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EARNINGS UPDATE Q4FY17
BHARAT FINANCIAL INCLUSION LIMITED(Formerly known as ‘SKS Microfinance Limited’)BSE: 533228 ● NSE: BHARATFIN
Corporate Identity No. L65999MH2003PLC250504
www.bfil.co.in
This presentation is solely for viewing. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from BHARAT Financial Inclusion Limited.
MAY 2017
CONTENTS
Particulars Slide No.
Executive Summary 3
Investment Hypothesis 5
Company Overview 8
Clarity on Major Uncertainties Post AP MFI Crisis 13
Growth Anatomy 18
Future Strategy 27
Pilot on Retail Distribution And Service Points (RDSP) 33
Update on Cashless and E-KYC 37
Loans for Housing Improvement & Two-Wheeler (Pilot) 41
Q4FY17 Performance Highlights 45
Update On Demonetisation 51
Review of Financials 60
Financial Architecture 71
Risk Management 76
Capital Structure 78
Annexures 81
Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary.
2
EXECUTIVE SUMMARY
3
4
136
244
377
641
848
184 178
FY13 FY14 FY15 FY16 FY17 Q4FY16Q4FY17
2,016 2,837
4,171
7,677 9,150
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Overview AUM Growth (Non-AP portfolio) Growing Net Interest Income
Attractive Financial Metrics Balanced Geographical mix Diversified Shareholding
Marginal cost of borrowing# 8.8%
Cost to income 50.0%
Return on Equity^ 13.6%
Return on Asset*^ 2.7%
EXECUTIVE SUMMARY
• Second largest microfinance company
in India with gross loan portfolio of INR
9,150 Cr., 67 Lakhs members in Non-
AP states and 1,399 branches
• Lowest lending rate (19.75%) among
NBFC-MFIs
• Company’s non-AP Portfolio grew by
19% (YoY) to INR 9,150 Crs. as of Mar
31, 2017
• Profit for FY17 of Rs. 290^ Crs
Note: Shareholding as of Mar 31, 2017
Net worth (INR Cr.) 2,447
Capital Adequacy 33.5%
Cash & Cash equivalent
(INR Cr.)
2,505
Note: Portfolio as of Mar 31, 2017
Strong Balance sheet and liquidity
Efficiency and Profitability
INR Cr.INR Cr.
NII = Interest income on Portfolio loans + Excess interest
spread on securitization/Income from Assignment + BC
Fee – Financial Cost
Note: Above Data for FY17 except Marginal Cost of Borrowing
Non-AP = excluding states of AP and Telangana
# includes on and off b/s borrowings (excluding processing fees) for Q4FY17
*includes securitized, assigned and managed loans
^Includes MAT Credit of Rs. 109 Crs for FY17 and unrecognized MAT credit of
Rs. 97 crs as on 31st March,2016.
Odisha18%
Bihar15%
West Bengal13%
Karnataka12%
Maharashtra11%
Uttar Pradesh
7%
Kerala6%
Rajasthan5%
Jharkhand4%
Madhya Pradesh
4%
Others6%
2.2%
2.2%
2.2%
2.6%
2.8%
2.8%
3.4%
3.6%
3.9%
6.7%
Vanguard
IDFC Mutual Fund
Wellington
Matthews India
Tree Line
William Blair
East Bridge Capital
Morgan Stanley Investment Management
Amansa Capital PTE Limited
Morgan Stanley Mauritius
Top 10 Shareholders
Figures rounded off to the nearest digit across the presentation
5
INVESTMENT HYPOTHESIS
5
INVESTMENT HYPOTHESIS
BFIL is the most efficient and lowest cost lender among NBFC-MFIs
Impeccable track record of meeting financial obligations in a timely manner even during the black swan event of AP-MFI Crisis
Diversified earnings stream with cross-sell / Non-Loan revenue contributing 17% to Profit* for FY17.
Pan-India presence with no unbalanced geographic sectoral exposure
Strong solvency (Capital Adequacy of 33.5% as on 31st Mar 2017) and sufficient liquidity
Steady state RoA of 4% is the highest among financial services play
Favorable Macros
Unmatched leadership
There is a huge demand/ supply gap for microfinance
Entry barriers and supervisory standards are significantly enhanced thwarting future competition
No credible alternative for microfinance emerges even after 6.3 years of AP MFI Act
Regulatory Clarity
RBI’s comprehensive regulatory framework mitigates political and regulatory risks
RBI and MoF acknowledge microfinance as a key component of financial inclusion
PSL requirement of banks to enhance funding availability and value of the franchise
6* Calculated as Gross Fees less incentives to Profit Before Tax for FY17.
7
Segment -1
70 mn households in India
with some assets (INR
90/day PPP)
Segment -2 (BPL)
80 mn households in India
with no assets (INR 55/day
PPP)
THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE
Assumptions
• Target households: 150 mn
•Basis: World Bank poverty statistics, India
• Avg. credit requirement: per household Rs. 45,000 (2015), adjusted with inflation on per
household Rs 20,000 (Year 2005)
•Basis: EDA Rural Systems, World Bank, Access to Finance
• Adjustment for service difficulties: 20%
•Basis: adjustment made to reflect inaccessible poor in rural areas (~7%) and half of
underserved urban poor (0.5 x 26% = 13%)
Source: World Bank; Sa-Dhan Bharat Microfinance reports
38,558 59,860 72,345
24,017
27,582 37,286
FY14 FY15 FY16
MFIs SHG
Micro-Credit Demand In India
covered in part by
moneylenders and
informal sources,
but largely untapped
*Disbursement in INR Crs.Demand
Rs. 2,40,000 Crs.
* *
Rs.87,442 crs
Rs.62,575 crs
Rs. 5,40,000 Crs.
Year 2005
Year 2015
*
Rs.1,09,631 crs
8
COMPANY OVERVIEW
8
9
Survey a village Recruit members
Deliver doorstep service Provide training
BFIL USES GRAMEEN MODEL TO PROVIDE UNSECURED CREDIT AT THE
DOORSTEP OF LOW INCOME RURAL WOMEN
Put loan
officers pic
1,484
2,875
3,503
FY 12 FY 13 FY 14
Drawdowns
AP exposure of Rs. 1,360
crore written off
Q3FY11 Q4FY14 Var.
Branches 2,403 1,255 -48%
Other Opex (INR crore)
51 21 -60%
Headcount 25,735 8,932 -65%
Personnel Cost (INR crore)
89 43 -52%
3,526
1,185
2,837
Q3FY11 Q3FY12 Q4FY14
Non–AP Gross Loan Portfolio
(13.6) (3.0)
70
FY12 FY13 FY14
Return To Profitability
Bn Bn
INR crore
BUILDING BLOCKS OF TURNAROUND POST AP MFI CRISIS
Balance Sheet Cleansed Supply-side Shock Managed Credit Growth Resumed
Cost Structure Optimization
10
12.6% 11.9%10.2%
8.9%
FY14 FY15 FY16 Q4FY17
Marginal Cost of Borrowing#
74.5%
61.1%
48.3% 50.0%
FY14 FY15 FY16 FY17
Cost to Income
2000 2014 -152012Yrs
14%
8%1,229
Oct’10 June’12 Dec’16
28,300
14,600
Non-AP Portfolio Outstanding
3,945
BFIL
Others
INR Crs.
▪ Net worth - Rs. 2,447 crs
▪ CAR - 33.5% (RBI Requirement
15%)
# On and Off balance sheet borrowings (excl. Managed
Loans) including processing fees 2015 -16
BFIL
Disbursement
share 24%* in
Q3FY17
* Industry
disbursements for
Q3FY17 is Rs.
12,424 crs.
Sep-16 data as per MFIN; (excludes data for Bandhan bank and Equitas)
15%8,531
56,634
DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (1/2)
Market Share Regained
Technology Upgraded
Capital Reinforced
Efficiency Gains
Installed Computers at all branches with In-House lending system
All branch connectivity with daily data receipt (1,215 remote locations)
Refactoring of In-house lending system
Equipped Loan Officers with tablets
Mobile/ digital/ cashless transactions
2016 -17 11
29.25%
24.55%23.55%
22.00%20.75%
19.75%
Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15
4.8% reduction since Oct’14
GLP: Gross Loan PortfolioTerm loan and cash credit facilities
Interest rate on income generation loans
74%
37%
Mar-13 Mar-17
Share of borrowing from top 5 banks
53%
46%
Sep-10 Mar-17
Top three states share in GLP
Political Risk Mitigation through interest rate reduction
Reduced Borrowing Dependence Lower State Concentration
DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (2/2)
12
CLARITY ON MAJOR UNCERTAINTIES
POST AP MFI CRISIS
13
WHAT DOESN’T KILL YOU, MAKES YOU STRONGER - POSITIVE DEVELOPMENTS POST AP MFI CRISIS
Will there be multiple
regulators?
▪ Regulatory clarity – RBI to be the sole regulator
Funding uncertainty?
▪ Priority sector status continues
▪ MFIs are the only indirect priority sector dispensation
Will there be contagion?
▪ No contagion
▪ Since past 6.3 years no other state has followed suit
Has the operating model
been challenged?
▪ Collection efficiency maintained despite disbursements being a fraction
of collections during the wind-down mode i.e. Oct’2010 to June’2012.
▪ No alternative credit delivery model has gained currency.
What will be the economics
under regulated interest
rate regime?
▪ RoA of 3-4% on a steady-state basis
Concerns Clarity
14
OPERATING MODEL VAILIDITY ESTABLISHED
3,942 3,526
2,706
2,101
1,635
1,185 1,320 1,229
Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13
Collection efficiency of 97% during wind-down mode dispels ever greening myth
Non-AP
Loan
Portfolio
No. of non-AP borrowers who repaid on-time
during this period5.2
No. of non-AP members who availed loans
during this period3.3
No. of non-AP members who didn’t
receive any incremental credit from BFIL
during this period
1.9
in Millions
1.9 million borrowers repaid loans
without incremental lending
INR crs
Internal generation -- and not incremental debt --
aids prompt repayment
MFI Industry non- AP Portfolio Outstanding (Rs Cr)
Oct’10 28,300
June’12 14,600
15
Sector outstanding
Non-AP Portfolio
Oct ’10 – 28,300
Mar’14 – 24,615
Mar’15- 40,138
Mar’16- 53,155
Dec’16- 56,634#
Market Share Dynamics
2nd, 3rd, 4th and 5th
largest MFI playerswith 40% Non-APmarket share areunder CDR.
Institutional Infrastructure
Credit Bureaus-
- Equifax & Highmarkare functional
- 95% of MFIs now use CB reports for disbursements
COMPETITIVE LANDSCAPE CHANGES TO BFILS’ ADVANTAGE
INR crore
• No. of loan records - 23.6 Crore
• No. of borrower records – 7.3 Crore
• No. of loan records (live) – 6.3 Crore
• No. of borrower records (live) – 3.8 Crore
• No. of MFIs reporting – 141
Snapshot of Equifax Credit Bureau*:
* Source: Equifax (as on Jan 2017), Excluding A.P and Telangana
# Dec-16 data as per MFIN; excludes data for Bandhan bank, Equitas;
16
7.5
6.5
1.01.6
5.0
1.9
19.75
STEADY-STATE ROA OF 4% CAN BE TARGETED
Processing fee
Interest rate
RevenueProfitTaxesProv. &
Write-off
Operating
cost
Financial cost
▪ Marginal Cost of
borrowings: 9.4%.
▪ Portfolio funded by debt:
80%
21.6
*interest rate charged is 19.75% for new loans effective from 7th Dec’15
#Processing fee is calculated based on weighted average portfolio mix of 50% IGL (1 Yr. loan) , 25% LTL (2 Yr. loan) and 25% MTL
(1.5 Yr. loan)
*
#
Minimum Alternate Tax @ 21%
17
GROWTH ANATOMY
18
3,942
1,185 1,320
2,016
2,837
4,171
6,177
7,677
8,531
Sep'10Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Dec'15 Mar'16 Dec'16
BFIL GLP*
28,300
14,600 16,740
24,499
38,386 36,912
55,266 56,634
-3,000
7,000
17,000
27,000
37,000
47,000
57,000
67,000
77,000
87,000
Oct'10 Jun'12 Mar'13 Mar'14 Mar'15 Dec'15 Mar'16 Dec'16
Industry GLP*
6.3 YEAR CAGR FOR THE SECTOR AND BFIL ARE 12% AND 13% RESPECTIVELY
* Non-AP GLP (Gross Loan Portfolio), Industry GLP data excludes Bandhan (Dec’15, Mar’16,Dec’16) and Equitas data for (Dec’15, Dec16)
Source: MFIN Micrometer (Mar’13,Mar’14, Mar’15, Dec’15, Mar’16,Dec’16 data)
19
Top 10 States by
GLP*
Industry Bharat Financial Inclusion Ltd.
GLP Q3FY17
(Rs. Cr.)YoY growth
GLP Q3FY17
(Rs. Cr.)
YoY
growth
Karnataka 8,081 40% 1,130 26%
Tamil Nadu 7,039 4% - -
Maharashtra 6,495 30% 1,058 36%
Uttar Pradesh 5,962 31% 697 20%
Bihar 3,975 75% 1,114 71%
Madhya Pradesh 3,946 20% 362 7%
West Bengal 3,499 43% 975 74%
Odisha 3,151 24% 1,481 33%
Kerala 3,009 62% 461 25%
Gujarat 2,113 34% - -
Overall 56,634 34% 8,531 38%
WE GREW SLOWER THAN THE SECTOR IN 7 OUT OF TOP 10 STATES
*Q3FY17 excludes Equitas data
Source: Micrometer
Growth > Industry
Growth < Industry
20
Top 10 growth
States*
Industry Bharat Financial Inclusion Ltd.
GLP
Increase
Q3FY17
(Rs. Cr.)
Contribution
to growth
GLP Increase
Q3FY17
(Rs. Cr.)
Contribution to
growth
Karnataka 2,290 16% 235 10%
Bihar 1,703 12% 463 20%
Maharashtra 1,488 10% 281 12%
Uttar Pradesh 1,401 10% 114 5%
Kerala 1,156 8% 93 4%
West Bengal 1,057 7% 414 18%
Jharkhand 663 5% 125 5%
Madhya Pradesh 661 5% 24 1%
Haryana 645 5% 56 2%
Odisha 607 4% 370 -
Other States 2,632 18% 178 8%
Overall 14,303 100% 2,353 100%
OUR GROWTH PATTERN IS DIFFERENT FROM THE SECTOR (CONT..)
*Q3FY17 data excludes Equitas data
Source: Micrometer
Growth > Industry
Growth < Industry
21
21%
53%
33%
79%
47%
67%
0% 20% 40% 60% 80% 100%
BFIL- Mar'17
MFI Industry -Dec'16*
MFI Industry-Mar'13^
Urban Rural
……INDUSTRY GROWTH SKEWED TOWARDS URBAN, WHEREAS WE REMAIN RURAL FOCUSED
Industry growth skewed
towards urban
We are rural
focused
Source: ^Sa-Dhan Report 2013,*MFIN Micrometer
22
20% 14% 7% 46%
AUM GROWTH IS PRIMARILY DRIVEN BY CUSTOMER ACQUISTION
Increase in
No. of
Borrowers
Increase in
Ticket sizeChange in Loan
duration^ AUM growth
27% 22% 18% 84%FY16
12% 6% 24% 47%FY15
26% 4% 8% 41%FY14
Notes:
^ Due to the impact of long term loans ( 2 years duration), which was piloted in FY14 and rolled out in FY15.
CAGR last
4 yrs.
23
15% 24% -16% 19%FY17
21,90921,201
18,38415,426 14,738
-7,500
2,500
12,500
22,500
32,500
MFI 1 MFI 5 MFI 3 BFIL (MFI 2) MFI 4
OUR OUTSTANDING PER BORROWER CONTINUE TO BE LOWER
MFI 1 – 5 are ranked in the order of Gross Loan Portfolio Source: Q3FY17 Micrometer
AVERAGE LOAN OUTSTANDING PER BORROWER
INR Figures for Q3FY17
24
OUR FOCUS ON AADHAAR ENHANCES CREDIT QUERY EFFICIENCY
* Primary KYC has to be Aadhaar or Voter ID
• Internal CAP of Rs. 60,000 for total indebtness of the
borrower, including loans from other MFIs..
CB REJECTIONS TREND
Rejection Reasons* - Q4FY17 % Mix
*Note: Rejections are done based on data inputs from Credit
bureau
9% 8% 9% 8% 9%
14%15%
21%24%23%
18%20%19%19%21%
23%23%
28%29%
22%24%22%23%25%25%25%24%25%25%26%26%25%25%24%24%25%
CB Rejection %57% of credit
enquiry with
Aadhaar as
primary KYC
99.6% of credit
enquiry with
Aadhaar as primary
KYC
Mandatory
submission
of 2 KYCs *
Reasons All Products LTL
Loans from=>2MFIs 54% 53%
=>2MFIs and Default History 13% 9%
=>2MFIs and Outstanding Balance >60K 11% 12%
Default History 9% 6%
Outstanding Balance>60K 6% 11%
Eligibility< Min Ticket Size 4% 6%
=>2MFIs,Outstanding Balance>60K and
Default History3% 2%
Default History and Outstanding Balance >60K 0.4% 0.4%
Total 100% 100%
25
State SHG Exposure* BFIL Exposure*
Andhra Pradesh 30% -
Telangana 17% -
Karnataka 13% 12%
Tamil Nadu 11% -
West Bengal 7% 13%
Kerala 4% 6%
Odisha 3% 18%
Maharashtra 3% 11%
Uttar Pradesh 3% 7%
Bihar 2% 15%
Madhya Pradesh 2% 4%
Assam 1% -
Rajasthan 1% 5%
Jharkhand 0.6% 4%
Gujarat 0.5% -
Chhattisgarh 0.5% 2%
Haryana 0.4% 2%
Punjab 0.3% 2%
Tripura 0.2% -
Himachal Pradesh 0.2% 0.1%
Others 0.6% 0.7%
BFIL HAS NIL EXPOSURE IN SHG CONCENTRATED STATES
SHG Exposure <4%
SHG Concentrated
States
*SHG Data (Source: NABARD Status of Microfinance in India-2016), BFIL data as on Mar’1726
FUTURE STRATEGY
27
OPPORTUNITIES CHALLENGES
A COMPARATIVE STUDY OF STRUCTURAL OPPORTUNITIES & CHALLENGES
✓ Access to low cost funds/deposits
✓ Bank accounts to customers
✓ Political risk mitigation
× CASA can be competitive only in the long
term
× CRR and SLR drag
× No PSL benefit on bank borrowings
× Interbank borrowings capped at 3x Net
Worth
× Cannot act as Business Correspondent
(BC) to other banks
× Investment in technology, infrastructure
and functional capabilities for banking
SFB
✓ Generate Agri-allied/ PSL for banks
✓ Leverage Business Correspondent (BC)
model to offer bank accounts and saving
products to customers without CRR and
SLR drag
× Political risk beyond a size
× Cannot access deposits
NBFC-MFI
28
528
381
804
20-Jul-15 18-Sep-15(RBI announcement on SFB in-principle license on 16 Sept'15)
28-Apr-17
BFIL Share Price
Political Risk mitigation Sub-20% interest rate mitigates political risk
• BFIL is the lowest cost lender with 19.75% interest rate amongst
NBFC-MFIs1
Access to refinance Access to refinance is now available to NBFCs also
• BFIL has accessed Rs.200 Cr refinance from MUDRA2
Bank accounts for customers
▪ Migration to cashless regime to
reduce opex
• Seed Jan-Dhan accounts of members
• Open bank accounts for members as BC for other banks3
Downward adjustment of risk
premium to reduce cost of
borrowings
• Lowest borrowing cost in the sector
• Highest safety Short-term rating at (A1+) and Long-term rating at
(A+)
• Strong Balance Sheet : Strong solvency and sufficient liquidity
• Relationship premium from credit grantors
4
SFB - MISSED OPPORTUNITY BUT NOT A SETBACK
MARKET ENDORSEMENT
Rationale for SFB application Mitigants / Counter Strategies
29
UNMATCHED LEADERSHIP
Unique
Operating Model
Extensive
Reach*
Lowest Cost
Producer
External
endorsements
Parameter
▪ Interest rate
▪ No. of districts
▪ No. of customers
▪ Group Lending
▪ Rural customer base
▪ Rating/Grading
Status
▪ 100%
▪ ~79%
▪ Lowest interest rate of
19.75% amongst NBFC-
MFI
▪ 322
▪ 6.7 Mn
▪ Highest Code of Conduct
Assessment Grading “C1”
▪ Corporate Governance rating at
“CGR2”
▪ Highest safety Short-term rating at
“A1+”
30
THE MOST EFFICIENT MFI IN THE GLOBE
10
Metric
▪ Sub-20
Interest
Rate to
Borrower
▪ Cost to
Income
Ratio
▪ Balance sheet
strength
▪ Stellar
repayment
record
▪ Judicious
sources mix
▪ Technology
initiatives
▪ Scale
▪ AUM
growth
▪ Operating
leverage
▪ Non-Loan
revenue
Drivers
▪ Marginal
cost of
Borrowing
▪ Cumulative
next 2
years salary
increase to
field staff
Target %
▪ Annualised
earnings
growth
Medium Term Strategic Priorities:
20 30 40 50
▪ Low marginal
cost of borrowing
▪ Scale &
Efficiency
▪ Productivity &
Efficiency
Status –
FY179.4* 19.75 15 50 -4#
*on and off b/s loans (including processing fees)# YoY% Profit Growth, including MAT credit of Rs. 109 Crs for FY17 and unrecognized MAT credit of Rs. 97 Crs as on 31st March,2016
31
CREATIVE DISTURBANCE TO ASSET-REVENUE-EARNING CORRELATION
10%
90%
Revenues
5%
95%
Assets*
15%
85%
Earnings
*Note: Core microfinance will continue to be more than 95% of credit assets
Medium-Term Targets
MFI
Non - MFI
Non-MFI Actuals – FY17
17.2%*
2.5%
0.4%
32* Calculated as Gross Fees less incentives to Profit Before Tax for FY17.
PILOT ON RETAIL DISTRIBUTION
AND SERVICE POINTS (RDSP)
33
WE MEET OUR BORROWERS 52 TIMES A YEAR
Door Step Delivery
During Center Meeting Hours, At any moment: 8,500+ Center Meetings take place & more than 2.6
lakh borrowers are met across the country
Center Meeting
Unique Distribution Channel
Convenient Day:
Monday to Friday
Convenient Timings:
Between 7 AM to 11 AM
Providing Financial &
Non-Financial Products
…AND WE UTILISED THIS CHANNEL FOR FACILITATION OF MULTIPLE FINANCIAL AND NON
FINANCIAL PRODUCTS.
34
DIGITAL AND PROCESS INITIATIVES HAVE HELPED REDUCE CENTER MEETING DURATION
EARLIER CENTER MEETINGDURATION
45 mins
WITH TAB AND PAPERLESS
35 mins
WITH CASHLESS AND RDSP
20 mins
• More time for value added activities at center meeting
• More center meetings per SM per day
RDSP CREATES A PARADIGM SHIFT IN CLIENT CONNECT…
35
FROM
TO
CENTER MEETINGS2 lakhs
• Once a week
• Limited and fixed time
• Cash points at a distance
• Along with 29 other members, limited
Sangam Manager bandwidth
Center meeting duration: 45 Mins
Customer
Avg. Distance:• Bank: 2 -5 KM• ATM: 1-3 Km
Dist <0.5 KM
Friendly Neighborhood
Bank
RDSP
• Cashless center meetings
• Alternative to members for services out
of center meeting as well
• Local and perpetual presence
• On demand accessibility
• Products on display
• Co-branding of banking partner and BFIL
• E-commerce feasibility
CENTER MEETINGS2 lakhs
RDSP2 lakhs+
Bank / ATM
Center meeting duration: 20 Mins
…AND PRODUCES MULTITUDE OF OPPORTUNITIES
36
Leveraging distribution
strength
Last mile for leading retailers
~₹80 Cr per day
~₹60 Cr per day
0.002
0.01
0.4
0.7
1.7
2.1
17
23
0 5 10 15 20 25
Two wheelers
Mixer grinders
Water purifiers
Cooking stove
Cycles
Sewing machines
Solar Lamps
Mobile Phones
U N I T S I N L A K H S
THE MODEL IS PROVEN THROUGH CENTER MEETINGS
IMMENSE E-COMMERCE POTENTIAL WITH RDSP IN PLACE EXISTING PARTNERS POTENTIAL BUSINESS OPPORTUNITY
OVER 45 LAKH NON FINANCIAL
UNITS FACILITATED*
*Cumulative units facilitated of non financial products as of Mar’17
RDSP
• E Commerce
• Railway ticketing
• OTC insurance
UPDATE ON CASHLESS AND E-KYC
37
E-KYC, E-SIGN AND INSTANT CB ROLLED OUT ACROSS ALL BRANCHES
• E-KYC, E-Sign and instant CB rolled out in all the branches by 16th Mar’17
• Completed training and handholding by IT, PTC and process team
38
Status
e-KYC, e-sign
Benefits
•Digitized Loan Application
•Saves CM by reducing signature on Loan Application
•Step Forward to Paper Less
•Minimize the risk of theft and robbery.
•Minimize the risk of high volume cash carrying and transactions
•Instant Approval.
•Reduced Loan Processing TAT
• Increased Business Volume
•Immediate member authentication
•Eliminates risk of fake borrowers
E-KYC Instant CB
E-signCashless Disbursement
• Time saving in center
meeting and at the
back office.
• Better competitive
advantage.
CASHLESS DISBURSMENTS ROLLED OUT IN ALL BRANCHES, 75% CASHLESS DISBURSEMENTS IN APR’17
39
12% 12%
25%
75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jan'17 Feb'17 Mar'17 1st to 24 Apr'17
Cashless Disbursement as % of Total Disbursement
CASHLESS PROCESS
CASHLESS DISBURSEMENT PROCESS
Center
meeting
Proposal on
TABE- KYC Instant Credit
Bureau
ABPS based
Loan
disbursal
Confirmati
on to
Customer
Customer
Consent
40
Sangam
Manager
checks the
willingness for
a new loan in
the center
meeting
Loan details
are recorded
in the proposal
screen on the
tab
Customer
consent is
taken and the
biometric
details are
captured
E-KYC is done
using online
UID data
check. This
happens
instantly in the
center meeting
Parallel CB
check
happens and
the customers
eligibility for
the loan and
the loan
amount gets
determined
Loan amount
is approved
and loan
proposal is e-
signed
Disbursement
is done on the
same day in
the Aadhar
linked bank
account
through ABPS
Customer gets
the
disbursement
confirmation
through an
SMS
E-sign
Status
CASHLESS DISBURSEMENT ACTIVATED IN ALL BRANCHES ACROSS THE COUNTRY
• 23.48 lakh bank accounts sourced through UID
• 15.20 lakh additional NEFT accounts sourced
• Cashless disbursement training and roll out completed in all the branches
LOANS FOR HOUSING IMPROVEMENT
& TWO-WHEELER (PILOT)
41
Assumptions
• Rural households: 166 mn
•Basis: Census 2011
• Adjustment : 46 mn
• For service difficulties: 20%
• For rented houses: 5% (source:
NSSO survey)
• For HHs with no house: 4 mn
(Source: NSSO survey)
• Addressable HH: 120 mn
• Annual no. of HH : 14 mn
• % of HHs having spent on
construction in last 1 yr (Source
NSSO survey): 12%
• Avg. credit requirement: Rs 100,000
per household
42
HUGE UNMET DEMAND FOR RURAL HOME IMPROVEMENT/EXTENSION LOANS
*FY15 disbursement of PSBs Rs.5,231 crs and HFCs Rs.3,146 crs (< Rs.5 lacs ticket size)
Source:(NHB Report on Trend & Progress of Housing in India 2015 )
Dollar Exchange rate for 27th April 2017 Rs. 64/-
Annual Disbursement Annual Demand
Gap filled by:
Own funds - 66%;
Family, Friends &
Money Lenders - 34%.
Rs. 1,40,000 Crs. ($22bn)
Rs. 8,377 Crores ($1.3 bn) *
NO FORMAL LENDER DUE TO OPERATING
CHALLENGES IN THIS SPACE
43
Easier, larger
opportunity in urban,
semi-urban
Lacks Rural Presence
Lack of title deeds
High Transaction
costs
Metro Urban Semi Urban Rural
Salaried Very High High Moderate No Competition
Professionals High Moderate Low No Competition
Self Employed Moderate Low Very Low No Competition
No Rural Focused Player
Operating Challenges in Rural
Purpose Home improvement and
extension
Eligibility Criteria • Should have completed at
least 3 IGL loan cycles
• Age between (18 to 55 years)
Ticket size Rs. 1,00,000 to Rs. 5,00,000
Loan Tenure 3 to 5 years
LTV (Loan to
Value Ratio)
Up to 75% of property value
Repayment
Frequency
Monthly
Our Product Offering
PILOT DETAILS
LOANS FOR TWO WHEELER
Product Details
Purpose Purchase of Two Wheeler
Eligibility ▪ Member of Joint Liability Group
▪ Minimum Two IGL Loan cycle completed
▪ Should not have availed IGL/MTL/LTL in last 12
weeks
▪ Exposure to borrower capped to Rs. 75,000 –
(within BFIL) and Rs. 1 Lacs across the MFIs
Ticket Size Rs. 33,000, Rs. 38,775 and Rs. 42,915
Loan Tenure 104 Weeks
Loan To Value 80% of On-road price of the vehicle (subject to a
maximum amount of Rs. 42,915
Repayment Frequency Weekly
44
Note: Portfolio outstanding for Two wheeler loans as on 31st Mar’17 Rs. 0.51 Crs
Q4FY17
PERFORMANCE HIGHLIGHTS
45
HIGHLIGHTS OF Q4FY17
▪ Networth of Rs.2,447 Crs. and Capital adequacy at 33.5% as of Mar 31, 2017.
▪ Incremental drawdowns of Rs.2,576 Crs.(growth of 146% QoQ) in Q4FY17 and Rs. 6,900 Crs. in FY17 (Rs.
7,317 Crs. in FY16) excluding origination under managed loans. BFIL also originated Rs.184 Crs. in Q4FY17
and Rs. 1,018 Crs. in FY17 (Rs. 1,064 Crs. in FY16) loans under managed portfolio.
▪ Loan disbursement of Rs. 3,902 Crs. (growth of 31% QoQ ) in Q4FY17 and Rs. 14,667 Crs. in FY17 (Rs. 12,088
Crs in FY16).
▪ Non-AP Portfolio grew by 19% YoY and 7% QoQ to Rs.9,150 Crs. as of Mar 31, 2017.
▪ Marginal cost of Borrowings* reduced to 8.8% in Q4FY17 from 9.9% in Q3FY17.
▪ Weighted avg. cost of borrowing(On-B/S - daily average)** reduced to 10.6% in Q4FY17 from 10.8% in Q3FY17.
▪ MAT Credit of Rs. 16 Crs. has been recognised on the balance sheet in Q4FY17,with this accumulated MAT
credit is Rs. 206 Crs. as on Mar 31,2017.
▪ The un-availed deferred tax benefit of Rs.281 Crs. will be available to offset tax on future taxable income.
▪ Loss for the period of Rs. 235 Crs. ( Pre-Provision Profit of Rs. 100 Crs) in Q4FY17 and Profit of Rs. 290# Crs
for FY17
▪ Cash & Cash equivalent^ of Rs.2,505 Crs as of Mar 31,2017.
▪ Code of Conduct Assessment Grading “C1” (Highest) by ICRA – Highest among MFIs.
▪ Disbursement to Bank Accounts (cashless disbursements) rolled out across all branches, 75% cashless
disbursement in the month of April (1st to 24th April).Note:
* Includes on and off balance sheet borrowings and excluding processing fees.
**Including processing fees.# Including MAT Credit of Rs. 97 Crs as on 31st March, 2016
^ Excluding security deposit.
Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary.46
OPERATIONAL HIGHLIGHTSParticulars Mar-16 Mar-17 YoY% Dec-16 QoQ%
Branches 1,324 1,399 6% 1,391 1%
Centers (Sangam) 2,46,647 2,79,252 13% 2,74,773 2%
- Centers in non-AP States 1,75,774 2,30,367 31% 2,25,888 2%
Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii) 11,991 14,755 23% 14,823 -
▪ Field Staff (i) + (ii) + (iii) + (iv) + (v) 11,689 14,030 20% 14,146 -1%
– Sangam Managers* (i) 6,884 9,157 33% 9,422 -3%
– Sangam Manager Trainees(ii) 1,008 616 -39% 450 37%
– Branch Management Staff (iii) 2,576 2,853 11% 2,866 -
– Area Managers (iv) 155 234 51% 237 -1%
– Regional Office Staff (v) 1,066 1,170 10% 1,171 -
▪ Central Processing Unit and Member helpline (vi) 99 404 - 338 20%
▪ Head Office Staff (vii) 203 321 58% 339 -5%
Members in non-AP States (in '000) 5,566 6,700 20% 6,585 2%
− Members added (in the quarter) (in ‘000) 806 325 -60% 444 -27%
Active borrowers in non-AP States (in '000) 4,637 5,324 15% 5,530 -4%
− Active borrowers added (in the quarter) (in ‘000) 845 421 -50% 469 -10%
No. of loans disbursed (in '000) 2,386 1,758 -26% 1,583 11%
Disbursements (for the quarter) (INR Crs.) 4,066 3,902 -4% 2,981 31%
Gross loan portfolio – Non-AP (INR Crs.) (A+B+C+D) 7,677 9,150 19% 8,531 7%
• Loans outstanding (A) 4,965 7,176 45% 6,891 4%
• Securitized (B) 1,707 754 -56% 857 -12%
• Assigned (C) 316 536 69% 60 -
• Managed loans (D) 688 684 -1% 723 -5%
Operational Efficiency – Non-AP :
Off-take Avg (Disbursements/ No of Loans disbursed) (INR) 17,049 22,194 30% 18,828 18%
Off-take Avg Excluding Cross Sell 20,578 23,263 13% 22,287 4%
Gross loan portfolio/ Active Borrowers (INR) 16,557 17,187 4% 15,426 11%
Gross loan portfolio/ No. of Sangam Managers (Rs. '000) 12,141 10,574 -13% 9,569 11%
Active borrowers / No. of Branches 3,893 4,205 8% 4,396 -4%
Active borrowers / No. of Sangam Managers 733 615 -16% 620 -1%
*Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Mar’17, we had 8,653 SMs in Non-AP States 47
IMPROVING FINANCIAL EFFICIENCY
Best before
AP MFI crisis
Worst during
AP MFI crisisFY14 FY15 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4FY17 FY17
Productivity – Non-AP:
Borrowers/ SM 489* 287 721 787 733 690 626 620 615 615
Gross Loan Portfolio/ SM ('000) 3,640* 1,320 6,275 8,994 12,141 11,469 10,297 9,569 10,574 10,574
Offtake Avg. 10,299* 9,237 11,849 12,273 15,024 16,758 17,744 18,828 22,194 18,676
Offtake Avg. (Excl Cross-sell) 10,383* 11,021 12,277 14,149 18,102 19,986 20,834 22,287 23,263 21,491
Cost Efficiency:
Financial Cost %** 6.6% 9.8% 8.3% 8.3% 8.5% 6.7% 7.2% 7.5% 7.4% 7.3%
On B/S daily Wt. Avg. Cost of
borrowings % (excl. processing
fees & other charges)
9.7%^ 12.9%^ 13.0% 12.8% 11.7% 11.0% 10.8% 10.6% 10.4% 10.7%
On B/s daily Wt. Avg. Cost of
borrowings %10.3%^ 16.0%^ 13.9%# 13.5%# 12.0%# 11.2%# 11.0%# 10.8%# 10.6% 10.9%
Opex/ Gross Loan Portfolio % 10.4% 21.7% 9.6% 9.5% 7.1% 6.3% 6.3% 6.6% 6.6% 6.5%
Cost to Income Ratio 52.4% 275% 74.5% 61.1% 48.3% 45.7% 47.0% 49.5% 59.3%## 50.0%##
Credit Quality - Non-AP:
Gross NPA% 0.20%* 5.5% 0.1% 0.1% 0.1% 0.1% 0.1% 0.06% 6.0%^^ 6.0%^^
Net NPA% 0.16%* 2.9% 0.1% 0.1% 0.04% 0.03% 0.04% 0.03% 2.7% 2.7%
*Enterprise figures includes figures from AP state
** Financial expenses to Avg. Gross Loan Portfolio
^Cost of borrowing for Best before AP MFI crisis and Worst during AP MFI crisis calculated on monthly averages and Includes processing fee for on and off balance sheet
# Includes processing fee for on b/s funding only, for FY 14 Rs. 13 Crs, FY15 Rs. 14.3 Crs. FY16 Rs.10.5 Crs. ,FY17 Rs. 10.4 Crs, Q1FY17 Rs. 1.7 Cr, Q2FY17 Rs. 2.3 Cr,
Q3FY17 Rs. 3.3 Crs, Q4FY17 Rs.3.1 Crs.
##Cost to income reduces to 55.0% and 49.2% for Q4FY17 and FY17 respectively , after adjusting interest reversal of Rs. 19 Crs on account of NPA in Q4FY17.
^^Rs. 4.3 Crs portfolio has been considered standard assets due to RBI dispensation .48
PORTFOLIO MIX CONCENTRATION NORMS
Metric % Cap on Disbursement* POS % Cap of Networth*
State
▪ <15%
▪ (20% for Karnataka &
Odisha)
▪ 75%
▪ (100% for the state of
Odisha, Karnataka and
Maharashtra)
District
▪ <3 %
▪ (4% for Karnataka &
Odisha)
▪ 5%
▪ (Only 5% of total operating
districts can go up to 10% of
Networth)
Branch
▪ <1 %
▪ (1.25 % for Karnataka &
Odisha)
▪ 1%
▪ (Only 5% of the total
operating branches can go
up to 2% of Networth )
NPA▪ No disbursement to a
branch with NPA > 1 %
Collection
efficiency
▪ No disbursement to a
branch with on-
time collection efficiency of
< 95%
15% Cap on portfolio outstanding for each state (20% for Karnataka and
Odisha)
*Subject to tolerance of 10%
Note: Portfolio percentage are based on proportion of
gross loan portfolio of respective states.
State %
0.1%
0.1%
1.1%
1.6%
1.3%
1.8%
5.3%
4.0%
4.8%
5.8%
9.4%
12.2%
14.2%
9.6%
11.1%
17.7%
0.1%
0.1%
0.6%
1.5%
1.6%
1.8%
3.8%
4.4%
4.5%
5.7%
6.7%
11.1%
12.4%
12.6%
14.9%
18.2%
Himachal Pradesh
Delhi
Uttarakhand
Punjab
Chattisgarh
Haryana
Madhya Pradesh
Jharkhand
Rajasthan
Kerala
Uttar Pradesh
Maharashtra
Karnataka
West Bengal
Bihar
Odisha
GLP Q4FY17
GLP Q4FY16
49
As of March 2017
VINTAGE OF NON-AP BRANCHES IS 7.4 YEARS PORTFOLIO OUTSTANDING BY ECONOMIC ACTIVITY
StateNo. of
Branches
Wt. Avg. Vintage
(in Yrs.)*
Karnataka 176 8.8
Odisha 163 8.1
Bihar 159 6.8
Uttar Pradesh 147 6.5
Maharashtra 135 7.6
West Bengal 130 8.0
Madhya Pradesh 73 8.2
Rajasthan 67 7.5
Kerala 58 5.8
Jharkhand 54 6.5
Chhattisgarh 38 5.2
Haryana 30 4.5
Punjab 18 7.6
Uttarakhand 12 6.5
Himachal Pradesh 3 2.3
Delhi 2 4.3
Non-AP 1,265 7.4
Purpose % Mix
Livestock 33%
Agriculture 14%
Grocery stores and other retail outlets 10%
Tailoring, Cloth weaving 9%
Trading of Vegetable & fruits 7%
Masonry, Painting, Plumbing,
Electrician, Carpenter and related6%
Vehicle repairs 5%
Eateries 4%
Trading of Agri-commodities 3%
Garments & Footwear retailing 3%
Trading of Utensils, Plastic items 1%
Bangles Shop 1%
Scrap Business 1%
Other income generating activities 6%
50
UPDATE ON DEMONETISATION
51
CREDIT BUREAU DATA ON (31-179 DPD) MFI INDUSTRY PORTFOLIO SIGNIFIES THE STRENGTH OF JLGLENDING MODEL, WEEKLY REPAYMENT FREQUENCY AND NON-URBAN GEOGRAPHIES
*JLG – Joint liability group lending model
14.5%13.1%
4.6%
Monthly Fortnightly Weekly
Repayment Frequency^ (31-179 DPD)
Urban Vs. Non-Urban (31-179 DPD)
JLG* Vs. Non-JLG model (31-179 DPD)
BFIL has 100% of
its loans in
Weekly
repayment format
52
17.0%
7.5%
Non-JLG JLG
BFIL has 100% of
its loans in JLG
format
17.3%
8.9%
Urban Non-Urban
^ The above data excludes 7% of Industry’s portfolio, which has
been categorized as “others” in repayment frequency.
# MFI portfolio in Top 50 Cities (by Population) of India are taken as
Urban portfolio
Source – Industry report by Equifax on Microfinance database as on Feb’17. This also includes data reported by Banks under Microfinance database.
91.0%
96.8%97.9% 98.2%
98.4% 98.5%
88.8%
93.5%94.9%
95.7% 95.9%
88.5%
92.4%
94.0%94.6%
89.2%
92.6%
93.6%
91.3%
93.2%
91.6%
As on 30th Nov'16 As on 31st Dec'16 As on 31st Jan'17 As on 28th Feb'17 As on 31st Mar'17 As on 25th Apri'17
11 to 30-Nov dues Dec'16 dues Jan'17 dues Feb'17 dues Mar'17 dues 1 to 25-Apr dues
GROSS COLLECTION EFFICIENCY FOR APR’17 HAS IMPROVED TO 96.7%
53
COLLECTION EFFICIENCY%
91.0%
92.5%
94.2%
95.5%
96.6% 96.7%
11 to 30-Nov-16 Dec'16 Jan'17 Feb'17 Mar'17 1st to 25-Apr-17
COLLECTION%*
* Collections for the Period/Dues for the Period Note: Cumulative Collection Efficiency for the period 11th Nov to 25th Apr is 94.5%
1,188
350
546
898 905
1,358
1,639
91%
67% 68% 71% 72%
122% 125%
-30%
-10%
10%
30%
50%
70%
90%
110%
-150
50
250
450
650
850
1,050
1,250
1,450
1,650
1,850
Oct'16 1 to 10-Nov 14 to 30-Nov Dec'16 Jan'17 Feb'17 Mar'17
Disbursements Disbursements as % of Collections
DISBURSEMENTS BACK TO PRE-DEMONETISATION LEVELS
54
INR Crores
Note :
Condition for disbursement in Partial Collection Centers– effective from12th Jan
• Min 2 groups in the centers have paid 100% of their dues*.
• No disbursements to arrear groups.
*For partial collection centers, Max Ticket size limit of Rs.21,184
Collections includes both principal and interest
(10 days)
(17 days)
ON BALANCE SHEET PORTFOLIO AGEING ANALYSIS
55
Date On B/S Portfolio Ageing
Total
Portfolio
(A+B+C
+D)
Curren
t (A)
1- 4
weeks
(B)
4-8
weeks
(C)
8-25
weeks (D)
>25
weeks
(E)
> 8 weeks
Expired
Contracts
(F)
Total
Overdue
Portfolio
(B+C+D+E+F)
31-Dec-16 6,891 5,822 716 341 13 - - 1,069
31-Jan-17 6,352 5,434 397 266 239 - 16 918
28 -Feb-17 6,879 6,075 258 163 353 - 30 804
31 -Mar-17 (E) 7,176 6,464 167 112 371 5 56 712
Portfolio of customers
who repaid once in last
two weeks (F)
- 6,464 157 90 92 - 9 -
Net (E-F) - - 10 22 279 5 47 363
Net % of Mar’17 Portfolio
(Rs. 7,176 Crs)- - 0.1% 0.3% 3.9% 0.1% 0.7% 5.0%
Asset Classification Total Standard Assets
Sub-
Standard
Assets
Loss Assets
Current1-4
weeks
4-8
weeks
8-25
weeks>25 weeks
> 8 weeks
Expired
Contracts
31-Mar-17 (G) 7,176 6,464 167 116* 371 5 52*
Provisions (H) 310 67 (1%) 185 (50%) 5 (100%) 52 (100%)
Net Loan Portfolio (G-H) 6,866 6,680 185 - -
INR Crs
* Rs. 4.3 Crs portfolio has been considered standard assets as per RBI dispensation
Note: Please refer slide 49 for company’s provisioning policy
OFF BALANCE SHEET COLLECTIONS ANALYSIS
56
Jan’17 Feb’17 Mar’17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
Due (A)* 130 112 115 273 225 171 92 17 3 1 -
Collections (B)* 122 105 111 - - - - - - - -
Shortfall (A-B) 8 7 4 - - - - - - - -
Collections %(A/B)^ 93.7% 94.3% 96.4% - - - - - - - -
Securitisation
Managed Loans
Jan’17 Feb’17 Mar’17
Due (A)* 108 94 103
Collections (B)* 85 76 86
Shortfall (A-B) 23 18 17
Cumulative Shortfall 57 75 92
Collections %(A/B)^ 78.7% 81.2% 83.4%
*Includes both interest and principal
^Gross collections for the period/Dues for the period
Note 1: Credit enhancement for securitisation portfolio is upto 15% of portfolio securitised and
Note 2 : Maximum credit guarantee for managed loans is 15% and 10% of disbursement tranche for disbursements before Feb’16 and from Feb’16 and
At overall program level 15% and 10% of total managed loan portfolio outstanding originated before Feb’16 and from Feb’16 respectively at any point in time,
INR Crs
1. Managed Loans instalments overdue of Rs. 92 Crs as
on 31st Mar,2017
2. Maximum credit guarantee is Rs. 72 Crs as on 31st
March, 2017. (Refer Note 2)
a. Booked loss of Rs. 6.6 Crs as on 31st March,
2017 (Rs. 5.8 Crs in Q4FY17)
b. Created provisions of Rs. 65.4 Crs as on 31st
March, 2017.(Rs. 57.9 Crs in Q4FY17)
OUR PROVISIONING POLICY
RBI norms for NBFC-
MFIs
BFIL compliance
Asset
Classification
Standard Assets 0-90 days 0- 8 weeks
Sub-Standard Assets 91-180 days >8-25 weeks
Loss Assets>180 days
>25 weeks and
expired contracts> 8 weeks
Provisioning
Norms
Standard Assets
1% of overall Portfolio reduced by
Provision for NPA (If provision for
NPA < 1% of overall Portfolio)
0.35-1% depending on NPA or as
stipulated by RBI, whichever is
higher
Sub-Standard Assets 50% of instalments overdue* 50% of outstanding principal*
Loss Assets 100% of instalments overdue* 100% of outstanding principal/
write-off*
Provisioning
Norms for
Securitised &
Managed loans
-
As per the Company’s
provisioning policy for on-balance
sheet loans net of losses, subject
to the maximum guarantee given
in respect of these arrangements.
* The aggregate loan provision will be maintained at higher of 1% of overall portfolio or as per company’s provisioning policy.
* RBI dispensation on account of demonetization:
Additional 90 days for asset downgrade from standard to substandard for loans < 1 crore
A) In respect of dues during Nov & Dec-16
B) All standard assets as of 1st Nov that slipped for any reason upto Dec-16 57
Q4FY17 COMPANY’S PROVISIONS AND WRITE-OFFS BREAKUP VIS-À-VIS REGULATORY PROVISIONING NORMS
58
As on
31-Dec-16
(A)
As on
31-Mar-17
(B)
(C)Q4FY17 Impact
(B-A+C)
On Balance Sheet
Standard asset provisions 67.0 67.5 - 0.5
Sub-Standard asset provisions 1.9 185.3 - 183.4
Loss asset Provisions 0.3 57.4 - 57.1
Write-offs - - 0.2 0.2
Off Balance Sheet-ManagedProvisions 7.5 65.4 - 57.9
Losses* - - 5.8 5.8
Off Balance Sheet-SecuritisedProvisions 7.6 17.6 - 10.0
Losses^ - - 19.7 19.7
Total 84.3 393.2 25.7 334.6
* Losses for managed portfolio are due to settlement done for arrear loans with more than 135 Days
Past Due (DPD).
^ Losses for securitised portfolio are incurred due to short fall in collections in Q4FY17.
As on
31-Mar-17 (with
RBI
dispensation)
On Balance Sheet
Standard asset provisions 70.5
Sub-Standard asset
provisions1.3
Off Balance Sheet-Managed Provisions -
Off Balance Sheet-
SecuritisedProvisions -
Total 71.8
BFIL PROVISIONS AND WRITE-OFFs
RBI PROVISIONING NORMS
Company made excess provisions of
Rs. 321.4 Crs = (393.2 – 71.8)
over and above regulatory provisions.
Following RBI provisioning norms,
Company could have made
Provision reversal in Q4FY17 of
Rs (12.5 Crs) = (71.8 -84.3)
PROFIT FOR Q4FY17 WOULD BE RS. 105.4 CRS WITH RBI PROVISIONING NORMS AND DISPENSATION
59
*NPA calculation is in respect of on balance sheet portfolio only
INR Crs
Particulars
BFIL Policy
+With RBI
dispensation
(A)
BFIL Policy+
Without RBI
dispensation
(B)
RBI Policy+
Dispensation
(C)
Net Impact
(B-A)
Net Impact
(C-A)Remarks
Interest income for Q4FY17 286.7 286.6 305.6 (0.04) 18.9 Interest reversal on account of
difference in NPA recognition
Provision for standard assets 0.47 0.43 3.5 (0.04) 3.0
Difference due to provisioning
policy (Refer Slides 49,50)Provision for NPA* 240.5 244.8 (0.9) 4.3 (241.4)
Provision and Loss on
securitized / managed portfolio 93.3 93.3 10.4 - (82.9)
Difference due to provisioning
policy (Refer Slide 49,50)
Write-Offs 0.2 0.2 0.2 - -
Provisions/Loss/Write-offs for
Q4FY17 334.6 339.0 13.2 4.3 (321.4)
Profit/Loss before tax for
Q4FY17(234.9) (239.2) 105.4 (4.2) 340.3
REVIEW OF FINANCIALS
60
STRONG SOLVENCY AND SUFFICIENT LIQUIDITY
INR Crs.
Capital AdequacyNetworth
Cash and Cash Equivalent^Drawdowns*
^ Excluding security deposit - Rs. 366 Crs in Q4FY17
15.0%
33.5%
RBI Requirement
Q4FY17
3,224
1,048
2,576
Q4FY16 Q3FY17 Q4FY17
1,383
2,671 2,447
Q4FY16 Q3FY17 Q4FY17
*Excluding Managed Loans – Rs. 184 Crs in Q4FY17
1,660
1,824
2,505
Q4FY16 Q3FY17 Q4FY17
61
84
143
(235)
303 290
Q4FY16 Q3FY17 Q4FY17 FY16 FY17
112 144 145
404
553
Q4FY16 Q3FY17 Q4FY17 FY16 FY17
29%
YoY
37%
YoY
DISBURSEMENTS GREW BY 31% QoQ AND 21% YoY
62
PATOperating CostNet Interest Income*
* Net interest income (excluding loan processing fees) = Interest income on Portfolio loans +
Excess interest spread on securitization/Income from assignment + BC Fee – Financial Cost
Disbursements Non-AP Gross Loan Portfolio Gross Revenue
INR Crs.
4,066 2,981
3,902
12,088
14,667
Q4FY16 Q3FY17 Q4FY17 FY16 FY17
21%
YoY
31%
QoQ7,677
8,531
9,150
Q4FY16 Q3FY17 Q4FY17
19%
YoY7%Y
QoQ
370 455 409
1,321
1,728
Q4FY16 Q3FY17 Q4FY17 FY16 FY17
184 221
178
641
848
Q4FY16 Q3FY17 Q4FY17 FY16 FY17
32%
YoY
Ta
x E
xp
:Rs. 26
Crs
- - Rs. 91
Crs
Rs.-97
Crs
11%
YoY
^PAT including MAT credit of Rs.97 Crs as on Mar 31, 2016
^
31%
YoY
PROFIT & LOSS STATEMENT (1/4 )
Particulars Q4FY16 Q4FY17 YoY%
Q4FY17
As % of Total
Revenue
Q3FY17 QoQ%
Income from Operations
Interest income on Portfolio loans 239 287 20% 70% 346 -17%
Excess interest spread on securitization / Assignment 61 42 -31% 10% 22 92%
Loan processing fees 23 32 40% 8% 34 -5%
Other Income
Income on investments 12 30 149% 7% 25 21%
Recovery against loans written off 3 1 -64% 0.2% 1 66%
Facilitation fees from Cross-sell 15 3 -78% 1% 10 -68%
BC fees 18 14 -20% 3% 17 -17%
Other miscellaneous income 0.2 0.5 155% 0.1% 0.3 90%
Total Revenue 370 409 11% 100% 455 -10%
Financial expenses 134 165 23% 40% 164 0.2%
Personnel expenses 80 105 32% 26% 106 -1%
Operating and other expenses 29 36 22% 9% 34 2%
Depreciation and amortization 3 4 46% 1% 3 20%
Total Operating Cost 112 145 29% 35% 144 0.8%
Provision & Write-offs 14 335 - 82% 4 -
Total Expenditure 260 644 148% 157% 312 106%
Profit before Tax 110 (235) - -57% 143 -
Tax expense 26 16 -39% 4% 29 -47%
MAT Credit Entitlement * - (16) - -50% (29) -47%
Profit after Tax 84 (235) - -57% 143 -
Profit for the period 84 (235) - -57% 143 -
INR Crs.
*Q3 FY17 , Q4FY17- MAT credit entitlement comprises tax expenses of Rs. 29 Crs and Rs. 16 Crs respectively. 63
PROFIT & LOSS STATEMENT (2/4)
64
Particulars Q3FY17 Q4FY17 Variance Comments
Int. on portfolio 346 287 (59)
Below factors lead to fall in interest income on portfolio
1. Yield Reduction (Q4FY17 = 17.6% , Q3FY17 = 19.6%)
(Due to interest reversals on account of NPA,
Higher overdue portfolio and
Securitisation/assignment transactions in Q4FY17)
2. Avg. Daily On B/S portfolio reduction due to securitisation/assignment transactions in
Q4FY17. Q3FY17 = Rs. 7,010 Crs ,Q4FY17 = Rs. 6,594 Crs
3. Lesser number of days interest recognition
92 days in Q3Y17, 90 days in Q4FY17
1. (Rs. 32 Crs)= 2.0%* Rs. 6,594 Crs* 90/365 impact on account of yield reduction
2. (Rs. 20 Crs)=(Rs. 7,010 Crs - Rs. 6,594 Crs)*19.75%*90/365 impact on account of
reduction in on-balance sheet Daily Avg. portfolio
3. (Rs. 7 Crs)= (Rs. 6,594 Crs *19.75%*2/365) impact on account of 92 days interest
recognition in Q3FY17 and 90 days in Q4FY17.
Income from Securitisation 20 24 4 ▪ Primarily driven by net recovery against earlier shortfalls.
Income from Assignment2 18 16 ▪ Incremental revenue on account of 3 Assignment transactions in Q4FY17
Loan Processing fees 34 32 (2)▪ LPF is amortised over the loan tenure
(~42% of Q4FY17 disbursements in Mar’17)
BC Fees 17 14 (3)
▪ Impact of (Rs. 1 Cr )- Daily Avg Managed loans for Q4FY17 decline by 6% (Rs. 704
Crs in Q4FY17 and Rs. 747 Crs in Q3FY17)
▪ Impact of ( Rs. 0.7) Crs - Loss of BC Fees of Rs. 2.4 Crs in Q4FY17 vs Rs. 1.7 Crs
in Q3FY17
Facilitation fees from Cross-sell 10 3 (7) ▪ Facilitated 89,000 units in Q4FY17 vs 2,74,000 units in Q3FY17
Income from Investments 25 30 5▪ Daily Avg. interest yielding assets up by 31%
(Rs. 1,950 Crs in Q4FY17 vs Rs. 1,492 Crs in Q3FY17)
Recovery from write-offs 0.5 0.9
Misc. 0.3 0.5 Note : Figures rounded-off to nearest digit.
Total 455 409 (46)
INR Crs.
65
Particulars Q3FY17 Q4FY17 Variance Comments
Finance costs 164 165 0.3
1.Avg daily borrowings increased QoQ by 3% in Q4FY17 i.e.
Rs 6,153 Crs. vs Rs. 5,974 Crs in Q3FY17.
2.Wt. Avg Cost of borrowings (Incl. Processing fees) has reduced
by 20 bps i.e. 10.6% in Q4FY17 vs 10.8% in Q3FY17.
3.Finance costs recognised for 90 days in Q4FY17 vs 92 days in
Q3FY17.
Total impact = ((1+.03)*(1-0.2%)*90/92 = 1)
Personnel expenses 106 105 (0.7) Employee count flat QoQ.
Other Operating expenses 38 40 2
Write-offs/Loss (A+B+C) 10.1 25.7 15.6
Write-offs -(A) 4.2 0.2 (4.0)
Loss on Securitised Portfolio- (B) 5.6 19.7 14.1 Rs. 19.7 Crs Loss on short collections against securitised portfolio
Loss on Managed Loans- (C) 0.3 5.8 5.5 Rs. 5.8 Crs shortfall settlement against managed Loans
Provisions (D+E+F+G) (6.3) 308.9 315.2
NPA Provisions On B/S Portfolio -(D) (1.1) 240.5 241.6 Please refer slide no : 14
Provisions on Managed Loans -(E) (0.5) 57.9 58.4Rs. 57.9 Crs incremental provisions based on company’s
provisioning policy subject to maximum performance security.
Provisions on Securitised Portfolio – (F) (5.3) 10.0 15.3Rs. 10 Crs incremental provisions on securitised portfolio based on
company’s provisioning policy
Provisions on Standard assets - (G) 0.6 0.5 (0.1)
Total Provisions/Loss/Write-offs 3.8 334.6 330.8
INR Crs.PROFIT & LOSS STATEMENT (3/4)
PROFIT & LOSS STATEMENT FOR FY17 (4/4)
Particulars FY16 FY17 YoY%
FY17
As % of Total
Revenue
Income from Operations
Interest income on Portfolio loans 954 1,228 29% 71%
Excess interest spread on securitization / Assignment 110 172 56% 10%
Loan processing fees 73 124 71% 7%
Other Income
Income on investments 56 85 51% 5%
Recovery against loans written off 15 4 -73% 0.2%
Facilitation fees from Cross-sell 50 43 -14% 2%
BC fees 62 71 15% 4%
Other miscellaneous income 2 1 -18% 0.1%
Total Revenue 1,321 1,728 31% 100%
Financial expenses 485 622 28% 36%
Personnel expenses 292 406 39% 24%
Operating and other expenses 103 134 31% 8%
Depreciation and amortization 8 13 53% 1%
Total Operating Cost 404 553 37% 32%
Provision & Write-offs 39 359 - 21%
Total Expenditure 927 1,535 66% 89%
Profit before Tax 394 193 -51% 11%
Tax expense 91 109 20% 6%
MAT Credit Entitlement * - (206) - -12%
Profit after Tax 303 290 -4% 17%
Profit for the period 303 193 -36% 11%
INR Crs.
*MAT credit is recognized from Q1FY17. MAT credit entitlement comprises tax expenses of Rs. 109 Crs for FY17, Unrecognised MAT credit of Rs. 97 Crs as on 31st March, 2016 66
STRONG CAPITAL BASE AND ROBUST LIQUIDITY DRIVE BFIL BALANCE SHEETParticulars Q4FY16 Q4FY17 YoY% Q3FY17 QoQ%
Equity Share Capital 127 138 8% 138 0%
Stock Options Outstanding 25 34 37% 26 32%
Reserves And Surplus 1,231 2,275 85% 2,508 -9%
Capital & Reserves 1,383 2,447 77% 2,671 -8%
Loan Funds 5,130 7,125 39% 6,295 13%
Payable Towards Assignment/Securitisation 247 204 -17% 136 50%
Expenses & Other Payables 44 29 -34% 28 5%
Provision For Taxation 2 1 -18% 9 -85%
Unamortised Loan Processing Fees 64 76 19% 70 8%
Employee Benefits Payable 24 31 27% 29 5%
Interest Accrued But Not Due On Borrowings 38 37 -1% 49 -25%
Provision For Leave Benefits & Gratuity 21 28 34% 27 5%
Statutory Dues Payable 4 5 37% 6 -10%
Unrealised Gain On Securitisation Transactions 124 41 -67% 49 -17%
Provision For Standard And NPA - Non-AP 74 393 - 84 -
Provision For Standard And NPA - AP 0.1 - - - -
Liabilities 5,771 7,971 38% 6,783 18%
Total Liabilities 7,154 10,418 46% 9,454 10%
Fixed Assets 11 17 49% 17 -2%
Intangible Assets 5 5 2% 6 -9%
Investment 0.2 0.2 - 0.2 -
Cash And Bank Balances (Incl. Security Deposits) 1,942 2,871 48% 2,169 32%
Trade Receivable 6 11 72% 0.3 -
Interest Accrued And Due On Loans 0 4 - 13 -70%
Interest Accrued But Not Due On Loans 10 11 6% 15 -27%
Interest Accrued But Not Due On Deposits With Banks 12 25 107% 26 -2%
Interest Strip On Securitization Transactions 124 41 -67% 49 -17%
Portfolio Loans -- Non-AP 4,806 7,083 47% 6,817 4%
Portfolio Loans -- AP 11 - - 0.1 -
Loans Placed As Collateral 160 92 -42% 75 24%
Security Deposits For Rent And Other Utilities 4 4 -10% 4 -2%
Advances For Loan Cover Insurance 1 1 -3% 1 -12%
Loans To BFIL Employee Benefit Trust 3 2 -22% 2 -
Advance Income Tax 16 16 4% 16 3%
Prepaid expenses 4 6 37% 9 -35%
MAT credit entitlement - 206 - 191 8%
Other Advances / Other Assets 39 22 -42% 45 -51%
Total Assets 7,154 10,418 46% 9,454 10%
Note:1 Non-AP Securitized/Managed/Assigned Portfolio 2,711 1,974 -27% 1,639 20%
2. Non-AP Gross Loan Portfolio 7,677 9,150 19% 8,531 7%
INR Crs.
67
RATIOSParticulars Q4 FY16 Q3 FY17 Q4 FY17
Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio)
Gross Yield (I) 21.3% 20.7% 18.5%
Portfolio Yield* (a) 18.3% 17.5% 15.5%
Financial Cost (b) 7.7% 7.5% 7.4%
NIM on portfolio (a-b) 10.6% 10.1% 8.1%
Operating Cost (c) 6.5% 6.6% 6.6%
Provision and Write-offs (d) 0.8% 0.2% 15.1%
Taxes# (e) 1.5% 1.3% 0.7%
Total Expense II = (b+c+d+e) 16.5% 15.5% 29.9%
Return on Avg. Gross Loan Portfolio (I) - (II) 4.9% 5.2% -11.3%
Efficiency:
Cost to Income 47.5% 49.5% 59.3%
Asset Quality – Non-AP:
Gross NPA 0.08% 0.06% 6.0%^^
Net NPA 0.04% 0.03% 2.7%
Gross NPA (INR Crs.) 4.1 4.1 428.1^^
Net NPA (INR Crs.) 1.9 1.9 185.3
Leverage:
Debt : Equity 3.7 2.4 2.9
Debt : Equity (Incl. Securitised, Assigned & Managed Loans) 5.9 3.0 3.8
Capital Adequacy: 23.1% 36.2% 33.5%
Profitability:
Return on Quarterly. Avg. Assets (Incl. Securitised, Assigned & Managed Loans) (Excl. MAT Credit)^ 3.9% 4.0% -8.5%
ROE (Quarterly Avg.) (Excl. MAT Credit)^ 25.3% 17.5% -39.2%
Return on Quarterly Avg. Assets (Incl. Securitised, Assigned & Managed Loans) (Incl. MAT Credit)^ 3.9% 5.1% -8.0%
ROE (Quarterly Avg.) (Incl. MAT credit)^ 25.3% 22.0% -36.7%
EPS - Diluted (INR) (Not Annualized) 6.6 10.3 -17.0
Book Value (INR) 108.6 193.7 177.3
*Portfolio Yield = (Int. income on portfolio loans + Excess interest spread on securitization and Asset Assignment + BC Fee ) /Avg. GLP
# Tax calculated excluding MAT credit entitlement of Rs.29 Crs for Q3FY17 and Rs. 16 Crs for Q4FY17
^ Rs. 29 Crs and Rs. 16 Crs MAT Credit for Q3FY17 and Q4FY17 resp.
^^ Rs. 4.3 Crs portfolio has been considered standard assets due to RBI dispensation.68
RATIOSParticulars FY16 FY17
Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio)
Gross Yield (I) 23.3% 20.1%
Portfolio Yield* (a) 19.9% 17.1%
Financial Cost (b) 8.5% 7.3%
NIM on portfolio (a-b) 11.3% 9.9%
Operating Cost (c) 7.1% 6.5%
Provision and Write-offs (d) 0.7% 4.2%
Taxes# (e) 1.6% 1.3%
Total Expense II = (b+c+d+e) 17.9% 19.2%
Return on Avg. Gross Loan Portfolio (I) - (II) 5.3% 1.0%
Efficiency:
Cost to Income 48.3% 50.0%
Asset Quality – Non-AP:
Gross NPA 0.08% 6.0%^^
Net NPA 0.04% 2.7%
Gross NPA (INR Crs.) 4.1 428.1^^
Net NPA (INR Crs.) 1.9 185.3
Leverage:
Debt : Equity 3.7 2.9
Debt : Equity (Incl. Securitised, Assigned & Managed Loans) 5.9 3.8
Capital Adequacy: 23.1% 33.5%
Profitability:
Return on Quarterly. Avg. Assets (Incl. Securitised, Assigned & Managed Loans) (Excl. MAT Credit)^ 4.2% 0.8%
ROE (Quarterly Avg.) (Excl. MAT Credit)^ 25.1% 3.9%
Return on Quarterly Avg. Assets (Incl. Securitised, Assigned & Managed Loans) (Incl. MAT Credit)^ 4.2% 2.7%
ROE (Quarterly Avg.) (Incl. MAT credit)^ 25.1% 13.6%
EPS - Diluted (INR) 23.6 21.6
Book Value (INR) 108.6 177.3
*Portfolio Yield = (Int. income on portfolio loans + Excess interest spread on securitization and Asset Assignment + BC Fee ) /Avg. GLP
# Tax excluding MAT credit entitlement of Rs.206 Crs for FY17
^MAT credit of Rs. 109 crs for FY17, Rs. 97 crs as on 31st March,2016.
^^ Rs. 4.3 Crs portfolio has been considered standard assets due to RBI dispensation. 69
GUIDANCE FOR FY18
70
INR Crs.
FY17 FY18
Actual Guidance
Incremental debt requirement 7,918 14,500
Non-AP Disbursement 14,667 19,500
Non-AP Gross Loan Portfolio 9,150 13,500
PBT 193 435
PAT (Incl. MAT Credit) 290* 435
* Including Rs. 97 Crs of MAT credit as on 31st March, 2016.
FINANCIAL ARCHITECTURE
71
On Balance Sheet* Q4FY16 Q3FY17 Q4FY17
State Bank Group 13% 10% 9%
Yes Bank 10% 7% 8%
SIDBI 8% 5% 7%
Bank of India 2% 8% 7%
IDBI Bank 7% 6% 7%
Kotak Mahindra Bank 3% 6% 6%
ICICI Bank 5% 6% 6%
Dena Bank 12% 6% 5%
IDFC Bank 8% 7% 5%
Bank of Maharashtra 4% 6% 5%
Standard Chartered Bank 4% 3% 4%
HSBC Bank 3% 3% 4%
RBL Bank 2% 5% 4%
Union Bank of India 1% 4% 4%
HDFC Bank 5% 2% 3%
Mudra 2% 1% 3%
Citi Bank 1% 2% 2%
Andhra Bank 3% 1% 2%
Axis Bank 1% 3% 2%
South Indian Bank 2% 2% 2%
Barclays Bank PLC 2% 2% 2%
Bajaj Finance Limited - 1% 1%
Others 4% 3% 3%
Total 4,440 5,429 6,018
FINANCIAL ARCHITECTURE
Diversified Source MixLenders Mix (On B/S) Devoid Of Dependence Risk
* Includes Term loan and cash credit facilities
Q4FY
16% Mix
Q3FY
17% Mix
Q4FY
17% Mix
Term Loans 4,307 53% 5,378 67% 5,939 64%
Securitisation 1,886 23% 958 12% 823 9%
CP 290 4% 466 6% 707 8%
Managed
Loans708 9% 728 9% 692 7%
Assignment 367 5% 69 1% 628 7%
NCD 400 5% 400 5% 400 4%
CC 133 2% 51 1% 78 1%
Total 8,091 100% 8,051 100% 9,268 100%
Securitised / Assigned Q4FY16 Q4FY17
State Bank Group - 29%
IDBI Bank 22% 20%
Yes Bank 32% 16%
Bank of India 16% 14%
HDFC Bank 8% 9%
Kotak Mahindra Bank 9% 5%
DCB Bank - 3%
ICICI Bank 11% 3%
RBL Bank 2% -
Total 100% 100%
Investor Mix (Off B/S) Broad-based
INR Crs.
72
SUB 9% MARGINAL COST OF BORROWING
* processing fees is amortized for marginal cost calculation.# Excluding Managed Loans, Expenses towards loan processing fees are recognized upfront whereas loan processing fees received from borrowers are
amortized over the period of contract.
Metric FY14 FY15 FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 FY17
Marginal Cost
of Borrowings
on and off b/s loans
(excluding processing
fees)
12.2% 11.7% 10.1% 9.2% 9.9% 9.4% 9.9% 8.8% 9.4%
on and off b/s loans
(including processing
fees)*
12.6% 11.9% 10.2% 9.3% 10.0% 9.5% 10.0% 8.9% 9.4%
on b/s loans (excluding
processing fees)12.9% 12.3% 11.0% 10.3% 10.4% 9.9% 9.9% 9.2% 9.8%
on b/s loans (including
processing fees)*13.6% 12.6% 11.1% 10.3% 10.5% 10.0% 10.0% 9.3% 9.9%
Daily
Average
Wt. avg. cost
of borrowing#
on and off b/s loans
(excluding processing
fees)
12.7% 12.3% 11.4% 10.8% 10.3% 10.3% 10.2% 10.1% 10.2%
on and off b/s loans
(including processing
fees)
13.6% 13.0% 11.6% 11.0% 10.4% 10.4% 10.4% 10.2% 10.4%
on b/s loans (excluding
processing fees)13.0% 12.8% 11.7% 11.3% 11.0% 10.8% 10.6% 10.4% 10.7%
on b/s loans (including
processing fees)13.9% 13.5% 12.0% 11.5% 11.2% 11.0% 10.8% 10.6% 10.9%
Monthly
Average
Wt. avg. cost
of borrowing#
on and off b/s loans
(excluding processing
fees)
12.2% 11.6% 10.9% 10.4% 10.0% 10.2% 10.0% 9.7% 10.0%
on and off b/s loans
(including processing
fees)
13.0% 12.2% 11.1% 10.7% 10.1% 10.3% 10.2% 9.9% 10.1%
on b/s loans (excluding
processing fees and other
charges)
12.8% 12.2% 11.4% 10.9% 10.6% 10.7% 10.4% 10.0% 10.5%
on b/s loans (including
processing fees)13.7% 12.8% 11.6% 11.1% 10.8% 10.8% 10.7% 10.2% 10.7%
Loan Processing Fees (INR Crs.) 17.3 16.9 11.6 2.5 1.7 2.3 3.3 3.1 10.4
Drawdowns (INR Crs.) 3,503 5,020 7,317 3,224 1,096 2,180 1,048 2,576 6,900
Financial Cost^ 8.3% 8.3% 8.5% 7.7% 6.7% 7.2% 7.5% 7.4% 7.3%
Funding Cost Analysis
^ Financial expenses to quarterly Avg. Gross Loan Portfolio.
73
POSITIVE ALM MISMATCH BENEFIT CONTINUES
56%39%
57% 46% 57% 48% 46%
44%61%
43%54%
43% 52% 54%
FY14 FY15 FY16 FY17 Q4FY16 Q3FY17 Q4FY17
Floating Fixed
* Excludes managed loans
ALM data includes Securitized/ Assigned loans
ALM
4.9 5.7 6.2 6.3 6.2 5.8 6.3 6.3
9.2 10.2
9.6 10.2 10.0 9.6
FY14 FY15 FY16 FY17 Q4FY16 Q3FY17 Q4FY17
Avg maturity of assets
Avg maturity of liabilities
No. of months
Interest Rate Mix of Borrowings*
74
EXTERNAL ASSESMENT
75
Rating Instrument Rating/Grading Rating Agency
Rating Amount Limits
(Rs. Crs.)
Q3FY17 Q4FY17
Code of Conduct Assessment C1 ICRA Limited N/A N/A
Corporate Governance Rating CGR2 ICRA Limited N/A N/A
Bank Loan Rating (Long-term facilities) CARE A+ CARE Ratings
5,500 5,500
Bank Loan Rating (Short-term facilities) CARE A1+ CARE Ratings
Long-term Debt (NCD) CARE A+ CARE Ratings 400 400
Short-term Debt (CP/NCD) CARE A1+ CARE Ratings 200 200
Long-term Debt [ICRA] A+ ICRA Limited
750^ 750^
Short-term Debt [ICRA] A1+ ICRA Limited
Securitisation Pool
CARE AA (SO) CARE Ratings 1,839 1,979*
ICRA AAA (SO), AA
+ (SO), AA (SO)#ICRA Limited 1,333 1,333*
^Subject to Long-term borrowings limit of Rs. 300 Crs
*Amount aggregates to 6 transactions rated by CARE Ratings and 4 transactions rated by ICRA
# Two transactions are rated as AA(SO) and the remaining two transactions rated as AA+(SO) and AAA(SO) respectively
RISK MANAGEMENT
76
KEY RISKS AND MANAGEMENT STRATEGIES
Management
Strategy
Key Risks
Risk Management
Political Risk
Responsible lending and fair
pricing
Concentration Risk
Geographic & dependence
norms
Operational Risk
Cash management system and
process controls
Liquidity Risk
Liquidity metrics
o Low cost lender
o Voluntary Cap on
RoA from core
lending
o Robust Customer
grievance redressal
(CGR) Mechanism
with Ombudsman
o Calibrated Growth
o Geographic
concentration
norms
- Disbursement
Related Caps
- Portfolio
Outstanding
Related Caps
o Borrowing
dependence norms
- Cap on borrowing
from any single
credit grantor (15%
of funding
requirement)
o Integrated cash
management system
o Product and process
Design
o ISO Certified Internal
audit
o Well defined metrics
for
- Cash burn
- Business continuity
- Growth
77
CAPITAL STRUCTURE
78
CAPITAL STRUCTURE AS ON 31st MARCH 2017
Excludes no. of Outstanding ESOPs 0.4 Crs.
Note: The Investment under different accounts by a fund are clubbed
under their respective names
SHAREHOLDING PATTERN
38.7%
1.1%
1.1%
1.1%
1.1%
1.1%
1.2%
1.2%
1.3%
1.3%
1.3%
1.4%
1.5%
1.6%
1.7%
1.7%
1.7%
1.7%
1.8%
2.1%
2.1%
2.2%
2.2%
2.2%
2.6%
2.8%
2.8%
3.4%
3.6%
3.9%
6.7%
Others
CIMB Bank Berhad
SIDBI
Matthews Asia
Citigroup Global Markets Mauritius Pvt. Ltd.
ICICI Prudential Mutual Fund
Morgan Stanley SG PTE
Societe Generale
Birla Sun Life Mutual Fund
Macquarie Emerging Markets Asia Trading…
Swiss Finance Corporation (Mauritus) Ltd.
Kismet SKS II
BNP Paribas Arbitrage
OHM Stock Broker Pvt Ltd.
Kismet Microfinance
Alliancebernstein
Sandstone
Goldman Sachs Asset Management
Credit Suisse Singapore
Goldman Sachs P Note
Vinod Khosla
Vanguard
IDFC Mutual Fund
Wellington
Matthews India
Tree Line
William Blair
East Bridge Capital
Morgan Stanley Investment Management
Amansa Capital PTE Limited
Morgan Stanley Mauritius
No. of shares -13.8 Crs.
FII, 24.3%
Domestic MFs,
Insurance co's & FIs ,
12.5%
Foreign Corporates,
5.8%
FPI, 40.7%
Domestic Individuals,
9.3%
NRI, 3.5%
Domestic Corporates,
3.9%
79
ADJUSTED PRICE TO BOOK COMPUTATION
80
Mar-17
Book value per share (A) 177
Present value of DTA per share (B)^ 19
Book value per share – Including PV of DTA (A+B) 196
Adjusted Price to Book Ratio (times) 4.1
Note:
^ Estimated Present Value of Deferred Tax Assets(DTA).
DTA as on Mar 31, 2017 is Rs. 281 Crs.
Discount rate assumed at 10.2% and applied over next 2 years’ estimated profit.
BFIL Market Price as of Apr 28, 2017 – Rs. 804
INR
ANNEXURES
81
ANNEXURES - OPERATIONS
82
GROUP UNDERWRITING AT WORK
53%45%
31%35% 33%
43% 43%40% 40%
21%
37%34%
34%
31% 30%33%
36%17%
15% 12% 11%12%
10% 11% 11%10%
IGL - 2 IGL - 3 IGL - 4 IGL - 5 IGL - 6 IGL - 7 IGL - 8 IGL - 9 IGL - 10
Conversion from IGL to IGL Conversion from IGL to LTL Conversion from IGL to MTL
LOAN CONVERSION TO NEXT CYCLE
70%
81% 81%79%
84% 84% 84% 87%81%
Active IGL loans disbursed during Jul’15 to Sep’15 have been considered as base and loans disbursed in subsequent cycles over the next 1.5 yrs i.e. till Mar’17 have been taken and cycle wise conversion has been arrived. Only the next first loan taken by customer is taken into consideration for conversion. 83
JLG MODEL ENSURES EFFECTIVE CONTROL ON AVERAGE INDIVIDUAL EXPOSURE, IRRESPECTIVE OF ACTUAL LOAN ELIGIBILITY
20,010
29,565 29,565 29,565 29,565 29,565 29,565 29,565 29,565 29,565
38,635
49,785 49,785
19,382
25,790 24,939 24,013 23,798 23,861 22,987 22,956 23,277 23,595
36,905
41,791 41,619
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10 Cycle 1 Cycle 2 Cycle 3
Income Generating Loan
Eligibility Amount (INR) Avg. Offtake Long Term Loan
Q4F
Y17
12,000
24,000
36,000
42,000
50,000 50,000 50,000 50,000 50,000 50,000
10,200
15,120 16,920 18,060 18,500 19,000 19,500 21,000 22,000 21,000
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10
^ Note: Maximum Offtake eligibility for IGL (1 year Tenure) : June-11 to Dec’15 – Rs. 15,000; Post Dec’15 – IGL 1 Rs.20,000 , IGL 2 Rs.30,000
Q2
FY
11
(P
RE
-CR
ISIS
)
^
^
84
CYCLE WISE NON-AP LOAN BORROWERS
Cycle Wise Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
IGL 1 42% 44% 45% 43% 38%
IGL 2 14% 15% 15% 15% 19%
IGL 3 5% 6% 6% 6% 6%
IGL 4 1% 1% 1% 1% 2%
IGL 5 1% 1% 1% 0.5% 1%
IGL 6 3% 2% 2% 1% 1%
IGL 7 2% 2% 2% 1% 1%
IGL 8 1% 1% 1% 1% 1%
IGL 9 0.3% 0.2% 0.3% 0.3% 0%
Total IGL Borrowers 69% 71% 72% 70% 68%
LTL 1 22% 22% 20% 20% 20%
LTL 2 0.2% 0.4% 0.7% 1% 2%
Total LTL Borrowers 22% 22% 21% 21% 22%
MTL 1 5% 4% 4% 6% 6%
MTL 2 2% 2% 2% 2% 2%
MTL 3 1% 0.4% 0.4% 0.6% 0.7%
MTL 4 0% 0.2% 0.2% 0.3% 0.4%
MTL 5 0.2% 0.1% 0.1% 0.2% 0.2%
MTL 6 0.1% 0.1% 0.1% 0.1% 0.1%
Total MTL Borrowers 8% 7% 7% 9% 10%
Cross Sell 0.3% 0.3% 0.2% 0.3% 0.2%
Total IGL + LTL + MTL
+ Cross Sell100% 100% 100% 100% 100%
Note:
▪ Customers having IGL & MTL loans, have been grouped under respective IGL loan cycle
▪ Customers having LTL & MTL loans, have been grouped under respective LTL loan cycle
▪ MTL clients represents borrowers with only MTL loans
▪ Cross-sell clients represents borrowers with only cross-sell loans85
DIFFERENCES IN LENDING MODEL BETWEEN SHG & JLG
SHG JLG (BFIL)
ModelSavings led (Members collectively save
money for 6 months to avail credit)
Credit led (No savings required, members have
an access to the finance as per the requirement)
Borrowers Segment Women/Men Women
Lending Methodology Group (Size 10-20 members) Group (5 members)
Loan Processing time 4 Months 1 week
Repayment frequency Monthly Weekly
Credit DecisionGroup leader decides the quantum of
loan for the member
Entire group and the center decides the quantum
of loan
Credit Bureaus Reporting
Not much information available (RBI
mandated the SHGs to share data from
July 2016)
Weekly sharing of the data with CICs
Top 5 States % Mix in Portfolio (Mar-16) Portfolio O/S (Mar-16) INR Crs.
Andhra Pradesh 30% 17,221
Telangana 17% 9,863
Karnataka 13% 7,475
Tamil Nadu 11% 6,359
West Bengal 7% 3,779
Others 22% 12,422
Total 100% 57,119
SHG Concentration:
Source: NABARD86
IGL MTL LTL
Other product
offerings^^
Loan portfolio (INR
Crs) / (% Mix)4,059 (44%) 3,113 (34%) 1,945 (21%) 32 (0.4%)#
Ticket size rangeINR 7,050 to
INR 29,565
INR 7,500 to
INR 25,421^
INR 30,915 to
INR 49,785
INR 1,310 to
INR 5,001
Avg. Ticket Size (INR)
For Q4FY1723,416 20,976 38,491 2,147
Eligibility*
▪ Completion of CGT /
GRT
▪ Age limit 18 years to
58 years
▪ Maximum limit of
INR. 20,010 for
IGL 1
▪ With IGL - Between
19th to 44th week
▪ With LTL – Between
19th to 94th week
▪ Maximum limit of
INR. 21,184 for MTL1
▪ Minimum Two IGL
Loan cycle completed
▪ Maximum limit of INR.
38,635 for
LTL 1
▪ With IGL – Between
4th to 44th week
▪ With LTL – Between
4th to 94th week
▪ With MTL – Between
4th to 71st week
Tenure 50 weeks 75 weeks^ 104 weeks 25 weeks
Annual effective
interest rate
19.75%
(w.e.f 7th Dec’15 for new loans) ▪ 19.60% - 19.70%
Processing fee (Incl.
Service Tax)1.15% ▪ 0.94% -1.14%
* Eligibility criteria over and above the criteria prescribed by the RBI
^^Loans for Mobile Phones, Solar lamps, Sewing Machines, Bicycle , Bio-Mass Stove, Water-purifier(Excluding Two wheeler loans pilot).# Portfolio Including Two wheeler loans pilot of Rs.0.51 Crs .
^w.e.f Aug, 2016 Tenure has been changed from 50 weeks to 75 weeks and ticket sizes are changed.
PRODUCT OFFERINGS
87
PRODUCT WISE - DISBURSEMENT, PORTFOLIO OUTSTANDING AND TICKET SIZE
88
IGL LTL MTL Others* Total
Q4FY16
No. of Loans Disbursed in '000 1,201 168 553 463 2,386
% Mix 50% 7% 23% 19% 100%
Amount of Loan Disbursed (In Crs.) 2,516 619 818 112 4,066
% Mix 62% 15% 20% 3% 100%
Portfolio Outstanding (In Crs.) 3,713 2,259 1,593 122 7,688
% Mix 48% 29% 21% 2% 100%
Avg. Ticket Size INR 20,951 36,812 14,783 2,422 17,041
Q3FY17
No. of Loans Disbursed in '000 692 69 547 275 1,583
% Mix 44% 4% 35% 17% 100%
Amount of Loan Disbursed (In Crs.) 1,519 264 1,133 64 2,981
% Mix 51% 9% 38% 2% 100%
Portfolio Outstanding (In Crs.) 4,066 2,022 2,371 71 8,531
% Mix 48% 24% 28% 1% 100%
Avg. Ticket Size INR 21,955 38,079 20,704 2,345 18,828
Q4FY17
No. of Loans Disbursed in '000 824 103 742 89 1,758
% Mix 47% 6% 42% 5% 100%
Amount of Loan Disbursed (In Crs.) 1,930 397 1,556 19 3,902
% Mix 49% 10% 40% 0.5% 100%
Portfolio Outstanding (In Crs.) 4,059 1,945 3,113 32 9,150
% Mix 44% 21% 34% 0.4% 100%
Avg. Ticket Size INR 23,416 38,491 20,976 2,147 22,194
*Cross sell products
LEVERAGING THE DISTRIBUTION STRENGTH
FY15 FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 FY17
Total Total Total Total TotalMobile
phone
Solar
lamp
Sewing
MachineCycle Total
Mobile
phone
Solar
lamp
Sewing
MachineCycle Others^ Total
No. of Units
Facilitated (in
Lacs)
8.4 15.6 4.2 3.8 2.7 0.2 0.7 0.05 - 0.9 4.0 6.2 0.7 0.6 0.1 11.6
Gross Fees (after
service tax) INR
Crs.
28.3 49.7 14.8 14.3 10.3 0.5 2.6 0.1 - 3.3 14.5 23.6 2.3 1.9 0.3 42.7
Less: Incentives
INR Crs.4.6 13.8 3.6 3.4 2.6 - - - - - 3.3 5.1 0.6 0.5 0.1 9.6
Net Fees INR
Crs.*23.7 28.3 8.8 8.6 6.0 0.4 2.0 0.1 - 2.6 8.9 14.6 1.3 1.1 0.2 26.0
Loan Portfolio
INR Crs.58.3 101.9 112.8
99.171.0 8.5 18.4 3.8 1.1 32.4 8.5 18.4 3.8 1.1 0.6 32.4
Net Fee Income
as % of PAT**12.6% 9.3% 6.3% 5.9% 4.2%
-
0.2%
-
0.8%
-
0.04%-
-
1.0%4.6% 7.6% 0.7% 0.6% 0.1% 13.5%
Loan Portfolio Mix 1.4% 1.3% 1.3% 1.1% 0.8% 0.1% 0.2% 0.04% 0.01% 0.4% 0.1% 0.2% 0.04% 0.01% 0.01% 0.4%
*Net fee post the incentive payout and sans transfer pricing of other operating cost and Post MAT adjustment
^Loans for Bio-Mass Stove, Water-purifier etc.
** Q1FY17- Profit for the period before MAT credit entitlement of Rs.97 Crs as on 31st March,2016, Q2FY17, Q3FY17 and Q4FY17,FY17 - Profit for the period
Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 6.7 mn for last 4 years is 37%
Frequency of
Loans (for the
period)
FY14 FY15 FY16 FY17Cumulative
past 4 years
#1 2.6% 8.8% 15.9% 15.6% 27.5%
#2 0.1% 0.8% 2.2% 0.8% 6.9%
#3 - 0.01% 0.2% 0.02% 2.1%
#4 - - 0.02% - 0.6%
#5 - - - - 0.2%
Total 2.7% 9.6% 18.3% 16.4% 37.4%
Penetration Based On Total No. Of Loans Frequency of Loans Based On Current Member Base
FY14 FY15 FY16 FY17Cumulative past
4 years
Mobile Phone 1.8% 6.6% 10.6% 5.8% 24.8%
Solar Lamp 1.1% 5.8% 7.9% 9.1% 23.9%
Sewing Machine - 0.2% 1.9% 1.1% 3.2%
Bicycle - 0.0% 1.6% 1.0% 2.6%
Bio-mass stove - 0.2% 0.7% 0.05% 1.0%
Water Purifier - 0.0% 0.5% 0.1% 0.6%
Others - - - 0.02% 0.02%
Total 2.9% 12.8% 23.1% 17.2% 56.0%
89
CREDIT BUREAU DATA
15%
23%25% 25% 26% 25%
FY-15 FY-16 Q1-FY17 Q2-FY17 Q3-FY17 Q4-FY17
Major Initiatives Impacting Credit Bureau Decision:
▪ 99.7% of credit enquiry with Aadhaar as primary KYC (Mar’17).
▪ Internal CAP of Rs. 60,000 for total indebtness of the borrower for JLG loans, including loans from other MFIs.
29%
38%
47%
41% 41%
29%
FY-15 FY-16 Q1-FY17 Q2-FY17 Q3-FY17 Q4-FY17
Rejection rate for Long Term loansRejection rate for All Products
87%
83%85%
86%87%
97%
FY-15 FY-16 Q1-FY17 Q2-FY17 Q3-FY17 Q4-FY17
FY-15 FY-16
Hit rate^ for all products ^ Hit rate = % of
loan applications
with matching
record in credit
bureau
Rejection Reasons – Q4FY17 % Mix
*Note: Rejections are
done based on data
inputs from Credit
bureau
90
Reasons All
ProductsLTL
Loans from=>2MFIs 54% 53%
=>2MFIs and Default History 13% 9%
=>2MFIs and Outstanding Balance
>60K11% 12%
Default History 9% 6%
Outstanding Balance>60K 6% 11%
Eligibility< Min Ticket Size 4% 6%
=>2MFIs,Outstanding Balance>60K
and Default History3% 2%
Default History and Outstanding
Balance >60K0.4% 0.4%
Total 100% 100%
BFIL FINANCIAL INCLUSION COVERAGE…
Doorstep Service Financial literacy Dedicated customer service
Doorstep delivery (i.e. at Center
meetings)
2 day process consisting of hour-long
sessions designed to educate clients
on BFIL processes and credit
discipline.
Toll-free helpline number with seven
different vernacular languages
Strong reach in under-banked areas Weaker & Minority section coverage
68% of BFIL branches are in RBI
under-banked district list
BFIL covers 68% of below average &
low financial districts identified by
CRISIL
20096 175
SKS 296 districts RBI 375 districts*
68%
68% of SKS branches are in RBI under-banked districts list SKS covers 68% of below average & low financial inclusion districts identified by Crisil
CRISIL level of financial inclusion
SKS Coverage of thosedistricts
High 18%
Above average 15%
Below average 51%
Low 16%
Grand Total 100%
68%
Weaker & Minority section coverage
16%
71%
100%
Minority
Economically Weakersection
Women
…. IS SUPPORTED BY ROBUST CUSTOMER CENTRIC PRACTISES
* Source: RBI under-banked districts data
[1] Source: CRISIL Inclusix: An index to measure India’s progress on Financial Inclusion, June 2013
91
WHAT ARE CLIENTS DOING POST THE ANDHRA PRADESH MFI CRISIS?
Interest rates charged by informal sources (in the
absence of MFIs)
Willingness to repay
Data relates to Andhra Pradesh & Telangana
Source: “What are Clients doing post the Andhra Pradesh MFI Crisis?”, MicroSave, 2011
59%
37%
22%
12%
29%
0%
10%
20%
30%
40%
50%
60%
70%
Money Lender SHG Pawn Broker Bank DFC
Sources of Credit (in the absence of MFI Loans) Reasons for not repaying MFI loans
92
ANNEXURES - FINANCIALS
93
CASH AND CASH EQUIVALENT BALANCES
INR Crs.
Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Interest Yielding^ 860 255 581 427 568 464 1,150 1,606
Non Interest
Yielding^^176 184 208 254 240 280 278 335
Total 1,036 439 789 681 808 744 1,428 1,941
^fixed deposits, excluding margin money deposits.
^^Includes current account and cash balances
Note: Daily Average figures
94
ANNEXURES - TECHNOLOGY
95
Initiatives SolutionTechnology Partner Benefits
New Lending
Management Software
TABLETS’ - Hand held
device for field staff
Migrated from on-
premises email system
to hosted exchange
Data Centre– Migration
to Cloud
Network protection
ERP Implementation
In-House Team SKS SMART
Enterprise Mobility
Office 365
Data Centre Hosting
Enterprise Web and
Network Security
ERP
▪ Enhances Productivity of SMs- Reduced time
spent at both center meeting and back office
▪ Paper less transaction - Pre-printed loan
application form.
▪ Enhanced email security, 99.99% uptime, On
mobile office 365 access.
▪ Additional products such as One-Drive,
Enterprise Skype etc. for easy access of data
and better communication.
▪ On-demand capacity scale-up.
▪ Business Continuity Plan.
▪ Improved performance and reliability of network
infrastructure and applications.
▪ A robust framework that encompasses
workflow/reporting and analytic engines
▪ Works in online/offline mode to mitigate
connectivity challenges.
▪ ERP - Automation of financial accounting/
investment management, procurement and
payment process.
TECH ADVANCEMENTS DRIVEN BY INDUSTRY LEADING PARTNERSHIPS
96
ANNEXURES – HR
97
Avg. Vintage (Yrs.)
Senior Management 8.3
Middle Management 8.8
Branch Management* 7.3
Sangam Managers 2.5 (3.8^)
Vintage of SMs Exited %Mix
< 6 Months 56%
6 Months - 1 Yr. 20%
1 -2 Yrs. 14%
2- 3 Yrs. 3%
> 3 Yrs. 7%
Who?
When?
Sangam
Manager
Attrition %
Why?
Retention
Strategy
▪ 33% (Annualised) for FY17
▪ Sangam managers who earn lesser
average monthly performance incentive
i.e. ~Rs. 3,600 vis-à-vis ~Rs. 7,000 for
other Sangam Managers .
▪ ~56% of staff who leave the job, decides
to leave within 6 Months from joining
date.
▪ Work conditions such as :
− Average distance travelled per day is
~30 kms.
− Work location is different from home
location
− Branch Reporting time at 6:30 AM
▪ 2ND Best paying job (~Rs.15,000 pm) in
the local milieu (1st – Govt. Job)
▪ High growth career path – No lateral
recruitments till 4 levels above loan
officer.
ATTRITION RATE AT SANGAM MANAGER LEVEL IS LARGELY CONTRIBUTED BY NEW JOINEES. EXCLUDING NEW JOINEES, THE AVG. VINTAGE IS 4.3 YEARS
* Includes Promoted Sangam Mangers
^ Avg Vintage of Sangam Managers
(Excl. who joined in last one year i.e.
57% of Sangam Managers) is 3.8 Yrs.
98
ANNEXURES - COMPLIANCE
99
COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (1/2)
RBI norms for NBFC-MFIs BFIL compliance
NBFC–MFIs
▪ Qualifying assets to constitute not less than 85% of its
total assets (excluding cash and bank balances)
▪ At least 50% of loans for income generation activities
▪ Qualifying assets - 95%
▪ Income generation loans 99.6%
Pricing Guidelines
Income of
Borrower’s Family
▪ Rural : <=Rs.100,000
▪ Non-Rural : <=Rs. 1,60,000 ✓
Ticket Size▪ <= 60,000 – 1st cycle
▪ <= Rs.100,000 – Subsequent cycle ✓
Indebtedness▪ <= Rs. 100,000
✓<= Rs. 60,000
Tenure▪ If loan amt. > Rs.30,000, then >= 24 months
✓
Collateral▪ Without collateral
✓
Repayment Model▪ Weekly, Fortnightly and Monthly
✓100
COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (2/2)
RBI norms for NBFC-MFIs BFIL compliance
Pricing Guidelines
Interest Rate^
▪ A. Margin cap – 10% above cost of borrowings
▪ B. Avg. base rate of top 5 commercial banks X 2.75
▪ Lower of the A and B.✓
Margin: 8.2% for FY17
Interest rate 19.75% w.e.f
7th December’15 for new
loans
Processing Fees▪ <= 1% of loan amt.
✓
Insurance
Premium
▪ Actual cost of insurance can be recovered from
borrower and spouse
▪ Administrative charges can be recovered as per IRDA
guidelines
✓
Penalty▪ No penalty for delayed payment
✓
Security Deposit
▪ No security deposit/ margin to be taken
✓BFIL has never taken
security deposit/ margin
101^ W.E.F April 1, 2017 - Quarterly Margin Cap will be followed- Average interest rate on loans sanctioned during a quarter shouldn’t exceed the
Avg borrowing cost during the preceding quarter plus margin cap.
BFIL does not levy any
administrative charges.
Note:
* Banks are also directed to ensure overall direct lending to non-corporate farmers does not fall below the system wide average of last
three years achievement, which is notified as 11.70% as per RBI notification dated 1st September 2016. They should also continue to
maintain all efforts to reach the level of 13.5% direct lending to beneficiaries..
Refer Slide no.42 for details on purpose wise loan portfolio outstanding.
RBI BFIL
S.no. Sector Category Target for Banks %Qualifying
Portfolio of BFIL %Explanation
1
Agriculture Target 18%
47% Livestock, Agri & Allied- Direct Agriculture* Sub-target ~13.5%*
- Direct Small &
Marginal farmers*Sub-target
7% (Mar’16)
8% (Mar’17)
2 Weaker Target 10% 100%
100% Loans are to women
beneficiaries (with less than
Rs.1 lac).
Further, Minority communities
constitute 16% and
economically weaker sections
71% of loan portfolio.
3 Micro-enterprises Target7% (Mar’16)
100%Loans to MFIs for on-lending to
microenterprises. 7.5% (Mar’17)
BFIL LOAN PORTFOLIO QUALIFIES FOR OVERALL PSL TARGET OF 40% AND ALL SUB-TARGETS UNDER NEW PSL NORMS
102
ANNEXURES – INTERNAL AUDIT
103
INTERNAL AUDIT PLAYS A CRITICAL ROLE IN ASSESSING PROCESS CONTROLS
Note:
* Approximately 30% of the clients are covered by Internal Audit in an year during the branch audits. Clients visited on a sample basis to check for
Loan confirmations, Loan utilization (LUC) , arrears and awareness on Client Protection Principles (CPP)
^ Fixed Assets are verified on Annual basis
• 211 strong headcount
• ISO 9001:2008 certified process
• All branches are inspected monthly based on a 4 tier grading system
• Grading linked to incentives/appraisals of field staff
• Head Office audit by KPMG
Strength
• Branches 1,399
• Branches per Internal Audit staff 7
• Regional Offices 28Scope
Scope of Audit
Audit area Frequency
Client
Acqui
sition
Center
Meeting
Proces
s
Document
verification
(KYC, Loan
utilization check
etc.)
Monitoring
process by
supervisor
s
Adheren
ce to
Process
/
Policies
Statutory
Requirement
s
(Credit
bureau, Fair
practices
etc.)
Client
Visits
*
High
Risk
items
(Fraud
s etc.)
Fixed
Assets
verific
ation^
IGL Branches Monthly √ √ √ √ √ √ √ √ √
Regional
Offices
Once in a
quarter,
distributed
monthly
- - - - √ √ - √ √
Head office Quarterly - - - - √ √ - - √
104