December 19, 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 Sirs,
Updated Presentation on Operations
We are enclosing herewith a copy of updated Presentation on operations.
We request you to kindly place the aforesaid presentation on your website for the information of
investors.
The aforesaid presentation will be made available on our website for information of all
stakeholders.
We request you to take the above on record and acknowledge receipt.
Thanking you,
Yours faithfully,
For Bharat Financial Inclusion Limited
(Formerly known as SKS Microfinance Limited)

Rajendra Patil
EVP Legal & Company Secretary
Encl: As above

BFIL UPDATE
Sab se Sastha loan

BFILs lowest interest rate benefits 55 lakh women in 1 lakh villages

DEC 2016
BHARAT FINANCIAL INCLUSION LIMITED
(Formerly known as SKS Microfinance Limited)
BSE: 533228 NSE: BHARATFIN
Corporate Identity No. L65999MH2003PLC250504

www.bfil.co.in
This presentation is solely for viewing. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from BHARAT Financial Inclusion Limited.

CONTENTS

Particulars

Slide No.

CORE STRENGTH

IMPACT OF DEMONETISATION EVENT

RISK MANAGEMENT

12

COMPLIANCE WITH RBI NBFC-MFI REGULATIONS

15

STRONG SOLVENCY AND SUFFICIENT LIQUIDITY

19

ANALYSIS OF PAST EVENTS

21

CORE STRENGTH

STRENGTHS OF OUR UNIQUE OPERATING MODEL AND DIVERSIFIED PRESENCE IS

HELPING US TO NAVIGATE THROUGH THE CURRENT CHALLENGES RELATED TO
DEMONETISATION

Strengths of our
Operating
Model*

Diversified
Presence*

100% Joint Liability Group lending (Disbursements to individuals but collections

from Groups)

All transactions at centre meetings (public place)

Small Weekly Installments

99% Loans for Income generating activities and most of our customers undertake
economic activities, which cater to non-discretionary spending in the local milieu
(Livestock (Eg:Milk) -33%, Grocery -10%, Eateries -4% etc.)

Lowest Offtake among top 5 MFIs of Rs. 17,744

Present in 315 Districts (Highest in Industry)

2,13,298 Centers in Non-A.P

Concentration Norms
< 15% of Disbursements in one state (Karnataka and Orissa <20%)
< 3% of Disbursements in one district (Karnataka and Orissa <4%)
< 1% of Disbursements in one branch (Karnataka and Orissa <1.25%)

* Data for Q2FY17

4

BFILs INTEREST RATE IS THE LOWEST IN THE SECTOR AND LOAN OFF-TAKE IS
LOWEST AMONG TOP 5 MFIs
Interest rate reduction
4.8% reduction in one year

29.25%
24.55%
23.55%

22.00%

20.75%
19.75%

Oct-10

Jan-11

Oct-14

Jul-15

Oct-15

Lowest interest rate

charged by any private
sector MFI in the globe

Dec-15

Interest rate on income generation loans

Loan Off-Take

INR Figures for Q1FY17

31,568
32,000
24,924

24,158

21,974

22,000

16,758

12,000
2,000
MFI 1

MFI 3

MFI 5

-8,000

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

Source: Micrometer

MFI 4

BFIL (MFI 2)

CLIENT PROTECTION PRINCIPLES AT WORK

DOs

DONTs

Gave customers time to repay

Educated customers to exchange
High Denomination Notes at nearby
Banks, Post offices
Continue to meet customers in
centers meetings (i.e. conducted at
public locations)
Robust Grievance redressal (toll free
numbers) to address customers
doubts
Lowest interest rate at 19.75%

Forcing customers to repay (Zero

Tolerance policy)
Door to door collections
Collections of old Rs.500 and
Rs.1,000 notes

IMPACT OF DEMONETISATION EVENT

98.6% OF CENTERS WITH FULL OR PARTIAL COLLECTIONS

% OF CENTERS
170.0%
160.0%
150.0%
140.0%
130.0%
120.0%
110.0%
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%

24-NOV-16

15-DEC-16

98.6%

95.8%

4.2%

Full/Partial
Zero Collection
Collection Centers
Centers

1.4%

Full/Partial
Zero Collection
Collection Centers
Centers

Cumulative position (post demonetisation)

* 37% and 24% of zero collection centers are from Uttar Pradesh and Maharashtra respectively.
8

COLLECTION EFFICIENCY OF 97.7% WITH A LAG OF 4 WEEKS DURING THE

DEMONETISATION PHASE

88.5%

92.3%

95.5%

97.7%

82.0%

On Time

1 Week Lag

2 Weeks Lag

3 Weeks Lag

4 Weeks Lag

09 to 15-Dec

02 to 08-Dec

25-Nov to 01-Dec

18 to 24-Nov

11 to 17-Nov

Cumulative Collection Efficiency improved to 91.2% for the period 11th Nov to 15th Dec from 89.3% for the
period 11th Nov to 25th Nov.
Note :Collection efficiency is calculated based on collections for the week and overdues collected over subsequent weeks
against ideal dues for the week

DISBURSEMENTS OF RS. 970 CRS SINCE DEMONETISATION

Disbursements
400

INR Crores

Disbursements as % of Collections

80%

75%

350

66%

68%

67%

64%

70%

300

60%

253
250
200

173

191

50%

198
156

(4 days)

150

40%
30%

100
50

20%

10%
14-Nov to 18-Nov 21-Nov to 25-Nov 28-Nov to 02-Dec 05-Dec to 09-Dec

12-Dec to 15-Dec

We continue to disburse in centers, only if the collection efficiency of

that center is 100%
Note 1: We continue to disburse by recycling cash collections, as there are restrictions on current
account withdrawals ( up to Rs. 50,000/week). Disbursement to customer bank accounts are also
limited due to ATM withdrawal limits and limited availability of cash at bank branches.
Note 2: Disbursements as % of Principal collections from 11th Nov to 15th Dec is 75%

10

COLLECTION EFFICIENCY OF 96% AND 93% WITH A LAG OF 4 WEEKS FOR

MAHARASHTRA & UTTAR PRADESH RESPECTIVELY
Maharashtra
Collection* %

Loan Portfolio
No. of Districts
(Sep16)
(INR Crs.)

Uttar Pradesh
Outstanding
%

Loan Portfolio
No. of Districts
(Sep16)
(INR Crs.)

Outstanding
%

>95

24

820

74%

28

444

56%

90 95

123

11%

179

23%

85 90

68

6%

40

5%

80 85

--

--

--

76

10%

75 80

101

9%

11

1%

70 - 75

--

--

--

11

1%

60 70

--

--

--

0.4%

51 60

--

--

--

30

4%

Total

27

1,113

100%

49

794

100%

* Collections with a lag of 4 weeks /Dues for the period between 11 th Nov to 17th Nov

Note :Cumulative collection efficiency for the period 11th Nov to 15th Dec for Maharashtra & Uttar Pradesh is 83%
and 74% respectively
11

RISK MANAGEMENT

12

KEY RISKS AND MANAGEMENT STRATEGIES

Risk
Management

Key Risks

Management
Strategy

Political Risk

Concentration
Risk

Operational Risk

Liquidity Risk

Responsible
lending and fair
pricing

Geographic &
dependence
norms

Cash
management
system and
process controls

Liquidity metrics

o Low cost lender

o Voluntary Cap on
RoA from core
lending
o Robust Customer
grievance redressal
(CGR) Mechanism
with Ombudsman
o Calibrated Growth

o Geographic
concentration
norms
-

Disbursement
Related Caps
Portfolio
Outstanding
Related Caps

o Integrated cash
management system

o Well defined metrics

for

o Product and process

Design

Cash burn

Business continuity

Growth

o ISO Certified Internal

audit

o Borrowing
dependence norms
-

Cap on borrowing
from any single
credit granter (15%
of funding
requirement)
13

PORTFOLIO MIX

CONCENTRATION NORMS

State

Metric

13.6%
14.3%

Karnataka

State

75%
(100% for the state of
Odisha, Karnataka and
Maharashtra)

District

<3 %
(4% for Karnataka &
Odisha)

5%
(Only 5% of total operating
districts can go up to 10% of
Networth)

Branch

<1 %
(1.25 % for Karnataka &
Odisha)

1%
(Only 5% of the total
operating branches can go
up to 2% of Networth )

NPA

No disbursement to a
branch with NPA > 1 %

12.3%
12.8%

Maharashtra

12.3%
11.0%

Bihar

11.1%
9.0%

West Bengal

8.8%
9.5%

Uttar Pradesh

5.4%
6.0%

Kerala

4.8%
5.0%

Rajasthan

4.7%
5.5%

Madhya Pradesh

4.2%
3.9%

Jharkhand

Haryana

2.0%
1.6%

Punjab

1.7%
1.7%

Chattisgarh

1.3%
1.3%

Uttarakhand

0.9%
1.0%

Delhi

0.1%
0.1%

Himachal Pradesh

0.1%
0.1%

GLP Q2FY17
GLP Q2FY16

Note: Portfolio percentage are based on proportion of

gross loan portfolio of respective states.

POS % Cap of Networth*

<15%
(20% for Karnataka &
Odisha)

16.8%
17.3%

Odisha

% Cap on Disbursement*

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

*Subject to tolerance of 10%

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

14

COMPLIANCE WITH RBI NBFC-MFI

REGULATIONS

15

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

NBFCMFIs

RBI norms for NBFC-MFIs

BFIL compliance

Qualifying assets to constitute not less than 85% of its

Qualifying assets - 95%

Income generation loans 99%

total assets (excluding cash and bank balances)

At least 50% of loans for income generation activities

Pricing Guidelines

Income of
Borrowers Family

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

Ticket Size

<= 60,000 1st cycle

<= Rs.100,000 Subsequent cycle

<= Rs. 100,000

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

Without collateral

Weekly, Fortnightly and Monthly

Indebtedness

Tenure

Collateral

Repayment Model

<= Rs. 60,000

16

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

RBI norms for NBFC-MFIs

BFIL compliance

A. Margin cap 10% above cost of borrowings

B. Avg. base rate of top 5 commercial banks X 2.75
Lower of the A and B.

<= 1% of loan amt.

Actual cost of insurance can be recovered from

Pricing Guidelines

Interest Rate

Processing Fees

Insurance
Premium

borrower and spouse

Administrative charges can be recovered as per IRDA
guidelines

No penalty for delayed payment

No security deposit/ margin to be taken

Penalty

Security Deposit

Margin: 9.6% for FY16

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

BFIL has never taken

security deposit/ margin

17

ROBUST KYC NORMS AND CREDIT BUREAU COMPLIANCE

All enquiries are with either Voter ID or with Aadhaar which are
two most reliable IDs for this segment (Maximum among the large
MFIs, as per MFIN)
100% loan clients have either Aadhaar (89%) or Voter ID
(80%)

Consider all lenders (incl. Banks BC portfolio, NBFCs, MFIs) for

the 2 MFI criteria
100% bureau enquiries sent with 2 IDs: First in the industry
(started in Oct14)
Weekly submission to all 4 bureaus (Equifax, Highmark, CIBIL,
Experian)

Robust KYC norms

Setting benchmarks in
credit compliance

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

Mandatory
submission
of 2 KYCs *
21%
14% 15%
9% 8% 9% 8% 9%

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

21%

23% 23%

CB Rejection %

28% 29%
22% 24% 22% 23%

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

93% of credit
enquiry with
Aadhaar as primary
KYC

18

STRONG SOLVENCY AND SUFFICIENT LIQUIDITY

19

STRONG SOLVENCY AND SUFFICIENT LIQUIDITY

INR Crs.

Networth

Capital Adequacy

Cash and Cash Equivalent^

33.4%

2,514
RBI Requirement

1,629
15.0%

Q2FY17

Q2FY17

15-Dec-16
^ Excluding security deposit

Drawdowns (Post Demonetisation)

Sanctions in Hand*

Positive ALM
Avg maturity of assets
Avg maturity of liabilities

647

No. of
months

2,256
10.1
5.7

11-Nov- 16 to 15-Dec-16

15-Dec-16

Q2FY17

*Excluding undrawn cash credit limit of Rs. 119 Crs

20

ANALYSIS OF PAST EVENTS

21

COLLECTIONS GET BACK TO PRE-MORATORIUM LEVELS WITHIN 2-3

WEEKS OF MORATORIUM GETTING OVER
Moratorium
period

Duration

State/
Region

Reason

No of clients
covered

Repayments back to
pre-moratorium
levels in

1 weeks

West
Bengal

Durga
Pooja

6.4 lakhs

One week

Sep16

2 weeks

Bhagalpur

Floods

2,619

Four weeks

Aug16

2 weeks

Kolkata

Floods

5421

One week

Oct15

2 weeks

BR, JH,
KA, MP,
MH, WB

Dussehra

22.16 lakhs

One week

Oct13

2 weeks

Odisha

Floods

57,381

Three weeks

Oct13

2 weeks

West
Bengal

Durga
Pooja

44,236

One week

Sep13

1 weeks

UP

Riots

2,368

Three weeks

Oct16

22

DURING WIND-DOWN MODE OVER 2 YEARS, WE HAD 97% COLLECTION

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

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

Q2FY11

Q3FY11

Q4FY11

Q1FY12

1.9 million borrowers repaid loans

without incremental lending

Q2FY12

1,185

1,320

1,229

Q3FY12

Q4FY12

Q1FY13

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

in Millions

MFI Industry non- AP Portfolio Outstanding (Rs Cr)

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

during this period

5.2

Oct10

28,300

No. of non-AP members who availed loans

during this period

3.3

June12

14,600

No. of non-AP members who didnt

receive any incremental credit from BFIL
during this period

1.9

23

THANK YOU

For any investor relations queries, please email to investor.relations@bfil.co.in

24