Q2 20/21

Oct 22, 2020

Quarterly report

Ladies and gentlemen, good day, and welcome to SBI Card's Second Quarter FY 'twenty one and First Half FY 'twenty one Earnings Conference Call with Analysts and Investors. As a reminder, all participants will be in listen only mode. And there will be an opportunity for you to ask questions after the presentation Please note that this conference is being recorded. I now hand the conference over to Mr. Ashwini Kumar Tabari, Managing Director and Chief Executive Officer of SDI Card. Thank you, and over to you, sir. Good afternoon, everyone. On behalf of our company, SBI Card and Payment Services Limited, I extend a very warm welcome to you and thank you for joining us today for the Q2 and H1 Investor Call for the financial year 2021. You would have seen the presentation, which has been uploaded. I would like to extend my gratitude to all of you for helping SBI Card grow as a trusted and responsible organization. We also hope that you and your families are staying safe and healthy. It is imperative to continue taking precautions during this festive season and beyond as the country goes through unlocked Phase five. So despite the challenging macroeconomic environment we are operating in, I'm happy to share that our business has continued to perform well SBI Card has remained agile in responding to changes in the operating environment and has continuously harnessed new opportunities to sustain business growth. This, when combined with our strong business fundamentals, has enabled us to performance on new account acquisition as well as trends, both coming closer to the near pre COVID levels. So let me just give you a high level view of what the performance has been. On the new account front, on a sequential quarter on quarter basis, in Q2, which is July to September over Q1, our new accounts volume has grown more than 2.4x to 688,000 accounts compared to 288,000 accounts in the previous quarter. This obviously is lower than the previous pre COVID levels, but in the month of September, we almost reached the pre COVID level at about ninety eight percent and we had run rate of 388,000 accounts, which was almost the same level as in COVID, which we defined by December to February month, because March, part of March was also part of COVID. The other thing I want to point out, which is detailed in the presentation is that we are also expanding the market. This is on the back of increased sourcing from the banker channel. The Tier three plus sourcing in Q2 was about 15 higher Y o Y. And new to credit card was 28% as against 25% in the Y o Y. And new to credit itself was 23% compared to 18.6% in the previous year. So therefore, we are expanding the market going into Tier three and beyond and also new to credit and new to credit card customers. And the delinquency levels on these are behaving better than these others which we have simply because they're coming from the bank and therefore we have a visibility on the accounts and also an access to accounts should they default. As for zero data also, our market share in these segments and new to credit was 31%, so we are leading the market here. In terms of trends on a sequential Q on Q basis, our retail spend grew by 50 and the increased growth was a result of the sales unlocking we have been seeing and the resumption of economic activity and consumption. There was also some element of pent up demand due to the lockdown in quarter one. Overall retail online spends which we gave in Q1 as 105% of pre COVID have gone to 114%. And overall it is 54% of the total retail spend and we estimate this will continue to grow well. The retail point of sale spends are at 72% of pre COVID levels, whereas the online spends are 114% as I mentioned. Retail spend for month of September especially have improved and they are at almost at 92% of the pre COVID levels, which as I mentioned, were defined by December to February period. Retail online spend at 114% and cost spends are at 75% in the month of September. For October, we have seen further growth in spend in the launch of festive offers, because the festival season began in October unlike last year when it began in September. We had a six day $1,000,000 day 1 million day sales with gift cards, which has seen a significant jump in volumes compared to last year's program during the festive season. We've also seen cardholders increasing adoption to the non cash contactless payments and almost one in every fourth possible industrial transactions, which which our card sees is coming in as a contactless transaction. And we got popular activities include grocery, environmental stores, fuel and restaurants, and this is likely to continue. Our performance is a result of various proactive and strategic initiatives we rolled out. And for giving more choice to customers, we have continued to forge new and strategic partnerships to give differentiated value proposition. We partnered with American Express to bolster our network and premium play. And now the S Pay card is available on all payment networks in India. Our payment cards that we currently lead and Cards Prime are now available on the American Express global network. We also launched a flagship offering of IRTTC SBI card on the RUPAY platform, extending the product to a larger customer segment, which is making our massive premium portfolio more comprehensive. We have also collaborated with Google to enable our cardholders to make contactless payments using Google Pay. We continue to seek an emotional connect with customers through various brand campaigns and we brought in targeted offers in line with consumer spending trends through extensive use of data analytics. On the merit of many such initiatives, we continue to grow faster than the industry and the market share on both parameters, spends and cards in force has risen for the quarter. One positive outcome of this COVID-nineteen is that digitization is the new normal. We expect consumer interest in digital and content and payments to grow further. We also continue to monitor the situation closely and realign ourselves to leverage emerging opportunities as also manage any potential business impact. On the other financial performance highlights, on profitability, despite a tough operating environment, the company did well in delivering a 37% Y o Y growth in pre provision earnings for second quarter FY21. This was enabled by a robust performance in the business front, ensuring positive operating leverage. Our net revenues for the quarter grew by 9% even as our operating expenditure reduced by 10% leading to a positive operating leverage of 19%. The credit risk situation is also impacted by the macroeconomic variables around us. Post COVID, the assessment of credit risk in the financial services sector has become complex, and it is also influenced by the RBI moratorium and Supreme Court orders on N. Standstill effective thirty first August twenty twenty. To cover ourselves for future credit risk, we have enhanced the management overlay to INR268 crores in Q2 and the overall management overlay in books stand at INR758 crores as on September. This is over and above the base required provisions of INR1295 crores. Our G and A number is 4.3% as compared to 2.3% Y o Y quarter two last year. The profit of the quarter has been impacted by higher provisions outlay, which is acquired for the quarter at INR $2.00 6 crores compared to INR $3.81 crores in Q2 financial year 'twenty, and therefore the ROAs for September is 3.4% and ROAE is 14.1%. We have much greater detail in the presentation and we'll be discussing more about this in the questions which follow. On market share, we've been steadily growing our market share in terms of cards in force and cement and I'm happy to share that our market share for cards in force has grown to 18.7% in August, which is the last RBI available data from 18% in Q2 FY twenty twenty. And our market share for spends in Q2 FY twenty twenty one has grown to 20.5% from 18.6% in Q2 twenty twenty. In each of the previous three months, our market share both in Sprint and cards in force has grown. Moving on to the cards in force and receivables. Cards in force grew by 16% year on year to INR1.10 crores or INR11 million from INR0.95 crores in Q2 FY20. Receivables grew by 4% year on year to INR2398 crores compared to INR2338 crores in Q2 FY20. Our liquidity and capital adequacy, our liquidity position continues to be strong. We have a lot of lines which are still not utilized. Our capital adequacy ratio for the period of September and September is 25.3% as compared to 19% last year in the same period. Our A1 capital ratio has moved to 21% from 14.8% in Q2. Our credit ratings remain excellent with A1 plus and AAA ratings by Chrysler and Iqra for both short term and long term borrowings. These ratings for rating agencies reflect our robust business and financial fundamentals. At SBI Card, we are working towards driving market expansion. And as I mentioned earlier, our sourcing of new integrated new strategic card customers is continuously increasing. We are seeing increasing percentage of customers from Tier three plus cities. Our share of market in new to credit, new to credit card and Tier three cities continues to be significant as per civil report for quarter one. This also reflects the increasing penetration of the SBI's base. We understand that the SBI card has also been included in the FDIC Global Equity Index Series in September 20, which reflects our strength in trusted investors and foreign portfolio investment share in our stocks has increased to 5.93% in September 2020 from 4.23% in June 2020. We at SBI Card have always been working towards holistic and sustainable changes impacting our communities. We have recently implemented a sustainability policy approved by our Board, which will strengthen our commitment to building a better society. We have included a summary of the ESG areas in this presentation. Just to highlight, our digital interventions through paperless communications have enabled a saving of over 1.5 lakh rupees in the last three years. In this year, we have contributed 18.66 lakh medical equipment and distributed over 3.1 lakh meals in relation to the underprivileged. Our social interventions through community development remain strong. I also want to call out the diversity. We have a share of 29% women in our workforce. And more important point is that in the senior leadership position, we have a similar number of 29%, which is much better than many others in the industry. We also have a very young workforce with 40 of the workforce being less than thirty years. I would like to reiterate that our business operations are running normally and we at SK Card remain committed towards supporting our colleagues and customers while remaining financially robust. Over the years, we established ourselves as leading player in the Indian credit card industry. And today, we are the largest pure play credit card issuer in this country with deep domain expertise and a strong legacy. Before I end, on behalf of SBI Card family, I also extend my heartiest warm wishes in advance for the upcoming festival. Enjoy the festivities while staying safe. Thank you very much for your time, and I will request the operator to please open the lines for any specific questions you may have on the performance of the company. Thank you. Thank you. Ladies and gentlemen, we will now begin with Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Nishant Shah from Macquarie. Yeah. Hi, sir. So I I just had a question. I'm trying to Sorry to interrupt, mister Shah. Sir, we're not able to hear you clearly. Your voice is breaking. Okay. I just Sir, your audio is not clear. Sorry. Is this better now? Hello? Yeah. Thank you. Yeah. So, yeah, so I'm just trying to figure out what is the total to monitor. So we have about 9% of restructured loans. We also have about 7.6 NPLs, excluding the Supreme Court settlement. So first of all, is there any overlap between these portfolios? That's question one. Question two is, is that 9% restructured, does it include only the RBI restructuring or does it also include the easy payment plan restructuring as well? And third would be, would you like the pool of Stage two or like any potential base that comes which are not yet completely reflected? So first, what is your question on this question, please? Yes. So I will ask Pranav to actually answer all of this. But 7.4 which you mentioned is the number including the Supreme Court standstill. It is not excluding that. So that's the first thing. Therefore, when we talk about 07/1946, it has the NPL number, which we have and it also includes the standstill, which is not classified yet, but had it not been fully ordered, would have been NPL. So that's the point number one. Second is the RPIRE number, which you're talking about, does not include the easy payment plan for the moment. And third is what, Stage two. And as there is no well. So, yes, could you just like quantify all the things for us like what is the easy payment plan AUM under that thing and less than all the overlap. So we're just trying to Of course NPL numbers overall, the absolute numbers are $10.28 crores, which is the 4.3% number. There is INR $7.62 crores, which is standstill and therefore the total number including the standstill is INR $17.90 crores and that accounts for 7.46%. So that's the first big number. You also have an RPIRE number of INR 2,108 crores. So and there is no overlap between these two sets of numbers. The easy payment plan, we haven't given out actually in the results. So But Nishanth, to your point, the easy payment plan was given only to customers who paid all their overdue and became current and hence that's the reason why it's not being called out separately. Yes. That's a smaller much smaller number compared to the RBI book. We have not given out that this number is just INR160 crores. It is all current because they all paid up the whatever dues they were there, old user. Okay. 160 is the total amount. Total amount is Q2. I mean, it might more people might come in later at Q2. Okay. Got it. And So, Nishanth, stage two for us will be accounts that are what we call as SICR, so they are not current, but they are significantly placed in credit risk. And the $7.62, which is asset sector. So it's not just $7.62, there is a delta there also. We haven't given the breakup between one, two and three here. However, I need to look at the financials that's been uploaded there, the numbers are available on that. Okay. I have a question. We'll move on to the next question that is from the line of Anuj Shigla from Bank of America. Yes. Thank you very much. Good evening, Mr. Devari and team. So my question, again, relates to the 07/10/1946 in December. So we are actually taking a cautious strategy of you know, pushing it out from volume one and that's why we have seen this planning more volume two. So when I look at this, this is a very limited number. So what kind of resolution framework do we have towards the second half of the year? And if at all we can give some guidance on the debt cost side as well, what credit cost you can see for FX? So two or three things. We can't we don't really give any guidance as to how the numbers will occur. Two or three things. One is that the problem actually is only on the moratorium stock because what we have been seeing from the post moratorium, which is those who did not go to moratorium, like, let's say, somebody funded in April, May and thereafter, that number from an analysis itself that it is already below the pre COVID level. So that portfolio is behaving good. I mean all of that which has taken the post moratorium period. So this is one part. The current business as we grow that business is behaving good. And in fact, it is delinquency levels are lower than the previous pre COVID levels. That's one. The second is on the moratorium pool. As I mentioned in the previous listing also in the Q1 call, a lot of these data people have already paid up. So what you see here, which is in terms of the RBI book, which from which as per the first month of that RBI book in terms of repayment has just started out in the month of October because many of them came in from August towards mid August or, let's say, towards August. And their first payment became due towards in September. And almost I mean, a large proportion has already paid up. I'm not saying that there are no delinquencies there, there are. But we are able to pull that quite significantly. So that gives us some comfort, but there was always this fear whether all of these people are going to pay or they're not going to pay. So we need to watch this book for the next quarter or beyond. If they pay the first three installments in our view, then this book should be good. So that's the second part of the piece. The 2,108 number has actually gone up since then. I would not I can't give you that number, but it has gone up since then. So what the Supreme Court order has done is given us some more time to actually enroll more people into the RE because the difference between the RE and the ATP is that for ATP, people have to pay quite a lot upfront. And that is why most people are preferring the RE. So that is the second part. Third is that the standstill, we have already provided for the entire standstill and we have given out those numbers so that whatever hit we have today, we have already taken. Now part of this standstill has also been pulled back into RE. So it's not that this is the final number. There is of course, there's some other number beyond this also, which is today sitting in, let's say, beyond the midway between the NPL stage and a standard or overdue stage, which might turn NPL also going forward. Again, from that pool also we are working to get them into RE. So the other thing is that there are some who are coming in for even these settlements, so where we might have to take some hit, but the account gets closed and they want to settle in one go. So we are open to all the things which are out there. We are also engaging with a couple of other partners for communication reaching out innovative ways, for example, Credita, that's one of our partners. We're also talking to SBI for gold loans to many of these who are who may be SBI customers or otherwise because SBI is into a big way in gold loans. So a combination of all of these factors, in my view, should help us going forward. This number, which is elevated, which you'll see, might stay around that for some time because clearly the resolutions will take over time. IB book of course will remain standard till the time the customer continues to pay us. But the elevation part could be a little bit elevated like you'll see. But I don't think that we are not in control of the situation. When we began this quarter actually and when the people just came out of moratorium, we had a real issue whether how we are going to find out because the RPA team wasn't there, it came only on the August 6. Since then, actually, our team has done a fantastic job in terms of enrolling this many numbers. And this number is equivalent to, I mean, lots of people, almost like three to four lots of people who have been enrolled, not a small number. So we are continuing to work on this problem as we go And I'm sure that we are on top of things and we will continue to provide if necessary. Understood. And the second question relates to Slide number seven on the presentation. So it's Okay. Yeah. See, what happens is that you are referring to the overall, you know, SIP data. Any kind of a arrival or attrition activity also impacts the shift number and that's not evenly distributed because that's not being caused by the acquisition effort. So the distribution that we have given to you on acquisition is the correct distribution in this quarter, which is INR 39 and INR 41. But you are right, the CF number will be impacted by the cancellation side as well. But what we have been seeing actually is that this number also is trending upward. So overall distribution also, the 1% is coming up. This is more a short term thing because of the unfavorable effect that you've mentioned. And lastly, Tier three plus others account for around 27% of unused card sourcing. Now what type of confidence we have and these might be unfettered towards as well. So what kind of confidence we have that this is not going to take any further escalation on the delinquency or the credit cost side? Expiration that's a very good question. Just I'll refer you to Slide nine, where we have given this tier wise distribution. And what are what we have seen here is that, for example, the I mean, I'm referring to the slide now, the 32% Tier three, is that 33%, 32%? And if you look at the delinquency beside it, it is lower than the others, I mean, the Tier one itself. So our comfort is that most of this Tier three and beyond is coming from Bank of America. So therefore, that is where we know the account, we have a visibility on the account, we also have a history of the transaction history of that person. And also finally, we also have access to the account. We can see the balance from the account where there to be default. So combination of all three gives us confidence that this will behave well and the delinquency number bears this out, but so far it is lower than the Tier one itself. Understood. Thank you very much. Thank you. Thank you. Your next question is from the line of Ashish Sharma from Inam AMC. Two questions from my side. One is on the SBIR Google Pay partnership. And second is the clarification on on the stage two this classification. So so we are providing stage right classification of the release. So any any comment on on that? And based on your observation, given that the annual report stage two number was quite high, I mean, how do we manage the cost outlook for FY 'twenty one? So the Google Pay partnership is really very important for us. I mean, I'll start with that because it is one more way to actually push the digital journey forward and you know the future is all digital. And since GPA has really taken over a significant chunk of the UPI transaction volume, I mean, they are the number one player at the moment, close to 50% of the UPI transaction pool. So we thought it important that we are part of this journey. And now we are there and we are as a tokenized card, we are available in the wherever the GPay app is used for payment. So this has just begun. I'm sure that this will go a long way in terms of our acceptability as a payment mode. So that's very important. And we are also in conversations with other things, which as they materialize, we will disclose. So that's on the Google based side. On Stage two, we haven't actually given the numbers as you also pointed out. We have not distributed between the stages as they are. But you want to comment? So it would include two things. The RBI, RE that we are booking, that will be part of Phase two. The other piece to notice is the $7.62 that we were talking about, the exit cancel, that is also a part of Phase two. So to that extent, Phase two will not be a pure Phase two number. Ma'am. And just on how to sort of see given that the annual report mentions that the profitability of the call and the loss given on the stage two is a high number. So how should we see the credit cost spending? And on the Google partnership, in that case, these are regular and they are we have a separate arrangement? No, no. The regular ones apply because you have to understand the debit card, there are limitations, I mean up to two thousand there is nothing and beyond two thousand days something. But in credit card, so far the MDR there has been no change. So for us as far as this partnership goes, there is no change in the MDR for the moment. Okay. Okay. Perfect. Thank you. The next question is from the line of Shweta Dopkadar from Prabhupada Srilagar. Please go ahead. So both I mean, the second question first, if you add those two also, it is 43%. It is a little lower than 45, which it was. But the RBI, we have just shown separately to be very transparent. So this is rather converted into a kind of an EMI program where the customers will be paying over a period of one year or two years. The key question definitely is how is this book going to behave going forward because there could be questions on this. And as I mentioned earlier in response to earlier questions by Nishant, that what we have seen the first round of payment which we can do for quite a significant portion of this book has been paid. And those who did not pay, we have been able to draw a lot of them back. There are still some delinquencies left, but we are on top of it. So if we watch this book for the next two, three months and we are able to collect a significant portion of this, I think we'll do good. So that is the question. I mean we can't fully predict it because this is just the first month and even there also not everybody has been statement. So over the next two months, we'll probably have a better handle on how this book is going to behave. So that's one thing. Regarding the other part, which is a standstill SP, as I mentioned, we have already provided for it. We are already pulling back some of that into the RBRE scheme because the RBRE scheme, as you know, is applicable till December. So therefore, we are doing that and the Supreme Court order is still at the moment till November 2, we get this dispensation. So till November 2, provided the second November opens up the NPR team, we still have some time to go. And we also have our own restructuring scheme, which at the moment we were not applying and that applies to NPL accounts. So we will be working on that as well. So we have a lot of tools available as far as the credit cost goes. I don't think we'll have many fresh surprises, but the level could remain high if we are able to provide for it completely and or recover it. Even if it goes into RE, it will still continue for the period of one or two years and there will be certain amount of uncertainty on that book. Is much, much better. So therefore, I mean, while I don't think I've given the numbers separately, I mean, is much, much lower than even the declared GNPA number what we have. So since you have not declared a number, I'm not giving you that number, but it is much better than the declared GNPA, not counting the standstill. So you can draw your conclusions from that. Sure. Thank you. I'll join back. Thank you. Thank you. The next question is from the line of Pumka Jatajwal from Amstrad Capital. Please go ahead. Yes. Hello, sir. Hi. Hello. Sir, what's the economics of this one billion day sale? I mean, how does it work? Sorry to interrupt, Mr. Agarwal. Sir, your voice is breaking up. Is it better now? Sir, it is slightly better. I can hear you. So go ahead, please. So what's the economics of this $1,000,000,000 I mean, because discounts are quite high on such transactions. So is there a high cost to income kind of transition to So the economics works like this. Typically, if you have seen this offer, let's say the Flipkart offer, it was broken into three two days offers. So $17.50 on first two days, 1,500 maximum cash back on second and then 1,500 once again. And the cash back was also there was a minimum transaction amount and then this was a maximum amount of cash back that you get. So there are actually limits to the way the cash back is given. Secondly, this particular cash back amount is shared there is a contractual sharing of this between the there is a back to back contract which we have with Flipkart or Amazon whenever when we are doing a cash flow buffer in terms of how this whole how the money is going to be looked at, okay? We a lot of this is NDAs, but the way it works also is that we see a large proportion of some of these sales because these sales typically people end up buying smartphones, consumer durables and high ticket sales categories. What we see is a lot of this gets converted into EMI options. So typically anywhere between 25% to 50% of the volume comes as EMI of book basis, which stays with us over a period of time and gives us interest income also. And the other just to add actually, one other thing is that we have a fixed amount which we paid for as part of cash back. There are, of course, gaps around the cash back as well. But it's not that the sale, if it goes beyond that whatever we had budgeted, we will continue to pay more. No, we don't pay more. And actual numbers are actually far more than what the credited So sales number for example, this Flipkart sale, there are multiple things that happen. So for example, Tier two and beyond, almost 50% of the sale comes from Tier two and beyond. So it we are very strong in Tier two and Tier three, we are sourcing a lot of cards from there. It helps us activate those customers. For example, a lot of inactive customers, almost one lakh plus around one lakh customers who were inactive for last six months suddenly started using this their card during this phase. And then they continue to work use their card over a period of time with us. So this still has multiple benefits. It improves not only spends, customer engagement, it builds assets over a period of time and also lesser attrition because once the customer gets the cash back offer, he realizes that he has got some value from the card. So there are multiple benefits of this. And the cost is limited because we budget for a particular sales, beyond that we don't pay at all. Yes. Thank you. But leaving aside the long term benefits of BMI or customer investment, would it be fair to say that at the time of transition, are the transition just Well, if you just say that the cash back on its own, of course, the cash back is upfront and the MDR is very small portion compared to the cash back. So on that, yes, that's the case. But overall, what we have seen, and this is not the first time we are doing this. Last year, we had with MSO. We've been doing this for last almost seven years. We have quantified the benefits of it. And not to mention the benefit with the brand gets because new customer acquisition, it is these are the biggest deal in the country at this point of time. And being the largest stand alone credit card provider, we have to participate and we should be participating in these ones. The SCSC did participate with Amazon. We signed up with Flipkart and that is We are not losing money. Let me just That's look at on the day of the sale, maybe you can say what's your sale, but not we are not losing money at all. Okay. Okay. And sir, my second question is on your. So when is the provisioning on the central segment relationship? So if I look at your normal, so we've been outstanding, I think, six and if I take ten years on 10, it's roughly. Right? This additional time, this process is not. No. Of course, is through P and L. How can I provision the outside the P and L? And so that number for our actual NPAs, etcetera, is about INR 1,200 odd crores. And then we have the other overlay of INR $7.58 crores on top of that. That includes INR 500 crores of the standstill I mean, provision against standstill NPAs plus an overlay of INR $2.68 crores. That's the total distribution. So I mean, I don't know which slide are you watching this, they say that it has not been seen? Like, I was looking at your, you know, one q, you know, provisions outstanding. Right? It was up 615,000. Right? Provision outstanding. And on the, $6.75 crores. Right? So roughly $4.50 crores of, you know, probably. And then you have some management over there and some items. Right? But now you can include the then your total provision cost. Right? Is included. So this is as on as on the account that 489 separate. If you go by that logic that 489 should be read today as $2.68. The next question is from the line of Gaurav Shah from ASK Investment Managers. My question is more with respect to this moratorium and subsequent action by the Supreme Court. So we are essentially a business like yours, which is revolving around. Any idea of a moratorium is a big problem at this point. But when a moratorium of three months gets doubled by one more moratorium, it makes it even more difficult. On top of it, when Supreme Court intervenes to not be played in India for a given length of time. So not really clear, really rational. It makes from a credit culture and other standpoint very complicated kind of situation because we would have got something called so that it doesn't give really a place to stand in this matter. It's really probably not a domain knowledge. I just like this are actually upholding of the legal context, which is what courts are supposed to do. The courts allow the legally injured contents to be delayed or deferred. How do we offer concessions? And then it's a very problematic overall issue. So in a short period, business like yours, doesn't it introduce kind of an unforeseen unknown kind of a risk? Mr. Shah, frankly, I cannot comment on the Supreme Court's rationale or whether it was right or not. All I can say is two key things. One is that we had actually at the end of the moratorium one and of course the uncertainty is absolutely correct. It lends a lot of uncertainty and the general thing is that nobody can pay 42 or 43% interest on a revolver for a long time, that's not on. And that is why our what we did at the end of moratorium one was to make it instead of an all out to make it an opt in, which means people have to go online and then apply for a moratorium. And what we found that our numbers of INR 7,000 plus crores, which were there at the May, would have already come down significantly at the end of moratorium one and about 1,500 crores remained. And that also came out to the significant extent in the next one or two months. So actually, for us, the Moratorium two was a very small number and was not there at all actually. For us, most of our customers, there was a Moratorium two. So that is one thing. I mean, wouldn't say that we are on top of the moratorium game altogether. But we decided that we had faced this problem as it stands. And therefore, for the last three, four months, we have been working with all of these customers and RBRE came at a very, very good time because people are not willing to pay the upfront significant minimum amount due required under the in house plan. So once the RBRE came, which was an equal kind of distribution and they did not need to make a significant payment upfront. From August 6 till thirtieth September, INR2108 crores is what we enrolled and some more numbers beyond that. So therefore, this was a good success. And our pitch was to all of these customers was well, you get more time, more importantly, your rate comes down. It becomes like less than half of what you're paying. And that actually many of the customers understood. So therefore, that standpoint also that is the sustainability of the debt, we were pushing this scheme, not so much to defer the NPAs or any other recognition, etcetera, because we will take provisions as they come along. And if the book does not behave as we intend, we'll provide more. So our idea was to make it sustainable, and that's why we are continuing to work in this direction. And then of course the Supreme Court judgment when it comes out, we have already taken that standstill number we have given it out, we have provided for it. So we are ready and when the judgment comes out and what we will decide ultimately hopefully we will get reimbursed, But at the moment, we don't know and we will wait for the judgment when it comes out. So that's where we stand. The uncertainty definitely is there, but we can't help it. And as a responsible company, we could have faced this uncertainty. Thank you. You. Participants, in order to ensure that the management will be able to address questions from all participants in this conference, The next question is from the line of Jairmin Shah from RWC Partners. Please go ahead. Yes. Hi. Thanks for the time. Two questions on my end. The first one is, could you talk a bit on how kind of the contours of restructuring, duration, rates, whether the spends are allowed, how credit limits kind of shift. And the same for, you know, the other two brackets, which is and the EJP scheme. And then I'll take the question to you. Sure, sure. So RTI, RE team, the accounts were all blocked because these have become delinquent. Partly, is that if the customer pays onefour of the scheduled PMI, let's say, one year plan and they pay for three months, then we will open up the card for them to a limited extent of what has been paid. So that's the pitch. And at the moment, those cards are blocked if we reach that level. Same applies to the EBT also. Initially, it is blocked, but then as they pay about two or three AMIs, they will open up that card. So that is where both the accounts stand. In terms of contours of this team, the RBRE team actually the limitation is that the maximum period is twenty four months and the customer has a choice to take plans. I mean, report with only two plans actually, one year and two years, so which means just to simplify it. And we have an interest rate of 1415%. So those are the two interest rates for this period. We have not placed any limitation on prepayment or earlier payment, etcetera. And some customers actually came back to us and paid the investing upfront after the first payment. So we are seeing all shares here. So that is what the RBI scheme is. The EDP scheme is more advanced. So we give time from right from three months to eighteen months and the rate of interest varies from 12% to 20 So therefore, there's a greater range there. The other difference is that the ECB scheme is not reported to the bureau because the minimum amount due has been paid, therefore, are current. Whereas the RBRE scheme is reported to the bureau as a restructured account. However, if they do pay us, then we would look at cleaning up the civil book. So that's the overall way in which the RBRE scheme and the APP scheme are structured. As I mentioned, the number for September was INR2108 crores for RBA and INR160 crores for EPP. Okay. That's helpful. So broadly, how how many of the accounts are in I'm just trying to understand this because if if your spends, for example, on on online is one one four, So the existing active accounts are essentially kind of spending a lot more. I just wanted to understand, you know, when do these accounts come out of either in PPR, know, restructuring so that, you know, your spend kind of I'm I'm just trying to understand when the growth on spend come back, it has to kind of increase your receivables later on with the lag, which is kind of, you know, we we don't focus on percentage Yes. That is a significant factor in terms of 2.3 lakhs. So okay, so the number okay, so you are right that in terms of the significant number of cards blocked and these are in terms of lakhs, these are blocked. Therefore, to that extent, the spend is not happening on these cards. And it is also not happening on those which have become NPLs and where they are not still part of the RBRE. So that's a significant number. But the other cards, which are existing cards are spending more on the back of lot of these teams and campaigns, which we are running and also the new sourcing, which we are doing. A lot of that is becoming active. And therefore, our spend levels that we mentioned in the month of September had already reached ninety eight percent of pre COVID levels. And in the month I mean, since then, actually, our receivables also have gone up significantly in the especially in the Flipkart campaign. So we don't give a number, but we've gone past whatever number was there in earlier year end number. So therefore, we are already doing good on both trends and the receivables. And as these cards get opened up and start spending, I think we'll have a very, very good cycle going. So I think on the spend side, we are not worrying too much. If these cards get opened, so be it because one other thing, which I had also mentioned in Q1, that 54% of these customers who were not paying us had been very good customers earlier, not missed the payment in the previous twenty four months. So therefore, we do want to retain these customers, do want them to actually become regular and start spending again. Right. If I were just to kind of please one more question related note is on on these two, how should we think about, you know, leverage of the consumers if you can, if because, you know, how much is from and all you can see that taking the ground. If it's outsourced, you know, is it second card, third card, or is the best customers, new to credit customers? Any any concern on there? Because I'm just trying to understand is if they are leveraged, we really kind of in the three months. So we have not given the data just to I mean, I'll just give you some high level figures. We have not given the data, but the high level thing is that the bulk of this, the major segment out of this pool is the self employed segment. And we have really tempered down on that segment tightening the credit filters. So whatever sales required is currently happening, the bulk of it is still happening from the banker channel. And as I mentioned earlier, the bank's default rate is very, very low. So there we're not seeing any default for simple reason. One is that we knew that account details and the transaction history earlier and we also have an access to the account. So if it is defaulting, we can see that account. So therefore, the default rate in Banka was very, very low. So therefore, all of this which you will see is not from Banka, mostly it is from the open market and the earlier ones, self employed and category C. Those are the major segments. Going forward, yes, whatever has been classified or whatever is in the RBRE book, we could still have some falls or delinquencies there, but we need to continuously follow them up. We have a special team to actually only look at following up on the RVRE because we understand that for the first three months at least, need to actually follow these customers closely, explain to them the benefits of continuing to pay. I mean, some of them may actually advance the payment a bit, some of them may be a little delayed, so we will work with them. If we pay the first three, four installments, I'm pretty sure that then they will be good because then they know that just one or two installments later the card is going be opened up. And today, many of the customers actually are very sensitive about credit history and they do want the credit history to continue to be good. The credit culture in terms of the bureau history is very, very important to many customers. So we are very, very positive on the continuation of prepayments in those areas. Sorry, just to clarify, major of these are just employed and them, their bulk of them are from Banka, correct? No, no. The default segment is not Banka. That's what I said. The default segment which we have majorly is self employed, not from Banka, but it is generally from open market from the previous side. Okay, thanks. Thank you. Thank you. Thank you. The next question is from the line of Dhaval Gada from BSC Investment Managers. Please go ahead. Yeah. Hi, sir. Couple of questions. First, if you could give the number of accounts in the in RJRE and the. Just want to understand what quantum of customers are not seeing are gonna be inactive really, trying to remove them from the face. So that is plan number one. And then the second point was, can you also give the letter p number if possible? Can I have one more follow-up? Yeah. So, Harvat, we've not given the number of customers. We have given the balances. So like this already mentioned, there's about INR 2,108 crores sitting in RBI, RE. There's about INR $7.62 crores that is sitting in the equity standstill book. However, again, like we said, we may not have classified them as NPA, but we have taken provision on them as a dealer NPA. So to that extent, we've already covered that. Understood. And approximate accumulative number also, would it be possible to you across this kind of customers was who are and that's Samsung or who were not able to spend at this moment. Any what's the the model will spend accordingly. So no. Well, I don't think the logic that only bank still accounts are not able to spend is not correct. Even under a regular course at BAU, there are accounts that get blocked for spend depending on their bureau history, depending on the kinds of transactions that they are doing. So I don't by that logic anybody who process a particular number of days any day gets blocked for them. So I don't think you can draw the line between NPN inability to spend that wouldn't be correct. But just to give you some comfort actually all of the moratorium customers had their cards blocked. Whatever the peak was, which was I mean, I think we did declare the Q1 number? Yes, 12.5 lakh. 12.5 lakh. So 12.5 lakh, which was the original number of moratoriums, the cards were blocked. Out of this, onethree, like numbers had paid up at the end of Q1 itself. So you can draw that conclusion. So significant numbers had paid up. So whatever remains which remains in moratorium or which actually either came into RE or became NPLs, they continue to develop. But as I mentioned, we have already reached 98% pre COVID spend level in September. And this is before this regard and other sales, etcetera, and the festival season have not even begun. So I think we are very good on the spend side. We don't have a challenge. If these customers come out of moratorium, etcetera, you will see a significant leg up in the spend. So that's what we are hoping for. That's an additional bonus. We are not counting on it to happen. Got it, sir. And the industry number and the third point was related to corporate expense. We've seen some pickup in the second quarter. What's driving this? If you could give some color and for the rest of the year, any comments on that. It can be 2.7%. It can be 2.7%. And corporate fund, Manish, please go ahead. Yes. Sure, you're right because in the numbers in the first quarter, we had about INR2477 crores and then INR4700 crores something in quarter two, principally driven by new use cases because international travel and corporate travel, yes, it is correct, it is still not happening. There is a domestic travel component, which is happening. It is going up for DGCS for the 60% limit of the flights that the domestic airlines can carry. So it's not fully back to normal. So that is subdued, but the opportunity has opened up in other use cases for corporate. They are also adopting digital payments in present times, especially GST payments, tax payments, utility payments, vendor payments. These are some of the categories. So we have signed either new deals or we have activated some of our customers who are doing those trends. Are getting B2B spend from these customers into these particular segments. And proportion of that within the mix of total corporate card spend has increased. And we will continue to follow that strategy, but as it is it deepens the corporate card spend space from an opportunity standpoint. And once the corporate travel is back, international travel is back because we are in a locked state, it's bound to happen at some point of time. Then those numbers will add up to the space which is already there. This is not necessary. What we have created as use cases is not for this period alone just to offset the loss of spend on the other side. These are actually making sense to the corporates that are adopting the cards for these payments, and we expect that to continue. Just to add actually, pre COVID, about eighty percent to 90% was travel and business segment. And now that we have already reached the seventy percent level of pre COVID and where the travel etcetera is very, very small. So therefore, once that comes back, I think will be very good because of these new use cases. And for the net interest, just to clarify, point seven percent includes the slant sale and one point four percent is our Q2 number for an NPA. Understood. And just one follow-up on the corporate side. What would be from the new use cases, sixty seven percent is now coming from these new use cases? Well, if I look at the mix, there is a bit of domestic travel, which is there while we don't release these percentages. But, yes, I can give you a sense. Yeah. About 50% plus is coming from the new use cases, bit from the T and E from domestic travel. That also is there. And we also have a business where the travel inventories in bulk, ticket sales in bulk are done from the airlines and the travel agencies. We've had a pretty dominating spend in that particular segment, some bit of that also continues and that is what constitutes the total spend and a small percentage on utility payments. Thank you. Thank you. We'll move on to the next question that is from the line of Gaurav Kocher from Sorry to interrupt, mister Kushner. Your voice is breaking up. Yeah. Is it better? I'll read it now. Thank you. It's not linked to the industry quarter. It's just indexed against our own portfolio. So if you're looking at U2 credit versus others, so just index against the others. In our portfolio, there's no industry data. I couldn't get your question. Mister, your voice is breaking up. Not you could hear me clearly. No, sir. Can you use the handset mode while speaking? Yeah. It's on a handset only. I am so sorry, sir, but we're not able to understand what you're saying. So new to credit card, what are you saying? Talking something about new to credit card. What was that? Provision that you are carrying as managing to a date, does this also include provision of the restructuring book as well as on sample book? No. So for restructuring, RBI had mandated 10% provision that is part of the base provision. So the overlay has two assets. One is 500 crores that is coming on account of the SC cancel of the NPA, which the balance is being overlay. So we have provisions in addition to the cancel as well. INR $2.68 crores is that overlay number. Yes. Okay. Okay. Sure. Then the question I had was on the ALM. So on in ALM, we did see there is an INR 1,800 odd crore inflow after five years. So just wanted to understand, is that restructuring or anything that is beyond five years? Have we do we have any loan outstanding which is Yeah. So some of the receivables of this are there, it could be longer duration, and those are included in the previous. Okay. So this this is nothing to do with the is nothing to do with the receivable, the restructuring. Okay. These are your loan loans. These are normal course. These are what? Just wondering whether it's 1,800. Even our EMI, which is the maximum tenure is forty eight months. So there will be no loan asset for us, receivable for us, which is more than five years. These are other assets. Okay. Okay. Sure. Sure. And just the last question was, in the previous quarter, we had any COVID related provisions. And then the outlook was that we saw in order to be coming down. Qualitative only because, obviously, the environment continues to be uncertain. It was even more uncertain at Q1. And at that point in time, of the borrowers had just come out of moratorium. And because during the moratorium, they were at a standstill, so many of the installments were not even due then. So therefore, we did not have any visibility as to how much was due and whether they will pay or not pay. I mean, hindsight, one can always argue that, yes, we could have as a matter of evident precaution provided more, but that is all history. So therefore, we started working with all these customers, once we started to understand and we got the RBARE and there were others who could not pay, then we understood the real extent of the problem and then we realized that and we decided that we'll proactively provide and that is why we have covered all the entire standstill as well. And this will be our philosophy going forward also that if there's if any of the book does not behave, we will provide for it. Because this problem is I mean, it's not fully solved, the pandemic is still on and therefore we really don't know how the environment around us will behave. At the moment, we are on top of what we have, the problem we have. So my only I mean, this is your fifth question, by the way, but I'll answer it because it might help others as well. So this book is the first set of dues actually in terms of the payments, it came due only this month. And from our initial thing, there were some delinquencies, but we were able to pull back quite a lot of it. So therefore, our hope is that as we go along and these people continue to pay for two, three months, they will get regular and later on, we'll, of course, open their card as well. But this obviously cannot we cannot predict that some of them will not default. So this percent is already covered as per RBA mandate. If we watch and see the book is not behaving as per our expectation, we'll provide more for it. But we have some hopes because we will be talking to these customers that they will pay, most of them will pay actually. Sure. Thank you. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Okay. So we'll work backwards. Yes, RBI, we have provided 10%. On the other standstill, we have provided like we do for all our Stage three NPLs, which is a number close to about 70%, Apurna? 65%. 67%. 65.5%. 65.5%. So that's what we provide for all NPLs and we have provided that. And that number is INR500 crores out of the INR768 crores, which is the overall transfer book. Now in terms of customer behavior, actually, we don't really know because we have had customers who have had much higher expectations of maybe the entire waiver, etcetera, some of them were not ready to pay because of that. And all we said to them was, well, if you get a benefit from the cohort or from anywhere else, they want to refund it to you. And that's what we will do for those customers who already paid. Our only hope is, I mean, this is something, again, a speculation because we really don't know, nobody can come out with a real circular or instructions as to how this will happen. Our only hope is that whatever we have to compensate the customers, we are we will be paid back by the government. But clearly, how this will work out, we don't know. So we'll wait for the government or the court to come out with the detailed instructions. We're not seeing too much change actually in the customer because of this, because on an individual customer level, this may not be very significant. But we'll wait to see what exactly the instructions are and how we'll get paid. If we get paid, it will be good because that will also help us to address some of those which are delinquent. Okay. So the quantum is, I mean, we haven't come out with this number because clearly this is still something which the final decision has not come out. But the quantum is not very significant. All I can say is that, I mean, if we were to absorb it, we can also absorb that. But since that number is not declared, I can't give you that number at the moment. We have done our internal analysis. Okay. So I don't think we have any extraordinary income. Nalin, would you want to take that? No, sir. There are there are no extraordinary income. Every, you know, item revenue is business as usual. Okay. Okay. Yeah. Thank you. Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Tabari, MD and CEO of FTI Cards for his closing comments. So thank you very much to all of you. I mean, know that there were many others whose questions were not answered. And we can always schedule follow-up calls like we had did in quarter one for those of you who are interested in talking to us. I guess the major question was around the collections and the NPL and provisions and we have been able to answer those to a significant extent. We will definitely be open to more questions in the coming days. And as we get more information, we will be open to sharing it with you. So thank you very much for today's call and for participating in the call. Thank you. Thank you. Ladies and gentlemen, on behalf of SDI Card, this concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.