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Bandhan Bank Ltd
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Ladies and gentlemen, good day, and welcome to the Bandhan Bank Limited Quarter 1 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Hiren Shah, Head Investor Relations. Thank you, and over to you, sir.
Thank you, Steve. Good evening, everyone, and thanks for joining this conference call. We are glad to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending June 2020. As this was a different time period along with COVID-19, we will also take the opportunity to update on the recent development in the industry and Bandhan Bank during this quarter. To discuss all this in detail, I've got with me our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh; our Executive Director (Designate); Mr. Sudhin Choksey; our Chief Financial Officer, Mr. Sunil Samdani; and myself, Hiren Shah, Head of Investor Relations.Now I'd like to request our Founder, MD and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about the financial performance of the company and development during the quarter. Over to you, sir.
Thank you, Hiren. Good afternoon to all of you, and welcome to all of you. We know that the time is not very much that good. But gradually, it is coming to improve. This is the first quarter of the full COVID, 2 months totally lockdown, 1 month only opened the lockdown and partially till now continuing as a containment zone lockdown.Also, this is the way -- this is -- we also find out on that, 1.5 week in the last month, have the big flood has come in Assam and Bihar, and we also know that Amphan in the Bengal. And all together, it is a very challenging time for all of us is the life and life people. But after that also, again took the by small traders, small businessman remain who are taking loans from us in advance. Their collection efficiency has come in June 30 -- up to June 30, the microcredit 68%. If I come to the total collection efficiency, it has come 76% of the bank.But as for today, the microcredit collection efficiency, 73% plus, day by day it is increasing. So it is then very important for all of us that I have been mentioned this point.Due this -- that the economy is not as much as the normal situation and we know that everyone is in fear about the COVID, but after -- within that period which I mentioned, the challenges of this quarter, our banks have been performed at a very good business in the -- good profit in this quarter.If I go to the quarter-on-quarter basis profit, yes, it is increased. But if I say that the year-on-year basis, no, it is not that much. Because of we are, again, extra provision have done, the INR 750 crores, which is for only the COVID expected provision. So all together, INR 1,750 crores total COVID provision in the bank. And after that also, our profit has come in this quarter INR 550 crores.Next is coming to the advance. That is -- I'd not like to again repeat on that the last quarter situation, you already know that. But after that also, the advance growth has come year-on-year, this is 17.68%, and quarter-on-quarter basis 3.46%. But very interestingly, my microcredit portfolio as a ratio of total portfolio of the bank and at 61% as a microcredit portfolio.And gross NPA, 1.43%, which is the last quarter it was in the 1.48%. Net NPA 0.48%, which was in the last quarter 0.58%. Very little bit has been the -- reduced the NPA. I'm not like to focusing on that. So very good focusing on that, within that challenging period, my deposits have reached INR 60,610 crores, which is 35.3% as in year-on-year growth and 6.18% is the quarter-on-quarter growth. And very fantastic performances given by team of the bank. My CASA percentage has come 37.08% in this quarter reached on that and which was the last quarter 36.84%. And last June, it was in the 34.06%. So it has been very good achievement have done. You know that very special was the challenge banking industry faced in the last quarter. I'm not like to mention that point. After that also, the bank's retail deposit has continued 78% -- 77.69%, which was in the last quarter 78.43%. All these parameters of the deposit growth, CASA percentage, retail percentage are in a similar way little bit better way on that. But my -- last is the microcredit, the deposit percentage, it has remain on that 5% as of June 30. And coming to the other some of the ratio, you maybe try to understand on that. My total -- before that, I must say that the total bank, the book size has come INR 1,34,941 crores, which was in a last quarter INR 1,28,928 crores. So bank has been reached and gradually step by step going to that big book as AUM. Our NIM is 8.15%, which was in the last quarter 8.13%. It is higher than the last quarter. Cost-to-income ratio, it has been decreased. Last quarter, it was in a 30.25%. This quarter, it has come 27.94%. But if we compare the last year first quarter, June '19, it was in a 28.89%, which has now come 27.94%, that again reduced on that.CASA percent -- [indiscernible] 4.94% and savings account balance percentage 32.14%. Our capital adequacy ratio maintaining on that at the 27.29%. So all of these -- the parameters have been presented to you. I have been -- will give the thank you to my first, borrower, they are people are running their business and coming forward to repay their installment happily. So this is a very good thing for us. And day by day, we hope that we can be like to reach to normalize in this way. It will be by September in 2020. So that is my expectation and the strong expectation on that.And the second thank you, my team who are in this moment. They are driving the business and the collection, especially on that, and they are achieved on that. And out of this altogether, I can say that the total of the bank, 38 of my colleagues are affected with the COVID and all are safe. 50% of these people already been joined in the work and some 50% they are in a good position, but they are home quarantined position on that. So this is the total bank position. So that I mentioned on that our total of the employee 41,563, which was 39,750 in the last quarter.Banking outlets is the same, 4,559. And customers has come to more than 2 crores and borrower is more than 1 crores.So I'd like to close in here. You have some questions, we'll be like to share all of this answer on my experience. So thank you to all of you. Please.
[Operator Instructions] First question is from the line of Mahrukh Adajania from Elara Securities.
Sir, my first question was on the moratorium. You've given details on collection efficiency. Sir, do your numbers capture the impact of the cyclone and the floods?
Yes. So what we are saying when we say collection efficiency, it means that of the total customers what proportion of customers have paid, right? So that includes all customers, including the customers under the cyclone belt as well. So this number considers all: COVID, cyclone, floods, everything considering, this is the collection numbers that we have seen.
Sir, and you expect this to stay stable or improve, right? You don't expect it to go up as we approach end August? Is that a fair view?
I mean, improve is August -- improve means it is likely to go up, collection numbers, right? So steadily we are seeing the numbers increasing. The key point is the unlocking that has happened. Our experience and our learning from the month of June is, moratorium is less of an impact. The larger issue is if the customers are able to do their business on the ground, the collections will steadily improve. So if we don't see any further lockdown or infections rising in a big way, we see these numbers improving.
So I can be add another point on that. This type of customers, they are very much involved with the livelihood, and I have been also talked earlier, only depend on that if they can be movement and our stock can be movement to a customer's house and customer can be moved to our house -- office. That if it is -- it will be only happen if the lockdown isn't open. So that has been happened that opportunities to collection efficiency can be increased on that. As of today, there is not in a full lockdown, but some part is the lockdown, very temporarily, maybe 7 days or 15 days. So that will be open. Maybe another area it will be like install on that. So that way we are seen on that, that people are movement is coming and go. And the lockdown is not big way is coming and not affecting. So that we are expecting on that this collection efficiency will be day by day increased, and it will be increasing by September in the normal position.
Okay, sir. Sir, and my second question was on your savings accounts. You traditionally also have done very well on savings deposits. And even this quarter, the growth has been exceptionally strong. So any key drivers that you would like to highlight?
In this quarter, particularly in the June, what we have seen that our deposit growth has come on both accounts. Our new customer acquisition in June has surpassed the pre-COVID level, right? So on the deposit side, our acquisition rate continues to grow strong as well as the existing customer balance, we've seen an improvement. And that's why we see the savings account, particularly this quarter, improving.
The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
And congrats on a very good collection ratio. I have 3 questions. Firstly, Mr. Ghosh in his opening comment said that, as of now, the microfinance business collection efficiency is around 73%. Could you give me some color on which is the state with the lowest collection efficiency and the state with the highest?
Okay. It depends on -- if you see that the -- my collection efficiency is highest in Bihar. And if we go to the Assam, that is also very good. It is 61%. Once upon a time, Assam was at 66%. It has come down because of the flood has come. After that, it has been decreased, again it is coming to increase on that.
So if you talk about the highest percentage, it's Andhra and Telangana, but that portfolio is very small, followed by Bihar. These are the top 2 states. And on the lower side, it will be Maharashtra, followed by Tamil Nadu because Tamil Nadu last month we had a lockdown for last 20 days.
Sir, Maharashtra would be what in terms of collection ratios as of now?
Maharashtra will be close to 45% to 50%.
50%? Sorry, is it about 50% if I got it right?
Yes. Maharashtra is about 54%.
54%. Okay. Excellent. My second question is, if you look at the June disbursement for microfinance, it is about INR 3,100-odd crores, what percent of the disbursement would have been to existing customers?
We've given that in our presentation, if you go to -- if you just visit our presentation on Slide #8, of the total disbursement that we have done, there are 2 things here. One is the new customer acquisition in microfinance for this quarter is about 100,000 or little less than 100,000. And in terms of existing customers getting new loans, 5% of our existing customers got additional loans from us during the quarter.
So which is -- that 5% is actually not number of existing customers, right? It is somewhere close to, let's say, 500,000 to 600,000. I just want to know what is it in value terms?
That number...
Okay. Not a problem. I can get it offline later. It's not a problem. My third question is, what percentage of the gold loans dispersed this quarter is to existing microfinance customers?
Existing microcredit customer, how many people are getting the gold loan, we are not in that information.
But that will be a very small [ support ].
Very small, because our brand is a very different area and microcredit borrowers also different. We are not have that information in the hand.
Okay. The reason I asked that question is because other retail loans have actually gone up 50-odd percent year-on-year. And in Slide 7, you say that the growth is largely contributed by gold loans. So that's why I was curious to understand whether you are actually selling gold loan -- I mean, dispersing gold loans to existing micro borrowers as an individual loan also?
No, not really. In fact, we have increased our distribution in the gold loan over last one year. We used to be less than 100, about 70, 75 branches a year back. Currently, we are doing that business in almost 500-plus branches.
Okay. Got it. Okay. Wish you and the team all the very best.
The next question is from the line of Antariksha Banerjee from ICICI Prudential Asset Management.
Do you hear me?
Yes, please.
Yes. First question is actually extending what Karthik was asking. So on these existing customers that you have given fresh disbursements to, these 5% of customers [Technical Difficulty] some 45,000, 50,000 or much low?
The average disbursement is below 50,000. .
So overall disbursement is 45,000. The top-up loan, the average disbursement will be in the range of 35,000.
So below 50,000?
Yes, that's correct.
More than...
Sorry, we can't hear you.
Mr. Banerjee, can you move to a better reception area, please? Your voice is not...
Is this better now?
Please go ahead, sir.
Is it better?
Yes, sir.
Yes, yes.
So these existing customers that you have given a loan to this time, is that old cycle loan that is getting restarted or...
Sir, sorry to interrupt, but we are losing your audio in between, sir.
Okay. I'll come back in the queue then.
All right. Sure, sir. The next question is from the line of Nishant Shah from Macquarie.
Am I audible?
Yes sir, you are.
Yes, perfect. So I had a question on the same thing. So if I just look at the last quarter around in the transcript, I think sir had mentioned that roughly around 36% or 46% of the -- of existing customers have been given new loans to start new businesses. And this time around, we're saying it's roughly around 5%. I think sir also mentioned a number close to 30% in that Sa-Dhan webinar with Muhammad Yunus. So just wanted to clarify what is the exact number. Is it 5% or closer to 35%? Or like, where is the understanding gap between last quarter and this quarter?
No, no. What we are seeing here is opportunity to increase the full percentage ratio, right? You see, since 3 years back, our whole lending percentage was 70%, which came down to 50%. That's because the competition used to give top-up to our customers. Now that in today's environment, the competition, largely NBFC-MFI, they have to managed the liability side of things and they are not lending today. So we think there is an opportunity to get back that wallet share of the customer and improve that sole percentage ratio. So this percentage that you're talking about, this 35%, this is quite different, that we expect that 30% to 35% of the customers who currently have additional loan apart from Bandhan, they would come back to Bandhan as we offer them additional loans and increase the sole proportion number and make them as a sole banker for Bandhan and move them into an individual loan category. So I think that's where the 2 issues seems to have got mixed.
Okay. Yes. So yes, last quarter's transcript was a little confusing. Okay. So that's it on the first question.The second question on this collection efficiency. So you've given the daily collection efficiency, which is now at around -- whatever, 73-odd percent. My question is, how does the accounting work in this kind of environment? For example, in June, in the first few weeks, it was roughly around 25-odd percent. So 75% did not get collected, right? So now when the EMIs become due, you are going to first adjust it against the dues of the oldest EMI tenure and like -- it will be a rolling kind of a basis. So even if like customers come back to 100%, there will still be a backlog that needs to be cleared. But from an accounting perspective, how will this look? Because what will end up happening, if I am correct, is that as you -- as the new collections get adjusted against the old dues, if there is to be any NPL recognition, it will get delayed by quite a bit, right? It will probably not happen for quite some time, probably beyond 3Q as well? Is that understanding correct? Or can you please correct me if my understanding is wrong on the accounting part, sir?
When the moratorium is granted to the customer, in our case, in microfinance, it is on an opt-out basis, so which means by default all customers are under moratorium. And if any customer wishes to pay, we will accept their installment, and we'll assume that for that installment they don't need moratorium, right? So moment you give moratorium, the loan tenure gets extended, which means these installments don't become due on these 3 months. If let's say a customer has taken moratorium for 3 months, this installment itself don't become due. These becomes due at the end of the tenure, right? So let's say, tomorrow, the moratorium ends in August and starting 1st September, the customer also starts paying, the customer will be treated as a regular zero DPD customer, because nothing was any which ways due till August.
Okay. So at the point at which he starts repaying or your collection starts -- restarting, the principal is adjusted upwards, is that right?
Yes.
Yes, to account for the interest on -- like the dues which were not collected?
Yes. So the installment itself doesn't become due, right?
Okay, okay. I got this. And the last couple of questions here, very small questions, these are just data points. Could you now share what is the split of your AUM by red, orange, green, or containment/non containment? And basically, I'm trying to understand where you can really collect versus where you cannot collect?
Okay. I give this a very broad sense on that. And coming to this by microcredit portfolio, 70% -- 75% of the portfolio in West Bengal, Assam and Tripura, Bihar, these 4 states. These are the core states of us and these 4 states are states now confirmed case 6.4% of the national total. So that means my core portfolio, 75% is a very less number of case of the COVID. So that the people's movement not in a containment in that much effect on us.
Okay. That's fine. And just one last data point. In the SME portfolio, could you split it between secured and unsecured? Because if I remember, the SEL portfolio which was merged with SME sometime back. So could you just give the split between secured and unsecured?
So SEL remains unsecured. It is about INR 2,000 crores.
Is this INR 2,000 crores?
Yes.
[Operator Instructions] The next question is from the line of Kunal Shah from ICICI Securities.
Sir, now looking at this kind of a collection efficiency, the trend which has been there, okay, till July what we have disclosed, now what would be the kind of additional provisioning buffer which we would continue to build? So maybe the last time also we highlighted that we could continue at more than 1-odd percent, but do we anticipate for an extra 2 more quarters we would be doing it based on the trend?
So we had always -- in our last interaction, we had said that in this financial year if the collection efficiency moves as we have planned, which still data is moving, we would look at additional credit costs of about 2% to 2.2%, right? So of that, we've already taken 50% of this. So what remains now is the normal credit cost which anyway would have happened which we typically guide of 1% to 1.25%.
Yes. So maybe that would be like more amortized over the quarter? So there would be no contingency kind of a thing which could come in? Largely, things remaining the way it is?
Yes. So it seems to move the [ way it ] is moving, so that's how it is. We will take a detailed call in the month of September as to where we stand on that.
Sure. And maybe any trends? Today, when we look at it, we are saying that maybe 73-odd percent is the collection efficiency. So this would be only for the last week? Or are there the customers who would have come and they would have repaid even the 3 months installments or maybe they would have repaid the entire 1 month even though they are just coming in the last 1 week? So no doubt it's an improving trend from, say, 25% to 70%, but any proportion of customers who would have had made more than the required installments in a particular week?
See, that customer will always be there. There will be few set of customers who would pay more than one installment, but that will be the case in the previous week as well, right? So we are looking at like-to-like basis. And secondly, even if you look at the number of customers, on the number of customers side also we are looking at 67%, 68% of customers in the month of June paying.
Yes. No, sir, maybe they are paying, but would it be like, I'm seeing more visibility in terms of my business operations and I don't want to make just a week payment or a fortnight payment, but I'll meet all the dues which are there over the last 2, 3 months. Maybe earlier, I was not able to pay in April and May, but now I'm comfortable. So are there any sort of customers? Or they are just making the payment which is due for that particular week?
As per the previous my practice, find any crisis has come, that time people are like to keep the money in their hand as a result. And whatever the regular installment is needed, that will be paid. And second type of customer who are the loan has been getting too close, they will wait to the next loan. That time they are coming to pay the earlier all installment. Otherwise, they cannot get the loan. So they are coming on that. So this is a way on that. This is the time very -- not a very normal position. So people keep little bit of reserves in their hand and so that is the better -- the large number of customer has given the single installment way on that.
Okay. Sure. And in terms of the OpEx, so when I look at it, apart from employees, so the other operating expenses up year-on-year, no doubt there would have been expansion in the last 12 months, but given such a low business activity, still the other OpEx is up. So should we say that we have more or less bottomed out in terms of OpEx? Or still there is a scope and we can bring down the cost?
No, I think this is the bottom OpEx-to-asset ratio given the doorstep collection and the people-intensive segments. I think we are right there among the industry with the corporates exposure as well. So we don't see any further reduction in the OpEx percentage per se.
Okay. And no scope in terms of bringing down some of the expenses as well?
No, we've already reduced. You see, this quarter we've -- whatever was possible we've already reduced the...
Okay, okay. Got it. And on the housing, so that is where the moratorium actually number has gone up, okay? So maybe from 13-odd percent to 15-odd percent. As well as within the GNPLS, if I look at it, the mortgage GNPLs, there is the addition which has happened out there. So how should we read into this? Maybe across all the portfolios, this is the one wherein there is some utilization both on asset quality as well as moratorium going up?
Mr. Choksey?
Yes. In regards to collection efficiency, you are looking at the figure of April versus June. April, it was around 87%, and which came down to 85% in the month of June. Many of our customers are on NCAs in that. So in the month of April, the NCAs had passed through and therefore obviously the efficiency was better. And the customers who would have opted for the moratorium, probably they didn't pay for the month of June. So I think that marginal decline is on account of that.Your observation in regards to increasing the NPA has been there. That has marginally gone up, especially on our mortgage loans and loan against property. I think that is where the NPAs have slightly increased during this quarter.
Okay. But they would have not taken moratorium and that's the reason they are getting split?
Yes, that is correct.
Okay. And one last question in terms of what was PSLC income this quarter? And how much would it be for the annual?
So PSLC for this quarter, we did -- for the full year, our PSLC income was -- yes, INR 474 crores is the PSLC income we've done during the quarter, as against the full year income of INR 453 crores. And our quality of accounting PSLC we amortize it over the four quarters. So accordingly...
So this quarter, it would be INR 1.1 crores, INR 1.2 crores?
It is INR 1.19 crores -- sorry, INR 119 crores, sorry INR 119 crores.
The next question is from the line of M.B. Mahesh from Kotak.
I have 2 questions from my side. How do you define collection efficiency in your -- in the organization?
So we look at total customers. So assuming if no moratorium was offered because business has [indiscernible] scenario, what would have been the total demand and against that what is it that we have collected.
Okay. So just one question. In the past, I think Mr. Ghosh has alluded as well, is that many customers have also the option to repay a loan or make extra installments -- extra payments only against the installment. Would that also be included when you're looking at collection efficiency?
So loan closure will not include. But if, let's say, a customer has paid 2 installments, instead of 1, that will form part of it.
It will form part of it. Okay. Do you -- is there any significance of that number when you're calculating a collection estimate in this, let's say, in the last few months?
The best way to look at is number of customers paying, right? So, number of customers paying for us is also around 68%.
Perfect. Okay. That's very useful. That's very useful. Sir, just one clarification. The billings, the numerator will have any payment which the customer makes, whether it's past payment, prepayment, anything which you get in the month divided by the total billings for that specific month?
No, numerator will not include loan closure, but it will include the prepayment.
Perfect. The second question to Mr. Choksey, if you could just tell us, is the situation on the ground on the mortgage book reached a point where you are now comfortable in looking at giving a credit cost number?
Okay. Credit cost in terms of the NPAs I can share with you. I think our NPAs are around 1.37% as on 30th of June, which was around 1.3% of the outstanding loan portfolio. So it has gone up from 1.30% to 1.37%.
That's right. I just wanted to understand have you reached -- do you think with this collection efficiency have you reached a state where it's moving closer to normalization? Or do you think you would have to reach to, let's say, 90%, 95% on a consistent basis before you can say that, look, the portfolio has stabilized from that perspective?
I think that is correct. We will have to wait and see that the consistency, and when our collection efficiencies goes up almost beyond 90% consistently then probably we'll be able to get confidence that the numbers should remain steady on that count.
Perfect. And my final question to Mr. Ghosh. It's a standard question, just finishing it off. Have you made -- has there been any progress on the promoter's stake?
My repeat of this answer, yes, we are very -- given the very important on this, but it is not the time today to say about it.
Perfect. Just wanted to -- because there's -- just trying to see if there has been any development this quarter?
If you see that many of things are happening now, so no, I cannot be like to mention that point, which is the new paper has come from the regulator. So will be like to see that, because now we have been very much important on that as the collection efficiency increase and provide the credit people livelihood can be increased and this is very important for us now.
The next question is from the line of Saurabh from JPMorgan.
Sir, just one question. Of this macro prudential provision you have, how much of that will relate to the microfinance business?
So about I would say 70% to 75% -- 75% of this will go towards micro.
Sir, of the INR 1,700 crores or [indiscernible] INR 1,475 or should I take INR 1,775?
See, we estimate that the sector that we have done and the way we have estimated the ultimate loss given the current scenario and the collection efficiency across all verticals, right? Basis that, we believe that whatever is the ultimate loss, 75% will be contributed by the micro.
The next question is from the line of Eric Chan from Buena Vista Fund Management.
Mr. Ghosh, I want to just clarify 2 points. You mentioned that under the current trend you're expecting by September, can you give me a bit more color on how the [indiscernible] normalizing of activities in terms of holding certain meetings and reaching all [indiscernible] applications for new loan so that I can understand how the asset growth and disbursement trends going forward? And if that was normalized, would the extra [indiscernible] that was previously higher still be maintained post the normalization?
And if we talk about the disbursement trend, inward can you see -- look at microbanking to start with, microbanking for us there are 2 important factors. One is the seasonality factor. So historically, we've seen that Q1 and Q2 has been a muted quarter for us in terms of disbursement. And bulk of the growth comes in Q3 and largely in Q4. Here again, what we have seen this time, the growth typically is a factor of existing customers and the new customers. Historically, we've grown at 30% plus year-on-year in microbanking. If you break up that growth, about 10% of the growth comes from the new customer and the rest is from the existing customers. So clearly, the new customer acquisition rate will slow down in this financial year till the situation and the infection comes under control. But the existing customer, once we have -- so where we have the track record and they have started their business, we see there as an opportunity to increase our book and consolidate the debt of the existing customers. So that's how we look at the growth side of the story. On the -- your next question was -- if I'm not mistaken, your next question was on the provisioning side or on the loss calculation side; if you can repeat that question?
, Sorry, the second part of the first question was about the extra field officers that we hire. We hire one extra field officer to handle the door-to-door collections during the lockdown period. And when you go towards September, when you're expecting normalization, should we expect that field officer per rural branch to be maintained or to go back to the previous ratio?
There are 2 things. Today, we've added extra field officers because we are not having a full-fledged group meetings. And it's more of a smaller group and door-to-door collection. So these field officers will eventually get utilized in 2 ways. One is, typically, we have 8% to 9% attrition. So as the attrition happens, these customers can -- these additional staff can be used as a replacement. And two is for the expansion. Once the situation normalizes, typically we expand our network by almost 8% to 10% every year. So once we start new branches, we will have a ready staff available with experience to be posted in the new branch to start that business. So that's the medium-term outlook on utilization of these additional officers.
Last question. Given the higher, at least in the short term, higher lending risk profile, in general, for both the housing as well as the microfinance business, is there any change in lending practice, lending terms compared to pre-COVID?
No. I mean the models, both on the microbanking side and the housing side, are very, very time tested models. These models have gone through many challenges historically. So the core model remains the same. Tactically, what we've done till the time there is infection around, instead of a larger group meetings, we have broken the group into a smaller group and the focus is more on door-to-door collections. But on the whole, the model remains the same. Once the situation normalizes, we intend to go back to the same model.
All right. So no change in terms, no change in lending rate to those customers?
So to the old customers, the current loans that we are disbursing, the additional loans, there we are charging 1% higher, from 17.85% to 18.85%.
All right. 1% higher.
The next question is from the line of [ Adarsh ] from CLSA.
Yes. Sir, one question I wanted to ask. Microfinance business has -- they always calculated affordability of the product, right, from an angle of household income. A lot of these families would have like migratory -- one of the family members may be the male member working out. And that part of the income would have got impacted, right, in a fair number of cases. I just wanted to understand, do you have any sense of how that is [ exceeding ] and eating into, say, when we have in the past, quantified a household income of, say, INR 25,000 or INR 30,000. Can you give some sense as to even in approximate sense as to how the labor migration could have impacted the household income?
First point on that is the microcredit. We are not lending to the borrower who have not any enterprise. We are not giving the start-up even also. So for that reason, the -- who are running the business, we are lending to them, yes, which is my -- as per my knowledge, our borrower's husband is -- when the income is increased, you say that the -- our study last time also [indiscernible] income of the family. They are multiple income. And we've -- earlier, some one of -- some of the few borrowers' family, the husband was in outside of India, outside of Bengal or state. So they are now returned back in the time of that when they've seen that their wife is running very good business, and they have started another business in the same family. So that time, they are returning back on that. But as of now, I have not any that much of the people who are migrated to others and coming back on that. Sometimes happens, it is in seasonal labor. Some of the harvesting of the -- time of the harvesting of the paddy, that time will go for a month, for a 15 days and return back. So this type of -- is some of the borrowers' husband was there, but not in a permanent -- we have not seen in that type of husband as a migrant labor in our borrower category.
And one more question on the housing mortgage moratorium just setting in. Sir, again, coming back to the same thing, our moratorium is about 15%. Now the only thing is that, when it was 13% in April and 15% now, the general expectation would have been that the number of people under moratorium 2 would be lower than moratorium 1, simply because some people may have chosen moratorium 1 out of fear, fear it was just a way to conserve cash, right? And usually, most companies, right, that we interact with, are kind of indicating that moratorium 2, which is you'll have to choose -- opt for moratorium 2. That proportion of borrowers are probably coming down. So why wouldn't we have seen that kind of a change in our customer base also, right, like why has the 15% remained constant?
See, I think, as I explained to you earlier, and as Sunil also explained on the collection efficiency, the way the bank has been calculating, these are in respect of the money which we collect and we receive from the customers. And the number of moratorium opted by the customer, obviously, for the phase 2 has been lower than the phase 1. In the month of April, as I mentioned to you, a large number of our customers, almost 80% to 85% of the customers are on ECS. So their ECS on April had already passed through. And obviously, therefore, there was no question of refunding or giving a moratorium on that. But once the moratorium period progressed, obviously, the month of May, this money we didn't get it. And in the month of June, therefore, the figure has slightly come down. But the number of customers opting for a moratorium under phase 2 are certainly 20% at least lower than the phase 1.
So you're saying, basically, don't look at April. You would have had a higher number than the 13% in May. And after that, the number has dropped to 15%, broadly?
That is correct.
The next question is from the line of Deepak Gupta from Reliance Nippon Life Insurance.
Sir, I just wanted one clarification. When we -- what would be the collection efficiency for the bank if one considers that the customer has cleared all his outstandings as of 30th of June?
No. That scenario is very different to see -- one, we've not calculated that. And two, in our system also, once you give moratorium, then the due itself gets postponed at the end of the tenure, right? So the best way to look at is to look at customers who were assuming if there was no moratorium, what would have been the demand and against that what has been the collection. What is also important here, in the collection efficiency, is to understand the behavior of customers. Is -- are there customers who are paying, let's say, who paid the first installment in the first week of June, what percentage of those customers have continued to pay till the end of June? The answer is 99%, right? So once the customer has started paying installments, they have -- 99% of them have continued paying installments, all 4 installments.
Right, but...
See. This type of customer actually is a behavioral category. If their behavior has come as a regularized, automatically all our previous dues, they are automatically paying to us.
Sir, I understand that, sir, but if the customer has paid all installments in the month of June, you will be adjusting those installments against his outstanding for the month of March or Feb. Am I correct in understanding?
See the customers -- what we are saying is the month of Feb and -- March and April, and March from starting 21st of March, so April and May, since there was a moratorium, that due itself has been postponed till the end of tenure. So nothing was due in April and May. So there is no question of adjusting it against the April and May installments.
The next question is from the line of Rahul Jain from LionRock Capital.
Am I audible?
Yes. Very good.
A couple of questions. One is, within the MFI space, you mentioned about INR 22 billion of loans on individual basis. Can you clarify like what essentially are these loans? Like, I mean is it something which you have started recently, or it has been always there?
No, it has been started in a -- little bit 1 year before. And [indiscernible] and now it has been like to -- coming on that to normalize. So that -- earlier, I have been maybe explained on that, but again I'll say that. 58 lakhs of microcredit borrowers, which is 51% of the total borrowers have a [indiscernible] years and above. That means up to 20 years their age. 16 lakh borrowers who are 14% of the total, INR 1,00,000 to INR 1,50,000 loan. And 40 lakh borrowers who are 35% of the total borrowers, INR 50,000 to INR 1,00,000 loan. So we see that there is an -- another data is there: 50% of borrowers have the single loan only from Bandhan. So we feel that there is opportunities with this customer. Long term with us, they are growing very good as a business, multiple business, will be like to promote them as a MSME. So that in its sole will be provided -- will be like to consolidate it on that. No, maybe they have that the -- 30% of our borrowers have that the -- another 1 loan from other entity. So if we like to consolidate it all on that, so whatever they have need in the money, in the purpose of housing, in the purpose of business, we'll be like to provide. And they will be -- very especially will be take care on them. Individual assess their credit, and individually will be like to take them. That is not in a group lending. This is not in a weekly collection, monthly collection and customer will come to the office to repay. And that is the plan we have been taken. And 1 year before pilot and at last 6 months we have started on that in a good way. That is the amount has come in the INR 2,200 crores on that.
And the terms of these loans like -- because they are individual loans, so they are obviously not required to go for weekly meetings.
Yes.
Would they be paying every week or every month?
No, I mentioned it on that. It is individually assessed. It will be not assessed by the microcredit branch head. It will be area managers above the 1 level and separate person. And assessment of these customers, separate person, separate way. And she has not need to go to the group meeting. She is not weekly installment. It's a monthly installment, and customer will come to office to repay, not we are going to customer house to collect. These are the something of the future of this product.
Okay. And the second question was about buying the portfolio through IBPC on the mortgage side. So what's the driver behind this? And I mean, would -- on our own, would we be looking at going on with the disbursement on a normalized basis within the housing finance portfolio? Or at this point of time the entire focus is only on collections, and disbursements are still going to be quite low for some time?
See the portfolio buyout under IBPC that we did, it's more of a liquidity management exercise, because we do lot of -- we are issuers of IBPC because as we have lot of priority sector loans, right? So we issue it at a low grade and to deploy that money, because reverse repo today has come down substantially. So if we can match a tenure and deploy and buy a non-PSL loan against that, we can make a decent split, right? So this is more of a money market exercise to earn that extra spread. So between selling and buying, we make a spread of 100 basis points plus.
Okay. And with respect to normalized disbursement on a regular basis, like are we back -- are we increasing disbursements on a regular basis? Or disbursements are likely to be subdued for now?
Disbursement in...
Housing.
In housing finance, in mortgage.
Mr. Choksey?
Yes. Disbursements have been on gradual increase. I think in the month of June, the disbursements were almost to the 77% of our pre-COVID level. I think in February, we have disbursed around close to INR 300 crores. And I think we have been able to do around -- in month of June, around INR 240 crores we have done it.
The next question is from the line of Mihir Ajmera from ENAM Holdings.
Just had a question on, what's your strategy in bringing the promoter holding down to 40%?
I mean, we've discussed this question many times. Ideally, if we have an opportunity, we would want to merge the holding company with the bank because that kind of solves the problem immediately. So we would await clarification from RBI and the committee that they have formed, which is likely to issue the paper for discussion by 30th September. So if we see an opportunity there, we would accordingly request RBI.
Okay. And lastly, just on the moratorium number, it's around 24% for the bank, that will be like 100% minus the 76% which is the collection efficiency?
So the moratorium could be different. What we are paying is -- because the moratorium is on an opt-out basis, right, and not the customer opting for it, the better way to look at moratorium is the customers who have not paid be considered as moratorium.
Okay.
Right. So since 76% have paid, 24% becomes the moratorium.
The next question is from the line of Jai Mundhra.
Sir, if you can comment on maybe the early signs of any political interference in the collection, in maybe select district of select states such as Punjab, Maharashtra?
We have not seen in this situation in this time. And this is more on that if you see that the central government and all are happy to disburse the money to people. So if it is not collection, disbursement also not happened. So that -- this is a very different behavior we are seeing, that very good credit is there, and all public community people and the political people.
Sure, sir. And sir, if you can talk about any implication on Bandhan Bank from the upcoming state election, maybe in the state of Bihar and West Bangal, how do you -- could that -- I mean, what could it imply going ahead? Your thoughts?
I many times given this answer. I have been like to same this answer on that the -- is the people are running the livelihood program, they have need the money. They are continue the relationship in any circumstances with us. I feel that the -- in the state which you mentioned, every year, I face the election. That is in central election, assembly election and [indiscernible] election, panchayat election. Every year is the one election. So my customer also habituate on that. And very good thing on that, that level of the customer, and they are very much focused on their livelihood. So that it is again proved on that. 2 months totally lockdown. When it is opened, again started the repayment. They not like to say that, no, I cannot give. They are only say that the give -- open the lockdown. And opened the lockdown, you see that now 73% collection has come. So that is a very big way I feel. It's my previous experience, election [ this year ] will come and the government will be like to continue or change. That is another part, but that will be not impact to this customer level.
The next question is from the line of Nishant Shah from Macquarie.
Just my follow-ups, which are more like anticipatory in nature. So on the collection efficiency, in one of the previous answers you described it as any collections received from customers except for loan closure divided by the billings for that month. So if a customer is under moratorium, will his dues be considered as billing for the month in the denominator? Or is the 72% calculated without including those?
No. So all customers, whether moratorium or not, will form part of denominator.
Perfect. Perfect. Yes. So that's one. And secondly, on active loans, so when you say about 5% of people have received loans for new businesses, this is 5% of the active customers, right, of 11.2 million?
Yes.
So roughly around 5,60,000, and you mentioned that the average ticket size is around INR 35,000. So roughly around INR 2,000 crores is what has been disbursed.
No. That is for top-up loan. The overall average ticket price is INR 46,500 -- I'll give you the exact number.
No, no. I mean only for the 5% -- the loans given to the 5% customers.
So that will include the customers who have closed their loan and taken a fresh loan as well as customers who have not closed the loan, but have also taken the additional loan.
Sorry, sorry. Could you come again? I didn't get that.
I can explain on that. See that the -- last March, about the 21st of the March, suddenly [indiscernible] and you know that every year, the last month and -- last month of the year and the last couple of days is the good disbursement happens. Who are closed the loan in the last 10 days before in the March, they are waiting to take the loan, because of the lockdown not taken the loan. So they are also taken the loan in this time when this lockdown opened, because if they are -- business is running, will come for, we are giving the loan. And other than this also, we have the top-up loan. Because here earlier I mentioned one point, if you recall, that is in our 50% of the customers, single loan from Bandhan, and another 51% customer who have the another single loan taken -- another loan taken from other along with the Bandhan.
Correct.
Because we are not giving the other loan. So if -- then we have been started the double loan called the top-up loan, so that is in -- appraised the sizes at INR 25,000 or INR 30,000 on that. So that people also taking the loan in this time. So that amount is in -- average has come INR 30,000. But if you go to this, the -- who are closed the loan in March, even the time of June, and business is running and good borrower, I cannot say no. So there is not in a INR 30,000. So that total average is coming. That is in INR 46,552.
Okay. Understood. So basically, there are 2 types of loans that you have given. One is the top-up loan with an average ticket size of INR 35,000. What is the proportion of your existing customers that have seen this top-up loan?
Top-up loan, all are existing customers.
Yes. But then not all of them would have taken, right? So there would have been some -- certain percentage would have taken.
That data is not in my hands now. I'll be in touch with you and [indiscernible]
Sorry? Or even a rough ballpark is fine, like, what, roughly 10%, 20%, 30%, like...
No. All put together is [indiscernible] So we'll have to see, giving that, what proportion is [indiscernible]
Okay. So top-up loans plus new business loans, both combined are only 5% of existing customers?
Correct.
Correct.
Okay. So -- okay, fair enough. That clarifies it. So roughly around INR 2,000 crores is the disbursement in -- for these customers combined? Average ticket size of roughly INR 35,000 multiplied by 5,60,000 customers. Is that a fair understanding?
Fair.
Yes.
Correct.
The next question is from the line of Abhishek Murarka from IIFL.
So couple of questions. Sir, one, are any borrowers paying anything more than their equal weekly or monthly installments? Is anybody paying in excess of that?
There have been a few borrowers who are paying more than their current demand. Current demand is that week's installment.
Okay. But -- okay. And in this case, unlike any of the previous events, basically there won't be any concept of arrears, because anything in arrear is presumed to be under moratorium and added to the end of the tenure. So when the moratorium lifts, you just have to collect from the 0 to 90 as of 29th February, and if the moratorium is, let's say -- or rather if the collection efficiency is, let's say, 90%, so on the remaining 10%, their clock starts from 1st of September?
Absolutely.
Right? So basically, that will be the portion which could eventually become NPA by September end or December end? That's what it's going to be like, right?
Yes.
Okay. And just a sort of conceptual question. So you said that a lot of people started new businesses and took loans for that. But I'm just trying to think, during lockdown and during a period where, in general, lenders are tightening credit to any new borrowers, what kind of businesses or customers have actually started new businesses? I mean, yes, what kind of customers have started new businesses?
If I give the one -- the point, it can be tried to understand and that what types of borrower we have. Our agriculture and allied activities is 44.4%. If I say that the -- some of the people are now again cultivating because the production has come go. So that is maybe the one kind of people is coming.Second is my food processing and small retail store. And that is a 30.3% of our microcredit borrower. So if you see that the food processing and retail, the small shops, as in very much demand is now in a rural market. And agricultural, allied, if you see that with the vegetable sellers and door-to-door sale, many people are not going to market and they have that the opportunities they can take one hand rickshaw and pulling it to the door-to-door, that is a very good business. So this type of people are coming now either INR 20,000 or INR 25,000 business loan to start their business or business running on that. So that types of new customer is coming. Very few, not very big amount.
Okay. And sir, just another question. What percentage of borrowers would not have paid anything, anything so far, let's say, in the last 3 months or during the moratorium?
Are you asking what percentage?
So that will be close to 30%. That number can change plus or minus 2%, but it will be around that range. We are talking about June end number.
So -- but your collection efficiency is in excess of 70%, right? So that should not be the case, right?
No. June was 68%. And our number of customers who paid in June was also 67%, 68%.
But as per your question, if I like to say that, actually, we are not in -- that much data not analyzed, but what I learn from my salespeople interaction, who have started to come, they have not dropped yet. Very accidental one -- who have received the loan, they have not yet dropped any installment as of now. Because now is a very one-to-one case the people -- our staff are observing and following it. No? So that it is increasing day by day on that. So that is -- we are trying on that how we can be make them as they behave to come as a regular one installment minimum. So when they are coming one installment, they are automatically on that -- coming on that next. And hopes have been increased on that. So this is a behavior also, this type of borrower.
Okay. So basically, around 30% customers have not paid anything in the last 3 months? That is the conclusion so far?
One month, because especially May was...
Totally, we are not going to collect. So they are not received.
Okay, okay. Fair. Fair. And just a last question. You've given your collection efficiency as of 3rd of July. Would you have a latest figure, let's say, 14th or like yesterday -- as of yesterday?
So the latest number, which is about 3 days back, was around 73%.
The next question is from the line of Nitin Aggarwal from Motilal Oswal Asset Management.
Am I audible?
Yes. Good evening.
Sir, I have 2 questions. Firstly, like on -- while all are moving steadily, we are now moving closer to the pre-COVID levels. How has the rejection rate trended over the recent months? Are you seeing more instances of [ over-rebuilding ] in MFI borrowers from other lenders trying to borrow from us? I know that you have shared the data point that we are not lending to our existing borrowers much, but from other MFIs, are you seeing more applications coming?
Yes. At least in our whole geography, right, we are any which way are primary lender to the customer, right? There have been instances where the -- where they have taken an additional loan from the other institutions because last year we had the policy of only 1 loan for that consumer, right? So whether we call them as customers who are coming from other lenders or -- the better way to say it is, consolidation of debt where we are now telling them that we will give -- we'll meet all of your requirements, why don't you bank exclusively with us?
Okay. And what was rejection rate? How has that been like in the recent months?
So clearly, the new customer acquisition has slowed down, as I had mentioned earlier. And as far as the existing customer goes, there we have the track record of almost 5 to 6 years to understand that customer. So the rejection rate is more to do with the new customer acquisition. The existing customers have been tracked on a weekly basis on the behavior and credit constraints. And the decision whether we will extend fresh loan or not is taken during the tenure of the first loan itself as we see the behavior of these customers.
Okay. And secondly, on this MFI collection efficiency, which is 73% you just said. And -- but has the income levels of these customers also moved back to their pre-COVID levels? Because that will only point toward the durability of this improvement.
There is a one point we would like to mention here. This is a customer segment, which they are -- only earning source is that business. And because of that, only the business or 2 businesses, their earning source. And that business, anyhow, they are trying to run it. And relationship with the bank, they are trying to best way. So I hope that that has been helped us on that to get return back the installment. And they are also very happy to return back. And then when they have a need the money, they will be getting. So that is the main, basic -- the principle has been, what's in this microcredit sector.
And the income level, to calculate in 1 month after the lockdown, I think it's too early. I think we should rather wait for some more time to have a better understanding on the income level. But certainly, when we are disbursing new loans, we are assessing the customers on the income and the obligation side.
Okay. And our NBFC-MFI portfolio has reported 100% collections for the month of June. So does it imply that their collection efficiency has already recovered back to normal levels and is probably trending higher than us also?
See, there are 2 things. As the governments announced the relief, the tactics of the NBFC through the refinance opportunities from NABARD is the -- in a growth institution. There has been some improvement on the liquidity side. And that's one reason why the collection efficiencies have improved. And two, the customers where we have gone with the TLTRO option, right, so the underlying condition was that we have to start repayment if they need the fresh TLTRO. These are the 2 reasons why we see the collection efficiency going back to 100% on the NBFC side.
Okay, okay. And lastly, Sunil, any impact of this Bihar lockdown decision on the collection efficiency again that was just [ announced ] but didn't come up?
See, Bihar -- you're talking about Bihar lockdown?
Yes, which is just announced day before.
No. I think it's not implemented, about to be implemented. So we'll have to wait and see. Otherwise, Bihar was one of the best-performing states for us, right there on the top.
Yes. So whereas now, it can again impact the center meetings as such.
Yes, clearly. Lockdown impacts the center meetings and collection efficiency. More than the red, green, yellow and the infection, it's the lockdown which is the single largest factor.
But this time, the -- any states have not started to total state lockdown. They are going to this the -- some pocket in Bihar, as in little bit have been affected as a [ flat ]. As in Nepal, water have been locked in, in the Bihar. That has been little bit in a disturb, as of my knowledge.
The next question is from the line of Anand Dama from Emkay Global.
Yes. Can you hear me?
Sir, your audio is too low. Can you speak closer to the handset, please?
Yes, sure. Sir, basically, when you say that the collection efficiency is 70% or so, do you mean that whatever EMIs which were due in the month of June, be it 4 EMIs or 5 EMIs, all have been paid by the customers? Or there could be a case where a customer would have just paid about 3 EMIs due or 2 EMIs due?
No. We are talking about for the month of June, right? So only June installment dues we are considering, because for April and May, customers were in moratorium so that due itself has been postponed to the end of the tenure.
Yes. That is fine. But, say, for instance, a customer where you would not have been able to reach in the first week of June or the second week of June, in that case, how have you recovered the first week or a second week kind of EMIs? Have you recovered any in the third and fourth week, collectively?
So there are 2 things here, right? One is whether the customer is paying more than 1 installment? Yes, few customers are do paying more than one installment. But let's say we started the collections from the first week of June -- 1st of June, so it started with 10% to 15% collection efficiency, increasing it to 70%, right? So as the days went by, the customers started increasing in terms of started paying collection. So those customers -- let's say, a customer who started paying from 16th and didn't pay the first 2 installments, so those customers are considered as moratorium for the first 2 installments, and that installment will fall due at the end of the tenure.
Okay. Okay. Okay.
So once they start installment, then it becomes the starting point.
Okay. Sure. And -- so customers who have paid and customers who have not paid. Fair. What is the reason? So if the customers have not paid 3 EMIs and have taken moratorium till date, is it because you have not been able to reach the customer or customer has not been able to reach you? Or is it that the customer has a genuine business disruption and because of it, they have not paid?
See, typically, these activities started only in the month of June, right, whether we call it collection activity from the bank side or business activities from the customer side. And our interaction with the customer is, it typically takes 4 to 6 weeks for the customers to start repayment after they start their activity. So these customers who are paying in June are those customers whose business never got impacted during COVID. Those agri-allied and the small retail grocery shop kind of business, food processing and retail.
Right.
So those are the customers who have first come up in the month of June. And as days goes by, July and August, the customers who started their activity in June will start paying.
Okay, okay. So sir, then in that case, what is your broad assessment? You will reach more than 90% kind of a collection in the month of September is what you were indicating, right, earlier on?
Yes, correct. Very strongly.
Okay. Yes, sure. And sir, question to Choksey sir. So in the mortgages, we have mentioned in the presentation that we had lot of new customers onboarding happening in this quarter. So how has this happened, particularly in this quarter where there was a lockdown?
So this is for the month of June.
This is for the month of June. Yes. But then even in month of June, how have you got these customers? Like, are these customers who have walked in? Or basically, these are the balance transfers which have happened and because of it, these are new customers for you? Or you have gone and sourced these customers from the ground?
Mr. Choksey, I think, will be the better person to answer this.
Yes. Mr. Choksey?
Our disbursements -- yes, our disbursements during the month as well as during the quarter primarily have been in respect of the partly disbursed loans. So they are the customers who have taken a loan and they have taken a part of the disbursement. Besides that, there have been new customers also who have walked in, in the month of June. And to them also, we have given the disbursements to them. There could be part of the -- these customers could be transferred from the other lenders as well.
Because you have mentioned somewhere that the disbursement basically to the new customers is more than 50%. So is really the proportion so big for the new customers?
Yes, that is 50%. Yes, that 50% is of that INR 250 crores disbursement that we are talking about, excluding the IBPC purchase.
We'll take the next question from the line of Karthik Chellappa from Buena Vista Fund Management.
Just 1 follow-up. In the last quarter, I had a data point that followed that 50% of the borrowers roughly were unique to Bandhan, and Bandhan plus one more MFI was 80% and Bandhan plus 2 MFI was 90%. So of the balance [ 44 ]% where there is Bandhan plus 1 or 2 MFIs, based on your feedback from the field, how would your collection ratio compare to that of the other lenders?
We cannot comment to the other lenders.
We will not be in a position to know also, right? We may have some market intelligence, but we cannot talk about that. We don't have any official numbers.
Sir, but at least qualitatively, is there any significant difference from [indiscernible] coming from is -- if it is different, then basically your collection ratio was much better than the peer group, right? So at least qualitatively, is there any color or...
Vertically, if you see, we have always done better than the other players in the industry, including what we saw in Assam, as recent as Assam. So historically, yes, we've always done well.
Okay. But -- because, if your target is -- sorry, please go ahead.
But only point of that, that is a customer behavior are same. Only change, that everything -- collection, disbursements, success -- how the employee are behaved with the customer. So that is only the differ to one to one. Other are more or less in the same.
Okay. Because the angle I was coming from is, if you are confident that over a period of time you will be able to expand the proportion of customers who deal only with you, then by definition, your peer lender must have a lower collection efficiency, right? If they have the same efficiency, then -- because then they can also disburse the loan.
No. I'm not getting that. I think we will give it a pass instead. Excuse to me to say other about it. And because every organization having their own policy, own strategy, own culture and values, not the [indiscernible] will be like to compare them.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Sunil Samdani for closing comments.
So thank you, ladies and gentlemen. Thank you for taking this time up. Really appreciate. Thank you.
Thank you.
Thank you.
Ladies and gentlemen, on behalf of Bandhan Bank Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.