Bandhan Bank Limited analyst Q&A

Thank you so much, sir. We will now begin with the question-and-answer session. The first question comes from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Hello, good evening. I had a couple of questions. Where do you expect the full year and the next year credit costs to settle? I understand that there were holidays, but even so, there is like a 54% increase in SMA-0, which is the sharpest. I know you explained, but even so, where do you see the SMA-0 set and you gave some October number, but where do you see the SMA-0 settling in the third quarter? And also, if you could highlight on the credit cost? That ’s my first question. My second question is that your PPoP margin, right, PPoP-to-assets has really fallen to a low in the 2nd Quarter. And it hardly cover, I mean, there ’s very little margin now to cover the credit costs, right? So, how do you strengthen the PPoP margin ? Because the book will play out in terms of the change in mix and its impact on margins. So, what are the levers we have to improve the PPoP margin to take care of the volatility in credit cost? And my third question is that in the Bihar election manifestos of opposition parties, debt waiver figures and a lot of soft to self-help groups figures are being talked about. So, how much of that would you expect to rub off to MFI in case these things come through in Bihar? These are my questions. Yes.

So, first of all, to answer your query on credit costs, s o we have a guidance for the next two, three years, where we have said that we should come to around 2.5%. So, this is a transition phase, as we have already said. During this transition phase, the NPAs are going to rise, as you have seen that we have done some major accounting changes also. Definitely, for which SMA- 0 is one of the condition. We had some effects of the ballooning effects of the accounting system earlier, where actually the overdue were getting balloon ed at the end of the EMI schedule, but now we have actually brought it forward. So, that has re sulted in some ballooning in NPAs, which is the reason of increasing credit costs. But grad ually it is coming down and it will gradually come down. This is the first thing. Second t hing is that gross slippages of EEB from the EEB segment. So, these are yet to get arrested. So, till Quarter 2, what was our expectation, it has not happened for definite reasons across the ind ustry. And so, that slippages are now showing some good credence. What Rajeev has recently just said that the SMA-2 figures almost decreased by Rs. 100 crores on a QoQ basis. And the trend is on the similar line. So, we expect that substantial slippages can be arrested. So, with the slippages, if they get arrested, definitely the provision requirement will come down and the credit cost will improve. This is the first thing. So, we are still maintaining our guidance that after 2-3 years, we will be looking at around 2.5%

So, just to further supplement and clarify on the first point, what we have said is by FY ’27 exit is where we are expecting a credit cost of 2.5% to 3% for EEB on a stable state basis. On an overall Bank basis, we will be looking at a credit cost of 1.5% to 1.6%. And that is because we are improving our secured mix as we have already seen. W e will continue to endeavor towards that. And also we expect that the recovery in the EEB environment comes through over the ensuing quarters.

So, second part, your SMA-0, as you have already said, that if holidays are there, we cannot help because demands are generated, but people are not there in the field for collection. But Rajeev has already given a trend that almost 350 cr of the am ount of SMA-0 in the EEB segment has already been recovered during the first month of this. When ever it is due, we expect that this will also come down, but it will definitely depend on the holiday period. As regarding your PPoP margin, so the effect of the reduced cost of funds, that will come into a balance sheet almost on a large basis. A partial will come in Q3, but a major w ill come in Q4. And Q1 of next quarter, we will see a substantial impact of this cost of reduction of our interest rates, the moderation of interest rates, and definitely that will also improve our margin. Further, we are also taking steps to increase our other income. So, recently we have also revised some of our service charges and we are taking many more steps to increase our other income. The treasury operations, which has given us a huge profit in the Q1, obviously because o f the increasing rates, it has not happened during this quarter. So, we are also looking if we can m ake some treasury gains. So, these are the steps we are taking to improve our PPoP margin. And the fourth one is regarding Bihar elections. So, we find that during election manifestos, many political parties do come with debt waiver. But we have also seen that most political parties have realized that this is not a permanent solution and even the state do not have the capacity actually to fulfill this commitment. So, we ’ll look into it, but I don ’t see a major problem because Bihar has been one of th e good states compared to many other MFIs, at least for Bandhan Bank, the recovery has been quite good.

I think just to supplement the PPoP margin, because the full brunt of the repo rate impact came through in this quarter on the advances book. While we have taken action to reduce the savings count rates, which has immediately given some benefits, the reduction in the term deposit rates will take a bit of time depending on when the deposi ts come for renewal. And that ’s what we said from Q4, we should start to see. So, effectively, t his net interest margin will be sort of the lower point. And from this coming quarter onward, we should start to see some improvement in the net interest margins.

How much did you cut your MCLR by, say since April?

So, roughly 200 basis points.

But has anyone cut MCLR so sharply, or you are higher tha n peers?

No, we have just moderated the calculation. So, earlier, what was the basis of the parameters of doing MCLR, because we took this opportunity, we are one of the outliers. So, we had an MCLR of almost 11.5% compared to the next one in the line in the queue with around 9.5% or 9.7%. So, we did a recalculation and we thought that it sh ould be prudent enough that we make the correction at one time, because it may be a requirement going forward. So, that has impacted almost Rs. 5,000 crores of our housing loan.

Okay. But as in, change the way you calculate what in MCLR, like cost of funds is a given, right?

Yes. So, definitely. So, some of the service charges, which we are actually recovering from the customer, so that was the basis for that year. So, that was, since we are recovering it, we have not taken it as the cost of funds.

I think some of the elements is just broadly aligned w ith the way the market actually computes it. So, we aligned it with the market.

Okay. Thank you. Thanks a lot.

Thank you so much. Our next question comes from the l ine of Abhishek Murarka from HSBC Bank. Please go ahead.

Hi, good evening, sir. So, I have a follow-up question on the microfinance business. So, in Bihar, has the MFIN stepped in or have you or some of the larg e lenders, have you all made some representations or at least issued some guidelines so that your field agents etc. can work without any hindrance? Or if customers tell them that it ’s going to be waived, they have some official document to show saying that right now you have to s ervice your loans. So, just the reaction from the industry and the support that you might be g etting or might not be getting from the government, if you can comment on that? So, that ’s question one. I ’ll come back on question two, actually.

So, Bihar, again, I ’m telling you that if you look at our portfolio, the delinquency trend is a very acceptable level, I can say for that. So, 30 dpd indus try trend is 5.14% against which our trend is 3.8%. If you look at the 90 plus delinquency trend, the industry trend is 3.0%, ours is 2.04%. If you look at 180 plus delinquency trend, 12.54% is t he industry trend and ours is 6.84%. So, we are little bit comfortably placed than what the industry is doing for the day. And this election manifesto, each time, whenever it happens in any state, I think, many of the political parties do come up. But till now, at least no major political party, we have not seen that they ’ll come with these manifestos. But Vishal, if you want to add.

Yes, this is Vishal here. In terms of the Bihar, we are wa tching it very closely in terms of the impact in the last one month or so. In our portfolio, as such, we have seen regular collection, that means the way it ’s been happening in the previous quarter. Though we have taken the cognizance in terms of the knowledge which is going around in the political environment out there, but that ’s one of the things which is always getting highlighted whenever a state election is happening. We are closely tracking. It ’s been performing as expectation and in fact, in the s ame manner it was performing in the previous quarter as well. So, I don ’t think, as of now, we see a challenge that we are cognizant of being keeping a very close eye in terms of how things are progressing there.

So, some pre-emptive steps have still not been take n or you have not felt the need to take? MFIN has not taken?

No, preemptive steps has been taken. We also liaison with MFIN lobby and the directive from them given to all our relationship officers to carry it along and ex plain that these waivers talk and all is not sustainable and not rightful and that is given and shared with all the ROs which are the relationship officers who travel. In the weekly meetings, they make the customer very much understand whoever comes up with that query. We haven ’t seen that far so much of customer noise saying that waive our loan amount or we would not like to pay because there is people who are saying, we are going to pay on behalf of us. Those things have really not come up. There have been very small, one or two group meetings in which it has come up and we ’ll explain. We haven ’t seen much of a number, difference of connections. In fact, much better than the industry.

So, even the MFIN has given us, you know, one page r to inform all our customers in terms of during the election time and that ’s only specific to Bihar. Whenever state elections are t here, MFIN has given a common guideline given to all of us in terms of how do we, you know, explain to the customers who are raising this point of political interferences and waivers for the loan.

Understood. Okay. Thank you for that. The second qu estion is, I see your disbursements in EEB have gone up. And obviously, a couple of states, there is still an increase in SMA 1, 2, etc. And you have also said in your opening remark that stress may continue in EEB for 1 or 3 quarters. So, which geography have you been comfortable in lendi ng? That is what I wanted to understand. Where has this disbursement happened?

Abhishek, just to clarify what MD sir mentioned was, just to probably continue for 1 or 2 more months and thereafter we should see more recovery just to clarify.

Yes, sure. Okay. But the question still stands. So, where have you found comfort in increasing your disbursements and lending more? So, definitely, I c an say the eastern part is doing reasonably well.

S o, West Bengal, Assam, Bihar, all these states. In the other parts also, we are seeing delinquencies are improving. The collection efficiency has improved. But see, like MD sir spoke about West Bengal, Bihar, Assam continues to be our strength area. And that is where we have seen growth also coming in. We have a large existing base. So, that is a renewal every 12 months or 18 months. So, that is where we really, for the good c ustomer of ours, we really focus upon and try to get that renewal. So, West Bengal, Assam, Bihar, in that order, keeps on doing well. We have also seen some traction happening now in parts of Odisha and Madhya Pradesh, though not in that scale of what Eastern India is going around. The places where we are really not able to go because of the guardrails are Tamil Nadu and Karnataka because of the late entrant of us. Otherwise, we see decent renewals coming in and you w ould have seen by the numbers, disbursal of EEB in last quarter, Quarter on Quarter, has been almost back to the levels of Q2FY25 levels. It is almost there. That is one good trend. That is one confident statement which we get when we see that the disbursals are picking up because the business runs both ways. Disbursal and collection goes hand in hand. So, in September month we crossed 5,000 crores of disbursal.

Understood. Okay. All right. Thank you, sir. Thank yo u for the clarification and all the best.

Thank you.

Thank you so much. Our next question comes from the l ine of Aravind Ravichandran from Sundaram Alternates. Please go ahead.

Thank you so much for the opportunity. I was trying to understand, in the housing category also, sequentially NPA has moved up, NPA percentage. Is it again because of the holidays or is there something else in the play here? Because growth is als o very strong in the housing category, despite the NPA percentage move up sequentially. I could just like to understand what is...?

Yes, so I think if I could understand, sorry, the audio is still in and out, but your question is around the housing NPA and the SMA, right? As to what is actually driving that?

Sure. So, I think, like MD sir had mentioned earlier, th ere had been some sort of ballooning related sort of NPA recognition, which had happened sometime back. And we do assessment of that on a quarterly basis, which affects some bit of the housing. However, even if the SMA book has slightly gone up and we ’ve seen that the credit cost and the final recovery that comes through are commensurate. And therefore, the net credit cost that comes through is aligned to the industry standards. The little bit of an increase that we ’ve seen coming through the housing pertains to some of the underlying portfolio in the affordable segme nt, but the Bank is taking efforts to make sure that the recovery comes through within that. So, we are not seeing any kind of a material trend, per se, which is causing a significant risk. But there are basically certain areas and certain sectors or sections within the housing, wh ere we ’ve seen the risk emanating a little bit more. But the Bank is taking actions to make sure that the collection efforts increase on that particular front. But overall, on a net basis, after the recovery, if you look at the credit cost, it ’s actually quite commensurate with what we see in the industry.

So, slippages have gone to 2.4%, so that is in the housing loan segment. But at the same time, recovery is around 15%. So, the NPA to the total advances stands at 2.8% during the quarter.

Okay. And just one more question. Within the EEB po rtfolio, Bandhan plus more than three lenders, it has been actually stable for the past few q uarters. What is happening there? Are you finding it difficult to run down the portfolio? What is happening there?

So, see, we put the guardrails on April 2 nd for FY26, that means it ’s been six months since the time the guardrail has been put into effect for three lend er norm. I think we ’ll have to wait for two more quarters and gradually it will speed up. Becaus e as of now, you have to compare in the first two quarters, the three lender plus has gone down by 50 bps or 100 bps, 1% it has come down from an 11% to a 9.5%, right? So, this 9.5% now w ill go at a speeder pace from Quarter 3, Quarter 4 onwards. So, come March, because our loans a lso run for 12, 18, 24 months. So, come March ’26, you will see this number of 9.5% going down to a 7%-6% is what when we checked out, it will become that way. And below 5, maybe a Q1FY27.

So, but what we are seeing, obviously 100 bps has co me down already in the last two quarters. And you will see the traction really picking up now b ecause whatever has been booked for the last 18 months, it will start maturing now in 12 month s and so on and so forth. So, all three lender norms will speed enough compared to what it has been up to. The numbers will keep on going down from there.

Understood, sir.

Thank you. Our next question comes from the line of Anish Rai from UBS. Please go ahead.

Hello. Thanks for taking my question. So, I have a question around your net new EEB customer accretion. So, that has been hovering at the same level for quite a while now, I think for the last 2-3 years now. So, I just wanted to check, do you stil l believe there ’s an increasing penetration story there or you think that the market there has sort of saturated and now it ’s all going to market share gains? And the related question is, so when you think about growth for the microfinance industry or for the Bank, where do you see that growth com ing from? So, how do you see that growth without that increase in customer accretion? So, that is my question. Thank you.

Sorry, Anish, your question just to understand, is the increase in customers or increase in advances?

No, net EEB customers, active customers, you disclose it, net EEB active customer number, right?

Got it.

So, you ’re right that we have stagnated in terms of the new bor rowers coming in month on month. But as we see, even today, we keep on adding up 1,30,000 - 1,40,000 customers, on an average and in a quarter we add up to 3,50,000-4,00,000 customers. What we also realize when we go for new customers, there are lots of rejects which have increased in the industry due to delinquency and that ’s why we are also not able to really work upon in terms of getting the new borrowers because they are being rejected on account of the performance outside Bandhan Bank as well. And that ’s the industry trend. The good news is that on the renewal side, we have been working very closely with analytics to ensure that the good customers of ours, which have been with us for a longer time, are all getting renewed and all getting rolled for the new loans as well. So, this fraction we will keep on seeing for the next 1 or 2 quarters and once the industry stabilizes and the leverage issue is completely lift off, we will try and get further new customers. Currently, if you see and go by the industry number, aroun d about 23%-24% of the overall industry customers are ineligible to take loans going by the government. I hope I am able to answer the query.

Yes, thank you, sir.

Thank you, sir. Our next question comes from the lin e of Param Subramanian from Investec. Please go ahead, sir.

Good evening. Thanks for taking my question. Firstly, on funding cost. So, quarter-to-quarter, your cost of funds is, as there is not much movement. Why is that the case? Because your CASA ratio is up. We have taken substantial cuts in our sa vings rate as well. So, why is cost of funds not yet showing improvement? And related to that, how to think about NIMs going into second half and next year? Because I think at the beginning of the cycle, we had called out that because of the mix shift, the Bank would lose 70-80 basis point of NIMs. And it looks like we are already there. So, how to think about NIMS from here on?

So, the funding cost, what we have already explained that a moderation in the savings Bank has come. So, my funding cost of savings Bank has almost like 200 basis point has come down. But the fixed deposits are yet to come. So, we have got almost close to almost 75,000 close of retail term deposits and also fixed deposits, bulk deposits are also there. So, there is the moderation will take place as and when this gets renewed. So, it will take two more actually to…

Your CASA ratio is up, quarter-on-quarter and there is a sav ings cost reduction …

Quarter-on-quarter, it is marginally up. Yes, we have 28%. It increased from 27.1% to 28%. We are marginally up. But the main thing is that because of the fixed deposits, which were adding a very high rate of interest. So, that needs to get moderated and that will get moderated only at the time of renewal for which we need to wait till Quarter 4. A little bit positive impact will come in Q3, but not much. So, Q4 actually the major impact will come.

Just to share some numbers, for instance, our savings account, the cost has come down from an average of 5.52% last year or even in Mar ’25, 5.5% to almost 4.2% for this quarter. And in fact, September month was almost down to 4%. So, we have d one substantial reduction in savings cost, which will continue to give us benefit going forw ard as well. The term deposit rate reduction that we have done will take some time to affect because of the renewal date of the TDs coming in largely in Q4. Some will come in Q3, mostly in Q4. Some will come in the first half of next year.

The second question regarding the NIM, we have already indicated that as we are moving towards more secured books, the NIM would get impacted. It has got further impacted because of the upfronting of the repo cut, which we were not expecting beginning of the year. But again, the moderation definitely will continue. But our guid ance is that we should have it around 6%. So, we are working towards it. It is not that EEB will n ot grow. So, whatever the degrowth in the EEB has taken place, I think it will be arrested. And from Q3 onwards, we will be witnessing the growth. So, that will definitely help us in actua lly achieving our NIM target. So, currently, we are around 6.1% if we look at the half year. So, alrea dy another 10-basis point moderation we have already taken into account. And probably, with the EEB segment going up, we will be able to achieve it.

Yes, I think just to supplement, the NIMs for the quarter were 5.8%. And what we expect as the renewals for the TDs come through, the margin should im prove from these levels. So, we actually expect an upward trajectory from here. And this could be sort of the bottom point, at least during this financial year.

Okay. So, from here on, it improves. And even from a mix perspective, right? So, our strategy, we initially highlighted that we want secured in the loan mix of about 55%. I think we are broadly there. Even microfinance, I mean, including the indivi dual loan is 36%-37%. We seem to be already there, right? So, how to think about mix going forward for the next, going into FY ’27? Is microfinance going to grow from here? And has it bottomed out in the mix?

So, that is our strategy. So, if we grow in microfinance, our growth in the non-microfinance will be much more at a much higher rate. So, this ratio will be maintained or a little bit, it will dip down.

Yes. So, I think the secured mix could actually incre ase further by rather say 2-3 percentage points through the next 6 to 7 quarters. But the degrowth in the EEB book is what we are trying to arrest, so that we can actually start having a mode rate bit of a growth. That is where we are trying to get the mix.

Okay. So, 55% can move towards something like 52% o r broadly, right? Is what you are saying 2-3 percentage points?

No, what we are saying is 55% could move down further t o say 57%-58% over the next 7 quarters. But during that particular period, we will also try and get the growth back into EEB, so the ratio could move between these ranges effectively.

Thank you. The next question come from the line of A nand Dama from Emkay Global Financial Service Limited. Please go ahead, sir.

Sir, thank you for the opportunity. Sir, this MCLR cut that we have done 200 basis point, is that something to do with RBI telling us or is it basically we have done it according to Reddy.

N o, nothing. Let me make it very clear that it has got nothing to do with RBI.

Okay. So, basically, I am sure that this year ’s RBI supervision would be nearly over. Any address comments that basically came through in the RBI report?

I think that we cannot pinpoint that. All banks do have a report. But I would say that the major regulatory issues which were there have been already ad dressed. And where technology dependence is there, these are on the process of gettin g addressed. So, that much I can say. So, the major regulatory issues what was there, we have al ready addressed those things. But definitely, whenever you are in any banking operations, there will be some observations from the regulator. We will address as and when required.

Just to confirm, basically, we will not have any furt her shocks in terms of any PSL classification or anything that would come from RBI.

No, nothing as such we have received in the supervis ory report.

So, secondly, on Bihar, I think it ’s the opposition manifesto which has talked about so me kind of waivers and so on. The ruling party hasn ’t. But is there any difficulty in terms of approaching the customer in terms of collections now, given that th e elections are around or we are able to reach to the customer, conduct center meetings and so on?

As of now, we are cognizant of the issues raised by th e opposition. However, we haven ’t seen any material change in our collections as for today as well, till date. But we are keeping a close watch. And it ’s been a part of the business of us now. Whenever there ’s a state election, these things have been spoken about and slowly it settles down and stabilizes. We haven ’t seen any disruption as of now. So, customer visits are happening, book center meetings are happening in a normal way.

Sure, sir. That ’s very helpful, sir. Thanks a lot.

Thank you, sir. Our next question comes from the line of Hardik Shah from ICICI Securities. Please go ahead.

Hi, sir. Good evening. Sir, if you can quantify the MF I slippages in this quarter. And sir, any qualitative reason why the situation did not pan out the way it should have been? Because other banks, all banks which have MFI segment, they have seen 20%, 30%, 40% decline in slippages. So, is this a geographical thing which is a bit of an adverse thing for us? Or why is it that the slippages seems to be elevated or not improved significantly versus others?

So, maybe I ’ll answer both. So, firstly, on the number, the slippages for the EEB, which is Group Loan Service as well both, was Rs. 1,118 crores. This wa s the gross slippage. And the net slippage was 984 crores. The gross slippage increased m arginally from 1,089 to 1,118 during the quarter. On your second question, I think, look, from our perspective, the Bank had already been following the guardrails to a large extent. If you l ook at it, for us, the Bandhan Plus 2 portfolio was almost close to 90%. And the overleverag ing portfolio portion of the EEB was only around 10%. So, that also has improved further down to 9.5%. However, the industry number used to be much larger. And what we see from the Bureau report, the industry almost a year back was 19%. And over the period, they have trie d to come down. So, you will probably see the reduction more in the industry because they ’re coming from a position of a much higher delinquencies to a lower delinquency. From our standpoint, our delinquency levels were lower, and we have been doing better than the industry. However, at the same time, we are trying to put in efforts to make sure that our collection rate and recovery efforts go up, and also that we have lower slippages come through, which is what we are expecting sometime in Q3 onwards for the recovery to come through.

Quickly I will just supplement in terms of what you spoke about the indus try, I ’ll give you the figures, which is reported by the Bureau end of September, 180 plus delinquency, which is typically at an industry level is at 15.26% and we are at 7% at a 180 level. At a 90 to 180 dpd, industry is at 3.27% and we are at 2.08%. So, comparatively, both 90 plus and 180 plus, we are far, far superior compared to the industry. So, even if t hey have said slippages have reduced, maybe for this quarter, they have already been at a very high end of 180 and 90 already in the previous quarter. The current quarter, if I stand in point, if I see in the month of September, there ’s a large difference between both 90 plus and 180 plus. So, I ’m not sure about whether you ’re getting the figures of slippages of the industry overa ll improving by 20 basis points. Maybe some other banks, because they have a very small amount of this EEB book. So, maybe they must have percentage-wise have shown a better improvement compared to us, because we have a large base. So, on this large base, the percentage improvement is difficult to predict.

Okay. Sure. And secondly, sir, this 650 crores of SMA-0, which was because of bunched up holidays, that you have managed to recover 350 crores of them. Ideally, it should have been even much more, right? I mean, is that the understanding or the 650 crores of bunched up holiday, of course, the holiday season is over and then 2H for October should be a decent active month. You have only managed to recover 350 crores. Is that what, I mean, this is what you said, right? That you have managed to recover 350 crores. You have managed to regularize Rs. 350 crores out of 650 crores bunched up, right?

Let me explain this holiday demand for your understandi ng. What happened was, because we have got a predominantly 53,000 crore of our portfolio in EEB and September 29 th and 30 th being holidays, there is an impact of holiday demand in wh ich we collected 92% of our customers. 92% of the customers on the days of 29 th and 30 th we were able to collect. 8% of the customers, which was because we have weekly installment, we were not able to collect. And the following week, we are able to collect 95% of the remaining 8% of the customers. But what happens is, because of the 8% of the customers, that totals up to close to Rs. 650 odd crores of the principal outstanding, which moves to 1 DPD, 1 to 7 DPD or 7 t o 15 DPDs. If there are two Monday holidays, like in this month of October, there have be en three holidays on Monday, which is being a Monday weekly installment, but we have to t ake advance, we take 92%-93%, 7%-8% are flown to the next weekly cycle and which we colle ct again in the next weekly cycle. So whatever flows like this Rs. 650 crores, which had happened earlier and specifically on the last day of the month, we are able to collect 92%-93% in the advance, 7%-8% in the following week. And that is a proof of the testament that when you see SMA-1 and 2, there is no increment, even from April to September or October, but SMA-0 gets elevated temporarily for a week primarily and slowly, slowly it keeps on coming down week by week. So as I speak, this approx. 1,500 crores which is reported here as SMA 0 would have been 1 ,200 crores odd 3-4 days back. So this number will slowly come down to a below 1,000 c rores, which was there in Quarter 2 and so on and so forth in the next one month, because th ere are no more holidays in November and December and nothing coming at the end of the month. The last day of a holiday in the last day of the month becomes a bigger problem because we don ’t have time to collect for that particular one. And September 29 th , 30 th , 1st and 2 nd were holidays. So they were continuous holidays for that period. But like what Rajeev explained, bulk of it has already got collected in October and whatever is still that one week pending will further get collected in November. So I don ’t see a risk in SMA-0 formation, that risk is very temporary for 2 -3 weeks and that is stabilized. This particular month, because of 3 Monday holiday, it is t aking maybe 1 week or 2 weeks more. Come November and I think that PAR 1 to 30 will stabilize back to the normal number of June quarter. I hope I made everybody clear on this point. Beca use it is a temporary blip because of the last day being a holiday in a month.

Sir, I just wanted to check this Wholesale Banking ABG book and erstwhile SEL book, what is the reason for the rise in GNPA there? Thank you.

You are talking about the erstwhile SEL, which is ABG book, the increase in NPA? Is that the question?

Yes .

Okay. See, the SEL erstwhile book, the denominator impact is there. We have gone a little slow in terms of the growth in SEL and we are planning to change our policies and making it far more robust. For that reason, there has been an impact of denominator growth in SEL. Otherwise, the slippage pattern of ABG has been on the similar numbers month-on-month, the way it was there also in the previous quarters or so. But because of the denominator coming down in the growth, we are trying to make it in a more robust manner. That is why you will see that impact of the NPA is elevated and the percentage is going higher.

Sir, I was referring to absolute number only, Rs. 730 crores of GNPA has become Rs. 870 crores on a quarter-to-quarter basis in wholesale banking. An d the GNPA in wholesale banking, Rs. 730 crores has become Rs. 870 crores.

Yes, the wholesale banking book includes the ABG po rtfolio. I think if you look at the wholesale banking NPA levels, excluding the ABG, it is quite lo w, almost like 0.5% or 0.8%. But ABG has a slightly higher NPA primarily because the book a ctually has been degrowing and the denominator effect, like Vishal mentioned, is affecting the NPA percentage. But there are certain underlying risks, which the team is actually looking at in terms of improving the collections. It has been an unsecured portfolio, which actually has had some bit of an NPA level, but the team is focused in terms of making sure that the collections come through within that.

Okay, so this is unsecured business banking, right? I mean, what we see at other Bank is , business banking.

That is correct.

And this is not a LAP, right? This is business banki ng, unsecured working.

Not a LAP.

It is unsecured.

Thanks for taking my question. So my question is regarding MFI. So we are seeing that Madhya Pradesh and Bihar and Maharashtra also have some difficult y in collections from some other players. So are you seeing any stress there?

So like I said, Bihar is doing reasonably well for us. Fo r us, like I said, Tamil Nadu, Karnataka is a little stressed. Maharashtra is doing reasonably okay for us as far as we are concerned, though I see there is an industry difference from our portfolio co mpared to the industry portfolio. Industry doesn ’t do that well. For us, Gujarat is a little, compared t o the industry, a little cause of concern, but not that much to worry because our portfolio in Gujarat and Southern states are much lower if you have to compare. So we are keeping o urselves abreast in terms of and watching Gujarat portfolio more qualitatively. Maharashtra is still holding for us the way it was earlier. I hope the question was answered.

Yes. So my next question was more forward-looking in na ture. So for H2, we were banking on the growth being higher in MFI and the asset quality i mproving. But next year in Q4, West Bengal and Assam, both will have their elections. So just wanted to understand historically in the past 2-3 election cycles for West Bengal and Assam , what has been the trend and disbursement in asset quality? Do they significantly deteriorate or we can Bank on H2 being significantly better than H1 despite the election months being dead?

In fact, five years back when the election took place, the portfolio quality was much better. There were no issues at all for them. In West Bengal, there is no election, no political party gives a campaign that no labor required there. I don ’t think that ’s going to happen in any way. But Assam also, there was post-election that has come up earlier. But I don ’t think in Bengal specifically, anything of this has been even spoken a t this point of time. But like I said, this business is such that there is a political infringement and we are aware of how to manage it even now because we have been doing it for a long time ac ross the industry. And like I said, this business is also, microfinance has been H2 is far superior than H1 in terms of both disbursement, growth, and stability in terms of quality of the book as well. So, we are optimistic that Quarter 3-Quarter 4 will have better trends in terms of both growth and quality of the asset book.

And also, I think because of the various guardrails and the communication, borrowers are also well aware now of the need for a discipline in terms of repayments.

Okay, got it. And lastly, have you taken any price hikes in group loan?

No, we have not increased any price.

Okay, got it. Thank you.

Thank you. Our next question comes from the line of Ara vind Ravichandran from Sundaram Alternates. Please go ahead.

I have this question, like, because we have seen diffe rent players, because of the risk-based pricing in MFI, they have inched up the yields, like 7 5 basis points, 100 basis points, different lenders have done different things. But based on the past several quarters, they felt like there is a need to raise yields. Don ’t you see any need like that in raising yields for JL G notes, MFI notes? That is my first question.

We are not looking at moving any risk-based pricing, because the group concept is cohesive. So, it ’s difficult to implement risk-based pricing in a group in many ways. So, we want to continue the way it is in terms of ensuring that we get the right quality book rather than looking at a risk- based pricing, because the group concept is very cohesive when we form a group, and it is very difficult to implement on the ground that we have diffe rent risk-based pricing and explain in a particular group. And so, we have been keeping the way in terms of keeping a flat rate at a group level. And we haven ’t increased the prices or yields in the recent past.

Yes, I think there is no plan to hike the rates in the MFI.

The rural market, basically, is a very sensitive market , because one customer is getting a particular rate, another is getting another rate, then there is basically a disconnect. So, most of them, they want the similar rate. If they have taken a loan of Rs. 50,000, in the fixed installment, I am paying so much amount to the Bank.

So, if you look at the risk profile of this customer, th e risk profile is also the same. It is very similar, except that some are paying on time and some are paying with some delay or some are not paying for the day. But if you look at the risk pr ofile for anything, whether on the basis of income, or whether the basis of the schemes, the unstructured information, the risk profile almost is very similar in respect of this particular segment of customers.

I was trying to understand, branch addition has been p articularly slow in the last few quarters. So, if we want to get back the growth in the subsequ ent years, is this enough? Are we going to significantly accelerate the branch expansion rather tha n investments? I understand that you mentioned that we need to make investments.

So, we have already a plan for branch expansion during the next one year. So, we are just going ahead with that plan only. But our motto is not that we would grow very aggressively in branch expansion. Rather, we are focusing on the digital strength capability of the Bank. But definitely, geographies where our presence is very less. So, we are focusing now on the south. We are also focusing a little bit on the north. But definitely, much lesser focus on the east.

Thank you, sir. And this question comes from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Thank you for giving me one more chance at asking qu estions. I just had one clarification that ECL will be implemented now. So, what would be your overall SMA pool, because that will determine the stage 2 provisions, right? In terms of even other loans. Obviously, you have been transparent enough and you are disclosing the EEB pool regularly, which is very helpful. But what is the total SMA pool including non-EEB? Like say for 0, 1, and 2?

You want the figures as of September 30 th or what you want?

No, September 30, the total SMA.

Are you asking for the SMA as per the current books or SMA as per IndAS new guidelines?

You can give either. I mean, you can give both.

No. So, look, we are assessing and evaluating. I thin k the draft guidelines have come through. We are looking at what exactly it would mean for the Bank. I think at this stage, that process is still on. So, currently, I think whatever we have in terms of the DPD books, in terms of the SMA 1, 2, etc., we ’ve already included in the investor deck for EEB. So, I t hink you will be able to see the details there. But the assessment for the new guidelines of ECL is still under process. So, we will not be able to have the details of that.

Sure. But IndGAAP, would you be able to share the to tal SMA pool under IndGAAP? Including non-EEB?

Sorry, Marukh, we will not have the figures for IndAS ri ght now. Not for the ECL as per the new guidelines.

Okay. IND GAAP also you won ’t have?

Yes, we can share it later. We can engage subsequentl y and then have a conversation.

All right. Thank you so much. Thanks.

Yes, we will connect with you.

Thank you.

Thank you everyone for joining for the investor call an d for patiently listening to the various updates as well as for asking the various questions. And thank you for reposing the trust in the Bank. Thank you so much.

Thank you, sir. On behalf of Bandhan Bank that concludes this conference. Thank you for joining us and you may now disconnect your lines.