Ladies and gentlemen, good day, and welcome to Q4 FY22 Earnings Conference Call of Bandhan Bank Limited. 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 Shashikant Shah. Thank you, and over to you, sir.
Thank you, Margaret. Good evening, everyone, and thanks for joining this call. It's our pleasure to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending March 2022. We will take this opportunity to update you on the recent developments in the industry and Bandhan Bank during this quarter. To discuss all this in detail, I've brought with me our founder, managing director, and CEO, Mr. Chandra Shekhar Ghosh, our Chief Financial Officer, Mr. Sunil Samdani, Head Assets, Mr. Kamal Batra, Housing Finance Head, Mr. Suresh Iyer, and myself, Hiren Shah, Head of Investor Relations. Now, I would like to request our founder, MD, and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about bank's operational and financial performance, along with developments for the quarter ending March 2022. Over to you, sir.
Good evening to all of my friends. Thank you for your time to join this call. I already said earlier, the fear of pandemic is over. The third wave has been much milder, but it has not instilled in me any confidence. Our results of quarter four, financial year 2022 also clearly reflects all of this trend. Quarter four of any year is the most active period for the banking industry, and financial year 2021-22 was no different from that. I have been meeting my customers at the ground level, and the signs of revival are for all to see. Credit demand is back. Many of our customers who had postponed their loans have taken fresh credit from us in the quarter. Let me start with a broad overview of the year.
We reached the milestone of around INR 1 lakh crore advances in the quarter gone by. Advances stood at INR 99,338 crore, which is year-on-year basis up the growth 14%. Deposit growth has come 24%, which is amount was INR 96,331 crore. CASA retained at 42% and retail deposits 77%. Net interest income has been grown 42.6% from the preceding quarter, INR 3,500 crore. Operating profit grown 53.5% from the preceding quarter, which is the highest growth in the bank life. The bank reported net profit for this quarter is INR 1,902 crore. NIM has increased a hundred and ninety basis points higher from the preceding quarter. The last financial year, the bank provided its resilience yet again.
We are now well on the revival path and the operating environment as well as ongoing reality is in favor of a strong resurgent of business in future. Now, let me dive deeper into the few key aspects of this, the success of this, the parameters. The first point is the collection efficiency. Total collection efficiency has come in the quarter, which is called the March 2022, has come 99%. Collection efficiency in the month of March in EEB has come 99%, which is increase from the 97% of the last quarter, excluding NPA and ARRs. This means the collection efficiency has come is normal. Collection efficiency in West Bengal also is 99% and Assam 1% lower, which is 98%, and total India is 99%.
Let me tell you that the another part, 89% of my NPA customers are paying. In March 2022. 59% of my restructured customer are paying in March 2022. The improvement in collection efficiency is thanks to our customer going back to their livelihood in full swing, and the commitment that the customers have towards the bank. The improvement in collection efficiency has resulted in lowering our NPA. The bank gross NPA stands now 6.46%, which it shows that the 4.35% lower than the last quarter. Net NPA has been reached 1.66%. DPD across the entire of microcredit because of the large portfolio, which has come nearly half of the, so half from the last quarter. EEB, the Emerging Entrepreneurs Business, has a three vertical.
One is a group-based lending, which is we call the microcredit. Another vertical called the small business and Agri- loan, which we call individual, which is graduated from microcredit to individual. Another vertical we say the micro home loan, which are also individual loan and some another one have, which is the two-wheeler loan. The EEB saw a robust growth in this quarter, as expected, because this is the portfolio has come growth in the last quarter of every year. In financial year 2022, we are added 22.88 lakhs new customers in financial year 2022. Disbursement in the quarter four, we indicated that it was INR 22,968 crore, which is 15% higher than the pre-pandemic year's last quarter, which is 2020.
That means which it shows that the business has come to this normalcy. The bank as a policy and a strategic policy, the migrated or graduated the group loan to the individual. As on March 2022, bank migrated 24.32% of the group loan to the individual loan. Sorry. Coming to the next growth vertical, which is the housing loan. Two and a half years ago, we merged this vertical from the group. Last quarter it has come very good growth, but this year they are giving this very tremendous growth. Portfolio grown 11% year-on-year. Portfolio stands now INR 23,726 crores. CAGR in the last two years has been healthy 9.29%, despite the challenging period we are passing.
In financial year 2022, the total disbursement in this vertical INR 4,340 crores. Growth of 105% over the previous year and 95% from the last quarter. In quarter four, 86% are housing and 13% are left. This is the housing loan portfolio, 61% salary based, 49% are self-employed. Portfolio quality continue in the same growth. Next point is the ticket size also increased from the previous year, nearly INR 1.1 lakh average ticket size. Coming to our next two vertical. Another vertical is in commercial banking. Commercial banking have been grown 60.8% year-on-year, and quarter-on-quarter have been grown 40%, which is a portfolio INR 11,720 crores.
The retail credit other than housing loan, our gold loan, personal loan, two-wheeler and auto loan, together this portfolio stands at INR 1,645 crores, which is the growth has come yearly 39%. These are the total performances come from the business point of view. I am coming now to the strategy of the bank. We are decided that the 2020 we have prepared a five-year plan, which was the 2021 to 2025. During this period, two years we have been in that there is a pandemic situation has come, business growth has not coming as normal. For that reason, last February, we are again revised our plan and we find out that we can reach that plan with another one year needed.
Instead of 2025, it will be reached 2026. Major other couple of points strategically we have decided which are on track I would like to mention. The bank have the strategic first point, how we can like to strategically diversify the microfinance loan with the other portfolio. Group loan, which in the last year, the 60% has come down to 47% in this year. Housing loan has increased from 23% to 24%. Commercial banking has increased from 16% to 28%, including individual loan, which is graduated from group loan. Retail loan, 1.3% of the total portfolio to 1.6% the portfolio. We like to continue in this way to graduate and also expand the other business.
Accordingly, by 2025, we can be reached to microcredit portfolio, which is called the group loan, 26% from today, 47%. We are diversifying geographically. Bank agreed on that geographically, expand the branches across the country other than east. This year we are also decided 530 branch will open, which is the 80% above will be other than east. That also help us to diversify the both. You know that housing loan vertical, we are already working on that, the, west and south. We are also expanding more of those branches in the south and north, which also help us to geographically diversification of the portfolio. Third point, bank are focusing on the retail business more, not as a corporate business.
Retail business more or less other than housing because of microcredit is an unsecured loan is more. Bank has decided on that how we can be like to strategically balance the secured and unsecured loan. As of today, the secured loan is in 39%. The bank has been decided by 2025 it can be 46% of the secured loan and 54% is in unsecured loan. 2026 we can be like to reach on that 50-50 secured, unsecured loan. Bank have been open in this year 329 new branches, means in the last year. Next point on that, bank are as per earlier I mentioned also, we are investing for the transformation of IT system, including CBS. We are developing in the digital banking.
Focusing on that, how we can provide the digital in the rural and semi-urban people with all respect of liabilities and assets. That we are primarily working on that. All of our loan, including microcredit, will process sanction this system digitally. Whoever the customer is possible, they are likely to repay the installment by digital, they will be likely to give also digital. Finally, graduation from the microcredit group to the individual, that is also separately we are likely to develop time to time. This is an overall, all this the performance has come because our bank team are working very good, and they are very much committed. Customer intention to return back the money is very good.
All together, I hope that they're coming to normal and next couple of years business will be also come to normal. Thank you to all of you. I pass on this, the next clarification to our CFO, Sunil Samdani. Then we'll be like to go to question- and- answer. Thank you, Sunil.
Thank you, sir. Good evening, everyone. I just want to take 5 minutes of yours to run through a couple of slides, which I think is important. First starting with the DPD status of our EEB, which we've been tracking and monitoring ever since the pandemic hit us. We are glad to say that we have come close, very close to the pre-pandemic levels in terms of delinquent loans. Our 1-30-day DPD, which was 5.3% in December 2021, has come down to 3% in March 2022. 31-60-day DPD from 2% to 1.6%. 61-90-day DPD from 2.9% to 1.9% and NPA from 13.7% to 7.8% in the EEB vertical.
What is important here is when we saw the turnaround in Q3 , we saw the early delinquency bucket showed the bigger improvement. In Q4 we are seeing that it's an improvement across all buckets, whether it's zero to 30 days, 31 to 60, 61 to 90 or NPA bucket. That's heartening, and that gives us the confidence the future is good for us. The other slide that I want to run through is the slide number 8 of our presentation, which talks about the stress pool and the coverage that we have against the stress pool. In December 2021, we had 170 billion of stress pool, and we had estimated that we could recover in the quarter about INR 50 billion in addition to the provisions and the CGFMU recovery.
We are glad to inform you that we have reached this INR 50 billion recovery instead of 2 quarters in 1 quarter itself. That again is a good sign and it gives confidence that our customer businesses are back to normal. The coverage that we estimate as on March 2022, you know the stress pool which was INR 170 billion has come down to INR 119 billion. Against that we used to have a 54% coverage by way of provision, has gone up to 58.5% as of March 2022. The estimated recovery, though we've done phenomenally in the Q4, conservatively we are budgeting for INR 30 billion for the next 2 quarters. The CGFMU recovery remains constant and as always, we don't want to put a guess on what will be the quantum of a family fund.
What is important here is despite not considering Assam , we feel that we have enough coverage to cover our entire stress pool. These are the two important points that I wanted to mention here. Happy to take questions. Thank you very much.
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 the 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. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah, congratulations for a good set of numbers. Firstly, you had highlighted that with respect to this credit guarantee will start applying from first of April. If you can just let us know in terms of what is the status and this entire CGFMU recovery of INR 2,500 crore, when do we expect it to come through?
To come in this financial year because we interacted and engaged with the CGFMU. The process that we have is the institutions can claim only once a year. With that being the case, this should come in two installments. First, the 50% of this, close to 50%, around INR 1,200 crore in this financial year and the balance in the next financial year.
We have not started. In terms of like we will do it towards the end of the fiscal or when should we expect this, INR 1,200 crores to come in this particular year? Sorry, I missed the earlier part. Yeah.
This year, as I said, you know, we can do it once a year, so we should do it in the by the end of this quarter, and we should expect in the first half this entire money to come in, the 50% piece of it.
Okay. Sure. Certainly when we look at it overall, the growth was primarily coming in from the bulk deposits. Retail was more or less flat and wholesale was flat and also not that much of a growth relative to the loan book growth. How should we look at the overall deposit mobilization given the rising interest rate scenario and what would be our stance in terms of increasing the rates over a period, yeah?
Clearly we are not worried about the deposits. The growth that you see in the bulk deposits is largely to do with the seasonality. You will always see Q4, the bulk ratio at the highest- level because our advances grow at a much faster pace than a pace at which a retail deposit can grow. That is one of the reasons. The other reason is we've if you see our rates today, we are as competitive as any other bank on the deposit rate side. We you know typically you know Q1 is relatively muted vis-a-vis the Q4 of the previous year. We are confident on our deposits.
You know, interest rates clearly should not, you know, it's a market-driven factor. We have, you know, if deposit cost goes up, the lending rates also goes up. In fact, on the fixed rate loan, which is largely microfinance for us, we have already taken an increase of almost 150 basis points last September. So the full benefit of that should accrue in this financial year. The rest portfolio is anyway linked to the variable rate loan. So we don't see a challenge there. One, on the deposit mobilization side, and two, our pricing our deposits competitively in line with the market.
Sure. Now with many of the MFIs, they are raising rates, given that margin cap is not there. Does that also provide us with more flexibility? Any which way we were much lower than that. Still would that provide the flexibility and would we also have a chance to increase it or it will be based on our pricing, our deposits? How would we take that stance, yeah?
Clearly it will depend on our deposits, our funds and our credit costs. With credit cost stabilizing, the factor here is only the cost of deposits today. Depending upon how that moves, we will take that decision.
Sure. Thanks.
Yeah.
Thanks a lot and all the best. Yeah.
Thank you.
Thank you. The next question is from the line of Saurabh Kumar from JP Morgan. Please go ahead.
Hi, Sunil. On your point of INR 500 crore of recovery for the quarter, if you see the stress book is down by about 51 crore, from 170 to 119, and there's a write-off of 20, shouldn't the recovery be INR 30 crore for the quarter?
Comparing like to like, right? When we are comparing 170% as of December, there as well we had an INR 12 billion write-off. Post that it was 170%. We are comparing like to like. In any which way, you know, if there is a write-off, it has a corresponding effect on my provisioning. The provisioning balance also comes down. My PCR. If you know, if you look at holistically whether the provisioning coverage, the PCR ratio, the credit cost and the coverage, you know, on the whole, it is a positive move.
No, no, it is a positive. I'm just trying to understand the collection from this EEB stress pool would have been 30 instead of 15.
Yes.
Okay. Understood. Okay. The second is, sir, I mean, on this provisioning, you could have chosen to make some more standard asset provision, you know, during the quarter. What is your view on the buffer provision which you want to keep?
If you see, during the quarter, we have taken additional standard asset provisioning. Because if you look at our NPAs, they have come down substantially. If we have not taken the additional standard asset provisioning, there would have been a negative credit cost in the quarter. We have buffered our balance sheet. Our ratios across have improved, whether we call it PCR or we call it coverage against the stress pool, whichever way we look at it. That is actually what we look at, and we have taken the adequate provision.
Okay. Lastly, you know, from a next year perspective, I mean, your historical normalized number used to be 1.7, 1.8. So how should we think about? Would you now buffer up that number, going ahead? Or how should we think about your normalized provisions around that?
We had given that guidance even in the earlier quarters, that on a steady state basis, we look at 200-225 basis points, so about 2-2.25%. You know, anyway what we say is 2% ±25 basis points as the regular credit cost going forward.
Okay.
Having said that, we would continue to add buffers, depending upon the. That can add to that. On the whole with buffer, you know, it could be slightly higher.
Got it. Just one last question, sir. What is the PSLC income for the full- year?
For the full- year, PSLC was INR 658 crore.
Got it. Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Rahul Jain from Goldman Sachs. Please go ahead.
Hi, Sunil. Hi, sir. Just a couple of questions. First on the slippages during the quarter. The math suggests that it was about INR 1,900 odd crore. Is that a correct number?
No. If you look at the bank as a whole, the gross slippages number, INR 1,365 crores, of which the EEB gross slippages is INR 1,181 crores. The gross recovery and upgrades is INR 2,395 crores. In the EEB, the recovery and upgrades is INR 2,204 crores.
Got it. Sunil, just on the slippages bit, generally through the year, the individual book which where you sort of, you know, sort of increasingly focus, how the asset quality trends are playing out there? Can you give us some sense?
Individual book clearly is much better than the group loans. Their asset quality is much lower than guided.
Credit cost that we are doing, it is much in fact half of it. You know, there we don't see an NPA beyond 1.5%.
You mean NPA or the loan losses?
The NPAs.
Okay.
Rahul, quality of the individual loan because of the very grateful customer from the group, and they are very, very good, better than the group.
Understood, sir. Sir, you know, if you look at the total EEB portfolio, what percentage over time can potentially move to individual? You know, when you look at the, you know, based on the new RBI norms on MFI, what percentage of book will be comfortable with INR 1 lakh of ticket size, assuming 50% of the loan to income ratio?
You know that the process-wise we have started two years before, graduate from the group to individual because their family income has been increased. We assess the family income two years before we check the status from the credit bureau, not only microfinance, non-microfinance, which is now RBI has come for micro introduced it. Practice point of view, we are on the very speed way we are making on that, and it is needed on that. Because if I go to this, the lending to these people, I should also see that they're not only women and also the husband check will be needed. That is a good way to grow the last mile connectivity by the industry. Bandhan is also the part of that to grow it.
Second point on that. Because of income level now, RBI have been suggesting that 2 years before we have talked all of you on that. How long I can say that this customer will be the microcredit customer? Is it 20 years? 10 years? If they have not income increased, I cannot then I have been not contribute anything their life. If their income increase, why not they will graduate to the MSME? They will graduate to the Agri business. We will come back on that. For that reason, we are started it now. If you see that 24% of our group loan are converted into an individual loan, which is last 2 years, but majorly last 2 quarters. I hope that it will be like to make it gradually in this way. 50% we can be like to make another 2 years.
Got it. That's helpful, sir. Sunil, one or two last questions. The previous question from Saurabh on the standard asset provision, you said you have taken it, you know, in this quarter. Can you quantify, you know, what that number is? Next year, fiscal 2023, you know, do you plan to build anything over and above this 200 basis points of guided credit costs that you have given?
I'll give you the exact number just during the call.
Sure. Just one last bit, you know, in terms of diversification, can we-
It's about INR 225 crores. Sorry, I just got that number. It's about INR 225 crores.
Okay, that's the standard asset provision that you have taken in this quarter.
Additional, over and above required.
Okay. Just last bit on diversification point, you know, which sir talked about. Of the MFI book individual plus non-individual, can we get the latest figures of east and the bifurcation between east, west, south, et cetera?
This you want to know for EEB or the bank as a whole?
EEB.
Sure. West Bengal, you know, if I have to give you the top three states, right? My total EEB book is INR 62,400 crore. West Bengal is INR 25,315 crore. Assam is INR 5,812 crore. Bihar is third at INR 6,957 crore. UP is fourth at INR 5,320 crore.
All right. Thank you so much and wish you all good luck.
Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question at this time. The next question is from the line of Karthik Chellappa from Mirae Asset Capital Markets. Please go ahead.
Yeah. Thank you very much for the opportunity, sir, and congrats on the great quarter. Sunil, I just want to confirm some numbers that you gave. You said INR 136 crore or INR 1,365 crore is the gross slippages and upgrade is INR 2,395 crore, right?
Yes, this does not include write-off. These are upgrades and recoveries.
The net reduction is possibly about INR 1,000 crore and the technical write-off separately is about another INR 2,000 crore, right?
Yes. That's right.
Okay. On the EEB book of INR 66,000 crore, how much is West Bengal?
Let me just discuss that number. The total EEB book post write-off is INR 62,400, of which West Bengal is INR 25,315.
25,000 3 1 5. Okay. Just two questions from my side. The first one is for FY 2023, what is the kind of loan growth that you are expecting for the bank? And specifically, if you could talk about the group loan and the housing loan. What is the kind of loan growth you are expecting for the bank as well as these two segments?
We are looking at 20%-25% at the bank level, and housing is also expected to grow. In fact, our internal target is to grow faster than the bank overall average.
The group micro?
That put together will be growing in line with the bank average.
Okay, got it. My last question is that can I get the restructured book for the housing segment? What was the yield for the housing segment this quarter, excluding the IBPC book?
On the yield side. Just a minute. Sure. It's about, almost 10%, 9.99, 10% yield on housing.
Okay. This excludes the IBPC, this one, right? Because that is much lower- yield.
Yes.
Okay. The restructured book for housing?
Excluding the book which has come out of restructuring, it now stands at INR 528 crore. There is about INR 475 crore where the restructuring. In fact, if we talk today, everything is out of moratorium. As of 31st March, you know, 528 was still in moratorium, while 475 came out six months back. As of today, everything is out from moratorium or restructuring.
By that we mean it's still part of the restructured book, but they have to start paying. The payment moratorium has expired, but it's still like restructured, right?
Yeah, because that's the regulatory requirement, that once you do a restructured loan, till the time the loan remains in your book, it has to be classified as restructured standard or otherwise as if the classification changes.
Excellent. Just one clarification, Sunil, to a comment that you made earlier. On the micro book, you said you have taken about 150 basis points of hike and the housing book is anyway on floating rate. Your underlying observation is that even if rates were to rise on the funding side, you should be able to hold on to your NIMs, all other things being equal, right?
No. Microfinance is a fixed rate. Yes. We should be able to maintain our NIMs, but that depends on which NIMs are you looking at, right? Q4, because of the big recovery that we see on the NPA pool, you know, it is higher. Yes, if you compare with last year, we should be better than that.
Okay. Got it. As far as this inflation impact on your micro borrowers is concerned, especially in the non-agri segment, is there anything that you wish to highlight at least from the cash flow serviceability point of view?
I don't think we've seen an impact of inflation so far on our customers. Historically also, we've never seen inflation as the major issue as far as microfinance customer goes. So far, we've not seen an impact.
Okay, great. Thank you very much and wish you and the team all the very best for the rest of the quarters. Thank you.
Thank you.
Thank you. The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Fund. Please go ahead.
Thanks for taking my question. Firstly, this EEB book, right, of INR 62,400 crores. Now, what is the tenure of this book? What proportion of the loans are one year and what proportion of the loans are two-year maturing loans?
60% loan are 2 years, 40% loan are 1 year.
Can you give the break-up of how many of them are first cycle, second cycle, so on and so forth?
We don't have it handy because for last many quarters we've not been discussing the cycles. We'll check that, and we'll share it with you.
Yeah. Thanks so much. That's all from my side.
Thank you.
Next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Sunil, just wanted to check, could you just give the breakdown of the other income, all income excluding the NII? You did mention the PSLC income, but if you could just break out the INR 2,800 crore.
Very difficult to give a line by, but I can give you the top three contributors, which will anyway be 80-90% of the total fee income. The highest, of course, is the processing fee that is linked to the disbursement. That for the full- year was INR 848 odd crores. And the third-party income, the third-party distribution income is the third largest, which is at INR 347 crores.
Got it. Just the PC.
The next piece is the bad debts recovery. This quarter has been a good quarter for us. Recovery from bad debts is INR 388 crores.
This is for the year?
This is for the year.
Got it. This is useful. The PC PSLC income of INR 660 crore was made on what kind of sell-down to certificate? Like, what's the underlying quantum?
We didn't sell anything under the micro portfolio because of the Udayama DA. These were largely other PSLs and Agri.
Would you now do a little bit more of PSLC sell-down? You would have excess, right?
Oh, that clearly depends on what is my excess and how we tend to use it. Because the option to us is IBPC or PSLC, depending upon where we get the better yields.
Got it. No, I was just asking this because there will be demand in one or two years from the large bank mergers. Just wanted to check if that you do have more scope in the P&L to do that. My second question is, could you just give the slippages and recovery upgrade numbers for the full- year?
Sure. For the full- year, if you look at bank as a whole or should I talk about EEB?
You could give both, Sunil, if that's okay.
For the bank as a whole, the gross slippage was INR 9,430 crore. I'm talking about bank as a whole. Recoveries and upgrades was INR 5,561 crore, and write-off was INR 3,247 crore.
EEB, the same numbers then maybe.
For the full- year it is INR 8,134 crore, the gross slippages. The recoveries and upgrades was INR 4,487 crore, and the write-off was INR 3,244 crore.
Perfect. This is helpful, Sunil. Last thing, it is asked, but let's say that Q4 was great. You do have momentum on collections now. If credit costs undershoot, the next 12 months in terms of the 2%-2.2% number that you guide, would it be fair to say that a lot of it could be used to, like, just build up the buffer?
Yes.
Got it. Perfect. This is useful, Sunil. Thanks.
Thank you.
Thank you.
Thank you. The next question is from the line of Kashyap Jhaveri from Emkay Investment Managers. Please go ahead. Mr. Jhaveri, there's a lot of background disturbance from your line. May I request you to move to a quieter area and ask your question?
Hello? Hello?
Sir, there's a lot of background disturbance from your line.
Yeah. I'm actually traveling right now. Just one question from my side and a data point. In the, you know, recovery that you had during this quarter, what was the interest income that was recognized on those recoveries during the quarter? That's the only question I have.
Mr. Jhaveri, I'm sorry, I don't have that number handy. I will have to come back. You can take from us offline.
Sure. Thank you.
Thank you.
Thank you. Before we take the next question, we would like to remind our participants, you may press star and one to ask a question. The next question is from the line of Param Subramanian from Macquarie. Please go ahead.
Hi, yeah. Thank you for the opportunity. I wanted to ask on the restructuring book, what proportion is still under moratorium? Because you'd mentioned, some amount would start coming out of moratorium from in Q4 and Q1 . What is the accrued interest on the restructured book, for the EEB vertical? Yeah.
50% of the, you know, roughly ±1 or 2% it can be. Roughly 50% of my restructured book has come out of moratorium starting first of April, and the rest will start from first of July.
Got it. That's helpful. What's the accrued interest on the restructured book?
Accrued interest on the said book should be around INR 800 odd crore.
Got it. Thanks, Sunil. One more question, basically on the new MFI norms. I wanted to ask, you know, a number of the MFI entities are talking about slowing down disbursements in the first half until, you know, the credit bureaus, et cetera, align to the new norms, basically on calculating household income. Firstly, how are we placed on these new norms if we are looking at it? Of course, applicability is a different thing for us, but are we looking to slow down disbursements? And what proportion of our book would be in line with this, you know, 50% EMI to household income cap? Yeah, that is my question. Thank you.
There is two factors in here. One factor, always after the March, April disbursement has come down. This is normal nature. First fifteen days there is no disbursement has come. This is a normal nature. Second part on that, I mentioned earlier, we are really practicing this household income credit bureau check in our graduation loan two years before, and it is practicing. So in that sense, we have not much more time to transform to the new system. This is going on to us. We have not wait for one month.
Essentially what we are saying is when we started this individual loan product, we were looking at family income, we were looking at family credit bureau. There is a process which is already running for individual loan process. Of course, that book is smaller the size than a group loan.
That is.
To that extent, the volume will be much bigger. It took us two weeks to start that process on the ground, and since then we've been doing it.
Got it. That's helpful. Thanks, Sunil Samdani, and congratulations on a good quarter. Thank you.
Thank you.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Yeah, good evening, sir. My question is again on these new norms. You said that you are, you know, already practicing this over the past two years. What I understand is some part of it is also dependent on external agencies like credit bureaus being able to give you the information. Some of the participants have called out that the bureau itself is not ready with that kind of information about specifics about the consumer and the household. How are you bypassing that? You know, I mean, you're able to get that information or have that information without the help of the bureau.
You're right. You know, how you read it is important. There is no one report for the consolidated family household record, you know, both on the micro and on this side. What we do in our arrangement with the credit bureau is they give us a separate report for the husband and then for the wife. But within that, they give us both the micro as well as the consumer. We take two reports instead of one, and accordingly we proceed. That is what we've been doing it for our individual loans.
Okay. What kind of observation do you have on the FOIR? Is there enough headroom to give large ticket loans, or do you have to increase the duration of the product to accommodate it? What has been the experience? Because, you know, you seem to be ahead of the curve in practicing this.
FOIR, we are also practicing in our individual loan 50%.
All the customers, they have enough headroom, in terms of that 50%?
No, that cannot be like to comment now. If we don't have another quarter, we'll be past and then we can discuss that.
Let me give you a data point. We used to be 50-50% two-year loan. That ratio is now 40%-60%. 40-60. Right? If that helps.
Okay. 40-60. Sorry, what was that?
40 is 1 year, 60 is 2 years. Earlier it used to be 50-50.
Okay. Are you also planning to introduce longer tenure loans, maybe three years or longer, just to reduce the EMI?
See that we will have to see, you know, once we have, it is just there, right? It's only a month. We will have to see whether we are able to fulfill the customer requirements or not. Then we will have to take that call, whether we are comfortable or is comfortable. Then we will have to take that call.
Okay. Thank you so much. Thanks for the answers.
Thank you.
Thank you.
Thank you. The next question is from the line of Rahul Picha from Multi-Act Equity Consultancy. Please go ahead.
Yeah, thanks for the opportunity. My first question is on Assam collection efficiency. When I look at the collection efficiency in Assam for the month of December, it was 96%, and for the month of March it was 98%, while for Q4 average it was 93%. Why is there a dip in the average number? I just wanted to understand that.
Yes, sir.
It is not a dip, right? If you see, the average has improved by 2%. Yes, you are right. If you assume that December was the base and then it has to improve, then yes, you will find it as a dip. If you see, on a month-on-month basis, there has been an improvement.
Yeah, for the quarter there is an improvement, but I was just thinking that from December onwards, our collection efficiency trend should have been on the upside. In Assam, was January or February a bit challenging or any qualitative insights on that?
No, not really. You will always see the last quarter of the month will have the higher collection efficiency. That has been the trend.
The average for the quarter being 93, it kind of also implies that probably Jan, Feb would have been even under 90, right?
No, there are two things here, right? One is the recoveries from NPA. As the quarter progresses, the recoveries improve, right. Second is the write-offs that we take. That also gets impacted only the March number and not the full quarter number.
Okay. These collection efficiencies don't include the recovery from the NPA pool, right? The geographic collection efficiencies that you have given. Is it included with it?
No, the geographic is excluding NPA.
Yeah. Okay. That would have been, I think, primarily impacted because of the write-offs.
Yes.
Okay. Sir, second question is on the restructured book. Like, a part of the restructured book would be out of moratorium starting first April. So how have the collection trends been in that book, if you can qualitatively give some, you know, color on that?
See, we don't want to give a forward-looking number, but you know, we've given the collection status on our restructured book as on thirty-first March. Right. It can't be very different there.
Okay.
It can only improve, right?
As of 31st March it was still not out of moratorium, right, so.
Okay. That's what I'm saying. It can only improve. It can't deteriorate.
Sir, my last question is on the steady-state credit costs. I think, little while back in the call you said that you expect 2.5% kind of steady-state credit cost going forward. Was that on the total book or only for microfinance?
That's on the total book.
Okay, fine. Thank you.
Thank you.
Thank you. The next question is from the line of Karthik Chellappa from Mirae Asset Capital Markets. Please go ahead.
Yeah. Thank you for the opportunity again, sir. I just have two questions. The first one is for the housing book. Can you share what is the average ticket size?
INR 815,000 on outstanding.
Oh, no, on disbursement.
Suresh, do you have that number, Suresh?
It is close. Good afternoon. The incremental disbursement is in the range of INR 13.5 lakh is the average ticket size.
13.5. Okay.
For the year.
For the individual micro loans, what is the average ticket size and yield?
Average ticket size INR 115,000 on disbursement basis. I would like to say that the-
Yield is the same as group loan, 19.5%.
Okay. If the NPA on the individual book is only 1%-1.5%, and if I assume credit loss is also in a similar range, with a higher ticket size, from a pure micro book perspective, this should be ROA accretive, right? As the mix shifts towards individual loans.
Yes.
In fact sizably ROA accretive, right?
No. See, we don't expect micro group loans to have a similar credit cost like what we had last financial year. Right. We expect credit cost there also to improve.
Clearly.
No, I mean, even if you assume the credit cost to be about 225-250 basis points for the group loans, and this is only 100 basis points lower with a lower cost income ratio and a higher ticket size, the ROA should actually be materially higher, right?
Yes, it will be higher. I don't want to put a con, you know, adjective to it, but yes, it is higher.
Adjective to it. Okay. This is enough. Thank you very much. I wish you all the very best.
Thank you.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Sunil Samdani, CFO, for closing comments.
Thank you, ladies and gentlemen, for your time and patience. Thank you very much.
Thank-
Thank you. On behalf of Bandhan Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.