Bajaj Finance Ltd Management Discussions.

Bajaj Finance Ltd. (‘BFL, ‘Bajaj Finance, or ‘the Company) is a deposit-taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI). It is a subsidiary of Bajaj Finserv Ltd. and is engaged in the business of lending and acceptance of deposits. The Company has a diversified lending portfolio across retail, SMEs and commercial customers with a significant presence in urban and rural India. It accepts public and corporate deposits and offers variety of financial services products to its customers.

BFL has two 100% subsidiaries (i) Bajaj Housing Finance Ltd. (‘BHFL or ‘Bajaj Housing), which is registered with National Housing Bank as a Housing Finance Company (HFC); and (ii) Bajaj Financial Securities Ltd. (‘BFinsec), which is registered with the Securities and Exchange Board of India (SEBI) as a stock broker and depository participant. BHFL started its business in the financial year 2017-18 (FY2018). BFinsec commenced its operations in the financial year 2019-20 (FY2020).

The COVID-19 pandemic and lockdown

We are amidst unprecedented times. The COVID-19 pandemic has spread across the world — leading to well above 4.7 million confirmed infections, over 315,000 deaths, enormous human suffering and a full stop on virtually all commercial and economic activities. Even India, apparently relatively fortunate up to now, has had 101,139 confirmed cases and 3,163 deaths as per COVID-19 Situation Report–120 of World Health Organisation (WHO) dated 19 May 2020. With lockdowns spreading across countries accounting for over 50% of the worlds gross domestic product (GDP), COVID-19 has caused disruptions on an unimaginable scale. Nobody really knows how long the pandemic will last; whether it will increase in the winter of 2020-21 and if so how, and what will be its final toll on lives and livelihood. With the impact of this pandemic still to play out, the scenario of eerily empty high streets, shut factories and stores, and literally millions being rendered unemployed together point to a single outcome — extreme stress for the global economy of the kind not seen since the Great Depression.

In India too, which implemented a lockdown since 25 March 2020, the pandemic has created shocks ripping through society and the world of business. The picture of millions of unemployed daily wage workers and their families trying to trudge back to their villages hundreds of kilometres away; shut factories and stores; empty construction sites; and a nation being deprived of its natural economic vigour are vignettes of this scourge. After a nationwide lockdown involving 1.35 billion people over 55 continuous days, the debate is now on how to gradually open the economy without seriously risking a major spike in infections —something that Indias frail medical facility can ill cope with.

The Government of India has announced lockdown 4.0 from 18 May 2020 till 31 May 2020. Containment zones in cities and metropolises continue to remain locked down and local authorities are to intensify focus on containment zones and the so-called ‘buffer zones, with some relaxations in non-containment zones. Efforts are being made to carefully open up economic activities including construction, factories, shops and stores across most parts of the country with adequate social distancing, use of masks and other stringent health protocols. Even so, returning to the pre-COVID-19 normal seems a long way away. The exit path from such a massive lockdown will be precarious with uneasy consumers, tricky health protocols and an irregular, downbeat business rhythm that will inhibit efficiency.

A group of empirically sound and carefully trained economists have been attempting to estimate what might be the impact of the pandemic in the financial year 2020-21 (FY2021). The consensus seems to be that real GDP growth will fall from 4.2% in FY2020 to (-)5% in FY2021. If it was to happen as predicted, this will represent the greatest fall in GDP growth since 1979-80, when real GDP growth plummeted from 5.7% in the previous year to (-)5.2%. According to this group of economists, Q1 FY2021 will show a sharp negative growth; Q2 FY2021 will see tortuous limping back; and H2 FY2021 will see a gradual pickup in growth which, unfortunately, may not be sufficient to prevent the full years GDP from a sharp contraction. Frankly speaking, we do not know. What we can say quite clearly is that FY2021 will be the most difficult year that we have seen for a very long time. Not just us in India, but across much of the world.

In response, Governments across the world have unleashed massive fiscal measures to protect economic activity and dramatically strengthen health services and testing. Central banks, too, have initiated multiple monetary and regulatory measures.

India, too, has initiated relief measures. The Government of India announced a slew of wide-ranging reforms across varied sectors amidst a comprehensive package aggregating Rs 20 lakh crore — or approximately 10% of nominal GDP — which covered among others (i) direct cash transfers and food security for vulnerable sections of society, (ii) collateral free loans and concessional credit to farmers and street vendors, (iii) enhancement of systemic liquidity by the Reserve Bank of India (RBI), (iv) special liquidity and partial credit guarantee scheme to provide liquidity to NBFCs, HFCs, MFIs and mutual funds, (v) 100% credit guarantee scheme for aggregate Rs 3 lakh crore of emergency credit lines by banks and NBFCs to their MSME borrowers and (vi) subordinated debt and equity support to MSMEs. The Government has also initiated compliance relief measures across various regulatory requirements. The RBI has also initiated several measures like reduction in policy rates, monetary transmission, credit flows to the economy and providing relief on debt servicing.

Some experts, however, believe that the measures announced by the Government are predominantly liquidity support mechanisms through banks and NBFCs, and constitute only a limited fiscal stimulus. Given the extended tenor of lockdown and severity of its impact on the economy, it is likely that the fiscal stimulus announced so far may not have the desirable effect on the economy. It remains to be seen whether there are other fiscal measures in the offing.

BFL and its subsidiaries took immediate steps to manage this force majeure situation, some of which have been:

• Keeping employee safety as the topmost priority, and so ensuring that all employees moved immediately to ‘Work-from-Home (WFH). All employees were advised to strictly follow lockdown guidelines of the Government,

• Activating the Companys business continuity plans. As a result, BFL and all its subsidiaries continued operating under a WFH protocol,

• IT team of the Company and its subsidiaries moved in swiftly to ensure availability of sufficient bandwidth, setting up virtual private networks and making available multiple platforms for collaboration using digital media,

• Triggering business continuity plans — for servicing and recovery, and

• Engaging all business partners digitally and through WFH protocol for business continuity.

The situation is still evolving, and it is not possible to hazard a guess on how this pandemic will evolve. On its part, BFL and its subsidiaries are focusing on capital preservation, Balance Sheet protection, conservative liquidity management, operating expenses management and strengthening collections.

Macroeconomic Overview

A brief summary of FY2020 and the emerging trends in the wake of COVID-19 pandemic are discussed below.

FY2020 began with an expectation that the year would witness a slowdown in growth owing to a significant moderation in economic activity. Recognising the economic headwinds, the Government of India undertook various measures to boost growth — which included a substantial tax relief to the corporate sector to boost investments. Even without the terrible effects of COVID-19, Indias GDP growth was rapidly slowing down.

Before the COVID-19 pandemic and lockdown, both the RBI and the Central Statistics Office (CSO) of the Government of India had revised the GDP growth rate downwards. The RBI changed its full year GDP growth estimate from an initial 7.2% to 5% in December 2019, and ascribed the tapering of growth to a tight credit market impacting fresh investments, weak capital expenditure and a slowdown in manufacturing. In a similar vein, the second advance estimates of national income for FY2020 released by the CSO on 28 February 2020 was substantially lower: GDP growth for FY2020 was pegged at 5% — a decadal low — compared to 6.1% in the financial year 2018-19 (FY2019); and growth in gross value added was estimated at 4.9% in FY2020 versus 6% in FY2019.

On 29 May 2020, the CSO released its estimates of GDP and GVA growth for FY2020 and the fourth quarter of FY2020. In this exercise, it also substantially revised downward its earlier estimates for the first three quarters of FY2020.

GDP growth was 5.7% in January-March 2019; fell to 5.2% in April-June 2019; then yet again to 4.4% in July-September 2019; followed by 4.1% growth in October-December 2019 and 3.1% growth in January-March 2020.

GDP growth for FY2020 was 4.2% — worst in the last 11 years.

Table 1 gives the data on real GDP and gross value added (GVA) growth over the last four financial years.

Table 1: Growth in Real GDP and GVA, India

FY2017 (3rd RE) FY2018 (2nd RE) FY2019 (1st RE) FY2020 (PE)
Real GDP growth 8.3% 7.0% 6.1% 4.2%
Real GVA growth 8.0% 6.6% 6.0% 3.9%

Source: Government of India, CSO. RE denotes revised estimate and PE denotes provisional estimate.

Retail inflation, measured by the consumer price index (CPI), peaked in January 2020 and then fell by a full percentage point in February 2020 to 6.6%. Fuel inflation increased sharply in February 2020, only to plunge in March with international crude prices plummeting as never before, including the brief phenomenon of negative prices for May 2020 futures. If the reduction in oil prices is allowed to pass-through, it will help to keep inflation down for at least the first half of FY2021. However, cash-strapped central and state Governments may not do so.

In line with slowdown in economic growth in FY2020, bank credit recorded a dismal 6.1% year-on-year growth as of 27 March 2020 — largely driven by growth in personal loans. Credit growth to industry and services has been decelerating sharply.

Systemic liquidity has remained in surplus territory since June 2019. The domestic money market conditions tightened considerably since the onset of COVID-19, with bond markets witnessing a sharp rise in yields on the back of sustained Foreign Portfolio Investor (FPI) selling. Continuous redemption pressures and an overall risk aversion have elevated yields on all fixed income segments like commercial papers and corporate bonds. Moreover, the recent action of one of the mutual funds to shut six of its open-ended debt schemes created a tizzy in the money markets. Thankfully, the RBI intervened and provided a special liquidity facility for mutual funds of up to Rs 50,000 crore through commercial banks. While this will ease liquidity pressures on mutual funds and provide confidence to financial system, it is definitely going to have an impact on pricing and flow of funds in money markets.

During the nine months ended 31 December 2019, BFL maintained its strong growth trajectory. It recorded a growth of 35% in consolidated assets under management (AUM), and 52% in consolidated profit after tax (PAT). The last quarters performance was impacted due to lockdown caused by COVID-19 which resulted in full years consolidated AUM growing at 27% compared to 35% in the first nine months; and consolidated PAT increasing by 32% versus 52% in first nine months. It was still a strong outcome given the difficult environment.

Having said this, the outlook for the coming year is expected to be extremely demanding. In the current situation, lending businesses face four daunting challenges of (i) disruption in business acquisition, (ii) providing customers adequate relief on their debt servicing obligations, (iii) dealing with a weakened customer service and debt recovery infrastructure, and (iv) continuing to service their own debt.

To overcome the COVID-19 crisis, Governments across the world will look to the financial sector to help revive their economies. Here, given BFLs healthy capital adequacy, strong liquidity position, low gross and net NPAs, access to retail deposits, large customer franchise, diversified portfolio mix, granular geographical distribution and robust risk metrics, the Company is better placed than many others in the NBFC space to capitalise on the opportunities that will emerge in what will possibly be a totally new business environment.

Industry Overview

The NBFC sector continued to grow its share in the financial services industry. Credit growth of scheduled commercial banks (SCBs) continued to moderate throughout FY2020. On 31 March 2019, growth in advances of SCBs was 13.2%. By 30 September 2019, this had reduced to 8.7% and on 27 March 2020, it was further down to 6.1%. SCBs also continued to face asset quality challenges in FY2020. Data published by the RBI in its Financial Stability Report dated 27 December 2019 show that NBFCs have outperformed SCBs on asset quality, as the figures below indicate.

Table 2: Comparison of asset quality of NBFCs and SCBs

31 March 2019 30 September 2019
Particulars SCBs NBFCs SCBs NBFCs
Gross Non-Performing Assets 9.3% 6.1% 9.3% 6.3%
Net Non-Performing Assets 3.8% 3.4% 3.7% 3.4%

Source: Reserve Bank of India, Financial Stability Report, dated 27 June 2019 and 27 December 2019.

While the importance of NBFCs in credit intermediation continued to grow, repayment default by a systemically important NBFC in September 2018 brought to focus asset-liability mismatches of the sector — where some NBFCs were more impacted than the others. To strengthen the asset-liability profile of the sector, RBI introduced a liquidity coverage ratio (LCR) requirement for all NBFCs with AUM of Rs 5,000 crore and above. The LCR regulation mandates NBFCs to maintain a minimum level of high-quality liquid assets to cover expected net cash outflows in a stressed scenario. The regulation also stipulates that NBFCs should attain LCR of 100% in a phased manner over a period of four years starting December 2020. It is a welcome regulatory change and will significantly strengthen ALM profile of the NBFC sector. BFLs liquidity buffer management framework exceeds these requirements even today — and demonstrates its strong orientation towards liquidity management.

COVID-19 further accentuated ALM challenges of the NBFC sector. The RBIs moratorium measures for customers is likely to put additional stress on many NBFCs. There is an asymmetry. On one hand, NBFCs have to offer such moratoriums to their customers; while on the other, their market borrowings must be repaid on due dates.

To ease liquidity pressure on NBFCs, the RBI has taken multiple actions including a Targeted Long-Term Repo Operation (TLTRO) for the sector of Rs 50,000 crore and a special financing window through SIDBI, NABARD and National Housing Bank (NHB) of another Rs 50,000 crore to enable financing NBFCs. It remains to be seen whether the RBI will open a direct window to support the NBFC sector.

The COVID-19 pandemic is also expected to result in a deterioration in the asset quality of the financial sector. NBFCs too will face similar pressures. Early indicators of non-delinquent customers opting for moratoriums reflect a considerable level of anxiety from customers. It remains to be seen how this anxiety eases when economic activities resume. A long-drawn lockdown or frequent lockdowns of economic activities may require the RBI to frame forbearance policies for impacted borrowers like a comprehensive one-time restructuring of loans without impacting asset classification. Such a one-time restructuring framework would enable financial sector to continue to lend and also provide customers adequate time to recover from the economic crisis and honour their obligations.

The Company

BFL enjoyed yet another strong year of performance aided by a diversified product mix, robust volume growth, prudent liability management, efficient operating costs and effective risk management. With a standalone AUM of Rs 116,102 crore and a consolidated AUM of Rs 147,153 crore, the Company has emerged as one of the leading diversified NBFC in the country today.

Consolidated performance highlights, FY2020

• Number of new loans booked increased by 17% to 27.44 million.

• Customer franchise grew by 24% to 42.60 million.

• AUM grew by 27% to Rs 147,153 crore.

• Total income increased by 43% to Rs 26,386 crore.

• Net interest income rose by 42% to Rs 16,913 crore.

• Total operating cost grew by 35% to Rs 5,662 crore.

• Total operating cost to net interest income improved to 33% from 35% in FY2019.

• Impairment on financial instruments was Rs 3,929 crore, which included a contingency provision of Rs 900 crore for COVID-19.

• BFLs consolidated net NPA at 0.65% was among the lowest across all NBFCs.

• Profit before tax (PBT) increased by 18% to Rs 7,322 crore.

• PAT grew by 32% to Rs 5,264 crore.

• As on 31 March 2020, capital adequacy was 25.01%, which is well above the RBI norms. Tier I adequacy was 21.27%.

• During the year, BFL raised equity capital of Rs 8,500 crore through the qualified institutional placement (QIP) route.

Present in 2,392 locations across the country, including 1,357 locations in rural/smaller towns and villages, BFL focuses on six broad categories: (i) consumer lending, (ii) SME lending, (iii) commercial lending, (iv) rural lending, (v) deposits and (vi) partnerships and services.

BFL is well capitalised with a capital-to-risk weighted asset ratio (CRAR) of 25.01% as at 31 March 2020. It remains one of the most capitalised among large NBFCs in India. During the year, it raised equity capital of Rs 8,500 crore through the QIP route.

BFL continued to prudently manage its asset liability management (ALM) with a strategy of raising long-term borrowings and maintaining a judicious mix of borrowings between banks, money markets, external commercial borrowings and deposits. It has a comprehensive liquidity management framework, and maintains an abundant liquidity buffer to manage liquidity risk. This has enabled BFL to overcome past and current liquidity stresses.

During the year, BFLs borrowing cost increased by 13 bps over FY2019. This was for two reasons; (i) elevated borrowing rates for the sector in the early part of FY2020 caused by default committed by a systemically important NBFC in September 2018 and (ii) conservative liquidity management stance of the Company to go long on its liability profile.

As on 31 March 2020, BFLs consolidated borrowings stood at Rs 129,806 crore.

The Companys loan book continued to remain strong as a result of its deeply embedded risk culture and robust risk management practices. BFLs consolidated net NPA at 0.65% is among the lowest in the NBFC industry.

Assets Under Management (AUM): A Snapshot

Chart A depicts BFLs standalone AUM over the last five years. Chart B shows the consolidated AUM.

Table 3 breaks down the AUM across the major business verticals.

Table 3: Assets Under Management

(Rs In Crore)
Standalone Consolidated
Particulars FY2020 FY2019 Change FY2020 FY2019 Change
Consumer B2B- auto finance business 13,085 9,726 35% 13,085 9,726 35%
Consumer B2B-sales finance 12,657 12,261 3% 12,657 12,261 3%
Consumer B2C businesses 30,514 22,551 35% 31,256 23,002 36%
SME business 19,256 15,678 23% 19,429 15,759 23%
Rural B2B-sales finance 2,669 2,142 25% 2,669 2,142 25%
Rural B2C businesses 10,659 7,101 50% 10,659 7,101 50%
Commercial lending 6,411 5,668 13% 6,411 5,668 13%
Loans against securities 4,818 6,359 (24%) 4,821 6,359 (24%)
Mortgages 16,033 17,185 (7%) 46,166 33,870 36%
Total 116,102 98,671 18% 147,153 115,888 27%

Business Update

During the year, the Company disbursed 27.44 million loans — a growth of 17% over FY2019. Its customer franchise as on 31 March 2020 stood at 42.6 million, or a growth of 24% over FY2019. Bajaj Finance is present in 2,392 locations across the country, including 1,357 locations in rural/ smaller towns and villages. BFL operates through over 114,400 distribution points across India.

Consumer Lending: consumer electronics, furniture, digital products, e-commerce purchases and daily spends financing

BFL continued to be the dominant lender for consumer electronics, furniture and digital products in India in FY2020.

It financed 13.4 million consumer electronics and digital products purchases in FY2020 compared to 12.7 million in the previous year, a growth of over 5%.

Its unique Existing Member Identification (EMI) card, with about 22 million cards in force, enables customers to avail instant finance after the first purchase across over 100,000 points of sale. In FY2020, EMI cards enabled BFL to finance over 13.6 million purchases, across all sales finance categories, namely consumer electronics, digital products, lifestyle products, lifecare, e-commerce and other retail spends. In aggregate, this represented an 18% growth over FY2019.

Bajaj Finance was the largest financier of Bajaj Auto motorcycles and three-wheelers in FY2020. It financed purchase of over 1.1 million motorcycles and about 187,000 three-wheelers in FY2020. This constituted over 54% of domestic sales of Bajaj motorcycles and 51% of domestic sales of Bajaj three-wheelers.

BFLs lifestyle financing business financed approximately 544,000 transactions, which represented a growth of 13% over FY2019. This included over 108,000 transactions of its recently introduced health care segment for elective and non-elective procedures — now contributing to nearly 20% of lifestyle finance business. To further the health care financing business and facilitate hassle-free processing of loans to customers, the Company has launched a ‘Health EMI Card in FY2020. This card comes with higher limit and customised health propositions.

Financing EMI card customers on e-commerce platforms for their various purchases has become an important business in the last two-three years. BFL expanded its online relationships from 19 to 33 partners. It financed over 2,563,000 transactions in FY2020 — which was a growth of 22% over the previous year.

The retail spends financing business offers easy instalment options to customers for small ticket purchases like fashion, eyewear, travel, insurance, tyres, car accessories and servicing, app based coaching and small appliances. The business is operational in 145 locations with a footprint of over 36,000 partner stores across India. BFL financed nearly 1.8 million purchases in FY2020 compared to approximately 1.5 million in FY2019.

Personal Loans

Personal loans cross-sell (PLCS) is offered only to existing customers of BFL with good repayment track record on their consumer loans. PLCS business is a pre-approved loan origination program and relies on risk analytics, campaign management and digital acquisition strategy to cross-sell personal loans to existing customers. This business has an optimal mix of salaried and self-employed customers. PLCS business grew by 38% over FY2019 to Rs 19,173 crore.

Salaried personal loans (SPL) is offered to affluent salaried customers with annual gross earnings of over Rs 600,000. The SPL business AUM grew by 31% over FY2019 to Rs 11,341 crore.

SME Lending

For Businesses

SME lending offers unsecured and secured loans to small businesses. SME lending consists of working capital loans and term facilities. Secured loans to SME customers are offered against their home, office or four-wheeler. SME Business loans AUM grew by 15% over FY2019 to Rs 11,930 crore. This business is present in over 1,100 locations in India. Secured loans to SMEs closed FY2020 with AUM of Rs 751 crore.

During the year, the Company has taken guarantee cover for portfolios worth Rs 3,582 crore under Credit Guarantee Fund Scheme for NBFCs (CGS-II) from Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) governed by the SIDBI.

For Professionals

BFL offers loans to doctors, chartered accountants, engineers and architects under this category. Professional loans consist of working capital loans and term facilities. Professional loans AUM grew by 39% over FY2019 to Rs 7,326 crore. This business is present in over 1,100 locations in India.

Rural Lending

The rural lending business is a seven-year old initiative. BFL offers all its lending and deposits products in small towns and villages in India through its rural lending business. In FY2020, BFL expanded its rural footprint by setting up branches in eight new states and union territories. At the end of FY2020, it was present in 1,357 locations across 21 states and union territories in India. The business had AUM of Rs 13,328 crore as on 31 March 2020 — up by 44% from a year earlier.

Commercial Lending

Commercial lending consists of the following products: loan against securities, loans to financial institution group (FIG), working and growth capital loans to auto component manufacturers and the light engineering industry, loans to speciality chemical and pharma industry and other mid-market companies. Commercial lending business closed FY2020 with AUM of Rs 11,229 crore. BFL witnessed a significant reduction in its loan against securities AUM due to volatile stock market condition in the second half of FY2020. It fully exited from warehouse receipt financing business in FY2020.

Deposits

BFL accepts deposits from retail and corporate clients. At the end of FY2020, BFL had a deposit book of Rs 21,427 crore, representing a growth of 62% compared to the end of FY2019. Deposits contributed to 21% of BFLs standalone borrowings versus 15% as at the end of FY2019. Within the overall deposits book, retail deposits grew 92% year-on-year to Rs 13,127 crore. To further facilitate this growth, BFL, in FY2020, as a test, launched 31 fixed deposits service branches across three large cities in India.

Partnerships and Services

In partnership with various financial service providers, BFL offers the following products to its customers: life insurance, health insurance, extended warranty, comprehensive asset care, co-branded credit card, co-branded wallets and financial fitness reports.

The Companys co-branded credit cards business in partnership with RBL Bank continued to grow in a robust manner in FY2020. The co-branded credit card is now offered across 102 locations in India. The number of cards-in-force stood at over 1.83 million as on 31 March 2020.

BFL continued to grow its co-branded wallet business by offering EMI cards in digital format. It closed FY2020 with approximately 15 million digital cards; and disbursed over 660,000 loans under its Rs 5K and Rs 10K loan offering on its co-branded wallet platform.

Financial performance

Table 4 gives BFLs standalone financial performance for FY2020 vis--vis FY2019

Table 4: Standalone Financials

(Rs In Crore)
Particular FY2020 FY2019 Change
Total income 23,834 17,399 37%
Interest and finance charges 7,857 5,939 32%
Net interest income (NII) 15,977 11,460 39%
Employee benefit expenses 2,295 1,720 33%
Depreciation and amortisation 271 137 98%
Other expenses 2,798 2,092 34%
Pre-provisioning operating profit 10,613 7,511 41%
Impairment on financial instruments 3,805 1,476 158%
Profit before tax (PBT) 6,808 6,035 13%
Profit after tax (PAT) 4,881 3,890 25%
Other comprehensive income/ (expenses) (114) 2
Total comprehensive income 4,767 3,892 22%
Earnings per share (EPS) basic, in Rs 83.25 67.52 23%
Earnings per share (EPS) diluted, in Rs 82.60 66.95 23%
Book value per share, in Rs 529.85 339.09 56%

Chart C depicts growth of BFLs standalone profits after tax over the last five years.

Chart C: Standalone profit after Tax (Rs In Crore)

Risk management and portfolio quality

Risk management

As an NBFC, BFL is exposed to credit, liquidity, market and interest rate risk. It continues to invest in talent, processes and emerging technologies for building advanced risk management and underwriting capabilities. Over years, sustained efforts to strengthen its risk framework have resulted in lower risk costs for the Company.

BFLs balanced approach to portfolio management coupled with a rigorous portfolio review mechanism has enabled it to pick up early warning signals and take corrective actions. The portfolio continues to remain healthy across most lines of businesses. With use of sophisticated analytics, BFL has maintained a healthy portfolio quality and takes risk mitigating policy actions with agility and precision.

A strong governance framework ensures that the Board of Directors and its committees approve risk strategies and delegates credit authorities. Robust underwriting practices and continuous risk monitoring ensure that portfolios stay within acceptable risk levels.

BFL has deeply invested in its risk organisation structure that includes dedicated credit risk units for each business vertical; business specific units such as underwriting, risk containment and fraud control; and horizontal risk analytics, business intelligence and operational risk management units.

Portfolio quality

BFL ended the year with a net NPA of 0.65% on consolidated basis. The standalone net NPA stood at 0.79%. On a consolidated basis, the Companys provision coverage on non-NPA assets, excluding the contingency provision, stood at 97 bps; and 159 bps including the contingency provision. Given the slowest GDP growth in last 40 years, FY2020 credit costs were higher than FY2019. BFL took several steps to manage its risk costs including lowering of AUM growth over four quarters of FY2020. It has also re-pivoted its mix towards lower risk assets like mortgages.

The Companys strategy of ‘acquire and cross-sell to manage cost and portfolio risk, based on the axiom that an existing customer poses significantly lower credit risk than a new customer, ensures lower risk across portfolios.

BFL has experience of lending to over 42.6 million customers as on 31 March 2020. Most businesses are focused on acquiring mass affluent customers — who represent bigger wallets, larger cross-sell opportunities and lower risk. The lending portfolio is diversified across various secured and unsecured products to meet almost all needs of the customer. The combination of a large franchise of mass affluent customers and multiple product offerings coupled with superior customer experience creates a strong cross-sell momentum, and thus reduces credit risk.

The Company has not only diversified risk across millions of customers and product categories but has also diversified its risk and portfolio in about 2,400 urban and rural locations in India. BFLs geographically distributed portfolio helps reduce concentration risks to the minimal.

The unprecedented health scare caused by COVID-19 which led to a countrywide lockdown is going to have a varying impact on different sectors of the economy. Salaried individuals may have to contend with a scenario of reduced income and/or job losses. Corporates, SMEs and MSMEs will struggle on account of reduced economic activities and business rhythm that is no longer efficient due to severe disruption in both demand and supply. All these will lead to major cash flow constraints and erosion in the asset value. These developments will, in turn, severely test the risk management framework across financial sector; and BFL will be no exception.

To provide relief on debt servicing obligations, the RBI has permitted financial institutions to offer moratorium to their borrowers on instalments falling due between 1 March 2020 to 31 May 2020. With uncertainties about the pace of easing of the lockdown restrictions, the time needed to restart the economy and attaining some level of normalcy, the servicing of debt obligation by these customers need to be monitored closely.

An analysis of the customer segments seeking moratorium and their past repayment behaviour reflects heightened anxiety from customer. This is borne out by our observation that nearly two-thirds of the customers seeking moratorium are those who had an impeccable repayment track record prior to COVID-19. Expectations of elevated default on timely payment of instalments and collection related constraints are likely to result in higher credit costs than witnessed hitherto. BFL has committed requisite investment to deepen its collections infrastructure to control its credit costs.

Based on early indicators of moratorium and delayed payment metrics observed in April 2020, the Company has made a contingency provision of Rs 900 crore for COVID-19 in FY2020.

Operational risk management

BFL identifies various operational risks inherent in its business model. These cover risks of loss resulting from inadequate or failed internal process, people and systems, or external events. It has a dedicated pillar — the Operational Risk Management Framework — to effectively identify, measure, report, monitor and control such operational risks.

Analytics

BFL uses business intelligence and analytics across all spheres of its operations. In doing so, it continues to democratise its analytical capabilities widely across the Company. It builds and deploys analytical models across new customer acquisition, cross-sell, propensity management, risk management, collections management and customer service

The Company has been always an early adopter of evolving technologies and analytical tools like Big Data, Cloud Computing and Open Source software like R and Python — which now allow access to statistical techniques that were not possible in the past. These have taken analytics and portfolio insights to a level where solutions are much more nuanced and specific. BFL remains fully committed to deepen and widen its analytics capabilities to further sharpen its competitive edge.

BFL has implemented various Machine Learning (ML) models in addition to classical logistic regressive models. It is also investing deeply in Artificial Intelligence (AI) for new acquisition and propensity management. These state of-the-art technologies enable decision engines with real time processing capabilities. These also enable unique customer propositions like ‘get now and ‘straight through processing to constantly push towards a smoother and frictionless experience for our customers. While doing so, BFL is conscious of customers privacy and ensures customer consent is obtained for any cross-sell offerings.

In FY2020, BFL hired more than 100 data science and technology graduates from IITs (Indian Institute of Technology) and other premier institutes in India. These graduates will deepen our ability to integrate data insights into decision processes and deliver cutting edge solutions.

Several solutions deployed last year using ML and AI for predictive insights have yielded positive outcomes. These have given the confidence to commit significant investments to further the use of these new domains. Here are some examples:

• ‘Data as Oil, an important initiative of FY2019, continues to focus on large volume of data capture and its effective utilisations for business and risk management. Significant investments have been committed to strengthen our data lake ecosystem and ML capabilities to enable data mining on semi-structured and unstructured data.

• BFLs entire data ecosystem and analytic workloads are now hosted on Microsoft Azure platform. This allows the computational flexibility to develop and deploy Big Data workloads.

• An expanding suite of statistical models for risk management across all stages of the credit lifecycle — acquisition, account management and debt management. With new geographies and distribution being added continuously, this also means that BFL has processes and governance defined to expeditiously modify and refine our risk scorecards to meet its growth.

• BFLs capability on risk analytics and scorecards helps adherence to the new expected credit loss (ECL) based provisioning requirement. This has also led the Company to re-define and strengthen its governance and processes around model monitoring and build controls around continuous validation of risk scorecards.

• Analytic solutions on product recommendation at point-of-sale, response propensity for targeted cross-sell, call volume forecasting for efficient capacity planning and the like are embedded in our business processes. We continue to refine and perfect these solutions on an on-going basis.

• Several Design of Experiments (DOE) and Proof of Concepts (POC) deployed using ML for predictive insights have yielded positive outcomes.

• Democratisation and adoption have been the mainstays of BFLs analytics journey. To further strengthen and enhance our understanding of ML applications and usage across the Company, BFL has invested in an internal learning facility called the School of Analytics.

Credit Rating and Asset Liability Management (ALM)

BFL enjoys the highest credit rating of AAA/stable from CRISIL, ICRA, CARE and India Rating for its long-term debt programme and A1+ from CRISIL, ICRA and India Ratings for its short-term debt programme. The Companys deposits programme is also rated the highest with credit rating of FAAA/Stable from CRISIL and MAAA(Stable) from ICRA. These ratings by credit rating agencies reaffirm the high reputation and trust BFL has earned for its sound financial management and ability to meet financial obligations.

BFL had been assigned a long-term issuer credit rating of BBB–/stable and a short-term issuer credit rating of ‘A-3 by S&P Global Ratings for its external commercial borrowings (ECB) programme. On 17 April 2020, S&P changed the rating outlook from stable to negative owing to tough operating conditions arising out of the COVID-19 pandemic. It should be noted, however, that BFLs rating of ‘BBB- is equivalent to Indias sovereign rating assigned by S&P Global Ratings.

The Company had a consolidated total borrowing of Rs 129,806 crore as on 31 March 2020. Its Asset Liability Committee (ALCO), set up in line with the guidelines issued by the RBI, monitors asset liability mismatches to ensure that there are no imbalances or excessive concentrations on either side of the balance sheet.

During FY2020, BFL established a secured Euro Medium Term Note (MTN) Programme for USD 1.5 billion on Singapore Stock Exchange. The MTN programme enables the Company to issue foreign currency denominated bonds in international markets. The Company continues to evaluate various options of diversification of liabilities sources including ECB. During the year, BFL raised its first tranche of fully hedged ECB term loans of USD 575 million, equivalent to Rs 4,082.66 crore.

During FY2020, the RBI sought to address NBFCs asset liability mismatches and introduced the liquidity coverage ratio (LCR) requirement for all deposit taking NBFCs, and non-deposit taking NBFCs with an asset size of Rs 5,000 crore and above. The new regulation mandated these NBFCs to maintain a minimum level of high-quality liquid assets to cover expected net cash outflows in a stressed scenario. The regulation also stipulated that these NBFCs should attain LCR of 100 per cent over a period of four years in a phased manner commencing from December 2020. BFLs liquidity buffer management framework is more than equipped to adhere and, indeed, surpass the requirements of this guideline.

BFLs robust liquidity management framework has ensured that it has sufficient liquidity to meet its debt service obligations, despite it having to offer repayment moratoriums to its customers on account of the COVID-19 pandemic.

Table 5 gives the behavioural maturity pattern of BFLs asset and liabilities, and depicts the prudent approach toward its ALM management. As can be seen, BFL has maintained significantly positive ALM position across all buckets as against 15% negative ALM position permissible under the current RBI regulations.

Table 5: Behaviouralised ALM snapshot as on 31 March 2020

(Rs In Crore)
Particulars 1 month > 1 to 2 month > 2 to 3 month >3 to 6 month > 6 month to 1 year > 1 to 3 years > 3 to 5 years > 5 years Total
A. Inflows
Cash and investments 12,517 1 1 4 120 2,115 437 5,560 20,755
Advances 6,584 4,116 6,262 13,863 19,566 42,699 16,116 7,851 117,057
Trade receivable and others 4,620 59 808 60 915 4,605 1,606 12,674
Total inflows 23,721 4,176 7,071 13,927 20,601 49,419 16,553 15,018 150,486
B. Cumulative total inflows 23,721 27,897 34,968 48,895 69,496 118,915 135,468 150,486
C. Outflows
Borrowings repayment 3,546 3,418 5,739 9,858 15,939 43,982 14,170 11,789 108,441
Other outflows 3,878 376 890 754 587 1,095 50 1,362 8,992
Capital reserves and surplus 33,053 33,053
Total outflows 7,424 3,794 6,629 10,612 16,526 45,077 14,220 46,204 150,486
D. Cumulative total outflows 7,424 11,218 17,847 28,459 44,985 90,062 104,282 150,486
E. Gap (A-C) 16,297 382 442 3,316 4,075 4,342 2,333 (31,186)
F. Cumulative GAP (B-D) 16,297 16,679 17,121 20,436 24,511 28,853 31,186 -
G. Cumulative GAP (%) (F/D) 220% 149% 96% 72% 54% 32% 30%
H. Permissible cum. GAP (%) (15)% (15)%

Till date, BFL has assigned Rs 10,603 crore of its receivables. No assignment was done in FY2020. The net assigned portfolio outstanding as on 31 March 2020 stood at Rs 2,685 crore.

Our judicious strategy of maintaining a longer duration for liabilities than assets, coupled with and an optimal mix of borrowings between banks, money markets, external commercial borrowings and deposits have helped us to effectively manage our net interest margin (NIM) throughout FY2020.

Technology

BFL has been at the forefront of technology adoption among NBFCs, and has continuously leveraged existing and emerging technologies to launch new products, enhance customer acquisition and servicing processes along with simplifying the back-office. In doing so, it has invested in tools, technologies and practices for robust and expeditious ‘Development-to-Operations implementation to enable delivery of applications and services at a high velocity. To facilitate rapid development and operational use of technology, BFL has restructured its technology organisation by hosting development, operations, quality assurance and security teams in a single unit to deliver fully integrated and tested application lifecycles.

We have deeply invested in Application Programme Interface (API) to integrate specialised applications with customer facing interfaces like web portals, app infrastructure and BOTS on to a micro services architecture supported by platform as a service (PaaS) infrastructure.

Investment in data technologies has accelerated our transition to the next generation campaign management, business intelligence (BI) and analytics. With a scalable cloud-based Enterprise Data Warehouse (EDW) architecture in place, BFL has now deployed the data lake infrastructure — with raw data getting streamed through ‘change data capture (CDC) technology from multiple online transaction processing system. This enables exploratory deep data analysis on the raw data as against pre-cooked and curated variables.

BFL is also actively investing and deploying capabilities in AI and ML in facial recognition, optical character recognition (OCR), natural language processing (NLP) and voice. These technologies will enable frictionless customer experience at various touch points. Some examples are as follows:

• Machine learning (ML): We have deployed advanced machine learning models in the area of risk management, fraud prevention, pre-approved offer generation, offer pricing and offer recommendation.

• Facial recognition: This technology has been deployed in our corporate office and over 180 branches for contactless access in the office premises. We have also introduced this in over 25 services branches for seamless customer recognition and service offerings. We are now running a pilot of facial recognition technology in select consumer electronics stores for differentiated and frictionless check-in experience for our customers.

• Natural Language Processing (NLP): BFL uses NLP to process unstructured text onto a structured dataset. With NCP, we can read through digital underwriting notes, bank statements, invoice data and derive data variables from plain text based information like chat-bots, which enriches our customer insights. With over 40 million interactions and our continuous investment in NLP Bots infrastructure, BFL is now transitioning to Voice Bots channels — and has already deployed more than 25 skills on Alexa and Google Assistant.

• Technology Innovation and Collaboration Center (TICC): We conceptualised, co-designed, developed and deployed a 15,000 square feet state-of-art innovation and collaboration center in Pune. TICC houses multi-mode collaboration zones and executive briefing centres, partner zones for displaying and demonstrating latest and emerging technologies, fintech demo floor for hosting tech start-ups, prototyping zones for research and faster production deployment, a knowledge hub warehouse of technological materials that are customised for BFL employees. TICC will accelerate innovation, collaboration and research in emerging technologies and enable faster production deployment.

Enterprise technology architecture is being rapidly modernised to address the need for consumerisation and manage the scale and agility requirements of the Company. This is in collaboration with global technology partners and start-ups. Bajaj Finance has deeply invested in cloud and data infrastructure, and has defined a roadmap for micro services architecture and core application modernisation. We follow the philosophy of distributed architecture to manage scale and agility.

Further, the Company is continuously working to transition our customer facing interfaces like web portals and Bots on to a micro services architecture with an auto scale layer supported by platform as a service (PaaS) infrastructure. This enables faster change management and provides ability to scale as well as to have rapid deployment.

With our scalable cloud based enterprise data warehouse (EDW) architecture, we have invested in real-time data stream ingestion technology for unstructured data analyses and re-marketing. BFL now runs large data workloads on Big Data infrastructure. Having the Big Data environment co-located with EDW has significantly powered customer segmentation, bureau time series, collection skip trace and de-duplication workloads.

In the wake of COVID-19, BFL swiftly leveraged its technological capabilities to ensure availability of bandwidth, setting up virtual private networks, making laptops available where needed and making available multiple platforms for collaboration and team meetings over digital media. This enabled continued operations under a ‘Work-from-Home (WFH) protocol. Simultaneously, BFL increased its thrust on digital capabilities to connect with customers for servicing and recovery during the lockdown period.

Customer service

We strive to create a culture of ‘Customer Obsession — by always listening to customers and driving continuous transformation to provide a frictionless experience across the lifecycle, from pre-disbursal to closure of a loan. We always aim to reduce the time to disburse loans with minimal documentation. And we have enhanced and introduced varied communication and service channels to keep our customers informed and instantly address their queries and requests.

BFL has adopted Net Promoter Score (NPS) — a comprehensive global methodology to measure customer loyalty — to gauge the outcome of its customer engagement efforts. This survey is conducted through an independent third party and its results play a central role in BFLs future planning process.

Our self-service chat Bot now provides support to customers across the BFL website, portal, mobile app and Wallet. We have also introduced an interactive voice based self service capability on Google Assistant and Alexa. These help customers in answering their basic queries. For non-digitally savvy customers, we have introduced a ‘Dynamic Missed Call Service for getting life-stage based details of latest relationships with BFL. To improve communication reach and effectiveness, we have also introduced customer communication on WhatsApp.

As mentioned earlier, during FY2020, BFL introduced its facial recognition technology to its customers in service branches across major cities. These facial recognition kiosks have provided superior customer experience to walk-in customers. We have also introduced various offerings in the language preferred by its customers. BFL provides critical documents like loan agreements, fair practice code (FPC) and branch notices in the language preferred by its customers. In addition, customer communications through digital channels like IVR and mobile apps are also available to customers in vernacular languages.

With COVID-19, the RBI initiated debt servicing relief to borrowers — where all commercial banks, co-operative banks, all-India financial institutions and NBFCs were permitted to give moratorium to customers in respect of all term loans instalments outstanding as on 1 March 2020. Accordingly, BFL has started offering repayment moratorium to its impacted customers to assist them in protecting their cash flows in these trying times.

Human resources

Our people are our key assets. In an increasingly competitive market for talent, we focus on attracting and retaining the right talent, and fostering a work culture that is always committed to providing the best opportunities to employees to realise their potential.

As on 31 March 2020, BFL, including its subsidiaries, had 26,969 full-time employees. It added 6,806 employees in FY2020.

We conduct an annual employee engagement (ESAT) survey, through Kincentric (earlier know as Aon Hewitt), a global leader in human resource consulting, to gauge satisfaction of our employees. Through a series of objective questions, the ESAT survey helps us to assess satisfaction levels of employees across three important dimensions:

(i) Say — do employees consistently speak positively about the Company to co-workers, potential employees and customers;

(ii) Stay — do employees have an intense desire to be a member of the Company and associate their future with it; and

(iii) Strive — do employees feel motivated to exert extra effort for the Company.

The FY2020 ESAT score saw a two percentage point increase to 91%. This places BFL in the top quartile of employee engagement across all industries in India.

We responded swiftly to the COVID-19 outbreak by adopting various measures to ensure health and safety of our employees. We cancelled all international trips, all physical trainings and conferences, curtailed domestic travels, and took extensive precautions like sanitisation of offices, availability of hand sanitisers and masks and operations in multiple shifts to ensure lesser number of staff — thus enabling social distancing. We have readied our offices to further ensure health protocols, such as making operational our Central Emergency Service Desk (CESD) into a 24x7 helpline, continuous communication on protection and social distancing, and self-declaration surveys for employees on their health status.

Awards

• April 2019: Ranked among the Top 25 Best Large Workplaces in Asia, 2019, (Rank 9) by the ‘Great Places to Work Institute.

May 2019: Recognised among organisations having more than 10,000 employees by the ‘Great Place to Work Institute.

May 2019: Recognised as one of the Best in the NBFC Industry by the ‘Great Place to Work Institute.

June 2019: Indias Best Companies to Work for 2019, by the ‘Great Place to Work Institute.

August 2019: Featured among the ‘Best Employers in India, 2019, by Aon Hewitt.

• August 2019: Leapvault Tata Institute of Social Sciences (TISS) Chief Learning Officers Silver Shield for simulation based learning program.

September 2019: Economic Times Awards for Corporate Excellence-Company of the Year for BFL.

September 2019: Financial Express (FE) Indias Best Banks Awards-Banker of the Year (2017-18) Award for Sanjiv Bajaj.

September 2019: FE Indias Best Banks Awards–Best NBFC of the Year 2017-18, for Bajaj Finance Ltd.

September 2019: CEO of the Year, financial services category–Business Today Awards 2019, Rajeev Jain, Managing Director of BFL.

December 2019: Best 50 People Capital Index Companies for 2019–Jombay.

Internal control systems and their adequacy

BFL has an independent internal management assurance function which is commensurate with its size and scale. It evaluates the adequacy of all internal controls and processes, and ensures strict adherence to clearly laid down processes and procedures as well as to the prescribed regulatory and legal framework. BFL has further strengthened its internal audit function by investing in domain specialists to increase effectiveness of controls. The Audit Committee of the Board of Directors regularly reviews the internal audit reports and the adequacy and effectiveness of internal controls.

Fulfilment of the RBIs norms and standards

BFL fulfils and often exceeds the applicable norms and standards laid down by the RBI relating to the recognition and provisioning of non-performing assets, capital adequacy, statutory liquidity ratio, etc. The capital to risk-weighted assets ratio of BFL is 25.01% (Ind AS), which is well above the RBI norm of 15%.

Bajaj Housing Finance Ltd.

Bajaj Housing Finance Ltd. (BHFL), a 100% subsidiary of BFL, was granted a non-deposit taking housing finance company license by the National Housing Bank (NHB) in September 2015 to carry the business of housing finance. BHFL started its lending operation from July 2017.

BHFL offers following products to its customers: (i) home loans, (ii) loan against property, (iii) lease rental discounting, and (iv) developer financing. It also has a dedicated vertical offering home loans and loan against property to rural individuals and MSME customers.

Home loans

BHFL offers home loans to mass affluent salaried customers in 32 locations across India for amounts ranging from Rs 3 million to Rs 15 million. It offers home loans for ready to move in homes as well as those under construction. It follows a micro-market presence strategy using a mix of direct and indirect channels. As at the end of FY2020, the home loans business had AUM of Rs 21,435 crore, a growth of 85% compared to the end of FY2019.

Loans against property

BHFL offers loans against property (LAP) to SMEs, MSMEs, self-employed individuals and professionals against mortgage of their residential and commercial properties. The LAP business is operational in 15 locations across India. It ended FY2020 with AUM of Rs 3,996 crore, a growth of 84% over FY2019.

Lease rental discounting

BHFL focusses on high net worth individuals (HNIs) and developers for their lease rental discounting needs with loan amounts ranging from Rs 5 crore to Rs 200 crore. It offers this product across eight cities in India. Moreover, it offers financing against lease rental cashflows of commercial properties occupied by prominent lessees under a long-term lease contract. The AUM from lease rental discounting grew by 72% in FY2020 to Rs 2,940 crore.

Developer financing

BHFL offers construction finance (CF) and inventory finance to small to mid-size developers with strong track record of timely delivery of projects and loan repayments. It is present in eight locations across the country. Developer relationships enable BHFL to acquire retail customers for home loans. Its AUM, as at 31 March 2020, stood at Rs 1,774 crore.

Rural mortgages

BHFL offers home loans and loans against property to salaried and self-employed customers across 73 small towns in India. Rural mortgages business operates at an average loan value of nearly Rs 1.3 million per customer. It closed FY2020 with AUM of Rs 1,629 crore

Tables 6 and 7 give the snapshot of BHFLs operation in FY2020.

Table 6: BHFLs Standalone Financials

(Rs In Crore)
Particular FY2020 FY2019 Change
Total income 2,646 1,150 130%
Interest and finance charges 1,616 685 136%
Net interest income (NII) 1,030 465 121%
Total operating expenses 339 297 14%
Pre-provisioning operating profit 691 168 311%
Impairment on financial instruments 124 25 396%
Profit before exceptional item and tax 567 143 297%
Exceptional item - 6
Profit before tax (PBT) 567 149 281%
Profit after tax (PAT) 421 110 283%
Other comprehensive income/(expenses) (1) (2) 0%
Total comprehensive income 420 108 289%
Earnings per share (EPS) basic, in Rs 1.12 0.52
Table 7: BHFLs Assets Under Management
(Rs In Crore)
Assets Under Management FY2020 FY2019 Change
Housing loans (including top ups) 21,435 11,584 85%
Loan against property 3,996 2,176 84%
Lease rental discounting 2,940 1,705 72%
Developer finance 1,774 705 152%
Rural mortgage loans 1,629 860 89%
Other loans 931 532 75%
32,705 17,562 86%

Bajaj Financial Securities Ltd.

Bajaj Financial Securities Ltd. (‘BFinsec), a 100% subsidiary of BFL, is registered with SEBI as a stock broker and depository participant. It started its business operations from August 2019. BFinsec generated a total income of Rs 11 crore and profit after tax of Rs 2 crore in FY2020.

Consolidated Financial Statement

Table 8 gives a summary of consolidated financial performance for FY2020, including that of BHFL and BFinsec.

Table 8: BFLs Consolidated Financials

(Rs In Crore)
Particular FY2020 FY2019 Change
Total income 26,386 18,500 43%
Interest and finance charges 9,473 6,623 43%
Net interest income (NII) 16,913 11,877 42%
Employee benefit expenses 2,549 1,939 31%
Depreciation and amortisation 295 144 105%
Other expenses 2,818 2,114 33%
Pre-provisioning operating profit 11,251 7,680 46%
Impairment on financial instruments 3,929 1,501 162%
Profit before tax (PBT) 7,322 6,179 18%
Profit after tax (PAT) 5,264 3,995 32%
Other comprehensive income/(expenses) (116) 0
Total comprehensive income 5,148 3,995 29%
Earnings per share (EPS) basic, in Rs 89.77 69.33 29%
Earnings per share (EPS) diluted, in Rs 89.07 68.75 30%
Book value per share, in Rs 538.4 341.4 58%

Key Ratios

Table 9 gives select key ratios for FY2020 vis-a-vis FY2019.

Table 9: BFLs key ratios on a consolidated basis

Ratios FY2020 FY2019
Net interest income to average loans 13.32% 12.40%
Total operating expenses to NII 33.47% 35.33%
Return on equity (ROE) 20.24% 22.48%
Capital to risk-weighted assets ratio (CRAR) * 25.01% 20.66%
Tier I 21.27% 16.27%
Tier II 3.74% 4.39%
Gross NPA 1.61% 1.54%
Net NPA 0.65% 0.63%
Provisioning coverage ratio (PCR) 60% 60%
EPS- Basic (Rs) 89.77 69.33
Diluted (Rs) 89.07 68.75

* These ratios are on a standalone basis.

Cautionary Statement

Some statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied.