sub: earning update for the quarter ended september 30,...
TRANSCRIPT
October 28, 2016
The General Manager
Department of Corporate Services - Listing
Department
BSE Limited
Phiroze Jeejeebhoy Towers
Dalal Street
Mumbai 400 001
The Vice President, Listing Department
National Stock Exchange of India Limited
Exchange Plaza
Bandra Kurla Complex
Bandra (East)
Mumbai 400 051
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
BFIL’s lowest interest rate benefits 50 lakh women in 1 lakh villages
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.
OCT 2016
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 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
3
4
136
244
377
641
165 232
FY-13 FY-14 FY-15 FY-16 Q2-FY16Q2-FY17
2,016 2,837
4,171
7,677
5,462
9,046
Mar-13 Mar-14 Mar-15 Mar-16 Sep-15 Sep-16
Overview AUM Growth (Non-AP portfolio) Growing Net Interest Income
Attractive Financial Metrics Balanced Geographical mix Diversified Shareholding
Marginal cost of borrowing# 9.4%
Cost to income 47.0%
Return on Equity^ 21.9%
Return on Asset*^ 4.3%
EXECUTIVE SUMMARY
• Second largest microfinance company
in India with gross loan portfolio of INR
9,046 Cr., 63 Lakhs members in Non-
AP states and 1,359 branches
• Lowest lending rate (19.75%) among
MFIs
• Company’s non-AP Portfolio grew by
66% (YoY) and 7% (QoQ) to INR
9,046 Crs. as of Sep 30, 2016
• PAT of Rs. 303 Crs for FY16 and Profit
for Q2FY17 of Rs. 146 Crs
Note: Shareholding as of Sep 30, 2016
Net worth (INR Cr.) 2,514
Capital Adequacy 33.4%
Cash & Cash equivalent (INR
Cr.)
1,632
Gross NPA 0.1%
Note: Portfolio as of Sep 30, 2016
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: 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
Odisha17%
Karnataka14%
Maharashtra12%
Bihar12%
West Bengal11%
Uttar Pradesh
9%
Kerala5%
Rajasthan5%
Madhya Pradesh
5%
Jharkhand4%
Others6%
2.5%
2.5%
2.8%
2.9%
3.1%
3.2%
3.3%
3.8%
3.9%
5.5%
Vinod Khosla
IDFC Mutual Fund
Tree Line
Baron Capital Management
Indus Capital Partners
Goldman Sachs
TIAA Cref
Morgan Stanley Mauritius
Amansa Capital PTE Limited
Morgan Stanley Investment…
Top 10 Shareholders
5
INVESTMENT HYPOTHESIS
5
INVESTMENT HYPOTHESIS
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
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 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
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
24,017
27,582
FY14 FY15
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
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/ provided
for
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
29.25%
24.55%23.55%
22.00%20.75%
19.75%
Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15
Lowest interest rate
charged by any private
sector MFI in the globe
4.8% reduction in one year
GLP: Gross Loan PortfolioTerm loan and cash credit facilities
Interest rate on income generation loans
74%
40%
Mar-13 Sep-16
Share of borrowing from top 5 banks
53%
43%
Sep-10 Sep-16
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 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
Junr’16- 60,165#
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 - 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
Snapshot of Equifax Credit Bureau*:
* Source: Equifax (as on July 2016)
# Jun-16 data as per MFIN; excludes data for Bandhan bank;
16
7.6
6.3
1.01.7
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: 9.5%.
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
4,797
7,677
8,463
Sep'10Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Jun'15 Mar'16 Jun'16
BFIL GLP*
28,300
14,600 16,740
24,499
38,386 42,053
68,645
75,659
-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 Jun'15 Mar'16 Jun'16
Industry GLP*
5.7 YEAR CAGR FOR THE SECTOR AND BFIL ARE 19% AND 14%
* Non-AP GLP (Gross Loan Portfolio), Industry GLP data includes Bandhan data, For Jun’16- Bandhan data as on Mar’16
Source: MFIN Micrometer (Mar’13,Mar’14, Mar’15, Jun’15, Mar’16 data)
19
Top 10 States by
GLP
IndustryBharat Financial Inclusion
Ltd.
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%
WE GREW SLOWER THAN THE SECTOR IN 9 OUT OF TOP 10 STATES
Source: Micrometer
Growth > Industry
Growth < Industry
20
Top 10 growth
States
IndustryBharat Financial Inclusion
Ltd.
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%
OUR GROWTH PATTERN IS DIFFERENT FROM THE SECTOR (CONT..)
Source: Micrometer
Growth > Industry
Growth < Industry
21
21%
60%
33%
79%
40%
67%
0% 20% 40% 60% 80% 100%
BFIL- Sep'16
MFI Industry -Jun'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 Micrometer22
21% 10% 16% 56%
OUR BORROWER GROWTH EXCEEDS TICKET SIZE GROWTH FOR LAST 3 YEARS
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
3 yrs.
44% 32% -13% 66%Q2FY17
(YoY)
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 8
Maharashtra 7
Odisha 5
Jharkhand 5
Haryana 5
Madhya Pradesh 3
West Bengal 1
Kerala 1
Delhi 1
Karnataka -
Punjab -
Uttarakhand -
Himachal Pradesh -
Total 74
Focus States
72% of new branches
added in focused
states
24
31,568
24,924 24,15821,974
16,758
-8,000
2,000
12,000
22,000
32,000
MFI 1 MFI 3 MFI 5 MFI 4 BFIL (MFI 2)
OUR LOAN OFF-TAKE IS LOWEST AMONG THE TOP 5 MFIs
24,040
17,84816,612 16,243
12,193
0
10,000
20,000
30,000
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
LOAN OFF-TAKE
AVERAGE LOAN OUTSTANDING PER BORROWER
INR Figures for Q1FY17
25
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* - Q2FY17 % 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%
CB Rejection %57% of credit
enquiry with
Aadhaar as
primary KYC
93% of credit
enquiry with
Aadhaar as primary
KYC
Mandatory
submission
of 2 KYCs *
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 3% 3%
=>2MFIs,Outstanding Balance>60K and
Default History 1% 1%
Default History and Outstanding Balance >60K 0.1% -
Total 100% 100%
26
FUTURE STRATEGY
28
528
381
883
20-Jul-15 18-Sep-15(RBI announcement on SFB in-principle license on 16 Sept'15)
28-Oct-16
BFIL Share Price
Political Risk mitigation Sub-20% interest rate mitigates political risk
• BFIL becomes the lowest cost lender with 19.75% interest rate1
Access to refinance Access to refinance is now available to NBFCs also
• BFIL has accessed Rs.100 Cr refinance from MUDRA @ 10%2
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
30
UNMATCHED LEADERSHIP
Unique
Operating Model
Extensive
Reach*
Best of Breed
financial ratios*
Lowest Cost
Producer
External
endorsements
Parameter
Interest rate
No. of districts
No. of customers
Group Lending
Rural customer base
Opex to GLP
Cost to Income
Earnings growth
RoA, RoE
Rating
Status
100%
~79%
Lowest interest rate of
19.75% among global
private sector MFI
315
6.3 Mn
6.3%
47.0%
87% YoY
4.3%, 21.9%
Corporate Governance rating at
“CGR2”
Highest safety Short-term rating at
“A1+”
* For Q2FY17, RoA , RoE before MAT credit for the period 31
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 –
Q2FY179.5* 19.75 15 47 87#
*on and off b/s loans (including processing fees)# YoY% Profit Growth
32
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 – Q2FY17
5.9%
3.2%
1.1%
33
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 HIGHLIGHTSParticulars Sep-15 Sep-16 YoY% June-16 QoQ%
Branches# 1,268 1,359 7% 1,368 -1%
Centers (Sangam) 2,16,723 2,62,183 21% 226,307 16%
- Centers in non-AP States 1,45,938 2,13,298 46% 193,393 10%
Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii) 10,782 15,459 43% 14,559 6%
Field Staff (i) + (ii) + (iii) + (iv) + (v) 10,490 14,913 42% 14,094 6%
– Sangam Managers* (i) 6,066 9,308 53% 7,914 18%
– Sangam Manager Trainees(ii) 736 1,425 94% 2,103 -32%
– Branch Management Staff (iii) 2,506 2,835 13% 2,708 5%
– Area Managers (iv) 137 228 66% 231 -1%
– Regional Office Staff (v) 1,045 1,117 7% 1,138 -2%
Central Processing Unit and Member helpline (vi) 31 215^ - 156 38%
Head Office Staff (vii) 261 331 27% 309 7%
Members in non-AP States (in '000) 4,592 6,290 37% 5,657 11%
− Members added (in the quarter) (in ‘000) 537 846 58% 778 9%
Active borrowers in non-AP States (in '000) 3,821 5,499 44% 5,095 8%
− Active borrowers added (in the quarter) (in ‘000) 552 789 43% 771 2%
No. of loans disbursed (in '000) 1,988 2,263 14% 2,249 1%
Disbursements (for the quarter) (INR Crs.) 2,665 4,016 51% 3,769 7%
Gross loan portfolio – Non-AP (INR Crs.) (A+B+C) 5,462 9,046 66% 8,463 7%
• Loans outstanding (A) 4,753 6,935 46% 6,227 11%
• Securitized/Assigned (B) 179 1,345 - 1,494 -10%
• Managed loans (C) 531 766 44% 742 3%
Operational Efficiency – Non-AP :
Off-take Avg (Disbursements/ No of Loans disbursed) (INR) 13,414 17,744 32% 16,758 6%
Off-take Avg Excluding Cross Sell 16,333 20,834 28% 19,986 4%
Gross loan portfolio/ Active Borrowers (INR) 14,295 16,449 15% 16,612 -1%
Gross loan portfolio/ No. of Sangam Managers (Rs. '000) 10,011 10,297 3% 11,469 -10%
Active borrowers / No. of Branches 3,367 4,486 33% 4,125 9%
Active borrowers / No. of Sangam Managers 700 626 -11% 690 -9%
*Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Sep’16, 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
MFI crisis
Worst during
AP MFI crisisFY14 FY15 FY16 Q1 FY17 Q2 FY17
Productivity – Non-AP:
Borrowers/ SM 489* 287 721 787 733 690 626
Gross Loan Portfolio/ SM ('000) 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
Cost Efficiency:
Financial Cost %** 6.6% 9.8% 8.3% 8.3% 8.5% 6.7% 7.2%
Daily Wt. Avg. Cost of borrowings %
(without processing fees & other charges)9.7%^ 12.9%^ 13.0% 12.8% 11.7% 11.0% 10.8%
Daily Wt. Avg. Cost of borrowings % 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%
Credit Quality - Non-AP:
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%
*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
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 %
Odisha, Karnataka and Maharashtra exposure are at 60%, 49% and 44%
respectively of our networth.
0.1%
0.1%
1.0%
1.3%
1.7%
1.6%
3.9%
5.5%
5.0%
6.0%
9.5%
9.0%
11.0%
12.8%
14.3%
17.3%
0.1%
0.1%
0.9%
1.3%
1.7%
2.0%
4.2%
4.7%
4.8%
5.4%
8.8%
11.1%
12.3%
12.3%
13.6%
16.8%
Himachal Pradesh
Delhi
Uttarakhand
Chattisgarh
Punjab
Haryana
Jharkhand
Madhya Pradesh
Rajasthan
Kerala
Uttar Pradesh
West Bengal
Bihar
Maharashtra
Karnataka
Odisha
GLP Q2FY17
GLP Q2FY16
38
As of Sep 2016
* Excludes 5 Gold Loan Branches.
VINTAGE OF NON-AP BRANCHES IS 7.1 YEARS PORTFOLIO OUTSTANDING BY ECONOMIC ACTIVITY
StateNo. of
Branches
Wt. Avg. Vintage
(in Yrs.)*
Karnataka 171 8.6
Odisha 155 8.0
Bihar 150 6.7
Uttar Pradesh 147 6.0
West Bengal 127 7.7
Maharashtra 125 7.6
Madhya Pradesh 72 7.8
Rajasthan 67 7.0
Kerala 54 5.9
Jharkhand 52 6.3
Chhattisgarh 38 4.7
Haryana 27 4.4
Punjab 18 7.1
Uttarakhand 12 6.0
Himachal Pradesh 3 1.8
Delhi 2 3.8
Non-AP 1,220 7.1
Purpose % Mix
Livestock 33%
Agriculture 11%
Tailoring, Cloth weaving 10%
Grocery stores and other retail outlets 10%
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 2%
Trading of Utensils, Plastic items 1%
Bangles Shop 1%
Scrap Business 1%
Other income generating activities 7%
39
REVIEW OF FINANCIALS
40
STRONG SOLVENCY AND SUFFICIENT LIQUIDITY
INR Crs.
Capital AdequacyNetworth
Cash and Cash Equivalent^Drawdowns*
^ Excluding security deposit
15.0%
33.4%
RBI Requirement
Q2FY17
1,569
1,096
2,180
Q2FY16 Q1FY17 Q2FY17
1,203
1,627
2,514
Q2FY16 Q1FY17 Q2FY17
*Excluding Managed Loans
834 762
1,632
Q2FY16 Q1FY17 Q2FY17
41
97 127
137
Q2FY16 Q1FY17 Q2FY17
8%
QoQ41%
YoY
PROFIT FOR THE PERIOD GROWS BY 87%YoY AND 5% QoQ
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.
2,665
3,769 4,016
Q2FY16 Q1FY17 Q2FY17
51%
YoY7%
QoQ
5,462
8,463 9,046
Q2FY16 Q1FY17 Q2FY17
66%
YoY
7%
QoQ
324
414450
Q2FY16 Q1FY17 Q2FY17
9%
QoQ
165
217 232
Q2FY16 Q1FY17 Q2FY17
7%
QoQ40%
YoY
Tax Exp: Rs. 23 Crs - -
78
139 146
Q2FY16 Q1FY17 Q2FY17
87%
YoY
5%
QoQ
39%
YoY
^PAT excluding MAT credit of Rs.97 Crs as on March 31, 2016
^
42
ROBUST EARNINGS MODEL DELIVERS IMPROVED PROFITABILITY
Particulars Q2FY16 Q2FY17 YoY%
Q2FY17
As % of Total
Revenue
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 9 14 57% 3% 16 17%
Recovery against loans written off 4 1 -88% - 2 -73%
Facilitation fees from Cross-sell 13 14 12% 3% 15 -3%
BC fees 16 20 29% 4% 19 6%
Other miscellaneous income 0.2 0.2 12% - 0.3 -29%
Total Revenue 324 450 39% 100% 414 9%
Financial expenses 117 158 35% 35% 136 16%
Personnel expenses 70 100 43% 22% 95 5%
Operating and other expenses 26 34 34% 8% 30 15%
Depreciation and amortization 2 3 65% 1% 2 41%
Total Operating Cost 97 137 41% 31% 127 8%
Provision & Write-offs 9 9 2% 2% 12 -25%9
Total Expenditure 223 304 36% 68% 275 10%
Profit before Tax 101 146 44% 32% 139 5%
Tax expense 23 33 40% 7% 32 3%
MAT Credit Entitlement * - (33) - - (129) -
Profit after Tax 78 146 87% 32% 236 -38%
Profit for the period 78 146 87% 32% 139^ 5%
INR Crs.
*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 Mar’16 for Q1FY1743
ROBUST EARNINGS MODEL DELIVERS IMPROVED PROFITABILITY
Particulars H1FY16 H1FY17 YoY%
H1FY17
As % of Total
Revenue
Income from Operations
Interest income on Portfolio loans 451 595 32% 69%
Excess interest spread on securitization / Assignment 33 108 232% 13%
Loan processing fees 31 59 89% 7%
Other Income
Income on investments 30 30 0.4% 3%
Recovery against loans written off 8 3 -70% 0.3%
Facilitation fees from Cross-sell 26 29 14% 3%
BC fees 28 39 41% 5%
Other miscellaneous income 0.5 0.6 28% 0.1%
Total Revenue 607 864 42% 100%
Financial expenses 218 294 35% 34%
Personnel expenses 141 195 38% 23%
Operating and other expenses 49 64 31% 7%
Depreciation and amortization 3 5 84% 1%
Total Operating Cost 193 264 37% 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%
MAT Credit Entitlement * - (161) - -
Profit after Tax 139 382 175% 44%
Profit for the period 139 285^ 105% 58%
INR Crs.
*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 Mar’1644
QOQ PROFITABILITY ANALYSIS
Particulars 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
Non-Core Drivers
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. Daily735 1,036 439 789 681 808 744
Non-Core Drags
Income deferred (net*) on account of
Securitisation/assignment9.1 (0.9) (1.0) 2.3 8.7 (2.3) (1.2)
Interest rate on new loans 23.55% 22.0%20.75%
& 19.75%19.75% 19.75% 19.75%
Average gross interest yield Daily Average (i)^ 22.4% 23.7% 23.2% 22.4% 21.1% 20.4% 20.0%
Wt. Avg. Cost of Borrowings (On and off B/S Incl.
Processing Fees) Daily Average (ii)^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%
INR Crs.
*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
Particulars Q2FY16 Q2FY17 YoY% Q1FY17 QoQ%
Equity Share Capital 127 138 9% 128 8%
Stock Options Outstanding 26 23 -12% 25 -6%
Reserves And Surplus 1,050 2,354 124% 1,474 60%
Capital & Reserves 1,203 2,514 109% 1,627 55%
Loan Funds 4,452 6,139 38% 5,359 15%
Payable Towards Assignment/Securitisation 68 227 - 266 -15%
Expenses & Other Payables 23 51 121% 46 12%
Provision For Taxation 8 2 -80% 10 -83%
Unamortised Loan Processing Fees 40 77 92% 71 8%
Employee Benefits Payable 16 24 49% 18 35%
Interest Accrued But Not Due On Borrowings 33 39 16% 25 57%
Provision For Leave Benefits & Gratuity 15 25 63% 25 -3%
Statutory Dues Payable 5 8 59% 11 -32%
Unrealised Gain On Securitisation Transactions 12 85 - 91 -7%
Provision For Standard And NPA - Non-AP 56 91 62% 84 8%
Provision For Standard And NPA - AP 0 0 -87% 0 -64%
Liabilities 4,728 6,766 43% 6,006 13%
Total Liabilities 5,932 9,280 56% 7,633 22%
Fixed Assets 14 16 16% 17 -5%
Intangible Assets 5 6 6% 6 -3%
Investment 0.2 0.2 0% 0.2 -
Cash And Bank Balances (Incl. Security Deposits) 1,039 1,975 90% 1,059 86%
Trade Receivable 10 9 -13% 15 -38%
Interest Accrued And Due On Loans 1 0 -77% 0 72%
Interest Accrued But Not Due On Loans 13 11 -13% 11 2%
Interest Accrued But Not Due On Deposits With Banks 11 17 52% 12 40%
Interest Strip On Securitization Transactions 12 85 - 91 -6%
Portfolio Loans -- Non-AP 4,736 6,825 44% 6,109 12%
Portfolio Loans -- AP 15 2 -87% 6 -64%
Loans Placed As Collateral 17 110 - 118 -7%
Security Deposits For Rent And Other Utilities 4 3 -10% 4 -7%
Advances For Loan Cover Insurance 2 1 -39% 1 140%
Loans To BFIL Employee Benefit Trust 5 2 -56% 3 -22%
Advance Income Tax 14 16 12% 16 -1%
Prepaid expenses 5 8 53% 3 130%
MAT credit entitlement - 161 - 129 25%
Other Advances / Other Assets 27 31 14% 32 -4%
Total Assets 5,932 9,280 56% 7,633 22%
Note:1 Non-AP Securitized/Managed/Assigned Portfolio 709 2,111 - 2,236 6%
2. Non-AP Gross Loan Portfolio 5,462 9,046 66% 8,463 7%
INR Crs.
46
BEST OF BREED RATIOS
Particulars Q2 FY16 Q1 FY17 Q2 FY17
Spread Analysis (as % of Avg. Gross Loan Portfolio)
Gross Yield (I) 25.2% 20.5% 20.5%
Portfolio Yield* (a) 21.9% 17.5% 17.8%
Financial Cost (b) 9.1% 6.7% 7.2%
NIM on portfolio (a-b) 12.8% 10.8% 10.6%
Operating Cost (c) 7.6% 6.3% 6.3%
Provision and Write-offs (d) 0.7% 0.6% 0.4%
Taxes# (e) 1.8% 1.6% 1.5%
Total Expense II = (b+c+d+e) 19.2% 15.2% 15.4%
Return on Avg. Gross Loan Portfolio (I) - (II) 6.1% 5.3% 5.2%
Efficiency:
Cost to Income 47.0% 45.7% 47.0%
Asset Quality – Non-AP:
Collection Efficiency 99.7% 99.8% 99.8%
Portfolio at Risk >30 Days 0.2% 0.1% 0.1%
Gross NPA 0.2% 0.1% 0.1%
Net NPA 0.1% 0.03% 0.04%
Gross NPA (INR Crs.) 7.5 3.5 6.3
Net NPA (INR Crs.) 3.9 1.6 3.0
Leverage:
Debt : Equity 3.7 3.3 2.4
Debt : Equity (Incl. Securitised, Assigned & Managed Loans) 4.3 4.8 3.4
Capital Adequacy: 24.6% 23.2% 33.4%
Profitability:
Return on Avg. Assets (Incl. Securitised, Assigned & Managed Loans)# 5.0% 4.3% 4.3%
ROE# 26.9% 28.5% 21.9%
EPS - Diluted (INR) (Not Annualized) 6.1 18.3 11.3
Book Value (INR) 94.9 127.5 182.8
*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 Q2FY1747
BEST OF BREED RATIOS
Particulars H1 FY16 H1 FY17
Spread Analysis (as % of Avg. Gross Loan Portfolio)
Gross Yield (I) 25.2% 20.6%
Portfolio Yield* (a) 21.2% 17.7%
Financial Cost (b) 9.0% 7.0%
NIM on portfolio (a-b) 12.2% 10.7%
Operating Cost (c) 8.0% 6.3%
Provision and Write-offs (d) 0.7% 0.5%
Taxes# (e) 1.7% 1.5%
Total Expense II = (b+c+d+e) 19.4% 15.3%
Return on Avg. Gross Loan Portfolio (I) - (II) 5.8% 5.2%
Efficiency:
Cost to Income 49.5% 46.3%
Asset Quality – Non-AP:
Collection Efficiency 99.7% 99.8%
Portfolio at Risk >30 Days 0.2% 0.1%
Gross NPA 0.2% 0.1%
Net NPA 0.1% 0.04%
Gross NPA (INR Crs.) 7.5 6.3
Net NPA (INR Crs.) 3.9 3.0
Leverage:
Debt : Equity 3.7 2.4
Debt : Equity (Incl. Securitised, Assigned & Managed Loans) 4.3 3.4
Capital Adequacy: 24.6% 33.4%
Profitability:
Return on Avg. Assets (Incl. Securitised, Assigned & Managed Loans)# 4.5% 4.2%
ROE# 24.8% 23.9%
EPS - Diluted (INR) (Not Annualized) 10.8 29.5
Book Value (INR) 94.9 182.8
*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
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
Profit After Tax
(Post MAT @ 21%)303 450^
INR Crs.
• MAT credit is recognized from Q1FY17, including unrecognized MAT Credit of Rs. 97 Crs as on 31st March, 2016.
• Recognition is based on extant guidance note issued by ICAI.
Note on MAT credit recognition:
^Excludes MAT credit recognition
49
FINANCIAL ARCHITECTURE
50
On Balance Sheet* Q2FY16 Q1FY17 Q2FY17
Yes Bank 13% 12% 9%
IDFC Bank 6% 6% 8%
State Bank Group 12% 10% 8%
Dena Bank 11% 10% 8%
ICICI Bank 8% 5% 7%
Kotak Mahindra Bank 7% 3% 7%
Bank of Maharashtra 6% 8% 6%
SIDBI 4% 8% 6%
Bank of India 3% 6% 5%
Union Bank of India 1% 1% 5%
HSBC Bank 3% 3% 4%
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%
Barclays Bank PLC - 1% 2%
Citi Bank 2% 2% 2%
Andhra Bank 4% 2% 2%
Mudra - 2% 1%
South Indian Bank 2% 2% 1%
Others 3% 3% 2%
Total 3,604 4,640 5,316
FINANCIAL ARCHITECTURE
Diversified Source MixLenders Mix (On B/S) Devoid Of Dependence Risk
* Includes Term loan and cash credit facilities
Q2FY
16% Mix
Q1FY
17% Mix
Q2FY
17% Mix
Term Loans 3,497 67% 4,576 58% 5,221 62%
Securitisation 244 5% 1,527 19% 1,461 17%
Managed
Loans533 10% 758 10% 773 9%
CP 448 9% 320 4% 423 5%
NCD 400 8% 400 5% 400 5%
Assignment - - 220 3% 98 1%
CC 107 2% 64 1% 95 1%
Total 5,229 100% 7,864 100% 8,471 100%
Securitised / Assigned Q2FY16 Q2FY17
Yes Bank 47% 39%
HDFC Bank 2% 17%
IDBI Bank - 14%
Kotak Mahindra Bank - 9%
ICICI Bank 15% 8%
Bank of India - 6%
DCB Bank - 6%
RBL Bank 27% 1%
IndusInd Bank 9% -
Total 100% 100%
Investor Mix (Off B/S) Broad-based
INR Crs.
51
SUB 10% 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 Q2FY16 Q1FY17 Q2FY17
Marginal Cost of
Borrowings
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%
on b/s loans (excluding
processing fees)12.9% 12.3% 11.0% 11.2% 10.4% 9.9%
on b/s loans (including
processing fees)*13.6% 12.6% 11.1% 11.4% 10.5% 10.0%
Daily
Average
Wt. avg. cost of
borrowing#
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%
on b/s loans (excluding
processing fees)13.0% 12.8% 11.7% 11.9% 11.0% 10.8%
on b/s loans (including
processing fees)13.9% 13.5% 12.0% 12.5% 11.2% 11.0%
Monthly
Average
Wt. avg. cost of
borrowing#
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%
on b/s loans (excluding
processing fees and other
charges)
12.8% 12.2% 11.4% 11.5% 10.6% 10.7%
on b/s loans (including
processing fees)13.7% 12.8% 11.6% 12.1% 10.8% 10.8%
Loan Processing Fees (INR Crs.) 17.3 16.9 11.6 5.7 1.7 2.3
Drawdowns (INR Crs.) 3,503 5,020 7,317 1,569 1,096 2,180
Financial Cost^ 8.3% 8.3% 8.5% 9.1% 6.7% 7.2%
Funding Cost Analysis
^ Financial expenses to quarterly Avg. Gross Loan Portfolio.
52
POSITIVE ALM MISMATCH BENEFIT CONTINUES
56%39%
57%35%
52% 55%
44%61%
43%65%
48% 45%
FY14 FY15 FY16 Q2FY16 Q1FY17 Q2FY17
Floating Fixed
* Excludes managed loans
ALM data includes Securitized/ Assigned loans
ALM
4.9 5.7 6.2 6.1 5.8 5.7 6.3
9.2 10.2
11.6 10.1 10.1
FY14 FY15 FY16 Q2FY16 Q1FY17 Q2FY17
Avg maturity of assets
Avg maturity of liabilities
No. of months
Interest Rate Mix of Borrowings*
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 5,500Bank 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 Limited750^ 750^
Short-term Debt [ICRA] A1+ ICRA Limited
Securitisation Pool
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
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 granter (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
56
CAPITAL STRUCTURE AND SHARE
PRICE MOVEMENT
57
CAPITAL STRUCTURE AS ON 30TH SEP 2016
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
37.5%
1.0%
1.1%
1.2%
1.3%
1.4%
1.4%
1.6%
1.7%
1.7%
1.8%
1.8%
2.0%
2.0%
2.1%
2.1%
2.4%
2.4%
2.5%
2.5%
2.8%
2.9%
3.1%
3.2%
3.3%
3.8%
3.9%
5.5%
Others
Citigroup Global Markets…
SIDBI
Swiss Finance Corporation…
Amundi
Kismet SKS II
PineBridge Investments
Capital Investment Trust…
Sandstone
Birla Sun Life Mutual Fund
Kismet Microfinance
Vanguard
Alliancebernstein
William Blair
Wasatch Funds
Wellington
Morgan Stanley SG PTE
Credit Suisse Singapore
Vinod Khosla
IDFC Mutual Fund
Tree Line
Baron Capital Management
Indus Capital Partners
Goldman Sachs
TIAA Cref
Morgan Stanley Mauritius
Amansa Capital PTE Limited
Morgan Stanley Investment…
No. of shares -13.8 Crs.
FII, 29.7%
Domestic MFs,
Insurance co's & FIs ,
10.6%
Foreign Corporates,
6.0%
FPI, 40.8%
Domestic Individuals,
8.4%
NRI, 3.6%
Domestic Corporates,
1.0%
58
ADJUSTED PRICE TO BOOK COMPUTATION
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
INR
59
ANNEXURES
60
ANNEXURES - OPERATIONS
61
GROUP UNDERWRITING AT WORK
61%
45%
32% 35%39% 41% 39% 37% 34%
27%48% 42%
42% 40% 43% 48% 51%
14%
11%
7%8%
7% 6% 6%6% 5%
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
75%
87%84%
87% 88% 88% 90% 91%
83%
Active IGL loans disbursed during Jan’15 to Mar’15 have been considered as base and loans disbursed in subsequent cycles over the next 1.5 yrs i.e. till Sep’16 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
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
19,462
25,88624,050 23,089 23,686 22,935 22,080 22,025 22,804 22,995
36,896
42,426 41,832
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 Cycle10
Cycle 1 Cycle 2 Cycle 3
Income Generating Loan
Eligibility Amount (INR) Avg. Offtake Long Term Loan
Q2F
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
)
^
^
63
CYCLE WISE NON-AP LOAN BORROWERS
Cycle Wise Q2FY16 Q1FY17 Q2FY17
IGL 1 36% 44% 45%
IGL 2 21% 15% 15%
IGL 3 5% 6% 6%
IGL 4 1% 1% 1%
IGL 5 5% 1% 1%
IGL 6 5% 2% 2%
IGL 7 3% 2% 2%
IGL 8 1% 1% 1%
IGL 9 0.2% 0.2% 0.3%
Total IGL Borrowers 76% 71% 72%
LTL 1 17% 22% 20.4%
LTL 2 - 0.4% 0.7%
Total LTL Borrowers 17% 22% 21%
MTL 1 4% 4% 4%
MTL 2 1% 2% 2%
MTL 3 1% 0.4% 0.4%
MTL 4 - 0.2% 0.2%
MTL 5 0.2% 0.1% 0.1%
MTL 6 0.1% 0.1% 0.1%
Total MTL Borrowers 6% 7% 7%
Cross Sell 0.3% 0.3% 0.2%
Total IGL + LTL + MTL +
Cross Sell100% 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 loans64
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
NPAs 6.5% as on Mar-16 0.1% as on Sep 30th 2016
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: NABARD65
IGL MTL LTL
Other product
offerings^^
Loan portfolio (INR
Crs) / (% Mix)4,654 (51%) 2,067 (23%) 2,225 (25%) 99 (1%)#
Ticket size rangeINR 9,100 to
INR 29,565
INR 10,755 to
INR 25,421^
INR 30,915 to
INR 49,785
INR 1,310 to
INR 5,001
Avg. Ticket Size (INR)
For Q2FY1721,403 17,194 38,048 2,381
Eligibility*
Completion of CGT /
GRT
Age limit 18 years to
55 years
Maximum limit of
INR. 20,010 for
IGL 1
With IGL - Between
20th to 46th week
With LTL – Between
20th to 96th week
Minimum Two IGL
Loan cycle completed
Maximum limit of INR.
38,635 for
LTL 1
With IGL – Between
4th to 46th week
With LTL – Between
4th to 100th 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% - 19.75%
Processing fee (Incl.
Service Tax)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.
PRODUCT OFFERINGS
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 Minimum Two IGL Loan cycle completed
Maximum limit of INR. 38,635 for LTL 1
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
LTL Enterprise % Mix LTL
Q2FY
16
Q1FY
17
Q2FY
17
Q2FY
16
Q1FY
17
Q2FY
17
Q2FY
16
Q1FY
17
Q2FY
17
No. of Loans Disbursed in '000 191 114 109 1,988 2,249 2,263 9.6% 5.1% 4.8%
Avg. Ticket Size INR 29,677 37,028 38,048 13,404 16,758 17,744
Amount of Loan Disbursed (In Crs.) 567 421 415 2,665 3,769 4,016 21.3% 11.2% 10.3%
Portfolio Outstanding (In Crs.) 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
Snapshot
67
LEVERAGING THE DISTRIBUTION STRENGTH
FY15 FY16 Q1FY17 Q2FY17
Total TotalMobile
phone
Solar
lamp
Sewing
MachineCycle Others^ Total
Mobile
phone
Solar
lamp
Sewing
MachineCycle Others^ Total
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. 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
Net Fee Income as % of
PAT**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%
Loan Portfolio Mix 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%
*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
Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 6.3 mn for last 3.5 years is 37%
Frequency
of Loans (for
the period)
FY14 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%
#3 - - 0.2% - 2.1%
#4 - - - - 0.6%
#5 - - - - 0.2%
Total 3.0% 10.6% 20.4% 12.3% 36.9%
Penetration Based On Total No. Of Loans Frequency of Loans Based On Current Member Base
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% 2.4%
Bio-mass stove - 0.2% 0.7% 0.05% 1.0%
Water Purifier - - 0.5% 0.1% 0.6%
Others - - - 0.02% 0.02%
Total 3.1% 11.5% 23.4% 12.7% 50.7%
68
CREDIT BUREAU DATA
15%
23%25% 25%
FY-15 FY-16 Q1-FY17 Q2-FY17
FY-15 FY-16 Q1-FY17 Q2-FY17
Major Initiatives Impacting Credit Bureau Decision:
93% of credit enquiry with Aadhaar as primary KYC (Sep’16).
Internal CAP of Rs. 60,000 for total indebtness of the borrower for JLG loans, including loans from other MFIs.
29%
38%
47%
41%
FY-15 FY-16 Q1-FY17 Q2-FY17
Rejection rate for Long Term loansRejection rate for All Products
87%
83%
85%
86%
FY-15 FY-16 Q1-FY17 Q2-FY17
FY-15 FY-16
Hit rate^ for all products
^ Hit rate = % of loan
applications with
matching record in
credit bureau
Rejection Reasons – Q2FY17 % Mix
*Note: Rejections
are done based on
data inputs from
Credit bureau
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 3% 3%
=>2MFIs,Outstanding Balance>60K
and Default History 1% 1%
Default History and Outstanding
Balance >60K 0.1% -
Total 100% 100%
69
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
70
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
71
ANNEXURES - FINANCIALS
72
HISTORICALLY, AUM GROWTH IS STRONGEST IN Q4 & NII GROWTH IS STRONGEST IN Q1
NII Growth QoQ Growth %AUM Growth
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
FY15 FY16FY14
35%
-1%
1%
17%20%
-2%
9%
5%
31%
15% 14% 13%
24%
10%7%
15%
29%
6%
2%
12%
27%
20%
-14%
12%
29% 28%
-1%
12%
18%
7%
-14%
-4%
6%
16%
26%
36%
46%
H1FY17
* 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
Total 1,036 439 789 681 808 744
^fixed deposits, excluding margin money deposits.
^^Includes current account and cash balances
Note: Daily Average figures
74
OUR PROVISIONING POLICY
RBI norms for NBFC-
MFIs
BFIL compliance
Asset
Classification
Standard Assets 0-90 days 0-60 days
Sub-Standard Assets 91-180 days 61-180 days
Loss Assets >180 days >180 days
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
-
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
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
77
ANNEXURES – HR
78
Avg. Vintage (Yrs.)
Senior Management 7.3
Middle Management 8.7
Branch Management* 7.0
Sangam Managers 2.2 (4.3^)
Vintage of SMs Exited %Mix
< 6 Months 54%
6 Months - 1 Yr. 22%
1 -2 Yrs. 13%
2- 3 Yrs. 2%
> 3 Yrs. 8%
Who?
When?
Sangam
Manager
Attrition %
Why?
Retention
Strategy
32% (Annualised) for H1FY17
Sangam managers who earn lesser
average monthly performance incentive
i.e. ~Rs. 3,600 vis-à-vis ~Rs. 7,000 for
other Sangam Managers .
~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.
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
ANNEXURES - COMPLIANCE
80
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%
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
81
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: 9.6% for FY16
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
82
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.
RBI BFIL
S.no. Sector Category Target for Banks %Qualifying
Portfolio of BFIL %Explanation
1
Agriculture Target 18%
42% 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
83
ANNEXURES – INTERNAL AUDIT
84
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
• 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
Strength
• Branches 1,359
• Branches per Internal Audit staff 7
• Regional Offices 26Scope
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 - - - - √ √ - - √
85
