AU Small Finance Bank Limited (AUBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to AU Small Finance Bank Q1 FY ' 22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aseem Pant, VP IR from AU Small Finance Bank. Thank you, and over to you, sir.

Thank you, Tami. Good day to everyone, and welcome to AU Bank's earnings call for the first quarter of FY '22. We thank you all for joining the call today, and we hope that you and your love ones are safe and well. As you might have noticed in our Q1 FY '22 invite, this time, the expected duration of the call is 1.5 hours. We will have a management team led by our MD and CEO, Mr. Sanjay Agarwal; our ED, Mr. Uttam Tibrewal; Chief of Strategy for Commercial Banking, Mr. Vivek Tripathi, Group Head of Branch Banking; Rishi Dhariwal; CIO, Mr. Ankur Tripathi; and lead Financial and Digital Inclusion, Mr. [ Lamda ] Sharma, share their perspectives on their respective businesses. This will take around 30 to 40 minutes, followed by Q&A for about 40 to 45 minutes. We have a few other members from our senior management team here as well. For the benefit of everyone, we kindly request everyone that the number of questions per participant be restricted to a maximum of 2 and join back in the queue or [ NIMAS ]. And if we can avoid repeating any question which has already been asked. With that, I request our MD and CEO, Mr. Sanjay Agarwal, to share his thoughts on the bank's performance and outlook.

Yes. Thank you, Aseem. Good evening, everyone. [Foreign Language] Thank you for joining. We sincerely hope that you and your dear one are doing well and keeping safe. It has been close to 6 quarters since the onset of the global dynamics. We stand in solidity with people for the loss of lives and livelihoods that is suffered globally during this time. With heavy heart, we would like to share that we lost 14 of our DSL colleagues during this pandemic. Even though we cannot fill the devoid, we are trying our best to support the aggregate families left behind. Safety of our employees is of paramount important to us. We are happy to inform you that 90% of our employees have been vaccinated with their first dose and 45% would the second dose. Quarter 1 of this year remained exceptionally challenging due to results known to all of us, but we demonstrated a very robust performance. I'm happy to share that entire team conducted themselves with a lot of commitment and courage, and I'm really proud of my team. The tensive caused by the second wave of COVID was for 6 weeks from mid-April to May end, but the impact of the lockdown was still June end. So the business has suffered for 8 weeks, but we all came back strongly. The major difference between last year and this year, as a financial institution, is that there was no moratorium this time. Hence, the customer demonstrated better financial discipline. However, the demand still has the [ forecast ] of potential [ curving ]. We received whole-hearted support from the government and the regulators in terms of relief, reforms and packages. Recently, the Ministry of MSME Real Estate, EPS status of the trading segment. It will boost our other income during the year and also ensure continuous flow of credit [ to 10 ] at competitive pricing. As a result in Q1, we grew our deposits by 38% year-on-year, reduced our cost of funds by 88 at this point year-on-year, grew our AUM by 22% year-on-year and asset quality, which is so important in this time, remain reasonably resilient despite the market volatility. We are very happy to share the launch of our digital bank, AU 0101, retail banking and credit card in this quarter. Going forward, we have vital focus area, which I want to elaborate. The #1 is scaling retail-focused and sustainable liability franchise. We manage the overall growth in our liabilities in the last 5 quarters with focus on retail. Last quarter, we calibrated it considering the muted divestments and managing the cost side. I'm happy with how we are putting a matter to [ magnets ] by putting in place many SOPs, adopting insights and effective use of data, thereby, we're building the right way to work. We believe that our deposit franchise is on the right track. We are keeping a balance between growth and cost. We believe our CASA issue, CD ratio, cost of money and ALM are going in the right trajectory. We have a lot of confidence that we'll continue to grow as a deposit franchise, balancing all these sectors. More on collaborative franchise will be narrated by Rishi. The #2 priority for us is to drive the sustainable growth from our asset products and customer -- the similar customer segments. Our historical approach to assets remain small digit size falling from the initial buffers, so lending and risk-based pricing. And this really has helped us to emerge much stronger from this once-in-a-century pandemic. Our performance, our customer behavior during these challenging times have boosted our confidence and will continue to drive our asset growth by focusing on existing products, which are Wheels, SBM, home loan, business banking and agri banking. And of course, we'll deepen our penetration in our identified customer segments and markets. More on the asset strategy will be covered by Uttam. The collection actually was in focus for the entire business team throughout the last quarters. We touched base with all the customers and understood their presence with this situation. Due to lockdown restrictions, businesses were impacted. We stood beside our customers with a solution-oriented approach and provided necessary support after understanding each customer's business situation. In this quarter, despite a lockdown of almost 60 days, we were able to manage our asset quality. We restructured 1.9% of gross advances in Q1 FY '22, which we feel is quite acceptable based on the current scenario. I'm happy to share that our customer responded well and so did our team. Our customer has shown a strong intent to repay their loans, which has resulted in significantly better collection efficiency in June and July. The availability of retail legal recourse in July has ensured that customer, of course, prior to the resolution of its dues which resulted some collection activity in 40% of our NPA accounts in July. In my opinion, this is the first quarter since March '20, in which we are able to actually recover our dues on equal terms. Adding more color on the asset quality will be given by the Vivek. The most important thing, which we are all building is our tech ecosystem. Amongst the learnings on the pandemic, the one that emerged on top is the importance of technology. Though we always focusing on investing in technology, but recently, we have made significant strides towards becoming a tech-led bank. Our strategy around technology has 4, 5 pillars. One of them is digital; second is digitization/automation; third is data and its analytics; fourth is IT [ infra ] and security; fifth is digital marketing. As for analysis, there are likely to be [ 15 ] digital-first families in next 10 years. And for them, banking needs to be digital, too. As the banking is all about us in the coming times, will be defined by convenience, availability, speed, security, flexibility and being customer obsessed. These are the foundations on which we have designed our digital bank. The best part of the last quarter in our digital journey is that we have launched our digital bank, that is AU 0101. And we are all very excited in feel about it. This app offers solution around savings in FDs, credit card, loans, investments, insurance, bill payments and other lifestyle solutions like cab and flight bookings, recharge and tax payments. We are getting tremendous response for this. We now offer multiple channels of digital and contactless banking like video banking, WhatsApp banking, [ checkout ], which enable our customers to fulfill their banking requirement from the comfort of their living rooms. We have also launched credit cards for our customers. I'm happy to share that we are the first and only small finance bank to have its own credit card and that one we [ won ]. To date, we have issued 25,000 around it. We also have restored one [indiscernible] by Q1 and are filling that up multiple this year. I personally believe that retail bank is a way forward, and it has to be supported by data and data analytics, which we are working upon. More will be communicated by Ankur in his passthrough. For 4, 5 years around how we empower our team and made them more capable, right? We hired close to 3,000 bankers in this quarter, including the tax team of senior management. However, the uncertainty due to pandemic with appreciation around the third wave, combined with the heightened competition in the SMB space, those are the challenges in terms of hiring, relocating and obtaining talent across the country, but more so at Jaipur. We are becoming the preferred pushing ground for many banks, NBFCs and fintechs. This remains an ongoing challenge, which we are trying to address. However, we continue to see some churn, including at senior level. The most important thing is to create a brand. The first [indiscernible] is around creating a brand awareness around AU. We believe that a strong brand can be a significant enabler for a bank to achieve its long-term objectives as it will enhance the awareness of the bank, its visibility, increased customer loyalty and help in attracting and retaining talent. I'm very happy to announce on this call that we have onboarded Mr. [ Amit Han ] and Madame [indiscernible] as our brand endorsers. We are going live with our brand campaign in next couple of weeks. The most important purpose for being a small finance bank is our commitment towards ESG goals. Wheel has been socially inclusive organization by design. Our business model has been focused on lending to the underserved segments in rural and semi-urban [ developments ], thereby creating employment, empowerment and developing financial inclusive clusters. Recently, we received a special award as the best-performing SMB from NABARD, which recognized our efforts in facility and agriculture projects, driving financial inclusion and enabling technology adoption. More on financial inclusion and CSR will be covered by [ indiscernible]. As we speak today, I see that things are settling down quickly. July was better than June, and we hope that coming month will be far better in terms of a life with mass vaccination drives and livelihood with demand picking up, but this is all subject to how the third wave spans out in incoming months. The growth momentum in the country has largely recovered from the slump of the second wave and looks on course to meet RBI GDP growth forecast around 9.5%. CapEx has picked up, especially for the SMEs, where we are seeing brownfield and greenfield expansions. I strongly believe that India is only [ short ] of creating strength through resilience and a strong comeback. However, we still have to remain cautious in the next 3 quarters, expecting the impact of potential third and fourth wave. To sum up, I would like to say that we are cautiously optimistic, happy with how we have handled the roller coaster ride of last 6 quarters. And while we hope for the best, we have prepared for the worst. Quarter 1 and July 1 -- July gives me the confidence that light in the tunnel is slowly visible. We are all well positioned to make the best use opportunity in this country and the banking platform has to offer. We are now 3 quarters away from the becoming eligible to apply for the universal bank license, and we will take the right call at the right time. We are happy and grateful as how the 5-year journey is getting completed and how we are doing as a bank. This brings to the end of my time. Thank you, and stay safe. Handing over to Uttam for his business outlook on assets. Thank you so much.

Thank you, Sanjay. [Foreign Language] Good evening to all of you. The quarter gone by has been one of the most challenging in terms of human loss and emotional vulnerability. The pandemic and its effect on society at large has been discussed in much today. Over the next few minutes, I am going to share some ground realities from our key businesses, Wheels, [indiscernible], housing, business banking and agri banking. Of course, I would like to extend my gratitude towards every AUI who stood from on ground with customers during this tough time. Our own employees by the sales service of collections was fully operational during the quarter with one mission, to help customers find solutions and ensure that portfolio quality is paramount. While the situation [indiscernible], our customer portfolio is lower than expected at around 50% to 60% of the takeover level. The majority of the customers are suffering their business expansion plans, nearing the possibility of a third wave. The collection momentum in July has given us confidence to look forward for the remaining year, of course, asserting that we have to live with this and the impact may not be severe. I'm excited around the opportunity of all our asset businesses in the post pandemic world. I'm happy to share some key insights on each of our businesses. First of all, Wheels. Wheels financing is our flagship and largest business for the bank where we have more than 25 years of experience. In line with the market, NPAs in this book is currently elevated to 5.9%, but we remain hopeful that opening up of the economy and resumption of certain segments like taxi and commercial passengers will aid resolution in coming quarters. We have already seen some traction in July. At INR 40,000 crores of AUM across 6 lakhs customers, our Wheels business still remains relatively small compared to the larger players in this business who have AUMs over the -- upward of INR 50,000 crores. We believe we can continue to grow significantly above market in coming 2, 3 years once the situation normalizes. Demand in new vehicles is expected to remain resilient with COVID-induced restraints for personal vehicles as against shared mobility. OEMs remain bullish, and indicators like advanced bookings, waiting periods, et cetera, are all quite positive. Similarly, used car market is expected to continue to grow at higher than new car market. Contribution of tractor segment has now reached to our 8% in base portfolio, and tractor demand is likely to be supported by a car [indiscernible] output, [ record ] procurement, favorable crop prices and expectation of normal monsoon for a third year in a row, all supporting rural customer sentiment. 2-wheeler is a fairly new segment for us, and we will continue growing cautiously in this business. We also remain watchful of the upcoming opportunity in EV space and are cautiously starting funding there. We believe there will be good demand for EV in coming times. Phase 2 and state subsidiaries are making these vehicles affordable, and there is a inclination in buying these. We are also looking at digital as a medium for enhancing customer experience, and also automating and digitizing our internal processes to drive efficiency and cost optimization. We are building customer journeys, partnering with OEMs like Maruti and [indiscernible] analytics for 3 approved offers on AU 0101. Further, talking about our SA business, it is our own product. There are unique features like low-ticket size, 50% [ ICVs ], lending to unorganized MSMEs for business deposits and secured by collateral. It is a highly generous and well-diversified business with no dominant segment of [indiscernible]. This book has now scaled to between INR 40,000 crores AUM across 1.5 lakh on a semi business use. And has remained one of our most stable and resilient businesses with NPA contained at 4.2%, even during such a devastating pandemic. We will continue to target profiles, which performed relatively better during the pandemic, like FMCG retail tables, grain merchants, foods and vegetable distributors, agricultural-related equipments, [ data ], shops and more. We are also focused on increasing the business share from our EC states of Maharashtra, Gujrat, Himachal Pradesh, Haryana and Chhattisgarh. While our core SBL markets of Rajasthan [indiscernible] provide steady growth, we also look to enter some new states like UT in near future. We have launched new diesel onboarding application battery, embedded in handheld device for improving efficiency of file loggings and processing. This eventually leads to enhancement in productivity, reduce chart and cost optimization. Moving on to home loans. We restarted our housing finance business on the banking platform about 3 years ago and have now built a portfolio of at least INR 1,400 crores onboarding 13,000 customers. Between the current portfolio and our [indiscernible] subsidiary AU housing, the management has more than a decade experience in the housing finance market, and we are now well positioned to take advantage of the market demand. Growth in this business is a matching progression for the team, with a deep understanding of customer behavior, understanding of various local nuances with decade-long leadership with the market participants. At present, we are operating in 7 states and offer home loan at 190 plus locations, and our [indiscernible] branches agreement. We do our asset business from 600-plus locations, and thus from here on, on expanding home loans will be on a plug-and-play mode. Our reducing cost of funds also give us an opportunity to tap into the better credit profile customers. Also with radar stabilizing and providing for better control over builder projects, we are also looking at increasing our share in good projects as we move forward. Overall, we have a small AUM of INR 1,400 crores with stable team, policy and process. We have more than a decade of experience and relationship in this business, and our opportunity to expand our home loan offering to all our 600-plus locations from the current 190 odd. We believe the opportunity is really big for this business, and we can build a strong housing franchising in AU over the coming few years. Further, our 2 main businesses on commercial banking platform are business banking and agri banking, which we started on our banking platform. And after 4 years, the team looks well settled. Product policy and processes have all been put in place, with business performing resiliently during the COVID-induced pandemic. We have slowly built a gross advance book of about INR 50,000 crores in these 2 businesses apart from a significant long-term base business. Both these businesses provide strong key opportunity in the form of nonfund base lending and production banking. The bank has onboarded more than 6,000 MSME -- SME customers in these businesses in the last few years and are also working with the bank branch banking team to convert them in liability customers, helping our car and [indiscernible] businesses. We will continue to grow this segment by focusing on expanding the geographic footprint, differentiating ourselves with servicing and providing [ bespoke ] solutions to MSMEs and focus on liability and transaction banking business from these customers. With our declining cost of funds and [indiscernible], AU is well positioned to take advantage of this up cycle and grow this business. Among the new businesses, while we do scale our credit card business, initially focusing on [ repeating ] customers, others like personal loans, gold loans, et cetera, branch tech products, where we want to service all the requirements of our deposit customers. All in all, our asset franchise is shaping up quite well with a mix of new and old businesses, all designed to capture market share, supported by stable team, existing cost of funds, faster adoption of technology in our daily working, our ground connectivity and our increased focus on penetration with our non-Rajasthan geographies. I'm personally very excited to lead this business and look forward to sharing more with you in coming quarters. With this outlook, I will now invite my colleague, Vivek Tripathi, to share our views on the asset quality of these businesses. Thank you. Stay safe.

I'll be giving a brief perspective on asset quality. Most of our borrower base is self-employed and running small business [indiscernible] segments. Therefore, was significantly impacted during the first and second wave of the pandemic. However, soon after the mobility improved and the businesses are allowed to open up, we saw collection efficiency is bouncing back to normal levels in both June 2020 as well as in June 2021. This time, pickup in collection efficiency was steeper compared to last year. The collection efficiency and customer activation numbers of June and July are in line with our pre-COVID levels, which is Feb, March '20. The collection efficiency in June was at 114% compared to 95% and [ 94% ] level in April and May. Further, collection efficiency in July '21 remained strong at 110%. Similarly, the customer activation has also improved to 92% in June and July as compared to 87%, 88% in April and May. On a gross NPA part, our GNPA remains stable, in fact, reduced marginally from INR [ 303 ] crores to INR [ 15 96 ] crores in absolute terms. However, situation remains fueled and that if there is no COVID and no further lockdown happens, then as of now, it looks to be under control. And July collection efficiency numbers also support the opposed statement. On the restructuring front, since there was no moratorium unlike Q1 FY '21, therefore, customer has to approach us for restructuring, and we have upgraded these customers as per government and regulatory requirements. We are seeing now significant tapering of demand by borrowers as situation is improving. Furthermore, only 1.9% of book avail restructuring in Q1 compared to 11% who had availed complete moratorium during FY '21 -- in [ Q1 ] FY '21. The bank has done INR [ 6 58 ] crores of standard restructuring in Q1. And on June 30, the bank has total of INR [ 165 ] crores of standard restructured book, which is 3.6% of our growth advances. Out of total growth advances on 30th June, 58% were ordinated before March 2020 and [ 32% ] were ordinated post-March 2020. Further, post-March 2020 book is 92% current and contributes only 2% of GNPA and 2% of restructured assets. The resilience of this book shows that we calibrated approach of underwriting during pandemic times has validated our understanding of season customer segment. We have also been cautious on fresh exposures to sectors certain hospitality, education, food and travel, which are yet to recover from impact of COVID. On moratorium base as on 30th June 2021, bank had outstanding 4 and 4-plus months moratorium book of INR 2,900 crores, which contributes roughly about 79% of bank's NPA and 72% of restructured assets. However, 45% of this book is current and another 20% will first in second bucket. Therefore, we expect further [indiscernible] to be minimal from this growth. Bank has gone cumulative [indiscernible] disbursement of INR 871 crores until June 2021. Out of this, INR 302 crores was done in Q1. Our security enforcement bank has a limited legal report for security enforcement during April 2020 to June 2021, which is a 15-month period, both due to internal [ goal ] to facilitate customers as well as [indiscernible] of judiciary and administration. However, the customer intends to repay their loans has shown very strong traction, also resulting to a significant better collection efficiency. Further, availability of legal reports to the bank have ensured that customer accord priority to resolution of their deals. This has resulted in some level of activity in almost 30% to 40% of R&D accounts in July 2021. On [indiscernible] part the bank is carrying a provision of INR [ 730 ] crores against GNPA of INR [ 14 96 ] crores with PCR of 39%, provision of INR 207 crores against restructured assets of INR 265 crores. As for our [indiscernible] of INR 190 crores, bank has already provided accelerated provisions of INR 430 crores on NPA [indiscernible] of the regulatory requirement. Our NPA book is quite granular with ATS of almost 1.5 lakh in deal, which is secured by [indiscernible], around 7 lakh, which is again [indiscernible] where average [indiscernible] NPA book [indiscernible] is around 29%. Therefore, as [indiscernible], the credit loss has been low both these books. Similarly, on restructured, book is very, very granular, and that's why revenue [indiscernible] asset [indiscernible] are occupied collaterals. Therefore, we feel the current provisions are adequate to cover any [indiscernible]. It is also important to note that a significant number of our customers clear all their dues on the collection effort or security [indiscernible] notices. On residual part, there, we are willing to improve our security. Our historical repo loss since FY '19 has been around 35% in vehicle or in POS loss on settlement or property disposal, SBL, has been around 20%. Therefore, keeping both these sectors in mind, we feel [indiscernible] the PCR of 49% is quite likely to be lower than sufficient to cover any credit loss arising from this group. Further, [ total loss ] of this bank is also carrying a contingency provision for any unforeseen stages or unfolding [indiscernible]. So that's it from my side. Handing over to Rishi.

Yes. Thank you, Vivek, and good evening, everyone. The liability team has the onerous task of ensuring uninterrupted services to customers as part of essential services. My gratitude to the entire team for their commitment in serving customers in the face of great difficulty and exposure to risk. In its fifth year now, branch banking business is coming of age in AU and made these very exciting times for our 6,000-plus team members. Launch of AU 0101 super app, of credit card and the upcoming brand campaign that Sanjay mentioned are the most awaited boosters to deepen our relationships with customers and drive customer acquisitions. We have also used the last quarter to make significant changes in the way we drive retail branch banking to achieve greater retailization, customer engagement and productivity, essentially bringing method to the madness of retail. Let me first touch upon overall business highlights before I share more details about how we are building the liability franchise. On the liabilities front, our overall savings deposits growth has been 166% year-on-year from INR 3,045 crores in Q1 FY '21 to INR 8,102 crores this quarter. The bank has close to 15 lakh savings accounts as of June '21. Almost 1.25 lakh -- at almost 1.25 lakh current accounts in June '21, our current account business grew by 68% year-on-year from INR 824 crores to INR [ 1,387 ] crores. With the majority of our QR [ import ] deployed with these customers, we are able to capture the cash flows of these customers, opening up opportunities for lending. Our CASA ratio was 26% as of June '21 versus 23% in March '21 and 14% in June 2020. Improving our CASA balances and optimum pricing on our sales deposits, savings and deposits will help us to reduce the overall cost of our deposits. We activated 72,000 debit cards in this quarter. Our partnership with ICICI Prudential and Societe Generale for life insurance and [indiscernible] and [ Care Health ] for health insurance have enabled us to sell more than 10,600 policies. We also have more than 34,000 3-in-1 broking accounts cumulatively through our partnership with Motilal Oswal Financial Services. In addition, we have about 9,000 customers who invest in mutual fund SIP through AU. With mutual fund and booking services now available through our AU 0101 app, we expect these volumes to go up significantly. Over the last couple of years, we have been -- dedicated channels for our current account, [ CAN ], key account management, task, NR and enterprise salary. Branch banking follows the philosophy of AAEDRR, which stands for acquisition, activation, engagement, deepening, retention and referral. Since the past 4 years, we have focused our efforts on acquisition and activation. Going forward, we'll be placing a lot of emphasis on engagement and retention to build sticky retail relationships. During the quarter, we have launched 3 new products, AU Platinum, a family branching program, [ Royal World ] targeted towards NR customers and AU power current account to fulfill the needs of retail merchants and traders who are tech-savvy and aim to provide digital payment solutions to their customers. These initiatives have resulted in about 47% of the savings customers regularly transacting with us, with average transactions per connecting customers at 16.6 transactions during the quarter and product per customer at 1.4 products. Current account customers have better transaction volumes, with 62% of the 1.05 lakh customers regularly transacting with us at the rate of 57 transactions per transacting customer and PTC of 1.73. We believe that the RBI circular on current accounts should help us to grow our business with small businesses. I'll talk about our plans for physical distribution. So physical distribution is important for branch banking, and yet increasing digitalization poses a constant debate about the need for branch expansion. However, with 73% of all the deposits in the country located in metro and urban regions where we have about 135 branches, we aim to expand in these markets to drive volume growth in deposits. With more and more transactions being done through digital channels, we are optimizing the size of our branches given the shift towards digitalization and our own investments in video banking where we take the branch to the customer's home or office. Digital initiatives around mobile app and video banking are key to drive customer engagement and conveniences. On our own 0101 super app, we have about 4.5 lakh users and growing daily. The number of transactions on the app have been increasing rapidly, recording approximately 20 lakh transactions in this quarter. We classify our customers as tech-savvy or digital customers. Migration of tech-savvy customers to digital customers is targeted through payment and cash management offerings, offers on credit cards, on debit cards as well as e-com platforms. One of its kind offer platform embedded in our AU 0101 super app, making it convenient for customers to avail offers, et cetera. A series of offers have been rolled out with the intention to increase customer engagement like discounts on Swiggy, Big Basket, Domino's and MakeMyTrip. These offers do result in balance improvements of customers, especially in the urban markets. I will now talk about our way forward. The initiatives on customer engagement, distribution and people capabilities and investments, coupled with brand campaign that Sanjay touched upon, will enhance our brand acceptability and provide the much-needed impetus to now take the foundations laid over the last 4 years to scale the business from here onwards. Stability in manpower leadership, our ability to attract talent and commitment and dedication of our teams, our initiatives and training, clarification of sales processes and customer engagement metrics through well-designed recognition programs for employees and reward programs for customers ensure that we are all geared up to grow the business to scale. One of the [indiscernible] brought us -- brought by us 4 years back is now by -- now being implemented by others, with other banks also offering monthly interest on savings to customers, thereby benefiting the citizens of the country. We are very excited about our liabilities journey and are sure to make a differentiated retail banking franchise through our initiatives and customer engagement, AU 0101 super app, video banking and the upcoming brand campaign. My colleague, Ankur will tell you more about the digital initiatives of the bank. Thank you.

Thank you, and good evening, everyone. At AU, we aspire to be a technical bank and have been building our capabilities across all 5 pillars, namely digital, digitization, data, digital marketing and infra and security. Last quarter, we launched our flagship division property AU 0101. It is accompanied with ecosystem of net banking, workshop banking, auto chatbot and video banking. [indiscernible] channels and mobile-first platform in 0101 offer full start payment [ chute ] and end-to-end onboarding journeys for savings accounts, hedge deposits, credit card, auto loan, personal loan, insurance and investment products. It also offers host of lifestyle services, including mobile recharge, hotel booking, flight booking, which are integrated with customer saving bank accounts for payments. Since the launch of 0101, we have seen 100% increase in new customer registrations, and monthly active users have gone up by 25%. As of now, 97% of all financial transactions and approximately 63% of service requests are being done through delivery channels. The feedback, love and appreciation our customers and employees have bestowed upon us is quite inspiring. We are pleased to share that AU 0101 is one of the top-rated banking apps on both Android and iOS platforms. Another key milestone in our digital journey is our video banking service. The bank has rolled out a dedicated video banking contact center with 100 video bankers. We've onboarded more than 4,000 customers and have done more than 6,000 interaction in the month of its launch. It portably complements our branch banking business. We foresee each video bankers are operating as one branch with cash and check being an exception. In our industry-first initiative, we have integrated video banking platform on AU 0101 that enables customers to open savings account, sales deposit account and perform financial transactions. Customers can also do more than 300 service request available with the bank. We launched AU Bank Credit Card on FiServe and Visa platform. Through 0101, we have rolled out a 4-step journey for approximately 1 lakh savings bank -- of 1 lakh existing to bank preapproved customers. We are in the process of rolling out similar journeys for non-preapproved as well as new to bank customers. We are also building our merchant and SME stack offering payments, reconciliation and digital collection. We have acquired more than 1 lakh merchant on [indiscernible] out of which, we have industry best activation of 60%. It gives us a great opportunity to build transaction banking relationship with these merchants. To further deepen our engagement, we have now started offering unsecured loans to merchants based on their transaction history. Another key pillar of digital bank is reaching out to the customer through contextual real-time levers. We have partnered with Adobe to build state-of-the-art marketing tech platform to enhance our capabilities for running campaign at scale. We are utilizing technology to digitize our sales operations process and building efficiencies at scale. With these automations, we have also enhanced our data quality through more than 180 validations in the back end. This makes our back-end operations leading and scalable. More than 90% of our sales offices are now labeled with mobile apps, either through a separate app or through BYOD. With digitization of remaining 10% business plan for next quarter, we will be one of the very few banks that digitize its 100% of sales force. To bring the enhanced sense of security and convenience for our customers, we have finalized our efforts to strengthen our cybersecurity framework. We have invested in best-in-class security operation centers. All components across network, infrastructure and application undergo periodic vulnerability assessment and application security chain. From an infra availability perspective, we have 0 data loss for all credible transacting systems with [indiscernible] environment fully automated. Over the last 1 year, we've have achieved an infra of time of 99.99%. We understand that tech-savvy customers will only engage with the bank through one of our digital properties. They only way to understand the customers is through data analytics. To sharpen our efforts for acquiring -- acquire, engage and serve our digital native customers, we are steadily strengthening our data warehouse and data analytics capabilities. At the bank level, we have more than 400 employees dedicated to our digital bank agenda, shouldering responsibilities across technology, digital marketing, product, analytics, sales and operations. We are strategically investing in our technology team to attract best tech talent. We have employees from premier institutes, mostly with fintech, consulting, investment banking and e-commerce background, working on our digital road map. We are ramping our technology team and plan to have more than 100 full-stack developers, product managers and designers to further strengthen our digital and analytics outlook. Other than these initiatives, we are also building our stack for account aggregator, real-time offers and [indiscernible], which we expect to launch this year. There's an enormous excitement within our team, and we are not going to miss out on joy of building most customer-centric digital bank. We'll talk more on our technology and digital strategy. We'll schedule a Tech Day in coming months. [indiscernible] will confirm an exact source in due course. Thank you. And now over to [indiscernible] for further updates on financial inclusion, CSR and new initiatives.

Thank you. Good evening, everyone. Within [indiscernible] digital bank, we have expanded our wings, which will help us soar higher towards the more prosperous and sustainability model. In this ever dynamic world full of uncertainties, it is our rules that have always guided us in the right direction. Mr. Tripathi just showed us the strength of our wins, and now I'm here to show you the depth of our wins. The very foundation of AU Bank was laid for empowering the economically weaker section by providing them better access to credit. Our business model is aligned with the UN Sustainable Development Goals, SDG, as we have been lending to the underserved segment for the last 26 years. Our purpose of empowering India begins with eradicating poverty, which contributes to everyone and reducing inequalities as the [indiscernible] while we strive to build an inclusive society to address the social, occupational and residential vulnerability. For us, financial inclusion is a vision of building the society where every individual has access to financial services irrespective of his or her social and economic background. With this systematic approach, we have segmented our financial inclusion efforts in 3 key dimensions. That is improving access, increasing usage and enhancing quality through financial education. The access used in equality framework approach is adopted from RBI's natural strategy for financial inflation. For improving access, we established 31% of our touch points in unbanked rural centers and have presence in 41 special focused districts as recognized by NABARD and UPI. For increasing usage, we offer a bouquet of financial services that includes basic saving bank deposit accounts, micro insurance, and pension and service products tailored to the needs of financially vulnerable sections. We have served more than 1 lakh [indiscernible] customers and secured over [ 30,000 ] under given [indiscernible] to address the social vulnerability. To address our occupation vulnerability, we have offered income generating loan under [indiscernible] due to more than 3 lakh customers. We have funded affordable housing project under [indiscernible] now for more than 5,000 customers from economically needy section, addressing their residential vulnerability. For enhancing the quality of consumption and banking services, we conduct financial literacy camps through street plays in the local stores to focus on concept literacy. [indiscernible] literacy and digital literacy counselors aid our customers in their digital journeys. While financial inclusion is providing a strong social perspective to business at AU, the [indiscernible] is continuously working towards community development. To date, we have empowered more than 1,000 women under AU building program, established 2 women community institutions, promoted 50-plus women entrepreneurs in rural areas. Besides that, the AU Foundation team has conducted over 4,000 financial and digital literacy camps with an outreach of [ 5 lakh flat ] beneficiaries across 12 states. Side-by-side, AU Foundation team worked to [indiscernible] to support the nation during the COVID time. The teams that have infrastructure for COVID relief supported 10,000 migrants, conducted vaccination drives and distributed safety gear for frontline workers. In all, we have contributed INR 7.5 crores towards COVID relief measures to date. Summing up, with the ESG framework, I have sufficiently covered the social aspect. Through our efforts in literacy and digitization, we have been able to positively impact the environment by reducing our carbon footprint. Our digital customer onboarding journeys have led to positive externalities in terms of reducing paper and fuel usage. Strong governance has been the backbone of our growth in the [indiscernible] journey, which has been further validated time and again by market regulators and retail agencies. [ The first quarter ] integrated annual report in FY '21, we have taken a step to track our ESG in fact more closely and to ensure increased monitoring and reporting on all 3 dimensions of this framework. We at AU understand that the new reality will require us to pivot our finances towards cleaner, responsible and more sustainable areas while maintaining a strong asset book and ensuring growth for the last 3 quarters. While we know the journey is long, we are committed to building the bank for all. With this, I will now like to hand over to Saanvi for Q&A.

[Operator Instructions] The first question is from the line of Rohan Mandora from Equirus Securities.

Congrats on a good set of numbers. Sir, what [indiscernible], including NPAs as of June end and as of March [ 2019 ]? And second, on Slide 22, we have shown a comparison on [indiscernible] overall. Now as I understand, the underwriting standards will be similar in both set of -- both category of customers. So what would be the reasons where -- why the limits here are higher than on new to credit customers? What are the [indiscernible] in there?

Rohan, Vivek here. I'll answer both the questions. So as far as -- I will give you answer that our 30-plus -- when you say 30-plus, it's only one bucket you speak [indiscernible] bucket, both put together at around close to [ 6.7% ] as of June 30. As far as our [ loan ], if you look at our core customer segment and the areas where we operate, we -- it's over a year period we mastered the understanding of those customers because most of them are new to credit. So almost -- historically, the ratio was much higher, obviously, now because the credit growth [indiscernible] areas have also increased, but still 32% of our customers NTC, right? And so our understanding of bank customers enable us to underwrite them better than the -- from the urban segment. And that is why you would see that [ trade labor ] of the segment has always -- certainly has been better with us.

Got it. And then, sir, one more thing, roughly 6% again [indiscernible]. And from annual report, you have indicated that [ 14% ] of the loans are contributing the majority of shares, of which roughly 6% was is in the non-NPA noncurrent category. So would it be fair to assume that there's a fair amount of overlap between these 2 segments right now?

[indiscernible] So it's not the entire core book [indiscernible], right. Within that book also, 45% of my customer is current. The people who are -- the customer base, which avail 4 and 4-plus moratorium, 45% of that book is current.

Right. But the revenue amount from roughly 6% of the booking, we are having similar [indiscernible].

Yes. So that's fair, Rohan. I would say in addition to what [ we already ] said, I think that's a fair assumption to make, that there will be a significant overlap between 4 and 4-plus and the SMA book.

The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.

Congratulations on your results. A couple of questions. Like, firstly, on the disbursement side, of the INR 1,900 crores that you've disclosed in this quarter, if you can indicate how much we have done in June and how has been the trend in the current quarter so far? And also [indiscernible] the disbursement in deals are like more than 6x [ of the understanding ], which is the largest vertical for us. So what has caused this gap this quarter? Because I thought deals are necessary [indiscernible].

[indiscernible] What is the number [indiscernible]?

[indiscernible] What is the number? Do you have a number?

[indiscernible] INR [ 7 crores ]. Okay. The June number -- Nitin, Sanjay Agarwal this time. The June number is close to INR [ 1,000 ] crores. And July also, we have that around...

[indiscernible]

INR 1,300 crores. So July is far better than June. And what is your other question?

The other is like of the total disbursement, deals is like more than 6x [ anything new ], which is the largest vertical for us. So why is there sort of [ anomaly ]? I thought this is more probably more at pace than other segments?

So let's say, deals is 5.9% gross NPA, right, if that's what you're mentioning in deals?

[indiscernible] The disbursement in deals [indiscernible] because primarily the yields, there's a different amount from retail and so that these deals, the [indiscernible] number has picked up in the month of June. SBL, where it is largely [indiscernible] customer segment, more retail rates largely, therefore, the effect of lockdown on that segment was for a much longer period. And the disbursement that you would see has started picking up from this month, and we would be taking over loans in the coming months, right? So we expect with activity and [indiscernible]. But yes, these are the very, very direct [ COVID-related ] business with activity at our dealership. And that is why you see great reduction there.

Okay. Sure. And certainly on the liability side, if you can touch upon like how the far balances per customer is moving now. We are seeing very strong production on [ 7-grade ] backed by, like, the interest rates also that we are offering. And so what are thoughts on the, sorry, like we have changed some [indiscernible], but will we continue to maintain this high-selling trades?

No. We have reduced our -- I talk about the, right, the structure of the rates that we offer allows us to tweak them to ensure that our cost of funds is sort of optimized, right? And I mean how -- until how long we will offer the high rate is something that we will calibrate as our book grows. But currently, our [indiscernible] book is at INR 8,102 crores. So I would believe that, that is a call that we will take over a period of time. But if you would look at the structure that we offer, up to 25 lakhs, we are not really offering a very high rate, which has helped us to optimize our overall rates. We are able to retailize the overall savings, both with the good traction on the savings acquisition and the current account acquisition in the last couple of months. Again, of course, April and May were difficult, but June and July, our acquisitions are back to what we were doing in, say, Jan and Feb. So we do believe that -- I mean we can continue to retailize the book and keep the costs under control because if we originate at the lower end of the overall buckets in which we offer pricing, we should be able to continue to retailize and reduce -- manage the cost of borrowings on the savings return in the cost of deposits on the savings book.

[indiscernible] talk about how the...

[Operator Instructions] The next question is from the line of Hiral Desai from Anived Portfolio Managers.

Sanjay, I had a couple of questions. Am I audible?

Yes, sir. You're audible.

Yes. So one was on the collection side. So just wanted to get a sense on how you guys have managed collections post the second moratorium. Because clearly, delinquencies have gone up. People movement has been a challenge in the last couple of months. So how large is the team today versus where it was in FY '20? And for the deeper buckets, do you work with agencies? So if you could just give us a framework on the collections bit.

Yes, yes. So [ Migrand ] is there who heads the collection. So he's the right guy to speak on this. So over to you, [ Migrand ].

So regarding our field approach, collections approach, I would say things have definitely eased out over the last 2 months. With the COVID restrictions lifting up, our face-to-face interactions with customers has gone up. With regards to our strategy, what we've done is we have formed the special task force comprising of collections, credit, business team. And of course, we have been providing a solutions-related approach. This is the feedback, which has been coming from this task force. Of course, [indiscernible] are legal because the [indiscernible] are due, I would say, in April and May. With a view onwards, we have changed our stance, and that is also helping us pick up our recoveries. We talked about agency penetration. Largely, our agency setup is in Tier 1 and Tier 2 cities. In Tier 3, Tier 4, we continue to have a strong presence of in-house teams.

And how large is the team on the collection side and the number of people?

So we have over 2,000 collection executives on the ground.

So just to add what [ Migrand ] has commented. So I would say from last 4 -- 1 year, of course, June '20, our collection team remained very agile and very specific on collections. Of course, last full year, we didn't have any legal recourse. So we had very soft kind of collection approach. The entirety, whether it's sales, operations, credit, fee investigation guys, even collection guys through agencies, who put all the resource to really have a focus on understanding customer fast, whether it's able to pay us, whether it's be able to build its business. So I hope -- I believe, last year also, we had a phenomenal number of some because of our efforts. This year, of course, April-May was completely [ it was lockdown ], but June came very strongly. And again, we built entire ecosystem, clearly have to understand our customer [indiscernible] and then see whether we can retain near future or whether is not, even if we're not able to pay us. So I think it's a very well-rounded approach and with a lot of focus on senior team ownership. And I believe the kind of response we are getting now after the -- after we build an equal kind of system customer now because we do have also legal recourse available. So I strongly believe that if what [indiscernible] for doesn't come, then we are again can build a very decent number around it.

And Sanjay, the second question was, I think during the asset quality update, I think there were some numbers mentioned on the vintage of the pool, right, like on the restructured book which was sourced prior to March '20. So if you can just repeat that number, [indiscernible] disclose number.

Yes. Vivek here. So the 58% of book was originated before March '20, and that was on our overall gross advance level, not at restructured base level. And 42% is post March. The contribution -- I was talking about the contribution. The older book was contributing largely on the NPA and restructured assets. The new book has shown very good resilience. And the learning around COVID was there in an entire underwriting approach.

The next question is from the line of Amit Nanavati from Nomura.

[indiscernible] Just want to check again on the collection trends, right? It is -- the entire quarter, so say, 101% collection [indiscernible] very strong, especially in the context of April and May where due collection fees were also impaired in general when we take [indiscernible] across company. So to your mind, what really was [indiscernible] for us in the sense that you had a legal recourse option, which is available this time around, not available last time around, a [much talent ] collection team this time around versus last time when we entered into [indiscernible] one, or in general, if there was resilience in the customers this time versus last time. If you can just clarify.

Vivek here. So if you compare last year, as I said, the major difference was with the approach itself. There was a moratorium. So people -- a lot of people update our moratorium, which was this time, the option was [indiscernible] the customer has to come forward and request [indiscernible]. That was one of the latest rising factors. And if you even look at the collection during the peak of pandemic in April and May, which is around 90% to 95% vis-à-vis 58% of the similar period of last year. So the difference was the trends was from the approach of customers, right? And second, I want to really complement my collection team and the whole environment around AU in terms of our approach. So I think we might be running one of the best collection team in the country who's very honest because the way they build themselves, even in the toughest time, signified that, right? And it is not about last year and this year. If you really see our data even in Q2 of last year or Q3 of last year, even Q4 of last year, it was significantly higher from the competition, right? So I would say collection in AU is in our DNA. So -- and we run a model called lending and collection. So I think that's the overall approach, which really helped us in this tough time also.

Certainly, it is clearly showing up. So maybe if you can just give some comments around new ONAN pool, right? The 1.5% has reduced to 0.2%. Just want to understand whether there is a flow forward or reversal to your earlier [indiscernible].

Yes. So on ONAN pool, since there was an onset of major issues in April and May, so almost 20% of ONAN pool, as we speak, we have, right, out of we talk about whatever we had at March 31. About 30% got upgraded where we repaid [indiscernible]. Almost 50% got hit [indiscernible] pandemic hit them hard.

Understood. Understood. Last thing, any outlook on growth, if you want to kind of comment on? I understand we clearly still have some of the [indiscernible]. But similar to last time, if you have seen some traction where we can kind of cover it for the [indiscernible]?

Difficult to answer, to be very honest. I would rather want to wait for 1 more quarter because there is a lot of discussion around the COVID 3, COVID 4. So otherwise, you have seen our data, which says that once the normalcy comes in, we'll have a lot of opportunity, honestly. And I personally believe post pandemic, and I don't know the time frame, India is really worthy of another kind of growth story for the next 10 years. A lot of CapEx, I'm seeing it, a lot of new things coming in, your own market, [ whole tax ], how they are setting up. So I believe, let's wait how do we handle this COVID 3, COVID 4 kind of the challenge, and then I think we should talk about growth.

The next question is from the line of Renish Bhuva from ICICI Securities.

Congrats on [indiscernible]. Just a couple of questions. One on the [indiscernible] customers [indiscernible]. So full paying customers are repeat [indiscernible] cosign. So I'm assuming the rest these cosigns up and active. So what percentage of these customers are already sort of recognized either as NPL or restructured or we have disbursed [indiscernible]?

Renish, you're referring to the activation slide, right, where basically, we are saying that 88% of the customer has paid fully EMI and 4% has big past EMI?

Correct. Correct. Correct.

Sorry. Just to understand your question better, what you're asking is where is the balance 8%? And then the question is?

Yes, yes.

Renish, Vivek here. This number keeps -- it is not the same customer who pay us every month. So there is pool where we are consistent new customer rebuilding. There is a pool which pays this month. And maybe because of certain difficulties, [indiscernible]. The formation of [indiscernible] at a gross advance level, this would be around the same level, even if it's COVID time, this is at the same level, right? There is almost 90% to 80% of the customers will pay every month. Which 90%, what 8% is not constant, I'm saying.

Got it, got it. So this 8% is not a static pool?

No, not a static pool.

Got it, got it. So my question is, again, referring to what Hiral is asking certainly on the moratorium book, okay? So as for the annual report throughout [indiscernible] 14% of the warrant book, are 3% was already recognized by March '21. And of that [ NL cosigned ], 42% was current. So the rest, 6% to 7%, what is the current status? How much of it is again total for restructured in June quarter and how much is recognized as NPA in this INR 200 crores kind of [ consistent ] number?

The percentage in restructure. Yes. I think it's very specific data. It's really across and we restructure, which would be [indiscernible].

Yes, Renish, I mean specifically, we won't have -- but if you -- I think the way you're coming from it is 45% of them are current. And what we have mentioned in our annual report currently as well, that most of the challenges were faced by this segment, and any kind of facility in terms of restructuring or [ in field deal ] or even forward flow to NPA had come from this portfolio. So it's safe to assume that most of them would have been falling in 1 of the 3 buckets.

The next question is from the line of [ Victor Way ] from Nippon India Mutual fund.

Two questions. One is, sir, on the restructured pool, this turnaround, if you see that INR 600 crore going into INR 1,200 crores, does the number of facilities or the number of customers, if I may, to date has, like, almost more than tripled, right? So that means that the -- either the customers incrementally are either [ rupee-financed ] customers or customers who have something significantly paid out their loan and last maybe 20%, 30% is left, and that data that you have provided last time around. So I just wanted to understand what is this incremental restructuring of INR 600-odd crores, and the number of customers are also higher this time. So is it like the customers have paid off most of it and remaining is 20%, 30%? Or is it like a lower end of the customers. Maybe used vehicles have reached a plain. Just if you could explain that.

Vivek here. So on an absolute term, if you look at [indiscernible] vehicle, the number of customers looks higher because there was a good amount of restructuring happening in the lease book as well. So the average tickets in vehicle, very, very nice [indiscernible] more number of contracts.

Okay. So incremental INR 600-odd crores is towards -- more towards deals, right? Is that a fair...

I would not say more towards it. 90% is between vehicle and deal. And it is almost equal in [ rental pools ]. But as I said, contract is not the [indiscernible] is much lower, and we see a larger number.

Sure. That's helpful. And second question is, I remember RBI last time around is a number that we were talking about having a special bid of INR 10,000-odd crores left [indiscernible] where we can develop on the RBI record levels on lending towards the type of customers agreement. Are we utilizing that limit, and that will help us get our cost of funds down further, right? Versus a 6-odd percent cost of fund, 6.8%, the incremental borrowing can come at the repo rate. So is that a facility that we are utilizing for our lending? Have we utilized it during the quarter or what other quarter?

So [indiscernible]. So we have not utilized the facility because we have [indiscernible] as of now in March also and this quarter also. So at the right time, you will see because, ultimately, their money will come with the government security [indiscernible]. So I have to first buy security with my money, and then only I can go and [indiscernible]. So ultimately, using my money only, first, I have to go up to market on some days and then only I will get [indiscernible] 4%. So as far as we have a lot of liquidities, I think we have not utilized that [indiscernible].

The next question is from the line of Nidhesh Jain from Investec.

Two questions. Let's talk about portable housing plans, how are we structuring our [indiscernible] in the book? Have you created a separate team? And how ready we are to scale that book? How do you see that book scaling up over the next 5 -- 4, 5 years? And secondly, sir, on the collection and asset quality, if you can give some more color. Because if I look at the performance that we have seen, that is significantly better than any other company operating in the same segment. So is it to do with that geography which has helped us in showing such sides how to reach a level of improvement. Or an entire credit goes to our collection team? Or if you can give some more color on that, that would be helpful.

So I think we should answer the second one first. Vivek, can you do that, or [ Migrand ]?

So I think we've given a very specific slide to -- which talks about -- and there is a highly correlated lines if you look at the mobility now. Our book, as I said [indiscernible] the market, well that they know, it is a very, very granular book. And the kind of businesses we've done, the customer at the moment, you have the [indiscernible] and the [indiscernible]. But as soon as it [indiscernible] mobility improves, and as we are allowed to operate, it -- the collections will inevitably pick up. Obviously, there could be [indiscernible], as we said, that vis-à-vis our competition, but there could be a difference within the customer segment, I would say, more or less [indiscernible] approach, engagement as well as our collection approach. So I think it's a combination of all 3.

If I look at the collection efficiency of the month of April and May, and April and May, whether it's 2 months where there was a sort of complete lockdown in [indiscernible] geography. Even those months [indiscernible] is pretty good.

Yes. So as I mentioned that the customer this time had to choose something called restructuring if they wanted to avoid some [indiscernible]. And a lot of people did not offer it. So we continue to take. And those were purely impacted. And those who had issues around health or family issues, [indiscernible], those, of course, only opted [ 12 months ] to pay.

And just to add there, if you again go back and see our March numbers, right, so there was a significant portion of portfolio which is classified as NPA, but were still paying customers, right? I think 88% of the non-paying were paying. So some of the businesses post pandemic 1 had kind of been recovering over a period of time. And profitably, the cash flows were there to support for 1 or 2 months. Ultimately, it was just a 2 months lockdown, right, or rather 6 weeks, 6 to 8 weeks. Uttam Tibrewal, maybe you can take up the home loan question?

Yes. So Nidhesh, regarding the team towards housing business, it's a special business, and we have formed a separate dedicated team to scout this housing loan business. And as I mentioned that we are presently working out of [ 190 ] locations, a total of 600 locations. So we are forming a dedicated team [indiscernible], being credit because we undersized this business from last 10 years, which is dedicated team separately for starting the business.

Yes. So just to add on what Uttam said, actually, to be honest, we -- our core housing business is due to do affordable housing finance. That's we have done from last 10 years, and we are very confident that the team which Uttam has built is doing a fabulous job. And I think we are looking very, very strong to do affordable housing space for AU Bank.

Sure. So because I think the opportunity is pretty huge here that your players are lending at 13%, 14%. Could that cost of funding, we can start -- we can build a very large, good quality book over the next 3 to 4 years. And if you can share any guidance or any reason that you have [indiscernible].

Yes. I would say housing will be [indiscernible] housing started that 3 years back, but it would be our #3 book in the next 5 years. And of course, you know about the whole cost of money at bank level and the whole land office. So I would say, I don't think that housing being built at around 13%, 14%, the average IRR around it, even in affordable housing is around 11%, 12%. And we are very comfortable with the [ rails ] there. It will be supported by government, being supported by NHB. So -- and this book is very exciting. And the kind of growth we are showing there gives us a lot of hope.

The next question is from the line of [ Manish ] [indiscernible].

Just one question on credit card. Just wanted to check your thought process and plans around the rupees impact. You have you own about 100,000 pre-approved, office 20,000, 25,000 have been issued. Will it largely be from existing liability customers? Or do you intend to go to open market as well?

Manish, for me, credit card is one of the most important payment mode, and we are very happy that team has built up an incredible home [indiscernible] around it until now. And we are really open for the open new customer or even as preapproved thing. So really a combination of both. But it's still very early days. We just launched in the last quarter only. So I think the core strategy will be forming in this year only, but we are open for a whole lot of ideas there. So -- and I would love everybody to use that card. It comes with a lot of offers, a lot of excitement.

Sure. And do you have a sense of how large could this be in 2 to 3 years time of your overall asset?

So data is mostly a game, if you talk about the opportunity, it's that for INR 6.5 crore people have the cars. So -- and a number of people may be around INR 5 crores, right? And the housing is growing and how the whole e-commerce space and online space is growing, any number can be only getting gain. So we have to do it small to begin with, honestly. So I think things across, let us build right product, right delivery, right kind of branding around it this year. And then we may talk about the whole long-term plan within coming quarters.

Sure. Just one [indiscernible] on the housing loan...

The next question [indiscernible]

Going back to the collections part again. So in normal times, how much of our collections generally happen in cash once there is [ bounced ] with the customer?

So normally, we see around 25% of our customer to do our branches or our team members retail for cash commission. Remaining 75% collection happens through presentation and online mode.

And sir, just following up, during April and May, did someone have like gone up significantly higher?

[indiscernible] of course, I mean was a slow month for us, so no.

Okay. And one more on the collection, with the 88% activation as of June, that number that you've given, what would that number be in April and May?

[indiscernible] probably you can write that -- we don't have the data right now, but maybe you can write to us, and we'll get back to you. Sorry, [indiscernible] do you have it? It was about 83% in April and May. Okay.

Okay. Very helpful. And second one quickly is, if you can give 2 numbers. One is what would be the size of cash on yield book as of June? And second one is that the [ PL ] book of INR 800 crores that we have, the [ TLJ ] book, which segment of the loan book has used this facility the most?

So yes, Vivek here. My cash on yield book, I will [indiscernible] is close to INR 1,800 crores, right? And [ PTL ] yields as a facility, largely utilized by MSME segment, which cut across largely SBL because we are larger there, and small amount of business banking and [ related investments ]. This -- the contribution of yield is still lower than that. But because of pandemic second wave, [ yields are close ] again as well.

The next question is from the line of Nikhil Walecha from SBI Life. We are not easy to hear you. Please unmute your line and proceed with your question. As there is no response, we'll move to the next question, from the line of Rohan Mandora from Equirus Securities.

Sir, just one [indiscernible].

Rohan, we could not hear you. Can you repeat the question?

What would be the unbooked treasury gain take currently?

Unbooked treasury gain.

So we don't disclose actually, what, recorded -- our company don't report treasury activity. So once we see [indiscernible] opportunity, accordingly, we take call and then go with the market, right? So...

Sure, sir. Just one more issue on the deposit interest expense line that went up for the quarter. So I think between 3Q to 4Q, that was almost 10.5% sequential growth in deposits [indiscernible] borrowing. But if we see the interest expense in 1Q versus 4Q, there is a decline. [indiscernible] declines only 20 basis points. So what [indiscernible] sharp decline in the absolute interest expense sequentially?

[indiscernible] that we have seen in the previous quarter.

Rohan, so this is a retargeting question. Can we take it off-line, please? I mean you write to us, and probably we'll get back to you.

The next question is from the line of [indiscernible]

Just one follow-up on the savings account side. Have we revised rates again in the last one month, let's say, in July, sir?

Rishi, do you want to answer this?

Yes. We have taken a small change in the savings rate in higher pockets where some rates at the higher end have been rise to [ 4% ].

[indiscernible] things on the soft stuff now or [indiscernible]?

Yes. Definitely. It will reduce our cost. Okay.

The next question comes from the line of [indiscernible]

I just have one question. For the first quarter, your cost income ratio is around 50% [indiscernible] book. But what would be the sustainable rate like going ahead? Is it going to be low or is it going to increase further going ahead? I mean what is the -- any kind of guidance to what should your cost income ratio looks like [indiscernible]?

Yes. Yes. As you know, AU is a growing franchise, and we are investing in a lot of properties around retail and our brand campaign. And also, we are bringing new product line across credit card, QR, the housing business. So -- and there are a lot of levers to actually manage your ROA. So we are moving around cost of money, asset [ leaves ]. So I think this variable, we are not so much focused, to be very honest. But anything low to mid-upper 50s can be a number where we want to drive on. As of now it's around 52%. But because we don't know how the market is and how the environment would be in next 2 to 3 quarters, so I don't want to comment much on that. But having anything around 50% to 55% is quite acceptable to us. Basically, this is our desire on the cost of money.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Aseem Pant for closing comments.

Thank you kindly. On behalf of the entire AU team, I thank you for joining us, and we wish you good health. Do reach out to us in case you have any further questions. Thank you.

Thank you very much.

Thank you.

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