Muthoot Finance Ltd (MUTHOOTFIN) Q2 FY22 Earnings Concall Transcript

Muthoot Finance Ltd (NSE:MUTHOOTFIN) Q2 FY22 Earnings Concall dated Nov. 08, 2021

Corporate Participants:

Sanket Chheda — Head of sector NBFC, Batlivala & Karani Securities India Private Limited

George Alexander Muthoot — Managing Director

Oommen K. Mammen — Chief Financial Officer

Analysts:

Abhijit Tibrewal — Motilal Oswal — Analyst

Digant Haria — GreenEdge Wealth Services — Analyst

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Ankush Agarwal — Research Capital — Analyst

Piran Engineer — CLSA — Analyst

Shubhranshu Mishra — Systematix — Analyst

Amit Mantri — 2Point2 Capital — Analyst

Veeral Gandhi — Ninety One Capital — Analyst

Bhavan Kumar — RatnaTraya Capital — Analyst

Nishant Shah — Point72 Asset Management — Analyst

Harshvardhan Agarwal — IDFC AMC — Analyst

Bhuvaneshkar — Investec — Analyst

Vikram Subramanian — Spark Capital Advisors — Analyst

Prolin Nandu — GMO — Analyst

Nirmal Bari — Sameeksha Capital — Analyst

Shweta Daptardar — Prabhudas Lilladher — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Muthoot Finance Limited Q2 FY ’22 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sanket Chheda, Head of sector NBFC at Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.

Sanket Chheda — Head of sector NBFC, Batlivala & Karani Securities India Private Limited

Hi and good evening to all of you. We have today the entire senior management team of Muthoot with us to discuss the Q2 results followed by the Q&A. So we have George Alexander Muthoot, who is our MD; Alexander M. George, the DMD; George M. Alexander, who is Executive Director: George M. George, who is ED; George M. Jacob, who is ED; Eapen Alexander, an ED; and Oommen Mammen, who is the CFO.

I would first take this opportunity to congratulate the management for consistently delivering more than what they have been guiding. And now I hand over the call to George, sir, over to you, sir.

George Alexander Muthoot — Managing Director

Thank you. First of all, Happy Diwali to all of you. Sorry, that we had to conduct the meeting near the Diwali time but, anyway, now that Diwali is behind us, we are back. We are back to normal. As far as the company is concerned, the consolidated assets under management is now stands at INR60,900 crores, which is up by about 17% and the consolidated profit after tax INR1,981 crores, which is also up by 11%. As far as the stand-alone assets under management for Muthoot Finance, it is INR55,187 crores, which is 17% more than the earlier one. And the stand-alone profit has increased to INR1,965 crores, which is up by 13%.

This quarter has been better — has shown better performance compared to quarter one, which was almost a flat growth quarter but profits were adequate in the first quarter, but growth was not there. This time we are believed to grow by about 5% just in this quarter. So we continue with our guidance of the 15% yearly growth target. So we should — we hope that we will be able to reach the 15%. And if things are looking better in the months to come, probably better than 15%. So that is about the guidance for the growth. Profit has been okay.

And what else is there? The subsidiaries has been — Muthoot Homefin has actually come down in its AUM. It has come down to INR1,640 crores because we have not been aggressively lending and there is always the instalments coming and the book going down because of the instalments being paid by the customers. The net profit here stood at very meager profit of just INR0.23 crores and for the half year, it was INR0.71 crores. Stage 3 assets stood at INR4.73 crores as of September as compared to INR5.9 crores for the previous year. So it’s better, and the net after Stage 3 is INR2.77 crores.

Belstar has shown — has started lending and therefore the book has grown from INR2,687 crores last year to INR3,354 crores. But it includes a profit after tax of INR2 crores and INR4 crores in the next quarter. The Stage 3 assets decreased to INR3.61 crores as of September as compared to INR3.67 crores. And net Stage 3 of provision is at INR1.02 [Phonetic] crores. Compared to other microfinance companies in this league, we feel that Belstar has done a good work.

Muthoot Insurance Brokers [Technical Issues] subsidiary, it has a total premium collection of INR98 crores with INR159 crores for the half year. It include a profit after tax of INR5 crores for this quarter and INR9 crores in the last quarter end — for the half year, it is INR9 crores.

Asia Asset, the subsidiary based in Sri Lanka, where we hold 72% of the share capital, the assets grew to LKR1,457 crores versus LKR1,298 crores last year, an increase of 12%. Glad to say — and it has achieved a small profit after tax of LKR2 crores. Glad to say that the portfolio is now skewing towards gold loan. And today, it’s about 60% of the portfolio is gold loan and going forward, probably, in the next four, five quarters, we should see it also reaching 85% to 90% just like Muthoot Finance.

Muthoot Money the wholly owned subsidiary which is doing vehicle finance has had a — not a good quarter because there were still a lot of write-offs and VAT collection — VAT payments there. So the portfolio is, of course, small, it is only INR282 crores, the revenue stood at INR13 crores and it achieved a profit after tax of INR0.92 crores. The vehicle finance sector, especially is not doing well and the Stage 3 assets, net of provisions, stood at INR12.89 crores. The vehicle finance is limping back to normal, very slowly only, and our assets I think after this quarter, the company should start doing well. We have started more lending, so lending has started in the Muthoot Money, the vehicle finance, as well as the home finance where we see in the next quarters the book also growing. So always there is a repayment coming every month. Every month the repayment is coming. Over and above that, the home finance is also planning to grow.

In Muthoot Finance, the credit losses stood at INR1.7 crores for this year versus INR4 crores in the last year, that is the credit loss. But nevertheless, it is only 0.03% of the assets under management. The gold loan per branch has increased to INR11.84 crores versus INR10 crores last year and the average ticket size almost the same, INR60,000 to INR62,000 and the number of employees also same 26,000 and 26,000.

So I think that should take care of the major activities is this quarter. Now, I think we will open for questions. We are open for questions.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yes, sir. Thank you for taking my questions and wish you a very happy Deepavali. So just three questions here. First one is…

George Alexander Muthoot — Managing Director

Can you speak more louder please?

Abhijit Tibrewal — Motilal Oswal — Analyst

Can you hear me now?

George Alexander Muthoot — Managing Director

Yes, yes, yes.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah, thank you so much. So the first question is on the demand outlook. Sometime during Q2, you had appeared on various media channels and participated in various conferences wherein you had highlighted that the gold loan demand was not looking as great as last year, which is obviously very natural. But already 40 days in the current quarter, how is the demand outlook looking like now? That’s my first question.

So the second question is on spreads. What we have seen in the last two quarters, yields are averaging around that 21% mark compared to around 23%, 24% levels what it used to be about two or three quarters back. So, I mean, what are the sustainable level of spreads that we are looking for assuming that there could be potential benefit in your cost of borrowing in the coming quarters?

And sir, lastly, what proportion of our book would be to customers…

Operator

Mr. Tibrewal?

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah. Please tell me.

Operator

Sir, there is an echo coming from the line of — from the management’s line. Sir, please check.

George Alexander Muthoot — Managing Director

[Indecipherable]

Operator

Yes, sir.

Abhijit Tibrewal — Motilal Oswal — Analyst

Is it better now?

Operator

No, still there is an echo coming from the management line.

Abhijit Tibrewal — Motilal Oswal — Analyst

Is it okay now?

Operator

Better, sir. Thank you.

George Alexander Muthoot — Managing Director

We had to switch off our AC. Thank you.

Abhijit Tibrewal — Motilal Oswal — Analyst

Okay. And sir, my last question was, what proportion of our AUM would be towards customers to whom we would have lend sometime maybe in August last year? Sir, the idea is to understand, I mean, can there be a, I mean, potential situation where we could have, I mean, higher auctioning in Q3 towards these customers to whom we would have lend when gold prices were at its peak.

George Alexander Muthoot — Managing Director

Okay. First of all, I did not quite understand when you said the first part of the question that there is not growth or something. I did not understand. What we had said about growth, what is that…

Abhijit Tibrewal — Motilal Oswal — Analyst

No, sir. The idea was just to ask, I mean, how is the demand outlook looking like now.

George Alexander Muthoot — Managing Director

Demand outlook? Okay. Okay. If you put it that way, yes, we see good demand now because we feel that the economic activities have started — restarted. So should see good demand moving forward in the next two quarters. That is the first part of your question. The yield that you are — were you talking about yields or interest spread? The yield is — yield is at 23%, 22%, 21% is what we should see that yield, 21%, 22%. 23% was just a one-off, which is the one quarter, that’s all. Otherwise our interest spread has always been 12%, 13%…

Oommen K. Mammen — Chief Financial Officer

NIMs.

George Alexander Muthoot — Managing Director

Yeah NIMs. It is NIMs. It has been 12%, 13% is what NIMs are there. NIMs has been 12%, 13%, that is continuing with that only. So there is always a marginal difference of 1%, etc. which is not substantial, and that is also sometimes seasonal. When old loans come in, we get a little more interest spread there. Otherwise, it is always — doesn’t vary much there. We don’t see much difference there also. Now your final question was about the number of loans given that time. So if there are any — so first to answer without any number, etc. is that if there are any loans which needs to be auctioned, it has to be auctioned. That is part of this business. Some people — if some people who abandon the loan or they don’t come back, there is no option other than to auction. So auctioning is not a sin. This — anyway, when we auction it, we get back our money also, probably we get a major part of the interest also. In some cases, probably we may not get the full interest, that’s all. That has been part of the business and we will continue to do that also. So, in August, etc., definitely when the price was high, people would have taken more. Many of them would have repaid, come of them would not have repaid. Those who have not repaid, if they’re still not repaying and the interest is not paying or renewing, we will have no option other than to auction it, that’s all. Auctioning is not — it’s a part of the business only.

Abhijit Tibrewal — Motilal Oswal — Analyst

Sure, sir. And sir, what was the quantum of loans which were auctioned during the quarter?

George Alexander Muthoot — Managing Director

Which quarter?

Oommen K. Mammen — Chief Financial Officer

INR217 crores.

George Alexander Muthoot — Managing Director

INR217 crores.

Abhijit Tibrewal — Motilal Oswal — Analyst

All right, sir. Thank you so much. Wish you the very best.

Operator

Thank you. The next question is from the line of Digant Haria from GreenEdge Wealth. Please go ahead.

Digant Haria — GreenEdge Wealth Services — Analyst

Yeah, hi, sir. Congratulations on the great set of numbers. Sir, just wanted your views that is the price intensity in the gold loan industry, which probably started some time last year, is it coming to some sort of rationalization or there is still a price war going and we are also participating in that because we may not want to lose good customers in these times? Sir, any insights from you on this thing would be helpful.

George Alexander Muthoot — Managing Director

Sure. There’s no price war, but then everybody wants to hold on to their turfs of business and nobody wants to lose business. That is why, what you see — what you call “price war”, etc. But then we have to remain a significant player in this, and we will have to do this. We have to sometimes offer lesser rates of — teaser rates, etc., but teaser rates are usually for shorter periods only. So after that, it should come back to normal. So intensity of competi — not competition, we have — everybody needs to grow [Speech Overlap], others also needs to grow. And now is a time when we are actually competing with banks also. Earlier, we were not competing with banks. Today we have to compete with banks also. So, it’s all part of the business only.

Digant Haria — GreenEdge Wealth Services — Analyst

Right, sir. Sir, so and my second question is again linked to this on opex. See, our cost — our operating cost to AUM is 3.5% which is the lowest in the whole industry. So it gives us some room to offer gold loans at, say, 9%, 10%, 11% also. So it’s commendable that we’ve got down these costs. But my question is, are there more levers available on the operating cost side that you may maintain the same yields that you can actually deliver the same ROAs or better ROAs because the costs keep — don’t go up as much as your revenue and the AUM?

George Alexander Muthoot — Managing Director

The operating cost can only — it can’t go down drastically, can only be maybe 10 basis points, 5 basis points. Other than that it can’t go down because some of these are — most of it is fixed also. You can’t — cannot go down unless we double the volume from INR50,000 [Phonetic] if you reach INR1 [Phonetic] crore with the same number of branches, same stuff probably, but that is not — that’s only wishful thinking. But then, not to worry, we will see that we maintain our NIMs and the spreads, etc. I think that is the only thing we are there to do.

Digant Haria — GreenEdge Wealth Services — Analyst

Right, sir. So I’ll ask it a little different that if we go from, say, we are right now at INR11.5 crores — INR11.8 crores per branch of gold loan AUM. if we, say, reach maybe INR15 crores, INR16 crores, INR17 crores in another two years, three years time, would the cost grow in the same proportion or then — that is where I’m hinting at that, can that lead to some operating leverage and we go down even from this 3.5% opex to AUM? Is that scope real or it’s unrealistic to expect that?

George Alexander Muthoot — Managing Director

Yeah, the cost will not go up proportionately because we have the cost are fixed. Salaries are fixed, the rents are fixed. Probably a few, say, extra stuff maybe required, but then it will not go proportionately. To answer your question, if our business grows — if our branch business grows 50%, our expenses will not come down by another 25% or so, but probably at least 10% or 15% reduction in the operating cost can happen. But I think more than the operating cost, it will be try to better the yields and the costs of funding. And that is where more flexibility can be achieved.

Digant Haria — GreenEdge Wealth Services — Analyst

Right, sir. And lastly, my last question is that, can we reach a stage where with 15% growth, has the market for gold loans expanded enough, like, are we seeing really new kind of use cases for gold loan or new kind of customers that maybe next two, three years we may actually end up seeing that 12%,15% kind of growth opportunity for gold loan as — on an industry level as a whole?

George Alexander Muthoot — Managing Director

Yeah, I think industry can grow even more than 15% because there is lot of potential. Now when everybody is talking about gold loan and gold loan being convenient than the banks and everybody offering gold loans, the market will expand, no doubt about it, no doubt about it. Today people who are today reluctant to take a gold loan will be encouraged to take a gold loan because definitely if you look at it in one way, it is the smartest loan available, smartest loans. Take it for some time, once you get the or when you get the long-term loan from somewhere else, you substitute it with — from this gold loan. That is how people generally use this gold loan.

Digant Haria — GreenEdge Wealth Services — Analyst

Right. Okay, sir. Thank you so much for all your responses and all the best to the team.

Operator

Thank you. The next question is from the line of Manan Tijoriwala from ICICI Prudential AMC. Please go ahead.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Hi, sir. A few questions. Are the customers responding to lower pricing and hence we’re seeing the kind of growth that we have witnessed? So is this how we should interpret the present yields that we’re looking at?

George Alexander Muthoot — Managing Director

Question, please? What is that? Couldn’t understand it properly, sir.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

So basically, we have seen the yields taper down by around 2 percentage and we have seen the growth being in — coming back for the company. So, is that how we should interpret the present yields that we have on the book?

Oommen K. Mammen — Chief Financial Officer

No, so, no, the average yield always varies by 100 basis points to 200 basis points. That doesn’t mean that the volume of business will increase or decrease by X percentage. That is not there from barometer of our growth. These are all the rate fluctuations or reductions which happens. It’s basically the normal fluctuations because of collections, efficiencies as well as discounts we offer to the customers, and as well as the churning in the portfolio, because as you might know gold loans are very short term and we give lot of rebates to customers when they close the loans or service the loans at a short rent.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Right, fair enough. We’ve been guiding for a full year growth of, say, 15%. So do we see the growth rate to taper off in the second half, or what should we interpret that as?

George Alexander Muthoot — Managing Director

See the quarter two, we grew by about little more than 5%. So you should see the same growth. We should — we have to grow at least 5% in the next two quarters. So I don’t think we have any headroom for tapering off. We’ll have to do the 5% in both the quarters. We will do it.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Right, sir. And sir, could you provide some color on what sort of LTVs should most of your — or what sort of LTV should your portfolio be divided into, say, above 80% or above 100% or something like that?

George Alexander Muthoot — Managing Director

At the time of disbursals, there is nothing more than 75%. So, at the time of disbursal, the average LTV should be in the range of — everyday, yesterday’s LTV should be in the range of 71%, 72%, that’s everyday, individual day, individual day LTV. But if you’re asking the change in the price and what we gave earlier and today, and adding the interest, etc., it is different.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Yeah. So if you could provide some qualitative or quantitative numbers on that — on the present portfolio.

Oommen K. Mammen — Chief Financial Officer

Average LTV in the portfolio, 73%.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Fair enough. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Ankush Agarwal with Research [Phonetic] Capital. Please go ahead.

Ankush Agarwal — Research Capital — Analyst

Yeah. Hi, sir, thanks for taking my question. Sir, firstly, on our borrowing side, so can you help me understand the split between long-term versus short-term borrowings and fixed rate versus variable rate borrowings?

Oommen K. Mammen — Chief Financial Officer

So right now, mainly we have three forms of — or four types of borrowings. One, bank borrowings, second is the NCDs, third is the external commercial borrowings and fourth is the commercial paper. So, bank borrowings are — now we are mostly more to term loans. It’s our own long-term loans. Secured NCDs, again it is a long-term instrument. And third one is the external commercial borrowing, which is again also a long-term loan. So purely, for short-term borrowing will be the commercial paper, which is roughly about INR4,000 crores to INR5,000 crores at any point of time.

Ankush Agarwal — Research Capital — Analyst

Right, right. And these bank loans, etc. are fixed rate in nature or these are variable term?

Oommen K. Mammen — Chief Financial Officer

Bank loans are all floating rate, linked to MCLR. Usually the reset happens whenever there is a rollover of the loan or a reset on a annual basis. If it is a term loan, the reset is on a annual basis.

Ankush Agarwal — Research Capital — Analyst

Okay, annual basis. Right. So, sir, do you think we as a company based on our past experience and based on the dynamics of business that we are in, there are further room to optimize this borrowing between long-term, short-term and fixed and variable?

Oommen K. Mammen — Chief Financial Officer

So I think we have fairly improved in terms of the proportion of the long-term borrowings. Pure long-term borrowings, we have now restricted to only — to commercial paper — yeah, short-term. So in terms of floating rate interest, bank loans mostly are linked to — they don’t give fixed rate instruments except for that period for which it is drawn. Otherwise all the bank loans are to be linked to the MCLR. Secured NCDs, almost entire borrowings stays in the nature of fixed rate nature. So we have the right mix in terms of proportion between fixed and floating.

Ankush Agarwal — Research Capital — Analyst

Great, great. Okay. And sir, secondly, in terms of the leverage, right, if I see last five, six years, the overall level of the company has fallen from around 4 times to 2.5 times now, right? Even though I understand that as a business wherein our ROE is more than our growth, obviously there is a deleveraging effect, but how do you see your overall leverage like in medium to long term? Do you think we would increase from here or will stay over here?

Oommen K. Mammen — Chief Financial Officer

So that is ultimate focus to improve the leverage at least to a reasonable extent, maybe we should target for 5 times, but at least for the time being, reaching the 5 times, it is going to take some time. We don’t have a view in terms of what point we are going to reach 5 times. But always the endeavor and focus is on to improve the leverage.

George Alexander Muthoot — Managing Director

See the question is to improve the leverage, do you need to grow the gold loan book? And gold loan book is not — it’s all individual loans, retail loans only. So you can’t just improve it by X crores, etc. overnight. So it has to be built brick-by-brick. So as the gold loan is improving, the leverage also will improve provided it is more than the — what’s our retail run rate.

Ankush Agarwal — Research Capital — Analyst

Right, right. And sir, lastly just one final one, so over time as the cost of borrowings reduces, so do you think you would be looking to pass on some of these benefits to the customers by reducing the yields and maintaining our spreads or you would look to increase your spreads?

George Alexander Muthoot — Managing Director

No, so exactly what you said, we would like to maintain our spread, interest rate spread and therefore pass it on to the customers. That’s what we have been doing always. Always maintaining — retaining our net spreads and passing on the difference to the customer.

Ankush Agarwal — Research Capital — Analyst

Okay. Okay, got it. So that was very helpful. Thank you.

Operator

Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead.

Piran Engineer — CLSA — Analyst

Yeah, hi, good morning — good afternoon and congrats on the results. I just have a couple of questions. Firstly, our number of inactive customers is like 3 times the number of active customers we have. Have you done any analytics on how many of our past customers now have gold loans with other banks and NBFCs? And if so, what are we doing to get them back? That’s my first question. And the second one is what is our Stage 2 loans ratio? So, yeah, these are the two questions.

George Alexander Muthoot — Managing Director

Okay. So see, inactive customers are customers who come to the company, take a gold loan, afterwards when they cross the gold loan, they go and take back the ornaments. The ornaments are in their house. They will come back only when they need the second loan. So almost always 80% of our customers are repeat customers. So they would have done a transaction with us, maybe one month back, six months back, eight months back. Only whenever they need the loan, they’ll come back. So that is okay. So what we do constantly is always reminding them that we are still there and giving better and speedier service to the customer. They will prefer to come back to us. We cannot force them to come back to us. To answer your question on whether we — generally, we feel that when they take the next loan, it’ll come to us only. That’s what, but we have not done a study of all these customers whether they have taken a gold loan from elsewhere. We can only understand from what our managers and field staff tell. They still see that the first choice for them, even our old customers, would be to come back to Muthoot.

Piran Engineer — CLSA — Analyst

Sir, would that be very difficult to do, given that we have the KYC done at the time of the loan and we have the credit bureaus? So would that be a very difficult thing to do?

George Alexander Muthoot — Managing Director

I think it will be possible. We have not tried it actually.

Piran Engineer — CLSA — Analyst

Okay, okay. Just wanted to understand the sense of whether a customer first takes a loan from you and then later on he goes to a bank. I’m just trying to understand the progression of the customers’ lifecycle. So that is why I was asking.

George Alexander Muthoot — Managing Director

That sometimes happens with very big loans, maybe INR15 lakhs, INR20 lakhs, etc., where the interest differential will be substantial, etc. But still, it is not simply just interest consideration for shifting from Muthoot to somewhere else, but some other considerations also. Definitely — there’ll definitely be some people going from Muthoot to a bank or maybe to sometimes in the NBFC also. But generally, maybe only to a bank.

Piran Engineer — CLSA — Analyst

Okay, okay. Sir, on the Stage 2 loans ratio?

Oommen K. Mammen — Chief Financial Officer

Yeah, Stage 2 will be INR6,153 crores, around 11%.

Piran Engineer — CLSA — Analyst

Okay. Yeah, thank you so much, sir.

Operator

Thank you. The next question is from the line of Shubhranshu Mishra from Systematix. Please go ahead.

Shubhranshu Mishra — Systematix — Analyst

Hi, sir. Good afternoon. Thank you for the opportunity. A couple of questions. One is that, are we really cheaper than the banks in sub-INR50,000 ticket sizes as we add up all the fee that would be levied to the customer by the bank? That’s the first question. Sir, the second question is on the cash that we’re carrying on a percentage of balance sheet. It’s almost at around 12%-odd. This is a difficult [Phonetic] high, sir. And with so much of liquidity, why are we carrying so much of cash on the balance sheet? And the third question is, sir, if I look at the loans that have been processed from branch and on a quarterly basis, it will be at around 1,800-odd levels. How do we increase this? What is our strategy to increase this from the new customers, sir. Three questions. And my fourth question is on a data keeping question. What is the interest accrued for this quarter, sir. Thank you.

George Alexander Muthoot — Managing Director

Yeah. Comparing of field representative charges, etc., there are several charges which some banks charge, there are several charges which others charge. For us, we try to keep it as customer-centric as possible, that we don’t take any upfront charges, we don’t take any appliances charge, we don’t take any pre-closure charges, etc. and the interest on that [Indecipherable]. Those are some of the things which we offer our customers. So probably, everything cannot be compared apple-to-apple from one company to other companies. But generally, the customers have the feeling that other than banks, which give at very low rates, we are the most reasonable of all NBFCs with regards to not only the interest rates but many other charges of consumer centric activities, etc., which we do for them.

Your second question was about…

Oommen K. Mammen — Chief Financial Officer

Interest accrual, it is INR2,384 crores.

Shubhranshu Mishra — Systematix — Analyst

Can you repeat the number, sir?

Oommen K. Mammen — Chief Financial Officer

INR2,384 crores, interest accrued.

Shubhranshu Mishra — Systematix — Analyst

Sure, sure. And cash? Why are we carrying so much of cash? Liquid cash.

Oommen K. Mammen — Chief Financial Officer

Yeah, so, okay. See, I think, we have been maintaining a higher level of liquid cash, I think, ever since COVID has started. We are conscious about the fact that we are maintaining, but now the times are good, a higher level of cash, I think, once now, since we are upgraded to AA+, I think gradually we will think about reducing the level of cash holding. But still, at least for some more time, we’ll have to maintain that high level of cash flows. But over a period, we would like to bring it to a reasonable level.

Shubhranshu Mishra — Systematix — Analyst

Excellent. And one question remains unanswered, sir. The number of loans, how do they increase per branch from new customers?

Oommen K. Mammen — Chief Financial Officer

I think, new customer numbers we have provided in the presentation, that’s about 3 lakhs.

George Alexander Muthoot — Managing Director

3.5 lakhs new customers, all put together.

Shubhranshu Mishra — Systematix — Analyst

Right. Sure, sir. Thank you.

Operator

Thank you. The next question is from the line of Amit Mantri from 2Point2 Capital. Please go ahead.

Amit Mantri — 2Point2 Capital — Analyst

Yeah, hi. Thank you. Sir, just a question of branch expansion. Now when you look over the last one year, there has been barely any branch expansion that has happened. And even when compared to two years back, we’ve added only 80 [Phonetic] gold loan branches. So what’s the plan going forward? And how — what is the — how much approval do we have from RBI on how many branches that we can open over the next year [Phonetic] to three years?

George Alexander Muthoot — Managing Director

Yeah. See, we would have — in the last two years, we would have opened 80 branches, we would have probably crossed or rationalized another 200 branches also. So we would’ve opened about 400, we would’ve maybe merged or rationalized another 300 branch. So net would have been — I don’t know the exact number, would have be 100, 200. So this year also the numbers have not been — we have not started too many branches. I think there is nothing like an approval from the RBI. Whenever we require a branch, we go to the RBI and they give the permission. We don’t take any approval and keep it with us. So when we require a branch, we go and approach them and get the approval.

Amit Mantri — 2Point2 Capital — Analyst

Okay. So I think one of your competitors had mentioned that approval from RBI has been a little bit delayed and because of that the branch expansion plans are not on track. So…

George Alexander Muthoot — Managing Director

Probably, it is right, I don’t know. Probably, maybe right.

Amit Mantri — 2Point2 Capital — Analyst

But that is not a reason why, for us, branch expansion has been a bit tepid.

George Alexander Muthoot — Managing Director

No.

Amit Mantri — 2Point2 Capital — Analyst

Okay, thank you very much.

Operator

Thank you. The next question is from line of Veeral Gandhi from Ninety One Capital. Please go ahead.

Veeral Gandhi — Ninety One Capital — Analyst

Hi. You mentioned earlier on that competition has increased somewhat. Can you just explain where the competition is coming from? Is it from banks or is it from NBFCs?

George Alexander Muthoot — Managing Director

Okay. In competition — not competition, I think people have become aggressive. I don’t call it competition. Everybody has been doing gold loan, there are banks, etc. Now they are also aggressively doing gold loans for reasons everybody knows that good portfolio to be had in the books is a gold loan. So that is why everybody is — every bank worth its name is also doing and upping the gold loan. There are some NBFCs also who have now started thinking of gold loan. Probably they might have also be having the same thoughts about this. But here I would like to add a word of caution, not a — caution is that, this is not as we see, because as it looks outside. So probably, gold loan you may not have NPAs and bad loans, etc., or non-performing loans or loan loss, etc., but operationally it is very challenging. It’s very easy to do a small two-branch, three-branch, 10-branch, 50-branch gold loan. But when you start to take it up, all these operational issues and operational challenges come up and probably we have passed that so we are aware of that. When new players are coming, they will realize it as time goes by.

Veeral Gandhi — Ninety One Capital — Analyst

Okay, thank you very much. And I just wanted to follow up on that is, like, do you have any views about how long this period of competitive intensity could last?

George Alexander Muthoot — Managing Director

We didn’t get — we didn’t under — get you properly. What is that? We didn’t understand.

Veeral Gandhi — Ninety One Capital — Analyst

How long do you think that your competitors will be aggressive? Do you think that they will last for [Speech Overlap]

George Alexander Muthoot — Managing Director

No, they will be aggressive. We don’t actually need to worry too much on that. If more and more people are coming, the market is also expanding. It’s not that there is only X amount and that they are taking away 20% from us and 5% from — no, no, the market is also expanding with banks and everybody’s advertising and doing gold loan business, more and more people — more and more customers may think of taking gold loan as an option. So that is what we should see. How long we will — it is for them, probably if the economic activity or their core business comes back to normal, usually that is what we have seen that the same thing happened in 2008 also when everybody jumped into the bandwagon and when there was a big problem. And afterwards when their own sectors started coming back to normal, they lost interest in this because this is — that is not their focus and only the focused companies remained and focused to gold loans. Others came in, they saw something, when their core — their core business, old core business started back, they went back to their old core business where they had probably more strength. So it will depend on such factors also.

Veeral Gandhi — Ninety One Capital — Analyst

Okay. Thank you very much.

Operator

Thank you. The next question is from the line of Bhavan Kumar from RatnaTraya Capital. Please go ahead.

Bhavan Kumar — RatnaTraya Capital — Analyst

So, sir, what is the incremental LTV that we are lending at, and how do we actually determine this particular LTV to lend?

George Alexander Muthoot — Managing Director

Actually we offer customers different options, where we — low LTV, low interest, higher LTV, higher interest options, etc. But on an average, what we’ve seen is some people take the 75%, some people take lesser, some people take even lesser. On an average, on a day, we don’t lend more than 75% LTV, but on an average, if you take everybody taking loan and if you find out, the LTV average, LTV, it should be in the 70%, 71% range only.

Bhavan Kumar — RatnaTraya Capital — Analyst

Okay. Okay. And since there has been a sharp — if you — if we compare it, say, with one-year back, your LTV on an average used to be somewhere around 63% and now it is around 73%. So I mean, I’m just trying to understand what has been the change exactly, in that sense.

George Alexander Muthoot — Managing Director

It’s as simple as, if today the price of gold goes up by 10% our LTV, 73%, it’ll come to 61%, simple as that. So at that time, the price was high, so the LTV was lower. So when the price is stable, it will be in the 70%, 71% range. When the price is — if it goes up — price goes up, the LTV will come down. The price goes down, the LTV will go up.

Bhavan Kumar — RatnaTraya Capital — Analyst

But, sir, at that point of time, again, you would have lended only 70%, 75% LTV only or else you were lending lower at a higher price? Was that the strategy? That is what I’m trying to understand [Speech Overlap]

George Alexander Muthoot — Managing Director

The LTV will be much lesser. The incremental lending is what I said 70%, 71%. That’s always 70%, 71%.

Bhavan Kumar — RatnaTraya Capital — Analyst

Okay. Historically, you are saying, LTV was lower.

George Alexander Muthoot — Managing Director

Yeah.

Bhavan Kumar — RatnaTraya Capital — Analyst

Okay. Okay, sir. Thank you.

Operator

The next question is from the line of Nishant Shah from Point72 Asset Management. Please go ahead.

Nishant Shah — Point72 Asset Management — Analyst

Hi, sir. Congrats on the results. I’m trying to understand the different types of customer bases that you have. So I take it that like most of our customers are going to be those small ticket rural, semi-urban kind of customers where you would not see very material bank competition. But if you could kind of like split your AUM and to slightly, say, higher ticket kind of like customers where banks are active and, say, semi-urban or urban geographies where also banks are active, what percentage of your AUM is theoretically at risk from competition from either, say, banks or large NBFCs or whatever else? That’s my first question.

George Alexander Muthoot — Managing Director

Okay. To answer your question on a lighter note, it is not that we are afraid of banks and sometimes we also give lesser rates than banks. So if it is only banks [Technical Issues]

Nishant Shah — Point72 Asset Management — Analyst

Hello?

Operator

Ladies and gentlemen, the line for the management has got disconnected. Request you all to please stay online while we reconnect them. Thank you. Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Thank you, and over to you, sir. Mr. Nishant Shah?

Nishant Shah — Point72 Asset Management — Analyst

Yeah. So…

Operator

Yeah. Please go ahead.

Nishant Shah — Point72 Asset Management — Analyst

Sir was answering.

George Alexander Muthoot — Managing Director

What I was saying was, it’s not that we are — we will not, at any point of time, be able to complete with banks. If necessary we can even compete with banks on rates. That’s not the question. So your question is whether we have bigger portfolios, which are bigger-sized portfolios, which are likely to go to banks. I think that was your question.

Nishant Shah — Point72 Asset Management — Analyst

Yeah, not likely to go, but at least like face some competition where you will have to kind of like work a little to retain those customers, yeah.

Oommen K. Mammen — Chief Financial Officer

That is whole — the whole thing is dependent on what is the option which borrower has, that we have an alternative. Now if he has an alternative, there is always a risk that, that customer might or can move to an alternative lender, not necessary it should be for gold loan. It could be an alternative loan product. That business is always there. But given the flexibilities of the gold loan and given the fact that it is — it could be disbursed in a very short pick up time and customer can easily meet his requirement for a shorter tenor. But if this customer basic requirement is for a longer-term product, certainly he might actively look for an alternative first, and if he has an alternative availability he certainly can move on. So being a large book, there is always a possibility that some customers can move, but the way we have consistently managed to grow our book and maintain our yield shows that there is a large customer base which is willing to come and take a gold loan. So we don’t consider that as a significant risk.

Nishant Shah — Point72 Asset Management — Analyst

Yeah, no, I’m particularly kind of like asking about competition from banks in a gold loan product. I fully agree with you regarding like the other competitive products, they are not as value-add or not as flexible, at least, as a gold loan. But banks are doling out a lot more gold loans as well. We see it with HDFC or SBI or anyone. So that was the sole kind of like purpose of trying to understand what percentage of the AUM could potentially be at risk. Or let me…

Oommen K. Mammen — Chief Financial Officer

So we don’t have that kind of a portfolio being identified that this kind of customers can move on to another lender. See, the way we look at is, look, all these banks have grown in the last six to nine months. But we have not degrown. We’re still — we have been able to grow the book. So there is a market which is available. And again we are repeating that we are not concerned about customers moving to an alternative player or a bank because there is a market available — niche market available for us. And certainly we will be able to grow in spite of the competition exists.

Nishant Shah — Point72 Asset Management — Analyst

Fair enough. Yeah, that’s it for me. Thank you.

Operator

Thank you. The next question is from the line of Harshvardhan Agarwal from IDFC AMC. Please go ahead.

Harshvardhan Agarwal — IDFC AMC — Analyst

Hi, sir. Thanks for the opportunity. So just wanted to understand, the auction that we do, is it like bunched more towards the end of the year or it’s evenly spread out during the whole year?

George Alexander Muthoot — Managing Director

Yeah, it is spread out during the whole year. We will do it weekly, monthly, depending on the regions. Some regions — today — everyday some auctions are happening somewhere. Everyday something is happening somewhere.

Harshvardhan Agarwal — IDFC AMC — Analyst

All right. So the reason I asked this is because if I were to look some — the data that we published in the Annual Report regarding the amount of auctions that we do, I see that between FY ’17 to FY ’19, our annual average is somewhere around INR1,500 crores of — worth of auctions is what we do. But in the first half till date, we have done somewhere roughly around INR450 crores, INR300 crores of auctions. So should we assume that this historical average number is what we would be at for — in the second half, like we’ll catch up with that number or the auctions would be way less this year?

George Alexander Muthoot — Managing Director

No, I think your historical average, I don’t know from where you got it, last year our auctions were [Speech Overlap]

Harshvardhan Agarwal — IDFC AMC — Analyst

INR385 crores. For FY ’21 — sir, FY ’21 auctions were very less, INR385 crores.

George Alexander Muthoot — Managing Director

Last year it was INR400 crores. Prior to that year, it was INR800 crores, and that is — I think that’s all. So even if we need to auction INR800 crores or INR1,000 crores in a year, the book is also growing. So three — two years back, our book was only 35% less than what we see today. Even then we did INR800 crores of auctions. Last year, because the price were actually good, we did not have to do much auctions. So this year, probably, we may have to do more auctions, but it is part of the business. Auctions is part of the business. See, we don’t lose any money because of auctions. It is only when customers abandon the gold, he’s not coming back and taking it, then we have no alternative other than to auction it.

Harshvardhan Agarwal — IDFC AMC — Analyst

Great. Sure, sure. Thanks a lot.

Operator

Thank you. The next question is from the line of Manan Tijoriwala from ICICI Prudential AMC. Please go ahead.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Thanks, sir. One follow-up question on what was asked earlier. So when you mentioned that around 11% Stage 2 assets as on end of September ’21, could you provide a corresponding number for the previous quarter and what sort of roll back of forward close should we expect from that book?

Oommen K. Mammen — Chief Financial Officer

No, I think, previous quarter, I think the number was less. So this quarter and as of September 30, our Stage 2 asset is about 11%. And I think your question was, how much of this roll back will happen out of this [Indecipherable] 11%, right?

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Yes.

Oommen K. Mammen — Chief Financial Officer

Yeah, so we are conscious about this number and we are looking at various methods to control this number and look at our track record in terms of managing this overdue book. And finally, just because an account is an NPA, we don’t lose anything. We de-recognize the interest growth also once an asset becomes a Stage 3. So to answer your specific question, we are taking active effort in terms of controlling this number. Let’s wait till December 31.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

And, sir, one question, how much would have been the opex in this previous quarter on advertising during the IPL?

George Alexander Muthoot — Managing Director

IPL? We are not sponsoring this time IPL, sir.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Got it, sir. Thank you.

George Alexander Muthoot — Managing Director

I think it was the other Muthoot which was doing the IPL. We stayed back this year.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Okay, sir. Got it.

Oommen K. Mammen — Chief Financial Officer

Additional [Phonetic] expenditure is INR25 crores, but that doesn’t — we don’t have any sponsoring towards IPL.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Got it, got it. Okay, sir.

Operator

Thank you. The next question is from the line of Bhuvaneshkar [Phonetic] from Investec. Please go ahead.

Bhuvaneshkar — Investec — Analyst

Hi, thank you for the opportunity. So I have couple of questions around the interest rate. Firstly, just want to know what is the lowest interest rate offered by Muthoot Finance on gold loan? That is my first question. And the second question is, on the website, I see there is an advertisement for 57 Paisa loan. So I just want to understand how does it commensurate with our overall yield of about 20%, 21%. So that’s the second question. And third question is on the — how do you categorize customers on different interest rate? Like what category of customer — which category of customers get lower interest rate, and which category of customers get higher interest rate? So these are my three questions. Thank you.

George Alexander Muthoot — Managing Director

Okay. So as you said, our site advertises 57% [Phonetic] because we need to compete with the market. So 57% is correct. That is the lowest we need to offer to our customers. These are all teaser rates. So when we give teaser rates, we see that, finally, we get a reasonable or good interest rate. That is our business model. This is not — nothing new. We have been offering this earlier also, lower rates, etc. So we have to maintain our market share, we have to maintain — we have to be seen as competitive in the market compared to others. When somebody else — others are offering at low rates, you should also see that we also offer the low rates, but it’s our job to see that we maintain a reasonable margin on offer deals. How we do it is actually within us.

Bhuvaneshkar — Investec — Analyst

Okay. And on the customer categorization? I mean, which customer — how do you categorize customer on interest rates? Which customer do you offer lower interest rate?

George Alexander Muthoot — Managing Director

I think that is also a function of the branch. We leave it to the branch to offer customers lower rates, etc. so that customers are kept happy.

Bhuvaneshkar — Investec — Analyst

Okay, sir. Fine, Thank you.

Operator

Thank you. The next question is from the line of Shweta Daptardar from Prabhudas Lilladher. Please go ahead. Shweta Daptardar, your line is in talk mode. Please go ahead with your question. As there is no response from the current participant, I have muted the line.

The next question is from the line of Vikram Subramanian from Spark Capital. Please go ahead.

Vikram Subramanian — Spark Capital Advisors — Analyst

Hello. Thanks for taking my questions. So my question is a bit on the operational aspects. First on this competition and the teaser rates and the yields that have been discussed quite a bit during the call. I would just like to know, operationally, at the branch level, what other methods can the branch staff or do the branch staff follow to increase customer walk-ins, customer count, basically maintain their market share? This is especially difficult during this time, more slightly increased competition. And also operationally, what do the branch staff do to control that particular branch’s LTV when, say, for example, tomorrow there is a, say, 5% drop in gold price, how do we react to that? These are my two questions.

George Alexander Muthoot — Managing Director

So on branch marketing, we have a good marketing team, sales team, etc., who go out and do activities, on-ground activities. Usually the branch staff do not go out for that. Only occasionally they accompany these people, otherwise there are branch activities, but not that every day there is an activity, it’s just in pockets we do these outside activities for this. The second one, your question is about — it is done at the CBS level, because ours is not core banking — core banking system. So any change we do, we can just do it in 1 second in the — our computer center. The branches cannot go beyond that. That is, the rates are set at the head of its level itself. So there is no operational flexibility for the branch.

Vikram Subramanian — Spark Capital Advisors — Analyst

Sir, second question was on how to control LTV? So, meaning, you said because of the core banking system, incremental LTV…

George Alexander Muthoot — Managing Director

I think, I said that we set it as the maximum of 75% of the base price, which is set everyday. Everyday it is set. If today’s gold price is X, we set to 75% of that as a maximum which a branch can do. So it is set every day.

Vikram Subramanian — Spark Capital Advisors — Analyst

Okay.

George Alexander Muthoot — Managing Director

Everyday it is set.

Vikram Subramanian — Spark Capital Advisors — Analyst

So if gold price falls, say, maybe 5% or 10%…

George Alexander Muthoot — Managing Director

The LTV will be falling tomorrow.

Vikram Subramanian — Spark Capital Advisors — Analyst

Only on the incremental loan, right? On the existing loans, there is [Speech Overlap]

George Alexander Muthoot — Managing Director

What is given is given, sir. What is given is given.

Vikram Subramanian — Spark Capital Advisors — Analyst

Got it, got it. And just one add-on there. I couldn’t get that correctly, maybe there was a problem with my line. There was some mention of branch expansion. Could you please elaborate on that, sir? Branch expansion plans for the current targeted run rate for this year and maybe the next couple of years?

George Alexander Muthoot — Managing Director

Yeah, yeah. Whenever we need branches, we approach the Reserve Bank and get permission for that. So we have — whenever we feel that there is a branch expansion required, we’ll do that. We plan to open about 100, 150 branches in the next 12 months.

Vikram Subramanian — Spark Capital Advisors — Analyst

Okay. Okay, thanks. Thank you.

Operator

Thank you. The next question is from the line of Prolin Nandu from GMO. Please go ahead.

Prolin Nandu — GMO — Analyst

Yeah. I hope I’m audible, sir. Two questions from my side not related to your quarterly. But one is, we have had, in the past, we have seen some correlation between marketing spend and the loan growth. Gold loan appears to be sort of a pull sort of a product, but there customers require comfortable nights. And we have had associations with some of the great brands like Amitabh Bachchan and we have done some innovative campaigns in and around Kumbh Mela. I just wanted to understand, is there any particular strategic reason why we decided to stay away from CSK and IPL this year?

George Alexander Muthoot — Managing Director

No, no. We have been associated with IPL for so many years. We thought let us give it a break at least once, so let us see whether we can come back with more vigor after that, that’s all. Nothing more than that. We still have the Amitabh Bachchan and the other things with us. And IPL is not — that one will serve us just because of IPL also. We also want to assess whether without IPL also, whether we can get business. Nothing more than that there.

Prolin Nandu — GMO — Analyst

Fair point, fair point, sir. Another — second question is that, we — some time, a couple of months back, we had changed our memorandum of association. And now we can do a lot more things from our branches. Any color on that? Do we have plans to — because we have amazing, I mean, huge footfalls, right, on a daily basis to our branches. Anything to monetize these footfalls further and I mean any — I mean is this change in memorandum of association in that direction?

George Alexander Muthoot — Managing Director

We have got an enabling provision in the memorandum of association to do something. Some of these things now — everything is for our changing — flexible and changing this brief. So we don’t want to go to the shareholders for approval. So we have just kept an approval, probably something will come up, some associations will come up. We always have people coming and talking to us, can we do that, can we do this in the branch. And we are assessing those and if we feel it’s beneficial to us and they’re not troublesome to the customer, we will start it, So it’s just an enabling provision.

Prolin Nandu — GMO — Analyst

Sure, sir. Thanks a lot really.

Operator

Thank you. The next question is from the line of Nirmal Bari from Sameeksha Capital. Please go ahead.

Nirmal Bari — Sameeksha Capital — Analyst

Yeah, sir. Thanks for taking my question. It’s just a clarification, this Stage 2 asset that you mentioned of 11%, so at what point do we classify a loan as Stage 2?

George Alexander Muthoot — Managing Director

More than 30 days.

Oommen K. Mammen — Chief Financial Officer

Overdue for more than 30 days.

George Alexander Muthoot — Managing Director

Overdue for more than 30 days.

Nirmal Bari — Sameeksha Capital — Analyst

So is it the interest overdue that is more than 30 days or once the principal is — becomes overdue for more than 30 days?

Oommen K. Mammen — Chief Financial Officer

No, either one of them for gold loans because interest is required to be paid only at the end of the [Indecipherable]. So primarily, it is the loan maturity date because there is no instalments or any interest payment contractually required for the customer in between.

Nirmal Bari — Sameeksha Capital — Analyst

Okay. So for a — our general loan of 1 year, when the loan crosses one year and 30 days, that is when it would be classified as Stage 2.

Oommen K. Mammen — Chief Financial Officer

Correct, correct.

Nirmal Bari — Sameeksha Capital — Analyst

Okay, okay, thanks for that clarification.

Operator

Thank you. The next question is from the line of Shweta Daptardar from Prabhudas Lilladher. Please go ahead.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Thank you for the opportunity. Am I audible?

Operator

Yes, you are.

George Alexander Muthoot — Managing Director

Yes, yes.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Yeah. Thank you, sir. Sir, couple of questions. Sir, when you say fresh loans with new collateral to existing active customers and which has been consistently growing for you, am I getting it correct if I put it across, like, is it that once the existing loan is completely repaid for and if the same customer comes back with the same collateral with a fresh — freshly for a loan, then it’s counted as a new collateral and a fresh loan to the existing customer? Am I getting the contours of this correct?

George Alexander Muthoot — Managing Director

See, if a customer breaks one chain this time, he takes it back. Next time he breaks the chain, actually, we actually do not know whether it’s the same chain or not. Anyway, he is bringing a new — a fresh ornament, that’s it.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Right, right. So this is not like — because one of your peers do that, like, when the loan is still going on, and generally they call up the customers closer to the maturity period and that’s where they kind of insists that you can further go for a renewal and then it’s counted as a new collateral.

George Alexander Muthoot — Managing Director

Renewal? They have to take back the gold and give a new — take a new loan, yeah.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Okay. Okay. Sir, secondly, sir, when you mentioned Stage 2 11% and even if I look at overall Stage 3, 1.85%, although you have been mentioning that the recoverability value of the underlying asset is absolutely 100% and your auction numbers are also lower. But what are these category of customers? Were they victim of pandemic challenges? Was it because of your shorter loan tenure, because of the high churn rate in the book or is it because of the underlying price fluctuations? So what exactly has led to this kind of slippage?

George Alexander Muthoot — Managing Director

It is not that we go after each customers. With our 20,000, 30,000, 50,000 customers, not worthwhile to go and ask them whether it is a COVID problem or no, but usually we don’t need to do that because there are no EMI requirement in this. There is no monthly commitment for this. So you have the time — all the time in the world for one year to repay the loan at any point of time. So if he brings in the money, he pays it, that’s all. And it’s not worthwhile, it’s not viable also to go and ask and find out from the customer what is his problem. But the fact that we’ve said, if he is paying the interest properly, if he’s servicing the loan, he can continue with the loan. Finally, if they abandon it, we’ll auction it. That’s it.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Okay. So any loan repayment extensions given in the period due to which this must have also happened?

George Alexander Muthoot — Managing Director

Yeah, when we — whatever you see as a NPA in the books currently is the extensions we have given to the customer. So when customer requests for some more time and the branches also reasonably optimistic or hopeful that the fellow will pay and he says don’t auction my gold. So we delay the auction and give him two, three month’s time. That is what you see as a NPA in the books. Those are the NPAs that we have consciously given tied to the customer. If not, we would have auctioned the gold and have nil NPAs.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Okay. Okay. And sir, absolutely the last question, you mentioned about competition, but then it’s been observed that last couple of quarters, the unorganized market, which has a lion’s share in the gold lending business has also kind of throwing huge competitive intensity. Sir, would you like to comment there besides what you were talking about banks and bigger NBFCs getting into the game?

George Alexander Muthoot — Managing Director

I think we have no much visibility or information about the growth of the unorganized sector. I don’t know from where you got that information. If it’s appropriate, maybe growing also. I’m not sure about that. If they are growing, well and good, I don’t think. They are also — definitely they are a competitor for us. There are a certain set of customers whom they also — a set of customers who go to them, whatever be the range, whatever be the company, whether it’s a bank or NBFC, there are still some customers who’ll still go to the unorganized sector. They still have their market share at their market. They’ll continue to do that. Whether they have increased their business, I’m not sure now.

Shweta Daptardar — Prabhudas Lilladher — Analyst

Got it, got it. Sure. That answer’s, sir. Thank you and congrats on good set of numbers. Thank you.

George Alexander Muthoot — Managing Director

Thank you. Thank you.

Operator

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

George Alexander Muthoot — Managing Director

George Alexander Muthoot here. I have with me our Chief General Manager, Bijimon; and our CFO, Mr. Oommen; and our DGM, Finance, Shanthi here in the call in this head office. The others — the other Directors, etc. have attended the meeting from their offsite. So, thank you for supporting us. All of you have been always been a big support for Muthoot and we will continue to expect your views, we’ll continue to grow and maybe we will be of value to all our stakeholders. We assure you that and wish you all the best once more a Happy Diwali and Happy New Year. Thank you.

Operator

[Operator Closing Remarks]