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Bandhan Bank Ltd
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Ladies and gentlemen, good day, and welcome to Q4 FY '22 Earnings Conference Call of Bandhan Bank Limited. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Hiren Shashikant Shah. Thank you, and over to you, sir.
Thank you, Margaret. Good evening, everyone, and thanks for joining this call. It's our pleasure to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending March 2022. We will take this opportunity to update you on the recent developments in the industry and Bandhan Bank during this quarter.
To discuss all this in detail, I brought with me our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh; our Chief Financial Officer, Mr. Sunil Samdani; 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 of our bank's operational and financial performance along with development for the quarter ending March 22. Over to you, sir.
Good evening to all of my friends. Thank you for your time to join this -- the call. I already said it in earlier, the fear of pandemic is over. The third wave has been much milder, but it has not infused into my any of the confidence. Our result of quarter 4 financial year 2022 also clearly reflects all of these trends. Quarter 4 of any is the most active period for the banking industry. And in financial year '21, '22 was no different from that. I have been meeting my customers at the ground level, and the signs of revival are for all to see. Credit demand is back. Many of our customers, who had postponed their loans, have taken fresh credit from us in the quarter.
Let me start with a broad overview of the year. We reached the milestone of around INR 1 lakh crore advances in the quarter gone by. Advances stood at INR 99,338 crores, which is year-on-year basis up the growth 14%. Deposit growth has come 24%, which is the amount was INR 96,331 crores. CASA retained at 42% and retail deposits 77%. Net interest income has been grown 42.6% from the preceding quarter, INR 3,500 crore. Operating profit grown 53.5% from the preceding quarter, which is the highest growth in the bank life. The bank reported net profit for this quarter is INR 1,902 crores. NIM has increased 190 basis points higher from the preceding quarter.
The last financial year, the bank provided its resilience yet again. We are now well on the revival path, and the operating environment as well as ongoing reality is in favor of a strong resurgent of business in future.
Now, let me dive deeper into the few key aspects of this -- the success of this -- the parameters. The first point is a collection efficiency. The collection efficiency has come in the quarter, which is called the March '22, has come 99%. Collection efficiency in the month of March in EEB has come 99%, which has increased from the 97% of the last quarter, excluding NPA and arrears. This means the collection efficiency has come, is normal. Collection efficiency in West Bengal also is 99%, and Assam, 1% lower, which is 98%, and total India is 99%.
So in the another part, 89% of my NPA customers are paying in the March 2022. 59% of my restructured customers are paying in March '22. The improvement in collection efficiency is that thanks to our customer going back to their livelihood in full swing, and the commitment that the customers have towards the bank. The improvement in collection efficiency that resulted in lowering our NPA. The bank's gross NPA stands now 6.46%, which shows that the 4.35% lower than last quarter. Net NPA has reached 1.66%. DPD across the vertical of microcredit because of the large portfolio, which has come nearly half of the -- half from the last quarter.
EEB, the emerging entrepreneur business, has a 3 verticals. One is a group-based lending, which is we call the microcredit. Another vertical called that the small business in agri loan, which are called individual, which is graduated from microcredit to individual. And another vertical we say that the micro home loan, which are also individual loans, and some -- another one have, which is the 2-wheeler loan. The EEB saw robust growth in this quarter as expected because this -- the portfolio has come growth in the last quarter of every year.
In financial year '22, they are added 22.88 lakhs new customers in financial year '22. Disbursement in the quarter of 4, where it is that they are raised on that the INR 22,968 crores, which is a 50% -- 15% higher than the pre-pandemic years last quarter, which is at 2020. So that means that this is shows that the business has come to this normalcy.
The bank as a policy and the strategic policy, migrated or graduated the group loan to the individual. As on March 2022, bank migrated 24.32% of the group loan to the individual loan.
Come to this, the next -- the growth vertical, which is the housing loan. We are -- 2.5 years ago, we have been merger this vertical from the Gruh. And last quarter, it has come very good growth, but this year, they are given that -- driven that growth. Portfolio grown 11% year-on-year. Portfolio stands is now INR 23,726 crores. CAGR in the last 2 years has been healthy, 9.29%, despite the challenges [indiscernible].
In financial year 2022, the total disbursement have done this vertical INR 4,340 crores, both of 105% over the previous year and 95% from the last quarter. In quarter 4, 86% are housing and 13% are left. And this is the housing loan portfolio, 61% salary-based, 49% is self-employed. Portfolio quality continue in the same growth. Next point is that this loan have been ticket size also increased from the previous year, nearly INR 110,000 our is ticket size.
Coming to our next 2 vertical, another vertical is in commercial banking. So commercial banking have been grown 60.8% year-on-year, and quarter-on-quarter have been grown 40%, which is a portfolio of INR 11,720 crores. The retail credit, other than housing loan, our gold loan, personal loan, 2-wheeler and auto loan, together this season stands this portfolio of INR 1,645 crores, which is that growth has come yearly 39%. This and the total performance has come from the business point of view.
I am coming now to the strategy of the bank. We are decided that the 2020 will be prepared a -- we have been preparing a 5-years plan, which has the '21 to '25. And during this period, 2 years we have been seeing that there is a pandemic situation has come, business growth is not coming as normal. For that reason, the last February, we are again revised our plan, and we find out on that we can reach that plan with another 1-year immediately. Instead of 2025, it will be reached 2026.
Major other couple of points strategically we have been decided, which are on the track we like to mention. The bank had a strategic first point how we can be like to strategically diversify the microfinance loan with the other portfolio. So group loan, which one is the last year, the 60%, has come down 47% within this year. Housing loan has increased from [ 23%, 24% ], and commercial banking has increased from 16% to 28%, including individual loans, which is graduated from group loan. And retail loan, 1.3% of the total portfolio to 1.6% the portfolio.
So we'd like to continue in this way to graduate and also expand to the other business. And accordingly, by 2025, we can be reached to microcredit portfolio, which is called the group loan, 26% from today, 47%. We are diversifying geographically. Bank has agreed on that the geographically expand the branches and across the country other than East. This year, we have also decided 530 branch will open, which is the 80% above will be other than East. That also helped us to diversify the book.
You know that a housing loan vertical, we are already working on that, the West and South. We are also expanding more of those branches in the South and North, which also helped us to geographically diversification of the portfolio.
Third point, banks are focusing on the retail business mode, not as a corporate business. So retail business more or less, other than housing, because of microcredit is the unsecured loan is more. So bank has decided on that how we can be like to strategically balance the secured and unsecured loan. So as of today, is in -- secured loan is in 39%. So bank has been decided by '25, it can be 46% of the secured loan, and 54% is in unsecured loan. And '26, we can be like to reach on that 50-50, secured and unsecured loan. Bank have been open in this year 329 new branches, means in the last year.
Next point on that, the bank are, as per earlier I mentioned also, we are investing for the transformation of IT system, including [ CBS ]. And also, we are developing in the digital banking. Focusing on that, how we can be provide the digital in the rural and semi-urban people with all respect of liabilities and assets. So that we are primarily -- we are working on that. All of our loans, including microcredit, we'll process, sanction, disburse digitally. And whoever the customer is possible, they are like to repay the installment by digital, they will be like to give also digital. And finally, graduation from the microcredit group to the individual that is also separately, we are like to develop time to time.
So this is the overall, all this the performance has come because our bank team are working very good, and they are very much committed. Customer intention to return back the money is very good. Altogether, I hope that has come into normal. And next couple of years, business will be also come to normal.
Thank you to all of you. I pass on this -- the next clarification to our CFO, Sunil Samdani. Then we'd like to go to question and answer. Thank you, Sunil.
Thank you, sir. Good evening, everyone. I just want to take 5 minutes of yours to run through a couple of slides, which I think is important.
First, starting with the DPD status of our EEB, which has -- which we've been tracking and monitoring ever since the pandemic hit us. We are glad to say that we have come close, very closely to the pre-pandemic levels in terms of delinquent goals.
Our 1 to 30 day DPD, which used to be -- which was 5.3% in December '21, has come down to 3% in March of 2022; 31 to 60 days DPD from 2% to 1.6%; 61 to 90-day DPD from 2.9% to 1.9%; and NPA from 13.7% to 7.8% in the DPD vertical.
What is important here is when we saw the turnaround in the third quarter, we saw the early delinquency bucket showed the bigger improvement. And in the fourth quarter, we are seeing that improvement across all buckets. Whether it's 30 -- 0 to 30 days, 31 to 60, 61 to 90 or NPA bucket. So that's heartening, and that gives us the confidence that future is good for us.
The other slide that I want to run through is the Slide #8 of our presentation, which talks about the stress pool and the coverage that we have against the stress pool. In December 21, we had INR 170 billion of stress pool, and we had estimated that we could recover in the quarter about INR 50 billion in addition to the provisions in the CGFMU recovery. We are glad to inform you that we have reached this INR 50 billion recovery instead of 2 quarters in 1 quarter itself. So that again is a good sign and gives us confidence that our customer businesses are back to normal.
And the coverage that we estimate as on March '22, that stress pool, which was INR 170 billion, has come down to INR 119 billion. And against that, we used to have a 54% coverage by way of provision, has gone up to 58.5% as of March 2022. The estimated recovery, though we've done phenomenally in the Q4, conservatively, we are budgeting for INR 30 billion for the next 2 quarters. The CGFMU recovery remains constant, and as always, we don't want to put a guess on what will be the quantum of Assam Relief Fund. But what is important here is despite not considering Assam, we feel that we have enough coverage to cover our entire stress pool.
So these are the 2 important points that I wanted to mention here. Happy to take questions. Thank you very much.
[Operator Instructions] The first question is from the line of Kunal Shah from ICICI Securities.
Yes. Congratulations for a good set of numbers. So firstly, you've highlighted that with respect to this credit guarantee, it will start applying from first of April. So if you can just let us know in terms of what is the status and this entire CGFMU recovery of INR 2,500 crores, when do we expect it to come through?
To come in this financial year because we will be interacted and engaged with the CGFMU. So the process that we have is the institutions can claim only once a year. So with that being the case, this should come in 2 installments. First, the 50% of this -- close to 50%, around INR 1,200-odd crores in this financial year, and the balance in the next financial year.
Okay. But we have not started. So in terms of like, we will do it towards the end of the fiscal? Or when should we expect this INR 1,200-odd crores to come in this particular year? Sorry, I missed the earlier part. Yes.
So this year, as I said, we can do it once a year. So we should do it in -- by the end of this quarter, and we should expect in the first half this entire money to come in, the 50% piece of it.
Okay, okay. Sure. And secondly, when we look at it, overall, the growth was primarily coming in from the bulk deposits, retail was more or less flattened [indiscernible] not that much of a growth related to the loan book growth. So how should we look at the overall deposit mobilization given the rising interest rate scenario? And what would be our stance in terms of increase in the rates over a period year?
So clearly, we are not worried about the deposits. The growth that you see in the bulk deposits is largely to do with the seasonality. You will always see Q4, the bulk ratio at the highest level because our advances grow at a much faster pace than a pace at which a retail deposit can grow, and that is one of the reasons.
The other reason is, if you see our rates today, we are as competitive as any other bank on the deposit rate side. And typically, the first quarter is relatively muted vis-a-vis the Q4 of the previous year, so we are confident on our deposits. Interest rates, clearly, you should not -- it's a market-driven factor. We have -- if deposit cost goes up, the lending rates also goes up.
In fact, on the fixed rate loan, which is largely microfinanced for us, we have already taken an increase of almost 150 basis points last September. So the benefit of -- the full benefit of that should accrue in this financial year, and the rest portfolio is anyway linked to the variable rate loan. So we don't see a challenge there. One, on the deposit mobilization side, and two, pricing our deposits competitively in line with the market side.
Sure. And now with many of the MFI, they are raising rates given that margin cap is not there. So does that also provide us with more flexibility and we were much lower than that, but still would that provide the flexibility and would we also have a stance to increase it? Or it will be based on our pricing and deposits? How would you think that stance?
So clearly, it will depend on our deposits, our funds and our credit costs. So with credit cost stabilizing, right, the factor here is only the cost of deposits day. SO depending upon how that moves, we will take that decision.
The next question is from the line of Saurabh Kumar from JPMorgan.
So on your point of INR 5,000 crores of recovery for the quarter, if you see the stress book is down by about INR 5,100 crores from [ INR 170 billion to INR 119 billion ], and it's a write-off of INR 20 crore, so shouldn't the recovery be [ INR 30 ] billion for the quarter?
Comparing like-to-like, right, when we are comparing [ INR 170 billion ] as of December, there as well, we had a INR 12 billion write-off. And post that, it was [ INR 170 billion ], comparing like-to-like. And in any which way, if there is a write-off, it has a corresponding effect on my provisioning, the positioning balance also comes down. My PCR -- so if you look at holistically whether the provisioning coverage, the PCR ratio, the credit cost and the coverage on the whole, it is a positive move.
No, it is a positive. I'm just trying to understand the collection from this EEB stress pool would have been [ 30 ] instead of [ 50 ].
Yes.
Okay. Understood, understood. Okay. The second is, sir, I mean, on this provisioning, you could have chosen to make some more standard asset provision during the quarter. So what is your view on the buffer provisions, which you want to keep?
If you see, during the quarter, we have taken additional asset provisioning because if you look at our NPAs, we have come down substantially. So if we have not taken the additional standard asset provisioning, there would have been a negative credit cost in the quarter. So we have buffered our balance sheet. Our ratios across have improved, whether we call it PCR or we call it coverage against the stress pool, whichever way we look at it. So that is absolutely what we look at, and we have taken the adequate [ provisioning ].
Okay. And lastly, from a next year perspective, I mean, your historical normalized number used to be 1.7%, 1.8%. So how should we think about? Would you now buffer up that number going ahead? How should we think about the normalized provision [indiscernible]?
So we had given that guidance even in the earlier quarters, that on a steady-state basis, we look at 200 to 225 basis points, so about 2% to 2.25%. Actually, what we say is 2% plus or minus 25 basis points at the regular credit cost going forward. And having said that, we would continue to add buffers, depending upon the -- so that can add to that. On the whole, with buffer, it could be slightly higher.
Got it. And just one last question, sir. What is the PSLC income for the full year?
For the full year, PSLC was...
INR 658 crores.
The next question is from the line of Rahul Jain from Goldman Sachs.
Just a couple of questions. First on the slippages during the quarter. So the math suggests that it was about INR 1,900-odd crores. Is that a correct number?
If you look at bank as a whole, the gross slippages number INR 13,065 crores, of which the EEB gross slippage is INR 11,081 crores. The gross recovery and upgrades is INR 2,395 crores. And in the EEB, the recovery and upgrades is INR 2,204 crores.
Got it. And Sunil, just on the slippages bit. Generally through the year, the individual book, which where you sort of have -- sort of increasingly focused, how the asset quality trends are playing out there? Can you give us some sense?
So individual book clearly is much better than the group loans. So there, the asset quality is much lower than the guided credit cost that we are doing. It is much in fact half of it. There, we don't see an NPA beyond [ 1%, 1.5% ].
You mean NPA or the loan losses?
The NPAs.
Rahul, quality of the individual loan because of the very graduate customer from the group, and they are very good, better than the group.
Okay. Understood, sir. And sir, if you look at the total EEB portfolio, what percentage over time can potentially move to individual? And when you look at the basis the new RBI norms on MFI, what percentage of the book will be comfortable with INR 1 lakh of ticket size, assuming 50% of the loan-to-income ratio?
You know that the process-wise, we have started 2 years before, graduate from the group to individual because their primarily income has been increased. And since the family income 2 years before, we [indiscernible] status from the credit bureau, not only microfinance, non-microfinance, which is now RBI has come for micro [indiscernible].
So at this point of view, we are on the very speedway, we are making on that. And we need it, it's needed on that because if I go to this -- the lending to this people, I should we also see that the not only [indiscernible] check will be needed. So that is a good way to grow the last mile connectivity by the industry, and Bandhan is also the part of that to grow it.
Second point on that, because of the income level now, RBI has been suggested. But 2 years before, we have talked to all of you on that. How long I can say that this customer will be the microcredit customer? Is it 20 years, 10 years, if they have not income increase? So I can -- then, I have been not contribute anything there life. So if their income increase, why not they will be graduated to the MSME, graduated to the agri business? They will come back on that.
For that reason, we are started it now. If you see that 24% of our group loan are [ combated ] in an individual loan, which is last 2 years, but naturally lasted 2 quarters. So I hope that it will be like to make it gradually in this way. 50%, we can be like to make another 2 years.
Got it. That's helpful, sir. Sunil, one or 2 last questions. The previous question from Saurabh on the standard asset provision, you said you have taken it in this quarter. Can you quantify what that number is? And next year, fiscal '23, do you plan to build anything over and above this 200 basis point of guided credit costs that you've given?
I'll give you the exact number just during the call.
Sure. And then just one last bit. In terms of diversification...
It's around INR 225 crores. Sorry, I just got that number. It's about INR 225 crores.
Okay. That's the standard asset provision that you've taken in this quarter.
Additional, over and above required.
Okay. And just last bit on diversification point, which sir talked about. Of the MFI book individual plus non-individual, can we get the latest figures of East and the bifurcation between east, west, south, et cetera?
So this you want to know for EEB or the bank as a whole?
EEB.
So West Bengal -- if I have to give you the top 3 states, right, my total EEB book is INR 62,400 crores, West Bengal is INR 25,315 crore, Assam is INR 5,812 crore, Bihar is third at INR 6,957 crore, and UP is fourth at INR 5,320 crore.
Got it. Wish you all a good luck.
[Operator Instructions] The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
Congrats on the great quarter. Sunil, I just want to confirm some numbers that you gave. So you said 13.6 -- INR 1,365 crores is the gross slippages and upgrade is INR 2,395 crores, right?
Yes. And this does not include write-off. These are upgrades and recoveries.
So the net reduction is possibly about INR 1,000-odd crores, and the technical write-off separately is about another INR 2,000 crores, right?
Yes. And the -- yes, that's right.
Okay. And on the EEB book of INR 66,000 crores, how much is West Bengal?
So we just discussed that number. So the total EEB book post write-off is INR 62,400 crores, of which West Bengal is INR 25,315 crore.
INR 25,315 crore. Just 2 questions from my side. The first one is for FY '23, what is the kind of loan growth that you are expecting for the bank? And specifically, if you could talk about the group loan and the housing loan, what is the kind of loan growth you're expecting for the bank as well as these 2 segments?
So we are looking at 20% to 25% at a bank level, and housing is also expected to grow, in fact our internal target is to grow faster and in the bank -- overall bank average.
And the group macro?
So that put together will be growing in line with the [ pan-bank ] average.
Okay. Got it. And my last question is, can I get the restructured book for the housing segment? And what was the yield for the housing segment this quarter, excluding the IBPC book?
On the yield side, just a minute, it's about almost 10%, 9.99%. 10% yield on housing.
Okay. And this excludes the IBPC, this one, right, because that is a much lower yield.
Yes.
Okay. And the restructure book for housing?
So the -- excluding the book, which has come out of restructuring, it now stands at INR 528 crores. So there is about INR 475 crores, where the restructuring -- in fact, if we talk today, everything is out of moratorium. But as of 31st March, INR 528 crore was still in moratorium, while INR 475 crore came all 6 months back. So as of today, everything is out from moratorium or restructured.
By that, we mean it's still part of the restructured book, but they have to start paying? The payment moratorium has expired, but it's still like restructured, right?
Yes, because that's the regulatory requirement that once you do a restructured loan till the time the loan remains in your book has to be classified as restructured, standard or otherwise, if the classification changes.
Excellent. Just one clarification, Sunil, to a comment that you made earlier. So on the micro book, you said you have taken about 150 basis points of hike and the housing book is anyway on floating rate, so your underlying observation is that even if rates were to rise on the funding side, you should be able to hold on to your earnings, all other things being equal, right?
No. Microfinance is a fixed rate. So we should be able to maintain our NIMs. But that depends on which NIMs are you looking at, right, because Q4, because of the big recovery that we see on the NPA pool, it is higher. But yes, if you look at the full year, we should be better than that.
Okay. Got it. And as far as this inflation impact on your micro borrowers is concerned, especially in the non-agri segment, is there anything that you wish to highlight at least from the cash flow serviceability point of view?
I don't think inflation has -- we've seen an impact of inflation so far on our customers. Historically, also, we've never seen inflation as the major issue as far as microfinance customer goes. And so far, we've not seen any impact.
Okay. Great. Wish you and the team all the very best for the rest of the quarters.
The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Funds.
Firstly, this EEB book, right, that is INR 62,400 crores. Now, what is the tenure of this book? How many -- what proportion of the loans are 1 year and what portion of the loans are 2 year maturing loans?
[ 60% ] loan are 2 years, 40% loan are 1 year.
Okay. And would you also -- can you give the breakup of how many of them are first cycle, second cycle, so on and so forth?
We don't have it handy because we've -- for the last many quarters, we've not been discussing these loans. So we'll check that, and we'll share it with you.
The next question is from the line of Adarsh Parasrampuria from CLSA.
Sunil, just wanted to check, could you just give the breakdown of the other income, all income excluding the NII? You did mention the PSLC income, but if you just break out the INR 2,800 crores.
Very difficult to give a line by, but I can give you the top 3 contributors, which will anyway be 80%, 90% of the total fee income. So the highest, of course, is the processing fee that is linked to the disbursement. So that for the full year was INR 848-odd crores. And the third-party income, the third party distribution income is the third largest, which is at INR 347 crores.
Got it. And just...
The next piece is the bad debt recovery. This quarter has been a good quarter for us, so recovery from bad debt is INR 388 crores.
This for the year?
This is for the year.
Got it. That is useful. And PSLC income of INR 660 crores was made on what kind of sell-downs of certificate, like, what's the underlying quantum?
So we didn't sell anything under the micro portfolio because of the [indiscernible], so these were largely other PSLs and [indiscernible].
And would you now do a little bit more of PSLC sell-down? You would have excess, right?
That clearly depends on what is my excess and how we tend to use it because the option to us is IBPC or PSLC depending upon where we get the better yields.
Got it. No, I was just asking this because there will be demand in 1 or 2 years from the large bank merger, so I just wanted to check if that -- you do have more scope in the P&L to do that. And my second question is, could you just give the slippages and recovery upgrade numbers for the full year?
Yes. So for the full year, if you look at bank as a whole -- or should I talk about EEB?
You could give both, Sunil, if that's okay?
So for the bank as a whole, the gross slippages was INR 9,430 crores. I'm talking about bank as a whole. Recoveries and upgrades was INR 5,561 crores, and write-off was INR 3,247 crores.
And EEB? The same numbers in EEB?
For the full year, it is INR 8,134 crores, the gross slippages. The recoveries and upgrades was INR 4,487, and the write-off was INR 3,244 crores.
Perfect. This is helpful, Sunil. And lastly, it was asked, but let's say that the fourth quarter was great, so you do have momentum on collections now. If credit costs undershoot in the next 12 months in terms of the [ 2, 2.2 ] number that you guide, would it be fair to say that a lot of it could be used to like just build up the buffer?
Yes.
The next question is from the line of Kashyap Javeri from Emkay Investment Managers.
Mr. Javeri, there's a lot of background disturbance from your line. May I request you to move to a quieter area and ask your question.
Sir, there's a lot of background disturbance from your line...
I'm actually traveling right now. Just one question from my side and a data point. In the recovery that you had during this quarter, what was the interest income that was recognized on those recoveries during the quarter? That's the only question I have.
Mr. Javeri, I'm sorry, I don't have that number handy. I will have to come back. You can take from us offline.
The next -- before we take the next question. [Operator Instructions]. The next question is from the line of Param Subramanian from Macquarie.
So I wanted to ask, on the restructuring book, what proportion is still under moratorium? Because you mentioned some amount would start coming out of moratorium from -- in fourth quarter and first quarter. And what is the accrued interest on the restructured book per the EEB vertical?
So 50% of the -- roughly plus or minus 1% or 2%, it can. But roughly 50% of restructured book will come out of -- had come out of moratorium starting first of April, and the rest will start from first of July.
Got it. That's helpful. And what's the accrued interest on the restructured book?
Accrued interest on the restructured book should be around INR 800-odd crores.
Got it. Sunil, one more question basically on the new MFI norms. I wanted to ask a number of the MFI entities are talking about slowing down disbursements in the first half until the credit bureau, et cetera, aligned to the new norms, basically on calculating household income.
So firstly, how are we placed on these new norms, which we are looking at it? Of course, applicability is a different thing for us, but are we looking to slow down the disbursements? And what proportion of our book would be in line with this 50% EMI to household income cap? Yes, that is my question.
There is 2 factors in here. One factor, always after the March, April disbursement has come down. This is normally first to 15 days, there is no disbursement that come. This is a normal nature. Second part on that, I mentioned earlier, we are really practicing this household income [indiscernible] in our graduation loan 2 years before, and it is practical. So in that sense, we have not much more time to transform to the new system. This is going on to us, and we are not wait for 1 month.
So essentially, what we are saying is when we started this individual loan product, we were looking at family income. We were looking at family credit bureau. So there is a process which is already running for our individual loan process. Of course, that book is smaller, the size than the group loan. So to that extent, the volume will be much bigger. It took us 2 weeks to start that process on the ground and we've then -- since then, we've been doing it.
Congratulations on the good quarter.
The next question is from the line of Abhishek Murarka from HSBC.
So my question is again on these new norms. Now, you said that you are already practicing this over the past 2 years. But what I understand is some part of it is also dependent on external agencies, like credit bureaus being able to give you the information. And some of the participants have called out that the bureau itself is not ready with that kind of information about specifics about the consumer and the household. So how are you bypassing that? And I mean, you're able to get that information and have that information without the help of the bureau?
So it is -- you're right, how you read it is important. So there is no one report for the consolidated family record, both on the micro and on the inside. So what we do and our arrangement with the credit bureau is they give us a separate report on the -- for the husband and then for the wife. But within that, they give us both the micro as well as the consumer. So we'll keep 2 reports instead of 1, and accordingly, we proceed. And that is what we've been doing for our individual loans.
Okay. And have you -- what kind of observations do you have on [indiscernible]? Is there enough headroom to give large ticket loans? Or do you have to increase the duration of the product to accommodate it? What has been the experience? Because you seem to be ahead of the curve in practicing this?
[indiscernible] we are also practicing in our individual loans, 50%.
So all the customers, they have enough headroom in terms of that 50%.
No. That cannot be like to commented now, but [indiscernible] another quarter will be passed in time [indiscernible].
So let me give you a data point. We used to be 50-50 for 2-year loan. That ratio is now 40% to 60%. 40-60, right, if that helps. Okay.
40-60, sorry, what was that?
So 40% is 1 year, 60% is 2 years. Earlier, it used to be 50-50.
Okay. And are you also planning to introduce longer tenure loans, maybe 3 years or longer? Just to reduce the EMI?
That we will have to see. Once we have -- it is just there, right? It's only a month. We will have to see whether we are able to fulfill the customer requirements or not. And then we will have to take that call. Whether we are comfortable, that is comfortable, and then we will have to take that call.
The next question is from the line of Rahul Picha from Multi-Act Equity.
My first question is on Assam collection efficiency. So when I look at the collection efficiency in Assam for the month of December, it was 96%. And for the month of March, it was 98%. While for Q4 average, it was 93%. So why is there a dip in the average number? I just wanted to understand that.
Yes. So it is not a dip, right? If you see the average has improved by 2%. So yes, you're right. So if you assume that December was the base and then it has to improve, then yes, you will find it as a dip. But if you see on a month-on-month basis, there has been an improvement.
Yes. For the quarter, there is an improvement, but I was just thinking that from December onwards, our collection efficiency trend should have been on the upside. So in Assam, was Jan or February a bit challenging? Any qualitative insights on that?
No, not really. You will always see the last quarter of the month will have the higher collection efficiency. So that has been the trend.
Okay. Okay. But the average for the quarter being 93%, it kind of also implies that probably Jan, Feb would have been even under 90%, right?
No, there are 2 things here, right? One is the recoveries from NPA. So as the quarter progresses, the recoveries improve, right. Second is the write-offs that we take. That also gets impacted, only the March number and not the full quarter number.
Okay. But these collection efficiencies don't include the recovery from the NPA pool, right? The geographic collection efficiencies that you have given? Or is it included with this?
No, this geographic is excluding NPA.
Yes. Okay. So that would have been, I think, primarily impacted because of the write-offs?
Yes.
Okay. And sir, second question is on the restructured book. Like a part of the restructured book would be out of moratorium starting first April. So how have the collection trends been in that book, if you can qualitatively give some color on that?
So we -- we don't want to give a forward-looking number, but we've given the collection status on our restructured book as on 31st March right? So it can't be very different there.
Okay. But as of 31st March it was still not out of moratorium, right? So...
So that's what I'm saying. It can only improve. It can't deteriorate.
Okay. And sir, my last question is on the steady-state credit costs. I think a little while back in the call, you said that you expect 2%, 2.5% kind of steady-state credit cost going forward. So was that on the total book or only for microfinance?
So that's on the total book.
The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
I just have 2 questions. The first one is for the housing book, can you share what is the average ticket size?
815,000 on outstanding.
No, no, on disbursement, on disbursement.
Suresh, do we have that number? Suresh?
Yes. It is close -- the incremental disbursement is the range of 13.5 lakh, is the average ticket size.
13.5, okay, for the year. Okay. And for the individual micro loans, what is the average ticket size and yield?
Average ticket size 115,000 [indiscernible] on disbursement basis. And I would like to say that...
Yield is the same as group loan, 19.5.
Okay. So if the NPA on the individual book is only 1% to 1.5%. And if I assume credit losses also in a similar range. With the higher ticket size, from a pure micro book perspective, this should be ROE accretive, right, as the mix shift towards individual loans?
Yes.
[indiscernible] sizeably accretive, right?
No, no. See we don't expect micro group loans to have a similar credit cost like what we had last financial year, right? So we expect credit cost there also to improve. So -- but clearly...
No. I mean even if you assume the credit cost to be about 225, 250 basis points for the group loans and this is only 100 basis points lower, with a lower cost income ratio and a higher ticket size, the ROA should actually be materially higher, right?
Yes, it will be higher. I don't want to put the adjective to it. But yes, it is higher.
Okay. Okay. This is enough. Wish you all the very best.
Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Sunil Samdani, CFO, for closing comments.
Thank you, ladies and gentlemen, for your time and patience. Thank you very much.
Thank you.
Thank you. On behalf of Bandhan Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.