creditacc gram Management discussions

I. Microfinance Industry: A Broad Perspective

A. Industry Overview: (Data as of March 31, 2023)

The Indian microfinance industry encompasses players from various segments catering to the unbanked and underserved sectors of the country including Non-Banking Financial Companies - Micro Finance Institutions (NBFC-MFIs), Banks, Small Finance Banks (SFBs), NBFCs, and non-profit MFIs. At the end of March 2023, the Indian microfinance industrys total gross loan portfolio (GLP) stood at ^3.48 trillion, registering 22.0% YoY growth and catering to 66 million unique borrowers. The NBFC-MFI segment has regained leadership status after 4 years with a 39.7% share of the universe portfolio followed by Banks at 34.2%, SFBs at 16.6%, and NBFCs/Others at 9.5%. A total of 211 lending institutions served microfinance borrowers - 82 NBFC-MFIs, 13 Banks, 9 SFBs, 69 NBFCs, and 38 others. The microfinance sector is highly regulated by the Reserve Bank of India (RBI) and supported by two industry self-regulatory organisations (MFIN and Sa-Dhan).

The new harmonisation guidelines applicable from April 01, 2022, have ushered in a host of new opportunities with customer protection at the core given that microfinance is a vital credit delivery channel across hinterlands. The first quarter of FY23 witnessed a major focus on implementing the new guidelines. Certain players requested the regulator to extend the effective date of guidelines resulting in six months extension of the adherence date to October 01, 2022. The industry quickly acclimatised to the regulatory changes and is on a path of accelerated growth. The introduction of a board-approved pricing policy has led to the introduction of risk-based pricing and transparency on pricing. The narrative of maintaining good credit discipline has become stronger with such borrowers reaping the benefits of lower charges. Further, the non-qualifying asset limit increased to 25% which has given additional headroom for MFIs to diversify into the non-MFI product suite. The RBI has pegged the annual household income limit at ^0.30 million for both urban and rural areas versus the previous guidelines allowing ^0.125 million for rural and ^0.20 million for urban areas. The incremental increase in income cap increases the scope of lending, with a higher number of borrowers falling under the microfinance ambit thereby enabling adequate credit to the customers. While the income levels have increased, the regulator has also introduced a balancing act by restricting the maximum FOIR of the household at 50%.

Despite rising inflation, the demand for credit in rural markets remains robust due to strong entrepreneurship opportunities, low penetration level and the underlying nature of microfinance loans used for income-generating activities. The models resilience is driven by customers involvement in multiple income-generating activities, especially from agri-allied activities that have better terms of trade in a rising inflation scenario resulting in a neutral or positive effect on their profit margins. Further, microfinance customers primarily conduct business in the essential services, thereby having minimal impact on their cashflows and weathering economic shocks.

B. NBFC- MFI

NBFC-MFIs, the market leaders, have shown strong growth momentum during FY23. The GLP grew 37.7% YoY to Rs.1.38 trillion while the borrower base grew 7.7% YoY to 28 million, largely reflecting the effect of pent-up demand and writing-off of delinquent borrowers. During FY23, a total of ^1.31 trillion was disbursed by the NBFC-MFIs, a 59.3% increase YoY, indicating that the disbursement levels have exceeded pre-covid levels. As the pandemic effect withers along with favourable guidelines in place, new avenues have opened up for NBFC-MFIs for increasing the client base through deeper rural penetration.

The NBFC-MFIs have time and again showcased their agility by quickly adapting to external macroeconomic disruptions. In FY17, following the demonetisation event, the industry shifted towards 100% cashless disbursements. However, given the customer ecosystem involving a high degree of cash involvement, cashless collections are expected to take longer to make material strides. The NBFC-MFIs currently operate through

18,739 branches, a 15.9% increase YoY and spread across the country, providing employment opportunities to 161,010 people.

The self-reported data of 49 NBFC-MFIs published in the MFIN Micrometer is categorised as Large, Medium, and Small according to their GLP. Companies with a GLP of more than ^20,000 million falls under the large category whereas companies having a GLP between Rs.5,000 million to ^20,000 million and GLP of less than Rs.5,000 million are categorised as medium and small entities respectively. Accordingly, there are 14 large, 11 medium, and 24 small entities operating of which 88% of the NBFC-MFI segment is held by large entities.

A profile of NBFC-MFIs is given below:

• Top Ten Large MFIs GLP contribute to 71.2% of the NBFC-MFI segment. As of March 31, 2023 rural portfolio contribution stood at 77.3%.

• Loans for Agri-Allied activities account for 63.5% of the GLP. Trade/services and manufacturing loans account for 34.2% while household finance loans account for 2.3% of GLP.

• Region-wise distribution of the portfolio is provided below.

• South:	26%
• West:	15%
North :	17%
• Central:	10%
• East and North-East:	32%

• Top 5 States - Bihar, Tamil Nadu, Karnataka, Uttar Pradesh, and Madhya Pradesh account for 50.2% of GLP. The top 10 States account for 79.2% of the total industry loan amount outstanding.

C. Industry Outlook

The microfinance sector continues to play a leading role in creating women entrepreneurs and formalizing the rural ecosystem by bringing them under the ambit of gross domestic product (GDP). The harmonization guidelines introduced have opened further growth opportunities by focusing on household needs. The NBFC- MFIs are expected to continue to lead the sector with risk-based pricing in place and spur product innovation given the increase in the regulatory threshold for offering non-microfinance products from 15% of net assets to 25% of total assets. With India being the largest microfinance market in the world and current penetration closer to 35-38% levels, there is a huge potential to provide formal credit across the hinterlands.

II. Competitive Strengths and Strategies

A. Higher Rural Penetration

Borrowers serviced by CreditAccess Grameen Limited (the "Company") in rural areas stood at 85% at the end of March 2023. Our modus operandi involves covering villages up to 30 Kms of radius from each branch office, foraying into unserved and underserved areas. The Company has continued to uphold its share in rural areas over the last five years. Details of the same have been provided in the below table:

Borrowers (Consolidated)	FY2019	FY2020	FY2021	FY2022	FY2023
Rural	82%	86%	85%	84%	85%
Urban	18%	14%	15%	16%	15%

B. Market Leadership

As of March 31, 2023, the Company on a consolidated basis held a 6.0% market share in the overall microfinance industry. The Companys market share across its top four states of business operations was 21.9% in Karnataka, 16.0% in Maharashtra, 9.1% in Tamil Nadu, and 6.7% in Madhya Pradesh. Within the NBFC-MFI segment, the Company maintained its position as the largest NBFC-MFI, with a 15.2% share of the total GLP.

C. Customer Connect

Customer centricity lies at the heart of our business operations, as we continue to follow the traditional Grameen model. Employees engage with customers at Kendra meetings largely on a weekly and bi-weekly basis, according to the borrowers convenience. These meetings serve as a platform for loan repayment, for customers to discuss their businesses, and to understand their needs and challenges. Along with loan-related transactions, employees impart knowledge to our customers on a plethora of vital topics such as financial literacy, responsible borrowing practices, hygiene, legal rights, etc. Additional programs such asjagruti, Social Awareness Campaigns, and training are standard practices to improve our customers overall exposure and financial resilience. Further, customer feedback is obtained at regular intervals, to enhance our existing product offerings and design new tailor-made products/services that address the specific requirements of our customers. This leads to higher customer satisfaction and loyalty.

D. Product Design - Customer oriented and Sustainable

Our unique product suite caters to the holistic needs of our clients. The Company positions customers at the centre of the brand strategy by understanding their requirements. Accordingly, the products are designed considering a "Life Cycle Approach" which involves supporting the borrowers requirements throughout their credit journey. Apart from our flagship product, Income-Generating loans, other loans such as primary education, higher education, medical emergencies, home improvement, emergency, water, and sanitation can be availed to serve the ever-changing demands of our borrowers through all facets of their lives.

Our company is always one step ahead of the curve in garnering a competitive advantage. In that regard, the customers can choose between weekly, bi-weekly, or monthly repayment frequency at the time of borrowing any loan product. Also, the customers have the flexibility to borrow as per their requirements within a predefined credit limit and further avail of multiple loans with varied sizes and tenures. We aim to strike a comfortable balance between retaining our high-vintage customers and adding new-to-credit borrowers. These are among the salient features offered by us, which are unique in the industry as well as worldwide, resulting in increased borrower retention, lower credit risk, and higher operational efficiency.

The Companys Vision 2025 entails being the preferred financial partner of Indian households at the bottom of the pyramid. In line with our agenda, we are strategically transitioning towards addressing the comprehensive financial needs of the entire household. By leveraging our extensive rural outreach coupled with close relationships with our target demographic, we have continuously evolved and identified certain products which are imperative in addressing their potential financial requirements. The company is currently running pilots in secured lending segments like gold loans, two-wheelers, and mortgages. While on the non-credit side, we are piloting innovative payments, saving, and investment products which is a true testament to the microfinance model going beyond the traditional credit delivery mechanism.

E. Employee Friendly Organisation

The companys employees are our strong suit and are considered the most valuable asset as the microfinance model is inherently a collection business. Over 90% of our field employees are freshers recruited from rural areas with diverse cultural backgrounds. Moreover, 50-60% of the feet on the street belong to the families of our clients. This provides them with direct access to the formal sector with career growth opportunities. Extensive on-site as well as classroom training programs are conducted as part of the employee onboarding process to inculcate customer-centric values that complement our company ethos. Effective compensation schemes are also designed that align with our performance-driven philosophy, including annual performance measurement and annual performance bonuses even at the loan officer level. Given the intensive travelling involved, field employees are fairly remunerated for the conveyance every week on a per kilometer basis recognizing their diligent efforts.

The Company is among the few MFIs in the industry following a 5-day work policy which has proved to enhance employee satisfaction and boost productivity. There are also various employee connect initiatives wherein we actively listen and obtain feedback to continually improve their experience. We made amendments to the leave policy by including six additional leaves annually especially for our women employees and further added a Special Occasion leave that can be availed once a year. The Company has been awarded "Great Place to Work" for the fourth time in a row and ranked among ranked among Indias 25 Best Workplaces in the Banking, Financial, and Insurance (BFSI) sector for 2023 by the Great Place to Work Institute, India. Our excellent people practices and unwavering commitment to their well-being have fostered an inclusive environment.

F. Seasoned and Stable Management Team

Our strategy of building unique DNA through hiring and grooming the right management team has helped us navigate through various negative externalities in the last 24 years. Exemplary leadership and rich experience have been instrumental in driving our growth and expansion, i.e., Our core operations leadership team has been associated with us over the last two decades signifying our strong culture. We follow the highest degree of corporate governance driving home loyalty factors in the form of business prosperity and sustainability.

III. Opportunities and Threats

A. Opportunities

The microfinance industry has accelerated the relocation of capital to the bottom of the social pyramid through innovative services over the years. Indian microfinance market is highly evolved with strong regulation and system support in place supported by the availability of digital KYC, bank accounts for all populations, high mobile penetration, and well-functioning credit bureaus. The rural economy contributes 47% to the GDP but the rural credit share stands at a mere 10%. With 66 million active microfinance borrowers in the country, rural penetration has not even crossed the one-third level. The future sustainable growth will be drawn from rural areas involving a higher proportion of new to credit customers as more households have become eligible for MFI loans especially due to the increased regulatory income of Rs. 0.30 million. India is also a very young country and will remain so for a significant time period enabling newer households getting credit established on a continuous basis.

The need for embedding environmental, social, and governance (ESG) practices in the culture has grown multifold in the past few years. NBFC-MFIs by virtue of their business model have contributed to many sustainable development goals. Rural India has a large scope in the sustainability realm where MFIs deep presence and last-mile connectivity makes a strong case to attract ESG funding whilst increasing investment resilience.

The new microfinance guidelines further pave the way to meet the growing aspirations of our clientele by offering non-microfinance loans to an extent of 25% of total assets. NBFC-MFIs have the opportunity to leverage the existing relationship by extending secured lending products such as affordable housing, two-wheeler loans, commercial vehicle loans, gold loans, and loan against property to ones falling above the microfinance income bandwidth. With the help of comprehensive credit bureau reports, lenders can gain better visibility on the existing loans of the entire household. The microfinance sector plays an integral role in creating a funnel for low-income borrowers to be eligible for higher ticket-size loans in the future through the creation of a credit footprint.

Apart from traditional credit products, the players have ample opportunities to foray into non-credit financial products by leveraging the established last-mile connectivity to their extensive borrower network. Products such as insurance, saving/investment and payments can be offered through strategic partnerships with various partners.

B. Threats

The microfinance ecosystem has demonstrated remarkable resilience despite facing three major macroeconomic disruptions in the last seven years. The Joint Liability Group (JLG) model has proven to be operationally robust, ensuring stable growth in normal times and minimizing steep asset quality impact in downturns.

In the rising interest rate environment, microfinance institutions, especially medium and smaller NBFC-MFIs face pressure on the cost of borrowing front leading to an adverse impact on their Net Interest Margin due to competitive pressure. With the new harmonisation guidelines in place, the industry is now better positioned from a risk-reward perspective and can adjust its interest rate accordingly.

The rising effects of global warming are evident from widespread natural disasters witnessed across the country from droughts, and heatwaves to extreme floods. While the low-income borrowers are particularly vulnerable given their lack of infrastructure to withstand extreme natural disasters, they have also been a segment who have been able to come back faster, given their high entrepreneurship skills, multiple income sources and agility. CA Grameen also avoids such risks as far as possible by geographic diversification through widespread district presence, careful choice of operating locations etc. NBFC-MFIs have the ability to create cutting-edge products going beyond cookie-cutter offerings to protect basic standards of living and smoothen income streams.

The microfinance industry has witnessed the entry of various conglomerates given a massive growth opportunity lying ahead resulting in increased competition and customers served by various entities. The business nature being unsecured lending always poses the risk of accurate mapping of income and debt sources. With new microfinance guidelines in place with a maximum obligation of 50% of the household income, anomalies have been taken care to democratise access to capital.

New Initiatives

A. New Product Introduction

Our customers are the biggest inspiration in our pursuit of designing new products by providing flexible solutions to meet their dynamic needs. We launched and piloted various products over the past 12-15 months to meet the increasing needs of our graduated customers. This includes individual unsecured business loans, mortgage backed higher ticket business loans, gold loans, and new two-wheeler loans. The new two-wheeler loans were recently launched and have received a phenomenal response from our customers. The AEPS enabled cash withdrawals and wage loss insurance product has also received a strong response in the pilot stage and will be scaled further in the coming financial year. We also launched a two-wheeler insurance product to protect customers against accident expenses/theft, etc.

B. Process and Technology Improvements

Our information technology structure is highly responsive to evolving business requirements and achieving growth targets. We were among the first in the industry to adapt to harmonization guidelines requiring tweaks to our processes whereby household income assessment was built into customer onboarding applications, instant loan eligibility was activated adhering to the FOIR limits, etc. We introduced customer specific QR codes for cashless collections and SMS in vernacular languages.

Among other initiatives, robotic process automation was expanded across multiple functions including credit bureau validations, loan sanctions, customer grievance handling, and business process management helping improve business scalability. We have introduced offline functionality to reduce dependence on the core banking solution (CBS) and our upgrading the CBS to allow functional flexibility and API integration.

C. Opening of New Branches

The Company opened 167 new branches in FY23 across Bihar (42 branches in 26 districts), Chhattisgarh (2 branches in 2 districts), Gujarat (17 branches in 10 districts), Jharkhand (5 branches in 3 districts), Karnataka (3 branches in 3 districts). Madhya Pradesh (8 branches in 8 districts), Maharashtra (16 branches in 11 districts), Rajasthan (28 branches in 11 districts), Tamil Nadu (9 branches in 9 districts), Uttar Pradesh (20 branches in 10 districts), and West Bengal (17 branches in 6 districts). The branch expansion was in line with the companys contiguous district- based expansion strategy, with a primary focus on new geographies.

IV. The Companys Operational Perspective A. Customers Profile:

The microfinance model thrives on social collateral where group members provide a mutual guarantee for each other, addressing the issue of information asymmetry. The table below shows, the distribution of the borrowers based on their vintage with the Company.

Borrower Vintage	FY2019	FY2020	FY2021	FY2022	FY2023
Less than 1 year	33%	17%	13%	15%	25%
1-3 years	34%	48%	52%	35%	22%
3-6 years	25%	23%	23%	33%	36%
6 years and above	8%	12%	12%	17%	17%

B. Profitability

For the period ended March 31, 2023, the Companys pre-provision operating profit grew 39.8% to RS 15,064.45 million as against ^10,775.31 million during the same period in the previous year. The Companys profit after tax stood at ^8,260.60 million as against Rs.3,530.80 million during the same time period in the previous year, an increase of 134.0%. Total revenue from operations for FY23 grew at a healthy pace of 29.1% to Rs.35,507.90 million as against ^27,501.32 million during the same period in the previous year. Total expenses stood at Rs.24,453.66 million as compared to ^22,693.43 million during the same period in the previous year, an increase of 7.8%.

C. Financial Performance

As of March 31, 2023, the portfolio yield stood at 18.9% as against 18.3% in the previous financial year. The cost- to-income ratio at the end of March 2023 was 35.6% as against 39.0% during the same period in the previous year. The operating cost to Gross Loan Portfolio ratio for FY23 stood largely stable at 4.7%, compared to 4.9% in the previous year.

D. Funding Trends

The changes in the outstanding borrowings from different sources during FY2023 in comparison to previous years can be seen in the below table:

In Rs. Million	FY2019	FY2020	FY2021	FY2022	FY2023 :
Public Sector Banks	1,217.06	44,770.53	25,052.30	30,470.70	28,847.42
Private and Foreign Banks	25,460.44	15,897.77	46,017.22	60,819.18	80,688.30
Securitization/ Direct Assignment (sold portion)	7,073.30	6,186.70	12,685.01	11,904.41	16,278.61
NCDs (FPIs) and ECBs	7,082.00	9,362.48	9,811.94	10,097.94	23,395.15
NBFCs, FIs, NCDs (Domestic) and Others	13,086.25	24,099.44	27,790.65	27,212.19	28,481.12
Total	53,919.05	100,316.92	121,357.12	140,504.42	177,690.60

E. Treasury and Cash management system

The Company has an integrated Treasury and Cash Management system that operates the complete cash/bank operations, handles pooling of excess funds from branches and funding disbursement, debt repayment, payments to vendors, employees for salaries, and investment of surplus funds, if any.

Ratios:

		(Rs. in millions)
Interest Coverage Ratio	FY2023	FY2022
PBT	11,054.24	4,807.89
Interest expense	12,128.84	9,841.40
EBIT	23,183.08	14,649.29
Interest expense	12,128.84	9,841.40
Interest coverage ratio	1.91	1.49
Debt Equity Ratio
Debt	163,122.57	129,206.87
Equity (incl. minority interest)	51,069.70	41,669.11
Ratio	3.19	3.10
Interest income	33,271.33	25,673.34
Income from direct assignment	1,190.06	699.89
Finance cost	12,128.84	9,841.40
Operating Profit (before other expenses)	22,332.55	16,531.83
Total Revenue from operations	35,507.90	27,501.32
Operating profit margin (before operating expenses)	62.89%	60.11%
Profit after tax	8,260.60	3,530.75
Net Profit margin Current ratio (Taken from ALM)	23.26%	12.84%
Current assets	130,458.47	106,875.13
Current liabilities	83,133.15	74,208.00
Current ratio	1.57	1.44
Return on Equity (PAT / Quarterly Average Total Equity)	17.97%	9.03%

F. Operational Trends:

F. Operational Trends

Particulars	FY2019	FY2020	FY2021	FY2022	FY2023	CAGR* (%)
Branches	670	1,393	1,424	1,635	1,786	27.78%
Districts	157	248	265	319	352	22.37%
Borrowers	2,469,837	4,055,486	3,911,619	3,823,724	4,264,269	14.63%
Loans disbursed (Rs.Millions)	82,212	103,892	110,112	154,663	185,390	22.54%
Gross AUM (Rs.Millions)	71,593	119,961	135,869	165,994	210,313	30.92%
Field Officers	5,768	9,688	9,559	10,770	11,354	18.45%
Total Staff	8,064	14,496	14,399	15,667	16,759	20.07%
Repayment Rate:	98.81%	98.61 %	92.21 %1	93.19%	97.31%	-
PAR (Rs. Millions):	579	3,671	9,040	8,088	3,124	-
Funds availed during the year (Rs. Millions)	50,931	81,011	80,658	101,114	134,324	27.44%

1) Since there was a loan moratorium applicable during Apr-20 to Aug-20, FY21 repayment rate is calculated over Sep-20 to Mar-21

*CAGR is calculated for the change during the last 4 years

Our borrower retention rate of over 84% in the past 5 years is a testament to our approach of creating women entrepreneurs by providingthem with suitable and affordable products. Our attrition rate has been largely arrested as we continue to foray into the hinterlands.

CA Grameen %	FY2019	FY2020	FY2021	FY2022	FY2023

G. Gross AUM and Borrower Distribution:

The Company has an operational presence in Karnataka (KA), Maharashtra (MH), Tamil Nadu (TN), Chhattisgarh (CG), Madhya Pradesh (MP), Kerala (KL), Odisha (OD), Goa (GA), Puducherry (PY), Jharkhand (JH), Gujarat (GJ), Rajasthan (RJ), Bihar (BR), Uttar Pradesh (UP) and West Bengal (WB). Our expansion approach is centered around a contiguous district strategy enabling cultural familiarity.

State-wise Gross AUM Distribution

	Consolidated Figures
(In Rs. Million)	FY2019		FY2020		FY2021		FY2022		FY2023
State	Gross AUM	% age	Gross AUM	% age	Gross AUM	% age	Gross AUM	% age	Gross AUM	/o age
KA	37,624	52.6%	48,020	40.0%	51,941	38.2%	59,639	35.9%	69,774	33.2%
MH	18,451	25.8%	28,969	24.1%	31,863	23.5%	35,684	21.5%	43,896	20.9%
TN	7,465	10.4%	23,894	19.9%	25,167	18.5%	34,581	20.8%	42,498	20.2%
MP	5,470	7.6%	9,141	7.6%	11,132	8.2%	12,238	7.4%	14,104	6.7%
OD	371	0.5%	2,408	2.0%	3,380	2.5%	5,026	3.0%	6,255	3.0%
BR			2,028	1.7%	3,156	2.3%	5,138	3.1%	9,343	4.4%
CG	2,044	2.9%	2,428	2.0%	2,683	2.0%	2,962	1.8%	4,341	2.1%
KL	105	0.1%	1,789	1.5%	2,440	1.8%	3,200	1.9%	5,242	2.5%
JH			394	0.3%	1,207	0.9%	2,267	1.4%	3,594	1.7%
RJ			176	0.1%	660	0.5%	1,605	1.0%	3,072	1.5%
GJ UP			167 72	0.1% 0.1%	601 441	0.4% 0.3%	1,071 1,579	0.6% 1.0%	2,208 4,159	1.0% 2.0%
WB			42	0.0%	363	0.3%	519	0.3%	1,221	0.6%
PY	53	0.1%	413	0.3%	362	0.3%	419	0.2%	488	0.2%
GA	11	0.0%	19	0.0%	22	0.0%	67	0.0%	119	0.1%
Total	71,593		119,961		135,869		165,994		210,313

State-wise Borrowers Distribution

Consolidated Figures
	FY20	19	FY20	20	FY20	21	FY2C	122	FY20;	!3
State	Borrowers	% age	Borrowers	% age	Borrowers	% age	Borrowers	% age	Borrowers	% age
KA	1,135,440	46.0%	1,261,247	31.1%	1,165,415	29.8%	1,077,335	28.2%	1,121,392	26.3%
MH	691,999	28.0%	903,757	22.3%	841,370	21.5%	791,560	20.7%	849,969	19.9%
TN	274,521	11.1%	1,113,385	27.5%	996,722	25.5%	911,649	23.8%	920,211	21.6%
MP	256,141	10.4%	323,098	8.0%	325,060	8.3%	312,475	8.2%	325,666	7.6%
OD	14,652	0.6%	121,438	3.0%	139,619	3.6%	149,699	3.9%	167,934	3.9%
BR			93,610	2.3%	130,165	3.3%	158,135	4.1%	234,518	5.5%
CG	91,129	3.7%	100,228	2.5%	89,670	2.3%	83,297	2.2%	101,870	2.4%
KL	3,549	0.1%	85,987	2.1%	98,408	2.5%	99,741	2.6%	121,665	2.9%
JH			14,329	0.4%	37,559	1.0%	70,224	1.8%	97,573	2.3%
RJ			6,182	0.2%	21,286	0.5%	51,256	1.3%	96,791	2.3%
GJ			6,164	0.2%	19,673	0.5%	37,448	1.0%	66,586	1.6%
UP			2,762	0.1%	14,803	0.4%	45,376	1.2%	107,713	2.5%
WB			1,366	0.0%	11,857	0.3%	18,936	0.5%	39,015	0.9%
PY	2,024	0.1%	21,123	0.5%	19,180	0.5%	14,909	0.4%	10,436	0.2%
GA	382	0.0%	810	0.0%	832	0.0%	1,684	0.0%	2,930	0.1%
Total	2,469,837		4,055,486		3,911,619		3,823,724		4,264,269

Product wise split of Gross AUM

(In Rs. Million)	Figures
	FY2019		FY2020		FY2021		FY2022		FY2023
State	Gross AUM	% age	Gross AUM	% age	Gross AUM	% age	Gross AUM	% age	Gross AUM	% age
Income Generation Loans	60,878	85.0%	1 05,470	87.9%	128,384	94.5%	159,490	96.1%	200,895	95.5%
Family Welfare Loans	928	1.3%	1,678	1.4%	232	0.2%	377	0.2%	668	0.3%
Home
Improvement Loans	6,433	9.0%	7,696	6.4%	3,108	2.3%	4,144	2.5%	6,977	3.3%
Emergency Loans	99	0.1%	126	0.1%	17	0.0%	28	0.0%	86	0.0%
Retail Finance Loans	3,255	4.5%	4,991	4.2%	4,128	3.0%	1,955	1.2%	1,683	0.8%
Total	71,593		119,961		135,869		165,994		210,313

Product wise split of Gross AUM

Figures
	FY2019	FY2020	FY2021	FY2022	FY2023
KA	30	30	31	31	31
MH	31	32	32	32	32
TN	30	36	37	37	37
MP	30	36	37	43	45
OD	13	24	24	24	24
BR	0	15	18	31	36
CG	17	19	19	20	22
KL	3	8	8	12	12
JH	0	14	17	19	21
RJ	0	11	16	22	26
GJ	0	8	10	20	25
UP	0	7	8	18	27
WB	0	4	4	6	10
PY	1	2	2	2	2
GA	2	2	2	2	2
Total	157	248	265	319	352

Number of Districts - District Exposure As % of Gross AUM

				Figures
	FY2019	FY2020	FY2021	FY2022	FY2023
<0.5%	105	186	205	281	290
0.5-1%	19	28	28	27	38
1 -2%	23	27	27	9	20
2-4%	8	7	5	2	4
>4%	2	0	0	0	0
Total	157	248	265	319	352

Number of Districts - District Exposure As % of Borrowers

				Figures
	FY2019	FY2020	FY2021	FY2022	FY2023
<0.5%	100	177	195	252	282
0.5-1%	25	40	46	45	52
1 -2%	22	27	21	19	16
2-4%	9	4	3	3	2
>4%	1	0	0	0	0
Total	157	248	265	319	352

H. Human Resources (HR)

The Company strongly abides by its Vision to be Committed, Reliable, Empathetic, Accountable, Transparent, Efficient and demonstrates learning & agility in business operations. Building an environment of trust and mutual respect is one of the companys constant endeavor. While there is a challenge in attracting the right talent as well as retaining them, the Company was able to build and implement practices that have helped in retaining talent. It is a constant effort to improvise from where the Company stands in terms of benefits, rewards, and recognition. The Company also has innovative benefits like gifts on birthdays, weddings, sibling wedding, and for children. While the 5-day week schedule of the company is unique for the microfinance industry, the Company has been providing other facilities like guest house arrangements for its entire field force. There has also been a systematic approach to increase the efficiency and support internal stakeholders using technology such as mobile apps and HRIS support systems.

HR Highlights

• 16,759 permanent employees on a consolidated basis as on March 31, 2023 with an attrition rate of 40.35%

No pending concerns under labour compliances, sexual harassment, and disciplinary issues

In-house Training

The in-house training team manages as well as provides the necessary training for freshers as well as people management trainings and leadership development training for mid-level managers. The training programs and talent development have enabled the Company to identify and nurture leaders who can take charge of the organization in the years to come.

This is apart from our regular requirements for operational productivity. Specific emphasis has been provided to train and test employees on the Code of Conduct, Client Protection Principles, and Anti Sexual harassment policy.

Some of the training programs that have been provided to employees are as follows:

• Basic training programs conducted for trainees in field operations

• Refresher training & product level training based on operational requirements Induction training for lateral staff hires

• People Management Program for field managers

• Departmental Process training and orientation programmes for new recruits and promoted employees

• Leadership training programmes for all manager-level employees

• Process enhancement workshops for the employees based on requirement

Training Type	Number of Hours	Number of staff trained
Refresher trainings - product, process, policies workshops	380	43,037
Induction training - new hires	576	11,517
Soft skills development trainings	88	4,446
Skill enhancement trainings	64	511
New Initiatives / Products trainings	48	29,894

I. Internal Controls and its adequacy

The Internal Audit department is guided by a philosophy of mapping emerging risks and potential opportunities with the strategic priorities defined. It gives advice and insights acting as a proactive measure while evaluating business practices. The internal controls defined at CA Grameen provide reasonable assurance to the stakeholders relating to the quality and effectiveness of the governance framework and risk management. We follow a robust internal control framework wherein the audit members are handpicked having an in-depth knowledge of operations. An in-house internal audit software platform enables managing audits across all branches, regional offices, field audits, and the Head Office with well-documented policies, procedures, and authorization guidelines in place. The entire branch audit life cycle is digitised being conducted every 60 days. The audited branches are assigned compliance scores based on the extent of adherence to systems, policies, and procedures. Time critical observations are escalated to the management on a real-time basis for immediate attention and action.

The internal audit function with strict accountability for confidentiality has unrestricted access to the Companys records, physical properties, and personnel associated with carrying out any engagement. The internal audit activity also has free and direct access to the Board. The significant findings and action points emanating from audit reports are reported to the Audit Committee on a quarterly basis.

J. Risk Management

The company has an enterprise wide risk-governance framework that monitors and analyse various risks. It also recommends risk management strategies and prepares stress tests and scenario plans to gauge risk appetite. Top risk events are prioritized based on frequency, ease of detection, and severity. The key activities of the risk management function include identifying material risks and measuring the companys exposure to them, monitoring any such activities posing a threat to breach board-approved risk limits, and establishing an early warning signal. We follow the Risk and Control Self-Assessment (RCSA) framework which is embedded into our overarching business strategy.

The Management Level Risk Committee comprising all department heads meets monthly to discuss and formulate mitigation strategies for any risk arising relating to their respective domains. It is reported to the Risk Management Committee of the Board of Directors every quarter. The Risk Management Committee of the Board comprises qualified directors who are aware of the risks specific to the Company and sectoral-related risks. The Board oversees the implementation of the risk management plan principally through the Risk Management Committee.

K. Information Technology

The Information Technology team in the Company has continually focused on implementing a centralized and consolidated Information System to enable a smooth and swift flow of information and data across the system. This has enabled the Company to control the cost of operations and provide improved services to customers. The Company has focused its efforts towards embracing state-of-the-art technology solutions to support the Companys growth and enhance the efficiency of its operations. The company has made significant progress on the enhancement of mobile device based data entry for customer on boarding, instant credit checks for new loan applications as well as field collections. All the field officers are provided with tablets for data entry and are enabled with android based apps for entry of loan collections, foreclosures, disbursements as well as for new customer on boarding.