October 28, 2016

The General Manager

The Vice President, Listing Department
Department of Corporate Services - Listing National Stock Exchange of India Limited
Department
Exchange Plaza
BSE Limited
Bandra Kurla Complex
Phiroze Jeejeebhoy Towers
Bandra (East)
Dalal Street
Mumbai 400 051
Mumbai 400 001
Dear Sir/Madam,

Sub: Earning Update for the quarter ended September 30, 2016

This is to inform you that the Board of Directors of the Company at its meeting held today i.e.
October 28, 2016, had approved the financial results for the half year (audited) and second quarter
(unaudited subjected to limited review by the Statutory Auditors) ended September 30, 2016 and
the same have been sent to you.
A copy of the Earnings Update for the quarter ended September 30, 2016, which we plan to host
on our website www.bfil.co.in is attached hereto.
We request you to take the above information on your record.
Thanking you,

Yours faithfully,
For Bharat Financial Inclusion Limited
(Formerly known as SKS Microfinance Limited)

Rajendra Patil
Sr. Vice President Legal & Company Secretary

EARNINGS UPDATE Q2FY17

Sab se Sastha loan

BFILs lowest interest rate benefits 50 lakh women in 1 lakh villages

OCT 2016
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.

CONTENTS

Particulars

Slide No.

Executive Summary

Investment Hypothesis

Company Overview

Clarity on Major Uncertainties Post AP MFI Crisis

13

Growth Anatomy

18

Future Strategy

28

Q2FY17 Performance Highlights

34

Review of Financials

40

Financial Architecture

50

Risk Management

55

Capital Structure

57

Annexures

60

Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary.
2

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
Overview

AUM Growth (Non-AP portfolio)

Second largest microfinance company

in India with gross loan portfolio of INR
9,046 Cr., 63 Lakhs members in NonAP states and 1,359 branches

INR Cr.

PAT of Rs. 303 Crs for FY16 and Profit

for Q2FY17 of Rs. 146 Crs

Attractive Financial Metrics

9,046

7,677

377
4,171

2,016

5,462

244

2,837

136

Mar-13 Mar-14 Mar-15 Mar-16

Sep-15 Sep-16

2,514
33.4%
1,632
0.1%

Efficiency and Profitability

Marginal cost of borrowing#
Cost to income
Return on Equity^

9.4%
47.0%
21.9%

Return on Asset*^

4.3%

Note: Q2FY17
Non-AP = excluding states of AP and Telangana
# includes on and off b/s borrowings (excluding processing fees) for Q2FY17
*includes securitized, assigned and managed loans
Figures rounded off to the nearest digit across the presentation
^ Excludes MAT Credit for Q2FY17

FY-13

165

FY-14

FY-15

FY-16

232

Q2-FY16Q2-FY17

NII = Interest income on Portfolio loans + Excess interest

spread on securitization/Income from Assignment + BC
Fee Financial Cost

Balanced Geographical mix

Strong Balance sheet and liquidity

Net worth (INR Cr.)
Capital Adequacy
Cash & Cash equivalent (INR
Cr.)
Gross NPA

INR Cr.

641

Lowest lending rate (19.75%) among

MFIs
Companys non-AP Portfolio grew by
66% (YoY) and 7% (QoQ) to INR
9,046 Crs. as of Sep 30, 2016

Growing Net Interest Income

Jharkhand
4%
Madhya
Pradesh
5%

Top 10 Shareholders

Others
6%

Morgan Stanley Investment

Odisha
17%

Rajasthan
5%
Karnataka
14%

Kerala
5%
Uttar
Pradesh
9%

West
Bengal
11%

Maharashtra
12%
Bihar
12%

Note: Portfolio as of Sep 30, 2016

Diversified Shareholding

5.5%

Amansa Capital PTE Limited

3.9%

Morgan Stanley Mauritius

3.8%

TIAA Cref

3.3%

Goldman Sachs

3.2%

Indus Capital Partners

3.1%

Baron Capital Management

2.9%

Tree Line

2.8%

IDFC Mutual Fund

2.5%

Vinod Khosla

2.5%

Note: Shareholding as of Sep 30, 2016

INVESTMENT HYPOTHESIS

INVESTMENT HYPOTHESIS
Favorable Macros
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 years of AP MFI Act

Regulatory Clarity
RBIs 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

Unmatched leadership
BFIL is the most efficient and lowest cost MFI lender across the globe
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 6% to PAT for Q2FY17.
Pan-India presence with no unbalanced geographic sectoral exposure
Strong solvency (Capital Adequacy of 33.4% as on 30th Sep 2016) and sufficient liquidity
Steady state RoA of 4% is the highest among financial services play
6

THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE

Micro-Credit Demand In India

Rs. 5,40,000 Crs.

Year 2015

covered in part by
moneylenders and
informal sources,
but largely untapped

Segment -1
70 mn households in India
with some assets (INR
90/day PPP)

MFIs

SHG
Rs. 2,40,000 Crs.

Year 2005

Rs.87,442 crs
Rs.62,575 crs

27,582

24,017
38,558
FY14*

59,860
FY15*

Demand

*Disbursement in INR Crs.

Segment -2 (BPL)
80 mn households in India
with no assets (INR 55/day
PPP)

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

COMPANY OVERVIEW

88

BFIL USES GRAMEEN MODEL TO PROVIDE UNSECURED CREDIT AT THE

DOORSTEP OF LOW INCOME RURAL WOMEN

Put loan
officers pic

Survey a village

Recruit members

Deliver doorstep service

Provide training
9

BUILDING BLOCKS OF TURNAROUND POST AP MFI CRISIS

INR crore

Balance Sheet Cleansed

Supply-side Shock Managed

Drawdowns

AP exposure of Rs. 1,360

crore written off/ provided
for

Credit Growth Resumed

3,526

NonAP Gross Loan

Portfolio

2,837

3,503
2,875

1,484
1,185

FY 12

FY 13

FY 14

Cost Structure Optimization

Q3FY11

Q4FY14

Q3FY11

Q3FY12

Q4FY14

Return To Profitability

Var.

70
Branches

Other Opex (INR

crore)
Headcount
Personnel Cost
(INR crore)

2,403

1,255

-48%

51

21

-60%

25,735

8,932

-65%

89

43

-52%

FY12
(13.6) Bn

FY13
(3.0) Bn

FY14
10

DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (1/2)

Market Share Regained
Non-AP Portfolio Outstanding

BFIL
Disbursement
share 20%* in
Q1FY17

60,165
28.300

3,945

14.600

1,229

Net worth - Rs. 2,514 crs

14%

8,463

14%

Capital Reinforced

INR Crs.

CAR - 33.4% (RBI Requirement

* Industry
disbursements
for Q1FY17 is
Rs. 18,811 crs.

8%

15%)

Others
BFIL

Oct10

June12

Jun16

Jun-16 data as per MFIN; (excludes data for Bandhan bank)

Technology Upgraded

Refactoring of
In-house lending
system

Installed
Computers at
all branches
with In-House
lending
system

Yrs

2000

Efficiency Gains

Equipped
Loan
Officers with
tablets

Mobile/ digital/
cashless
transactions

Marginal Cost of
Borrowing#

Cost to Income
74.5%
61.1%
48.3%

47.0%

FY16

Q2FY17

12.6% 11.9%

10.2%

9.5%

FY16

Q2FY17

All branch
connectivity
with daily data
receipt (1,215
remote
locations)
FY14

2012

2014 -15

2015 -16

2016 -17

FY15

FY14

FY15

# On and Off balance sheet borrowings (excl. Managed

Loans) including processing fees

11

DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (2/2)

Political Risk Mitigation through interest rate reduction
29.25%

4.8% reduction in one year

24.55%

23.55%

22.00%

20.75%
19.75%

Oct-10

Jan-11

Oct-14

Jul-15

Oct-15

Lowest interest rate

charged by any private
sector MFI in the globe

Dec-15

Interest rate on income generation loans

Reduced Borrowing Dependence

Share of borrowing from top 5
banks
74%

Lower State Concentration

Top three states share in GLP

53%
43%

40%

Mar-13

Sep-16

Term loan and cash credit facilities

Sep-10

Sep-16

GLP: Gross Loan Portfolio

12

CLARITY ON MAJOR UNCERTAINTIES

POST AP MFI CRISIS

13

WHAT DOESNT KILL YOU, MAKES YOU STRONGER - POSITIVE DEVELOPMENTS

POST AP MFI CRISIS
Concerns

Clarity
Regulatory clarity RBI to be the sole regulator

Will there be multiple

regulators?

Priority sector status continues

Funding uncertainty?

MFIs are the only indirect priority sector dispensation

No contagion
Will there be contagion?

Since past 6 years no other state has followed suit

Collection efficiency maintained despite disbursements being a fraction

Has the operating model

been challenged?

What will be the economics

under regulated interest
rate regime?

of collections during the wind-down mode i.e. Oct2010 to June2012.

No alternative credit delivery model has gained currency.

RoA of 3-4% on a steady-state basis

14

OPERATING MODEL VAILIDITY ESTABLISHED

Collection efficiency of 97% during wind-down mode dispels ever greening myth
Non-AP
Loan
Portfolio

INR crs
3,942
3,526
2,706
2,101
1,635

Q2FY11

Q3FY11

Q4FY11

Q1FY12

1.9 million borrowers repaid loans

without incremental lending

Q2FY12

1,185

1,320

1,229

Q3FY12

Q4FY12

Q1FY13

Internal generation -- and not incremental debt -aids prompt repayment

in Millions

MFI Industry non- AP Portfolio Outstanding (Rs Cr)

No. of non-AP borrowers who repaid on-time

during this period

5.2

Oct10

28,300

No. of non-AP members who availed loans

during this period

3.3

June12

14,600

No. of non-AP members who didnt

receive any incremental credit from BFIL
during this period

1.9

15

COMPETITIVE LANDSCAPE CHANGES TO BFILS ADVANTAGE

Snapshot of Equifax Credit Bureau*:

INR crore

Institutional
Infrastructure
Credit Bureaus- Equifax & Highmark
are functional
- 95% of MFIs now use
CB reports for
disbursements

No. of loan records - 21.2 Crore

No. of borrower records 8.5 Crore
No. of loan records (live) 5.7 Crore
No. of borrower records (live) 4.1 Crore
No. of MFIs reporting 135
Frequency of sharing the records Weekly

Market Share
Dynamics
2nd, 3rd, 4th and 5th
largest MFI players
with 40% Non-AP
market share are
under CDR.

Sector outstanding
Non-AP Portfolio
Oct 10 28,300
Mar14 24,615
Mar15- 40,138
Mar16- 53,155
Junr16- 60,165#

* Source: Equifax (as on July 2016)

# Jun-16 data as per MFIN; excludes data for Bandhan bank;
16

STEADY-STATE ROA OF 4% CAN BE TARGETED

Interest rate
Processing fee

21.6
Minimum Alternate Tax @ 21%

5.0

Marginal Cost of
borrowings: 9.5%.

1.7

Portfolio funded by debt:

1.0

80%

19.75*

6.3

7.6
#

1.9

Financial cost

Operating
cost

Prov. &
Write-off

Taxes

Profit

Revenue

*interest rate charged is 19.75% for new loans effective from 7th Dec15
#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)

17

GROWTH ANATOMY

18

5.7 YEAR CAGR FOR THE SECTOR AND BFIL ARE 19% AND 14%

Industry GLP*

BFIL GLP*

87,000
75,659

77,000

8,463

68,645

7,677

67,000
57,000
47,000
38,386

42,053
3,942

37,000

28,300

2,837

24,499

27,000
17,000

4,797

4,171

14,600

2,016

16,740
1,185 1,320

7,000
-3,000

Oct'10 Jun'12 Mar'13 Mar'14 Mar'15 Jun'15 Mar'16 Jun'16

Sep'10 Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Jun'15 Mar'16 Jun'16

* Non-AP GLP (Gross Loan Portfolio), Industry GLP data includes Bandhan data, For Jun16- Bandhan data as on Mar16
Source: MFIN Micrometer (Mar13,Mar14, Mar15, Jun15, Mar16 data)

19

WE GREW SLOWER THAN THE SECTOR IN 9 OUT OF TOP 10 STATES

Industry
Top 10 States by
GLP

Bharat Financial Inclusion

Ltd.

Growth > Industry

Growth < Industry

GLP Q1FY17
(Rs. Cr.)

YoY growth

GLP Q1FY17
(Rs. Cr.)

YoY
growth

Tamil Nadu

9,821

80%

Karnataka

8,105

73%

1,171

64%

Maharashtra

6,962

81%

1,039

69%

Uttar Pradesh

6,250

91%

798

80%

Madhya Pradesh

4,372

78%

440

73%

West Bengal

3,739

105%

854

90%

Bihar

3,566

111%

980

93%

Orissa

3,366

73%

1,446

76%

Kerala

2,766

119%

473

62%

Gujarat

2,316

98%

Overall

60,165

90%

8,463

76%

Source: Micrometer

20

OUR GROWTH PATTERN IS DIFFERENT FROM THE SECTOR (CONT..)

Bharat Financial Inclusion
Ltd.

Industry
Top 10 growth
States

GLP
Increase
Q1FY17
(Rs. Cr.)

Contribution
to growth

GLP
Increase
Q1FY17
(Rs. Cr.)

Contribution
to growth

Tamil Nadu

4,350

15%

Karnataka

3,428

12%

458

13%

Maharashtra

3,123

11%

425

12%

Uttar Pradesh

2,980

10%

353

10%

Madhya Pradesh

1,916

7%

186

5%

West Bengal

1,915

7%

405

11%

Bihar

1,877

7%

473

13%

Orissa

1,418

5%

625

17%

Kerala

1,504

5%

180

5%

Gujarat

1,144

4%

Other States

4,801

17%

560

15%

Overall

28,454

100%

3,666

100%

Growth > Industry

Growth < Industry

Source: Micrometer

21

INDUSTRY GROWTH SKEWED TOWARDS URBAN, WHEREAS WE REMAIN

RURAL FOCUSED

Urban

MFI IndustryMar'13^

33%

Rural

67%

Industry growth skewed

towards urban

MFI Industry Jun'16*

60%

40%

We are rural
focused
BFIL- Sep'16

21%

0%

79%

20%

40%

Source: ^Sa-Dhan Report 2013,*MFIN Micrometer

60%

80%

100%
22

OUR BORROWER GROWTH EXCEEDS TICKET SIZE GROWTH FOR LAST 3 YEARS

Increase in
No. of
Borrowers

Increase in
Ticket size

Change in Loan
duration^

AUM growth

FY14

26%

4%

8%

41%

FY15

12%

6%

24%

47%

FY16

27%

22%

18%

84%

CAGR last
3 yrs.

21%

10%

16%

56%

Q2FY17
(YoY)

44%

32%

-13%

66%

Notes:
^ Due to the impact of long term loans ( 2 years duration), which was piloted in FY14 and rolled out in FY15.

23

WE HAVE BEEN ADDING BRANCHES IN FOCUSED UNDER PENETRATED

MARKETS
State

Branch (Net Add. in H1FY17)

Bihar

14

Uttar Pradesh

14

Chhattisgarh

10

Rajasthan

Maharashtra

Odisha

Jharkhand

Haryana

Madhya Pradesh

West Bengal

Kerala

Delhi

Karnataka

Punjab

Uttarakhand

Himachal Pradesh

Total

72% of new branches

added in focused
states

74

Focus States

24

OUR LOAN OFF-TAKE IS LOWEST AMONG THE TOP 5 MFIs

LOAN OFF-TAKE

INR Figures for Q1FY17

31,568

32,000
24,924

24,158

21,974

22,000

16,758

12,000
2,000
MFI 1

MFI 3

MFI 5

MFI 4

BFIL (MFI 2)

-8,000

AVERAGE LOAN OUTSTANDING PER BORROWER

30,000
24,040

17,848

20,000

16,612

16,243
12,193

10,000

0
MFI 1

MFI 3

BFIL (MFI 2)

MFI 5

MFI 4

MFI 1 5 are ranked in the order of Gross Loan Portfolio

Source: Micrometer
25

OUR FOCUS ON AADHAAR ENHANCES CREDIT QUERY EFFICIENCY

CB REJECTIONS TREND
57% of credit
enquiry with
Aadhaar as
primary KYC

Mandatory
submission
of 2 KYCs *
21%

24% 23%
18% 20% 19% 19%

21%

CB Rejection %

28% 29%

23% 23%

14% 15%

22% 24% 22% 23%

25% 25% 25% 24% 25% 25% 26%

93% of credit
enquiry with
Aadhaar as primary
KYC

9% 8% 9% 8% 9%

Rejection Reasons* - Q2FY17 % Mix

Reasons

All Products

LTL

Loans from=>2MFIs

62%

69%

=>2MFIs and Outstanding Balance >60K

20%

16%

Eligibility< Min Ticket Size

7%

5%

Outstanding Balance>60K

5%

4%

Default History

3%

2%

=>2MFIs and Default History

=>2MFIs,Outstanding Balance>60K and
Default History

3%

3%

1%

1%

0.1%
100%

100%

Default History and Outstanding Balance >60K

Total

*Note: Rejections are done based on data inputs from Credit

bureau

* 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..

26

BFIL HAS NIL EXPOSURE IN SHG CONCENTRATED STATES

State
SHG Concentrated
States

SHG Exposure <4%

SHG Exposure* BFIL Exposure*

Andhra Pradesh

30%

Telangana

17%

Karnataka

13%

14%

Tamil Nadu

11%

West Bengal

7%

11%

Kerala

4%

5%

Odisha

3%

17%

Maharashtra

3%

12%

Uttar Pradesh

3%

9%

Bihar

2%

12%

Madhya Pradesh

2%

5%

Assam

1%

Rajasthan

1%

5%

Jharkhand

0.6%

4%

Gujarat

0.5%

Chhattisgarh
Haryana

0.5%
0.4%

1%

Punjab

0.3%

2%

Tripura

0.2%

Himachal Pradesh

0.2%

0.1%

Others

0.6%

1%

*SHG Data (Source: NABARD Status of Microfinance in India-2016), BFIL data as on Sep16

2%

27

FUTURE STRATEGY

28

A COMPARATIVE STUDY OF STRUCTURAL OPPORTUNITIES & CHALLENGES

CHALLENGES

OPPORTUNITIES

Access to low cost funds/deposits

Bank accounts to customers
Political risk mitigation

SFB

NBFCMFI

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

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

Political risk beyond a size

Cannot access deposits

29

SFB - MISSED OPPORTUNITY BUT NOT A SETBACK

Rationale for SFB application
Political Risk mitigation

Sub-20% interest rate mitigates political risk

BFIL becomes the lowest cost lender with 19.75% interest rate

Access to refinance

Access to refinance is now available to NBFCs also

BFIL has accessed Rs.100 Cr refinance from MUDRA @ 10%

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 banks

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

Mitigants / Counter Strategies

MARKET ENDORSEMENT
BFIL Share Price
883

528

381

20-Jul-15

18-Sep-15
(RBI announcement on SFB in-principle license on 16 Sept'15)

28-Oct-16
30

UNMATCHED LEADERSHIP
Parameter

Status

Unique
Operating Model

Group Lending

100%

Rural customer base

~79%

Extensive
Reach*

No. of districts

315

No. of customers

6.3 Mn

Lowest Cost
Producer

Interest rate

Lowest interest rate of

19.75% among global
private sector MFI

Opex to GLP

6.3%

Cost to Income

47.0%

Earnings growth

87% YoY

RoA, RoE

4.3%, 21.9%

Best of Breed
financial ratios*

External
endorsements

Rating

* For Q2FY17, RoA , RoE before MAT credit for the period

Corporate Governance rating at

CGR2
Highest safety Short-term rating at
A1+
31

THE MOST EFFICIENT MFI IN THE GLOBE

Medium Term Strategic Priorities:

Target %

Metric

Drivers

10

20

30

Marginal
cost of
Borrowing

Sub-20
Interest
Rate to
Borrower

Cumulative
next 2
years salary
increase to
field staff

Balance sheet
strength

Low marginal
cost of borrowing

Stellar
repayment
record

Scale &
Efficiency

Productivity &
Efficiency

40
Cost to
Income
Ratio

9.5*

*on and off b/s loans (including processing fees)

# YoY% Profit Growth

Annualised
earnings
growth

Technology
initiatives

AUM
growth

Scale

Operating
leverage
Non-Loan
revenue

Judicious
sources mix

Status
Q2FY17

50

19.75

15

47

87#

32

CREATIVE DISTURBANCE TO ASSET-REVENUE-EARNING CORRELATION

Medium-Term Targets

Earnings
15%
5.9%

Revenues
85%

10%
3.2%

Assets*
90%
5%
1.1%

MFI
Non - MFI
Non-MFI Actuals Q2FY17

95%

*Note: Core microfinance will continue to be more than 95% of credit assets

33

Q2FY17
PERFORMANCE HIGHLIGHTS

34

HIGHLIGHTS OF Q2FY17
Completed QIP of Rs. 750 Crs. with multiple times oversubscription.
Networth of Rs.2,514 Crs. and Capital adequacy at 33.4% as of Sep 30, 2016.
Incremental drawdowns of Rs.2,180 Crs. in Q2FY17 (Rs.1,569 Crs. in Q2FY16) and Rs. 3,276 Crs. in H1FY17
(Rs. 2,615 in H1FY16) excluding origination under managed loans. BFIL also originated Rs.306 Crs. and Rs. 609
Crs. loans under managed portfolio in Q2FY17 and H1FY17 respectively.
Completed securitization transactions of Rs.639 Crs in Q2FY17 ( Nil in Q2FY16) and Rs. 852 Crs in H1FY17 (Rs.
84 Crs. in H1FY16) rated as AA (SO).
Loan disbursement of Rs.4,016 Crs. in Q2FY17 (growth of 51% YoY and 7% QoQ).
Non-AP Portfolio grew by 66% YoY and 7% QoQ to Rs.9,046 Crs. as of Sep 30, 2016.
Marginal cost of Borrowings* reduced from 9.9% in Q1FY17 to 9.4% in Q2FY17.
MAT Credit of Rs. 33 Crs. has been recognised on the balance sheet in Q2FY17,with this accumulated MAT credit
is Rs. 161 Crs. as on Sep 30,2016.
The un-availed deferred tax benefit of Rs.256 Crs. will be available to offset tax on future taxable income.
Profit for the period of Rs. 146 Crs. in Q2FY17 (growth of 87% YoY and 5% QoQ#) and Rs. 285# Crs for H1FY17
(growth of 105% YoY)
Cash & Cash equivalent^ of Rs.1,632 Crs as of Sep 30,2016.
Note:
^ Excluding security deposit.
* Includes on and off b/s borrowings, excluding processing fees.
# Excluding MAT Credit of Rs. 97 Crs as on 31st March, 2016
Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary.

35

OPERATIONAL HIGHLIGHTS
Particulars
Branches#
Centers (Sangam)
- Centers in non-AP States
Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii)
Field Staff (i) + (ii) + (iii) + (iv) + (v)

Sangam Managers* (i)

Sangam Manager Trainees(ii)

Branch Management Staff (iii)

Area Managers (iv)

Regional Office Staff (v)

Central Processing Unit and Member helpline (vi)
Head Office Staff (vii)
Members in non-AP States (in '000)

Members added (in the quarter) (in 000)

Active borrowers in non-AP States (in '000)

Active borrowers added (in the quarter) (in 000)

No. of loans disbursed (in '000)
Disbursements (for the quarter) (INR Crs.)
Gross loan portfolio Non-AP (INR Crs.) (A+B+C)

Loans outstanding (A)

Securitized/Assigned (B)

Managed loans (C)

Operational Efficiency Non-AP :
Off-take Avg (Disbursements/ No of Loans disbursed) (INR)
Off-take Avg Excluding Cross Sell
Gross loan portfolio/ Active Borrowers (INR)
Gross loan portfolio/ No. of Sangam Managers (Rs. '000)
Active borrowers / No. of Branches
Active borrowers / No. of Sangam Managers

Sep-15

Sep-16

YoY%

June-16

QoQ%

1,268
2,16,723
1,45,938
10,782
10,490
6,066

1,359
2,62,183
2,13,298
15,459
14,913
9,308

7%
21%
46%
43%
42%
53%

1,368
226,307
193,393
14,559
14,094
7,914

-1%
16%
10%
6%
6%
18%

736

1,425

94%

2,103

-32%

2,506

2,835

13%

2,708

5%

137

228

66%

231

-1%

1,045

1,117

7%

1,138

-2%

31

215^

156

38%

261

331

27%

309

7%

4,592
537
3,821
552
1,988
2,665
5,462
4,753
179
531

6,290
846
5,499
789
2,263
4,016
9,046
6,935
1,345
766

37%
58%
44%
43%
14%
51%
66%
46%
44%

5,657
778
5,095
771
2,249
3,769
8,463
6,227
1,494
742

11%
9%
8%
2%
1%
7%
7%
11%
-10%
3%

13,414
16,333
14,295
10,011
3,367
700

17,744
20,834
16,449
10,297
4,486
626

32%
28%
15%
3%
33%
-11%

16,758
19,986
16,612
11,469
4,125
690

6%
4%
-1%
-10%
9%
-9%

*Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Sep16, we had 8,785 SMs in Non-AP States
# Closed 39 Gold loan branches in Q2FY17; ^ 104 employees moved from field to Central Processing Unit and Member helpline

36

PRODUCTIVITY GAINS & COST EFFICIENCY ENABLE BFIL TO LEVERAGE THE

CONDUCIVE ENVIRONMENT
Best before AP Worst during
MFI crisis
AP MFI crisis

FY14

FY15

FY16

Q1 FY17

Q2 FY17

Productivity Non-AP:
Borrowers/ SM

489*

287

721

787

733

690

626

3,640*

1,320

6,275

8,994

12,141

11,469

10,297

Offtake Avg.

10,299*

9,237

11,849

12,273

15,024

16,758

17,744

Offtake Avg. (Excl Cross-sell)

10,383*

11,021

12,277

14,149

18,102

19,986

20,834

6.6%

9.8%

8.3%

8.3%

8.5%

6.7%

7.2%

9.7%^

12.9%^

13.0%

12.8%

11.7%

11.0%

10.8%

10.3%^

16.0%^

13.9%#

13.5%#

12.0%#

11.2%#

11.0%#

Opex/ Gross Loan Portfolio %

10.4%

21.7%

9.6%

9.5%

7.1%

6.3%

6.3%

Cost to Income Ratio

52.4%

275%

74.5%

61.1%

48.3%

45.7%

47.0%

Gross NPA%

0.20%*

5.5%

0.1%

0.1%

0.1%

0.1%

0.1%

Net NPA%

0.16%*

2.9%

0.1%

0.1%

0.04%

0.03%

0.04%

Collection Efficiency %

99.8%*

94.9%

99.9%

99.8%

99.8%

99.8%

99.8%

Gross Loan Portfolio/ SM ('000)

Cost Efficiency:

Financial Cost %**

Daily Wt. Avg. Cost of borrowings %
(without processing fees & other charges)
Daily Wt. Avg. Cost of borrowings %

Credit Quality - Non-AP:

*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 daily Wt. Avg. Cost of borrowings % Includes
processing fee for on and off balance sheet funding for the said periods,
# 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. ,Q1FY17 Rs. 1.7 Cr, Q2FY17 Rs. 2.3 Cr

37

PORTFOLIO MIX

CONCENTRATION NORMS

State

Metric

13.6%
14.3%

Karnataka

State

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 %

12.3%
12.8%

Maharashtra

12.3%
11.0%

Bihar

11.1%
9.0%

West Bengal

8.8%
9.5%

Uttar Pradesh

5.4%
6.0%

Kerala

4.8%
5.0%

Rajasthan

4.7%
5.5%

Madhya Pradesh

4.2%
3.9%

Jharkhand
Haryana

2.0%
1.6%

Punjab

1.7%
1.7%

Chattisgarh

1.3%
1.3%

Uttarakhand

0.9%
1.0%

Delhi

0.1%
0.1%

Himachal Pradesh

0.1%
0.1%

GLP Q2FY17
GLP Q2FY16

Note: Portfolio percentage are based on proportion of

gross loan portfolio of respective states.

POS % Cap of Networth*

<15%
(20% for Karnataka &
Odisha)

16.8%
17.3%

Odisha

% Cap on Disbursement*

No disbursement to a
branch with ontime collection efficiency of
< 95%
15% Cap on portfolio outstanding for each state (20% for Karnataka and
Odisha)
Collection
efficiency

*Subject to tolerance of 10%

Odisha, Karnataka and Maharashtra exposure are at 60%, 49% and 44%
respectively of our networth.

38

VINTAGE OF NON-AP BRANCHES IS 7.1 YEARS

PORTFOLIO OUTSTANDING BY ECONOMIC ACTIVITY

No. of
Branches

Wt. Avg. Vintage

(in Yrs.)*

Karnataka

171

8.6

Livestock

33%

Odisha

155

8.0

Agriculture

11%

Bihar

150

6.7

Tailoring, Cloth weaving

10%

Uttar Pradesh

147

6.0

West Bengal

127

7.7

Grocery stores and other retail outlets

10%

Maharashtra

125

7.6

Trading of Vegetable & fruits

7%

Madhya Pradesh

72

7.8

Masonry, Painting, Plumbing,

Rajasthan

67

7.0

Electrician, Carpenter and related

Kerala

54

5.9

Vehicle repairs

5%

Jharkhand

52

6.3

Eateries

4%

Chhattisgarh

38

4.7

Trading of Agri-commodities

3%

Haryana

27

4.4

Punjab

18

7.1

Garments & Footwear retailing

2%

Uttarakhand

12

6.0

Trading of Utensils, Plastic items

1%

Himachal Pradesh

1.8

Bangles Shop

1%

Delhi

3.8

Scrap Business

1%

1,220

7.1
Other income generating activities

7%

State

Non-AP

As of Sep 2016
* Excludes 5 Gold Loan Branches.

Purpose

% Mix

6%

39

REVIEW OF FINANCIALS

40

STRONG SOLVENCY AND SUFFICIENT LIQUIDITY

INR Crs.

Networth

Capital Adequacy

33.4%

2,514
RBI Requirement

1,627
15.0%

1,203

Q2FY16

Q1FY17

Q2FY17

Q2FY17

Drawdowns*

Cash and Cash Equivalent^

2,180
1,632
1,569
1,096

Q2FY16
*Excluding Managed Loans

Q1FY17

834

Q2FY17

Q2FY16
^ Excluding security deposit

762

Q1FY17

Q2FY17
41

PROFIT FOR THE PERIOD GROWS BY 87%YoY AND 5% QoQ

INR Crs.

Non-AP Gross Loan Portfolio

Disbursements

Gross Revenue

66%
YoY

51%
YoY

7%
QoQ

4,016

3,769

9,046

8,463

Q1FY17

Q2FY17

Q2FY16

7%
QoQ

217

Q1FY17

Q2FY17

87%
YoY

Q2FY16

Q2FY17

5%
QoQ

139^

146

137

97

Q2FY17

Q1FY17

PAT

8%
QoQ

41%
YoY

232

127

Q1FY17

Q2FY16

Operating Cost

165

Q2FY16

450

414

5,462

Net Interest Income*

40%
YoY

9%
QoQ

324

2,665

Q2FY16

39%
YoY

7%
QoQ

78

Q1FY17

Q2FY16

Q2FY17

* Net interest income (excluding loan processing fees) = Interest income on Portfolio loans +
Excess interest spread on securitization/Income from assignment + BC Fee Financial Cost

Tax Exp:

Q1FY17

Q2FY17

Rs. 23 Crs

^PAT excluding MAT credit of Rs.97 Crs as

on March 31, 2016

42

ROBUST EARNINGS MODEL DELIVERS IMPROVED PROFITABILITY

Particulars

Q2FY16

Q2FY17

Q2FY17
As % of Total
Revenue

YoY%

INR Crs.

Q1FY17

QoQ%

Income from Operations

Interest income on Portfolio loans

256

317

24%

71%

278

14%

Excess interest spread on securitization / Assignment

11

52

381%

12%

56

-8%

Loan processing fees

16

31

94%

7%

27

15%

Other Income
Income on investments
Recovery against loans written off
Facilitation fees from Cross-sell
BC fees
Other miscellaneous income
Total Revenue

9
4
13
16
0.2
324

14
1
14
20
0.2
450

57%
-88%
12%
29%
12%
39%

3%
3%
4%
100%

16
2
15
19
0.3
414

17%
-73%
-3%
6%
-29%
9%

Financial expenses
Personnel expenses
Operating and other expenses
Depreciation and amortization
Total Operating Cost

117
70
26
2
97

158
100
34
3
137

35%
43%
34%
65%
41%

35%
22%
8%
1%
31%

136
95
30
2
127

16%
5%
15%
41%
8%

2%

2%

12

-25%

Provision & Write-offs

Total Expenditure

223

304

36%

68%

275

10%

Profit before Tax

101

146

44%

32%

139

5%

23

33

40%

7%

32

3%

(33)

(129)

Profit after Tax

78

146

87%

32%

236

-38%

Profit for the period

78

146

87%

32%

139^

5%

Tax expense
MAT Credit Entitlement *

*MAT credit is recognized from Q1FY17. Q1FY17 -MAT credit entitlement comprises tax expenses of Rs. 32 Crs for Q1FY17 and unrecognized MAT credit of Rs.
97 Crs as on 31st March, 2016. Q2FY17 MAT credit entitlement comprises tax expenses of Rs. 33 Crs
^ Excluding MAT Credit of Rs. 97 Crs as of Mar16 for Q1FY17

43

ROBUST EARNINGS MODEL DELIVERS IMPROVED PROFITABILITY

H1FY16

H1FY17

YoY%

H1FY17
As % of Total
Revenue

451
33

595
108

32%
232%

69%
13%

31

59

89%

7%

Other Income
Income on investments
Recovery against loans written off
Facilitation fees from Cross-sell
BC fees
Other miscellaneous income
Total Revenue

30
8
26
28
0.5
607

30
3
29
39
0.6
864

0.4%
-70%
14%
41%
28%
42%

3%
0.3%
3%
5%
0.1%
100%

Financial expenses
Personnel expenses
Operating and other expenses
Depreciation and amortization
Total Operating Cost

218
141
49
3
193

294
195
64
5
264

35%
38%
31%
84%
37%

34%
23%
7%
1%
31%

Provision & Write-offs

16

21

31%

2%

Total Expenditure

426

579

36%

67%

Profit before Tax

181

285

58%

33%

Tax expense

42

65

55%

7%

(161)

Profit after Tax

139

382

175%

44%

Profit for the period

139

285^

105%

58%

Particulars

INR Crs.

Income from Operations

Interest income on Portfolio loans
Excess interest spread on securitization / Assignment
Loan processing fees

MAT Credit Entitlement *

*MAT credit is recognized from Q1FY17. MAT credit entitlement comprises tax expenses of Rs. 65 Crs for H1FY17 and unrecognized MAT credit of Rs. 97 Crs
as on 31st March, 2016
^ Excluding MAT Credit of Rs. 97 Crs as of Mar16

44

QOQ PROFITABILITY ANALYSIS

Particulars

INR Crs.

FY16

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

AUM growth rate (QoQ) Closing

84%

15%

14%

13%

24%

10%

7%

AUM growth rate (QoQ) Monthly Averages

80%

22%

17%

10%

22%

16%

9%

PAT/Profit for the period

303

61

78

79

84

139#

146

PAT Growth rate ( QoQ)

61%

51%

27%

2%

6%

65%#

5%

Cross sale fee (Facilitation fees)

49.7

12.8

12.7

9.3

14.9

14.8

14.2

Standard Asset Provision (Inc. off b/s provision

upto 1%)

30.8

4.9

6.1

7.3

12.5

9.9

5.5

Cash & Bank balance (net of security deposit)

Avg. Daily

735

1,036

439

789

681

808

744

9.1

(0.9)

(1.0)

2.3

8.7

(2.3)

(1.2)

23.55%

22.0%

20.75%
& 19.75%

19.75%

19.75%

19.75%

Non-Core Drivers

Non-Core Drags

Income deferred (net*) on account of

Securitisation/assignment
Interest rate on new loans
Average gross interest yield Daily Average (i)^
Wt. Avg. Cost of Borrowings (On and off B/S Incl.
Processing Fees) Daily Average (ii)^

22.4%

23.7%

23.2%

22.4%

21.1%

20.4%

20.0%

11.6%

11.8%

12.3%

11.5%

11.0%

10.4%

10.4%

Spread (i-ii)

10.8%

11.9%

10.9%

10.9%

10.1%

10.0%

9.6%

NIM%$

11.3%

11.4%

12.8%

11.2%

10.6%

10.8%

10.6%

*Net of flow back from earlier deferrals

# Q1FY17 PAT & PAT growth rate excluding MAT credit of Rs.97 Crs as on March 31, 2016
^Excluding Managed Loans,
$ NIM = (Interest income on Portfolio loans + Excess interest spread on securitization/Income from assignment + BC Fees Financial
Cost)/(Average Quarterly GLP)

45

STRONG CAPITAL BASE AND ROBUST LIQUIDITY DRIVE BFIL BALANCE SHEET
INR Crs.
Particulars
Equity Share Capital
Stock Options Outstanding
Reserves And Surplus
Capital & Reserves
Loan Funds
Payable Towards Assignment/Securitisation
Expenses & Other Payables
Provision For Taxation
Unamortised Loan Processing Fees
Employee Benefits Payable
Interest Accrued But Not Due On Borrowings
Provision For Leave Benefits & Gratuity
Statutory Dues Payable
Unrealised Gain On Securitisation Transactions
Provision For Standard And NPA - Non-AP
Provision For Standard And NPA - AP
Liabilities
Total Liabilities
Fixed Assets
Intangible Assets
Investment
Cash And Bank Balances (Incl. Security Deposits)
Trade Receivable
Interest Accrued And Due On Loans
Interest Accrued But Not Due On Loans
Interest Accrued But Not Due On Deposits With Banks
Interest Strip On Securitization Transactions
Portfolio Loans -- Non-AP
Portfolio Loans -- AP
Loans Placed As Collateral
Security Deposits For Rent And Other Utilities
Advances For Loan Cover Insurance
Loans To BFIL Employee Benefit Trust
Advance Income Tax
Prepaid expenses
MAT credit entitlement
Other Advances / Other Assets
Total Assets
Note:1 Non-AP Securitized/Managed/Assigned Portfolio
2. Non-AP Gross Loan Portfolio

Q2FY16
127
26
1,050
1,203
4,452
68
23
8
40
16
33
15
5
12
56
0
4,728
5,932
14
5
0.2
1,039
10
1
13
11
12
4,736
15
17
4
2
5
14
5
27
5,932
709
5,462

Q2FY17
138
23
2,354
2,514
6,139
227
51
2
77
24
39
25
8
85
91
0
6,766
9,280
16
6
0.2
1,975
9
0
11
17
85
6,825
2
110
3
1
2
16
8
161
31
9,280
2,111
9,046

YoY%
9%
-12%
124%
109%
38%
121%
-80%
92%
49%
16%
63%
59%
62%
-87%
43%
56%
16%
6%
0%
90%
-13%
-77%
-13%
52%
44%
-87%
-10%
-39%
-56%
12%
53%
14%
56%
66%

Q1FY17
128
25
1,474
1,627
5,359
266
46
10
71
18
25
25
11
91
84
0
6,006
7,633
17
6
0.2
1,059
15
0
11
12
91
6,109
6
118
4
1
3
16
3
129
32
7,633
2,236
8,463

QoQ%
8%
-6%
60%
55%
15%
-15%
12%
-83%
8%
35%
57%
-3%
-32%
-7%
8%
-64%
13%
22%
-5%
-3%
86%
-38%
72%
2%
40%
-6%
12%
-64%
-7%
-7%
140%
-22%
-1%
130%
25%
-4%
22%
6%
7%

46

BEST OF BREED RATIOS

Particulars
Spread Analysis (as % of Avg. Gross Loan Portfolio)
Gross Yield
Portfolio Yield*
Financial Cost
NIM on portfolio
Operating Cost
Provision and Write-offs
Taxes#
Total Expense
Return on Avg. Gross Loan Portfolio

(I)
(a)
(b)
(a-b)
(c)
(d)
(e)
II = (b+c+d+e)
(I) - (II)

Q2 FY16

Q1 FY17

Q2 FY17

25.2%
21.9%
9.1%
12.8%
7.6%
0.7%
1.8%
19.2%
6.1%

20.5%
17.5%
6.7%
10.8%
6.3%
0.6%
1.6%
15.2%
5.3%

20.5%
17.8%
7.2%
10.6%
6.3%
0.4%
1.5%
15.4%
5.2%

Efficiency:
Cost to Income

47.0%

45.7%

47.0%

Asset Quality Non-AP:

Collection Efficiency
Portfolio at Risk >30 Days
Gross NPA
Net NPA
Gross NPA (INR Crs.)
Net NPA (INR Crs.)

99.7%
0.2%
0.2%
0.1%
7.5
3.9

99.8%
0.1%
0.1%
0.03%
3.5
1.6

99.8%
0.1%
0.1%
0.04%
6.3
3.0

3.7
4.3

3.3
4.8

2.4
3.4

Capital Adequacy:

24.6%

23.2%

33.4%

Profitability:
Return on Avg. Assets (Incl. Securitised, Assigned & Managed Loans)#
ROE#
EPS - Diluted (INR) (Not Annualized)
Book Value (INR)

5.0%
26.9%
6.1
94.9

4.3%
28.5%
18.3
127.5

4.3%
21.9%
11.3
182.8

Leverage:
Debt : Equity
Debt : Equity (Incl. Securitised, Assigned & Managed Loans)

*Portfolio Yield = (Int. income on portfolio loans + Excess interest spread on securitization and Asset Assignment + BC Fee ) /Avg. GLP
# Tax, ROA, ROE ratios are calculated excluding MAT credit entitlement of Rs.129 Crs for Q1FY17 and Rs. 33 Crs for Q2FY17
47

BEST OF BREED RATIOS

Particulars
Spread Analysis (as % of Avg. Gross Loan Portfolio)
Gross Yield
Portfolio Yield*
Financial Cost
NIM on portfolio
Operating Cost
Provision and Write-offs
Taxes#
Total Expense
Return on Avg. Gross Loan Portfolio

(I)
(a)
(b)
(a-b)
(c)
(d)
(e)
II = (b+c+d+e)
(I) - (II)

H1 FY16

H1 FY17

25.2%
21.2%
9.0%
12.2%
8.0%
0.7%
1.7%
19.4%
5.8%

20.6%
17.7%
7.0%
10.7%
6.3%
0.5%
1.5%
15.3%
5.2%

Efficiency:
Cost to Income

49.5%

46.3%

Asset Quality Non-AP:

Collection Efficiency
Portfolio at Risk >30 Days
Gross NPA
Net NPA
Gross NPA (INR Crs.)
Net NPA (INR Crs.)

99.7%
0.2%
0.2%
0.1%
7.5
3.9

99.8%
0.1%
0.1%
0.04%
6.3
3.0

3.7
4.3

2.4
3.4

Capital Adequacy:

24.6%

33.4%

Profitability:
Return on Avg. Assets (Incl. Securitised, Assigned & Managed Loans)#
ROE#
EPS - Diluted (INR) (Not Annualized)
Book Value (INR)

4.5%
24.8%
10.8
94.9

4.2%
23.9%
29.5
182.8

Leverage:
Debt : Equity
Debt : Equity (Incl. Securitised, Assigned & Managed Loans)

*Portfolio Yield = (Int. income on portfolio loans + Excess interest spread on securitization and Asset Assignment + BC Fee ) /Avg. GLP
# Tax, ROA, ROE ratios are calculated excluding MAT credit entitlement of Rs.161 Crs for H1FY17
48

GUIDANCE FOR FY17

INR Crs.

FY16

FY17

Actual

Guidance

Incremental debt requirement

8,385

10,000

Non-AP Disbursement

12,063

16,500

Non-AP Gross Loan Portfolio

7,677

11,000

303

450^

Profit After Tax

(Post MAT @ 21%)
^Excludes MAT credit recognition

Note on MAT credit recognition:

MAT credit is recognized from Q1FY17, including unrecognized MAT Credit of Rs. 97 Crs as on 31 st March, 2016.
Recognition is based on extant guidance note issued by ICAI.

49

FINANCIAL ARCHITECTURE

50

FINANCIAL ARCHITECTURE

INR Crs.

Lenders Mix (On B/S) Devoid Of Dependence Risk

On Balance Sheet*

Diversified Source Mix

Q2FY16

Q1FY17

Q2FY17

Yes Bank

13%

12%

9%

IDFC Bank

6%

6%

8%

Term Loans

State Bank Group

12%

10%

8%

Dena Bank

11%

10%

8%

ICICI Bank

8%

5%

Kotak Mahindra Bank

7%

Bank of Maharashtra

Q2FY
Q1FY
Q2FY
% Mix
% Mix
% Mix
16
17
17
3,497

67%

4,576

58%

5,221

62%

Securitisation

244

5%

1,527

19%

1,461

17%

7%

Managed
Loans

533

10%

758

10%

773

9%

3%

7%

CP

448

9%

320

4%

423

5%

6%

8%

6%

NCD

400

8%

400

5%

400

5%

SIDBI

4%

8%

6%

220

3%

98

1%

Bank of India

3%

6%

5%

Union Bank of India

1%

1%

5%

107

2%

64

1%

95

1%

HSBC Bank

3%

3%

4%

5,229

100%

7,864

100%

8,471

100%

RBL Bank

4%

2%

4%

IDBI Bank

4%

6%

4%

Axis Bank

2%

2%

3%

HDFC Bank

3%

4%

3%

Standard Chartered Bank

2%

3%

3%

1%

2%

Citi Bank

2%

2%

2%

Andhra Bank

4%

2%

2%

2%

1%

South Indian Bank

2%

2%

1%

Others

3%

3%

2%

3,604

4,640

5,316

Barclays Bank PLC

Mudra

Total

* Includes Term loan and cash credit facilities

Assignment
CC
Total

Investor Mix (Off B/S) Broad-based

Securitised / Assigned
Yes Bank
HDFC Bank
IDBI Bank
Kotak Mahindra Bank
ICICI Bank
Bank of India
DCB Bank
RBL Bank
IndusInd Bank
Total

Q2FY16

Q2FY17

47%
2%
15%
27%
9%

39%
17%
14%
9%
8%
6%
6%
1%
-

100%

100%
51

SUB 10% MARGINAL COST OF BORROWING

Funding Cost Analysis
Metric

Marginal Cost of
Borrowings

Daily
Average

Monthly
Average

Wt. avg. cost of

borrowing#

FY14

FY15

FY16

Q2FY16

on and off b/s loans

(excluding processing fees)

12.2%

11.7%

10.1%

11.2%

9.9%

9.4%

on and off b/s loans

(including processing fees)*

12.6%

11.9%

10.2%

11.4%

10.0%

9.5%

12.9%

12.3%

11.0%

11.2%

10.4%

9.9%

13.6%

12.6%

11.1%

11.4%

10.5%

10.0%

on and off b/s loans

(excluding processing fees)

12.7%

12.3%

11.4%

11.7%

10.3%

10.3%

on and off b/s loans

(including processing fees)

13.6%

13.0%

11.6%

12.3%

10.4%

10.4%

13.0%

12.8%

11.7%

11.9%

11.0%

10.8%

13.9%

13.5%

12.0%

12.5%

11.2%

11.0%

on and off b/s loans

(excluding processing fees)

12.2%

11.6%

10.9%

11.3%

10.0%

10.2%

on and off b/s loans

(including processing fees)

13.0%

12.2%

11.1%

11.8%

10.1%

10.3%

12.8%

12.2%

11.4%

11.5%

10.6%

10.7%

13.7%

12.8%

11.6%

12.1%

10.8%

10.8%

17.3

16.9

11.6

5.7

1.7

2.3

3,503
8.3%

5,020
8.3%

7,317
8.5%

1,569
9.1%

1,096
6.7%

2,180
7.2%

on b/s loans (excluding

processing fees)
on b/s loans (including
processing fees)*

on b/s loans (excluding

processing fees)
on b/s loans (including
processing fees)

Wt. avg. cost of

borrowing#

on b/s loans (excluding

processing fees and other
charges)
on b/s loans (including
processing fees)

Loan Processing Fees (INR Crs.)

Drawdowns (INR Crs.)
Financial Cost^

Q1FY17

^ Financial expenses to quarterly Avg. Gross Loan Portfolio.

* 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.

Q2FY17

52

POSITIVE ALM MISMATCH BENEFIT CONTINUES

ALM
No. of months

Avg maturity of assets

Avg maturity of liabilities
11.6
10.2

9.2
6.3
4.9

FY14

5.7

FY15

6.2

FY16

10.1

10.1

6.1

5.8

5.7

Q2FY16

Q1FY17

Q2FY17

ALM data includes Securitized/ Assigned loans

Interest Rate Mix of Borrowings*

Floating

44%

56%

FY14

Fixed

61%

39%
FY15

* Excludes managed loans

43%
65%
57%
35%
FY16

Q2FY16

48%

45%

52%

55%

Q1FY17

Q2FY17
53

EXTERNAL ASSESMENT
Rating Instrument

Rating

Rating Agency

Rating Amount Limits

(Rs. Crs.)
Q1FY17

Q2FY17**

MFI Grading

MFI 1

CARE Ratings

N/A

N/A

Corporate Governance Rating

CGR2

ICRA Limited

N/A

N/A

Bank Loan Rating (Long-term

facilities)

CARE A+

CARE Ratings
4,500

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

Securitisation Pool

[ICRA] A1+

ICRA Limited

CARE AA (SO)

CARE Ratings

1,731

1,839*

ICRA AAA (SO),

AA + (SO), AA
(SO)#

ICRA Limited

802

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 are rated as AA+(SO) and AAA(SO) respectively
** As on October 28, 2016.

54

RISK MANAGEMENT

55

KEY RISKS AND MANAGEMENT STRATEGIES

Risk
Management

Key Risks

Management
Strategy

Political Risk

Concentration
Risk

Operational Risk

Liquidity Risk

Responsible
lending and fair
pricing

Geographic &
dependence
norms

Cash
management
system and
process controls

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 Integrated cash
management system

o Well defined metrics

for

o Product and process

Design

Cash burn

Business continuity

Growth

o ISO Certified Internal

audit

o Borrowing
dependence norms
-

Cap on borrowing
from any single
credit granter (15%
of funding
requirement)
56

CAPITAL STRUCTURE AND SHARE

PRICE MOVEMENT

57

CAPITAL STRUCTURE AS ON 30TH SEP 2016

Morgan Stanley Investment
Amansa Capital PTE Limited
Morgan Stanley Mauritius
TIAA Cref
Goldman Sachs
Indus Capital Partners
Baron Capital Management
Tree Line
IDFC Mutual Fund
Vinod Khosla
Credit Suisse Singapore
Morgan Stanley SG PTE
Wellington
Wasatch Funds
William Blair
Alliancebernstein
Vanguard
Kismet Microfinance
Birla Sun Life Mutual Fund
Sandstone
Capital Investment Trust
PineBridge Investments
Kismet SKS II
Amundi
Swiss Finance Corporation
SIDBI
Citigroup Global Markets
Others

5.5%
3.9%
3.8%
3.3%
3.2%
3.1%
2.9%
2.8%
2.5%
2.5%
2.4%
2.4%
2.1%
2.1%
2.0%
2.0%
1.8%
1.8%
1.7%
1.7%
1.6%
1.4%
1.4%
1.3%
No. of shares -13.8 Crs.
1.2%
1.1%
1.0%
37.5%

Excludes no. of Outstanding ESOPs 0.3 Crs.

Note: The Investment under different accounts by a fund are clubbed
under their respective names

SHAREHOLDING PATTERN

FPI, 40.8%
Foreign
Corporates,
6.0%
Domestic
MFs,
Insurance
co's & FIs ,
10.6%

FII, 29.7%

Domestic
Individuals,
8.4%
NRI, 3.6%
Domestic
Corporates,
1.0%

58

ADJUSTED PRICE TO BOOK COMPUTATION

INR

Sep-16
Book value per share (A)

183

Present value of DTA per share (B)^

17

Book value per share Including PV of DTA (A+B)

200

Adjusted Price to Book Ratio (times)

4.4

Note:
^ Estimated Present Value of Deferred Tax Assets(DTA).
DTA as on Sep 30, 2016 is Rs. 256 Crs.
Discount rate assumed at 10.7% and applied over next 2 years estimated profit.
BFIL Market Price as of Oct 28, 2016 Rs. 883

59

ANNEXURES

60

ANNEXURES - OPERATIONS

61

GROUP UNDERWRITING AT WORK

LOAN CONVERSION TO NEXT CYCLE
83%
75%

87%
7%

84%

90%
6%

91%
5%

43%

48%

51%

39%

37%

34%

IGL - 8

IGL - 9

IGL - 10

87%

88%

88%

7%

6%

6%

42%

40%

39%

41%

IGL - 6

IGL - 7

8%

11%

14%
27%

48%

42%

32%

35%

IGL - 4

IGL - 5

61%
45%

IGL - 2

IGL - 3

Conversion from IGL to IGL

Conversion from IGL to LTL

Conversion from IGL to MTL

Active IGL loans disbursed during Jan15 to Mar15 have been considered as base and loans disbursed in subsequent cycles over the next 1.5 yrs
i.e. till Sep16 have been taken and cycle wise conversion has been arrived. Only the next first loan taken by customer is taken into consideration
for conversion.

62

JLG MODEL ENSURES EFFECTIVE CONTROL ON AVERAGE INDIVIDUAL

EXPOSURE, IRRESPECTIVE OF HER ACTUAL LOAN ELIGIBILITY
Eligibility Amount (INR)

Avg. Offtake Long Term Loan

Q2FY11 (PRE-CRISIS)

Q2FY17

50,000 Income Generating Loan

45,000
40,000
35,000
29,565 29,565 29,565 29,565 29,565 29,565 29,565 29,565 29,565
30,000
25,886 24,050
23,089 23,686 22,935 22,080 22,025 22,804 22,995
25,00020,01019,462
20,000
15,000
10,000
5,000
0
Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle
10

49,785

49,785

42,426
38,63536,896

41,832

50,000

50,000

50,000

Cycle 1 Cycle 2 Cycle 3

50,000

50,000

50,000

42,000
36,000
24,000

15,120

18,500

19,000

19,500

22,000

18,060

21,000

21,000

16,920

Cycle 3

Cycle 4

Cycle 5

Cycle 6

Cycle 7

Cycle 8

Cycle 9

Cycle 10

12,000 10,200

Cycle 1

Cycle 2

^ Note: Maximum Offtake eligibility for IGL (1 year Tenure) : June-11 to Dec15 Rs. 15,000; Post Dec15 IGL 1 Rs.20,000 , IGL 2 Rs.30,000
63

CYCLE WISE NON-AP LOAN BORROWERS

Cycle Wise
IGL 1
IGL 2
IGL 3
IGL 4
IGL 5
IGL 6
IGL 7
IGL 8
IGL 9

Q2FY16
36%
21%
5%
1%
5%
5%
3%
1%
0.2%

Q1FY17
44%
15%
6%
1%
1%
2%
2%
1%
0.2%

Q2FY17
45%
15%
6%
1%
1%
2%
2%
1%
0.3%

Total IGL Borrowers

76%

71%

72%

LTL 1
LTL 2
Total LTL Borrowers

17%
17%

22%
0.4%
22%

20.4%
0.7%
21%

MTL 1
MTL 2
MTL 3
MTL 4
MTL 5
MTL 6

4%
1%
1%
0.2%
0.1%

4%
2%
0.4%
0.2%
0.1%
0.1%

4%
2%
0.4%
0.2%
0.1%
0.1%

6%

7%

7%

Cross Sell

0.3%

0.3%

0.2%

Total IGL + LTL + MTL +

Cross Sell

100%

100%

100%

Total MTL Borrowers

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 loans

64

DIFFERENCES IN LENDING MODEL BETWEEN SHG & JLG

SHG

JLG (BFIL)

Model

Savings 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 Decision

Group 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

NPAs

6.5% as on Mar-16

0.1% as on Sep 30th 2016

SHG Concentration:
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

Source: NABARD

65

PRODUCT OFFERINGS
IGL

MTL

LTL

Other product
offerings^^

Loan portfolio (INR

Crs) / (% Mix)

4,654 (51%)

2,067 (23%)

2,225 (25%)

99 (1%)#

Ticket size range

INR 9,100 to
INR 29,565

INR 10,755 to
INR 25,421^

INR 30,915 to
INR 49,785

21,403

17,194

Avg. Ticket Size (INR)

For Q2FY17

Eligibility*

Tenure

Annual effective
interest rate
Processing fee (Incl.
Service Tax)

Completion of CGT /
GRT
Age limit 18 years to
55 years
Maximum limit of
INR. 20,010 for
IGL 1
50 weeks

With IGL - Between

20th to 46th week
With LTL Between
20th to 96th week

38,048

Minimum Two IGL

Loan cycle completed
Maximum limit of INR.
38,635 for
LTL 1

75 weeks^

104 weeks

INR 1,310 to
INR 5,001

2,381

With IGL Between

4th to 46th week
With LTL Between
4th to 100th week

25 weeks

19.75%
(w.e.f 7th Dec15 for new loans)

19.60% - 19.75%

1.15%

0.94% -1.14%

* Eligibility criteria over and above the criteria prescribed by the RBI
Stopped disbursement of gold loans from January 2016 (Portfolio outstanding as on 30th Sep 2016 is Rs. 0.36 Crs.)
^^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.0.47 Crs .We have started Two wheeler loans on Pilot basis from the month of April 2016.
^w.e.f Aug, 2016 Tenure has been changed from 50 weeks to 75 weeks and ticket sizes are changed.

66

HIGHLIGHTS - LONG TERM LOANS (LTL)

Product Details
Purpose

Income generating activity

Ticket Size

Rs.30,915 to Rs.49,785

Tenure

104 Weeks

Eligibility

Product design

Equal weekly installment (EWI) similar to IGL

Eg.: IGL Rs.15K Ticket size : Rs. 330 EWI
LTL Rs. 30K Ticket size : Rs. 360 EWI

Minimum Two IGL Loan cycle completed

Maximum limit of INR. 38,635 for LTL 1

Snapshot
LTL

No. of Loans Disbursed in '000

Avg. Ticket Size INR
Amount of Loan Disbursed (In Crs.)
Portfolio Outstanding (In Crs.)

Enterprise

% Mix LTL

Q2FY
16

Q1FY
17

Q2FY
17

Q2FY
16

Q1FY
17

Q2FY
17

Q2FY
16

Q1FY
17

Q2FY
17

191

114

109

1,988

2,249

2,263

9.6%

5.1%

4.8%

29,677

37,028

38,048

13,404

16,758

17,744

567

421

415

2,665

3,769

4,016

21.3%

11.2%

10.3%

1,513

2,270

2,225

5,462

8,463

9,046

27.7%

26.8%

24.6%

*Disbursement capped at 25% of overall disbursement

^ Income Generating Loans with ticket size of Rs.9,100 to Rs.29,565 with tenure of 50 weeks
67

LEVERAGING THE DISTRIBUTION STRENGTH

FY15

FY16

Q1FY17

Q2FY17

Total

Total

Mobile Solar Sewing

Cycle Others^ Total
phone lamp Machine

No. of Units Facilitated (in

Lacs)

8.4

15.6

1.6

1.7

0.4

0.4

0.1

4.2

1.6

2.0

0.2

0.0

0.0

3.8

Gross Fees (after service

tax) INR Crs.

28.3

49.7

5.8

6.3

1.3

1.3

0.2

14.8

5.9

7.8

0.5

0.1

0.1

14.3

Less: Incentives INR Crs.

4.6

13.8

1.4

1.5

0.3

0.4

0.1

3.6

1.4

1.7

0.1

0.0

0.0

3.4

Net Fees INR Crs.*

23.7

28.3

3.5

3.7

0.7

0.7

0.1

8.8

3.6

4.7

0.3

0.1

0.0

8.6

Loan Portfolio INR Crs.

Net Fee Income as % of
PAT**
Loan Portfolio Mix

58.3

101.9

44.8

30.3

19.2

16.3

2.1

112.8

47.1

36.2

9.4

5.4

1.0

99.1

12.6%

9.3%

2.5%

2.7%

0.5%

0.5%

0.1%

6.3%

2.4%

3.2%

0.2%

0.0%

0.0%

5.9%

1.4%

1.3%

0.5%

0.4%

0.2%

0.2%

0.0%

1.3%

0.5%

0.4%

0.1%

0.1%

0.0%

1.1%

Mobile Solar Sewing

Cycle Others^
phone lamp Machine

Total

*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- Profit for the period

Frequency of Loans Based On Current Member Base

Penetration Based On Total No. Of Loans

FY14

FY15

FY16

H1FY17

Cumulative
past
3.5 years

Mobile Phone

2.0%

5.9%

10.7%

5.0%

23.5%

Solar Lamp

1.2%

5.2%

8.0%

5.9%

20.2%

Sewing Machine

0.2%

2.0%

0.8%

3.0%

Bicycle

1.6%

0.8%

Bio-mass stove

0.2%

0.7%

Water Purifier

3.1%

11.5%

Others
Total

Frequency
of Loans (for FY14
the period)

FY15

FY16

H1FY17

Cumulative
past 3.5
years

#1

2.9%

9.7%

17.8%

11.9%

27.0%

#2

0.1%

0.9%

2.4%

0.4%

7.0%

2.4%

#3

0.2%

2.1%

0.05%

1.0%

#4

0.6%

0.5%

0.1%

0.6%

#5

0.2%

23.4%

0.02%
12.7%

0.02%
50.7%

Total

3.0%

10.6%

20.4%

12.3%

36.9%

Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 6.3 mn for last 3.5 years is 37%

68

CREDIT BUREAU DATA

Rejection rate for All Products

23%

Rejection rate for Long Term loans

47%

25%

25%

29%

15%

FY-15

FY-16
FY-15

FY-16

Q1-FY17
Q1-FY17

FY-15

Q2-FY17

86%
85%

^ Hit rate = % of loan

Reasons
applications with
Loans from=>2MFIs
matching record in
credit bureau
=>2MFIs and Outstanding Balance
>60K

83%

FY-15

Q1-FY17

Q1-FY17

Q2-FY17

Rejection Reasons Q2FY17 % Mix

87%

FY-16

FY-16

Q2-FY17

Hit rate^ for all products

FY-15

41%

38%

Q2-FY17 *Note: Rejections

FY-16

are done based on

data inputs from
Credit bureau

Major Initiatives Impacting Credit Bureau Decision:

All Products

LTL

62%

69%

20%

16%

Eligibility< Min Ticket Size

7%

5%

Outstanding Balance>60K

5%

4%

Default History

3%

2%

=>2MFIs and Default History

=>2MFIs,Outstanding Balance>60K
and Default History
Default History and Outstanding
Balance >60K

3%

3%

1%

1%

0.1%

100%

100%

Total

93% of credit enquiry with Aadhaar as primary KYC (Sep16).

Internal CAP of Rs. 60,000 for total indebtness of the borrower for JLG loans, including loans from other MFIs.

69

BFIL FINANCIAL INCLUSION COVERAGE

Strong reach in under-banked areas
68% of BFIL branches are in RBI
under-banked district list

68% of SKS branches are in RBI under-banked districts list

SKS 296 districts

96

RBI 375
districts*

200

175

68%

Weaker & Minority section coverage

Weaker & Minority section coverage

BFIL covers 68% of below average &

low
financial
by
SKS covers
68%districts
of below identified
average & low
CRISIL
financial
inclusion districts identified by Crisil
CRISIL level of financial
inclusion

Women

SKS Coverage
of those
districts

High

18%

Above average

15%

Below average

51%

Low

16%

Grand Total

100%

Economically Weaker
section

68%

Minority

71%

16%

100%

* Source: RBI under-banked districts data

[1] Source: CRISIL Inclusix: An index to measure Indias progress on Financial Inclusion, June 2013

. IS SUPPORTED BY ROBUST CUSTOMER CENTRIC PRACTISES

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
70

WHAT ARE CLIENTS DOING POST THE ANDHRA PRADESH MFI CRISIS?
Sources of Credit (in the absence of MFI Loans)

70%
60%
50%
40%
30%
20%
10%
0%

Reasons for not repaying MFI loans

59%
37%
29%
22%
12%

Money Lender

SHG

Pawn Broker

Bank

DFC

Interest rates charged by informal sources (in the

absence of MFIs)

Data relates to Andhra Pradesh & Telangana

Source: What are Clients doing post the Andhra Pradesh MFI Crisis?, MicroSave, 2011

Willingness to repay

71

ANNEXURES - FINANCIALS

72

HISTORICALLY, AUM GROWTH IS STRONGEST IN Q4 & NII GROWTH IS

STRONGEST IN Q1
AUM Growth

QoQ Growth %

NII Growth

46%
36%

35%
29%

26%
16%

17%

15%

-4%

-1%

28%
24%
18%

15%
12%

9%

6%
1%

29%

20%

20%
12%

6%

31%

27%

14%

13%

12%

10%

5%

7% 7%

2%
-1%

-2%

-14%

-14%

FY14

FY15

FY16

H1FY17

Reasons:
Deferral of income due to higher volume of securitisation and asset assignment in Q4;
or/and
Higher Cash balances at the end of Q4
* Net interest income (excluding loan processing fees) = Interest income on Portfolio loans +
Excess interest spread on securitization/Income from assignment + BC Fee Financial Cost

73

CASH AND CASH EQUIVALENT BALANCES

INR Crs.

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Interest Yielding^

860

255

581

427

568

464

Non Interest
Yielding^^

176

184

208

254

240

280

1,036

439

789

681

808

744

Total

^fixed deposits, excluding margin money deposits.

^^Includes current account and cash balances

Note: Daily Average figures

74

OUR PROVISIONING POLICY

RBI norms for NBFCMFIs
Asset
Classification

Provisioning
Norms

Provisioning
Norms for
Securitised &
Managed loans

BFIL compliance

Standard Assets

0-90 days

0-60 days

Sub-Standard Assets

91-180 days

61-180 days

Loss Assets

>180 days

>180 days

Standard Assets

1% of overall Portfolio reduced

by Provision for NPA (If
provision for NPA < 1% of
overall Portfolio)

Sub-Standard Assets

50% of instalments overdue*

50% of outstanding principal*

Loss Assets

100% of instalments overdue*

100% of outstanding
principal/ write-off*

0.35-1% depending on NPA or

as stipulated by RBI,
whichever is higher

1% of outstanding portfolio
as per company provisioning
policy, net-off losses, if any.

* The aggregate loan provision will be maintained at higher of 1% of overall portfolio or sum of provisioning for sub-standard and loss
assets.

75

ANNEXURES - TECHNOLOGY

76

TECH ADVANCEMENTS DRIVEN BY INDUSTRY LEADING PARTNERSHIPS

Initiatives

New Lending
Management Software

TABLETS - Hand held

device for field staff

ERP Implementation

Technology Partner Solution

In-House Team

SKS SMART

Enterprise Mobility

ERP

Benefits
A robust framework that encompasses
workflow/reporting and analytic engines
Works in online/offline mode to mitigate
connectivity challenges.
Enhances Productivity of SMs- Reduced time
spent at both center meeting and back office
Paper less transaction - Pre-printed loan
application form.

ERP - Automation of financial accounting/

investment management, procurement and
payment process.
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.

Migrated from onpremises email system

to hosted exchange

Office 365

Data Centre Migration

to Cloud

Data Centre Hosting

On-demand capacity scale-up.

Business Continuity Plan.

Network protection

Enterprise Web and

Network Security

Improved performance and reliability of network

infrastructure and applications.
77

ANNEXURES HR

78

ATTRITION RATE AT SANGAM MANAGER LEVEL IS LARGELY CONTRIBUTED BY

NEW JOINEES. EXCLUDING NEW JOINEES, THE AVG. VINTAGE IS 4.3 YEARS
Sangam
Manager
Attrition %

Who?

When?

Why?

Retention
Strategy

Vintage of SMs Exited

%Mix

32% (Annualised) for H1FY17

Sangam managers who earn lesser

average monthly performance incentive
i.e. ~Rs. 3,600 vis--vis ~Rs. 7,000 for
other Sangam Managers .

< 6 Months

54%

6 Months - 1 Yr.

22%

1 -2 Yrs.

13%

2- 3 Yrs.

2%

> 3 Yrs.

8%

~54% 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.

* Includes Promoted Sangam Mangers

Avg. Vintage (Yrs.)

Senior Management

7.3

Middle Management

8.7

Branch Management*

7.0

Sangam Managers

2.2 (4.3^)

^ Avg Vintage of Sangam Managers

(Excl. who joined in last one year i.e.
54% of Sangam Managers) is 4.3 Yrs.
79

ANNEXURES - COMPLIANCE

80

COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (1/2)

NBFCMFIs

RBI norms for NBFC-MFIs

BFIL compliance

Qualifying assets to constitute not less than 85% of its

Qualifying assets - 95%

Income generation loans 99%

total assets (excluding cash and bank balances)

At least 50% of loans for income generation activities

Pricing Guidelines

Income of
Borrowers Family

Rural : <=Rs.100,000
Non-Rural : <=Rs. 1,60,000

Ticket Size

<= 60,000 1st cycle

<= Rs.100,000 Subsequent cycle

<= Rs. 100,000

If loan amt. > Rs.30,000, then >= 24 months

Without collateral

Weekly, Fortnightly and Monthly

Indebtedness

Tenure

Collateral

Repayment Model

<= Rs. 60,000

81

COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (2/2)

RBI norms for NBFC-MFIs

BFIL compliance

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.

<= 1% of loan amt.

Actual cost of insurance can be recovered from

Pricing Guidelines

Interest Rate

Processing Fees

Insurance
Premium

borrower and spouse

Administrative charges can be recovered as per IRDA
guidelines

No penalty for delayed payment

No security deposit/ margin to be taken

Penalty

Security Deposit

Margin: 9.6% for FY16

Interest rate 19.75% w.e.f
7th December15 for new
loans

BFIL has never taken

security deposit/ margin

82

BFIL LOAN PORTFOLIO QUALIFIES FOR OVERALL PSL TARGET OF 40% AND ALL
SUB-TARGETS UNDER NEW PSL NORMS

RBI
S.no.

Sector

Category

Agriculture

Target

- Direct Agriculture*

Sub-target

- Direct Small &

Marginal farmers*

Sub-target

BFIL
Target for Banks %

Qualifying
Portfolio of BFIL %

Explanation

18%
~13.5%*
7% (Mar16)

42%

Livestock, Agri & Allied

8% (Mar17)
100% Loans are to women
beneficiaries (with less than
Rs.1 lac).

Weaker

Target

Micro-enterprises

Target

10%

7% (Mar16)
7.5% (Mar17)

100%

100%

Further, Minority communities

constitute 16% and
economically weaker sections
71% of loan portfolio.
Loans to MFIs for on-lending to
microenterprises.

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.39 for details on purpose wise loan portfolio outstanding.

83

ANNEXURES INTERNAL AUDIT

84

INTERNAL AUDIT PLAYS A CRITICAL ROLE IN ASSESSING PROCESS CONTROLS

Strength

207 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

Branches 1,359
Branches per Internal Audit staff 7
Regional Offices 26

Scope

Scope of Audit

Audit area

Frequency

Document
Center
Client
verification
Meeting
Acqui
(KYC, Loan
Proces
sition
utilization check
s
etc.)

Statutory
Adheren Requirement
High
Monitoring
Fixed
ce to
s
Client Risk
process by
Assets
Process
(Credit
Visits items
supervisor
verific
/
bureau, Fair
*
(Fraud
s
ation^
Policies
practices
s etc.)
etc.)

IGL Branches

Monthly

Regional
Offices

Once in a
quarter,
distributed
monthly

Head office

Quarterly

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

85

THANK YOU

For any investor relations queries, please email to investor.relations@sksindia.com

86