Can Fin Homes Limited (511196) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Can Fin Homes Limited Q4 FY '20 Earnings Conference Call hosted by Investec Capital Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Utsav Gogirwar from Investec Capital Services. Thank you, and over to you, sir.

Thank you, Janice. Good morning, all. Welcome to the Quarter 4 and Full year FY '20 Earnings Conference Call of Can Fin Homes Limited. To discuss the financial performance of Can Fin Homes and to address your queries, we have with us today, Mr. Girish Kousgi, MD and CEO of Can Fin Homes; Mr. Shreekant Bhandiwad, Deputy MD; Mr. Prashanth Joishy, CFO of Can Fin Homes Limited. I would now like to hand over the call to Mr. Girish Kousgi for his opening comments. Over to you, sir.

Good morning to all the investors. Welcome to earnings call of Q4 and for the whole year. With me, I have Mr. Shreekant Bhandiwad, Deputy Managing Director. We have Shamila, Business Head. We have Prashanth Joishy, CFO, and we have Veena Kamath, Company Secretary. We have our collections head and credit head with us, Prakash and Sudhakar. Welcome to this call. Broadly, I will -- am I audible?

Yes, you are. Sir, please go ahead.

Thank you. I will be broadly covering the financial performance for the company for Q4 and for the whole year, then talk a little bit about liquidity and talk little bit about moratorium, what is our strategy as a company, what is the outlook and way forward. And then we'll open the forum for Q&A. And then we can take up questions as and when it comes to us. So let's start. First, I will be talking about Q4 of this year Y-o-Y compared to last year Q4. On the revenue, we have shown a growth of 14%. We had a very good quarter but for a few days in March. Book has grown by 13%. There's a very, very good growth in operating profit at INR 160 crores against INR 117 crores, thereby showing a growth of 37%. PBT, there was a growth of 3%. We'll come to it in a little while. In terms of provisioning, we have provided 41x more. Last year, Q4 was INR 1 crore, and this year, Q4 is INR 41 crores. So it's about 41x. There is a growth of PAT by 37%. On the disbursement, if you remember, for the first time, we had shown a very good growth in Q3. The growth was 12%, and we were to continue in Q4 as well. Since we lost about 8 crucial days, there was a lockdown from March 24 announced nationwide, and therefore, we had to suspend operations and business on 24th of March. So we lost about 8 days. So if we had done business till March 31, we would have ideally shown a growth of about 17% to 18% on disbursements compared to last year Q4. Now it is negative 10% because we had to suspend business from 24th of March. Certain ratios and numbers on a cumulative basis. Yield has improved to 10.23%, which was 10.06%. Spread has improved to 2.46% against 2.16% (sic) [ 2.17% ]. NIM has improved to 3.52% against 3.33%. Debt/equity ratio is at 8.64%, which is quite comfortable. CAR is at 22.28%. ROA is 1.93%. ROE is 19.1%. Some annual numbers to share. On revenue, we have shown growth of 17% at INR 2,030 crores for this year, last year was INR 1,731 crores. Operating profit growth of 23%, PBT growth of 10% and PAT growth of 27%. So overall, it was a good quarter and good year. To talk a little bit about liquidity, we were very, very comfortable on liquidity; especially after IL&FS and Dewan, we were quite conscious to be high on liquidity at all points of time. And therefore, we managed it very, very well and not just liquidity but also tried to keep the costs low, most competitive in the market. So just to give you a number, as of now, we have close to about INR 4,000 crores, which is approved but not availed. So we have open limits of INR 4,000 crores, which will take care very easily till about December and Jan. Now we haven't borrowed anything in Q4 because there was no need. So Q3, we did borrow some from the banks. So we are pretty comfortable on liquidity. On the morat, both Part 1 and Part 2, number of customers opting for morat is 29%. I've also mentioned this in public forum and in media. So when we talk about morat, when we have to project about delinquency or NPA, we should always look at what is the delinquent pool. We believe our delinquent pool is best in the industry. So the propensity of customers moving to NPA is higher in delinquent pool vis-à-vis compared to regular pool. We largely focused on -- even though we were -- we had shut all our offices from 24th of March, we were working from home. The entire team was focusing on moratorium, collection and recovery. So every single day from 24th, we've been focusing on collections and recovery and managing the entire moratorium piece. In terms of strategy, we stay put to our defined strategy of focusing liquidity, asset quality, growth and profitability. While we talk about liquidity, as I told, we also try to see what is the funding mix, which would help us to be competitive in the market and also our costs being quite low. Asset quality, we've always spoken about Can Fin loan for asset quality. Our focus is on home loans. We don't focus much on LAP. In our entire portfolio, LAP is 5% and 95% is home loans' top-up loan. I'm saying top-up is part of home because top-up loan is a loan which is given to regular home loan customers. And therefore, the risk associated is similar to home loan. So our LAP is only 5% in the entire portfolio. We literally have -- I mean we have no exposure to developers. It should be hardly less than INR 1 crore, I think, at this point in time -- sorry, it's about INR 6 crores. Our exposure to developers is about INR 6 crores now. So that is hardly negligible. Our focus is on affordable ticket sizes INR 18 lakhs. We largely focus on Tier 2, 3, 4 kind of cities. Most of our customers would avail loan for self-occupation. And therefore, the emotional connect is better. And when it comes to priority in terms of servicing, we are always on the top in customers' mind for serviceability. And therefore, we have a better share of customer wallet in terms of servicing our EMIs. So we largely focus on asset quality. In terms of profile, 71% is salaried, 29% is self-employed. This mix wouldn't change even in the future, we want to stay focused. There could be a slight change in terms of 3%, 4% here and there, but we want to stay focused. We want to definitely grow. We will grow. We will look for opportunities in markets where we can try and gain market share, which has to come with profitability, so there is no compromise on profitability. Whether it is spread, whether it is NIM, we will try to maintain plus or minus few bps here and there, but our focus is clearly on these 4 pillars, that is: liquidity, asset quality, growth and profitability. In terms of outlook, we started business from the fourth week of May. We opened office on -- from April 20. From April 20 till about third week of May, we were largely focusing on collections and recovery and managing the entire moratorium. From last week of May, we started business -- started doing business in a small way. And if I have to talk about June, the pickup is quite good, but this is more attributable to the stock what we had. So these are early trends, not really willing to extrapolate depending on the demand what we see now. But I feel that for demand to come back, it will take at least another 2 to 3 quarters. In terms of NPA, there will be a surge in NPA, definitely in the SME space. We're seeing stress in the SME space, that's because the loss of income in SME is actual loss. We have funded to small traders and businessmen. They had shut shop for 2.5 to 3, 3.5 months. So for those 3 months, there is actual loss of income. Even when they resume, in order to come back to a level where they can start servicing, it will take time. And therefore, there'll be a surge in NPAs in the SME pool. Since our profile mix is favorable toward salaried, and we are also present mostly in good geographies, the impact is going to be less compared to maybe other peers in the market. And therefore, we expect there will be a slight increase in NPA in coming quarters, maybe in the next 4 quarters or so, we'll be able to bring back -- 4 to 5 quarters, bring back NPA to the current level. In terms of business, as I told, last year was -- industry didn't grew much because there was a lot of liquidity challenge, not to -- in the industry as a whole, not for Can Fin, and therefore, demand was quite low. There were so many issues which were bothering this industry. However, this year, showing growth over last year would be a challenge because Q1 literally would be -- Q1 is literally not there but for some business in June. So Q2 would be quite ordinary, I think, for the entire industry as such. So by Q4 -- after December, December-Jan is when we expect business to come back to a level where one can talk about decent business. So this is our sense in terms of outlook. I would now open the entire forum for Q&A.

[Operator Instructions] We take the first question from the line of Kishan Gupta from CD Equisearch.

[ Pradesh this side ]. Sir, what is the single most important priority for the management this year?

Single most priority, I can't say single, I would say top 2. I would say, liquidity and asset quality. So we need to very closely manage delinquency this year along with liquidity. So these 2 are very important. For Can Fin liquidity may not be a challenge because we have been always quite comfortable. So for Can Fin, it's going to be -- we have to manage delinquency this year.

And sir, since you mentioned asset quality, what different plan are you undertaking because circumstances are very different than normal at this point?

See, it is -- one is, of course, managing now, and second is what we need to manage. So I will get into more of what we need to manage because our core strength because our policies are quite stringent, our assets are low -- in terms of ticket size, it's only INR 18 lakhs. So we have funded properties in the range of INR 24 lakhs to INR 30 lakhs, INR 35 lakhs, and it is in Tier 2, 3, 4 cities, largely for self-occupation. We don't fund for surrogate income. So these are all the strengths. We focus largely on salaried. So inherent health of portfolio is very good. Because inherent health of portfolio is very good, whether it is profile mix, whether it is product mix, whether it is age, on any parameter, we are in a much, much comfortable position. And therefore, for us to manage delinquency this year is going to be less of a challenge.

Okay. But per se, sir, nothing different than what is usually being done?

For Can Fin, yes, nothing different. But yes, if you're comparing with industry, I think that the difference comes in the inherent strength of the portfolio.

All right, sir. Sir, my second question is that, what would be your peak gross NPA this year? And what sort of clients will be expected to default?

I would not be able to comment on what would be the peak NPA this year. But yes, I can say, there'll be a surge in NPA. That would be largely in SME space, that is self-employed space. And since we -- since the proportion in the total portfolio is only 29% in the SMA piece -- sorry in the SME piece, so that is where we see a bit of stress. And therefore, I said, we need to manage that. We are in constant touch with all the customers. We're trying to educate customers, tracking their -- how soon they can get back to business and start servicing. So there will be surge in NPAs, but I think as a company, we'll be able to manage that in the next 2, 3 quarters' time. And so there'll be -- the flow would be higher from delinquent pool vis-à-vis compared to regular pool because regular pool customers, they have been regular till February, and they've taken morat only because there was an option available to them. And so once morat gets over, they'll start paying. So there'll be flow from regular pool as well, but that will be limited.

All right, sir. And sir, what has been the loan book growth in metros and nonmetros this year?

You're asking this year, what will be the growth?

No. What has been in FY '20?

Okay. See, FY '20, I'll just give you the actual numbers, but the growth would be -- if I have to talk about top 10 cities and next set of cities, the growth would be slightly higher in next -- not in top 10 cities.

Okay. No, because still Q3, sir, in the presentation, there was a breakup of nonmetro and metro loan book growth. So this year, you'll have discontinued [Audio Gap]

Metro is about 10% to 11% and nonmetro, see always we've been growing higher in nonmetro and therefore, the focus would continue. For Q4, we have not given specifically, but the growth rate would be in the same -- it will be on same lines.

[Operator Instructions] We take the next question from the line of Lakshmi Narayan from ICICI Mutual Fund.

There are 2 questions. First is, in terms of your top-up loans, right, what are the standard procedures you actually follow in terms of what should be the tenure of the home loan as well as the repayment schedule before the top-up loan kicks in? And what is LTV at the time of top-up loan? That's the first question. The second question is that in terms of your liabilities and assets, what percentage of your liabilities is below 3 years? And what percentage of liabilities is below 5 years?

So what we do is when we give loan to all the customers, we see the repayment track record of the customers for 1 year. If the repayment track record is satisfactory after 1 year, if top-up justifies depending on the income level and LTV, then we'll go ahead and give top-up. So whether it is income norm, whether it is LTV norm, both will have to fit in. And if the customer is eligible, that's when we go and give top-up. And the tenor of top-up would be -- would not be beyond the primary loan tenor, it can be lesser, but it can't be more than the primary, which means both the primary loan and top-up loan would end at the same tenor, but it could be little earlier depending on customer's convenience.

So if a customer takes home loan and within 1.5 years, he can actually avail a top-up loan?

Not really. Customer can avail -- see, why I'm saying not really is that suppose if customer while taking the primary loan, if he's taken what is the maximum LTV available, then the cushion won't be there because all of us know that in the last 4 to 5 years, property prices are not increasing. So if customer had taken a lower LTV while availing the loan and if customer feels after 1 year he needs some more money, then he would qualify. Otherwise, on LTV front, customer rarely gets qualified in 1 year's time.

Okay. And this is -- the objective of this loan is -- would it be available at the same home loan rate? Or it will be a differentiated rate? And what purpose it actually serves?

The purpose would be -- but for -- no, it will be normally for improvement or it could be extension or it could be any other purpose like education or consumption apart from speculative purposes.

And the interest rate differential will be...

We don't fund for speculative purpose. Other than that, we fund for any other purpose as long as customer income justifies and LTV supports.

And what will be the rate differential?

Rate -- there'll be a differential in terms of pricing, which varies from 0.25% to 0.5%.

Okay. And the asset-liability question, please?

We didn't get your second question, if you could please repeat?

My second question is, sir, what percentage of your liabilities are within 3 years' tenure and what percentage of liabilities are within 5 years' tenure?

Most of the -- I mean, in fact, almost all the term loans are long term, it will be either 7 or 10 years. We don't have anything less than 3, only OD, which is 1 year. CP obviously would be in months, maximum 1 year and NCD would be long term, which is slightly over 3 -- 36 months.

Next question is from the line of Amit Ganatra from HDFC AMC. Looks like there's no response from the current participant. We take the next question from the line of Anirvan Sarkar from Principal AMC.

A couple of questions. So we have clarified that our extra provisions for COVID is based on the standstill book and some buffer on top of it. So if I calculate the standstill book, it comes to around INR 210 crores because we have -- I mean the minimum required based on 10% was INR 21 crore. And if we just -- I mean that's basically 10% of INR 210 crores. So that would have been as of the end of February. Now is there any improvement in that book as time has passed? Or do you still see that book as something that should comfortably flip once the moratorium is over?

There is a significant improvement from that base.

Okay. So those customers are now coming back to repay the loans or...

Not repay the loans. Now they're paying the EMIs. So what I mean to say is that we calculated -- we have provided INR 21 crores. So the SMA base as of Feb end is INR 210 crores, so has that base come down now? That's the question. So the answer is, every day we are seeing improvement in that and a lot of customers are coming forward and paying. See, today, if you look at but for few pockets in Delhi and Maharashtra, like Mumbai, Nashik and Nagpur, most of the other cities in other states, they're back. So even the business is back. They were closed for about 2.5, 3 months' time, and now they're back. So we are seeing a lot of improvement in this segment as well, that is SMA-2. So this base is coming down every day.

Got it. Got it. So sir, 1 more question regarding the moratorium book. So is there a trend that you see -- with respect to this improvement that you said, is there a trend that most of the improvement is from salaried customers, whereas the self-employed class remains more or less the same that they were at the end of February and has that worsened because you mentioned that most of the slippages -- incremental slippages we should expect from SMEs? So should we assume that most of the improvement is from the salaried base?

No. Improvement is based on both, both salaried and SENP. The improvement would be -- or the flow would be hardly anything from salaried and whatever incremental flow would be that will be from SME. So -- but there is significant improvement in both.

All right. All right. And sir, 1 last question. We have guided that our liquidity is enough to support us till January, at least given the bank lines that we have opened. So does that build in the moratorium? Or are we assuming that once the moratorium is lifted, customers -- I mean, does it build in any moratorium after August? Or have we assumed that after August, things go back to normal?

So we have taken all our commitments till Jan. So when I say we are positive on liquidity is basically, we've taken all the commitments till Jan. And when I say this, we have assumed, even if 100% of our customers opt for moratorium, we are pretty comfortable, a; b, we didn't raise any finance in Q4 because there is no need. So had we got more limits in Q4, we would have been -- probably this number would have been another INR 1,000 crores, INR 2,000 crores higher. So we haven't because we have no avenues to deploy at this point in time. So we are pretty comfortable on liquidity and 100% -- for calculation purpose, we have considered even if 100% of customers opt for morat, we are pretty comfortable.

We take the next question from the line of Amit Ganatra from HDFC AMC.

So my question was -- 2 questions. One is that you mentioned the moratorium as of -- I mean, 28%, 29% moratorium in terms of number of customer accounts. Is it same in terms of AUM also?

In terms of AUM, not much difference, not much difference. It would be slightly lesser, about 20 -- see 29% is on account and on value, it will be slightly lesser, but more or less both are same.

Okay. That was one. Second thing is that, see, last year, you -- because your growth was low and your profitability was strong, you ended up adding to your Tier 1 category. Now what is your current thought process on the capital adequacy and adequacy of the overall capital base? Because there is this -- a lot of NBFCs are in the capital raising mode. Some of them, although they are well capitalized, they are in capital raising mode. What is your stand on capital positioning of your entity?

See, our CAR is 22%. So we are pretty comfortable. Our DER is 8.64%, pretty comfortable. So we had plans of raising capital. We still have that plan. We've only deferred it because of COVID. So maybe this year, we will plan to raise some capital. Quantum and timing will be decided at the appropriate time. But there is no -- we are not in a hurry to raise capital, but we will raise this year.

We take the next question from the line of Andrey Purushottam from Cogito Advisors.

My first question was on your cost of funds. Would I be right in assuming that in the general declining interest rate scenario, your cost of funds should reduce in this year? And secondly, I noticed that your contribution from NHB as the source of funding has increased from 12% to 19%, which also would have decreased your cost of funds. Is there any such other move in terms of your funding sources that may lead us to believe that your cost of funds would go further down apart from the general reduction in rates?

Yes, if you look at last few quarters, the cost of funds have been coming down, whether it is bank or NHB, CP or whatever, any form of raising funds has been coming at a very, very low cost. So even in this year, we feel that the rates would come down because there is a downward trend of interest rates. And we've got special -- we got some funding from NHB on special refinance scheme. So there, the cost is quite -- very, very low. So to answer your question, yes, this year, we see a trend of rates coming down and therefore, CoF also would come down.

And how about from the source of funds? For example, just like your NHB proportion has gone up, can we also expect some of your lower-cost funding sources per se will also go up in terms of proportion to your funding?

In fact, today, if you look at our mix, that mix is only because we are quite conscious on at what cost we raise. And therefore, you can see our funding from bank is a little over 50%. That's only because we're getting at a very, very competitive rate. Now NHB rates are always competitive, so we would try and increase that percentage to the extent possible. It also depends on what is the allocation NHB makes to each company. Currently, our cost of raising deposits is quite high. And therefore, the growth there would be normal, it won't be abnormal, even though the base is quite small. On market borrowings, we would also focus on NCD, only if we are getting at the right cost. And CP, of course, CP will be a backup because we will try and fix that with OD limits. And then if we can get the benefit of cost, which we do always, so we keep that percentage under 15%, even though currently, it's about less than 10%. So the idea is to try and raise from all sources, but it largely depends on at what cost we're able to raise.

Right. Is the declining cost-to-income trend likely to continue in this year? And what would be your principal areas of cost savings?

So to answer your question, there won't be much difference in cost-to-income, but we feel that cost-to-income would slightly surge because we are investing in technology. We are investing in IT infrastructure and a lot of other things. At the same time, there is a lot of cost control measures introduced in the company. So for example, we are reworking on all the lease rentals. We're working on all the -- every line item to try and contain costs. So it would be both. But yes, there will be a slight increase, not majorly. To answer your question, there will be a slight increase, but that would be offset by increase in revenue and growth.

Right. This is Sangeeta, I'm Andrey's partner. I had a question on your collections. Basically, you said that 28% of the loan book is under moratorium. Now does that mean that of the balance 72%, which is not in moratorium, we are seeing regular collections?

It's actually, today, what we know is only delinquent pool. What we don't know is regular pool. So actually, we will know only after August. What we have done is we are now educating all the customers, delinquent customers from March 27 or 28, that day we got the RBI guideline, and regular customers, I think, from time to time, we've been advising them because regular customers, who have opted for moratorium, they would start resuming to pay from September onwards. So what would happen is that one is, how many customers have opted for morat? Number two, customers who have not opted for morat, suppose if they bounce the instrument, so even that would get added to the collection list. So we have from both the pools. And therefore, I said it's very, very pertinent to note that from delinquent pool, the flow would be slightly higher compared to regular because from regular, the flow is going to be hardly anything.

Right. So actually, I'm a little confused as to how do we define the percentage of people who have opted for a moratorium. So let's say, on 1st of April, if my outstanding book was 100, are we saying that out of 100, 28 is the pool who has actually opted for a moratorium? And then there is 72 and that 72 will be split into delinquent and regular?

See, it's like this. Yes, your understanding is right. When I say 28%, 28% of total number of customers have opted for morat. Now this 28% would be from both regular as well as delinquent, but it will be more from delinquent as a percentage, right? When we say we will have delinquency, both from the delinquent pool and also regular pool, we will have delinquency both from morat pool and nonmorat pool. So it's a combination of 4. It is quite complicated. We've have analyzed all the permutations and combinations. We've also done our own internal run. We have our own team, which does [ analysis ] on customer data and behavior. So taking all those things into account, I made a statement that the flow is going to be higher from delinquent pool, especially from SMA segment and it's going to be low from regular pool as I mentioned. But it's too early for us to comment [Technical Difficulty]

Well, ladies and gentlemen, it looks like we've lost the line for the management. Requesting you also please stay online while we reconnect the management back to the conference. Ladies and gentlemen, thank you for patiently holding the line, we have the management reconnected to the conference. So we proceed to the next question. [Operator Instructions] We take the next question from the line of Pranav Gupta from Aditya Birla Sun Life Insurance.

I've a couple of questions. So firstly, I just wanted to get a sense on when you interact with your -- the customers who have availed moratorium, what is the reason they provide typically, like, I mean, whether it's due to loss of salary or loss of -- hello?

Yes, please go ahead.

Yes. So just some sense on what are the interactions we are having with our moratorium customers? What are they saying? When do they feel they can start paying up once the moratorium is lifted? Some sense on that. And if you could give a breakup of how many of these 29% of moratorium customers are salaried and self-employed?

Okay. So when we talk to our customers, the pitch is very clear. We say that -- on the salaried pool, we say that if they are getting salary regularly, and if there is no concern in servicing the EMI, they should. Because if they don't, then what happens is that interest gets added to the principal and that they have to service, which means that cost would go to the customer. And therefore, we try and educate customers. We still give an option to the customer to either opt in or opt out. But we tell the customer, if customer opts for morat, what is the implication; if customer doesn't, what is the implication. We'll leave the decision to the customer and this is for both salaried customer and SENP. So suppose, let's say, salaried customer has got a pay cut, and in spite of pay cut, if he or she is able to service the loan, we would advise customer to pay, but still give the option to the customer. If it is SENP, if customer had shut shop because of lockdown, then obviously, we tell him to look for appropriate time to resume his business and then start paying. So this is the pitch both for salaried and self-employed depending on the situation. And as of -- it's too early for us to give you a breakup because we've taken the entire morat as one piece because of which our communication is on the entire 6 months moratorium. So it will be too early, but just to give you a number in terms of 28%, see, our mix is 71% and 29%. Now out of this 28% morat, with respect to the base of SENP, the percentage is slightly higher compared to salaried and which is quite true for the entire industry. Only advantage, what we have is that we are -- SENP proportion is quite low, which is only 29%. And therefore, we see that [ there are so many factors. ]

Right. So actually, what I was trying to understand was, say, if I look at only the salaried segment who has taken the moratorium, what are the reasons they give you in terms of whether cash, whether they've seen salary cuts or that some of them have seen job losses? Specifically, the salaried segment, what are the reasons they give you for availing the moratorium? That is what I was trying to understand.

No. So there are basically 3 reasons. One is the job loss, which in our case is very, very less. Two would be cut in pay, which again is quite less. Three would be, it is more of conserving cash because they want to see what's going to happen in the next few months because they may anticipate a pay cut or they may anticipate some kind of issue in terms of job. So these are the 3 categories. But overall, salaried as a percentage is quite low. So these are the only 3 reasons.

Okay. And just 1 thing, if you could give your views also on today's hearing in terms of the interest to be charged, whether it is supposed to be charged on the interest or not in the Supreme Court. So interest on interest, that's the debate, right? In your case, given the amortization and given that the principal of -- the interest component at the beginning of the loan is much lesser, the interest on interest component becomes very high in a 6-month moratorium. How are you viewing this? And how will you tackle this if the Supreme Court gives a hearing that, you're not allowed to charge interest on interest?

So I think I don't want to comment on that. But as of now, what we have prepared is that interest gets added to principal and customer has to service this. How would customers manage that is we are very clear, and we have made customers also understand the implication of this. At this point in time, I don't want to give a contrary view because it's still pending in the court.

We take the next question from the line of Rohit Shimpi from SBI Mutual Fund.

So I just wanted to ask to you, sir, was there a change in the moratorium percentage if we look at May end versus currently, morat 1, morat 2?

Okay. I know it's too early, but still let me attempt to answer your question. So the whole month of May because we got the regulation, we got the guideline end of March. So if I look at April, April -- March was normal collection because we got the guideline quite late. Normal collection like any other month -- any other earlier months. So April, the collection was quite low because even customers are trying to understand the implication and stuff like that. And from May, May is better than April, significantly higher compared to April and June is far, far better than May. So that's the trend.

Okay. Okay. But you -- at that point, the actual customers who have taken morat was -- would have been much higher? Is it? Or was it -- I mean...

It's like this, let's say, the minute -- let's say, as a customer, the minute I know that there is an option, I would opt for morat. Then after 15, 20 days, I would change my option to no morat because I would know the implication. So there are a lot of personal changes which happen. Therefore, even if ratios keep, this facility keeps changing.

Yes. Yes. And sir, second question is, so are we -- one is, can you talk a little bit about the collection infrastructure because the delinquent numbers are low, but eventually, one needs to be prepared in case, let's say, post morat, we need to do a lot more effort there? And second is, are we able to track customers who have taken moratorium from Can Fin and, let's say, not taken moratorium from other lenders for maybe shorter-term products like personal loans and other?

No, we are able to track all the customers whoever has taken morat and who has not taken morat. That is the coverage is 100%. So we are in constant touch with all the customers. Now customers who have taken morat from us, not taken morat from others, see, what happens is there, a lot of things depend on the type of loan and the quantum of EMI. For example, somebody has taken a personal loan and the EMI, let's say, is INR 3,000 and EMI for home loan, let's say, is INR 28,000. So as a customer, customer might feel that I can take morat for home loan because the EMI is higher and he may not take for personal loan because the amount is only INR 3,000. And the impact of taking morat on a personal loan or any other nonhome loan product, the impact is quite significant. So we are not tracking that, to be honest with you. But we are tracking our customer behavior, our customers, we're able to track and we are in constant touch with them.

Okay, sir. And just on the collection infrastructure, can you talk about it? Are you gearing up for a, let's say...

Absolutely. In fact, this year -- in fact, last year, we strengthened the collections. We have a hybrid model where we collect through branches. We have a very strong branch team [indiscernible] collection. For deeper buckets, we have a centralized collection team, which supports branches and directly collects. So we have a hybrid model. And for COVID, we have a special task force, which communicates, tracks and monitors repayment from all the customers. So we have collection broken into 3 pieces. So very, very robust and strong collection teams and process.

Okay. And so is there any external -- other agencies also involved over and above the internal staff?

See, for us, I would say, largely, it is -- because we have an in-house collection model, so that's not outsourced. But yes, for certain cases, in certain locations, we may engage agencies. But as far as COVID is concerned, no, the management has been completely internal because it's quite sensitive. We don't want to give it to the agency at this point in time. But we have a model where we can also engage agency for specific areas, specific set of cases.

We take the next question from the line of Ashutosh Garud from Ocean Dial.

So my question was that going ahead, when you mentioned that the recovery might happen, you might see a concrete recovery indications only in December, Jan. So what different processes are -- do we wish to follow when we are going to incrementally disburse loans as compared to, let's say, before -- I mean till February? So anything incremental filters you are going to look out for. Because of the lockdown, maybe the pay scale uncertainty is going to linger around for a longer period than just these 3, 4 months, right? So on that aspect, what are your thoughts? And the second one is, even though, I mean, on -- especially on a home loan basis, home loan, even though the average ticket size might be lower for you as compared to anyone else, but for the borrower, it is a big ticket item, it's like a big percentage from his monthly income. So what kind of change in behavior do you expect, I mean? And any indications on the level of recovery you see in the demand for your product, especially in housing finance?

Okay. So we have tweaked our policy to a certain extent to try and have more filters. So this would enable that our customer profile would be better, our assessment will be quite sharper. And therefore, the -- we may have to [ give it to ] some customers that we'll try and build in demand from other locations. So that definitely, there is some tweaking in the policy and also in the process. Now if you talk about customers' priority, for customer, home loan is a big item, definitely is. Here, there is a differentiation of secured and unsecured. And I think there is a report from TransUnion, if I'm not wrong, which says that the default in -- especially mortgage is going to be much lower than default in unsecured like personal loan and BIL. Of course, this is something which is known to all, but they've come out with a detailed report. And where they say, within unsecured, what is the priority for customer to opt for morat and not to pay, if at all, if situation warrants. So in that list, in unsecured, and they have a similar list in secured as well depending on the type of property, depending on what is the end use. When I say end use, LAP, it is for investment purposes, it is for rental purpose, it is for self-occupation. So here, I would like to say a few things. Most of our customers are first-time borrowers. When I say first time, first-time home loan borrowers. They may have a card, credit card, they may have a personal loan, but it will be the first home loan, which means that is for self-occupation. So -- and therefore, there is emotional connect. And whether the value of property goes down or goes up or goes down temporarily doesn't really matter. And since there is emotional connect and it's a secured loan, the propensity of default will be quite low. So in that sense, we are in the safe quadrant. Adding to this is that our ticket size is quite low. And also because ticket size is quite low, even the property value would be quite low. And therefore, whether increase or decrease in property price would be least impact -- there will be an impact, but it will be least impact in this -- in the segment, up to INR 30 lakhs, INR 35 lakhs property value.

We take the next question from the line of Shubhranshu Mishra from BOB Capital Markets.

Just wanted to understand your salaried customer base a little more. Of the salaried base, sir, how many people are employed in government sectors? And if they are not, what kind of private sector jobs are they doing? Are they teachers? Are they employed in IT companies? So if you can elaborate on that on a percentage basis, it will be great, sir. The second question is that how do you compete with the banks like SBI or any other banks, which are also present in the Tier 2, Tier 3 markets? And the salaried guys would have their salary accounts with the banks, so why should they pay for higher yield or higher pricing versus the banks, which will offer them a cheaper rate? So these are the first 2 questions.

Okay. The first question is the split between private and government within salaried is about 50%-50%. We have 50% from both government and private. Now second, see, our specialization is in identifying markets, identifying pockets within large cities where we see an opportunity. So that's where we gain market share. And we don't compete with banks, whether it is SBI, OBC, any bank. We don't compete with banks because we can't compete with banks. Our product is different. Our customer profile is different. And therefore, we don't compete. There could be an overlap. There is overlap with some of the big HFIs and also some of the banks. But that we try to manage by choosing geographies carefully. And that is why we're able to grow our book year-on-year.

Next question is from the line of Nitin Jain from Barclays Capital.

I have just 1 question. Sir, your debt to equity, although it has been improving in the last 2 years, when you compare with other stable housing finance companies, it is still pretty high, sir, above 8% or so. So is there any plan on bringing it down in the next 2, 3 years?

See, as I told, we are pretty comfortable with our debt to equity ratio around this level, 8%, 8.5%. But having said that, we have plan to raise capital this year.

Next question is from the line of SivaKumar from Unifi Capital.

Just I'm revisiting the previous question. Can you give the breakup of the morat loans of 28% between salaried and self-employed?

My suggestion is, as I told you, even now things are changing. And if you ask me, it will keep changing for another 2, 3 months' time. So it's too early for us to look at the breakup at this point in time because morat is there till August, which is quite some time from now. Since our SENP proportion is quite low, I would definitely say the share of SENP will be not higher in morat percentage vis-à-vis compared to salaried compared to their base.

Next question is from the line of Saurabh Dhole from Trivantage Capital.

I have just 2 questions. One is, in your opening commentary, you have mentioned that SENP is a high-risk group, and it comprises businesses which have suffered sizable losses. But at the same time, you've mentioned that you plan to not alter the current mix between salaried and SENP. So could you just help us reconcile these statements? Because ideally, you would want to reduce the high-risk proportion of the book, right?

Yes. So when I said that the mix won't change much. Today, salaried is 71% and SENP is 29%. Incrementally, what will happen is when we expand, so we are present in South, so we'll be opening branches in South, we'll be opening branches in regions other than South. So when we open branches, now there are certain states where the proportion of self-employed is high compared to salaried. So when I say that this mix won't undergo too many changes is in next 2 to 3 years and not just 1 year. For next 1 year, we are a little cautious on SENP, and therefore, we have tweaked our policy and our process, so that -- measures we have already taken. But this mix won't really change because you have -- the mix is quite skewed towards salaried in South, whereas in other regions, the mix is quite skewed towards SENP. So when we have to expand. Now today, what we talk about, 71% and 29%, maybe 2 to 3 years from now, it could be 65% and 35%. So while we will eventually increase the proportion of SENP, not in next 1 year, but let's say, after 1 year and next 2, 3 years' time, we will take all controls. We've put our controls in place to filter profiles which don't suit our policy norms. So to that extent, we will ensure that we only source good customers. And when we also expand in markets other than south, we will expand in safe geographies, which are predominantly SENP skewed but with good repayment culture.

Right. Right. And what is the yield difference between what you offer to salaried versus what you offer to SENP?

See it will be 0.75% to 1%. So this is a differential what we have between salaried and SENP.

Right. Just 1 last question. What is the kind of changes in the provisioning policy that you have brought about in this financial year vis-à-vis the previous one? Because if I look at the credit costs that you had for that previous year, which were substantially lower than what you had in this year, even if I take away the COVID provision?

Yes, this is Joishy here. Yes, in provisions. See whatever we maintained is as per the IRAC norms of the NHB asset, which is in tune with the NPAs, whatever we have. Apart from that, as per the RBI guidelines, we have made a provision of 10% of the delinquency account, that is...

SMA-2 assets.

SMA-2 assets. RBI says 5% is required, but as a prudent measure, we provided 10% itself. Over and above that, we have provided another INR 15 crores for [ downside ] contingencies because there is an additional provision of INR 36 crores in the books. Because of this, what we get, the total provision, what is appearing in the books is around INR 154 crores, which compared to the previous year, appears to be on the higher side.

We take the next question from the line of Nirmal Bari from Sameeksha Capital.

My first question is, what are we doing on the digital front to capture leads now considering that people would be hesitant to walk into our branches and all in the near term?

Okay. Are you already through with the question?

Yes, that is my first question. I have other questions as well. Should I...

Let me answer this. Let me answer this. So on the digital front, what we're trying to do is, we are trying to split digital into what is relevant for home as a industry and what is relevant for other products, which are largely unsecured. Because for a product like home, 100% digitalization is not required. And if we do that, there are a lot of risks associated with this, so we have a legal leg and technical leg, and the assessment is quite [Technical Difficulty]

[Technical Difficulty] Ladies and gentlemen, please stay online. We may give out the line to the management again, we'd like to move on to the next question. Our line has disconnected, we are reconnecting the management back to the conference. Participants, please stay on line we are just trying to connect the management back to the conference, we request you all to please stay on line. [Operator Instructions] Ladies and gentlemen, thank you for patiently holding the line. We have the management reconnected. So over to you all. We have the question from Mr. Nirmal Bari from Sameeksha Capital.

Yes, should I repeat my question?

Yes, please go ahead, sir.

Yes. So the question was that what are we doing to digitally capture leads for new customers and...

So I think, I answered this question. Maybe I think there were some issues. No problem, I'll repeat. So I'm saying for a product like home loan, 100% digitization is not required. And therefore, we don't plan to digitally source, approve, monitor and then manage. So what we -- definitely, we will automate. We will automate sourcing. We'll automate key lead management. We'll automate certain processes. We will integrate various KPI's, which will assist us in decisioning the case. So we'll do all those things. So we'll be up there on 100% automation, but we would not completely digitize.

No, I was talking about only the sourcing part of it, sir.

Yes, sourcing, we will automate.

The second question is on loan takeovers and buyouts? I know it's quite early, like it's been only 20 days since opening up. But now our interest rate differential between what we are offering at the lowest rate and what the banks are offering, like SBI is offering at 7.25% versus ours is 9%. So that is a significant difference. And due to that, do we anticipate a much higher prepayment rate this year?

See, if you look at data for last 10, 15, 20 years, there was always differential between the rate what we offer and what banks offer. We don't compete with banks because we can't compete for the simple reason, their catchment is different, our catchment is different. Their cost is different, our cost is different. And therefore, we are in these segment, our profiles are different. And we don't compete with some of the bigger HFCs or banks. There could be an overlap to the extent of 10%, 20%, so that we manage as a strategy within the city or within the pocket in the city, but we don't compete with them. But this difference has always been there.

Okay. And the third question was on the CLSS scheme. So you have had quite a lot of beneficiaries of CLSS came from our customer base. So given the fiscal situation and all, do we see that impacting? Anyways, the sales would be low, but do we see that as an additional impact coming on the loan disbursement process or the real estate sales?

No, it did not have an impact. CLSS is to the beneficiaries who are eligible and fulfilling certain parameters. So after the disbursement, they'll be eligible to the extent of up to INR 2.67 lakhs. So in no way, it is affecting the business growth or -- it will be one way incentive to the borrowers to go for housing loans and especially in the affordable segment where most of our sourcing is from affordable source. So in one way, it's going to help us CLSS scheme rather than coming in the way.

The next question is from the line of Aditya Singhania from Enam Holdings.

Sir, I just have a few questions that on your moratorium, which you said was at 29%, do you think that's likely to increase because technically, people can opt for moratorium even in July? Or it stays stable here? Or it gets lower?

No. See, because we had given time line, and I don't think that there'll be much variance from the number what we mentioned.

This is as of end June? This is as of June or...

No this is for the total morat from March to August. There could be some exceptions where we accept some genuine cases, but otherwise, this number would largely not change.

Okay. And do you think people will pay up a little lower or it broadly remain like this only?

No. I mentioned earlier, there are various permutations and combinations. So I've also given you how the outlook is in terms of NPA for next few quarters. So definitely, there will be a change. So you will have certain cases flowing from delinquent pool, nondelinquent pool, morat pool, nonmorat pool. So you will have from all the four.

The next question is from the line of Pankaj Naik from India Ratings.

Hello, am I audible?

Yes, please go ahead.

Sir, sorry if this -- someone's in the line actually. I just wanted to understand, sir, the COVID-related provisioning that has been made and how much it is? And whether it is adequate now there will be no further requirement of provisioning, especially for COVID purpose?

So I think we all know how much we've provided now for COVID. That is what is our assessment at this point in time. Whether it is required in future or not, it would be difficult to predict at this point in time. So we will take appropriate decision at the appropriate time.

We take the next question from the line of [indiscernible]

I just wanted to understand in the future is around INR 4,000 crores of unbound bank...

You'll have to be a little louder, please. Can't hear you, little louder, please.

Sure. So I was asking that you have mentioned that we have INR 4,000 crores of unbound bank line, is that sufficient -- which is sufficient till December 2020, right? So wanted to understand, does this include the expected disbursements also?

Everything. We have taken into account disbursement, we've taken into account all the interest and principal payment what we need to make to banks. So it covers everything.

Okay. So sir, just the derivative of this would be like, we expect our disbursement between June to December to be very less than INR 4,000 crores?

No, no, no. See, it's the net of figure. Sorry, that is the net of figures, see because we have taken into account the collection we're going to make from our customers, we've taken into account all the repayment which we have to make to banks and institutions. So it is the -- there is no linkage between INR 4,000 crores and what we're going to disburse. So there is no linkage. So we have seen a good pickup in June. I cannot comment on that because this is more to do with the stock. So the INR 4,000 crores and how much you're going to disburse till December, these 2 are not linked at all because this is a net of figure.

We take the next question from the line of Pavan Kumar from Ratna Traya Capital.

Sir, what is the -- since there has been a washout of maybe 2 quarters, do we expect any kind of growth in this year on the loan book side? And number two, what are your -- what is your view on the NIMs going forward this year? Do we expect to maintain it at the current quarter level or we will see a downward or an upper trend?

So if the question is, will there be growth in book? Yes, there'll be growth in book. Will there be growth in disbursement? No, over last year, it's too early to comment, but this year is going to be a little challenging. It all depends on when we will completely come out of COVID. So that question, it is difficult to answer at this point in time. But growth seems difficult, it may be flat, it may be less than what we have done in the last year. Sorry?

My second question was on the NIM, sir.

Yes. So NIM, see, for a housing finance company, NIM, about 3% is very good. So we would definitely -- I'm not very sure whether we'll be able to better from the NIM of this quarter, but definitely, there will be much change, plus or minus 10, 12 bps, that we should be able to make because our focus is clearly on spread and NIM.

And what would be our overall tenure of loan book, I mean, average tenure of the loan book?

Average tenure of the loan book is about...

7 to 8 years, 7 to 8 years. The loans are sanctioned for 15 to 20 years. Actually, repayment will be about 7 to 8 years.

Next question is from the line of from Pranay Rajani from B&K Securities.

In fact, I just had a few data keeping questions. First of all, what was the collection efficiency for Q4 and FY '20? And secondly, what was our borrowings as of Q4 FY '20?

Collection, especially for Q4 was normal. It was like any other quarter. As I mentioned, because the morat discussions happened maybe by end of March. So by that time, the collection efforts were over and collection for Q4 was normal.

And secondly, sir, the borrowings as of Q4 FY '20?

So since we were very comfortable on liquidity, Q4, we haven't really borrowed because there was no need to borrow. So our -- whatever we mentioned as borrowings till December and what we borrowed in Q3, only that remains.

Next question is from the line of Bunty Chawla from IDBI Capital.

Just 1 data point question. If you can share any rate cut for the home loans you have announced in Q1? Because we are seeing very much a differential between the 2 banks and ours. So any rate cut -- and what will be the -- when it will be impacting our yield?

Actually, in Q4, we were running a campaign for a limited period up to March 31. And now we have extended further for a couple of months, for another -- at least up to June end. So the offer was -- it was below the CAR rate, giving some discount over the CAR rate. So that we are continuing. So though our CAR rate is 9%. But actually, what we are offering to the customers is below that. So in view of that, it is not very high compared to banks. At the same time, it is about 50 to 75 basis points over the banks' rate.

So just to answer your question, we will be very competitive on pricing. Since then we will maintain our spread. If that's the question, we will definitely maintain our spread. We are quite watchful on spread and NIM. Because of -- our cost is going down, we will reduce -- we will take a -- there will be some drop in yield, but there won't be any drop in spread or NIM.

We take the next question from the line of Ritika Dua from Elara.

Actually 2 are follow-ups. First, to the previous question. Sir, did you mention how much have we cut the rate by, that the scheme which we offered in the month of August?

We keep doing that from time to time. So it's very difficult to mention at what rate or how much we have dropped. But I think what is more important is to see what is the spread and what is the NIM.

No, absolutely. Sir, the spread is very impressive. I mean, I just wanted to know if we could share that. And sir, secondly, the second follow-up was also to another previous question, where we were sharing that -- to the question that how is the collection in the -- for the customers where who haven't taken a moratorium? Sir, if you could again finally share your views on that? I didn't quite clearly get it that time.

No, I mentioned this earlier also. So I've given some early trends. I think I have nothing to say beyond that because this morat is till August. And as I told you, every month, there is -- the collection efficiency is improving. And the percentage of morat also we're seeing until now, going forward, the percentage won't change. And since morat is going to get over in August, it will be difficult to predict beyond what I've told.

And sir, just to clarify, we are -- our way of moratorium was an opt-in or...

We have given option to the customer. So based on customer option, we have taken the percentage.

We take the next question from the line Sonal Minhas from Prescient Capital.

Sir, this is Sonal. I have 2 questions. First one, on your ECL model. What operating assumptions actually go in this ECL model, if you could share some color on that? And...

ECL model, what we collected, we have taken the last 4 years movement of the loan account, each individual loan account, INR 1.5 lakhs loan account, what we have, we have taken the movement month-on-month, stage-by-stage the movement is taken. According to that, we derived NCD and LGD. Taking into consideration we derived the collection -- what is the collection efficiency in these loan accounts. And accordingly, what we derived, as per that ECL model, even at the discounted rate also of the security value, the provision required to be maintained is far, far below the NHB requirements. So that is why we provided as per the NHB norms only in the books because NHB guidance is clear, either the ECL model or the IRAC norms, whichever is higher will be provided. So that is why the higher is provided in the books as such.

Sir, does that answer your question?

That answers my questions. I have another question, which is a follow-on question. Can I ask?

Sure, please go ahead.

Yes. Sir, I have a follow-on question on deposits made in Can Fin. I think I asked this question 2, 3 quarters back also, what are the attempts made by you guys to actually improve and accelerate the effort to ramp up the deposits? And what is the rate we are offering right now on deposits? And can it be a sustainable viable means of liability management, if not now, maybe 2, 3 years down the line?

So at this point in time, no, we don't plan to grow the base drastically because the cost of raising deposits is quite high for us compared to other sources of reducing the cost.

Sir, what would be the cost. What would be the cost, just curious?

It will be about 15 to 18 bps higher. So we -- so what drives the source is basically cost. So since we have multiple sources, we are not quite Gung Ho on at this point in time, maybe in future, things might change. If the cost comes down, we will go Gung Ho on deposits as well. And therefore, you will see the base not growing.

And is this -- just curious, is this higher than the short-term money that you borrow in terms of CPs also? Or...

Definitely. And our deposit rates are generally 50.

50 basis points.

Over the peripheral banks.

We take the next question from the line of [ Fahad Shah ] from SBI General Insurance.

Probably, you may have mentioned this in the opening commentary, but I missed it due to some disturbance in the line. Just wanted to understand the cumulative mismatches in ALM. So earlier, you used to provide that in the investor presentation, I could not find that. So at least in the next 3 months or 3 to 6 months and up to 1 year and probably greater than 1 year. So all of them are positive? Or do you see some negative mismatches?

No. All the ALM mismatch as such because we have the undrawn limits is considered for the ALM purpose. So we are positive only. And within the dollar event held by the NHB. As told by this in the earlier comments also, we have an undrawn limit of INR 4,700 crores. So the question of that one will take care of the commitment up to December. So this is -- taken in terms the question of mismatch will never come in.

Your next question is from the line of Abhijit Tibrewal from ICICI Securities.

I just wanted to understand what proportion of our collections will be through digital means?

You are talking about the collection will be through digital mode.

Sorry, sir.

Yes. So more than that, see, almost 70%, 75% people are through ECS and NACH. Collection -- actually cash collection will be hardly about 4% to 5%.

Okay. So for the future periods is, 70% to 75% is through ECS and NACH, whereas 20%, which you suggested is digital.

ECS and NACH also.

Okay, okay. And you suggested about 5% is through cash?

No, no. Okay. I'll put it this way. If we take the fully disbursed pool, collection through electronic mode is about 98%, 99%. Because since we -- our focus is largely on self-construction and composite loan, a lot of customers will be in pre-EMI mode. So the pre-EMI, we collect check. And once the EMI starts from, then we move to either ECS or NACH. So if on the fully disbursed pool, the collection is about 98%, 99% and only 1% is by way of PDC. So on the part disbursed pool, which is not very relevant to measure this metric, the PDC would be high because we have a lot of engaged customers, we have to make multiple visits to customers. And therefore, it will be PDC.

Okay. And sir, you suggested that since April 20, you have opened your branches, and you've been concentrating a lot on collections and recoveries. And despite, I mean, more than 95% of collections to digital, still the collections in April were not very good, is it?

No, no, it's not that. We were not -- see, there was direction from Ministry of Home Affairs to open offices from April 20, and therefore, we opened from 20th of April. Since we were quite conscious about our employee safety, and therefore, we didn't let our employees go out, to meet customers and even customers were not walking in because of COVID, right? So therefore, all the branches, they're focused on customer education and collections, right? So the mode is electronic only, but engage -- customer engagement and helping customers to decide on what to choose, how to choose, if customer opts to pay, then I think that trigger point was through engagement. And therefore, as I said, the entire team was focusing on collections and recoveries.

Okay. And sir, I mean, can we share, I mean, how have collections improved from April to May and to June now?

I mentioned that, I think April was a null month because all the customers, they were debating, deliberating whether to opt for morat or not, and therefore, April was quite low, but May was significantly higher, and June is much better than May. And so every month, the -- as the awareness is improving, I think customers, who can afford to pay, they're coming forward, changing their option and paying. And therefore, every month, we've seen a huge increase in number of customers actually paying.

Next question is from Rohan Mandora from Equirus Securities.

So if you could share what percentage of our portfolio currently would carry an execution risk in terms of the property not completely completed? That would be one. Second, in case there are any new sanctions that we have done in, say, May and June, what is the customer profile? What is the nature of the demand that is coming up in terms of the customer profile? And third, in terms of the rate, I think there was some benefit that we have given to the customers in, say, April, May, June. So how do we -- what is the incremental cost of fund and incremental yield that we have made in the last 3 months?

Okay. So in terms of the completion risk, literally, it's not there because we fund apartments only when it is nearing completion. Therefore, there is no completion risk. As far as independent houses are concerned, the risk is not really there because we have there the comfort of land value kicking in, and we disburse based on progress of construction. So definitely, there is no completion risk to us as a company, A. B, the incremental cost is coming down, but we are maintaining spread. I think that would answer your yield spread. And so our incremental cost of funds is about 7.5%. And if you see for the whole of last year, it's 7.77%. So I think that's the level where we are today.

Yes. I think if any new sanctions that we have done in, say, after April...

Yes, yes. Sorry, I missed that question. So April -- sorry, April, obviously, we had to shut. Even though we opened from 20th, we didn't do any business per se. Till May third week, there was no incremental sanction or disbursement. From May fourth week, we resumed business.

Right. And so what your nature of the customers who were coming up for the new loans? And is this salaried? Is it self-employed? And within that, what is the income source of these people where business expects they are from? Some color on that. Just to understand what is the nature of demand that is coming up? Is it actually the investor profile? Or is it the genuine customers who are getting better deals, say, 20%, 30% lower than the market price, that's why they are purchasing a house right now?

So to answer your question, the profile is individual for self-occupation, not investors, number one. Number two, the profile is the same, whether it is salaried or SENP. Because we have now tweaked our policy, and we have more filters now. So a number of people who qualify has come down to a certain extent. And we are trying to bridge that gap by going to other markets where we can see more comfortable profiles. So there's nothing -- there's no change in profile, there is no change in mix. In terms of the end-use of property purchase, there is no change, which means it's largely for self-occupation. But however, on the demand, it's too early to comment, because we've just seen, maybe only 4 weeks till now. So it could be that pent-up demand in terms of stock, and therefore, it's too early to comment on demand. As I mentioned earlier, for demand to come back, I think it will take another, at least 8 to 10 months.

Next question is from the line of [ Neeraj Mehra ] from Enam Holdings.

Just needed some clarification. On the moratorium, the 29% is for the number of customers, right?

Yes. It's for a number of customers. Even if you look at -- if I see on value basis, there's not much change.

Okay. So value would be similar number you are saying around 29%...

And it will be slightly lesser than 29%, but there is no change. We go by a number of customers, but value would be a little low -- little lesser than 29%.

Okay. And this you are saying is basically includes even for moratorium to, like this is the May to June transition or...

That is for the entire period from March till August.

From March till August. Okay. And on the collection efficiency, like how is the trend, like from the moratorium too? So from May to June, like what's the kind of trend? So obviously, you mentioned that it's improving, but is there some rough ballpark number that you can share? And secondly, on the collection efficiency, if you can just like mention whether this collection efficiency, we could have actually collected by the demand rate. So basically, is it the denominator is 72% or is it 100%?

Okay. So basically, when we talk about collections, it is largely from the delinquent pool because from regular customers, there is no demand. Regular customers opting for morat, there is no demand. So regular customers not opting for morat, anyway, they're paying, so there is no issue. Regular customer opting for morat, because it is morat, there is no demand, there is no due. So there is -- so all the collection, what I spoke about, it's only from delinquent pool, and these are the installments pending prior to March. And there, we see the trend being very, very encouraging.

Okay. Is there a number that you can share or something?

No. I think at this point in time because it's the stock. So the stock is coming down, right? So basically, the stock as of March end, or let's say, Feb 29, whatever is the delinquent pool stock, because whatever EMIs are pending, it's pending for the earlier month and customers who are comfortably paying, they're paying. And therefore, the stock is coming down since there is no demand for set of cases where customers have opted for morat. Basically, the stock rate is coming down. So as I told you, April, collection was pretty low because everyone was trying to deliberate, and they were in the process of decision-making. May was significantly higher and June is far better than May. So every month, it is changing and it's very encouraging.

Understood. And just finally, of this amount, say around that INR 210 crores amount. So is that this amount that would have slipped had there been no moratorium announced? Or just could you clarify on that?

INR 210 crores in the base, you're right, because that was the SMA-2 base. Obviously, INR 210 crores, that is not the amount we should have slipped because we suspended business from 24th of March. And though I cannot comment on the number what would have flown, because for us, Q4 is always better than any other quarter. Our Q3 NPA was 0.8%, I can only say that, assuming that there was no morat scheme, our NPA would have been much lower than Q3 NPA level. We lost about 8 days in March. So that 8 days we would have collected from SMA-2 base as well.

Next question is from the line of Anirvan Sarkar from Principal AMC.

My questions have been answered, but thank you.

Next question is from the line of Amit Ganatra of HDFC AMC. It looks like no response from the current participant. We take the next question from the line of Aditya Singhania from Enam Holdings.

My questions have mostly been answered. I just wanted to stress on this again, but the INR 210 crores question that was asked previously. You're saying this is the SMA-2 in its entirety on which you have taken the provision more than required. Part of this, you would have already collected in the month of March? Or this is the part which has not been collected upon?

No. On that date, we have taken the number and we have provided. So there'll be collection from this pool as well.

And has the pool that was not collected upon, let's say, out of INR 210 crores, you collected on INR 100 crores and you did not collect on INR 110 crores, is that INR 110 crores part of the state fee or NPA? Or is it is not part of state fee and NPA?

So but that is as per the RBI guideline, DPD doesn't move. And therefore, all the status with respect to DPD wouldn't change.

I understand. So basically, that part is whatever that part you did not collect on, whether it's INR 50 crores or INR 100 crores, that is not part of the NPA?

Definitely not, because that's the guideline.

Yes, I understand. I understand. And just -- I'm so sorry to stress upon this collection efficiency again and again. I know repeated questions have been asked.

You're most welcome, sir. Please carry on.

Yes. So what is -- there is a way -- the way collection efficiency has been defined by most NBFCs and housing finance companies is -- what was the total that you were supposed to get from customers, whether regular or delinquent? And how much you actually received? So if you could just sort of talk about that in whatever way you can without giving actual numbers rather than just on the delinquent customers as you've been sort of highlighting?

No, first of all, the collection efficiency the way, it is broken up into is, x bucket, bucket 1, bucket 2 and bucket 3 and bucket 4. So basically, bounce, SMA-0, SMA-1, SMA-2 and NPA, this is how it is broken up. And then they talk about efficiency, they talk about efficiency in all the buckets. For example, in next bucket, suppose if 100 customers bounce and if 99% pay 1% flows and that gets added to SMA-0. And similarly, from SMA-0 to 1, 1 to 2, and 2 to NPA, that's how they do. And whatever -- if you're not able to regularize and if we collect 1 EMI, let's say SMA-1 account, we collect 1 EMI, then it stays in SMA-1 for this month. If you collect 2, it is rolled back to the previous that is SMA-0. So rollback, stat and roll forward. And you have various bucket that is bucket 1, bucket 2, bucket 3, bucket 4, and of course, x bucket. So this is how the collection strategy is worked upon. So when I spoke about efficiency in collection, I was talking about all the buckets, starting from SMA-0, 1 and 2.

So let me just attempt to ask it 1 more time. If, let's say, your -- on your total loan book, if you had a collection, all buckets put together of INR 100 crores, let's say, out of that, how much did you collect roughly in, let's say, March?

That would be difficult for us to answer. No, March is normal. I mentioned earlier also.

That is like 98%, 99%.

March was -- whatever is the collection efficiency. In any other month or any other quarter, March and Q4 was same. So there was no change at all. Rather, it was better than the earlier quarter. So Q4 or March, there is no difference. Okay. So from the pool, April, the collection was quite less; May was significantly higher; and June was much better than -- of course, we are still in June, so June is much more than...

I know we're just trying to -- I think most people on the call are trying to understand it a little bit differently. So if you can clarify of the 71 customers who are not in moratorium, 71%, what percent of customers would be paying you in April or in May?

No. That would be difficult to answer now because we are still -- see collection is still on, morat is still on. And people who adopted for morat, they're coming back and they're paying. So this keeps changing. And therefore...

And so, of the people who have not opted for morat? Actually who have not opted?

It would be difficult to answer at this point of time because the effort is still on. Because, see for example, the way customer would see is that, the customer has time till August for morat and from September, customer has to pay. Lot of work is happening, whatever collection I spoke about, it's only on delinquent because if it is regular pool, customer can pay is paying, customers who can't pay has opted for morat. So regular pool, there is no change. Whatever collection, I spoke about, I think that's a big comfort, whatever collection I spoke about, that is from stock, and that is only in delinquency in all the buckets, starting for SMA-0 till SMA-2.

Next question is from the line of Bhavin Shah from Equirus Securities.

So there are a couple of moving variables here. One is the loan values are rising because of moratorium. And the asset values, I mean, we don't know. I mean -- so I don't know whether you have done any assessments as to what percentage of your loan book is now at a point where LTV is? I know near 100%, near 90% in a sort of a danger zone? That's my first question.

Okay. So we don't -- see, we -- our general -- our LTV is quite low. And in most of the self-construction and in most of the self-construction we have the cushion of land value. So I don't see too much of a risk on LTV per se, A. B, when we talk about delinquency because of LTV or because of any other reason, what comes into play is most of the properties we find are for self-occupation, not for investment purpose. And therefore, we don't see much of a risk, though we are not -- we are in the process of assessing this. We have done some back of the envelope calculation, but we are in the process of getting this done, but that we will do not now, a little later. Because after morat ends, we will see what is the actual position because till August, we will not know. From the regular pool, what will be the flow, we will not know that because now nothing is due for them to pay. So from September, it starts. So by December, we'll get a complete sense of this. So we are in the process of doing that.

So would you be able to say that before COVID-19, what percentage of your loans had LTV greater than 80%?

It is about 15%. 10% to 15% of our loan book will be having LTV of more than 80%. Otherwise, usual range is about 60%.

Next question is from the line of Ajit Agrawal from Ambit Capital.

Just a couple, if you quite helpful, if you can give some color on the customer profile. I think like from salaried, what percent of customers are government employees? I mean, self-employed, what percentage are in the private sector, like entertainment, travel, et cetera? And overall, what percentage of our customers will -- what percentage -- will be there an overlap with [ Canara Bank ] customers?

See, customer profile, as I mentioned earlier, 50% -- the mix is 50% government, 50% private. The profile, I would quantify in terms of salary levels, it will be in the range of INR 20,000 to about INR 40,000, INR 45,000. There could be a appreciated dip. So this is the band where we operate. In terms of overlap, generally, overlap is with the banks and some of the larger HFIs. So there is no direct competition between Canara Bank and Can Fin Homes. There is no synergy in terms of lead sharing or customer reference. There is no competition, not only with Canara but any bank. We don't compete with any banks. We have a niche segment. We focus on niche market and we grow our book. So [Technical Difficulty] are affordable, more than INR 50 lakhs loan is just 3% of the entire portfolio. So this would give you some kind -- some sense on the profile what we source.

Next question is from the line of Dixit Doshi from Whitestone Financial Advisors.

Yes. Most of my questions have been answered. Just a couple of things. One clarification, you mentioned that disbursal for this year will be flat or maybe lower, but the outstanding loan book will go up. Is that the -- that's true?

Yes. Because if we can manage to grow much beyond normal repayments, and if the [ arrest ] balance transfers, our book will grow. So I said on AUM front, we will grow. On disbursement trend, it's too early to comment whether we'll be able to grow over last year or not because Q1 obviously was not that good, but for last week of May and June. So it's too early to comment on the growth. But on AUM, there will be a growth.

Okay. And second thing, you mentioned that you spoke about the collection effort in delinquent pool, okay? And 28% of the morat loan book is a mix of both delinquent and regular customers, okay? So does that mean that the 72% who have not opted for morat, they are paying their regular EMI even in the month of April, May and June. Is that the right understanding?

No. April, May, June, I won't be able to answer. See because since there is no demand, okay, if customer pays even 1 EMI or 2 EMIs, my stock comes down. Correct? So customer who has not opted for morat is paying. Customer who has opted for morat, and if customer pays and then changes, I think that's a difference what you will see. So it may not be month-on-month, but from the stock, definitely, customer is paying.

Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments.

Should we wait for 1 more question.

Sir, we're closing the questions now. I will hand the floor back to you for your closing comments.

Closing comments.

Okay. Thank you so much. I think a lot of intelligent questions. I'm sure we'll be -- we have addressed all the queries and questions appropriately. Thank you very much. This year it is going to be a little challenging, but we are geared up to manage both on business front as well as recovery. And let's hope for the better. If COVID gets over fast, I think the recovery is going to be that much earlier. Let's hope for the best. Thank you very much.

Thank you very much. On behalf of Investec Capital Services, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.