Capri Global Capital Limited (531595) Earnings Call Transcript & Summary

Hi, good afternoon guys. Thanks for making time and joining this conversation. So I think since 2019, it's the first time we are doing this kind of an interaction. And I believe you are also interacting with us in this format for the first time. The purpose was to familiarize with the branch operations at the Borivali branch and also walk you through our underwriting process. So in terms of presentation, we are going to refer to Slide #32 of our corporate presentation, which is already available on the website. From Capri Global, let me just have -- introduce ourselves, I am Ravikant Bhat, I handle Investor Relations. Sandeep Kotian is our DVP for the Zonal Operations. Bhavesh Prajapati is our head of Credit Risk and Credit Policy, Sheetal represents Go India Advisors, who's our external IR agency. Why don't you just introduce your name and the firm you represent.

Yes. Myself, Prashant Kumar and from Sunidhi Securities.

Hi, I am Mayank Mistry from B&K Securities.

[indiscernible] Shah from Antique Stock Broking.

So what we'll do is we will -- so Bhavesh, Sandeep will open the interaction, maybe we'll have a quick walk-through of the branch also. As it suits, maybe we can do it in the end when this is over. We will keep it mostly a freewheeling discussion. Sandeep will open and he will give his -- give the perspective on how the operations are run over here followed by Bhavesh will speak on credit underwriting, FCU, Legal, Technical. And although we don't have [indiscernible], we can handle -- Sandeep can handle operations part.

I can talk about your background. Sandeep before you [indiscernible].

Yes.

I take care of the entire operations for West, so Zonal Operations. I've been with Capri for 5 years now. So prior to Capri, I was part of ICICI Bank for 9 years and Kotak Mahindra Bank for almost 4 years. And since past 5 years, I've been taking care of the operation piece as well as the Customer Care in Capri. On branch banking, we have a separate set of branches across pan-India. So we have our spoke and hub model. When I say spoke and hub, it's basically hub, it is basically back from where the entire disbursement happens. That is -- once all the documents are collected, all these documents are segregated, the sanctioning happens, decisioning happens for credit. And once all these documents are collected and detailed NDC, that is non-discrepancy check-list happens on this particular documents, then the disbursement of that particular loan happens through the hub branches. So the spokes would be -- spoke branches would be basically from where we connect as we were saying, that is it would be Tier 1 cities where we would be adding our branches. But Tier 2, Tier 3 cities where the customers are located at. We have, say, in case if you I have to say for Bombay, we have 2 branches that is Borivali and Thane and we have 1 spoke branches, which is at Virar. So we cater to home loans and LAP customers, that's loan against properties. So I am a part of operations. The entire cycle as to right from onboarding of a customer, till the time the customer pays back the entire loan and moves out, we will go through the entire cycle itself. So sir, will you may take the liberty to start from the business origination.

Before we start the discussion about [ annual ] process, let us understand the customer profile because this process, we have developed where we can deliver our customers. As I mentioned, those -- they are informal, not having perfect banking and -- not covered in GST and ITR. So these are small businesses or individuals, they are running their own businesses, not in a very formative kind of structure, but in a very informal environment. So for example, as I mentioned, that dairy owners or mechanics or eatery owners, or that beauty parlor, the women who're running beauty parlor or saree shop or any garments shop, provision store owners, so these are -- typically these are the businesses which we are funding. Now obviously, since these customers are lacking on certain data, means this data won't technically be available on certain domains, or they are not having a footprint on a digital media. And thus, they are not having any documentary that -- income supported by strong documents like ITR or GST, income tax returns or GST. So now for our challenge, or our USP, you can see that we need to assess, we need to generate data, or we need to create a profile of a customer by visiting, by making various attempt to the customer premises for financial analysis or their income assessment or their net worth verifications. So there are multiple visits are required. So I always say this is touch and feel [ money ] right? So this is not 100% digital, but this is a physical because it's a mix of 2 things. Obviously, costs, this is the most important factor that we need to maintain at the lower side. So hence, we are embedded that digital process into our loan journey for our process efficiency. And for data generation or for their trade -- funding decisions purpose that my credit team or my technical team or my FCU team that is RCU team. So they will do open visits and verify customer credentials. So that is -- so since there's multiple touch points involved to assess the customer financial strength, customer background search because the finance-wise customer is excellent, but ultimately it is his background, for example, if he is politically affiliated, then definitely, there is a risk. If a customer is having a great financial habits, but he's is [ over-leveraged ] in the market, though, you can see a lavish bungalow, but ultimately that turf or there is a huge -- okay, that's in the market. So my FCU and my RCU teams, play a very important role to find out any kind of threats in a credit underwriting process. So that is how by keeping that touch point -- importance of customer touch point, we have entrant process from business origination to connection. So business origination that 100% in-house, we have in-house team that is the relationship manager, a relationship manager are people on street, they are meeting the customer, they are the first person who are interacting with the customers. They are collecting documents, collecting data on mobile, obviously. We have mobile app where we will collect all the data and then we capture images of the documents so that the application form can be generated digitally. So earlier, we used to fill that physical application form now it is completely digitalized. So I say phygital. So we try to augment our processes by introducing certain easy to implement technologies so that customer experience and our internal customer experience can be improved. So this application is generated on mobile. And then he will submit this entire application to my [ credit desk ]. So that is the reason we have mentioned that it's a DST model since that sourcing through internal channels. And your reliance on internal channel is always higher as compared to external channel like BSA or connectors or consultants because they always come from the customers, whereas my internal team are properly trained on my own products. So they can give a proper communication to the customer. My customers can get proper knowledge about products and various charges involved for the loan they are looking for.

Sir, you want to refer to that digital banking stuff. This is mobility [Foreign Language].

[Foreign Language] So in Sales Mobility, okay, as you mentioned, so there is various controls we have put in. So like digital banking, where we will capture that the bank statement -- pieces of the bank segment. So that's scanned document. We can share with our external vendor and earlier, we used to do that banking services from a physical that I want all the documents and then preparing in Excel, but now it is fully automated. So I'm just sharing the document.

So we are just moving towards having a digitized, even the geotagging concept -- field officer visits the customer's place, even the geotagging is done. So I know that this person has visited this particular place at so and so time and so and so place, and he has filled up this particular details.

Sir, [Foreign Language] CIBIL sales model, it is a CIBIL with [indiscernible].

So this has started since how long. The more of the digitized...

So Sales Mobility, we have started COVID, that is in 2020 because COVID -- COVID is the best situation in life. We did -- and many of the processes converted into digital to aboid face to face contact with the customer. So this is the Sales Mobility is invention, is during the COVID situation. Similarly, that banking is my -- this is, again, after recovery of COVID, business was picking up, and we found that we need to digitize this process. So we have implemented it somewhere into 2021. So we are just.

You mean signing of the bank statements.

Yes. So the bank segment is shared with the vendor. Vendor will convert those data that through OCR technology and they will give you that preformatted data in some logical manner so that you can have -- you can take a faster kind of decisions.

Just to interrupt, sir, have you registered with the account aggregator to -- I mean to minimize the -- all bank statement data?

Aggregators?

Yes.

So we are in 2 process for discussion with the 2 vendors, one is Novel Patterns and second is -- actually, today, I had a meeting with them, but because of this meeting, I need to cancel that meeting. So I am having that meeting on Friday.

So which 2? 1 you have named.

So one is Novel Patterns. Novel Patterns is a middle vendor -- actually, is a corrector betting the tool of -- ultimately [ CAMs ].

I mean [ CAMs ] has just started very. I think 8, 9.

So leading banks they have. But SBI is a -- SBI is still out of this group. SBI has not signed up for aggregator. But because even SBI is having their own process, and they will take some time, but that PSU banks, largely PSU banks are part of the aggregator services. So we are exploring those possibilities. And what is happening in a -- okay, this is the banks thing because I may not ask that 12-month bank statement, I simply share some [indiscernible].

Ultimately it is on transparency side also.

Correct. So that fraud, chances of fraud or any fabrication of the documents, fudging of the documents, that can be avoided through aggregator services. So that is on the shelf and we are exploring those possibilities. So that is how we are trying to automate our processes by introducing that most critical requirement. So instead of inventing that entire ecosystem that IT infrastructure, we are implementing our own needs wherever we feel. Okay, this is the most required support and we are trying to implement over the time. And that is the best -- method to achieve on digitalization otherwise sitting in an AC room and just envisaging various things, which is not practically possible. But here, let's say, analysis of bank statement, I have my own formats, I have all my triggers, everything I have put in place. So I need to give that those requirements with the vendor and vendor will give the output, which I can validate with my own -- live scenarios. So that is the most advantage to build that IT infra, in a piece-meal instead of inventing the entire ecosystem.

Yes. I think so the fintech, in next 4 to 5 years, I mean all financial company will convert to in technology company.

That is the future where -- see cost is everyone, right?

[indiscernible] legal, save it.

Because technology is the only option.

Yes.

If I were the process of or, let's say, 1 bank segment, it will take at least 2.5 months. Anyone sending the bank statement to the vendor, he will share that to end to end data, it is hardly 5 to 10 minutes. So seeing the productivity, the impact on the productivity. So -- and that chances of errors in a manual environment is huge, whereas this is a 100% error-free process. So whatever are the [ EABP ] calculations, that is okay -- near to 100% accuracy. So this is the advantage of technology. So business or that the origination we have seen. And then after that, business origination, the next part is credit underwriting process. Where my credit underwriting team comprises of credit officers and branch credit managers. So they are doing all due diligence on the file sourced by the relationship manager and branch managers. So they will do various type of verifications. As I mentioned, we need to create a profile, right? See, currently, the bank is ignoring -- that large housing finance or large NBFC are ignoring because they are not having the sufficient data. And now my challenge at this stage, we need to gather the data, which is scattered across all the corners of the, let's say, business place, references, suppliers, buyers, his vendors, right, or his bank statement so that I need to create a profile. And for this, we need to do various verification. So field investigations, bureau check, online verifications, credit PD, residence verification. So there are various type of verifications we need to perform. And after this, he will prepare a very exhaustive, very lengthy credit memorandum [indiscernible]. So it will cover that is 360-degree overview of the customers. So what is his residence vintage, employment vintage, his total experience, his net worth, his saving habits, investment, his total family members, dependents, earning numbers, so many things involving the camshaft, shape? And after this credit decisions will happen. So we have a vertical structure here. So to avoid any conflict of interest, so we have vertical structure, sales is responsible for sourcing and credit is responsible for credit underwriting. So that proper decisioning, proper.

Just go through on the recovery side because that is a part, I think everyone is hinged on that. So on [indiscernible] and all, what is the set up over here.

So this is the [indiscernible] for NBFC, CGCL more than INR 20 lakhs, loan amount more than INR 20 lakhs to the surface, more than INR 20 lakhs is not allowed. And for home loan, that is loan amount more than INR 1 lakh, [indiscernible].

More than -- home loan.

More than INR 1 lakh on home loan.

[indiscernible].

So before jumping to collections, because credit -- see, ultimately, risk management, how we are managing the risk right? And see in risk, there are 2 major risks, one is credit risk management, second is fraud risk progress and third is operational risk. So -- but the gating factor is always credit risk management and fraud risk management. If let's say there's a product INR 10 lakhs or INR 25 lakhs, it's a huge loss to us. So we are very, very concerned and the origination stage itself that our fraud risk should be minimal or 0 or near to 0. 0 is not possible, because 0 mentality always try to take advantage of the system. But we have a very robust risk containment unit framework, where we have a separate team apart from credit, so credit are doing their -- they're busy due diligence. And parallelly, the risk team is also visiting customers, doing some ground work, like said.

Credit team, branch manager and relation manager, they are doing [indiscernible].

So branch manager and relationship manager are not sales part, so simply. And credit team is different from branch managers. So branch credit manager and credit executives. So these are separate team and risk team, this is the third team.

Sir, let's go through -- just the business origination part again. So these [ RN ] how do they approach the customers. I mean which customers do they approach, I mean it's an on-field job, mean that is there is no one here right now.

So they will do multiple activities on the ground. So first of all, they will have their own network of charter accountants or builders, collectors. So they have their own networks. So they will always be in touch with them and they will do a daily call into them so that they will guide everyone.

So these people, if they -- won't be having any ideas or GST -- how the CAs make -- how are these customers then touch with the CAs?

Yes. Yes. So normally, this CEA in the sense that income tax consultants, I mean to say, right? And again -- in India...

Apart from this mouth-to-mouth publicity, which happens, the kind of customers we have, it's normally most of the mouth-to-mouth publicity. Basically, yes, I have taken loan from Capri. So now if somebody else wants. So I will prefer him to Capri saying that, okay, I know, I know the relationship manager. He is in touch. So the bond within the relationship manager and the customers are to such an extent that he is bound to refer this customer to Capri.

But then that would be very less, the referrals would be very minimal.

Referrals in that case because of the tier 2 cities and the tier 3 cities, the referral will be more comparatively with what we have in the metro cities because there, the relationship within a village or within a town, the kind of relationship you have is basically, even if you default, the word of mouth travels faster than [Foreign Language].

Though we see online platforms and so many literacy -- financial literacy around from RBI side. But still, you must have seen in your neighborhoods that so and so finance consultants, so and so loan consultant, right? So -- and still people coming to branch as a walk-in, they will prefer -- some segment of the population, they're still depending on consultants. They perceive, okay, these are the main door to enter into that financial services part. So they will contact either this type of consultant. So this market exists still. That is why Andromeda -- that is why that Square Capital, they are doing good businesses even for affordable segment. So this is now -- they are doing -- plus they are doing all that pamphlets distribution, they are doing kiosks set-up, certain locations like market location, let's say, on Saturday they are setting up kiosks at the retail market, weekly market so that all merchants can be given that information about the products, sometimes in school, sometime in bus station, wherever, right, in a [indiscernible]. So they will they will have one day marketing activity, so that inquiries can be generated from our office. So that is how they are trying to generate leads.

So how -- what is the team size there?

So RM is around 900 plus and BMV of around 300-plus.

So actually I was going to ask, why don't we use the DSA network, and we are only totally looking -- totally dependent on the in-house team. So since Andromeda has such a large network or other DSAs, maybe if the word of mouth would spread even faster then, so why are we not going through our DSA path?

So as I mentioned, DSA is having the own objectives. Ultimately, let's say, cost of -- our experience is, business through DSA where customer stickiness with the company is lesser as compared to business source directly from the market because after 12 months, the same customer will be blue-eyed boy for everyone, for SBI, for HDFC, for you name it. Because he's having the CIBIL...

So you're saying Andromeda itself may source a different loan from a different lender for them.

Yes. After 12 months...

It was typical [indiscernible] how we run, even with the banks as well.

Because the with the registry is again [indiscernible] they would just...

Andromeda will say -- Andromeda will say yes, you have completed 12 months do you require any loan? You are getting also so many calls. Sir, you are having one car loan. Do you want any top-up? So this is what -- this is DSA, DSA only. They are selling into people.

This can be taken as more of a hypothetical example since on the record, we have mentioned the DSA, that we personally don't work with. But take it more as a hypothetical example of DSAs and what we think of DSAs and our past experience. So we moved from that model to the direct sales team model as of today.

But yes, thought on metro, for metro we are looking for this opportunity where we met a large [ VAC ] or CSA kind of structure, but not with a small deals.

So only for metros...

Only for metros like Mumbai and Delhi. But in a small city that we have a branch, we have a proper team. So we are relying on our internal sourcing, et cetera.

How many branches do we have?

100 plus.

117 as of March. So our medium-term target is to add another 100 to this 117 network for the MSME and housing piece. And we have talked about 1,500 branches for Gold, loans, which is separate, those will be exclusive and they have certain cross-sell opportunities, which we will explore obviously, but that requires a more dense network so that's how it's been thought about, but for the MSME and housing piece, we are looking at another at least 100 branches over the next 4 to 5 years.

[indiscernible] do we get like each branches on which monthly files -- how much do we get with this sourcing model that we are looking at?

So on an average, see in a normal scenario, we can say around 4,000 to 5,000 files. 4,000, 5,000 files. 4000-5000 -- 5000 files we are having as a login.

And how much actually we land up -- like [indiscernible].

So around 1,500.

Sir this is monthly -- this is yearly you said?

Monthly, monthly.

And around how much?

1500 files.

March, we had 1000.

March is a very unique, so we can observe -- we can't [indiscernible].

So out of the 117 branches -- all we are -- I mean back side or on the road side itself also because since we have an in-house team already working, if the branches are open on the road side, don't you think it will add even more advantage then.

For all the branches, they will be in a very market location only. Yes, this is not a ground floor, but first floor, second, because walk-ins are limited. So either -- but yes, branch will be on a very upscale market only where that customer footfall in the market is huge and visibility of the brand should be proper. This is [indiscernible]

Basically into the financial, Indore, wherein we had every other...

Indore is again a regional office.

It's a different thing. Let's say this one, this branch, but this is not road-facing branch, right. Okay, this is your point now, this is not a road-facing branch. But see, Borivali branch, typically, this is like a processing hub, right? Here customer footfalls are limited. And we have here 2 branch managers and around 7 RMs. So they are always on the field. So that log-ins, they are sourcing, they are bringing to this location, and they are processing the file. But if you go to my Virar branch, so Virar branch is on the road side or road facing branch, if you go to my Vidisha branch, in MP, it's a first floor road-facing branch, the main location. Similarly, you go to Bikaner. So Bikaner, this is in the middle of the market, second floor.

So how much would be any difference in the footfalls than so basically if there's...

Visibility, not footfall. Brand -- see ultimatley you will be surprised, there is a complex and within the complex, if you look at spread your vision, you will find -- okay, maximum NBFC and even ICICI Bank and HDFC Bank in the same complex, Amravati branch. Amravati branch once I can -- go into the complex, you will find Muthoot, you will find InCred, you will find this one, Capri first floor, ICICI Home Finance, then Muthoot Red, Muthoot Blue, everyone in the same complex. This is not because of customer footfall. This is just a brand visibility.

I think what he wants to know is how many customers actually come to the branch and like convert, like basically, how many walk-ins -- is that what you want to know? Is there a benefit of having a branch where customer can just walk-in whether it -- yes.

Your point is valid. See, if I'm keeping branch in a -- okay, rear portion, it will not hurt that business very much because, ultimately I have feet on street and they will bring the logins. But my -- this is my first -- okay, primary objective that log-in should come. And my second primary -- that secondary -- not secondary, but second most objective is what, my brand should be visible into the market. And that is why I will prefer that my brand should road-facing or somewhere in the -- eyes of the public should be on the brand, that...

The signage.

And basically our model is only feet on street, rather than...

Correct.

We are more driving those kinds of -- it's not a mind recall -- it's not a mind recall, it's not a B2C through a branch.

If you have a regularly transacting customer -- as in case of the bank it makes -- so I am not going to climb a flight of stairs reach a place of business then it makes a lot of difference. But we don't have a regularly transacting customers.

So usually -- NBFCs usually have branches at these locations. They're not like banks, like in a...

I think they -- how many customers are we having -- hardly 1 or 2, maybe.

But the final signing we do at our branch?

So that is again...

I think what we saying is because there's not a visible signage here, but usually in tier 2 end cities, have you seen, there is like a board visible.

Yes, like sir said, there is one place, one complex, for the NBFCs out there, with that logic -- they have the different logic, that okay. There is a one-stop-shop.

Exactly.

You go in, you have all the options, you choose the best out of it.

So this is the one. So this is how this all marketing and sourcing activity happens. These are equal credit risk management, I mentioned how credit risk management, the assessment of income, the financial credential verifications touch-point verifications that we have discussed to assess the credit risk of the customer. Fraud risk customer, we have a risk containment unit, which is a -- we have a third team, sourcing team, credit and risk containment team.

Yes. So if you explain different risk and the credit that you are talking about?

Risk and?

The credit team you said right, like the credit also analyzes on its own, whether risk also does [indiscernible], then just differentiate...

So yes. So see credit team normally, they are concerned with that what is the daily cash flow. What are the business model, what are the costs, top line, profit, bank statements, various registration available or not available. So those kind of checks that is to be performed by credit team. Risk team is having a very specific job. So they are expert to identify any fraud triggers in the either on the documents, either on the profile or customer background. So all documents, they have a skill set about forensic kind of [skill]. So that by looking at the document, they can identify okay, this document is having some triggers where fraud is possible. And whereas the credit team, they understand the document, or with a very basic understanding. And they have an advanced level of understanding about the document triggers. So this is one. Second, they are highly networked with the market because they need to do a background check on the customer. So let's say, my credit manager will visit and they will understand the financials and everything. But if they missed about some very critical parameter, let's say customer is politically affiliated. Then my risk team, my risk team will dig out this information and he will come out, okay this customer is having market borrowings, this customer is having political connections, this customer is having bad habits, sometimes some shallow kind of profile. My FCU person, he will say, okay, this customer is having second wife, so some time. So see, again, so any bad habits will affect your repayment capacity, right? Obviously, this is not part of my business rules, but this is additional triggers.

People also forge bank statements, while forging that the fonts. So one bank may have a particular font, which they use. So fraud teams have also [indiscernible].

That's what, that is I told you. Forensic analysis of this document. So they have various triggers.

I think those aggregators only would be tracing that, already.

Aggregating services is very -- completely different. Aggregating services is what they are collecting data from bad loans. It's a repository. And whatever data banks have, they will share their data with us. So there is no chances of any fudging, correct. Whereas here customer is providing your document or DSA providing you document or some third party or our internal team is collecting the document. But any physical document is having chances of [indiscernible]. That is half after investing so much energy to create to create that profile, then this risk case is really for credit decision.

How much time does all this take?

So turnaround time of -- or by average turnaround time, I would say, that is 5 to 6 days.

For both risk and the credit teams?

Everything.

And how much, they will work simultaneously.

Yes, this is a parallel activity.

And the credit team would be how much -- like each branch -- like...

So it depends on the format of the branch, if it is a fulfilled -- just how he's mentioned, let's say Jaipur branch, or Indore branch, so it's a hub. It's a regional hub. So they will have multiple credit managers. Small branch, I will have one credit manager, right? In a remote location branch, I will have only sales, that is no credit -- these are only sourcing locations.

Okay, and the file goes to the nearest hub.

Hub, nearest hub.

The risk person also would be at the credit risk.

Yes. So after credit sanction, we have legal and technical activities. So we have in-house technical valuers. We have in-house legal officers. So all proper due diligence, since we have 100% secured business, so proper due diligence is very, very important. So our technical manager visits the property, they will do a complete due diligence like structure stability, marketability, valuation, identification of the property. So there are 5, 6 parameters we have defined. And legal, they will do a title search, documentation part, and list of documentation, preparation of LODs. So this is their activity. So title tracing is part of legal and valuation is part of technical. And after having all these reports then this file is ready for disbursement. And for each and every activities, we have maintained a checkup -- this is in a banking or finance.

But many times also the title is not clear, so how do we like -- for these customers, especially the titles are never clear.

That is the reason -- 13 years search and we require all chain documents, original chain documents with us. So see, this is typically limitations from the SRO side, where [ date ] product, or data are not uploaded or system. So you can't do anything on this. So to mitigate that, we are collecting 13 years original documents.

The credit team only does all this.

Yes. Yes, so all documents, let's say, there are 4 chains in that entire title. So all the original documents will come to us. So if customer is let's say, some customer will say my previous documents are misplaced. I have only latest ones, so we say no, because it's a huge risk. We don't know where he has logged his property or this is genuine or maybe is genuine, but the chances of fraud is very high. But once that entire chain is coming to me in original, then definitely I will say, okay, this title is fairly acceptable. So this is after performing all these things, this file, then there's NDC check -- maker and checker I mentioned, so credit is the maker, operations is the checker. So credit will do all the review of the file, while sanction condition, legal condition, technical condition, naturally there are so many conditions. So they will check, and they will confirm, okay, this all are in place and this is ready for disbursement. So they will recommend for disbursement. And then this will...

And this is where we come into picture.

This file will ultimately move to operations for customer onboarding. So before that lower document execution happens at the branch level. So credit manager will execute turnover documentation, CIBIL collect all indemnity, [indiscernible] he will take that [ DPN ] and everything. And then after file plus the loan documents, this will be handed over to ops for customer onboarding process. So now ops is gate keeper, he is a tiger, so okay. He will now allow.

Now that's the toughest part because there is always a clash between the sales and the operation per say, as to [Foreign Language]. So we are just a gatekeepers, but yes, we ensure, say, whatever documents which have been checked and forwarded to us. It is again being rechecked as per the non-discrepancy checklist which we have. So the best part is, we are trying -- we are getting this updated in the system itself. So we have Indus, which is the main loan originating system at the [ LM ]. So and the best part is even in credit -- even if a credit manager, there's hierarchy which is built in the system itself. So if an ex-credit manager is supposed to -- has an opportunity to approve a INR 15 lakh loan and if the loan is of INR 25 lakhs, it will directly go to the next level. And the hierarchy, the last level of hierarchy is with Bhavesh sir. So the end decision maker is his. So whatsoever file is gets stacked up. So he is the ultimate decision maker.

So he is the senior tiger.

So, document per se, we -- as in operations, we undergo and we go to the each and every document which has been forwarded to us. And then against that, if there are certain approvals which are required. In case if we are not comfortable as an operation saying that, yes, we would require mandatory details of this particular or an approval from this particular hierarchy, we may ask for that particular details. And unless and until the approvals are not provided, we would not go off with the disbursal. So as you rightly said, we are the gatekeeper so we have to be extra cautious about it. Apart from once the disbursement is done, so there are other back-end processes, which happens. So within the operations, we have central operations teams as well. So our states start from getting the CKYC done for the customer. These are [indiscernible] updations of the customer. And then there is a welcome once the disbursement happens there is, again, a welcome calling, which happens to the customer, informing them that, okay, whether there are a few checklists, which normally an officer asks the customer on the phone saying that, okay, whether all the details were provided to you or whether the rate of interest, whether there was any kind of cash or anything in kind being asked to get this loan processed. So all such details are -- and this is on a recorded line. So all these feedbacks are taken. And accordingly, there is -- in case if we find any discrepancies in that particular welcome calling checklist, the details are forwarded to the risk containment unit, that is risk unit, they do an investigation again. As to whether there was any kind of foul play, which has been done to get the disbursement done. Apart from this...

What would be the rejection rates of yours. Like whatever doc files comes from the credit team, after various checks and everything, what would be your rejection rates, in terms of whether you will go ahead with the disbursement or not?

See, there is a to and fro, but the rejections would be minimal. Why? Because as I asked for a justification, if there is a proper justification with an approval, I will go ahead with the disbursement.

Rejection and operation level is [indiscernible], the reason being your complete -- due diligence is over at credit stage. So either in terms of legal, technical, credit, RCU, all the checks are in place and they have validated, okay this is level, and this is fine. Yes, subject to certain conditions. Now operational role is to validate whether these conditions are properly fulfilled, whether KYC compliance are in place, whether that mandatory compliance is suggested by RBI is available. So they will check the compliance -- that compliance part. Okay, these loan documents are properly executed. They are properly stamped -- or stamping is available, signs are available requisite affidavits are available. So they will check from compliance from the operational -- see, they are the custodian of operational risk. So operational risk is more towards compliance part. So they will ensure, okay, whatever processes, whatever policy stipulates, that is in place, and this is good to go. So once all the conditions are fulfilled, then only they will allow that customer be onboarded. So this is how operations functions, but the rejection at operation state is nil, mostly.

So it's only that when we see any kind of discrepancies either we will say that provides with a particular approval or a clarification on that particular discrepancy. So we would not reject it upfront, saying no, we will not disburse. Yes, we will ask for a clarification as to what this discrepancy is for. And in case if there is certain things wherein we would require an approval, we will ask for an approval. So how -- this is how the disbursement happens. Once the disbursement happens, it is the handover the checks to the customer. And the original documents of the customer that is the original property papers are handed over to the operations, post legal getting the duly check along with the list of documents. The legal team provides us with the list of documents as to what all are the documents available in the original property papers.

So all the customers, where are all the documents stored in [indiscernible].

This is stored with our vendor, which is StockHolding Corporation, and we have another vendor called as Iron Mountain. So the original property, we place a request to get these documents collected. So they come with -- in a van, which is basically fully waterproof and fire proof van. So they collect these documents, they barcode it in-house that is before collecting, they provide us with the acknowledgment and then this is taken to the vendor place. And same way with the -- in case if I have to retrieve this from particular files, I have to place a request. The documents are raised at our branches and then they hand it over to us.

StockHolding and the other one?

Iron Mountain.

So you can use this one for gold also? For collection of...

No, for gold we have got strong rooms. So they will be -- gold will be...

So these are 2 for the document -- titles.

Only for documents, yes. They specialize in document storage and they are vendors to many other companies even for banks. But for gold, we will have a strong -- we have already a bit strong rooms in each of the branches that we are...

It should be owned...

Later this month, yes. With I think AIML, artificial intelligence systems to unlock it as in open it. So I mean, those all security measures have been put in place. So these are -- as we understand, some of the latest probably the latest system that's available in the market for strong rooms.

Sandeep, sir, if you can just give an example, like when you said during a welcome call also sometimes we find some discrepancy -- like what do you mean by that, like...

See, what happens is, at times, the customers are in touch with the middle agents. So who connects with us. So at times what happens is, there are few transactions which happens between the middleman and the customer. But for the customer, it is basically -- when I call him up, yes, I have the level of the customers we have. Yes, they may say that, okay, I have...

Sorry, discrepancy, means here, he mean to say, so let's say now check to be handed over to the customer. but there are certain documents are pending from the customer's side, which customer is not aware about. But in the meantime, that welcome call goes to the customer since we have opened the customer -- that loan account. So customer will ask you, okay, I'm waiting for check. So while my operation team will update, okay these all -- few pendencies that you need to complete because you have given declaration at the time of opening account. So provide those document and you will take your check. So those kind of questions from the customer comes normally, right? Otherwise, all the terms and conditions are being conveyed to the customer at the time of loan documents. So there is no such so the customers side, but normally, there's what type of documents wants to be submitted or any pendencies. So that only.

Middlemen you mean by [indiscernible] talking about it.

Yes.

So RMs like are in touch with both the consultant and the customer.

Perfect. Sometime you [indiscernible] sometime they are some middlemen, they will.

So we call them as connectors, right?

Connectors.

So these are not DSA type, but who don't mind getting being paid some small incentive, something which is decent enough to make them happy. But they are not exactly DSAs.

That's obviously by the customer only. The connectors, they are obviously incentivized by the customer, right? Or by...

No. Referrals, let's say, you have some good friends, you will be referring to us and definitely, we will pay some referral incentive to you. So this type of payment. So on customer per say, we have a central team of catching to all the customers. So we have a toll-free number that is one single number to which Pan India customers can directly get in touch with us. We have a separate e-mail team who caters to the e-mails received from the customers. So we also have a generic ID on which any of the customer wants to share their experiences, requests, grievances, queries that has been -- and apart from this, we have branches across. So we have a branch customer care team in the branches. That is in the Hub. So any customer who want to have a face-to-face interaction, surely, you can get in touch with the branch customer care team and they will look at this as well. We have recently brought in the sales force CRM. So that is basically an automated service request management system that is a ticket gets generated for each and every interactions, which the officer happens with the customer. So normally on a call or be it on a branch or be it on an e-mail. So it is mandatory for them to create a service request and hand it over to the customer. So accordingly, there is a team which would cater to all this, and we have a centralized team in Thane basically for as a contact center. And even in Godhegaon branch, we have -- we moved -- we added in Borivali branch, the contact center we have moved it to the Worli branch.

And after the credit team takes over status after then a comment more days to the customers onboading.

So say, now our dependency on customer. So once customer is available or document is with us sometime documents are put it in a locker so retrieval of documents where the customer will take time. So it takes normally 10 to 15 days for disbursal.

Total you have mentioned. Right now when the file comes, logging happens till the disbursement.

Till disbursement, it will take at least 20, 25 days.

Okay.

So that is how -- so that is the ultimate cycle and then customers wherein the loan is closed. So such customers would also visit the branches to get the original documents collected from us. So this -- we have a centralized team that is document management or we may say it as a record management unit who looks after the original property papers. So we have hubs, one in Bombay, one in Ahmedabad and the other one in Delhi. So this team caters to the original property papers. Once all the -- or when the loan is closed and NOC is issued by the central operations team, these documents will be retrieved from the vendor, and it will be sent to the base branch where the customer belongs to. So we intimate the customer saying that documents are available in the branch. We send an SMS to the customer. So with the implementation of the CRM, the SMS are triggered automatically to the customers. So on every request, which is created, an SMS is triggered to the customer saying that this is the service request number, and this is the request for which you have called out and the turnaround time within which the request will be closed. So even for basically the loan closure, post loan closure, once the document reaches the branch, a trigger is being raised to the customer saying that please get the documents collected within 15 working days from XYZ branch.

So now to perform all these activities. We have sales mobility team, we have LOS for credit underwriting, CRM, BMS, technical mobility, PD is personal discussion application. So many of the things will happen on digital environment. So ultimately, IE is not moving from branch at credit underwriting stage. Once file is with branch credit manager and he recovers to what is higher ups. So this entire journey of the file happens in the system. There is no physical filing. Even at disbursement stage once file is completed that branch will courier that file and once file reaches the state head then file will go to storage. So there is a lot journey of the file.

The credit manager keep uploading all the documents on the system but as and then he will get an access.

So that is on BMS.

I think all this has started just during COVID or this was...

No, no, no. See certain patches we have implemented during COVID, certain patches we have implemented just now like DMS.

All branches have this DMS.

So DMS, we have implemented just now. So now training is going on. So they are now getting the scanning and uploading of the documents.

Yes. Now on the collections.

Some members of the teams are here, but it's again the main team sits in the HO and act globally. So yes, collection, we have separate that dedicated team because here you need to get a constant touch with the customer since first mortgage sent, so that the customer can pay your EMI through bank first of all customer behavior of cash, handling cash and paying through bank is completely different. So we need to educate the customer through constant calling, awareness calling that pre-EMI calling so that customer can at less pay his EMI through banking. So this is one activity we are doing plus my collection team is having various strategies for various buckets. So that soft bucket, hard bucket. So soft bucket is 1 to 30. So where the sales teams also involved, credit team is also involved for customer follow ups and ensuring payments on targets. For 30-plus bucket collection team is involved, and they are doing all running debtors or customer meetings and everything. 60-plus and 90 that NPE bucket where the hard volume or some notices to be given. So we have litigation department. So our litigation department issue various notices and at least try to regularize the account on time. And in case after exhausting all the efforts, customer loan accounts are given to our NPA. Then obviously, as per guidelines, we need to wait, we need to initiate litigation or we have arbitration process below INR 20 lakhs. And 138 check bouncing, 138 is also applicable. So we have multiple options. But our heavy guys always in secured loans against residential or commercial properties. So SARFAESI is the best tool, right? So SARFAESI takes at least 1 year or 1.5 year for complete recovery of the loan so because that is something waiting window is provided by that act itself. So we need to follow that process that ultimately takes at least 1, 1.5 years to settle the account. So this is how collection. So collection, basically, again, this is a very empathetic approach with the customer because sometime this is not always like tapping the customer with the legal bylaws or shouting at the highest, it's not possible. But my collection as well as sales, they will always remain in touch with the customer so that they will understand, okay, this is the problem, we will help you out. But -- so both the approach this empathetic approach as well as your real legal actions. So that way, we are trying to manage our collections.

How many customers would -- customers currently pay on time? And don't have to put efforts in terms of collections. What percentage are monthly paying?

I would tell you say, let's say, my check bounce ratio that is in CGCL that is below -- around 18%, right? Now out of this pool, around 96%, 98% customers are paying EMI on reservation. So that is how you can say. So 98% customers are paying. Cash collection is there but in NPA account, all the hard bucket account. Otherwise, 100% of payment is through NACH.

Cash collections will be very minimal and even in those cases, receipts are generated at the point of collection. So even if a representative of CGCL collects cash and the company knows that cash has been collected and receipt has been issued. That is we have a separate application credit nirvana. So that happens in the application itself.

No, I'm not trying to assume the company point to view, but I am assuming customer point of view, like how many of your customers are paying cash through collections and...

That's very minimal, yes.

Mostly, they all have bank accounts. Or event if they have banks with, they tend to pay by cash or something.

No, No, that's not. That's what I told you, this happens only in hard bucket cases like NPA accounts. An NPA customer is paying in cash. And definitely, I will not say, okay, no, no, I will not receive cash, always go to check, check, right? So wherever customer is -- wants to clear his overdue amount through whichever mode then we will accept it. But as Ravi has mentioned, it's minimal because through NPA account, not all the NPA account holders are paying through cash. But a few of the customers will try to settle the account through cash and we will accept it. Again, this is subject to income tax rules where you can't accept more than INR 2 lakhs or those things you need to comply.

So this 18% is -- that is the bounce rate, so how you deal with that like what measures do you take there?

So I told you following number one, pre-EMI calling, right. So like credit team, I always engage my credit team on the case. So he will be in attach with the customer then. Okay, sir, your next due date is.

Collection team and the credit team, both will start.

So collection but on all that credit will call the customer, they will cover the customer month is next due date. And they will pursue it. Sir, if you are not paying EMI on due date then this is the additional cost, you need to bear plus your civil -- that impact on your civil number, right, plus any additional hardship. So that awareness is constantly being given to the customers. So that my check bounce can be minimal.

So what is the time allotted that is credit team obviously must be given so and so days. They must be more into the calling of the customer rather than checking the file on the customer, right?

So this is a huge pool, branch, let's say, 5 customers or 10 customers are bouncing out of the total pool.

So it's nothing like in particular days.

So let's say in our days, they need to get the 2 months. So they are traveling, they will call the customers.

So how is geotagging done? So this is done at the start of the process, right?

Yes, sales mobility. But when the officer visits the customer.

In application, in mobile application, we have that feature. So for sales mobility, that residence that visit are done by RM. So that geotagging will be captured. For technical visit, the property geotagging will be captured through technical mobility. So we have that feature in -- inbuilt feature in that application.

So how does it help for collections I'm asking.

So let's say, if I want to visit the property, right? So I can use that geo coordinates so that I will have that route to the property, right? And I can look at the property with the geotagging. In a rural area, you will not have a very detailed addresses. So this will help.

So this is nothing related to property documents or anything. This is just for path.

This is to locate the property. For example, once you start from your house for this office, you will use what that Google Map. The Google Map is what? This is geo only. Coordinates only. So, okay, you will see that Western age, but Western age is based on some geo coordinates at the back end, they are using that coordinates, right?

It's like properties are there.

So collection team visit these places for approaching the customers.

Tagging has happened in the sales mobility app, it's more of a tracker for the collections team when we visit for the collections. [Foreign Language]

This will be more like authentication [Foreign Language] Tomorrow if somebody else puts a claim on it, they have like a digitized barcoding on it.

So geo will help you out to take you through that property and identify the property finance by us. And what's on technical. Let's say, I'm sitting in Mumbai and some proposal is coming to me. So I don't know for each and every product of India, right? So I will go to technical report. In technical report, geo ordinates or geo images are given. So I will say, okay, what is the surrounding development, is it good, average or bad or poor. So I can make out from those geo coordinates. Plus, I can say, okay, this is near to highway or is there any issues in terms of development, surrounding development. So that I can use those judgment by using geo coordinates, right? So that I can say whether this property is available, or I would say, okay, in this area, we will do maximum INR 10 lakhs business loan, not INR 50 lakhs business loan because I have not seen any surrounding developments on the geo coordinates.

So there is always a collateral for all the...

100%, no unsecured loans. 100% collateralized and typical LTVs are 50%, 55%.

Sir, from the customers give the channel, collection team only has to go and collect the checks for almost all the customers.

Yes.

Customers do that or deposit a check or something?

They can come to our branch and they can deposit the check, but normally our collection team will collect it. Because daily, everyday customer will come and they will deposit. So it will be better if the customer is committing by collection.

LTV has also moved up recently, last 2 years, 5% increase from 47%, 48% to 52% now.

Below 50, it was below 50, but it's now getting to 50 only.

Yes. So you are planning increase further. 100% collateralized.

We have increased our LTV by 5% in last year -- not last year, but 6 months back. And that is the impact of that in up by 3%, 4%. But it's not a very significant jump in LTV.

No, but I am saying there is enough room, right? It's 100% collateralized business.

We've also got something to do with the ticket sizes we are comfortable with. So we may be getting properties that are -- so let's say, worth INR 4 million. But we don't want to look ticket sizes more than INR 2 million. So that naturally caps the LTV of the loans that.

But we are comfortable with 50%, 55% again, the reason being higher equity, lesser the chances of default. This is the thumb rule. So if customer equity is high, then my credit risk is comfortably low.

Once gold loan comes in then LTV loan...

Gold loan is different. Gold loan average LTV would be almost 70%, 75%. That also is a liquid asset.

Yes. So it will go up, right?

You just sell gold and you will get your money. But here, if I want to sell the property, first of all I need to follow that entire process of 1, 1.5 year then I need to wait for auction and then in auction, I need to have a good buyers like you.

How much time it will take to auction and all process?

As I told you, 1, 1.5 years.

What are the yields for home loan and SME products?

So SME product, that average comes to around 15% and home loan is around 12%.

Less than 12%.

Now less than 12%, 11.75% something.

So in quantum, how much bucket you can estimate in FY '23 that will be recovered, like 1.5 years, you have time. So how much in that bucket?

So we don't have a specific guidance on that. But say, I mean, if you have seen our Q4 results, we had some write-offs over that. Some of those were -- 30% of that was purely technical. So it's a matter of time and we will recover those entire amounts. Some portion of that had stickiness in it and may take some time but our historical loss due defaults are in the side of 30%. We had done a more recent review of data and that data has also surprised us positively, although we are trying to build a cushion from a ECM and coverage perspective. So net debt, I mean if your question is how comfortable we are even without the recovery happening and if things continue as they are. So what we're basically saying is our credit costs are going to be on the lower side in FY '23 in absolute terms. I'm not talking in terms of credit cost. But even an absolute terms from what I think we did upwards of INR 1 million credit cost in FY '22, it will be lower and recoveries come -- if they do come in this financial year, that will be icing on the cake.

Your structure is very minimal.

It's not very minimal. But yes, I mean, if you look at it from a portfolio perspective, so we have got INR 31 million of SME portfolio and a chunk of our restructured portfolio, which is INR 2.1 million, chunk of that, INR 130 million is housing. So if you take that out, then the rest is in SME. So in high single digits. But finance side. So I think what we are saying is we expect about 25% delinquency to happen in this restructure portfolio. Yes. So let's say, INR 500 million of that.

Across industry is 25%, I think.

So we haven't moved that number. And as of now, things seem okay. So we are also looking at it. I think recoveries are -- I mean, payments are happening in the restructured portfolio also. But we are tracking it. I think we'll have a more conclusive number, not conclusive, I would say, or slightly more directional commentary post Q1.

And most of the restructuring on asset class, I mean it is in stage 1, 2 or 3?

Classification is 2.

Totally in 2.

Yes, a very small bit is slip. So I mean, very small, I think it's around INR 60 million, that's in Stage 3. But the other stuff it is.

Nothing in 1.

Nothing in 1. If we are done with Q&A. If you have any questions, we can take more questions. Otherwise, we can have after the lunch.

I am done. They can also talk along there.