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Bandhan Bank Ltd
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Ladies and gentlemen, good day, and welcome to the Bandhan Bank Limited Q3 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Hiren Shah from Bandhan Bank Limited. Thank you, and over to you, sir.
Thank you, Faizan. Good evening, everyone, and thanks for joining this conference call. It's our pleasure to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending December 2021. We will take this opportunity to update you on the recent development in the industry and Bandhan Bank during the quarter. To discuss all this in detail, I've got with me our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh; our Chief Financial Officer, Mr. Sunil Samdani; Head Business; Mr. Sanjeev Naryani; Head Assets, Mr. Kamal Batra; Housing Finance Head, Mr. Suresh Iyer; and myself, Hiren Shah, Head of Investor Relations. Now I would like to request our Founder, MD and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about our bank's operational and financial performance, along with the development for the quarter ending December 2021. Over to you, sir.
Thank you, Hiren. Good evening, and [Foreign Language] and I wish a very happy New Year 2022. Thank you so much for joining us today in the call of quarter 3 financial year '21/'22. Hope all of you and your loved one stay safe, healthy and happy new year for all of your families. I'm pleased to state that the October-December 2022 quarter has been a very good one for the bank, where we have witnessed growth across all parameters. After the challenging first half of 2022, you have seen growth bounce back strongly and that seem to stabilize on the asset quality front with the collection efficiency improving strongly. The continued momentum in vaccination, the third quarter of the current financial year saw economic growth revised strongly as the business returned to normalcy. The third quarter also coincide with the festive season, starting with the Dussehra and Durga puja and followed by Diwali. As I have mentioned earlier on many of the occasion, the festive season is where we start seeing growth. And in the current financial year, business activities returned to almost prepandemic levels during this period. We are happy to see sign of strong demand for credit coincide with the collection efficiency number which have shown considerable growth in this quarter. For the bank in quarter 3, '22, we reported a robust 10% year-on-year advance growth, which is 8% quarter-on-quarter, amount-wise the INR 88,000 around crores. Our deposit growth also has come as a very strong, which is 19% year-on-year, 3% quarter-on-quarter, total amount to INR 84,500 crores. Our total business size as on December 31, '21, stood at INR 1,72,000 crores. In line with our aim of building a robust granular retail deposit front side, our CASA deposit grew 26% year-on-year, which amount is INR 38,528 crores during this quarter. This gives us CASA ratio of 45.6% in quarter 3 compared to last quarter, which was 44.6%, but 1 year before it was 42.9%. Also, our retail deposit of the deposit received very healthy, which is 85%. Along with business growth in advance and deposits, we also see very encouraging collection efficiency spends during this quarter. With people's livelihood coming back on track, our customers have been very eager to standardize their overdue accounts and the arrears. In order to continue and build up benefits of formal credit by maintaining a healthy credit record. And this is reflected in the strong collection efficiency trends witnessed in this quarter. The overall collection efficiency of the bank stood at 93% from 90% in the last quarter. If I go to our EEB vertical, which is the measure to the micro credit, the vertical improved the collection efficiencies 6%, which is 92% from 86% in this quarter. Furthermore, among our non-NPA customers, we are recording a collection efficiency 97% from 93%, which we expect from that very soon will be like to reach 99%. After including arrears, the collection efficiency of EEB vertical stood at 160% from last quarter 129%, which is showing that the NPA customer also very good amount they are paying. In Assam, very specifically, we'd like to mention that the collection efficiency of the Assam has come 96% of this quarter from the last quarter, 82%, which is 14% increase and 96% is a 1% lower only from the national collection efficiency activity. In the West Bengal, West Bengal is a collection efficiency has come 97%, which was the last quarter was 92%, 97%, which is aligned with the country collection efficiency of the bank. Another part on that, full paying customer has been increased at 10% from 79% that increased to 89% EEB customers are paying the full installment to the bank. Of course, there is an NPA customer also paying to us, 66% of NPA customer are paying in the last quarter and 61% of our restructured customers are paying in the last quarter. So these all are the collections efficiencies improvement has been in the confidence to the bank. So that -- with this the business growth and improvement of this collection efficiency, we have seen our net profit for the quarter has increased INR 859 crores, which is 35.7% year-on-year growth. Along with this, we have the fee-based income. Fee-based income has come 17.3% of the total income, which was in the last quarter -- earlier quarter, it was 14.2%. Bank have the continue with 7.8%. Cost-to-income ratio has come down 31.3% from 35.7%. For the third quarter, our gross NPA ratio will align with the last -- the preceding quarter, which is a 10.8% and net NPA ratio stood at 3%. EPS is very strong 74.4% and capital adequacy is 20%. It is encouraging to note that after the challenging last 2 quarters, we have been able to erase the increase in gross NPA. The reason for that, the many of our customers have nearly regularized their overdue accounts. But until all the overdue amount is not recorded, they cannot be categorized as a non-NPA customer. It is only a matter of time that these customers regularize their account fully, after which we are likely to see a significant drop in gross NPA ratio in the next couple of quarters. There is also slippage in the normal course of operation with the This quarter also has come, but net become aligned with the sales ratio of the gross NPA. We have not done any further restructure in this quarter, but the restructured loan, it was in a bank INR 9,000 crores has come down INR 6,600 crores which is nearly INR 2,500 crores have been repaid by customers. This is an encouraging indication that the sales in the system has considerably reduced. Therefore, this will also help gross NPA come down in the next few quarters. Another highlight of the previous quarter has seen the strong performance of the housing finance vertical. For the first time, a total outstanding assets of the Housing Finance segment crossed INR 20,000 crores to stand at INR 20,939 crores. This represents the 6% year-on-year growth and 7% quarter-on-quarter growth. During the quarter, we also learned special offers on housing loans to attractive rates of interest for our borrower, and we expect this offers to provide additional attraction to this business in the coming quarter. Disbursement of this quarter has grown, which is the year-on-year disbursement growth in the 27% and quarter-on-quarter disbursement growth 55%. Housing loan disbursement highest from merger is INR 1,361 crores in this quarter, an outstanding growth INR 600 crores in this quarter other than EEB. I'm also happy to report that the diversification strategy of the bank, which we have outlined in the past is progressing well and as per expectation. In line with the objective of reducing the share of micro loans, which is called the group loans, in the total asset mix of the bank over time, at the end of December 2021, the share of group loan with the total asset portfolio stood at around 52% down from 57% in the previous quarter. The share of EEB individual loans to the total EEB book of the bank stood at around 21% from the previous quarter 14%. We have mentioned in the past that the end of this fiscal year, we aim to have a 50-50 mix between group loans in the overall bank loan. I'm happy to state that we are on track to achieve this goal on time. Coming to the outlook for the rest of the year, as you all know, we are seeing the third wave of COVID cases across the country. However, we remain confident that this will have not any impact on our business operation. We have extensively spoken to our customers and the state and find out our customers are deep confidence on that to return back the money in during the time. Even our customers who could not repay their due during the first and second wave have told us that they would like to continue paying on time going forward if they do not want another disruption as far as their credit records are concerned. As we enter the new year, we remain optimistic that the worst is over. The trend that we are witnessing make us belief that things should continuously improve going forward. With our investments in the diversification strategy, technology, people and the processes, the bundled growth story remain as strong as ever. I wish you and your family all the very best. Please take care and stay safe. Thank you to all of you. I now request to all of you to open for this question.
Thank you, sir. Now I would like to request our CFO, Mr. Sunil Samdani, also to give you some more details on a few financial parameters, including NPA provisions and coverages. Over to you, Sunil.
Thank you, Hiren. Good evening, ladies and gentlemen. I will just take a few minutes of yours and draw your attention to a few slides which I believe is important to understand our performance this quarter. Starting with Slide #5 of our presentation. There, we show the collection efficiency of the EEB portfolio. The collection efficiency, excluding arrear, including NPA improved from 86% to 92%; excluding NPA, improved from 93% to 97% when we compare September to December. For the quarter as well, it has improved substantially from 81% to 91%, including NPA and 88% to 96% excluding NPA. Including arrears, for the month of December, it stood at 160%. For the quarter as a whole, it was 154%. In terms of key states, how we fared? West Bengal collection efficiency, we are excluding NPA numbers, stood at 97% as against 92% in September; Assam at 96% against 82% in September; and rest of India at 98% against 94% in September. So at an overall level, while West Bengal is at national average of 97%, it's heartening to see that the Assam is also not far behind just a percentage below the national average. The similar trend is being observed for the full quarter as well, but I'll quickly move you to the customer paying profiles. As Mr. Ghosh mentioned, our full-paying customers have improved from 79% in September to 89% in December. These are the percentage in terms of number of customers if we look at in value terms of the demand, 84% of the customers paid full installments in September. This number has improved to 93%. Partial paying customers in number of customer terms reduced to 7% from 17%, which means they converted to a full paying customer and in value terms as well, it reduced to 6% from 14% by moving to full paying customers. Non-paying customer at 4% between December and September, but in value terms, improved to 1% from 2%. So clearly, overall collections have shown improvement. The next one, Slide 6, talks about the customer payment patterns and the restructure of the NPA customers and the restructured customers payment patterns. In both the cases, we continue to see healthy collections, almost 2/3 of the customers continue to pay. As far as NPA customer goes, they continue to pay, which helps us reduce our recovery from NPA. While the restructured customers who are technically not required to pay as their businesses get normalized, they come forward and this number is 61% of them have started repaying. This clearly gives us that confidence that after the restructuring period, we will not see a material movement into NPA from this pool. While we will have to wait as the period gets over, the initial signs are encouraging. Next is an important slide on the asset quality of our EEB pool, which is where we have seen the maximum stress. Here, we've seen improvement all around and more importantly in the earlier bucket because as we see the improvement in the earlier buckets, the floor rate is automatically reduced going forward. So 1- to 30-day DPD, which used to be 11% -- 11.1% of the EEB portfolio has now come down to 5.3%. And even within this 1 to 30 days, if I remove 1 to 8 days, which is more of a technical in nature, this number will further reduce by 1.7%. 31 to 60 days, it has reduced from 7.1% in September to 2.9%. 61 to 90 days has marginally gone up from 2.5 to 2.9. And NPAs, of course, is flat between September and December at 13.7%. While it has been slightly aided by the write-off that we have done during the quarter of INR 12 billion, but even excluding write-offs, the improvement what we are seeing which is about 10 percentage points, right, the overall delinquent pool has reduced by 10%, excluding write-off, it has still reduced by 8%. Now coming to Slide #8. It talks about the set pool, which we had identified last quarter, and we had put up a coverage or a resolution plan against that. We have seen a reduction in overall stress pool by INR 25 billion from INR 195 billion to INR 170 billion, and the coverage or the resolution plan against this stress pool has gone up. In September, we had a 95% coverage, which in December, we see it going up to 98%. So despite the write-off and utilization of the provision we continue to provide, and we have seen a healthy coverage in our books. Well, Mr. Ghosh mentioned this restructuring positioning from an original restructuring at the time of doing restructuring, we had a INR 90.3 billion total restructuring done. This pool has come down to INR 66 billion. This is an encouraging sign. The another aspect we want to highlight this time is on the diversification, right, while our EEB portfolio has always shown a strong traction over the years. This year, we see traction across our non-EEB verticals as well. Our disbursements and advances have grown at a much faster rate. And it is now seen on Slide #11, as to how we fare if we have to realign our individual book to the commercial banking and the micro housing loans in the overall housing portfolio, which is what we had envisaged when we had planned this strategy to achieve diversification at 2025. We are progressing well, and we are in line, and we are confident of achieving the diversification by the end of 2025. So thank you very much for your patience hearing. I'm sure we will have some questions. We're happy to do.
[Operator Instructions] First question is from the line of Shagun Verma from Goldman Sachs.
A couple of questions. Number one, can we get the slippages and upgradation recovery for this quarter?
Sure. One has to look at with the backdrop of zero restructuring that we have done in this quarter, right, which in the previous 2 quarters, we had the benefit of restructuring. This time on, we've decided not to restructure any further loans going forward as well. So the gross slippages for the quarter was INR 3,400 crores. The recoveries were INR 1,548 crores with net addition of about INR 1,893 crores, and there has been a write-off from there of INR 1,215 crores, which leads to the overall increase in NPA by INR 678 crores.
Got it. And just trying to understand this, the arrears -- collection efficiency, including arrears. So does it -- the arrears amount, can we get some sense as to where all does it reflect in the actual numbers, balance sheet numbers? Does it go and sit in the upgradation recovery? Or there is a flow -- I mean there is a backward sort of flow in the bucket movement? How does it sort of work out? And is it 160% of collection efficiency versus 97%, excluding that?
So when we say that, including arrears collection efficiency is 154%, it means the customers who have started paying are not only paying the current installment but are also repaying their old overdue. This essentially means my DPD position should improve and which is where we can see that our DPD positions have improved substantially. And when I say 150% collection efficiency, it means my collection is 150% of my demand amount.
Correct. Sir, the upgradation recovery that you have of INR 1,548 crores in this quarter, was it also because...
Is also part of that. So if I receive the entire overdue of the customer, they get upgraded. If I receive the partial overdue of the customer, the DPD position improves.
Understood. Got it. Got it. And 2 more questions. Number one, in this write-off, wouldn't you get any tax relief in this? Or this would be reflected in the fourth quarter?
See, that's -- the tax relief part is more of a current tax issue. But for the financial purposes, it gets negated with deferred tax. So as far as the financial goes, the net impact of current tax and deferred tax effectively keeps your effective tax rate at same.
Understood. And the last is this credit guarantee fund, which was September, estimated recovery of INR 30 billion. In your new table, it shows INR 25 million. So INR 5 billion is the recovery that happened or...
Yes. That's the recovery that happened. My stress pool has come down. So obviously, as if the stress pool has come down, then there can't be so much of recovery.
No. So -- okay. So you've not actually received from the fund yet. It is just the stress pool has come down because of recoveries or whatever, the arrears...
Yes.
But how confident we are that this INR 25 billion would be recovered over the next -- how many quarters, I think you said March?
That's the actual calculation we've done basis the guarantees we have taken against the customers. So if that customer falls in that stress pool and there is a guarantee available with, of course, all those details as to what is our share, what is their share, we calculate that, and this is what the number is.
When should we expect this recovery to start coming through?
From the CGFMU?
Yes. Yes.
We will be able to place our claims only after 31st March.
Okay. And then whatever time that the government takes or the fund -- okay.
Typically, a quarter or so.
The next question is from the line of Kunal Shah from ICICI Securities.
Yes. Congratulations for a good set of numbers after the loss in Q2. So firstly, with respect to the provisioning. So again, looking at Slide #8, okay, comparatively, the stress pool is coming off. And based on the stress pool last time, we have knocked off a significant proportion maybe now in one single quarter. And thereafter, there has been just the improvement. So there is an increase of INR 600-odd crores in GNPA. But otherwise, would it be fair to assume that balance is the increase in the restructured provisioning? So how is the provisioning breakup during the quarter, specific restructured standard and outside of EEB?
So let me explain it slightly differently. You are right, right? If my stress pool and the coverage has only improved, what is the need for having an additional provisioning. Now 2 reasons for that. One, provisioning are at a customer level; and two, we have improved our PCR from 74.1% to 74.4% despite having the INR 12 billion of write-offs. So normally, you see when there is a write-off, the PCR reduces. We have not allowed the PCR to review, and hence, there was a need of these additional provisions.
So it was largely specific provisioning towards the assets and any increase in the restructured provisioning?
Not really because my restructured pool itself has come down.
Okay. So larger part of it is standard asset and this specific provisioning?
Yes.
Yes. And if you can highlight in terms of this restructuring movement that you had given. And again, quarter-on-quarter also, it's down from INR 6,900 crores to INR 5,700 crores. So how much is moving into slippages, how much is getting recovered? How is the movement and right from INR 9,000 crore, if you can just give -- say at least we can gauge in terms of how would be the behavior of the balance INR 5,800-odd crores? So write-off slippages and recovered, how is that pool -- yes, so the decline in the pool, how much is each of the proportion? Yes.
See, Kunal, as far as restructuring pool grows, technically, these customers are not required to pay, right? Their installment is not due. So the movement in bucket is not possible. This pool has come down because the customers have voluntarily come and repaid their money and installments and started repaying the installment because customer fees, their business has become normal they don't want to increase the interest burden, and they have started their installments.
Okay. So it's purely recovery. There is no write-off and slippage coming in, in this restructured pool movement?
No. It's pure recovery, 100% recovery.
Kunal, this customer, there is a restructure means we have giving the moratoria, not the installment needed on that restructured the installment size and given some amount, not like that. So whatever has come, it is a totally has come by voluntarily basis.
Okay. Sure. And last question, in terms of the other income, so you also highlighted noninterest income, but what was the component of that? What is leading to the increase in the incremental delta of INR 150 -- INR 160-odd crores on a quarter?
So clearly, the increase in disbursements, the processing fees have increased. It has gone up from INR 161 crores to INR 280 crores quarter-on-quarter. The other improvement area is on the third-party income where we have seen a 25% increase quarter-on-quarter at INR 85 crores. And the third biggest area is the recovery from bad debt. That number for the quarter is INR 90 crores. This is from the written-off -- earlier written-off pool. We've been able to recover INR 90 crores.
INR 90 crores. Okay. And third party, you said INR 85 crores?
INR 85 crores.
The next question is from the line of Sameer Bhise from JM Financial.
Just a quick question on the recoveries, which were overdue. How is it being allocated in terms of priority? I mean, principal, penal address, interest, can you just highlight it?
So first, the allocation goes towards interest with the penal interest - penal interest, we typically, we don't charge interest on interest. As a policy, we don't charge interest on interest for our EEB customer. So the allocation is on the interest charges and then senses.
Okay. And secondly, on the non-micro loan book, can you give some sense on how is the growth shaping up in terms of customer segments, opportunity, primarily housing and even the SME piece?
So this is something that we've been trying to build. We've got a team in place. So we have commercial banking headed by Kamal, who put in a lot of effort in bringing the systems, processes, people in place, and we are seeing traction there across MSME and retail verticals. Housing after Suresh taking over under the guidance of Mr. Naryani, we have identified the areas where to strengthen and we have seen the traction there. Until last quarter, while we were improving on disbursement, we used to see a lot of balance transfer out as well. So we've adjusted our pricing to ensure that the disbursement get converted into the balance sheet growth. And in terms of products, if you talk about the SME continues to focus on SEL which is 3 lakh to 10 lakh ticket size. Then there is an SME vertical which is 10 lakh to 50 lakh ticket size. And then we have a slightly larger ticket which is up from 50 lakhs to 20 crore where the average ticket size is about 6 crores to 7 crores. So these are the 3 verticals that we have. The larger piece will normally work as a consortium as well as multiple lending. And for the other 2 businesses, we continue to have -- in terms of SME we continue to work with individual businesses. For housing business, our salaried and self-employed mix is at a salary at 67.5% and self-employed as the rest.
Okay. And just one final bit. What is the interest rate on individual loan versus group loans? If there is any difference? And any changes that you have made there in the last 12, 15 months?
No, there is no change in the interest rates between individual and group loans because essentially, these are same set of customers. The idea of -- which have been converted from group to individual loans, the idea of converting individual loans is what to have a better control on the asset quality and the overall indebtedness of the customer by becoming a sole lender. So this was a strategy to consolidate debt of the customer the interest rate continues to be same as we have the lowest interest rate charge and as we charge the lowest interest rates in the market for these segments of customers.
What is it currently?
19.5% -- 4-5 percent, 19.45%.
The next question is from the line of Deepak Gupta from Reliance Nippon Life Insurance.
My first question is, if you could give us a sense, what is the percent -- what is the amount of loan, which is eligible under Assam Relief scheme?
Now we had done that analysis and presented it a couple of quarters back. Now the scheme is being implemented in various stages, right? And this scheme continues to get modified as the stage comes. So very difficult to quantify. That's why if you see in our coverage analysis, we are not trying to put a number there. But what we have seen is the zero DPD customers, the government has started distributing the money. They have taken now the information from us and the credit bureau for the overdue customers. So we expect this quarter, which is Q4, the government distribution to come in for the overdue pool. And the third piece will be the NPA, which we will have to see when the government announced. So far, they have only announced for the overdue customers. So far, we have received for 39,000 -- this I'm talking about the standard pool, we have received 39,600 customers amounting to INR 86.48 crores.
Sure. I hear that. I hear that. Okay. And my second question is on this scheme of CGFMU, you had earlier indicated that about 14 -- loans worth INR 14,500 crores, INR 14,300 crores of MFI loans are eligible. Is that amount still the same given the fact that you've had some amount of repayments or had the quantum reduced?
Sorry, I didn't get that question, could you please repeat?
No, I was talking about the CGTMSE scheme where you had availed insurance. I think in one of the earlier calls, you had indicated that loans of INR 14,300 crores were eligible under the scheme. So given the fact that you've had some amount of recoveries, so what is the eligibility size? Is the amount still the same? Or has the eligibility size reduced or increased?
It has reduced because there has been a recovery. So earlier when we were estimating a INR 3,000 crore claim against the eligible pool depending upon the said portfolio, if the customer was 30-plus, and now that has come down from INR 3,000 crore to INR 2,500 crores because the pool itself has come down.
Sure. Okay. And the last question is on emergency credit line guarantee scheme. If you could give us a sense, what is the total loan disbursed under that scheme? And what will be the breakup statewide?
The total disbursement under ECLGS was INR 1,905 crores. The current outstanding is INR 1,045 crores. State-wise, we don't have the data readily available, but we can share it offline.
The next question is from the line of Adarsh Parasrampuria from CLSA.
So, question was, Sunil, if I look at the provisioning that we had, we had NPA provisions with standard asset of INR 2,100 crores and restructured provision of INR 1,030 crores. Have you utilized standardized provisions or there is something left?
We had a INR 2,100 crore provision made last quarter. The reversals from that pool is INR 800 crores. INR 1,300 crores continues to be there.
Okay. And what about the restructured pool, is the same number?
So restructured pool, clearly, the provisions will come down as the restructured portfolio itself has come down. So if I don't have a customer, the balances have reduced, the percentage will -- the coverage or the provision should also come down. So that reduction is about INR 200 crores.
Got you. Got you. And second, just from a timing perspective, you did allude to both the guarantee scheme and the government, how they are going about doing the implementation of the scheme in Assam. Any sense on timing as to when money starts finally flowing to us against whatever we have to receive? We will start with the guarantee scheme and then we can get to Assam?
So guarantee, we just discussed. The earliest we can place a claim is after 31st of March. And once we place the claim, typically, we should expect 3 months' time.
Got it. Okay.
And Assam, it is a stage-wise process. Government has already started with 0 DPD customers as on the cutoff date to start repaying them. The repayment is INR 25,000 or the current outstanding, whichever is lower. So we have started receiving the payments. So far, we have received probably for 0 DPD pool, 39,000 customers amounting to INR 86.48 crores.
The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
Just 3 questions from my side. What would be the total provisions that we are carrying at this point? For EEB, it's 91.7%, if you put all the asset categories together, what would be the total provision?
Just a second. I'll just do the math and...
Sure. I believe this figure was about INR 106 million last quarter.
INR 10,219 crores.
INR 10,219 crores. And this was about INR 10,600 crores last quarter, right?
Yes, INR 10,642 crores.
Okay. Got it. Second question, Sunil, if I just look at the total stress book on the EEB, which is NPA plus restructured plus SMA 1 and 2, it is still hovering around 29% to 30%, which was the same level as it was in the first quarter of this year. And compared to the exit quarter last year, the fourth quarter, which was about 12% to 13%. So it's still meaningfully high. Given the kind of collection efficiency improvements that you are seeing over how many quarters do you think it starts to get back to more like a pre-COVID level?
No, I don't know from where you see that it is still higher because the numbers that we have presented clearly shows a sharp dip from 11.1% to 5.3% from 7.1% to 2.9%. Now let me give you a perspective. Pre-COVID, my 0 to 90-day DPD used to be in the range of 3% to 5%, right? About 5% of my book used to be there. Now I'm not very different. It's just 5% more. So in all, 10% other than NPA as against the pre-COVID level of 3% to 5%. And the improvement in 1 quarter itself is 10%. And for me to reach that pre-COVID levels, the gap outside NPA is only 5%.
Okay. To ask a question in a different way. If I look at the total pool of INR 170 billion on a loan base of about INR 575 billion, which is almost close to 30%, that whole group for it to meaningfully decline in your view, will take how many quarters? That entire pool of INR 170 billion?
A large component of that group. There are 2 main large -- 2 large components. One is restructuring and NPA, right? NPA, we are seeing it, there is a reduction. Restructure also, we are seeing a 20% reduction in 2 quarters. And technically, NPA customers are not required to pay. Despite that, we are seeing the 27% reduction in 2 quarters of the restructured pool. This number will only increase. I mean, the reduction number as and when the customer is required to pay.
Got it. Got it. Okay. Got it. My last question is on our restructured book, the current provision that we are carrying is, I think it's somewhere around 19.08% of the restructured advances. How do you assess the adequacy of this provision, whether that 19% provision against the restructure book is sufficient? How do you assess whether it's adequate enough?
See, that exactly is something that we have tried to answer in Slide 8, right? When we have put down not only restructuring but also NPA and DPD customers and against that, how are we covered, right? So -- in fact, we are not even -- with that coverage in mind, we believe that we are adequately covered against INR 170 billion pool, we have a coverage of INR 166.7 billion.
Okay. Okay. So at this point, going forward, whatever provisions that we take will be based on individual provisions, which are falling into the NPA bucket, right? There should not be any contingency related provision necessity going forward. Would that be a fair conclusion?
Yes.
The next question is from the line of Mahesh M.B. (sic) [ M.B. Mahesh ] from Kotak Securities.
Sir, just a couple of questions. If you look at last quarter of the total micro finance book that you had, approximately about 45% of the book was in some form of stress. When we look at the total business we made this quarter, it kind of covers up a fairly large amount of the standard assets of the previous quarter. Just wanted to understand how should we look at this book in terms of disbursements for the second next quarter? And also whether any of the customers who have, let's say, gone into some form of NPAs, do they get immediate disbursements as well?
So to your question, while you see 34% of our book as of September being delinquent. Of the 34%, 11%, 11.1% was 0 to 30 days, which was in a very early bucket, right? So if I have to remove that, then it's only 24%. So that's one. And with that number, I don't think the incremental disbursements as the customer gets regularized should be an issue in Q4 as well. And to your point on NPA, clearly, if these customers who are part paying customers who have repaid their full installments, we will reassess them at the time of their application as to what is the amount that they will be able to service adjust the loan amount, which could be lower as well and accordingly disbursed. If we have customer needs to continue paying either in part or in full. If we assess that the customer repayment capability has come down, their income levels have come down, we will keep a lower disburse.
Do you provide an immediate disbursement to a customer who is regularized? Or is there a cool-off period to the customer who is regularized?
See, cool-off is required if the customer is not paying for a long time. We have a standard cool-off period between 1 to 7 days. But otherwise, if you talk about the NPA customers, NPA customers who have continued to repay in part and have now repaid their full installments they will be considered for a standard cool-off period.
Which is 7 days?
Between 1 to 7days.
Okay. Okay. Just one clarification. If you could also provide the restructured book between Assam and West Bengal for the quarter?
Yes. The outstanding of restructured book in West Bengal is INR 2,600 crores and Assam is INR 1,759 crores.
Okay. And one last question, sir. We see a fairly large number of advertisements of Bandhan in housing loan at 6.4%. Are these simply teaser rates or are you generally getting very aggressive in that market as well?
No, this is in line with what every bank does.
Okay. Because your cost of funds has still not reached that point. I'm just trying to understand, should we kind of look at a customer segment targeting...
We have a risk-based pricing, right? So this is the best rate anyone can get. But this is not something that we disburse at that rate.
Correct. Correct. Correct. So just trying to understand, these are -- I think this traction of loans coming in this price would be very low?
Yes.
The next question is from the line of Prakhar Agarwal from Edelweiss.
I have, sir, 3 set of questions. Just one clarification. When we say that our collection efficiency, including arrears and NPA, has been improving. But when I look at the number of paying customers in NPA bucket, that essentially has remained stagnant at 61% being paying in NPA. Essentially, should it not increase if NPA customers are paying more and we are saying that it is technical and probably over the next 2, 3 quarters, we will see a gain on that. Shouldn't the number of paying customers within an NPA increase, which is broadly the same within the 2 quarters that we are talking about?
So there are 2 things. One is the number of customers; and two is the value. So the customers who have started paying have started paying more installments, right? That's how one has to look at. So in value terms, we are seeing that number reducing. And the NPA customers also -- when I said that 67% of my customers pay, these are the customers who pay in full or part, right? When I see a higher recovery from NPA, which means either the full paying customers have increased or the part paying customers has increased the share of their part payments.
Okay. And similar to that, when I look at restructured book as well. So while there's been a fair bit of recovery that you talk about, of the balance, what we see is essentially the nonpaying customers are relatively a higher chunk. Do we anticipate that part of that in terms of crystallization that will crystalize into higher stress going forward in terms of restructure pool now? If I just take a movement between restructured pool over last 2 quarters, the nonpaying seems to be rising, of the remaining balance pool.
No, no. There are 2 ways to look at it. One is the restructured customers are not required to pay. They are under moratory. Despite the fact that they are under moratorium, they are voluntarily coming and paying. So to conclude that this will be the ratio post moratorium also may not be the right conclusion. While clearly, we are not suggesting that all customers under restructuring will pay and nobody will fall. But the fact that despite being in moratorium, 61% have shown their intent to pay. It's just that confident that this restructuring the result will be different from the historical results.
Okay. Got it. And in terms of housing, when I look at segmental gross NPA movement, there has been some rise, although marginal, but when I look at it from an absolute basis numbers, there has been some rise in housing NPA. Any particular segment that you are all particularly seeing stress or any pocket that you're seeing stress in, or what will you attribute this to?
Suresh, do you want to take that?
Yes, sure. There is a little bit of elevated this thing coming from the self-employed segment. But otherwise, there is no very great kind of disparity or a difference which is observed. It is, by and large, the NPAs in the -- the Stage 3 NPA or the Stage 3 accounts continue to remain the same. It is just the movement within the SMA 2 to NPA flow, which has happened a little bit.
Just one last question on this. Sir, when I look at individual book, that number has significantly gone up during this quarter. What is exactly the ticket size that we are offering in individual as of now? And what is -- if I look at the growth that happened from INR 77 billion to INR 120 billion, how much of that is because of value and volume?
Okay. So the average ticket size has gone up a little bit. And with this new campaign, which has also come and the launch of the DSAs, though we do have a little bit of increase in the ticket size, the average ticket size is somewhere in the range of about INR 12 lakhs, which used to be around INR 10.5 lakhs.
Sorry, I was talking for EEB book, the last question was in terms of EEB book.
Sorry, can you please repeat the question?
So within the EEB book, when I look at individual contribution, that number has gone up significantly over 2 quarters. So when I look at from INR 77 billion to INR 120 billion, what exactly is the ticket size that you're offering there? And what is the value and volume growth that could be ascribed to the growth -- overall growth?
Individual average ticket size on disbursement is INR 1,15,000 and an outstanding is INR 1,03,000.
The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.
So a few questions, like, firstly, is annual audit for FY '21 by the RBI over? Like any feedback or comments from the RBI that you can share?
The audit is over. Clearly, these are confidential, so we can't share. We are not allowed to share even if we wish to, so we can't talk much, but there is nothing to report, which is required under the regulation to report.
Okay. Sure. And secondly, when you say that you're only 5% higher than usual levels of 0 to 90 DPD, obviously, you are not counting the restructured loans there, right?
Yes.
And likewise, on the collection efficiency of 97%, excluding NPA, again, the restructured loans because you are not raising any billings for them, that is not there in that denominator as well?
But that will be the case for any restructuring.
Right. No, but in case just because the number is still quite sizable, so that is something that we need to see as to how that goes. And related to that, as the third question, like when you report 26% of nonpaying NPA and 34% of nonpaying restructured customers are from Assam, how much does these numbers stack up when you look at the same proportions out of the total customers in Assam in terms of total nonpaying customers in Assam and total restructured customers in Assam? Because it looks like that this ratio will be very, very high. And in this context, this seems to be a very sticky pool and therefore, any levels of stress that you're building in from this portfolio?
See, there are 2 ways to look at, right? We were aware and we were anticipating that when we restructure, when you see 30 plus, 60 plus, there will be a lot of questions, right? And that is why in the previous quarter, we had gone ahead and taken this provision. If you look at our total stress pool, we consider 100% of restructuring as stress pool. We consider 100% of 30-plus as stress pool, notwithstanding the fact that I have reduced my stress portfolio from 34% to 24% in 1 quarter. Still, we continue to show this 30 plus, 60 plus as 100%, right? And then we show the coverage on that. So this clearly shows that this has been a very conservative way of looking at stress, right? I'm not reducing stress despite the trend showing that the stress is reducing at 30% to 40% in 1 quarter. And I'm putting 100% coverage on that. So clearly, while I can give you the numbers of restructuring outstanding, I think we shared that. For West Bengal, it's INR 2,600 crores and Assam is INR 1,759 crores.
The next question is from the line of Abhishek Murarka from HSBC.
So can you give the waterfall of this overall stress pool? So the 195 coming to 170, can you sort of share how much was recovered, how much was added, how much was written-off?
INR 12 billion is the write-off that we have done. And the recovery from this pool will be -- just a second, let me get you that number. Net slippage was INR 1,893 crores there. But that was NPA. We're talking about...
Yes, correct. Yes.
Let me get these numbers in hand, and I'll answer this during the call.
Okay. And correct to assume that this INR 12 billion write-off is entirely from the SMA 1 pool? Because in restructured, you are saying there is purely repayment.
SMA 2 as well. Which has flown into NPA.
Right, right. Okay. Okay. Sure. The next question is this estimated recovery till 30th June of INR 50 billion, first of all, this includes interest and principle, right? And this is -- how is this spread over the next 2 quarters or likely to be spread?
Seasonally, historically, Q4 has always been the best performing quarter for us, both in terms of recovery and disbursements. If you look at our third quarter performance, that pool has come down from 195 to 70, the reduction of INR 25 billion. We are assuming a similar reduction despite entering Q4, which historically has been the best quarter for us. So that's how, we have conservatively assumed going by the actual performance of Q3.
Sure. And this includes interest in principle, both? The INR 50 billion?
Yes. So I have recovered more than INR 25 billion, part...
Yes, understood. And also when I look at the NPA bucket, especially in Bengal, in Assam, I understand there's been an issue there. But in Bengal, what is the reason for forward flows? I mean 61 to 90 is also showing a decent forward flow and NPA has shown a little bit of a forward flow. So what is the ground level issue over there right now?
In fact, we've seen an improvement there, right? It is about the part paying customers. We were seeing that part paying customers because there was a delayed recovery in West Bengal by a quarter, there were a clue, right, by our rest of India has improved, Bengal took 1 quarter more. So the part paying customers there, there will be a flow.
Okay. It's just the timing of the recovery?
It's just the timing, yes.
Okay. And finally, just a quick question. This moratorium that is given to restructured customers. When does this end? Because you're nonpaying keeps going up, and obviously, it looks like they are not paying, but they are under moratorium. So when does this end and this -- they have to come back and pay?
So half of it roughly -- this is not the exact number, but roughly half of it ends in 31st March and the balance half on 30th June.
The next question is from the line of Param Subramanian from Macquarie.
I wanted to ask firstly on Assam, what is the state of doing business over there? So what are the disbursements there in this quarter? And what is the current loan book outstanding, if you could give both these numbers on a year-on-year comparison as well?
The Assam outstanding is INR 10,400 crores. No. Let me correct that. Let me correct that. INR 5,979.9 crores is the outstanding of Assam.
Okay. This includes NPA?
Everything.
Okay. So this includes 25% of NPA. And -- okay, and what was this number last year? And if you could just -- what is the disbursement right now as in this quarter in Assam as well as if you could give some qualitative comments around how the state of doing business over there in terms of -- on an ongoing basis in Assam?
So for the first -- in this financial year, totally, we have disbursed INR 1,666 crores in Assam.
Okay. Okay. Got it. Got it. Can you just tell -- if you could just speak about the state of being business over there right now, what is the outlook over there for the next -- as in going forward, how do you -- how does the business shape up in Assam going forward? And if you could perhaps talk a bit about your competitive dynamics in your core geographies, West Bengal and Assam, how is your market share, say, on a disbursement basis trending versus say a pre-COVID level? How is the competitive intensity to pre-COVID? Yes, those are my questions.
As far as the environment in Assam goes, it is fast improving, right? We have seen the right set of commentary by the government encouraging customers to come forward and start repaying their installments and regularize their loans so that their credit score does not get impacted, right? Decreased messaging from their government right at the top, it only helps improving the credit culture, which is what we are seeing in Assam today. And as things improve, we intend to clearly do well in Assam. In terms of competitive intensity, it's a very difficult question to answer till we have a formal data from an independent rating agency or someone like that. It typically comes with a lag of 3 to 6 months. But if I have to anecdotally tell you, the intensity have only reduced the competitive intensity directionally what it was a year back and today.
Got it. That's helpful, Sunil. Just one last thing, if I can ask, the INR 1,666 number, what was it a year ago? That would be my last question. You said 9 months was INR 1,666 crores of disbursement in Assam. So how was it a year ago? Yes, that's it from me.
A year ago, I don't have the number readily with me, we can share it offline. Thank you.
Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to Mr. Sunil Samdani for closing comments. Thank you, and over to you, sir.
Thank you, ladies and gentlemen, for your patient hearing. Thank you. Stay safe. Thank you to all of you for your good time. Stay safe.
Thank you. Ladies and gentlemen, on behalf of Bandhan Bank Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.