Ujjivan Small Finance Bank Limited (UJJIVANSFB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Ujjivan Small Finance Bank Q2 FY '22 Earnings Conference Call, hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Alpesh Mehta from IIFL Securities Limited. Thank you, and over to you, sir.

Thank you, and good morning, everyone, and welcome to Q2 and 1H FY '22 Ujjivan Earnings Conference Call of the given finance time. From the management, we have Mr. Martin PS, Officer on Special Duty and Head Operations and other senior management from the company to discuss the results. Now without much ado, I hand it over to Martin for the initial comments. And [ post it ], we'll have a Q&A. Thanks, and over to you, Martin.

Good morning, and welcome to our earnings call. Hope you all are safe and healthy. For the part of FY '22 was fairly subdued with Q2 witnessing gradual recovery. Early H1, the business environment was disrupted due to COVID wave 2. The economy improving post COVID wave 2, business confidence has started building, leading to higher credit demand and improved collection, which was severely impacted in the months of May and June of this year. We are seeing a good credit demand in segments like affordable housing and MSE as our lodgings are now higher than pre-COVID. In microfinance segment, the demand is picking up gradually. Overall, credit demand is picking up well. The improvement is secular across regions. South, which was the most affected by the second wave of COVID, has done quite well with an exception of Kerala. Among the other big states with where we operate, Maharashtra and West Bengal are behind the national average. West Bengal is largely due to continued disruptions when coming as the local trains were not operational. Consequently, we are witnessing a significant improvement in business volumes and collections are sustaining at 95-plus percent. Business background. We worked on a 100-day plan, primarily focusing on 3 areas: rebuilding business volumes, improving portfolio quality collections, retaining talent. We are periodically evaluating their performance against the 100-day plan, and we expect to roll it forward until the end of this financial year. The disbursement in Q2 of this year has improved INR 3,122 crores, which is up by 114% compared to the year-on-year, 38% quarter-on-quarter. The improvement is across all business verticals. September disbursements, there are more than INR [ 100 ] crores and October was around INR 1,300 crores. Also, we continue to diversify our asset book towards non-micro banking business, which now contributes 34% of the loan book. Collections that includes [ budget ] are sustaining around 95% during August and September, leading to overall PAR declining to 18.9% as of 30th September, which was 30.8% as of June '21. A good proportion of the PAR has come from the collection and normalization of the accounts. Balanced production has come down to restructure. As of 30th September, our restructuring book stands at INR 1,480 crores, despite an overlap of INR 400 crores with total GNPA. Collections in our restructured book is very healthy at 86% as on September and similar in October. Given that most of the restructured book was due for collection in October '21, we see an overall October collections to be healthy and are confident of improving in the coming year. We have also focused to empower employees during this period and tried to address most of the employees' concern. We have started to see some withdrawals of resignations across mid and junior levels. Talking about Q2. I would say it was a very good quarter as disbursement moved up significantly and collections too have improved. We see the momentum continuing in October '21 as disbursements were significantly higher than September. Few key highlights of quarter 2: gross advance was at INR 14,514 crores, up by 5% year-on-year, 3% quarter-on-quarter. Microfinance disbursement of INR 2,130 crores, up by 95% year-on-year, 170% quarter-on-quarter. Secured book has improved to 32% as of September compared to 23% as on 30th September '20. Total deposits stands at INR 14,090 crores, up by 31% year-on-year, with total retail deposits at 52% versus 49% in Q1 of this year. CASA deposits have grown by 79% year-on-year to INR 3,166 crores or this contributes to 22.5% of the total book. Also with the continued focus on improving product mix and encouraging customers to use top accounts for transaction. We continue to see increase in average balances across our CASA accounts. We have acquired 1.8 lakh new customers into retail liabilities during Q2 of this year. With strong growth in retail liabilities, our cost of funds continued to decline for Q2 of this year after funds over 6.3% against 6.5% in Q1. Collections in micro banking improved at 95% in September '21 from a lower 71% in May of this year and 77% of June. Moving on to provisions. Book coverage is at 10.4% as of September '21, including a 34% provision coverage on restructured book. Tier 1 capital at 20.8% with capital adequacy ratio at 22.25% as on September. Liquidity coverage ratio at 151% as on 30th September. Now on to reverse merger. Earlier this year, RBI has informed SFB to merge with promotor holding companies to up from the regulator 3 months prior to the completion of the 5 years of operations. Accordingly, the bank Board has approved this team up amalgamation with the promotor in [indiscernible]. The same has been filed with the regulators. We are now in the process to get serious regulatory approval. We believe the process will take around 12 to 15 months to execute. On the premier management. The Board has submitted names of 2 candidates to [ Ujji ] for the post of MD and CEO. Also, the Board is close to filling other key leadership positions like CFO, CHRO, CTO. In fact, a few have been closed, and we are delighted to mention that. There is a few very good leaders to be joining us and adding to our overall management strength. In the interim, we would like to assure you that the bank has a strong leadership team with relevant and varied experience across banking functions and businesses. Also, we have a strong and independent Board to guide our strategy and execution. On the closing comment, I would like to say the extensive level of vaccination drive across the country gives us confidence regarding potential third wave COVID impact. As we give them, we have been driving employee vaccination over the last few quarters. As on date, 95-plus percent of our employees are vaccinated and the numbers are going up as per our plan. We have also started to help our customers and their families to get vaccinated. This, coupled with rising trends in the economy makes us believe we are nearing the tail end of the COVID situation. To conclude, I would like to reiterate that as per our long-term strategy, we want to accelerate business growth and profitability, diversify our asset book and build up stable granular liability base. In the process, we would continue to use technology as a key enabler. On immediate basis, our primary focus is to improve portfolio quality, collections and retail business volumes. Increase collections across verticals, especially from restructured and NNPA tool, reducing power and rising disbursement gives us confidence that H2 of FY '22 will be significantly better than H1. We have recently got detailed audit of our portfolio quality done by an independent expert. Accordingly, we have taken accelerated provisions and further strengthened collections team and overall governance level across function. With improving business momentum with our deep understanding of our target customer segment and focus on delivering relevant products of services with superior customer service level. We do not expect any major surprises in our business performance or lower impact in FY '23. I would like to stop here and open the floor for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Sri Pal Doshi from Equirus.

Sir, firstly, the question is with respect to the new NNPA that we have sort of short listed. So just wanted to like sort of see the strategy to bring in somebody from the same ecosystem? Or will it be something where we'll have separate business heads for each of the segments and then there will be 1% looking at the entire ecosystem? So how are we incrementally looking at it?

I'm Carol Furtado, Chief Operating Officer, who is responsible on finance bank. Thank you for your question. We are -- we have submitted all our... [Technical Difficulty]

Ladies and gentlemen, the lines of the management has got disconnected. Please stay connected while we try to reconnect the management. Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, ma'am.

Sorry for the disconnect. I'm Carol Furtado, Chief Operating Officer of Ujjivan Small Finance Bank. Thank you for your question. We have submitted applications to the Reserve Bank of India on the MD designate. And the Board has taken a call. We are awaiting the response from the Reserve Bank of India. The permission has been done within the stipulated time line. Thank you.

So just the follow-up there was that like incrementally, we are moving towards changing the loan book mix that's clear from the commentary also. And we're looking at 50%-50% split, which is also indicated during the last quarter. So how will the management digit look like in order to take care of another 50%, which will be secured sort of a portfolio? So what are the -- what is the strategy that we are looking at in order to go towards that loan book mix?

Shreepal, just a query, your query is still on the management or you are querying on how the business will -- on the business strategy?

Both, so it's like because that will drive the strategy. So from that perspective, I wanted to understanded a few things.

Thank you. We have a very good leadership team in place and the sale is aligned to the quality growth that we end for the bank in the medium and the long term. We have also seen a lot of progress in each aspect of our business and positive changes on all fronts, including our people and collections. We are very hopeful of a very good second half of the financial year, and it was built strongly to achieve the plans we have set for the next 2 to 4 years. If I have to get into business vertical wise, affordable housing, we are seeing a very good traction, especially in the last 2 months. Our log-ins have already reached higher than the pre-COVID levels and are at an all-time high. As COVID fears are reducing, people are selling on house purchase and construction, and this is helping from the growth in the construction sector. We, over the past 4 years, have built a very strong book and -- which makes us a very meaningful player in this segment. We look now to consolidate our position in the industry and become one of the top lenders for affordable housing. We are working on various areas to increase our efficiencies in terms of products and service offerings. The other area of focus for us is the MSE book, which has been a star performer for us in the half year 1. We had been incubating this business for over 4 years and I'm confident to move to the next level in terms of product offering. Onboarding again, I would take up on the people side. We have onboarded the right talent across all levels and have a skewed approach towards secured lending, which is giving us good results. We believe we can become a preferred lender to our customer segment in the medium term. We will go stronger on fintech partnerships to complement the customer acquisition and growth. In fact, our first fintech partnership has been very encouraging, and we have built a strong book in record time. This we have to look at our newer lines of business, which is the personal loans and the vehicle finance. Both these businesses are currently small, but we are confident of growing them fast. We have a good leadership team in place and skills with people in place. These businesses are at a stage where MSE and housing were 3 years back for us. We will accelerate our growth here than through fintech partnerships. In the medium term, yes, too, we will create a niche for this segment. Microfinance continues and will continue to be a key focus area for us. We are gradually opening up the new customer acquisition. We are among the leaders in the industry with a very rich legacy and business will continue to be a meaningful contributor to our overall volume. All our business verticals will grow with the customer segmentation approach. We will introduce newer lines of businesses after careful research around customer needs and if it makes business sense to us. I hope that answers your question.

Yes. Just a number related questions. So like of our restructured book, which -- so what will be the spread of it in terms of SME 1 to an NPA? I suppose you're already at INR 400 crores already in the NPA pool of the restructure book. So how will that spread over SMA 1 and 2?

Ashish Goel, here. So the INR 400 crores of NPA that you're referring to is from the resolution framework 1.0. So this was restructured in the month of December, a total of INR 850 crores as we had disclosed in our earlier earnings call. And from that INR 400 crores, which is about 46% has moved into NPA. The balance has not recovered or are into nondelinquent buckets. The risk on this portfolio going forward is close to 0. There will be recoveries from the school now, which we are seeing a very encouraging trend. On RF 2.0, the repayments have just started in the month of July, August and September. We've seen a very good trend there. As Martin mentioned, 86%, 87% and above. So that is a very stable portfolio.

Sir, so basically, if I look at it, we have overall restructured close to INR 1,900 crores -- INR 1,911 crores, of which broadly INR 400 crores are slipped to NPA. How would the other remaining sort of INR 1,500 crores look like in terms of 30-plus be sort of a number or 60-plus be sort of a bucket, sir?

Shreepal, as of date, we have around INR 1,480 crores on book with this revenue structure. Of that INR 567 crores is PAR. Of that INR 567 crores, INR 402 crores is GNPA. I don't think we'll be able to provide a bucket-wise breakup of the PAR number, which anyway is a very small number right now of about INR 65-odd crores.

Got it. Just one last data keeping number question. What is the gross slippage and upgrades to providing write-offs for the quarter?

For the quarter?

Yes.

Just a second. INR 600 is the rough slippage in quarter 2.

Okay. And the other part was...

Upgrades one quarter.

One quarter. Okay. And the coverage?

It's -- upgrade is -- republic.

The next question is from the line of Arun Kejriwal from Kejriwal Research.

Sir, congrats on an encouraging set of numbers. I wanted to understand on the digital initiative that the company has been focusing on. We have invested a lot in terms of resources on this. So if we take a 6- to 12-month view going forward, how do you see these initiatives spanning out for the company in terms of cost, manpower savings and better business?

Thank you, Mr. Kejriwal. This is Martin. Digital initiatives have been a part of our long-term strategy to create [ market ] bank. We will continue to work along the same lines, which was generated in the overall mission of the bank. To elaborate on this topic, there are 2 aspects to this: one aimed at the back-end processes and other for the customer-facing applications. During the initial phase, the robotic process automation was heavily focused on back-end operations. Now we plan to extend it to other units within the back office and also to the business functions, like micro banking and the branch banking. During the month of October, we have added 5 more new processors to the robotic process automation. As we speak, there are 25 processes, which is already in line. There are another 24 processes, which is in the final stages of testing. Coming to the artificial intelligence. We have launched our website bot, [ Aria ], which is currently available on our website and soon to be launched on WhatsApp, which can answer basic customer queries and generate lead at the moment and can converse in regional languages like Hindi and Kannada. We plan to extend it to 7 more languages. Also in the process of building more intelligence in the bot to make the conversations more human-like. Among the SFBs, we have the largest share of the UPA transactions. We have also entered into strategic fintech partnerships for posting of loans, repayment collection. The results are encouraging. We'll be looking at more such partnerships to enhance customer experience. At this point, we have tied up with different entities for our personal loans, micro banking, vehicle loan, MSE and liabilities. And our customer onboarding journey has undergone a thorough revamp. It has been launched for the closed user to testing at the moment. And we see this going on scaling up as we progress in the next year.

Right. Sir, one more broader type of question. There is a stated objective of the bank that they want to move towards a 50-50 loan book going forward. So if we take a 2- to 4-year horizon, how do you see things panning out: a, on the loan book front; b, where do you see the traction coming in, which would help in increasing the focus to non-microfinance? So your thoughts on this broader perspective.

Thank you, Mr. Kejriwal. I will take the questions. So to elaborate a little on our medium term. Like you said, our retail asset book will grow faster than the micro banking book, mainly due to larger volumes from the retail asset portfolio. This, of course, will contribute to around 50% of our portfolio and deepen our footprint in the aspiring middle-class segment. I have elaborated in the first question about the details about our strategy for affordable housing, MSE and our newer lines of businesses like personal loans and vehicle finance. Also, our micro banking will continue to be a key focus area for us. And we have also started opening up to new customer acquisition once again now that the COVID has receded in most parts of the country. We have always been leaders in the industry with a very rich legacy, and our business will continue to be a meaningful contributor to our overall volume. All our business verticals will grow with our customer segmentation approach, even our deposit base will get more granular. And we will increase the wallet share of our existing customers, along with the quality acquisition of new customers. Our focus on solution-based approach continues, and we will accordingly create product procedures which are relevant for them. Just to also touch upon what we are doing currently. I would like to highlight that we have recognized our areas of concern transparently and are working strongly on a 100-day plan to business momentum across all our business verticals. Over the last 2 months, we have seen good progress in building the business momentum. In fact, last month has been a record month for us in terms of disbursement despite the many holidays. Actually, the festive season helped us in faster traction and our incremental overviews are also showing an improving trend. Like I said earlier, we have a very good leadership team aligned to the quality growth we -- for our bank. And based on the progress in each aspect of our business and the positive changes we are seeing on all fronts, including our season sentiment and increasing our collection efficiencies, we are confident of a very good second half for the financial year. And on this strong base, we hope to achieve our plans that we have set for the next 2 to 4 years.

The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund.

My questions are all around the GNPA and collections. I've noticed that the cumulative collection efficiency has gone over 100%. So do you expect a strong pullback of GNPA in the current quarter? And do you get a sense that this is peak? There are also specific problems that we have cited in states like West Bengal Transport issue and Maharashtra political issue. Is there some resolution of these issues that is going to help accelerate the recoveries?

Thank you. Ashish here. So to answer your question on GNPA, yes, as been suggested, there will be peaking out. And we've seen a very, very good traction in Q2 after the reopening of the economy, plus the lockdowns eased out. There has been a very, very solid rebound on collections. We are making incremental collections over and above the strategy month-on-month. So the GNPA as we see will pick out some time now. And there should be some recovery. We put a very solid infrastructure on ground so that recoveries from NPAs start accelerating from year onwards. We would also like to state that there has been a very good progress on the NPA action on secured assets that we have initiated in Q2 that we should see results happening Q3 onwards. So we should see some good recoveries on NPAs.

As far as your query on the specific states are concerned. I think, West Bengal, we are seeing some [ catch net ] as the local trains are now starting sooner. They've already started, they have already starting now. Maharashtra is a slow process, and we had limited our exposure strategy to areas which are less politically active in Maharashtra. However, there, the state has always been a laggard since the COVID has been there. So we are seeing the recovery in Maharashtra continues to be slow. However, having said that, in the month of October, the collection efficiency reached around 92%, which is more or less reaching the national average now. So those steady -- slow, but steadily, it's moving up.

Excellent, sir. just one follow-up question on the same [ leisure ]. Do you see that the customer cash flows have improved significantly? I know they would be having some lags, but is there hope that the worst is over for your customer base?

So in the last 2 or 3 months, we have seen that the nondelinquent would have remained very steady. So our incremental overview has come down to less than 1%. Our NPA collection efficiency has steadily improved in Q2 2019, 8.7%. And moving forward, we see the trend going even better than this. It sends the NPA pool, which is now starting to give us some recoveries. And therefore, overall collection NPA efficiency will continue to trend upwards.

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

Also 2 questions. One is on the provision side on the P&L. If you could provide the breakup of the provision of our NPA and restructuring?

Our total provision on the book is around INR 1,506 crores.

No, no, sir, I'm talking about this quarter.

I'm giving you the breakup. You want the breakup of that, right?

No, I want for this quarter's P&L provision of INR 400-odd crores.

Okay. So roughly INR 250 crores of this is towards your NPA provision, roughly INR 63 crores was towards the write-off that we did and the balance was towards the standard asset provision. The standard asset provision that was there was because of the restructuring that we have done.

Okay. So INR 50 crores is towards NPA?

NPA solution.

Got it. And just to follow-up on that. So in one of the calls, you highlighted director for the entire FY '22, our credit cost will be around INR 1,100 crore to INR 1,200 crores. So post this review done by the third party, which likes to be [ accelerated ] going in Q2, does that guidance business impact? Or you would like to revise that upward or downward?

Renish, the guidance was given after the credit quality audit done by the independent experts. And that guidance included all the corrected action plan that the management has put through. We are happy to say that we are -- the evaluation or the performance on that corrected action plan is up to the mark.

Got it. Got it. And just a last question on the collection side. So in September, there has been a steady upfront in the collection. But in October, verticals like MFI and housing, the dip in collection in October. So what is happening there? I mean is this something one should not look at very deeply?

Renish, this is largely because across the country, there were a lot of holidays, East, West, South across the country because of Navaratri, Durga Puja and other holidays. There were a lot of nonworking days, which impacted collection. However, if you look at the absolute number of amount collected, which is in line in September. So there's actually not really a dip in the collection. And also given what Ashish already mentioned in one of his remarks, a lot of restructured pool came for collections in the October month, despite that the overall collection is in line with September, which is a very healthy time.

The next question is from the line of Vidhi Shah from Antique Stock Broking.

I just wanted to know what is your collection team size as of now?

We have 2 verticals, one for micro banking and one for retail. In retail, we have a team strength of about 175 people and the [indiscernible]. So we have a panel about 50 agencies across the country. So they would have their own set of about 3 to 4 people in each unit. From micro banking, we have a team strength of about [ 22 ].

Okay. And how much has that increased over the last 1 to 2 quarters?

A net increase of about 600 people.

In microfinance you're talking about?

Yes, in microfinance. Because microfinance is where we have increased our spend in quarter 1 and quarter 2.

Okay. And have any sales people also been diverted to collection?

No, not really.

Per months?

What really happened was, we -- at the time when disbursement were not -- so the logins were not very high. All the teams possibly, including the sales as well as the collections were interacting with customers to get that earliest. Sometime during quarter 2 when login started picking up since started focusing more on logins and disbursements so the teams, they covered the entire roll off over in collections.

The next question is from the line of Viraj Mehta from Equirus PMS.

My question is a little broad based over the last 1.5 years, what we have seen. If I look at the total write-off and provisions we have taken, we are probably the worst effected bank across all at least listed microfinance companies and small finance bank and even a large universal bank, which focuses on microfinance. Now what I wanted to understand, a, what led to such a larger provision on our part in terms of processes went wrong? Or is it -- because we are -- to be honest, compared to some of these guys, we are not even as concentrated geographically. And second, what are we doing to change the process so that whenever every 3, 4 years, such an event happens, the kind of numbers that we have thrown over the last 1.5 years are not repeated in the future, especially compared to everybody -- every peer of ours?

Viraj, so this question clearly has a lot of comparisons with a lot of other industry players. In fact, we don't want to abstain from making any comparisons with anyone else in the industry. From our point of view, we had put a strategy in post COVID 1.0 as well as 2. Both the waves had impacted our consumer segment severely, especially COVID 2. And the dispensation available were allowing us to restructure accounts with provisions sales for each account that we are restructuring. So obviously, we have done all that was allowed within the frame book or that was allowed within the country conditions. And therefore, our numbers are showing the provisions that we have taken on standard as well as [indiscernible]. And I can also assure you that the management has taken all steps required for recovery, starting from reduced slippages from the nondelinquent markets to shrinking the delinquent buckets in SMA 1 and 2. And also focusing on building the strength required for collections from the NPA even. So we've not kept any stone unturned in terms of recoveries and strengthening our operations and infrastructure. We've also put a 100-day plan as we said in the beginning of the presentation. And this 100-day plan is for disbursements as well as recoveries. So we're happy to say that as we [indiscernible] The first couple of months have been exactly executed to plan. So we are some -- taking from our point of view, we've done exactly what we wanted to do.

Sure. I understand that both of you have -- I mean, there was a lot of changes at the top level, which is kind of not your call. So I really understand the candid [ one ]. Second, what I wanted to understand is, even though we were basically not -- I would say, our disbursement were like pretty low until probably second half of this quarter for last 5 quarters. Our expenses, both operating as well as employee expenses have significantly grown over the last 1 year each quarter actually. Even this quarter, we see a significant growth in expenditure, both employee and operating expenses. Can you talk a little bit what explains this? And what can be our forward expenses over -- like what's the plan for next -- 1 year or so?

Viraj, there are a lot of expenses that have come during this first half and towards collection. So we -- as Ashish mentioned, that a lot of off-roll employees are hired on the collection side. We explained how the team size has increased. We also mentioned about the agencies that have been hired. A lot of expenses during this first half is towards agency and the off-roll employee payment. And also some bit of our direct business expenses have started to pick up as the business is now starting to grow. And that is in line with how variable expenses will go. So that has led to the increase in the cost-to-income ratio, which you have rightly pointed out. And also the income is subdued because of increased GNPA level, which does not allow us to recognize the pre-tax income. Even versus June, the GNPA has gone up by 200 basis points, which led to further derecognition of interest income. So that is the reason why cost-to-income and other expense ratios are looking a little higher side. However, we can say that with the given plan that we are working on, things will fall in place by the time we are about to end the year.

Talking about [indiscernible] talk of absolute which have gone up significantly, especially [indiscernible].

Sorry to interrupt, Viraj, your voice is breaking up.

Sure. Sorry. So just one last thing. We have been a shareholder of the holding company in the bank for 4 years now. We would really appreciate -- I mean we had a summit on the call last time kind of explaining the problems that we were going through. I would have really appreciated him also being on the call, especially when we are seeing this transition happening once we have the MD and the CEO, it's great. It's just a suggestion, and I hope we do well going forward.

The next question is from the line of [ Yash Dandivaria ] from Dundee Equity Research.

I'd just like to understand what people are paying you or going forward to pay you back, let it be the 90 days [indiscernible] or a 60-day bucket? I just want to understand the trend that has been happening since the last 2 to 3 months, that would be great.

Yash, so when we are going through quarter 1, the COVID 2 wave, we had done a little research with a set of customers, and we found that almost 60% of the customers had seen a heavier impact on their income. In Q2, we have seen that about 6% to 7% of our customers have regularly said that they are not in a position to pay. And this is broadly the number that we are also seeing reflecting in our slippages. Most of the customers seem to have bounced back. There has been a good trend of repeat customers taking further loans, which is a good indicator of customers starting to revise their income, revise their livelihoods. So that gives us confidence that most of the customers are actually past their -- the impact it had on their income. In terms of the customer segment, we've not seen any lag other than a couple of geographies where the lockdowns were extended or where -- as local trains not functioning or things like that. But most of the other segments also have done quite well.

Also, what kind of measures are we taking to keep our management impact, especially the junior and the mid-level and the senior level? I want to understand what measures are you taking to make sure that the employees are retained.

Yash, this is Carol. See, we -- I mean, we have seen attrition across various levels in the bank. But one of our key aspects in the 100-day plan is to address the people issues. That's one of our key focus areas. We have put in a lot of programs in place to reach out to our employees and address the challenges and concerns. We have opened up all our communication channels, address people, do town hall meetings and various forum meetings. There are business leaders who have started visiting branch teams and working on a quicker resolution of people issues. We have also ensured that jobs are aligned, too. People still have made minor tweaks in job responsibilities and the organization structure. Few of the hygiene requirements were immediately addressed to ensure people focus on points and achievements are applauded across the country. So we are seeing early signs of positive trends where our people are revoking their resignations and staying on with us. The attrition level is due to personal reasons. We have started the recruitment process and have shortlisted few provisions and closed a few positions as was addressed in the initial speech by Martin. We are very happy with the people quality that we are attractive from the market. But that said, we have a very strong internal leadership team in place who are very well capable of taking forward the strategy for the bank. We...

I just have a follow-up question on what you just said. So is it -- for me to understand that the resolution trend is over, I mean is that only a Q1 ground?

Yes. I mean, people have been withdrawing their resignations. We have been able to give them a lot more satisfaction in their roles. And now since the economy is rising, we do not emphasize any surprises. And I hope is now very well understood. We have taken a lot of steps to ensure that we have recognized our areas of concerns that fluently. We have seen a lot of achievements in the last 2 months, and we are seeing progressive results. So our -- the Board is also very close to filling up key leadership positions, like CFO, CRO. This was addressed in the [ inaugural seat ]. And we are also delighted to mention that we have very good leaders who will be joining us and adding to our overall management strength. So we do not emphasize any surprises in the quarter.

Okay. Also from the write-off that we've taken in the last -- like say 6 months, what percentage are -- what percentage do you see like people coming up and paying from a write-off alone? I mean if you can throw a number of how the trend been in the last 2, 3 months.

Yes, it is too soon to give a number of what percentage of people will come back and pay. However, like Ashish mentioned...

No, the trend that is happening right now, right? Obviously, we'll have a...

Yes. So there is a significant focus on increasing the collection from the NPA pool. As of now, what we can say is roughly 1/3 is the collection efficiency from the NPA pool, and we are focusing on improving it month-on-month.

The next question is from the line of [ Jain Mundra ] from B&K Securities.

The question is on provisioning coverage. And I think the context that we had that in the last call or maybe the last 2 calls, the bank intended to increase the provisioning coverage just in anticipation of not so great outcomes. If I look at this quarter, the provisioning coverage has actually declined. At the same time, if I were to see the write-off that we have done in the last 6 quarters since the beginning of the pandemic, we have had somewhere around INR 1,600 crores, INR 1,700-odd crores rise in the GNPA. So the only write-off that we have done is only INR 165 million or nearly 10% of the rise in GNPA. So a, the write-off itself seems less. On top of that, the provision cover again looks low, and it is lower than last quarter. If I were to add the entire provision of around INR 1,600 crores on the entire power book, the number would be even lower. And this is coming in the context that the bank wanted to have a very decent level of provisioning. So just wanted to get your comments here. Would this mean that we would be keep providing at the expense of future profitability?

Jain, there is a bit of disconnect. When you say that the provision coverage has gone down versus June, I would highlight that in the month -- as on June 30, the provision -- PCR was at 75%. And as of September, we have maintained the PCR at 75%. However, the book coverage has gone up from around 8% as of June to 10.4% as of 10th September. So that is what we meant when we said that we want to increase the provisioning overall. Versus September last year, if you compare, yes, definitely overall provisioning coverage, all that would look a little lower. Provision coverage last year was 86%. However, if you look at the pro forma basis, that was 71%. Last year, there was no NPA pool where you would actually compare. So that would not really be a good comparison.

No. so I am looking at the specific coverage only. So if I look at the net gross NPA at INR 1,700 crores and net NPA at INR 635 crores, the provisioning and the way specific provision coverage would be...

Sorry, Jain. I'll correct you here. The INR 1,700 crores the GNPA number is correct. Your total provisioning on the book is around INR 1,500-odd crores, of which INR 1,026 crores to INR 1,028 crores is NPA provisioning, plus INR 250 crores of floating provision is there. So the net NPA is INR 435 crores. The number that you are mentioning of INR 635 crores is probably an error that was there. So please look at it at INR 435-odd crores.

Okay. But sir, in the last call also, you had -- I mean there was an exchange filing which said that floating provision of INR 250 crores is a part of PCR, right? So I think that will be the same this quarter also.

Yes. That is the same this quarter. Booking coverage is part of the PCR. So PCR has been maintained where it was last quarter. However, the overall book coverage has been increased by 4.4%.

The next question is from the line of [ Deepak ] from [ DIFS ].

Can you hear me?

There's a lot of background noise from your side. Yes, it's better now.

Yes. So on 30th, the Board has approved merger plan -- reverse merger plan. Hence, I know updated on 29th itself, the price was of 20% or so. So it shows that there is a -- somebody is starting insider information. So how the Board is planning to take such things seriously because from 30th, the published -- publication was there in 30th, whereas the price increase was there on 29th itself. And how you guys are planning? Because this year, that there is a lot of control on insider information.

Deepak, I would highlight that we got the RBI later in the month of July. And post that in our August communication and every communication post that, we have maintained that 1st November is the date when we would be -- when we are eligible to file with RBI. And we would try and stick to the time line. So the bank went ahead with the time line and how market reacted -- the earlier communication and recent communication is as to how market participants behave. So we cannot really comment on that. From our side, I can assure you that all compliances and all norms were followed, and we were quite tight on that. As for the time line, as I already mentioned, it was an open secret that we would be looking to file in the first week of the November itself, which we have maintained in every conversation of ours with the investors.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Thank you all for participating on this call. Look forward for a good performance in the second half.

Thank you. Ladies and gentlemen, on behalf of IIFL Securities Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.