)
Vintage of SMs Exited
Q1FY19%Mix
< 6 Months 36%
6 Months - 1 Yr. 26%
1 -2 Yrs. 20%
2- 3 Yrs. 11%
> 3 Yrs. 8%
Who?
When?
Sangam
Manager
Attrition %
Why?
Retention
Strategy
▪ 26% for Q1FY19 (Annualised)
▪ Sangam managers who earn lesser
average monthly performance incentive
i.e. ~Rs. 3,800 vis-à-vis ~Rs. 8,400 for
other Sangam Managers .
▪ Majority of the staff who leaves the job,
decides to leave within first year from
joining date.
▪ Work conditions such as :
− Average distance travelled per day is
~30 kms.
− Work location is different from home
location
− Branch Reporting time at 6:30 AM
▪ 2nd Best paying job (~Rs.17,500 pm) in
the local milieu (1st – Govt. Job)
▪ High growth career path – No lateral
recruitments till 4 levels above loan
officer.
ATTRITION RATE AT SANGAM MANAGER LEVEL IS LARGELY CONTRIBUTED BY NEW JOINEES. EXCLUDING NEW JOINEES, THE AVG. VINTAGE IS 3.4 YEARS
* Includes Promoted Sangam Mangers
^ Avg Vintage of Sangam Managers
(Excl. who joined in last one year) i.e.
68% of Sangam Managers is 3.4 Yrs.
102
ANNEXURES - COMPLIANCE
103
COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (1/2)
RBI norms for NBFC-MFIs BFIL compliance
NBFC–MFIs
▪ Qualifying assets to constitute not less than 85% of its
total assets (excluding cash and bank balances)
▪ At least 50% of loans for income generation activities
▪ Qualifying assets - 95%
▪ Income generation loans 99%
Pricing Guidelines
Income of
Borrower’s Family
▪ Rural : <=Rs.100,000
▪ Non-Rural : <=Rs. 1,60,000 ✓
Ticket Size▪ <= 60,000 – 1st cycle
▪ <= Rs.100,000 – Subsequent cycle ✓
Indebtedness▪ <= Rs. 100,000
✓<= Rs. 80,000*
Tenure▪ If loan amt. > Rs.30,000, then >= 24 months
✓
Collateral▪ Without collateral
✓
Repayment Model▪ Weekly, Fortnightly and Monthly
✓104
* Rs. 60,000 for 1st cycle loans (IGL 1 or IGL 1 + MTL 1)
COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (2/2)
RBI norms for NBFC-MFIs BFIL compliance
Pricing Guidelines
Interest Rate^
▪ A. Margin cap – 10% above cost of borrowings
▪ B. Avg. base rate of top 5 commercial banks X 2.75
▪ Lower of the A and B.✓
Margin: 9.6% for Q1FY19
Interest rate 19.75% w.e.f
7th December’15 for new
loans
Processing Fees▪ <= 1% of loan amt.
✓
Insurance
Premium
▪ Actual cost of insurance can be recovered from
borrower and spouse
▪ Administrative charges can be recovered as per IRDA
guidelines
✓
Penalty▪ No penalty for delayed payment
✓
Security Deposit
▪ No security deposit/ margin to be taken
✓BFIL has never taken
security deposit/ margin
105
^ W.E.F April 1, 2017 - Quarterly Margin Cap will be followed- Average interest rate on loans sanctioned during a quarter shouldn’t exceed the
Avg borrowing cost during the preceding quarter plus margin cap.
Note:
* Banks are also directed to ensure overall direct lending to non-corporate farmers, which should not fall below the system wide average
of last three years achievement, which is notified as 11.78% as per RBI notification dated 21st September 2017. They should also
continue to maintain all efforts to reach the level of 13.5% direct lending to beneficiaries..
Refer Slide no. 53 for details on purpose wise loan portfolio outstanding.
RBI BFIL
S.no. Sector Category Target for Banks %Qualifying
Portfolio of BFIL %Explanation
1
Agriculture Target 18%
56% Livestock, Agri & Allied- Direct Agriculture* Sub-target ~13.5%*
- Direct Small &
Marginal farmers*Sub-target 8%
2 Weaker Target 10% 100%
100% Loans are to women
beneficiaries (with less than
Rs.1 lac).
Further, Minority communities
constitute 17% and
economically weaker sections
72% of loan portfolio.
3 Micro-enterprises Target 7.5% 100%Loans to MFIs for on-lending to
microenterprises.
BFIL LOAN PORTFOLIO QUALIFIES FOR OVERALL PSL TARGET OF 40% AND ALL SUB-TARGETS UNDER NEW PSL NORMS
106
ANNEXURES – INTERNAL AUDIT
107
INTERNAL AUDIT PLAYS A CRITICAL ROLE IN ASSESSING PROCESS CONTROLS
Note:
* Approximately 20% of the clients are covered by Internal Audit in an year during the branch audits. Clients visited on a sample basis to check for
Loan confirmations, Loan utilization (LUC) , arrears and awareness on Client Protection Principles (CPP)
** Head Office Audit is co-sourced with Deloitte Haskins & Shell LLP, Hyderabad
• 236 strong headcount
• ISO 9001:2015 certified process
• All branches are inspected monthly based on a 4
tier grading system
• Top 25 disbursement branches are audited twice
in a month
• Incentives/appraisals of field staff linked to branch
grading
• Internal Audit of branches are fully automated
• Process Consulting & IT applications review
Strength
• Branches 1,639
• Branches per Internal Audit staff 7
• Regional Offices 38Scope
Scope of Audit
Audit area FrequencyClient
Acquisition
Center
Meeting
Process
Document
verification
(KYC, Loan
utilization
check etc.)
Monitoring
process by
supervisors
Adherence
to Process /
Policies
Statutory
Requirements
(Credit
bureau, Fair
practices etc.)
Client
Visits*
High Risk
items
(Frauds
etc.)
IGL
BranchesMonthly √ √ √ √ √ √ √ √
Regional
OfficesQuarterly - - - - √ √ - √
Head office** Quarterly - - - - √ √ - -
108
Pre Post Benefits
MS-Excel Automated risk
based audit
Improved Audit
quality
Offline audit &
control
Real time
control for
Managers
Improved Audit
supervision
7 branches
per IA staff
8 branches per
IA staff by FY19Efficiency gains
Automation of Internal Audit