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Muthoot Finance Ltd
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[Audio Gap]I have with me Mr. Oommen Mammen, our CFO; our -- Mr. K. R. Bijimon, our Chief General Manager; Shanthi, our Finance [ VGM ]. Instead of Mr. George M. Alexander, who is actually listening on our call, is Mr. George M. Jacob, who is also an Executive Director who is at present here with me. So having said that, going forward, you will have seen the numbers. We are quite upbeat that the -- our total AUM has -- the multi-finance as well as the subsidiaries have crossed the landmark figure of INR 40,000 crores, and also, the all-time high of gold loan portfolio of INR 35,171 crores in the gold loan business. These things -- these 2 sales on the peak, and definitely, we are quite pleased with that. Along with that, our numbers also -- the consolidated profit of INR 5.63 million and the stand-alone profit of Muthoot Finance of INR 530 million. They're also quite heartening. So in these difficult times, in these difficult times of fund availability, Muthoot has been able to grow its core loan portfolio in this quarter also, so the quarter growth has come. The funding for that has come mainly through our issue of an NCD. We did an NCD issue of about INR 800 crores in Muthoot Finance. And also, our subsidiary, home finance, also reached INR 300 crores. These 2 were the NCD funding which you received. Of course, we get around INR 600 crores approximately of collections every quarter. So with these, we were able to manage the gold loan growth. The gold loan growth has been quite good. There is a quite good demand, and the price of gold is also high so that it strengths our collections. So things are favorable, and we should see good growth going forward also. But sad to say that the banking system has different -- maintained [indiscernible] existed. And they are not actually releasing one additional funds to Muthoot. Of course, nobody has been drawing any money, any line -- correct lines, but new funding is not coming. Of course, they're all saying the same excuse that their exposure to NBFC is high, et cetera. In fact, I've been talking to the -- once or twice, I've talked to the RBI. [indiscernible] up also to see that the -- to request for a separate classification for gold loan NBFCs because now we are also classified with the -- all the other NBFCs, especially with regard to NPA as well as liquidity or ALM. Both these are mostly favorable for gold loan companies. As you know, for us, NPA is not an issue. We have never lost even INR 1 because of an NPA over the last 20, 25 years. And the liquidity is always -- has been very good for NBFC because all our portfolio in the last several years, 61% of our advances come back in 6 months' time. So the collections are very good. Every month, we get 60 billion or 600 -- INR 6,000 crores of people coming and taking back their gold and INR 6,500 crores of people being lent money. So that is the final cost of growth, which we saw in the last 3 months also, month-on-month. So liquidity has never been an issue. Whenever we have issue for [ green ] NBFC. But what is definitely required is growth capital. Towards this end, we are planning NCD issues both at the parent level as well as one of the subsidiaries. Probably in this month and next month, we should see some of the NCD issues, [indiscernible] NCD issues coming out. That should bring us some more capital. Now all the capital which will be used is for the gold loan growth, which is good. It's good potential. So subject to availability of funding, et cetera, we should see a minimum 15% of growth in the AUM both in the gold loan business as well as in the other subsidiaries this year. And if things are better and more funds are forthcoming from banks, et cetera, we can expect maybe 15%, a little more than 15% growth, probably somewhere between 15% to 20% growth this year in AUM. But again, a lot depends on how -- RBI is expecting the banks to open their purse strings to NBFCs. At least to the good NBFCs would be fair, we agree. We are definitely in talks with the -- all the banks. Probably, we should see some more funding coming from the banks in the next 2, 3 months. So with that positive note, I think I will have an end here. And as usual, we prefer that we answer your queries and questions, et cetera. But okay, thank you very much for supporting the company, all the investors, portfolio [indiscernible]. Thank you definitely for supporting us because probably in the end, many of you people would have bored on it or have cut off, so now everybody is there. So definitely, thank you all for supporting Muthoot all through these things. Thank you.
[Operator Instructions] The first question is from the line of Ashish Kumar from Infinity Alternatives.
And I think you had described that the challenges in terms of environment pretty well. Just wanted to check with you on one thing, which is in terms of your NIM coming down. Given the fact that there's such a lack of liquidity, did we think about increasing our interest rate mark pricing so that we could maintain our NIM yields? Because our NIM yields seems to have contracted significantly over the last 1 year. What's the strategy to kind of get back to historical levels?
So in the first quarter, the growth was not uniform. So the amount of selection and [ build ] remain. We didn't see much of a growth happening. Afterwards, we started growing. So probably it is -- partly is due to the averaging effect. And also, we had started a low rate scheme. So which -- in between, we do these kind of schemes, so probably because of that, there is a lower yield coming on this quarter. But again, these [indiscernible] doesn't have a long-term impact. No, because of more like a [indiscernible]. And the differential also is not material.
So would it be fair to say that, that what yields we saw, let's say, in the first half of FY '19, maybe in the next couple of quarters, we can go back to those yields in terms of specifics, sir?
See, yields of a -- yields or net interest margin?
Net interest margin, that's what I mean.
Net interest margin, we will see around 12%. 12% is still -- it's too good. 12% plus or minus 0.5% is where we -- or plus or minus 1% is where we should be looking at. I think we will -- we are able to maintain that whatever will be the circumstance. For your information, it's not difficult for us to pass on any increased borrowing cost to the customer.
Okay. And in terms of this lack of liquidity, is there any thought process of diverting capital, which you get to the gold loan business? Because, obviously, that the businesses are not as profitable as gold loan, and you're seeing a larger growth.
So first of all, let me tell you, there's no liquidity effect. So as MD explained, it's more about the growth capital, which is not forthcoming as was earlier.
Yes. But what I meant was the incremental growth, incremental capital -- growth capital which is available. Do you think that all of this will be in the gold loan rather than the other businesses? Or what's the thoughts around that?
So other businesses are done in the subsidiary, so they raise funds from -- on their own way. So whatever is available for Muthoot Finance, we will do it here. Other businesses, we have started not with -- well, from a short-term view. It is -- we should see those businesses from a medium- to long-term perspective. Obviously, when we started the business, we knew that we are not going to get the same return on asset as we generate on our gold loan business.
Right. And just squeezing in a last question. Does this -- do you have also approval a $2 billion MTN program for foreign currency borrowings? Any time line as to by when you can start getting money from the offshore capital?
It's an enabling [indiscernible]. So we look at various modes of fund-raising. We will know -- as and when it is required, we will do it.
Next question is from the line of Christine Rowley from Sloane Robinson.
I just wanted to follow up on the previous question. I noticed this quarter that you let the lending yields slip a bit, and I totally take on board your comment about the loan book growth being slow until after the elections. In the past, the company has earned very high margins but had very slow AUM growth. And I noticed this quarter that you added 7 tonnes of gold into your lockers, which is about half the total accretion in gold that you added in throughout the whole of the last fiscal year. And I think it's a real debate in the stock market as to whether Muthoot, whether the -- whether your financial investors would like to see the company or whether you guys, as family shareholders, would like to see the company grow relatively quicker, I'd say, in the 15% to 20% range with slightly lower margins, or have very high margins like you earned in the period '18 -- '17, '18, '19 and have slightly slower growth. And I'd really like to explore and understand with you, if possible, whether the company is making some changes with respect to your pricing strategy on the gold loans, to say, "Okay, well, our margins might not stay in the 14% range. They might be more in, say, the 12% to 13% range, but our asset growth will be quicker." And it would be helpful to understand if there's a change going on in the company's outlook because I've definitely noticed in the last 2 quarters a return to growth.
Yes. Thank you. We have returned into growth, as I told you. Yes, growth will happen. We expect about 15% growth for the AUM, the gold as well as to the other things or -- and other subsidiaries also. So that's a given. Regarding yields on NIM, I think we always try to maintain the 12% NIM. So sometimes, 1 quarter it may go up 1%; it may come up -- down [indiscernible]. It's just the quarter variances where it varies. But otherwise, we try to maintain the 12% NIM. That's [indiscernible] where we know what's good for the company and shareholders also.
I agree. But it's just notable that in the last 2 fiscals, you achieved -- the company achieved, because of the circumstances in which you operate in, a 15.29% NIM and a 14.47% NIM. So I don't know this. Along the lines of the previous questioner was expect -- the market is expecting the company to maintain a high -- much comfortably well above 12% NIM and operate with slower growth, or maybe give way a little bit on NIM back into the 12% to 13% range, but have the company offer a product to its customers which is very compellingly priced and enables you to grow more quickly. It feels to me like there's a little bit of a change going on.
Christine, so if you look at the yield for this quarter vis-à-vis last year, the difference is about 50 basis points. Now we attribute this to 2 reasons: one, because of the averaging effect; and second, there is a low rate scheme which was done during last quarter. And if you look at the return asset, there is a decline of around 50 basis points. In our assessment, these are all normal, variations happen on a regular basis. Sometimes it can be higher by 50 basis points or some 50 basis points, can be slightly lower. The point here to be noted is that we are currently generating a return on asset much higher than what we have guided to the market. So we have been guiding about 4% on a medium term. So currently, we are generating a return on asset of almost like 6%, which is fairly good in this kind of a market. And because we have short-term loans, any time we can look at reviewing all these numbers in terms of increasing the rate or reducing the rate and we periodically do this in different geographies, different schemes at different points of time, so sometimes, there'll be penalty at due, exact fine-tuning in terms of the overall yield to be achieved. So that can be slightly higher, slightly lower. I think that explains the reasons for the variations in the yield by about 50 basis points.
The next question is from the line of Nirmal Bari from Sameeksha Capital.
Yes, sir. My first question is on the incremental cost of borrowing. If you can give the incremental cost of borrowing and also the segment-wise incremental cost in terms of what is in inventories versus in bank borrowings.
So I think about the activities and bank borrowings, there is a 100% increase -- 100 basis points increase from last year.
Okay. And in terms of this liquidity situation, particularly after the budget announcements or anything, is there any change that we are seeing from the bank's perspective in terms of lending more to NBFCs, or being more forthcoming with giving new credit lines? Or there's no change?
There is change. Banks are giving credit lines to NBFCs, but they are being taken by the -- we have 2 NBFCs: Power Finance Corporation; [indiscernible] corporates, et cetera, they are making it. And what little is left, NBFC is getting. Not -- no other NBFC is getting money from the banks.
Okay. And sir, this medium-term note programs which were having on a cost analysis on what kind of borrowing cost do we -- would we expect there?
So as I said, this is an enabling resolution taken by the Board. So as and when we decide it, we can have brief you.
Okay. And finally, on the growth targets for our subsidiaries. So what are the current year -- what kind of growth are we expecting in the current year for home finance, for vehicle finance and for microfinance subsidiary?
Yes. Yes. So we have about INR 4,500 crores, INR 5,000 crores of portfolio -- INR 4,500 crores of portfolio in the subsidiaries. So we'll see that there may be 15% growth in those things and also a 15% growth in the Muthoot Finance gold loans.
Okay. And sir, the same gold price increase, so what steps are we taking to ensure that in case the gold rate starts falling, we are not at a higher risk of -- in terms of probability of default and all? If you can talk briefly about that.
Okay. First things first, the -- just because the price goes up or the price goes down, the customers don't decide to abandon the gold or take more loan to that. So it is not price dependent. It is the requirement of the customers. Second, we take only ornaments, which are adding not only the gold value plus the summation charge, the gold's sentimental value, et cetera. But having said that, whenever there is a price increase, we take only this 30 days' average price to determine the loan-to-value. So the gold price is going up by 1 day, the rate of [indiscernible] doesn't go up because of our 30-day moving average. So that also takes care of that. So [ 35% ] margins is very good. But of course, we always have to have the discretion of not needing to lend fully also. So that is the question which management you should take. And until now, we have not had any issues because of that.
The next question is from the line of Parag Jariwala from White Oak Capital.
Yes. So I have 2 questions. One, as you indicated in the beginning of the call that no NBFCs are getting pricing and the market looks relatively tight. What is the reason to start newly linked products? As the CFO mentioned that it was part of the reduction in the overall NIM. Is this mainly because we have also started short-term or a lower-yielding product? That's the first question. And the second question, you also can give us some number into -- in the sense that what has been the increase in the borrowing cost since the IL&FS has alluded late September onwards as the borrowing cost increase? And how much we have passed on in terms of -- by increasing our lending rates?
So the increase in borrowing cost, I think I told 2 or 3 times. It is 100 basis points in the last 7 months. That is after the IL&FS of the NBFC fiasco. It's almost 100 basis points. And we have been able to pass on the whole thing to the customers. Then your question about the high-yielding products, low-yielding, well, these are all schemes which we definitely do to keep the customers and the staff enthused. That has -- there were some changes. Sometimes you go [indiscernible] sometimes you do plain [indiscernible] Sometimes you go [indiscernible] subject to -- you have to keep changing and do something. That's nothing more -- nothing more than that. So [indiscernible] you want to deliver [indiscernible] you want [indiscernible] you want plain [indiscernible] you want [indiscernible]. You have to do those things always. So it happens that way. Nothing more than that. So we'd like to maintain our yield always.
Okay. Okay. So okay, so you are trying to indicate that this is just the normal business per se [indiscernible]
Yes. Yes. Yes. Keep your customers and your staff. They should have something to walk in front of a bank, which is already gold loan at the 4% and 10% of companies operate which offering a 21%. So you should have something -- we should have something [indiscernible].
The next question is from the line of Antariksha Banerjee from ICICI Prudential.
,Yes. Sir, so one -- firstly, following on from the previous question, it says, so how much would the lower rate -- whatever the high-ticket loans form a part of your overall gold AUM right now?
Very insignificant. Nothing very substantial.
Okay. Over time, rating is also -- if you compare your Y-o-Y average ticket size, which you mentioned in the press release, that has gone up by 9%. And so, of course, the gold price has gone up more. So the question on LTV is more than what it was before. But do I see that as -- I mean, ticket size going up, is that like a lot, I mean...
Customers have inflation, so what you want is for 30% to be sustained here. The 9% is the annual inflation India. That's our summary. Who is borrowing [ INR 40,000 ] will borrow 8% to 9% more always. That's nothing more than the inflation.
Okay. So your customer granularity on a run rate is also similar?
Yes [ I would say so ].
Okay. And in the stand-alone piece itself, this other loans part of INR 650 crores that you have, what is exactly that component?
INR 410 crores. So we have lent first to the Muthoot Money who [indiscernible] the portfolio subsidiaries, Muthoot Money as well as Muthoot Homefin. These subsidiaries, we need to support them until they get back [indiscernible].
Okay. So that is debt capital provided to subsidiaries basically?
Yes. [indiscernible].
Okay. And coming to our own borrowings, so we did some 12 months because of borrowing in this quarter to support this whatever [indiscernible] because of growth. How much borrowing is planned for this quarter?
I told you, we are trying to cover the 2 -- 1 or 2 issues, [indiscernible] issues, maybe [indiscernible] in the next 2 months.
Okay. And the rate at which you're getting bank borrowing at the moment, how different is it from short-term CPs you get from the capital markets?
Oh, that's quite -- CP market has -- CP market has significantly come down. So the bank rates -- though RBI have reduced the rate, but a lot banks have not started reducing the rate, especially for NBFCs.
But what about the availability of CPs? Are you getting enough CPs? Or you plan to [indiscernible]?
No, we don't want to increase the CP limit as of now. Currently, it consumes about 12% of our total book. We like to remain it as it is, currently where it is.
And from your March balance sheet, I see you've drawn out some cash on the books also. So are you going to maintain the INR 1,000 crore-odd level? Or is that more headway or [indiscernible]?
No, March -- well, what happens is banks also put pressure on [ availing ] the limits fully. So that's why the cash balance is that. But June, that kind of put pressure may not be there.
So the INR 1,000 crores will be stable from here on? Around about the same?
Yes. So there is some liquid cash always will be there in the system.
The next question is from the line of Dhaval Gada from DSP Mutual Fund.
Sir, just 3 questions. First is on the gold loan business, if the funding environment was normal, what is the kind of growth that we would have sort of seen? So I'm just trying to understand the loss of growth because of the current funding environment. That is the first question.
Okay. So we would still do the 15%, probably more funding exercise coming, probably it will go up 2%, 3% more.
Is that the loss of business that you would have seen in the first part of [indiscernible]?
What is gone is gone.
Okay. And the second question is around some of our competition, which is probably not the organized gold finance companies. But how do you see competition in this current environment and their positioning? If you could give some qualitative comments around it.
There is not much visibility on what these people are doing, but only what visibility we get is through our branches who says that some customers are going to this person; some customers are going to this person; some customers having loans from their [indiscernible]. But other than that, we also don't have any big numbers. But because there is demand for funding and that's -- some of the NBFCs, et cetera, are not really doing some funding, I'm sure people will be taking -- take the benefit of placing gold either with NBFC organized or unorganized to get money. So there is simply a shortage of funding in the market. And some people would be making it up through pledging either with the bank or with the NBFC like us, or will maybe definitely there are not resources. There is some fund shortage in the [indiscernible] -- in the economy, I think.
So would you agree that there is some market share shift that would have happened to us -- player like us? Is that something that you would see? Or it's not really true? The shift would be...
This is a scenario we have seen in the third quarter of last year also, but we have not seen a significant shift happening because this applies to all NBFCs.
Okay. The third question was, sir, on the operating expenses. If you could sort of give some comment around how do you see this sort of shaping up from here on. We've seen some sort of correction in the ad expenses, et cetera. So just some color around the OpEx line.
See, ad, et cetera, we have done the -- we covered some campaigns. We are leading the CSK, Chennai Super Kings campaign. All of these things are definitely [indiscernible]. These things we'll do come lump up in some quarter, some debt payments develop in the next quarter. That's it. Those are the lumpy expenses. Otherwise, it's all the usual and salary exercise.
Right. So sir, the overall OpEx to net income ratio, which, in the last 2, 3 years, we've sort of held it around a 30% level, do you think that is a normal range? Or we -- there could be some more efficiency that can come through?
I think 4%, 4.5% is the number which you should look at.
The next question is from the line of Amey Sathe from Tata Mutual Fund.
Sir, one question. Is it possible to understand is there any correlation between stage 3 assets or other NPLs vis-à-vis gold prices going up?
No, no, no.
Can we see some reduction in stage 3 assets because of that?
No. That can happen only if some people take the gold and then think of selling it. I don't know many people do that.
So Amey, as we explained earlier also, it's more like they give some extended time to these customers, which is quite positive for us in terms of the revenue vehicle and from a customer satisfaction point of view. So at different points of time, we give this flexibility. And we look at, certainly, the quality of the assets also we give a focus.
Okay. Okay. So -- and then the question was so -- on the impression was that if gold prices keep going up or keep rising in a gold prices scenario, stage 3 assets should not probably have much of a movement. But what we have seen is a slightly increasing that. So...
So the stage 3 asset movement of -- stage 3 which is actually NPA. And just because we have given little more time to the customer. What you see as NPAs is the [ INR 700 crores or INR 300 crores ]. It goes fully out of our books in the next 3 months. The next 3 months' time, we give to the customer. The new ones come next month. There is no loan which is outstanding like that in our books. So there's new ones coming. Some people are getting [indiscernible]. We are actually seeing at the most reasonable of NBFC because I can restrict the auctions of gold that we pay. There'll be no NPA. I don't need to answer these questions, but then customers would be really unhappy, and it's not a customer satisfaction, customer-centering business. So we just think like [indiscernible] as I said earlier, people have so much of choices, low interest to banks [indiscernible] level. They are [indiscernible] are coming to us because there is some flexibility also. So that's not [indiscernible] we are losing. We never lose INR 1 because of an increase. We have never lost INR 1 because of increase. Our credit loss is not because of NPA at all, so we have not lost money. We will get the full interest. If he takes it back, we get the most, 70%, 80%, 90% of interest if you auction those. But then otherwise, no loss [indiscernible] very good customer-friendly mission. If I'm very strict and harsh and we're very [indiscernible], they will think twice before coming to us. They pay high rates, maybe 18%, 19%, 20%, they'll come to us; whereas, it may be available at 10%, 12%, 13% from somewhere else. So this is the [indiscernible] which we are seeing. And like I said, perception of the customers -- the perception of customers is really important for getting new business. And that is the -- you will see that Muthoot has -- the next competitor is only 1/3 our size. Why? Because people still prefer to come to us. They have almost the same number of branches. They come to us because of these things, and that is always -- we never really lost one. It's always beneficial to us.
The next question is from the line of Shubhranshu Mishra from BOB Capital Markets.
My first question is with regards to the growth target that you're giving, around 15% of AUM growth. What is the anatomy of this growth? So how much are we getting from our core south market? How much are we expecting from the non-south market? How much from the present set of customers? How much are we going to churn the existing customers? If you can give a little more flavor to this growth number, I think it will be very helpful, sir.
Okay. So there is no core business in south, et cetera. Our Kerala business is only 4.5% of our total business, so there's no core. We are very well present in all the other states. So our loans are just for very short term, 4 and 5 months. So whether the business is coming from new geography, new customer again coming back, et cetera, we don't have any exact numbers of that. But generally, we know that a majority of our customers come back to us after 2 months again to [ place ] the same ornaments and they use it. So we get business from everywhere. So 15% is what generally we see a growth, overall growth. We see [indiscernible] expect in relation to just the full year.
No. What I'm trying to understand is that this 15% that you're getting, is it from -- how much of it is from the existing customer? How much are you churning the existing customer because it is easier to churn the existing customer with the same set of ornaments as compared to new customer where you'll take a longer period of time to [ assess ] the ornament.
No, no. Once we give back the customer the ornament, we have to again check it when he brings it back. [indiscernible] once we return it to him, we have to do the full checking once he returns it back [indiscernible]. So that advantage is not there. So they don't keep it with us after releasing. After releasing there, 99.9%, they take it back and give it back to [indiscernible]. So now they want it after 3 months, he comes again. At that time, we'll do the same checking. Maybe [indiscernible] will not do it twice, but the gold ornament has to be checked again.
Right, sir. And my last question, sir, is with respect to your average ticket size versus your loan accounts. Now your loan accounts have increased maybe around 8% to 9% over a 2-year period versus your average ticket size, which has increased around 15%, 16% on a 2-year basis. So what explains these differences?
So I just told the 2 questioners previously, maybe 78% increase in the AUM every year is that the inflation, sir. It is inflation. Someone who was getting 30,000 last year will require about 32,000 this year. That's just inflation.
[Operator Instructions] The next question is from the line of Piran Engineer from Motilal Oswal Securities.
Yes. Sir, congrats on the quarter. I just have one conceptual question to ask. So if in an auction, you get INR 100. And the outstanding loan, including P&L interest, et cetera is INR 90, do you have to return the INR 10 or do you keep it?
No. We have to return it to the customer. We return it to the customer. We have to, and we do it.
Okay. And just secondly, what is the core ROE that you're expecting in our housing finance business now given -- because I'm seeing in the last 2 quarters that, that has been on a decline. So...
I think it is too early to -- it just started 2 years only, 3 years only, so it's too early to tell on the ROE. Anyway, [indiscernible] business, we are [indiscernible] that business also. So we'll [indiscernible] definitely. But ROE, what we expect today and what we will be expecting, let us leave it for a minute.
The next question is from the line of Shiv Kumar from Unifi Capital.
Yes. Sir, just one question with regards to the recent regulation from the union government. They have barred banks from issuing those low-priced -- low-interest gold loans, which have been used as agricultural loans and which has been misused for nonagricultural purposes. Do you think now that the demand should shift to organized gold finance -- gold loan financing companies like you?
It was not a demand-based loan. It was just as arbitrage. Most of -- majority of the people used to take this loan -- the gold [indiscernible], he comes and goes to the bank and gets it at 4% and probably deposits the same money in the same bank for 8% and [indiscernible] year-on-year. Everybody is happy. Banks, deposits has gone up. Agricultural advance has gone up. Everybody is [ happy ]. There's only one person that lose their interest, that is, I think, the government of India. So that is stopping it. These are not actual loans which people request. They only request -- they have a lot of stories here also. Some of the [indiscernible] in fact, [indiscernible] is having the maximum agricultural loans.
Sir, and one more structural question. We see that the loan growth has been very strong. But on the other side, the economy is under a cloud, especially in the SME segment. So how do you see things going forward when you say you are confident of sustaining the 16% AUM growth?
The gold loan is a bridge finance, generally a bridge finance. When somebody's bridge finance is not forthcoming quickly, instead of 1 week, it is taking 2 or 3 months or 4 months, they resort to a gold loan. So as and when the -- when there is more requirements, the availability of credit in this is very slow or slow in forthcoming, they resort to gold loans because [indiscernible] requirement through a bridge loan. That is what is usually a gold loan. So as and when they're not getting the money with the payments which have locked somewhere or the bank funding which is the bank in which it's held up or delayed, they will tell you they will return this. So when there is a money shortage in the market, one-off or this refinance, [indiscernible] always get a little more than usual.
The next question is from the line of Nischint Chawathe from Kotak Securities.
Sure. Can you give us a breakup of ECLs between stage 1, 2 and 3?
Okay. Okay. Oommen is getting this, but...
And the other one was how much auction should you do in this quarter?
About INR 340 crores of auction.
As compared to previous quarter was?
I think it's around that level. So fourth quarter of the last year, it was INR 204 crores.
INR 204 crores, okay. And stage 1, stage 2, stage 3 ECLs?
Stage 1 and stage 2, it is higher than INR 31 crores. And stage 3, it's INR 158 crores.
And extra provisions if you're carrying on the balance sheet right now?
INR 119 crores.
The next question is from the line of Amit Mantri from 2Point2 Capital.
Yes. So what is the current LTV which you're lending right now in the gold loan business?
Our maximum ceiling is INR 2,300 per gram.
And as of currently, what is the AUM -- is the LTVs?
Yes. That's right. The maximum ceiling is INR 2,300 per gram.
Okay. And, sir, your competitors are offering much higher rates. So how does that impact your business now?
Nobody can -- regulated NBFCs can't offer more than that. They can offer only the 35% of moving average. If somebody's offering, then I think RBI will take action on them.
Sir, this INR 2,300 is the limit. But as of now, you're not offering those kind of rates, right?
No. We have allocations for different geographies.
The next question is from the line of Rajeev Agrawal from DoorDarshi Advisors.
Yes. My first question is related to the floods that are in different parts of the country and if that would have any impact either on your gold loans or any other part of your portfolio.
Okay, okay, okay. Flooding, no. Because most of our branches -- flooding usually happens not in the [indiscernible] cities, it happens in the hilly areas like [indiscernible]. That's what I see in Kerala. So the hilly areas, the grass sections, et cetera, are the places where you have this floods -- different floods and all these well flowing, et cetera. So we have never had such issue. So that's the general impression. But then from our side, the last flood also [indiscernible], we have not had any issues because of that.
The next question is from the line of [ Anil Vengsarkar ] from [ Principal AMG ].
Yes. Just one clarification, if you could provide. Your news guided to 12% NIM. Was it a NIM guidance or a spread guidance? I did not understand that part.
No. So the 12% is a general number. If you look at the current NIMs, it was slightly higher because we have a higher capital. So the ideal number is to look at the spread as of now, which is currently at around...
So your spread for this quarter is at 11.7% while...
Yes, 11.7%. That is a number which you should look at.
Okay. And that's the number you're guiding could be -- should be around 12% as gold...
Yes, plus or minus 0.5%.
All right. All right. So north of 13.54% was the number, which is a margin, but you guided...
That is a NIM number.
That's a NIM. And you guided towards the spread being somewhere around 12% plus/minus 50 basis points. Am I right?
Yes.
The next question is from the line of Anitha Rangan from HSBC.
Yes. My question is that in the earlier part of the call, you said that only the likes of PFC, REC and HDFC is getting bank funding and loans. And NBFC is getting any funding. So in that sense, like what is -- how -- what is the giving -- what is giving you confidence for even growth going forward? In the sense, I wanted to understand, do you have visibility that in some time this will get cleared? And also that whatever lines you're having in terms of limits, are they available to you -- for you, so the banks are not giving you funding even for those sanctioned and available limits?
The existing limits are continuing. We are aware of the limits. We are looking at -- we were talking more about the enhancement and additional limits. So if you look at the last 6, 7 months, banks were not that generous compared to it was earlier. We feel that going forward, it will -- the situation will improve. But we are working on alternative strategies, especially around our retail [ industries ]. We have done 2 issues in the last 3, 4 months. We have raised almost, like, INR 1,500 crores. So we are planning for the next issue. So these are the ways in which probably Muthoot Financial will be able to generate additional resources.
So our view is quite possibly the banks [indiscernible] at some point of time, next week, next month, et cetera, they will break. And then probably, they will open their taxes [indiscernible].
Right. So what I understand is like, sir, once you repay your existing bank line, even that gap is -- banks don't give you funding to that extent also?
No. That is not correct. [indiscernible] for utilization.
Utilization. Okay. Okay. And how much is...
It's about the fresh funding which is required for growth.
Okay. Okay. And how much is your bank line and your repayment over the next, say, 2 to 3 months?
That is a normal level which is available in the financial statements probably. We can share it to you separately.
Okay. Okay. So you're saying -- all you're saying is that for growth capital, you are tapping like the retail finance market? But for existing investment and so on, you are having adequate bank lines?
Yes, correct.
The next question is from the line of [ Suvrat Saigal ] from [ Mahindra Finance ].
Sir, I just want to know only one question. Like, in your experience, like, you were in this business for a long time. So is there any correlation between like gold price going -- hello?
Yes, please.
Yes. Is there any correlation between gold price going up and early repayment as such?
Early repayment, no, no, no. I don't think there's any correlation with the early repayment.
So like have you experienced anything like when gold price go up, there is a tendency for people to repay it back or anything like that, sir?
So please understand something. Our loans are for 12 months. They can repay it at any point of time. There are no [indiscernible]. So they can -- he can repay it at any point of time, and there are no -- there is no entry, no exit loans. So even if the -- for several decades, we see that there's 60% plus of our customers repay their money in 6 months' time. So there is no prepayments coming happening because they can repay anytime because they are charged interest only on the actual number of days. So if they pay for 20 days and repay it in 20 days [indiscernible] in fact, 10% of our customers repay in the first [ 200 days ].
The next question is from the line of Christine Rowley from Sloane Robinson.
I just wanted to ask about your meeting with the RBI that...
A bit more louder, please. A bit more louder, please.
I'm sorry. I just wanted to ask about the meeting with the RBI that you mentioned at the introduction to this call. Are you able to provide any additional color on that discussion? Do you think it's likely that they will separate out the treatment of gold lending companies relative to others NBFCs?
Okay. We have regular meetings with RBI. So we also open our mind to them. So when we say that we are not getting money, money is going [indiscernible] we also put up [indiscernible] that RBI is not an institution or a regulator which will just upgrade, they'll do it. Probably, they are just putting a thought in their mind that they should see gold [indiscernible] because especially with regard to this [ ALM ] and also the [ NBs ], which are quite different from any other NBFCs. That's what they are trying to do. It takes time.
Okay. But it's not something that's on the [ angle ] at the present juncture for the RBI?
No, no, not at all. Not at all. We request [indiscernible] only because we know some of them may consider some appropriate and some time -- some point of time. I think because we did not ask that it should not be [indiscernible] we did not get it. We ask for it.
And in terms of the NCD issues that you discussed, the issue at the parent level and the subsidiaries, what sort of interest rate do you think you might be able to achieve in the market on an NCD?
So, Christine, the 1 year back, our interest rate range was 8% to 8.5% for a period of 1 year to 5 years. The last 2 institutions after this highlight of this crisis, we did at almost 1% higher than what we had offered earlier. So the rates moved from 9% to -- 9.25% to 10%.
And where do you think that you would -- if you were to come into the market at the present time, given that the RBI has cut rates and we've seen some decline in rates in the market, would the rates hold the same as they were at the time of the 9.25% to 10%? Or do you think that they would be still impacted by the NBFC crisis more generally?
So one difference compared to the NCD issuances of other entities, ours is a pure-pure retail. And depending upon how the trends and the bank deposit base, we can always look at pricing it appropriately. There's not much of an impact when we -- even if we vary the interest rates by about 25, 50 basis points.
So the average ticket size, there is about 2 lakhs to 3 lakhs [indiscernible]. So it's all retail. Full, full retail. We have a very large investor base for the last several decades, so they are banking with us. Their father, their parents, their children, all do business with us. We have a large base, and that is where we tap our NCD. Our NCDs are retail NCDs, not wholesale.
We'll be able to take one last question. We take the last question from the line of [ Hadim Groswalla ] from Union Asset Management.
Sir, I want to understand at what rate are we currently borrowing from banks?
I think, mostly, it will be around 9.5%.
Okay. So the incremental, I think happening, then we'll have to go to NCDs, which will be slightly costly?
So I don't think both these 2 are related. So NCDs happen on a different -- which we answered the earlier question. NCDs happen -- these are different factors. Bank rates has been more because of the NBFCs prices, et cetera, which is currently. Otherwise, if you look at RBI current facility, we're releasing the record to banks. They are not really the rates.
We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Thanks, everyone, for joining the call.
It is a pleasure to have you all participating in the call. And next quarter -- we'll see you next quarter. We hope to do better next quarter. Thank you.