Ladies and gentlemen, good day and welcome to the Bandhan Bank Limited Q3 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being 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 hand over to 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 namaskar, and I wish a very Happy New Year, 2022. Thank you so much for joining us today in the call of quarter three financial year 2021-22. Hope all of you and your loved ones stay safe, healthy and happy New Year for all of your family. I'm pleased to state that the October-December 2021 quarter has been a very good one for the bank where we have witnessed growth across all parameters. After the challenging first half of 2021, we have seen growth bounce back strongly and things stabilize on the asset quality front with collection efficiency improving strongly. The continued momentum in vaccination, the third quarter of the current financial year saw economic growth revive strongly as business returns to normalcy.
The third quarter also coincides with the festive season, starting with the Dussehra and Durga Puja and followed by Diwali. As I have mentioned earlier on many of the occasions, the festive season is where we start seeing growth. In the current financial year, business activities return to almost pre-pandemic 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 three 2022, we reported a robust 10% year-on-year advance growth, which is 8% quarter-on-quarter, amount-wise around INR 88,000 crore. Our deposit growth also has come in very strong, which is 19% year-on-year, 3% quarter-on-quarter, total amount INR 84,500 crore.
Our total business size as on December 31, 2021 stood at INR 1,72,000 crore. In line with our aim of building a robust granular retail deposit franchise, our CASA deposits grew 26% year-on-year. Its amount is INR 38,528 crore during this quarter. It gives us CASA ratio 45.6% in quarter three compared to last quarter, which was 44.6%. One year before it was 42.9%. Also, our retail deposits to total deposit ratio stood very healthy, which is 85%. Along with business growth in advances and deposits, we also see very encouraging collection efficiency trends during this quarter.
With people's livelihood coming back on track, our customers have been very eager to standardize their overdue accounts at the earliest in order to continue enjoy the benefits of formal credit by maintaining a healthy credit record. This is reflected in the strong collection efficiency trend witnessed in this quarter. The overall collection efficiency of the bank stood at 93% from 90% in the last quarter. If I go to this, our EEB vertical, which is the major is the microcredit. The vertical has been improved the collection efficiency 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 on that very soon will be like to reach 99%.
After including areas, 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 like to mention that the collection efficiency of the Assam has come 96% of this quarter from the last quarter 82%. It is 14% increase and 96% is a 1% lower only from the national collection efficiency of EEB. In West Bengal, West Bengal is a collection efficiency has come 97%, which was the last quarter is 92%. 97%, which is aligned with this, the country collection efficiency of the bank. Another part on that, full paying customers has been increased at 10% from 79% has increased to 89% EEB customers are paying the full installment to the bank.
Of course, there is NPA customer also paying to us. 66% of NPA customer paying in the last quarter, and 61% of our restructured customers are paying in the last quarter. These all are the collection efficiency improvement have been giving the confidence to the bank. 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 crore, 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 in a 14.2%. Bank have the NIM continue with a 7.8%. Cost to income ratio has come down 31.3% from 35.7%.
For the third quarter, our gross NPA ratio is aligned with the last, the preceding quarter, which is the 10.8%, and net NPA ratio stood at 3%. PCR is very strong, 74.4%, and the capital adequacy, 20%. It is encouraging to note that after the challenging last two quarters, we have been able to arrest the increasing gross NPA. The reason for that many of our customers have merely 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 PM.
This quarter also has come, but net of it has been in line with the same ratio of the gross NPA. We have not done any further restructuring in this quarter, but the restructured loan book, it was in the bank, INR 9,000 crore has come down INR 6,600 crore, which is nearly INR 2,500 crore have been repaid by customers. This is an encouraging indication that the stress 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 been the strong performance of the housing finance vertical. For the first time, the total outstanding assets of the housing finance segment crossed INR 20,000 crore to stand at INR 20,939 crore. This represents 6% year-on-year growth and 7% quarter-on-quarter growth.
During the quarter, we also launched special offers on housing loans to attractive rates of interest for our borrowers, and we expect these 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 margin is INR 1,361 crore in this quarter. Outstanding grown INR 600 crore in this quarter other than I did it. I am 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 loan, in the total asset mix of the bank over time.
At the end of December 2021, the share of group loans to 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 am 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 a third wave of COVID cases across the country. However, we remain confident that this will not have any impact on our business operations.
We have extensively spoken to our customers and the Street and found out our customers are pretty confident about returning the money in due time. Even our customers who could not repay their loans during the first and second wave have told us that they would like to continue paying on time going forward since 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 trends that we are witnessing make us believe that things should continuously improve going forward. With our investments in the diversification strategy, technology, people and processes, the Bandhan Group story remains 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 all of you to open for the discussion.
Thank you, sir. Now, I would like to request our CFO, Mr. Sunil Samdani, also to give you some more details on few financial parameters, including NPA provisions and coverages. Over to you, Sunil.
Thank you, Hiren. Good evening, ladies and gentlemen. I will just take few minutes of yours and draw your attention to few slides, which I believe is important to understand our performance this quarter. Starting with slide number five of our presentation, where we show the collection efficiency of the EEB portfolio. The collection efficiency, excluding arrears, 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, these 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. 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. I'll quickly move you to the customer paying profile. 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 customer, 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 customer. Non-paying customer at 4% between December and September, but in value terms improved to 1% from 2%. Clearly, overall collections have shown improvement. The next one, slide six, talks about the customer payment pattern and the restructured NPA customers and the restructured customers' payment pattern. In both the cases, we continue to see healthy collections. Almost two-thirds 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 the 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 are seeing the maximum stress. Here we've seen improvement all around, and more importantly in the earlier buckets because as we see the improvement in the earlier buckets, the flow rate is automatically reduced going forward. So one to 30-day DPD, which used to be 11%, 11.1% of the EEB portfolio, has now come down to 5.3%.
Even within this one to 30 days, if I remove one to eight days, which is more of a technical in nature, this number will further reduce by 1.7%. 31-60 days, it has reduced from 7.1% in September to 2.9%. 61-90 days has marginally gone up from 2.5 to 2.9. 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-off, the improvement what we are seeing, which is about 10 percentage points, right? The overall delinquent pool have reduced by 10%. Excluding write-off, it has still reduced by 8%.
Now coming to slide number eight, which talks about the stress 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-INR 170 billion, and the coverage or the resolution plan against this stress pool has gone up. You know, in September we had a 95% coverage, which in December we see it going up to 98%. Despite, you know, the write-off and the utilizations of the provisions, 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 other 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 a traction across our non-EEB verticals as well. Our disbursements and advances have grown at a much faster rate. If you now see on slide number 11 as to how we fare if we have to realign our individual books to the commercial banking and the micro-housing loans to the overall housing portfolio, which is what we had envisaged when we had planned the strategy to achieve diversification at 2025. We are progressing well, and we are in line, and we are confident of achieving this diversification by the end of 2025.
Thank you very much for your patient hearing. I'm sure you will have some questions. We're happy to take.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. First question is from the line of Shagun Verma from Goldman Sachs. Please go ahead.
Yeah. Hi. Good evening, sir and Sunil. Thanks for the opportunity. A couple of questions. Number one, can we get the slippages and upgradation recovery for this quarter?
Sure. Rahul, one has to look at with the backdrop of zero restructuring that we have done in this quarter, right? Which in the previous two quarters we had the benefit of restructuring. This time on, we have decided not to restructure any further loans going forward as yet. The gross slippages for the quarter was INR 3,400 crore. The recoveries was 1,548 crore with a net addition of about INR 1,893 crore. There has been a write-off from there of INR 1,215 crore, which leads to the overall increase in NPA by INR 678 crore.
Got it. Just trying to understand this, you know, the arrears, you know, collection efficiency including arrears. 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, you know, backward sort of flow in the bucket movement. How does it sort of work out? Is it 160% of collection efficiency versus 97% excluding that?
When we say that including arrears collection efficiency is 154%.
Yeah.
It means the customers who have started paying are not only paying the current installment but are also repaying their old overdue, which essentially means my DPD position should improve and which is where we can see that our DPD positions have improved substantially. When I say 150% collection efficiency, it means my collection is 150% of my demand amount.
Correct. The upgradation recovery that you have of INR 1,548 in this quarter, was it also part of that?
Is also part of that. If I receive the entire overdue of the customer, they get upgraded. If I receive the partial overdue of the customer, their DPD position improves.
Understood. Got it. Thanks. Two 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, you know, the tax relief part is more of a current tax issue, but for the financial purposes it gets negated with deferred tax. As far as the financial goes, the net impact of current tax and deferred tax effectively keeps your effective tax rate the same.
Understood. The last is this credit guarantee, you know, fund, which for September estimated recovery was INR 30 billion. In your new table it shows 25. So 5 billion is the recovery that happened or
Yes, that's the recovery that happened. My stress pool has come down. If the stress pool has come down, then there can't be so much of recovery.
No. Okay. You've not actually received from the fund yet. It is just the stress pool has come down because of recoveries or whatever.
Yes.
the areas. How confident we are that, you know, this INR 25 billion would be recovered, you know, over the next, how many quarters? I think you said March. Yeah.
That's the actual calculation we've done based on the guarantees we have taken against the customers. 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, you know, we calculate that and that is what the number is.
When should we expect this recovery to start coming through?
From the CGTMSE?
Yes. Yeah.
We will be able to place our claims only after thirty-first March.
Okay. Whatever time that the government takes. Okay.
Typically, a quarter or so.
Got it. Thank you so much, Sunil.
Thank you.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Thanks for taking my question and congratulations for good set of numbers after the loss in Q2. Firstly, with respect to the provisioning, again looking at slide number 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. Thereafter there has been just the improvement. There is increase of INR 600-odd crore in GNPA. Otherwise, would it be fair to assume that balance is the increase in the restructured provisioning? How is the provisioning breakup during the quarter? Specific, restructured, standard and outside of EEB.
Let me explain it slightly differently. You are right. Right? If my stress pool is and the coverage has only improved, what is the need for having an additional provisioning? Now, two reasons for that. One, provisions are at a customer level. Two, we have improved our PCR from 74.1 to 74.4 despite having this INR 12 billion write-off. Normally you see when there is a write-off, the PCR reduces. We have not allowed the PCR to reduce and hence there was a need of these additional provisions.
It was largely specific provisioning towards the assets. Any increase in the restructured provisioning?
Not really, because my restructure pool itself has come down.
Okay. Larger part of it is standard asset and the specific provisioning.
Yes.
Yeah. If you can highlight in terms of this restructuring amount that you had given, and again, quarter-on-quarter also it's down from INR 6,900 crores to INR 5,700 crores. How much is moving into slippages? How much is getting recovered? How is the movement and write-off from INR 9,000 crores, if you can just give, at least we can gauge in terms of how would be the behavior of the balance INR 5,800 odd crores. Write-off, slippages and recovered, how is that pool? Yeah. The decline in the pool, how much is each of the proportion, yeah?
Kunal, as far as restructuring pool goes, technically these customers are not required to pay, right? Their installment is not due. 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 installments. Because customer feels their business has become normal, they don't want to increase the interest burden, and they have started their installments.
It's purely recovery. There is no write-off and slippage coming in this restructured pool movement.
No, it's purely recovery. 100% recovery. Kunal, this customer, there is a restructure means we have given the moratorium. Not the installments needed on that restructure the installment size and given some amount, not like that. Whatever has come, it is totally has come by voluntary basis.
Okay. Sure. Last question in terms of the other income, so you also highlighted non-interest income, but what was the component of that? What is leading to the increase and the incremental delta of INR 150-INR 160 odd crore on a quarter?
Clearly, with 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 to INR 85 crores. The third biggest area is the recovery from that debt. That number for the quarter is INR 90 crores. This is from the written-off, earlier written-off pools.
Sure.
We've been able to recover INR 90 crore.
INR 90 crore.
These are-
Okay. Third party, you said 85?
85, yes.
Okay, thanks. Yeah, that's helpful. Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Sameer Bhise from JM Financial. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just a quick question on the recoveries, which were overdue. How is it being allocated in terms of priority, I mean, principal, penal interest? Can you just highlight it?
First the allocation goes towards interest. Penal interest, we typically don't charge interest on interest. As a policy, we don't charge interest on interest for our EEB customers. The allocation is on the interest charges and then principal.
Okay. Secondly on the non-housing, the non-micro loan book, can you give some sense on how the growth is shaping up in terms of customer segments, opportunity, primarily housing and even the SMEs?
You know, this is something that we've been trying to build. We've got a team in place. We have commercial banking headed by Kamal, you know, who's 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. Narayani, we have identified the areas where to you know, strengthen and we are seeing the traction there. You know, till last quarter, while we were improving on disbursement, we used to see lot of balance transfer out as well. We've adjusted our pricing to ensure that the disbursements get converted into the balance sheet growth.
In terms of products, if you talk about, you know, the SME continues to focus on ACL, which is INR 3 lakh-INR 10 lakh ticket size. There is an SME vertical, which is INR 10 lakh-INR 50 lakh ticket size. We have a slightly larger ticket, which is up from INR 50 lakhs to INR 20 crores, where the average ticket size is about six to seven scores. These are the three verticals that we have. The larger piece will normally work as a consortium as well as multiple lending. For the other two 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, you know, is salaried at 67.5% and self-employed as the rest.
Okay. 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 converting individual loans was to have a better control on the asset quality and the overall indebtedness of the customer by becoming a sole lender. This was a strategy to consolidate debt of the customer. The interest rate continues to be same as we have the lowest interest rates charged and as we charge the lowest interest rates in the market for this segment of customers.
What is it currently?
Nineteen point five percent. Four five. Four five percent. Nineteen point four five percent.
Okay. This is helpful. Thank you and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Deepak Gupta from Reliance Nippon Life Insurance. Please go ahead.
Hi. Good evening. Thank you for taking my question. My first question is, if you could give us a sense, 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? The 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. We expect this quarter, which is Q4, the government distribution to come in for the overdue pool. The third piece will be the NPA, which we will have to see when the government announce. 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 crore.
Sure. I hear that. Okay, thanks. My second question is on this scheme of CGTMSE. You had earlier indicated that about loans worth INR 14,500 crores, INR 14,300 crores of MFI loans were eligible. Is that amount still the same or given the fact that you've had some amount of repayments or had the quantum reduced?
Sorry, I didn't get that question. 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 crore were eligible under the scheme. Given the fact that you've had some amount of recoveries, 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. Earlier when we were estimating a INR 3,000 crore claim against the eligible pool, depending upon the SME portfolio if the customer was 30+, now that has come down from INR 3,000 crore to INR 2,500 crore because the pool itself has come down.
Sure. Okay. 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 breakups state-wise? Thank you.
ECLGS. 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. We can share it offline.
Sure. Thank you so much.
Thank you.
Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Yeah. Hi, Sunil and Suresh.
Sorry to interrupt, sir. Adarsh, your audio is not clear from your line, sir.
Okay, maybe this should be better. 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 1,430 crores. Have you fully utilized standard asset provisions, or there is something left?
We had a INR 2,100 crore provision made last quarter.
Yeah.
The reversal from that pool is INR 800 crore. INR 1,300 crore continues to be there.
Okay. What about the restructured pool? It's the same number?
Restructured pool, clearly the provisions will come down as the restructured portfolio itself has come down. If I don't have a customer, the balances have reduced, the percentage will also come down. You know, the coverage or the provision should also come down. That reduction is about INR 200 crore.
Got it. Second, just from a timing perspective, you did allude to both the guarantee scheme and the government's 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'll start with the guarantee scheme and then we can get to Assam.
Guarantee we just discussed.
Mm-hmm.
The earliest we can place a claim is after thirty-first of March.
Mm-hmm.
Once we shift the claim, typically we should expect three months time.
Got it. Okay.
Assam, it is a stage-wise process. Government has already started the zero DPD customers as on the cutoff date to start repaying them. The repayment is INR 25,000 or the outstanding, whichever is lower. We have started receiving the payments. So far we have received, for the zero DPD pool, 39,000 customers, amounting to INR 86.48 crores.
Got it. That's it, I think. This is helpful. Thanks.
Thank you.
Thank you. The next question is from the line of Karthik Chellappa from Buena Vista Fund Management. Please go ahead.
Yeah. Thank you very much for the opportunity, sir. Just three questions from my side. What would be the total provisions that we are carrying at this point? For EEB it's INR 91.7. If you put all the asset categories together, what would be the total provision?
Just a second. I just do the math.
Sure. I believe this figure was about INR 106 billion last quarter.
Ten thousand two hundred and nineteen crores.
INR 10,219. This was about INR 10,600 crore last quarter, right?
Yes. INR 10,642 crores.
Okay. Got it. Second question, Sunil, if I just look at the total stressed book on the EEB, which is NPA plus restructure plus SMA 1 and 2, it is still hovering around 29%-30%, which was the same level as it was in the first quarter of this year. Compared to the exit quarter last year, the fourth quarter, which was about 12%-13%. 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?
You know, I don't know from where you see that it is still higher because, you know, 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 0-90-day DPD used to be in that range of 3%-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%-5%. The improvement in one quarter itself is 10%. For me to reach that pre-COVID level, the gap outside NPA is only 5%.
To ask the 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. You know, there are two main large components. One is restructuring and NPA.
Yes.
Right? NPA, we are seeing it, there is a reduction. Restructure also, we are seeing a 20 bps, 20% reduction in two quarters. Technically, NPA customers are not required to pay. Despite that, we are seeing the 27% reductions in two 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. Okay. My last question is on our restructured book. The current provision that we are carrying is, I think, somewhere around 19.08% of the restructured advances. How do you assess the adequacy of this provision? Whether that 19% provision against the restructured 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. With that coverage in mind, we believe that we are adequately covered. You know, against the INR 170 billion pool, we have a coverage of INR 166.7 billion.
Okay. 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.
Okay. Got it. This is great. Thank you very much and I wish you all the very best for the following quarters. That's all from my side. Thank you.
Thank you. The next question is from the line of Mahesh M.B. From Kotak Securities. Please go ahead.
Good evening, sir. Just a couple of questions. If you look at last quarter of the total microfinance book that you had, approximately about 45% of the book was in some form of stress. When we look at the total disbursements made this quarter, it kind of covers up a very 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 NPA, do they get immediate disbursements as well?
To your question, you know, while you see 34% of our book as of September being delinquent, of the 34%, 11%, 11.1% was 0-30 days, which was in a very early bucket. Right? If I have to remove that, then it's only 24%. That's one. With that number, I don't think the incremental disbursement as the customer gets regularized should be an issue in Q4 as well. 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 disburse.
You do.
If the 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 give a lower disbursement.
Sir, do you provide an immediate disbursement to a customer who's regularized, or is there a cool-off period to the customer who is regularized by it?
The cool-off is required if the customer is not paying for a long time. We have a standard cool-off period between one to seven days. Otherwise, if you talk about the 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 seven days.
Between one to seven days.
Okay, just one clarification. If you also provide the restructured book between Assam and West Bengal for the quarter?
Yeah. The outstanding of restructured book in West Bengal is INR 2,600 crores and Assam is INR 1,759 crores.
Okay. 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 which is a...
We have a risk-based pricing, right? This is the best rate anyone can get, but this is not something that we disburse at that rate.
Correct. Just trying to understand, these are, I think this fraction of loans coming in at this price would be very low.
Yes.
Oh, okay. Thanks.
Thanks.
Thank you. The next question is from the line of Prakhar Agarwal from Edelweiss. Please go ahead.
Yeah, hi sir. Sir, three sets 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 two, three 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 two quarters that we are talking about?
There are two things. One is the number of customers and two is the value. Customers who have started paying have started paying more installments. Right? That's how one has to look at. In value terms, we are seeing that number reducing. The NPA customers also, you know, when I give that 67% of my customers pay, you know, 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 have increased the share of their part payments.
Okay. Similar to that, when I look at restructured book as well, so while there has been fair bit of recovery that you talk about, of the balance what we say is essentially the non-paying customers are relatively a higher chunk. Do we anticipate that part of that, in terms of crystallization, that will crystallize into higher stress going forward in terms of restructured pool now? If I just take a moment between restructured pool over like last two quarters, the non-paying seems to be rising of the remaining balance pool.
You know, there are two ways to look at it. One is the restructured customers are not required to pay. They are under moratorium. Despite the fact that they are under moratorium, they are voluntarily coming and paying. 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 gives us that confidence that this restructuring, the result will be different from the historical results.
Okay, got it. In terms of housing, when I look at segmental gross NPA movements, there has been some rise although marginal, but when I look at from an absolute basis numbers, there has been some rise in housing NPAs. Any particular segment that you are particularly seeing stress or any product that you're seeing stress in, too, or what will you attribute this to?
Suresh, do you want to take that?
Yes, sure. Yeah, good evening. There is a little bit of, you know, elevated stress coming from the self-employed segment, but otherwise there is no very great kind of a disparity or a difference which is observed. It is by and large the NPAs in the stage three NPAs or the stage three accounts continue to remain the same. It is just the movement within the SMA two to NPA flow which has happened a little bit. Hello?
Just one last question on this. 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. 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, so 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.
Oh, sorry. Could you please repeat the question?
Within the EEB book, when I look at individual contribution, that number has gone up significantly over two quarters. When I look at from INR 77 billion to INR 120 billion, what exactly is the ticket size that we offer in 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 on outstanding is INR 1,03,000.
Okay, got it. That is it from my side. Thanks. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Nitin Agarwal from Motilal Oswal Financial Services . Please go ahead.
Hi, good evening. Thanks for taking my questions. A few questions, like firstly, is annual audit for FY 2021 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. We can't talk much, but there is nothing to report which is required under the regulation to report.
Okay. Sure. Secondly, when you say that you are only 5% higher than usual levels of 0-90 DPD, obviously you are not counting the restructured loans there, right?
Yes.
Likewise in the collection efficiency of 97% excluding NPA, again, the restructured loans because we are not raising any billings for them, that is not there in that denominator as well.
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. Related to that, the third question, like, when you report 26% of non-performing NPA and 34% of non-performing 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 non-performing customers in Assam and total restructured customers in Assam? Because it looks like that this ratio will be very, very high. In this context, this seems to be very sticky pool and, therefore any levels of stress that you are building in from this portfolio.
See, there are two ways to look at, right? We were aware and we were anticipating that when we restructure, when we see 30+, 60+, there will be a lot of questions, right? And that is why in the previous quarter, we had gone ahead and taken the provision. If you look at our total stress pool, we consider 100% of restructuring as stress pool. We consider 100% of 30+ as stress, notwithstanding the fact that I have reduced my stress portfolio from 34% to 24% in one quarter. Still we continue to show this 30+, 60+ as 100%, right? And then we show the coverage on that. 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%-40% in 1 quarter.
Right.
I'm putting 100% coverage on that. Clearly, while I can give you the numbers of restructuring, outstanding, I think we shared that. For West Bengal it's INR 2,600 crore and Assam is INR 1,759 crore.
Right. Got it. Thanks, Sunil. Wish you all the best.
Thank you.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Hello, good evening. Thanks for taking my question. Can you give the waterfall of this overall stress pool? The INR 195 coming to INR 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.
Right.
The recovery from this pool will be just a second. Let me get to that number.
Sure.
Yeah. Net slippage was INR 1,893 there. That was NPA, we are talking about.
Yeah, correct. Yeah.
Give me numbers in hand and I'll answer this during the call.
Okay. Is it correct to assume that this INR 12 billion write-off is entirely from the SMA 1 pool? Because in restructured you are saying there's purely repayment.
No, SMA two as well, which had flown into NPA.
Right. Okay. Sure. The next question is this estimated recovery till thirtieth June of INR 50 billion. First of all, this includes interest and principal, right? How is this spread over the next two quarters? Or likely to be spread.
Usually, 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 170. The reduction of INR 25 billion. We are assuming a similar reduction despite entering Q4, which historically has been the best quarter for us. That's how we have conservatively assumed going by the actual performance of Q3.
Sure. This includes interest and principal both?
Yes.
The INR 50 billion.
Yeah. I have recovered more than INR 25 billion.
Yeah.
Part of it is.
Yeah, understood. Also when I look at the NPA bucket, especially in Bengal, in Assam, I understand there's been a, you know, issue there. In Bengal, what is the reason for forward flows? I mean, 61-90 is also showing a decent forward flow. NPA has shown a little bit of a forward flow. What is the ground level issue over there right now?
In fact, we've seen an improvement there, right? If it's about the part-paying customer, we were seeing that part-paying customer because there was a delayed recovery in West Bengal by a quarter. There was a flow, right? While rest of India improved faster, Bengal took one quarter more. With part-paying customers there will be a flow.
Okay. Is this the timing of the recovery?
It's just the timing, yes.
Okay. Finally, just a quick question. This moratorium that is given to restructured customers, when does this end? Because your non-paying, you know, keeps going up, and obviously it looks like they are not paying, but they are under moratorium. When does this end and they have to come back and pay?
Half of it, roughly, it's not the exact number, but roughly half of it ends in thirty-first March and the balance half on thirtieth June.
Okay. Got it. Thank you, Sunil. Thank you so much.
Thank you.
Thank you. The next question is from the line of Param Subramanian from Macquarie. Please go ahead.
Hi. Thank you for the opportunity. I wanted to ask firstly on Assam, what is the state of doing business over there? You know, what are the disbursements there in this quarter, and what is the current loan book outstanding? If you could give both these numbers, you know, on a year-on-year comparison as well.
Param, just a sec. The Assam outstanding is INR 10,400 crore. Do you understand that? No, sorry. No. Just let me correct that. INR 5,979.9 crore is the outstanding of Assam.
Okay, this includes NPA?
Everything.
This includes 25% of NPA, and what was this number last year? If you could just, you know, what is the disbursement right now, as in this quarter in Assam, as well as, you know, if you could give some qualitative comments around, you know, how the state of doing business over there in terms of, you know, on an ongoing basis, in Assam.
For the first nine months in this financial year, totally we have disbursed INR 1,666 crore in Assam.
Okay. Got it. Could you just tell, as in if you could just speak about the state of doing business over there right now, what is the outlook over there for the next, you know, as in going forward, 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, you know, how is your market share, say, on a disbursement basis trending, versus, say, pre-COVID level? You know, how is the competitive intensity behaving versus pre-COVID? Yeah, those are my questions. Thank you.
As far as the environment in Assam goes, it is fast improving, right? We have seen the right set of communication 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? This clear messaging from the government right at the top, it only helps improving the credit culture, which is what we are seeing in Assam today. As things improve, you know, we intend to clearly do well in Assam. In terms of competitive intensity, you know, it's a very difficult question to answer till we have formal data from an independent rating agency or someone like that, which typically comes with a lag of three to six months.
You know, 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 nine months was INR 1,666 of disbursement in Assam. How was it a year ago? Yeah, that's it from me. Thanks for the answers, Sunil. Thank you.
A year ago, I don't have the number readily with me. We can share it offline. Thank you.
Okay. Thanks, Sunil.
Mm-hmm.
Thank you. Ladies and gentlemen, we will take that as our 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.