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Aavas Financiers Ltd
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Ladies and gentlemen, good day, and welcome to Aavas Financiers Limited Q3 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Sushil Agarwal, Managing Director and CEO of Aavas Financiers Limited. Thank you, and over to you, Mr. Agarwal.
Yes. Good afternoon, everybody. Thank you for participating on the earnings call to discuss the performance of our company for quarter 3 and 9-month FY '21. With me, I have Mr. Ghanshyam Rawat, CFO; Mr. Ram Naresh, Chief Business Officer; Ashutosh Atre, Chief Risk Officer; Himanshu Agrawal, Investor relationship; and other senior member of the management team and strategic growth adviser or investor relationship adviser. The results and the presentations are available on the stock exchanges as well as our company website. And I hope everyone has had a chance to look at it. At Aavas, we continue to grow consistently in a calibrated manner and registered AUM growth of 23% year-on-year as of December 2020. With continued improvement in economic activity and people adapting to new normal, our business has also been improving. While the total disbursement for 9-month FY '21 at INR 1,644 crore were lower by 21% on year-on-year basis, the disbursement for Q3 FY '21 at INR 764 crore registered 2% year-on-year growth and 15% quarter-on-quarter growth. Profit after tax for 9-month FY '21 increased by 7% on a year-on-year basis as per Ind AS accounting, and registered a 24% year-on-year growth as per IGAAP accounting. On the asset quality front, the 1+DPD and gross Stage 3 of our company is around 8.2% and 1%, respectively, as of December 2020. These are largely in line with our earlier expectation. Gross Stage 3 includes roughly 0.59% of the assets which have not been declared NPA for regulatory requirement and other purpose on account of an interim Supreme Court order. But we have provided for the Stage 3 assets as per Ind AS norms, and created additional provision of INR 19.03 crore on account of COVID. Having said, that we have witnessed an encouraging trend in collection efficiency, which improved from 95% in September to pre-COVID level of 98.8% in December. Further, we draw comfort from the fact that 100% of our portfolio is secured against mortgage, most of which is self-occupied residential property. Also, the portfolio is very granular in terms of customer profiles with average ticket size of sub INR 10 lakh, and average loan-to-value ratio is less than 50% on the outstanding amount. Now I will hand over the line to Ghanshyamji, CFO, to discuss various business parameters in detail.
Thank you, Sushilji. Good afternoon, everyone, and a warm welcome to our earning call. During this quarter, company has borrowed an incremental amount of INR 9,356 million at the 7.06 -- 7.04% for 144 months. As of December '20, our average cost of borrowing stood at 7.68% on the outstanding amount of INR 81,861 million, with an average maturity of 131 months. Our long-term credit rating continues to be AA- with a stable outlook from ICRA and CARE. Despite the highest short-term rating of A1+, we continue to maintain 0 exposure to commercial paper as a prudent borrowing practice. IGAAP to Ind AS reconciliation has been explained in detail for a PAT as well as net worth on the Slide #31 to 33 of presentation. Key parameters: As on December 31, 2020, total number of live account stood at 118,398, that is 22% year-on-year growth. Total number of branches was 263. We opened 18 new branches in last 12 months. Employee count of 3,545 versus 3,109 in December '19, a 14% year-on-year growth. Assets under management grew 23% year-on-year to INR 88,226 million as on December 31, 2020. Product-wise breakup: Home loans, 73.4%; other mortgage loan, 26.6%. Occupation wise breakup: Salaried, 39.3%; self-employed, 60.7%. The increase in salaries proportion from usual 35% level is due to higher proportion of salaried disbursement during 9 months of this FY '21 and reclassification on existing few loan accounts, basis of occupation of primary earning members instead of main applicant. The disbursement decreased by 21% year-on-year to INR 16,441 million for 9-month FY '21, but with the return of gradual normalcy, disbursement increased by 2% year-on-year and 15% quarter-on-quarter to INR 7,645 million for Q3 FY '21. As on 31 December 2020, average borrowing cost 7.68% against the average portfolio yield of 13.42%, resulted in a spread of 5.74%. Borrowing, we have access to diversified cost-effective long-term borrowing, a strong relationship with all the lenders, development funding institutions, banks and institutions. Overall borrowing mix as on 31 December 2020, is 35% from the banks, 23.8% from assignment and securitization, 21.9% from NHB and 19.3% for debt capital market. Provisioning. Additional ECL provisioning of INR 42.9 million created to consider the impact of COVID-19 during Q3 FY '21. The total COVID provision including at least 3 quarters stood at INR 190.3 million as on December 31, 2020. Total ECL provisioning including COVID-19 provisioning stood at INR 482.9 million as on December 31, 2020. 1-day -- Assets quality, 1-day past due stood at 8.21%. Gross Stage 3 stood at 1%, and net Stage 3 stood at 0.72% as on December 31, 2020. Gross stage 3, and Sushilji explained earlier, is inclusive of loan account, which are not classified NPA as per interim order dated September 3, 2020, of honorable Supreme Court. Such account has been -- have an outstanding amount INR 413.8 million, which is approx 0.59% of AU, have been provided for as a prudent practice during the quarter. Liquidity of INR 26,740 million as on December 31, 2020, cash and cash equivalent INR 19,670 million, unavailed CC limit of INR 1,220 million, documented unavailed sanction from other banks INR 5,850 million. Profitability. Profit after tax increased by 7% year-on-year to INR 2,022 million for 9 months FY '21 as per Ind-AS accounting. As per IGAAP accounting, PAT has registered year-on-year growth of 24% to INR 1,999 million for 9 months FY '21. ROA was 3.2% and ROE, 12.2% for 9-month FY '20 month. ROA was 3.9% and ROE was 15.1% for quarter 3 FY '21. As on December 31, 2020, we are well-capitalized with a net worth of INR 23,097 million. Capital adequacy ratio stood at 53%. Our book value per share stood at INR 294.6. With this, I open the floor for Q&A.
[Operator Instructions] The first question is from the line of Kunal Shah from ICICI Securities.
Yes. Congratulations, sir, a good set of numbers. So firstly, in terms of this 1+DPD, last time, it was 6.2%, though we highlighted that we are settling at that level much earlier than anticipated. But how should we read into the moment, say, going up to 8.2%? And finally, last time, you said like 15% to 20% of it generally splits into NPL, so then should we assume like 1.3% to 1.5% Stage 3 has been moved forward or collection efficiency is giving us a lot of comfort that it will settle at the current level?
Yes. So 1+ number of September shows, because this was after 5 months of moratorium or 6 months of moratorium, so the accounts which has not paid the September installment, which is roll forward number, which was 6.2%. And in a normal business, customer pays installment as on time, but certain customer missed one installment, certain customer has missed second installment. And that's where we have 1+ number. So as we have mentioned, collection efficiency in September was 95%, which is 98.8% in December, and if you remove already NPA become account, so it's 100% collection efficiency. So that is more or less giving that now the account which are in whatever buckets are going to improve. And secondly, like we were having around 5,800 accounts, which has not paid the EMI in September. Now as of December, only 2,000 accounts were there who have not paid the December installment, so significant improvement. And out of this, also, most of the accounts are in first bucket or second bucket. So whatever account was supposed to be 90-plus -- or we can't say 90-plus at this point of time, so it's Stage 3. So that has already happened and which is 0.8% as per IGAAP and 1% as Ind-AS. And that has already been fully provided in the balance sheet. And above -- over and above that, again -- it's still 19.06 crore. COVID provision is in the balance sheet. So first of all, we always used to tell that whatever is 1+, 10% to 15% of it becomes NPA. So that is already reflecting 8.1% and 0.8% and IGAAP, so that is already matching. Going forward, I think as we see that trend, it will improve from this number because earlier also, we have told that it will go up to 10%, and it will come down to normal 5%, 6% level in 1 or 2 quarters' time. So we -- that is still holding true for us. And second is this once this government -- Supreme Court order will be there, I think that will also help. There's a roll down as quickly as possible.
So with this Stage 3, we should be pretty much comfortable, it's very much reflecting this 8.2% of 1+DPD?
Yes. Yes.
Okay. And just 2 more questions. On securitization this time, it was higher at 2.4% along with much better yield, and now it's almost 23% of the AUM. And normally, we used to keep it at 19%, 20%. So what would be our plan out there our strategy? Should we be taking up further, if there are like maybe opportunities available to cross-sell at a better yield? So that's first question. And secondly, just wanted to understand, you mentioned something in terms of reclassification of this salaried, okay, which is leading to a higher proportion from, say, the applicant to the earning member. So anything to read into this? Or this is just like the internal classification and much...
We will tell you. As we have told during this 9 months, we have improved filter on what we will fund or what we will not fund. So in the self-employed side, we have improved filter and only positive lists were funded. So during this 9 months, salaried disbursements were higher. So the 3%, 3.5% difference, around 2%, 2.5% difference is because this 9 months higher disbursement on salaried class around 1%, 1.25% customer, as we have told that we have talked to 100% of the customer during the COVID period. And we have, for the ECL classification also, recheck everything. And in some of the cases, like very few cases where we have mentioned first applicant, which is business, and we have mentioned it a business and -- but installment were coming from a salaried guy who was the main earning member of the family. So in less than around 1% or 1% cases or 1.5% cases, those has been classified once we have checked during the ECL provisioning. So this is the essence. So there is nothing to read in between on this classification. On this assignment side, Ghanshyamji will explain.
Kunal, in this 9-month, we've done assignment of INR 390 crore. Last year, we've done INR 564 crore in the 9-month period. I think in last earlier calls also, we explained this thing assignment securitization is one of our funding tool. We are consistently maintaining around 15% to 20%. It depends upon the market available and pricing available. We -- accordingly, we figure out the deal with the banking institutions, and -- we do that sessions. And secondly, I want to update from additional data count on that from our side. If you see this quarter, we have shown an profit on account of assignment transaction of roughly INR 40 crore around -- in this quarter versus last year quarter, INR 18 crore, because in this quarter, we sold a pool, which is having AS spread of more than 6.5%. That's why the higher income came. But you compare 9-month on 9-month basis, in this 9-month, you -- I also update here also, this is an NPV of future income, we book under Ind-AS accounting. But as we move ahead in the next year, it gets unwinded automatically in the systems. So if we take unwinding also in the account, so in this 9-month, we had a net income of INR 11 crores versus last year 9 months, we have INR 26 crores. So still in this 9-month, apple-to-apple comparison, we have a INR 15 crore less income in this year.
Okay. Yes. That's helpful. And in proportion, it will again be like 15% to 20-odd percent?
Yes, roughly, the standard.
The next question is from the line of Chirag Sureka from DSP Investment Managers.
Sir, actually my question also was regarding that 8% number that we saw in 1+DPD. Is there a -- what is the kind of -- usually, these numbers reflect either distress or a change in banking behavior. What aspects did the customer behavior as cost has jumped? That's the question that I had, sir.
No. So say, from September to December, 4 installment accrued, and most of the customer has paid 3. And even more than 3 if somebody has not paid half of the installment or 1 installment, he is not able to pay. So that has caused this. But more or less, I have told you, we should see this into entirety, that collection efficiency has increased from 95% to almost 100%. And the customer who has not paid a single installment in September was 5,800. And in December, it was around 2,000, so significantly improved.
Sir, so you're -- basically you're saying it's just a gradual wind down of the COVID relation disruption which you're seeing?
Yes.
The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
I have 3 questions. The first one is, if I look at the 1+DPD of 8% and the NPL ratio of 1%, which are the geographies which are above this ratio currently?
Karthik, all the geographies are below that except Maharashtra.
What would that ratio be for Maharashtra, sir, if you could share it?
Maharashtra is 12%, then rest of the geographies are 8% or less.
Okay. Is it the same for NPL as well? Hello?
Yes, I'm just checking the number.
Yes, sure, sure. No problem.
Yes, only Maharashtra.
Okay. So Maharashtra is also above 1% as far as NPL is concerned. Okay. Okay. The second question, sir, is this shift in favor of salaried and away from self-employed, which is this quarter has probably seen the sharpest change in the mix. You said that about 2.5% is because of the disbursements in the salaried segment. What are some of the early warning signals that you saw in the self-employed segment for you to turn a little bit more cautious?
No. So Karthik, there's no such kind of thing as COVID came in. And every quarter, we recalibrate our funding depending on the segments, which we fund. So in self-employed, as we have told you earlier, there was only negative list, we will not fund this and everything has to be fund and mostly 50 categories we trap. And when COVID came in, we said that we will fund only this 20 positive categories, as we will see how they behave over the period of 1 and 2 quarters, and then we will open up. So because of that, I think salaried went a little bit higher and self-employed category became normal. So out of the 3 categories, which was mostly -- which is most impacted was school and around the textiles. So like stationery guys, school transporters rented accommodation near the college and school uniforms. Second was hospitality and tourism, which was also on the track. And so these are the 2 industries, which was mostly impacted. So school was the industry which has now opened up ban. Government has started -- announced that school is opening up. Hospital industry got opened up last quarter. And there, we have seen that most of the things are normalizing now, but still we are cautious. So 8 to 10 profile in this kind of segments we have restricted, and that's where the proportion -- the disbursement number is same, but the salaried and self-employed proportion got changed for this quarter. And let's see how the things plan up in next 1 and 2 quarters, and then we will continue doing the same 35-65 or 40-60, depending on that. But we still will prefer in our business segment is our key segment for funding.
Great. Excellent. My last question, sir, is what Ghanshyamji just said to the previous response. So if we look at the securitization volume on a year-on-year basis was only up about 15-odd percent, but the income that we booked was up more than 50%. Ghanshyamji said that, that is because of the higher -- that is a higher mix of higher-yielding loans in the securitization volume. What exactly would these loans be? Would these be the home improvement loans, which actually carry higher yield and that has been securitized with a higher portion this quarter?
No, no, no. It's not on account of any home improvement. It's a simply selection of home loan pool, which has a maturity of more than 1 year as per the assignment announced by the RBI. So pool yield was 14.1%, this pool got sold at 7.56%. So spread was 6.54%. So that's why if earlier pool, if you compare with the last quarter, it was a -- spread was just 5%. So 5% between 6.54%, so 1.6% extra spread has given a higher income on the assignment.
The next question is from the line of Aditya Jain from Citigroup.
Sir, one, just to confirm, the selection efficiency number includes the entire customer base, including 1+DPD and NPA?
Yes. So including NPA, 98.8%; excluding NPA, 100%.
Got it. Okay. And the 1+DPD reduction that we are expecting over the coming quarters, so largely you are saying that's going to be driven by more people within that category coming back to regular payments. Is that the right understanding? Because you said that...
Mostly, it was because of one EMI duped in last quarter and last 4 months, so -- and most of the guy -- I told you that when we did case by case and that is mostly around school and textiles was down and some of the guys were in hospitality. Both these segments have now started recovering, and we are seeing that positive result also. Hopefully, I think it will be better. And third one is, again, Supreme Court order. So once that will be there, I think things will improve. But I think as a team when we see if some -- anything new not coming in, it will be much better because I've told you, collection efficiency significantly improved. Any customer who has not paid that month installment has reduced by 60% from 5,800 to 2,000. So that's a significant improvement.
Got it, sir. And sir, home loan NPA ratio is higher than the other mortgage loans. This sort of ferocity, what has driven this? Is it -- I mean, how would you see that phenomena?
No, but that is the same as last 3 quarters' trend for us. Normally, if you'll see always because home loans -- no, so mortgage loans anyway average tickets are 8 lakh. You have housing property in which customer is living. So this is a normal trend, if you'll see last 1 and 2 years for us, so there's nothing changed and nothing to read in between.
Got it, sir. Sir, this is the last thing. On the disbursement growth, so last quarter we had about 2%, 3%. Basically, we had same in this quarter year-over-year terms. And last quarter, I assume earlier months would have been very little disbursement compared to September. So exit growth rate might have been higher. So -- but we would have thought that the -- which you are not looking that because there is a seasonality involved and 2Q has low -- less disbursement. So how would you see that pickup in disbursement growth, kind of affecting, say, little slow.
No. So Aditya, I think this is as per our plans because as you've told, 20% to 25% growth on -- in year-on-year AUM wise. So we're already at 24% growth. So we are doing in line, but sourcing has significantly improved. But we have improved filter. So I think we are on track as we have decided for this year. Till Q4, we will be a little bit over cautious. Then we will be on a normal growth path.
The next question is from the line of Piran Engineer from Motilal Oswal Financial Services.
Sir, congrats on the quarter. I have 2, 3 questions. Sir, my first question is you have almost INR 2,000 crores liquidity on the balance sheet. Now the next year, you have borrowing repayment of INR 1,000 crores, 1 year operating expense is also INR 250 crores. So even if we don't do single collection, you have enough liquidity to manage debt repayments and OpEx for more than a year. So why are we keeping so much of liquidity? Is it that the bankers asked for it? Or you raised NCDs from the development financial institutions abroad? Are they asking you? What is the rationale for keeping such high levels of liquidity?
So Piran, there is -- first thing, there is no such ask from anybody. It's management and Board decision, which we take according to situation. Normally, we keep 3 to 4 months of future disbursement as cash in hand, traditionally, since the last 5, 6 years. Due to COVID, we thought we will increase to 5 to 6 months. And as the things will normalize, we will again come back to 3 to 4 month of disbursement, like cash in hand, and it's a conservative policy, which we keep on doing. And as management, we are comfortable with this.
So sir, 3, 4 months means about INR 800 crores, INR 900 crores, INR 1,000 crores, maybe. That much of liquidity you all will tone down to.
Yes. So our disbursement rate will be around INR 300 crore to INR 400 crore. Accordingly, we'll be there.
Okay. Okay. Sir, my next question. So it's a bit more strategic, but I just wanted to understand now with GRUH becoming a bank. Now the differential between interest rates that GRUH or Bandhan Bank offers versus what you offer is now more than 300 bps. And even if I look at the branch network in some key states, like, say, Gujarat, there is an overlap of 90%, 95%. Even the branches, when I see they're just 1, 2 kilometers apart. So what is our competitive advantage now versus such players who can offer a much lower interest rate? And do you see yield pressure as a result of this, not in the near term, but maybe over the next 2, 3 years?
Yes. So Piran, as we always tell that when we started our journey also, we were having the same apprehensions, like when we entered in Gujarat 2013, that GRUH is the most powerful and whether we will be able to do business or not. After 7 or 8 years, both are coexisting. They are also doing around INR 100 crore of business, and we are also doing INR 50 crore, INR 60 crore of business per month. Branches are there, but the customer segment is different. We are 70% self-employed. They are maybe 70% salaried. They are having more apartment properties, we are having more independent houses. They have 100% sourcing from DSL, DMA, we have 100% sourcing in-house. But market is such large, both can co-adjust. Yes. We always acknowledge there will be competition. There can be pressure on our balance sheet also, which we are seeing in the last 3 years. So we always say that maybe our AS can compare by 50 to 75 basis points in next 2 to 3 years. But we have sufficient debt available in the balance sheet where we can reduce our OpEx, and we can sustain 2.5% ROA for medium to long term in our book.
Fair enough. Sir, and my last question. It's a bit more strategic, but I just wanted to get your thoughts. So one of your competitors, which is getting listed very soon, they cater to the same sort of customer segment and affordable housing. But their business model is very different in terms of centralized underwriting. And as a result of that, they have a PAT of 2 days versus we have a PAT of 8, 10 days. So is that something in the distant future, we -- I wanted to understand from you, what are the pros and cons of such a model and could we look to transform the such a model because that business will require only 15, 20, 30 credit managers. We have more than 600 credit managers. So it would be a more lean operating business. So I just wanted your thoughts on what the pros and cons could be? That's my last question.
Piran, if you can name the competitor?
Home, sir.
Okay. Yes, so, yes, so totally different business model. They have 86% salaried business. They have more concentration on metro and we say we don't want to work in metro because they are already top-level guys, AAA guys are exist, and there will be lots of pricing pressure, lots of competition, lots of BT. And over the period of last 10 years, we have created our niche in Tier 3 to Tier 5 where we can price the risk. And now we have appraised almost 300,000 customers in that segment. So we are comfortable the kind of appraisal system. And everybody's business model have different kind of levers. So I will not comment on others. But in our business model, we have sufficient spread. We have very good asset quality, which we can maintain, and we were able to generate 2.5% plus ROA over a period of last 10 years. So I think we will continue with our kind of business segment. Yes, last 5 years, we have also ensued lots of technology, which is helping us out in operations and bringing down OpEx. If you will see also over a period of last 3 years, we are -- every year, we are able to reduce our OpEx by about 30 to 40 basis points. And I think that journey will continue for us.
The next question is from the line of Shreepal Doshi from Equirus Securities.
Sir, my question is with respect to the restructuring-related request that we would have received. What is that -- so if you can throw some color on that aspect.
Yes. So first of all, like our 1+ number and NPA number, this is without any ECL redisbursement without any restructuring. So it's plain and simple number. In the process, we have received around 100 to 150 restructuring request that we have evaluated at our end and communicated to the customer. Some of the customers which were not happy with our decision, so they have moved out and did the BT from ourself. And rest of the customers, either we have convinced them because it was not that their business is fully impacted and they need restructuring. And since 97% of our book is less than INR 25 lakh. And those are the very smaller customers. And with opening up of schools and tourism industry, most of the requests from that side. So customer got convinced, and we have not registered any account in our book.
Okay. And incrementally, also, we don't see that happening?
Yes. Now so we cannot do because it was a process. You need to do till December 31 and then implementation can be in last 3 months. So that's where I'm saying, that 1+ number, 90+ numbers, these are plain, simple number without any restructuring, without any ECLG, without any Supreme Court. Supreme Court number is shown in NPA, but we have still provisioned and published all the numbers taking without any reference. And beyond that, further INR 19.6 crore as COVID provision is - there is the balance sheet. And anyway, we are making sufficient profits INR 200 crores and how much -- INR 270 crore of PBT for us. So every quarter, we are making sufficient profit, so balance sheet is in a very strong position.
Sure, sir. And sir, The second question was with respect to the reclassification of the customer profile. I understand that you said that there is not much to read into, but are we -- so is there a thought process to increase the salaried segment at the management level in the near term, say, from currently 70% to 65% or 60%?
No. So Shreepalji, that's not the scenario, but it's an evolution like when we started our journey, we were BBB-, now we are AAA-. Our borrowing cost is around 7.5% for 12 years and incremental borrowing, the credit team has done excellent job with 7% for 12 years. So with pricing coming in, that also gives -- creates a opportunity for us to have a better customer segment, maintaining the spread. But as the company, we have 3 priorities. First, your asset quality; second, maintaining the spread; and third is growth. So maintaining all this 3 DNA of our company, we will choose the segment for funding. On account of classification, it's only 1% or 1.5% impact, so that is not much. And that -- it's a very detailed exercise with everybody involved or it does, et cetera, because ECL classification. And we have the most detailed kind of framework, which we have created. So that's how it is.
The next question is from the line of Antariksha Banerjee from ICICI Prudential Asset Management.
Yes. Sir, first question is on this DPD movement. Sir just clarifying if I've understood it clearly. The 6.2% number that you had in September, that included everything that was more than 1 day overdue, right, including NPA?
Yes.
Yes. So if I compare between September and December, most of that 6%, excluding NPA, would have been in the 1 to 30 bucket, right, because they would have missed 1 installment?
No. So 1+ when we say, it includes 1 to 30 DPD, 30 to 60 DPD, 60 to 90 DPD, and 90-plus accounts.
Sir, can you give the 30 to 90 buckets for September and December? I think that would clarify.
So 30 to 90, right now, out of this 8.2% is 3.8%.
Okay. And September was how much?
September, it will not be negligible because last 6 months installment is not there, only September installment was...
If you compare it year-to-year, it was 1.7%.
Antariksha?
Yes, yes.
Are you with me? So like say, your March to August was moratorium, so no installments approved.
Correct.
So September month, first installment accrued. So any account cannot be moved to 31 to 60.
Okay. So that amount will be very small, negligible. That's what I just wanted to confirm.
Yes. Because no installment accrued that point of time.
Okay. And 0 to 30, as per my understanding, was about 5,800 in terms of the number of accounts in September, 0 to 30 is 2,000 accounts in December. Broadly, that is right?
No, no. I will give you...
[Foreign Language]
[Foreign Language]
No, no, no. I mean, sorry, 1 to 30.
Sorry?
People who have not paid in September and people who have not paid in December, that you said 5,800 versus 2000, right?
Yes, correct. Yes.
So that is 1 bucket view. That's all I wanted to confirm.
No, that can be in any bucket. It can be on 1 to 30 also, 31 to 60 also, 61 to 90 also.
Got it. Got it. Okay. The second question is on the yield, sir. So you have been seeing a sharp decline in cost of funds for quite a few quarters now. When do you intend to pass it on to customers? Or is that on the table at all?
So...
So is that above your in average for quite a few quarters?
Antariksha, as per last quarter Board meeting decision, we have already passed it on 10 basis point on January 1. And we will wait for another Board meeting decision. So if things will be normalized by March 31, again some part of it, we will really in maybe April to June quarter.
The next question is from the line of Abhijit Tibrewal from Reliance Securities.
I just wanted to go back to the question which Antariksha was asking. So I mean, while you suggested that about 5,800 people had not paid their EMIs in September and about 2,000 accounts have not paid their EMI in the month of December. I mean what would this number be if you were to look at people who have not paid a single EMI till September? And how many people have not paid a single EMI till December?
So that has already become NPA. So 0.49% was NPA earlier, now 1% NPA. And on IGAAP number, it was 0.32% and 0.8%.
Right. Sir, which is to suggest if 1% of...
So 0.5% of the total pool, which has not paid a single installment has become NPA.
Fair point. Fair point. Which is to suggest that your pro forma Stage 3 number includes everyone who has not paid a single EMI till December?
Yes, yes. So for us, there is no difference in pro forma and non pro forma. We are straight. We are saying that 1% people is NPA. Without restructuring, without ECLG, without doing -- without Supreme Court freezing decision. Supreme Court freezing decision, it is around 0.3%. And we have also provided 100% as per our ECL norms for the entire 1%.
Fair point. Fair point. And now going back to that question around your 1+ DPD and collection efficiencies. So with the -- with 1+DPD of about 8.2%, and like you suggested collection efficiency of about 98.8% in December, and if we kind of exclude the GNPAs, that number would go up to 100%. So since, if we were to assume here that these people who have paid their EMIs in the month of December, if these customers continue to pay their EMIs in the month of January, February and March, would it be fair to assume that your DPD number, the 1+DPD number should come down kind of drastically from 8% levels, unless otherwise there are a lot of customers who are still paying part installments?
No. So anyway, we don't count part installment to attain the DPD bucket, first thing. Second thing, what we are saying that after 120,000 live customers, only 2,000 have not paid the installment. Rest, out of this 2,000 customers, must have paid more than 2 installments. That's where it's a 100% collection efficiency. Going by that trend, if 118,000 continued to pay all the 3 installments because if they have paid in December, so there is -- but collection doesn't happen that way. There will be some roll forward, and there will be some roll backward. So we can assume that roll forward will be less and roll back will be high. So we should be in a much better situation and much as per 1+. And NPA or Stage 3 numbers can significantly change only when the Supreme Court decision will be there.
Sir, fair point. So which is to suggest that, I mean, in your anticipation, let's say, if collection efficiencies were to hold at these levels between 98.5% and 99%, then can we go back to our guided levels of less than 5% DPD?
We will attempt that. We cannot comment on that.
Okay. And sir, just 1 last question. While a lot has been discussed about salaried and self-employed mix, this 4.2% spike in your salaried mix during the quarter. So while you're suggesting that over the last 9 months you've been doing a lot of these salaried disbursements, this kind of a mix we have already -- I mean, we've seen in this quarter itself. Till the last quarter, your mix was holding steady, at the same 35-65 kind of a salaried, self-employed mix. So I mean, what was there to suggest that -- I mean -- and again, you've been very kind, you've given that breakup that about 2%, 2.5% differential is because of higher disbursements. So I mean this differential because of higher disbursements, did they come only in Q3 itself? Because till last quarter, your mix was holding steady.
No. Abhijit, every quarter, we give AUM number. 65-35 is AUM number. Disbursement number we have not given. Disbursement number for -- anyway, I think, 40-50 or more than that, 45-55.
Yes. This quarter -- this 9 months.
Right. Okay. Sir, but your mix has changed only in this quarter. This is what I'm trying to suggest. Have you been giving higher disbursements in salaried?
Anyway, first 3 months, there were no disbursement, so last 6 months that is there. And as the economy will open up, we will again be more on the self-employed side. But during this month, since we were very cautious about certain sectors in self-employed category, so this last 6-month disbursement had this scenario.
Okay. And sir, just 1 last question, if I may just squeeze in. So this reclassification that we have done, tagging the accounts, which is the primary earning member of the family rather than the main applicant. Is it a standard industry practice that is there today? Or...
It was also -- with us also. It's only 1% in cases which has changed, I've told you. So what happens in a case where you have funded INR 10 lakh, and there is a applicant which has INR 15,000 or INR 20,000 income, and there is a salaried guy who is a co-applicant, who has INR 25,000 income or maybe INR 30,000 income, and you have taken repayment from co-applicant from a salary account. So normal practice was from which account we have taken the repayment, we will classify that account into that category. For this 1% of the cases, instead of that, the primary applicant, which was like a business guy, tagged as a business category. So only this 1%, 1.5% cases during when we were doing the ECL framework during the COVID, and we were talking 100% of the customers, we find this inconsistency of 1%, 1.5% cases where we have tagged them as a self-employed rather than salaried guy. And the installment was coming from his salary account. We have -- because of the auditors' observation and in our -- from our own, again, rechecking it, we have done that classification.
Due to time constraints, that was the last question. I now hand the conference over to Mr. Sushil Agarwal for closing comments.
Thank you, all. Thank you, all, for attending the call. And hope we have answered all your questions. To summarize, at Aavas, we continue to focus on improving customer service, being transparent with our customers. As mentioned in the last earnings call, we have reduced Aavas Financiers Limited prime lending rate by 10 basis points with effect from 1 January 2021. Thank you so much for your time. For any further information, we request you to get in touch with Himanshu in our Investor Relations team or SGA, our IR Adviser, and they would be happy to help you. Thank you all for your joining us call, showing interest and enthusiased asked -- about asking question. We will continue or doing our best efforts to answer all your questions in future also.
Thank you. On behalf of Aavas Financiers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.