SPANDANA SPHOORTY FINANCIAL (NSE: SPANDANA) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Shalabh Saxena — Managing Director, Chief Executive Officer
Ashish Damani — President and Chief Financial Officer
Analysts:
Rajiv Mehta — Analyst
Shreepal Doshi — Analyst
Renish Bhuva — Analyst
Abhijit Tibrewal — Analyst
Ritika Dua — Analyst
Unidentified Participant
Aviral Jain — Analyst
Ashlesh Sonje — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Spandana Sphoorty Financial Limited Q2 FY25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Shalabh Saxena, MD and CEO, Spandana Sphoorty Financial Limited. Thank you, and over to you, Mr. Saxena.
Shalabh Saxena — Managing Director, Chief Executive Officer
Thank you very much. Good evening to all of you. Thank you for your interest in our company and for taking time out to join us on this call. Most of you would have gone through our results that have been updated on the stock exchanges a couple of hours ago. While the results are definitely undervalue, please allow me to give you a context for these results. There have been — so at an industry level, so let me begin with giving you some landscape on the industry, and then we’ll go into the specifics of the company.
So over the past couple of years, there have been still shifts that have happened in the sector. I’ll take you through the happenings.Before that, as you are already aware, microfinance and the JLG model is the mainstay of our business. Q1 was the first quarter where we saw signs of weakness in the environment when the sector was impacted due to the long drawn elections, intense heat waves and the high attrition in a few states. This is what we had covered in our last call when we met up with all of you. The dilution of the JLG model and when I say dilution, it is obviously not uniform, but there has been a dilution post-COVID. That is taking time to turn around. This has impacted our center meetings, the discipline around the center meetings and a key indicator of a customer engagement being center attendance, that is still at 55% all levels. So 55% to 60%, certain pockets are slightly higher, but I’m just averaging it out at a national level.
Another point is that the field attrition level, and this we covered in detail the last time around. The field staff attrition level has been high over the past few quarters. Our understanding and this is the deep engagement that we have done over the past quarter, 1.5 quarters with our field staff, which is both the branch and the supervisory level. The employees are obviously — there are various reasons, and we’ll cover it in this opening remarks as well as in the subsequent questions if people would have. There are various people who react to the various challenges that are there in the market or that exist in the market. Our understanding from what we gathered was that, most of them prefer to go out of the industry. There is a — there isn’t a significant percentage, which is moving into the industry. So that is what I would want to bring out. Another point is borrowers with established track record. They graduate or they are graduating to non-MFI loans. While there’s nothing wrong in it. It is just that in times like these, it puts some bit of pressure on the financials of the family and hence, the repayment capabilities.
The last point on this landscape that I would want to highlight is borrower indebtedness, and we’ve covered this in detail. So borrower indebtedness is one of the challenges impacting the industry. If we look at the borrower indebtedness or overleveraging. I’m just referring to Slide 6 of the investor presentation. While — when we gave the loan, we had a particular position, the position over the last two years. As for the latest data available, has seen a significant shift downwards from Spandana and Spandana plus 1, the percentage of portfolio, it has moved and shifted downwards and the numbers are given there. While — and you’ve been listening to us over the past many quarters, we have been maintaining a ticket size of not more than INR80,000 irrespective of the vintage, that’s the max ticket size that we offer. The tenure of the loans is 24 months, we introduced 12 and 18. And we obviously keep a close track of the indebtedness at a customer level. So the average indebtedness of a borrower with Spandana, while it has declined by 13%. However, we operate in an environment and hence there we’ve been impacted. The details are there in the slides.
So this is the background of the industry and the impact on us. Obviously, we are doing our best, and the various initiatives that we have taken to kind of ensure that we correct the situation, and we try to turn this around, the environment will have to play its part, but we are doing our — the best that we can as a team to ensure that we kind of manage the two, three clear vectors, which are there, which is how you lend, how you collect and most importantly, take care of your people. Back to the script, more recently, the disruption was caused in a few — over the past few months, you would have seen and read the disruption was caused in few geographies due to the climatic factors like heavy rainfall and floods during the second quarter. So the sector has been experiencing improved in the form of localized movements also with further compounded the problems.
As I mentioned, Spandana has not been immune to any of these challenges due to attrition over the past few quarters, the share of loan officers, and we’ve highlighted this in the presentation as well. So we’ve had — now this share of loan officers with less than one year tenure at Spandana was 67%. This has to be looked at in context because we have opened new branches, because we — because our branches which are big, we split those branches as well. So the tenure has to be looked at in context, but the end result is that we have a slightly — the 67% comparatively used to be about 50%, 51% just about three, four quarters back. So that’s — there’s a bit of a rawness in the team, which obviously, given the fact that we’ve had the various challenges that I have elucidated to.
On the branch manager side — this was the loan officer. On the branch manager side, last — in the last earnings call, we had detailed to you, we had taken many steps to ensure that the branch manager attrition is curtailed, which I think we’ve been reasonably successful of the branch managers who we wanted to retain, there are regrettable resignations and there are non-regrettable resignations, of the regrettable ones, we had taken an organizing wide initiative about a couple of months back to ensure that we reach out to them, and we’ve been reasonably successful. We were able to retain about 78% of the people who we wanted to retain. So I think in — as a headline if I were to say, the branch managers reasonably protected and we keep up and keep monitoring this important vector for the next few quarters. The supervisory layer above the branch manager was — we had some challenges, but that was not really to the extent where we would be worried and we’ve kind of taken care of them as well.
This quarter and the next quarter is all about the loan officer and how do we engage with them to ensure there is a — we reduced the attrition at the loan officer level. Having considered the external and internal challenges, we had already announced a few measures during our last earnings call. The teams are working hard to normalize the operations. However, as a measure of abundant caution, the following additional steps were taken during the second quarter.
The first, and I covered this, prioritizing people. We introduced a few cultural changes in the way business is conducted at Spandana, including focus on soft aspects like reward and recognition, team building, increasing employee connect through multiple channels of communication and meetings, compulsory system shutdown, our leave policy, etc, all of these things, all of these policies and initiatives are looked at and we’re kind of implementing them. We will start — we already implemented them.
Point number two, conservative lending approach. As announced earlier, Spandana had paused onboarding to new to credit borrowers, the organization — so you would have read the guardrails and the way the industry has kind of joined together to ensure that we bring discipline. As a matter of abundant caution, we have announced internally that the organization will not be the fourth lender new to Spandana borrowers. So any borrower, which is new to Spandana, we will be the third lender, although the guardrail allows fourth, but for now, we are kind of — we will — to begin with, we are seeing that we will be the third lender. So this is slightly more conservative than the guardrail. And I think we will see as it goes, things improve, then we might change, but at this point in time, this is what we have — this is one of the initiatives that we’ve undertaken.
Point number three is on controls. Strengthening control is something that we’ve been working on. We’ve been — microfinance is all about how well you put a policy in place and how well you monitor. So on the control side, optimized supervisory span of control and monitoring, further strengthening of KYC checks, additional controls that we put in place to check fraud, etc.
Point number four on collection focus. We have classified branches into three sets of branches, growth branches, stable branches and focus based on parameters like collection efficiency, portfolio quality, etc. Basis this qualification, we’ve stopped new member acquisition in about 46% of the branches, which are essentially the focus branches. Similarly, we’ve put restrictions in place to stop adding new centers — new centers in 15% of stable branches. So while customer acquisition is on in these branches, but however new centers we just put a restriction to that. These are restrictions, we believe, will help the field team of these branches to focus solely on ensuring timely collection of dues and meeting the customers’ assortment requirements as and when they might need.
Point number five, as announced in the last earnings call, Spandana has created a separate quality assurance layer at branches, which will focus on process adherence, quality, customer service, etc. This will help free up the branch managers bandwidth, allowing him to focus on business and control parameters.
Point number six, to ensure focus stays on collections, additional bench has been added across few branches, dedicated collection team has been created and borrower to loan officer spend in select branches has been reduced. This has led to an increase in opex to AUM for the quarter as you would have seen. But then these are temporary pains for quicker than usual normalization. And we expect the year by the year-end, this opex to AUM to be — cost to income — to be about 45% by end of the year.
We continue to believe that these challenges are transitory in nature and operations should normalize by end of the current financial year. We have not come across cultural changes in rural demand or long-term different economic activity or macroeconomic outlook or income levels. So this is very critical. Next few quarters as far as the company is concerned is we will drive the rigor and discipline of how well and judiciously we learn and how efficiently we collect. This is going to decide the coming quarters. And we as a team are geared up to kind of ensure that we run this in a very well and efficient manner.
Now let me move to the regular business updates. On the business drivers, owing to challenges alluded to earlier, Spandana was cautious in lending. Our disbursement for the quarter was INR1,514 crores, a Y-o-Y decline of 40%. AUM at the end of quarter two was INR10,537 crores, registering a growth of 8% Y-o-Y. However, sequentially, the AUM declined by about 10%. While two, three lines have added on the AUM and the group, I maintain and we believe this is our discussion with the customer. The day we decide this is a segment which is always in need of a formal channel of finance.
Right now, we are completely focused on ensuring that the stability on the portfolio quality side comes up sooner than later. And hence, we’ve — the slowing down of disbursement is a part of the larger strategy that we have, wherein we give more time to the branch to reach out to the — not regular customers or the earlier customers, and we collect and get them back to a regular mode. The day we are confident that this will happen, which we believe is not very far. The AUM will be stepped up and by the end of the year, we should be slightly more than what we ended the last year with from an AUM point of view. I thought I’d just add this before I get into the next point.
With pause in the customer acquisition, a large number of bunches, our total customer acquisition for the quarter was about 80,000 customers. The last time around also in every earnings call, we give you details of our new tools, new lines of business, which is LAP and Nano loans. Our LAP and Nano loans business under our subsidiary Criss Financial is growing steadily, this we started about a year ago. We have now scaled the distribution to over 100 branches spread across six states with AUM at the end of quarter two at about INR160 crores.
The portfolio quality under both these products continues to be strong. We invested last year in setting up systems and processes and continue to believe in the strong market potential of these products. Back to the portfolio quality of the microfinance business predominantly. This at a company level, we continue to maintain provisioning at 80%, the quarter because of the reasons that I alluded to, the quarter saw a GNPA increased to 4.86%. Likewise, our NNPA for the quarter was 0.99%, up 46 bps over 0.53 reported at the end of June ’24.
On the liability and marginal cost of borrowings, including the borrowing mix. During the quarter, we borrowed INR1,584 crores, the reduction in borrowing was due to the cautious disbursed approach that we had adopted as an organization. Our marginal cost of borrowing for the quarter was 11.4%, which was 46 bps lower than quarter two FY24 and 61 bps higher over quarter one of FY25. Likewise, on the borrowing mix, the bank contribution in the total borrowing has increased to 54% at the end of quarter two — by the end of quarter twp FY25. On the quarter two financial year ’25 financial performance. The net interest income for the quarter increased 9% Y-o-Y to INR341 crores over INR312 crores reported for Q2 of last year. Net interest income was down 20% over the last quarter.
The PPOP for the quarter was INR228 crores, down 12% Y-o-Y, and 21% quarter-on-quarter. Yield on the portfolio was down by 202 bps to 22.4%. NIM for the quarter was 12.8%. NIMs declined as a result of decline in yield and increase in cost of borrowing. Our efforts are constantly focused on improving our cost of borrowing. However, the bigger opportunity lies here in reversing the portfolio quality trend, where we’ll get a lot of releases. On the profit after tax, higher provisioning at the end of the quarter has led to a decline in the PAT, and we’ve reported, as you would have seen a loss of INR216 crores. We continue to believe that these challenges are transitory and expect operations to normalize by end of the current financial year.
The steps taken to course correctly, we monitor very closely, and all our actions will now be focused on improving the portfolio quality. We will continue to be prudent in our approach to lending, ensuring that our portfolio is well diversified, while staying conservative on ticket sizes and customer indebtedness. The entire management team of Spandana is thankful for the consistent feedback that we’ve been receiving from all of you. We look forward to your continued support.
We can now open up for questions, operator.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Rajiv Mehta with YES Securities. Please go ahead.
Rajiv Mehta
Yeah, hi, good evening. So my question is on Stage 2, which has substantially increased. So when I look at the previous quarter, kind of increase we saw in Stage 2, in 1Q and then the flow which came in 2Q in Stage 3, it seems that the flow rates are significantly high, almost everything is flowing from Stage 2 to Stage 3 despite augmented collection effort. So now that Stage 2 have further increased so substantially in Q2, would this assessment be correct that a significant part of it will flow in Q3?
Ashish Damani
Hi, Rajiv, this is Ashish this side. I mean, if we do a simple math, maybe what you’re saying adds up. But the right way to look at it is, there has been almost 50% collections happening even in the Stage 2 buckets. So although the flows at the top is what is contributing the flows going below. So that needs to stabilize and that’s what we are working on.
Shalabh Saxena
Let me just add, Rajiv, the recruitment — we started additional manpower recruitment beginning of last quarter, somewhere around July and August, so the incremental benefits of all the people that we have recruited and all the people who’ve been in the branches where we’ve taken, we will see the incremental benefits only this quarter. That’s number one. Number 2 is, even if — and I kind of mathematically obviously agree to you. But what we are — for the flows also which have happened. We’ve — additionally, we have a recovery team now, which will — because you don’t disturb the core, we are not — we will not disturb the core of the model, which is until 90 the loan offer handles, beyond 90 because we still feel we’ve analyzed Rajiv, the portfolio, the customers who are kind of flowing the — who have kind of crossed the buckets.
We believe that these are all customers. So there is no specific trend of a particular quarter sourcing being bad or a particular year sourcing being bad. There is a very clear linearity in the vintage and the contribution of the AUM and the subsequent percentage of SMA buckets, SMA customers in those buckets. So our belief is for customers who’ve been with us for four years, five years, six years, it is probably the current disruption in the environment that is leading them to not really honor their payments is our belief. So our recovery team, which has now been set up, we already have some 300-odd people and by — in the next — or rather this month and max by mid of next month, we will have around 500, 550 people who will approach these customers and we’ll start the recovery initiatives. So that’s going to add to — is how we believe, because these customers from an intent point of view is not an issue. They are all old customers with us. So that should also incrementally play out to our benefit as we progress.
Rajiv Mehta
Got it. And just to understand that the problem — that the problem addition is now stabilizing or curtailing, if you can get the collection efficiency of the zero DPD bucket and how it is moving between September and October? Because I think Ashish did point out that the leakages or the slippages are coming from the top. So if we want to understand that whether the slippages at the top are reducing now incrementally, we need to know the zero DPD collection efficiency bucket, I mean, collection efficiency and how that is moving incrementally?
Shalabh Saxena
So I will directionally answer that. October obviously will be difficult one to answer here. But you know, directionally, is there a very significant better movement? The answer is no, Rajiv.
Rajiv Mehta
Okay.
Shalabh Saxena
Is there — are there green shoots in certain pockets? The answer is yes. Is there a clear correlation where you put people and it is going to help you? The answer is again yes. And we are seeing some initial green shoots. But are the green shoots want to convert into a trend, it is too early for us to say. However, our understanding of the problem and the pockets that are green that are — that have been impacted and our various engagements over the past three months with the teams on-the-ground, I think we have a reasonable sense of the extent of the problem when it — and the next steps as far as the problems are concerned.
That is why we’ve kind of recruited the people and put them in places where we will be, where we have an issue. The second point or additional point, Rajiv also is a fact that there is like it or not because of the environmental challenges, most of the people have curtailed, many companies or rather practically every company has curtailed their lending because, and rightfully so we are no different. So this has led to some bit of shortage in the circulation from a customer’s working capital point-of-view. So we are dealing with all this. Our belief is that the customer’s intent is not a problem. It is just some bit of working capital adjustment that needs to be done on her part. And more engaged we are, the better the chance that we will be regularizing it soon.
Rajiv Mehta
And on this ESOP, I mean, what is the ESOP penetration within the company? I mean, till what level have you distributed ESOPs and how many people would be covered if you can give that some color? And second is, you spoke about that you’ve been able to retain some of the outgoing BMs, whom you wanted to retain. So how are they retained? I mean, were they offered you know, were their bandwidth got released and which is why they stayed back or some other initiatives were taken to retain there?
Shalabh Saxena
Yeah. So the good part, Rajiv, and it’s a very good question because that’s exactly our focus because we believe that if you have happy people around, the rest is an outcome which can be taken care of. For the specific point that you mentioned on the branch manager because that is what we had identified the last thing around because that was a problem that could be addressed because we have some 1,700, 1,650 odd branch managers. We physically went out to them — different senior people went out to 36 locations and had a physical meeting with them. And that led to the turnaround where we were able to retain almost 78% of the branch managers, who were serving notice. Now did we offer them anything? The answer is no. Did we give them any other benefit outside of that? That obviously is not correct also because somebody resigns, you don’t really offer them anything which is monetary.
All it required us was to have a good discussion of the — and understanding of what were the issues that they were facing. And clearly there were issues and hence they were where they were. We were able to come back to them in terms of the action steps and we have some list of 10, 12 action steps which we had to take, which we’ve already implemented at an organization level. So that within a space of about 10 days, we had all of them pull back their resignations. Once we had and our belief and we continue to believe that if you take care of your branch manager, then which we did the last-time around, this time our initiatives, we’ve already started those initiatives, which is to connect at a low-level through the branch manager. So ensure that the branch manager and the supervisory level have their KRAs very well integrated to the larger objective of the organization, which is holding back the LOs.
Once you hold them because any native knowledge which goes out of your company, it takes about two, three months for a new person to really come and then come up to speed. So overall, I think we are as a team very happy with the way we’ve kind of dealt with branch managers and above. As an organization reaching out to 36 — in 36 locations across about almost about 2,500 people, which is branch managers and above, I think was a good step and a timely step, which gave us results. I think another month, month-and-a-half, I think we should be in a decent position to at least come to a place where we — apart from the branch manager, we start seeing incremental results on the loan officer side as well.
Operator
Thank you. Mr. Mehta, please rejoin the queue for more questions. Next question comes from the line of Shreepal Doshi with Enquirus. Please go ahead.
Shreepal Doshi
Hi, sir. Good evening. Thank you for giving me the opportunity. Sir, my question was, I mean, while a few questions have been answered, but just a data keeping question, what is our Spandana plus 4 and unique to Spandana customer base?
Shalabh Saxena
[Foreign Speech].
Shreepal Doshi
Okay, okay, got it. I’ll go through that, sir. Yeah. And sir, just another question was on this — the rising PAR numbers, right? So is it fair to understand — take it this way that the MFIN guardrails have led to an accelerated recognition of stress or the movement have of Stage 1 to Stage 2 and then so forth has been pretty sharp?
Shalabh Saxena
For Shreepal, so here is my view. You know, any step which is taken, which is good for the industry, you know, should be welcomed. And I think in fact, we have — and you would have — I don’t know if you picked it up in my commentary, we have said that new to Spandana, we are going a step ahead. We will not either the — it will not be the fourth lender. So effectively we are stopping at one. We are stopping at three. [Foreign Speech] end result has to be that we all of us get well as an industry. So that’s where I am not looking at it one quarter or two months or one month and looking to the four quarters, eight quarters. I think it’s a step in the right direction. And I think everybody is going to benefit out of this.
Shreepal Doshi
Okay, okay. And then last question, I think it is part of your commentary as well. You highlighted that much of the stress will get absorbed or say taken care of during this year itself. So like you think that will be a function of collections improving from, say, December end and onwards otherwise, like do you think there will be spillover in the next year as well?
Shalabh Saxena
So we are giving — so we still have about five months to go before the end of the year. As I mentioned, I think I gave a lengthy commentary to Rajiv in the previous question. We are seeing some movement in the market, but we are not really — is it — it is still not a trend. Hence, I am hesitating to say anything there in terms of this is going to turnaround by December or January. However, the last two quarters are the quarters which are good for the industry, number one. Number two, we believe that with all the other initiatives that we have taken first the initiative which the — which the SRO has taken, I think will ultimately lead it to a situation where I think the environment operates for the right lending more than anything else. So that’s the belief. Five — I mean, it took three months-to for the position that we are in, we are still giving five months for this to improve. So I think we are — and we are already two quarters down in this year where we’ve dealt with this problem. So my belief is that attrition stabilizing, environment stabilizing, lending slightly curtailed customer discipline back. I think we should by end-of-the year be able to come out of this.
Shreepal Doshi
Got it, sir. Got it. Thank you so much, sir and good luck for the next year sir.
Shalabh Saxena
Thanks.
Operator
Thank you. Next question comes from the line of Renish with ICICI. Please go ahead.
Renish Bhuva
Yeah, hi, sir. Thanks for the opportunity. Sir, three questions. So we’ll go one-by-one. So sir, if we look at the — that slide, it is very much visible that we have been prudent lender is reflecting four-plus lender share at the time of at around 5%, but then eventually it increases to 13%. Clearly, you know, our players are just lending without proper cash flow assessment maybe leading toward leverage and despite being the conservative lender, we have to pay a price for leveraging done by others. So how do you think this can be taken care going ahead? I mean do you foresee SRO regulator or anyone sort of talking about it and maybe they are — maybe in discussion stage, whatever, but any insights on this will be very helpful, sir.
Shalabh Saxena
Yeah. So Renish, I partly answered, so I’ll start and then Ashish will add. I completely agree with what you’ve said. With customers who are with us already, we have limited options about to go and keep pursuing. Somewhere in the commentary, I did mention that if for all the customer acquisition that we are going to start doing now, if there is a borrower who is new to Spandana, we will not be the fourth, even though the guardrails allow you to be the fourth, we will be only the third.
If we are the fourth, then we will regretfully not do the case. So that is one of the initiatives that we have taken because — and because Renish, we’ve kind of analyzed various data points all these months that we’ve been doing. What — while there could be patchy trends on various theories that you and I would have. But one of the trends which is unmistakable is the correlation of lenders and the collection efficiency stroke GNPA. The more the number of lenders, clearly there is a higher you know our pool of earlier customers in corresponding to the AUM that you would have. I’ll give you a data point and Ashish just add to this. The four and the greater than four, sorry, five and greater than five lenders is about 12% in our AUM, 12% 12.5% in our AUM and there these set of customers contribution to the arrear bucket, which includes the GNPA is about 21%.
Renish Bhuva
So, you mean one plus DPD?
Shalabh Saxena
[Foreign speech] So basically — see we are discussing quality, [foreign speech] So this is the point I’m just trying to — I’m just trying to validate the point that I made that the more number of lenders, there is a clear trend that it kind of stresses out the customer. Here, we are not talking of because more number of lenders you to attend as many center meetings and so on and so forth. This is also one of the reasons why the center meeting attendance could be low because four, five companies and weekly and combination of fortnightly and monthly, I mean it’s a bit of a stretch for the customer.
So that’s the reason why to answer your question. We’ve kind of made it a policy until things resume back to normalcy on one, we will continue to not offer due to credit customers alone because of — I had covered this in detail last-time around because there’s so much of operational time which goes and there are other things as well, which influence this. That’s number one. Number two is on this four and more than four. If it is an existing customer of Spandana, then obviously she has to be regular and then we’ll see if we have to continue. If she applies for another loan, we will evaluate. But if it is a new to Spandana customer, then we are stopping one short of what is agreed upon by everybody, which is we will not be the fourth lender. We will be — we will stop at three.
Ashish Damani
Yeah, the hygiene will get billed over time, Renish. Because I think the regular — I mean the SROs have already come out with these guardrails. And if you know and we have a strong reason to believe everybody will follow the guardrails and that will condition the behavior at the customer level also over a period of time. So I think that is what is going to take care of what you mentioned that how would this discipline come in. This is how the discipline will come. Beyond that — sorry, given that the weighted-average maturity at least for, let’s say, Spandana in terms of the portfolio is only 8.6 months, if this origination is improved, you know at best two more quarters or three quarters you should be able to refine the entire book.
Shalabh Saxena
I would also want to add, Renish, before you go to your second question. Yeah, we — there are — with four vintage customers, there is a practice to graduate them from a GLG customer to an individual borrower and give a higher loan. You know, we’ve stayed away from that path and we will continue to stay away from the path. The hope is that once there is some bit of discipline around, what we will see is because ultimately the money lands into the family. So once all of that is slightly pruned, we will see definitely some bit of an uptick in the repayment capability of the customer.
Renish Bhuva
Yeah.
Shalabh Saxena
Over to your next question?
Renish Bhuva
Got it. Thank you. Thank you, sir. Sir, second is again in terms of the stress. So if you can just highlight this — a stress in maybe last two, three, six months, say, it’s coming from which state district etc. I mean, is there a real cash flow impact at the borrower level or is it just because of the pure over leveraging sort of which is leading to this stress?
Shalabh Saxena
[Foreign speech] Yes, I think I mentioned, Renish, [foreign speech] specific, the trend is linear to the AUM that is there across the vintages.
Renish Bhuva
Okay.
Shalabh Saxena
So what happens is that we cannot say that last year [foreign speech] problem. So it is not that. So if I look at my five-year and just to give you an illustration, if my four-year vintage customer is about 10% of my AUM. The contribution of that 10% in the GNPA and the SMA buckets also is equivalent, it could be 9% or 11% or thereabouts. So if that is a cause of optimism because I key, which means that there are multiple factors at play. While it could also be and I must add, it could also be our — see, we are not picture perfect. It could be our inability to kind of reach out to that customer at that point in time, which could have led to where we are.
I’m not shying away from that at all. So hence, we’ve went back to just repeating the point. Once you staff the — when you have adequate staffing, when you have a motivated branch team and if you reduce the workload on them, we will be addressed, we will be able to address each of these customers. Until now, Ranish, in microfinance, you would not need to customize a solution in case of a — in case of a disruption. However, in the current times, there is a need this whole one-size-fits-all does not work. So hence, we will need to customize all of these resolutions back until all of them are back in the JLG channel and center meeting channel.
Renish Bhuva
Got it. And maybe just the last question is more on the strategy side. I mean, so let’s say, you know after every crisis, things sort of changes. So let’s say, post a demon industry move to cash less disbursement. Clearly now people are talking about let’s say paperless or maybe time-driven underwriting. So after this crisis, do you feel there will be need for a separate collection or mechanism for this product as well?
Shalabh Saxena
So look, this is a very — so this is a very subjective question. Sorry, it is a fair question with very subjective answers. Different will — people will give different answers. There are companies already, which are following 1 to 30 loan officer [foreign speech] and then it moves to a different team. Certain companies follow once the customer flows into a GNPA, you have a different team recovering because the customer for all practical purposes stops coming to the center meeting. So essentially, it’s a door knock.
Now if you were to ask our company’s view, we would prefer the latter. I don’t think we should be — this is a very close-in closely integrated model where you lend and collect the same person lends and collects. And there is a group which influences both. The moment you try to fracture it or you try to dislocate that model, there are implications, which will have to be dealt with or which will have to be felt. We are not in this can, but we do believe that in our case and I covered it in my opening remarks as well.
Once a customer flows into GNPA, she practically stops coming to the center meeting. That is when a different team follows, there’s a lot of value that it will generate. Till the time and once again, let me add, till the time this is regularized, once it is regularized, then you can move back to the BAU, which was everybody does everything. I mean, one person, the loan officer does everything. But at this point in time, it is advisable to just focus on the 90 plus with a different team.
Renish Bhuva
Got it. Got it. This is very helpful, sir. Thank you and best of luck, sir.
Shalabh Saxena
Thank you.
Operator
Thank you. Next question comes from the line of Abhijit Tibrewal with Motilal Oswal Financial Services Limited. Please go ahead.
Abhijit Tibrewal
Hello. Am I audible?
Shalabh Saxena
Yeah, Abhijit.
Abhijit Tibrewal
Yeah. Hi, sir. Sir, couple of things I want to understand. One is, I mean, in your slides, you’ve talked about improving KYC. I feel this is one topic which has not been addressed adequately by the players in the ecosystem. So what I’m trying to understand is during lot of findings that you did, what did you come across in terms of the fact that all the players lend on voter IDs. And to that extent, right, I mean the problem that we’ve heard of our customers having multiple voter IDs and taking multiple loans on these multiple voter IDs. I mean, is that a very big problem today in the industry or something which is trivial and doesn’t warrant much attention?
Shalabh Saxena
So such instances are — do they contribute to 5% of the book, the answer is no. So the question is that would you want to experiment this and take that call when you already have a situation at hand, is the question that is to be debated. At this point in time and that is why when we stopped it, we didn’t notice some of what you’ve already said, Abhijit. So there were two options. So what is the option? The first is when you acquire a new customer who is new to Spandana and specifically new to credit, you have to do a lot of diligence. You have to go home, visit home and so on. So operationally, the process is about two, three days.
So rather than walk that path, we said for now, we will stop and continue to focus on customers who have a valid KYC. Now — sorry, who have taken a loan from somewhere, which is not new to credit. Having said which, there are instances that have been noticed to the likes of what you’ve just mentioned. There are also instances where you don’t get a hit at a point in time and then get a hit the second time around if you try after the next day. So there are some tech issues as well that have to be grappled with.
So while we are dealing with that, our — is there a problem — the problem accentuates in this kind of a disrupted scenario. So the best that we thought of was to avoid that path and hence focus on customers and for people who are not new to credit as in they have a credit history. We do checks internally to ensure all the instances that you’ve just mentioned in terms of multiple IDs and all of that. So we try doing it because ultimately it comes from one source and can be checked. All it requires you to do is to ensure that you do it some two, three times to validate the point that you just made. So you have to be cautious and in good times, these things really go unnoticed. In these times, it’s always good that these things come up and you integrate it into a process so that it stands by the test of in the future.
Abhijit Tibrewal
Got it. Sir, the other thing is, I mean, during your opening remarks, you touched upon your expectations of cost-income ratio, AUM growth will be slightly higher versus where we ended in March. So I mean, maybe I missed it, but did you also guide on credit costs?
Shalabh Saxena
No. So this is a fluid situation, Abhijit, and we are avoiding that guidance point because see, when Q1 happened, to be honest, you know we — I mean, at least we took some time to understand the scale. At this point in time, we are avoiding any such guidance. We’ll wait until Q3 to end for us to stick our neck out and either way, about 75% we would have done from a tenure point-of-view in a year you would have done three out of four quarters. So that is when we’ll be in a reasonable position. So the situation is pretty dynamic. So we are avoiding walking that path at this point in time.
Abhijit Tibrewal
Got it. And sir, just one last question or the two questions. One is a clarification for Ashish sir. But the third one, sir for you, sir don’t you think that NFI players now need to start lending to their customer/vintage customers in 2H? Otherwise, with the tightness which is there in working capital, I mean, even your good customers might start exhibiting delinquencies if you don’t loosen your per strengths. I’m talking about the industry and the sector as a whole?
Shalabh Saxena
Yeah, I agree. So see, it has forget the industry and what you do to the industry. It is about if a customer has been paying you well over the past 12 months, 24 months, 36 months and has been with you for long, you don’t hold back, right? You have to suffice the demand, otherwise you will end up aggravating the situation. I think that’s the point you are making. And hence, you know that we have built up framework to ensure that you take care of your customers in terms of the resolution and getting them back on track. It is important that you know we — I mean at least we as a company as in Spandana, we have started the process of trying to ensure that customers will keep meeting the demand of the customer who desires of a loan.
Obviously, the checks will be slightly more stringent from what we would have otherwise done, but then so be it. If a customer has been prudent and has displayed good behavior over the past couple of years and more, I think we should be giving. And I’m sure everybody sees that everybody takes time including us to respond to a fast-changing environment. My belief is that now we are seized of the problem. Everybody understands the nature of the problem and the way out. And one of the solutions is definitely — not solutions, one of the given is that you have to start and regularizing and normalizing the disbursement part, provided you are convinced on the — on the customer’s ability to pay in the future because you also don’t want a situation where you lend and then the customer goes the other way. So it’s a balanced view that one has to take. And we are — we have put in, you know, we do believe that is the way forward.
Abhijit Tibrewal
Thank you, sir. And just one last question for Ashish, sir. Sir, I mean, is there a different methodology using which we calculate our NIMs. Now why I ask is, I mean, I mean other peers when they report the results, you see it, I mean despite so much stress, there is no change in the way they report their margins. A large part of the stress which is seen in their P&L is in their credit costs. For us, I mean I see that hit is there both on top line as well as the credit costs. So I mean, how should we understand this?
Ashish Damani
So there are two things which will impact the top line and thus NIM. One is, any flows into the GNPA, we reverse the incomes. So I mean the interest that has been already accrued. So that obviously impacts on the top line. The second thing is any transactions that we would have done on the DA side, that will also have an impact on both the denominator as well as numerator. Income will move to a different line item for the quarter to the extent of whatever timeframe and whatever the upfronting happens, goes — all of that goes into a separate line item doesn’t form part of the NIM when we do the calculation. These are the two primary things which will keep impacting the calculation Abhijit.
Abhijit Tibrewal
Got it. This is very, very useful. Thank you and wish you good luck for the coming quarters.
Ashish Damani
Thank you.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Ritika Dua with Bandhan. Please go-ahead.
Ritika Dua
Thank you. Sir, actually one first basic question. Whenever everybody is reporting say like Spandana plus 1, 2, 3, maybe say like 1 NBFC, MFI plus cluster 1, 2, 3, how is this getting reported?
Shalabh Saxena
So every time, let’s say, when we do the credit bureau, now, for example, we have said we will not be the fifth lender for the existing borrowers or if we are going to originate a new customer and we’ll not be the fourth lender. If there are already three lenders, then we will reject the loan. Otherwise, when we give the loan, we will report that we have led. This is how the reporting happens and it happens every week.
Ritika Dua
And sir, here obviously — sorry again first then just here again, only the NBFC MFI are the four, which you are looking at. And also only the MFI loan that you are looking at?
Shalabh Saxena
All the microfinance loans we are looking at, including if the loan was given by a bank or a section 25 or through a BCE or any of the participants who do microfinance loans, all are covered.
Ritika Dua
But if this person has taken or a lady or has taken, maybe you know I don’t know if that will exactly respect, but if her husband has taken maybe a two-wheeler loan or something or maybe some gold loan that the lady has taken, that is still out of the purview?
Ashish Damani
So let me explain. There is — sequentially there is a FOIR which is calculated, which is — so first of all, the household income has to be less than INR300,000 for it to qualify for a microfinance loan. Any cost — any household with an income of more than INR3 lakhs obviously doesn’t enter our system. That’s one number-one. Point number two is in the specific example that you gave where the husband has taken a housing — has taken a two-wheeler loan, there is a liability which he must be servicing. That liability gets included in the allowable liability. So 50% is what is the allowable — 50% is towards expenses and then the 50% is towards the allowable as far as the installment is concerned.
So when you calculate the eligibility of the customer, all of this is taken into account. That’s the — that’s how sequentially you have to work at. And then obviously, how much is the — what is the customer’s installment depending on the loan she takes, will decide how much she is eligible for. On the gold loan, there is a criteria which has already been announced or maybe I mean, you were just illustrating the gold loan, hence I’m kind of ticking on it. Earlier there were some different methods which were used, now it has been standardized into how you calculate the liability of a gold loan also. So net-net, the borrowing at a family level also enters into the calculation of FOIR to determine the eligibility of the customer.
Ritika Dua
Sure, sir. And sir, obviously, why I’m trying to understand this is linked to the second question I have. So obviously of the NBFC MFIs who have reported so far, which have actually been very transparent in terms of the them plus the other lender exposure. Obviously, we don’t know so much from the other players. So they obviously are disclosing on an average 12% to 13% at least is 4-plus for somebody and maybe, and if I go by the conservative way that you are going [Technical Issue].
Shalabh Saxena
Hello? Ritika are you there?
Operator
We have lost the line. Next question comes from the line of Kaitav Shah [phonetic]. Please go ahead.
Shalabh Saxena
[Foreign Speech] Because suddenly we seem to have lost quite a lot. All of them —
Operator
[Operator Instructions].
Unidentified Participant
Hi. Kaitav here. Sir, good evening. Not a very resounding quarter, of course. But you mentioned some areas of green shoots. And if you can throw some light around whether it is state-wise or still its pocket for you to not elucidate it too much. As in — so are certain states coming back or is just pockets that are coming back?
Shalabh Saxena
There are patches, it’s not — see, there’s nothing called a state. I mean, it is [Foreign Speech] unless if there is a calamity, it impacts whichever regions it impacts is what it will be impacted. So my specific comment was patches in various states, including the ones which are stressed. But the reason why kind of I’m differing in terms of getting into the details is it is still not a trend. So we don’t want to celebrate earlier than what we should. We’ll just wait for it to become a trend. And our belief is that we should start seeing some turnaround so as to ensure that by end of this year, we are well in track to sort of put 2024 or FY25 behind us and move towards into FY26 with a smile on our face.
Unidentified Participant
Thank you. Thank you so much. Yeah, that’s it from me.
Shalabh Saxena
Thanks, Kaitav. Yeah, just get Ritika. We lost her —
Operator
Sure. Our next question comes from the line of from Ritika Dua with Bandhan. Please go ahead.
Ritika Dua
Hi, sorry. Am I audible now?
Shalabh Saxena
Yeah. Yeah. We lost you somewhere. So if you can repeat that question.
Ritika Dua
Yes, sir. Sorry, sir. Thank you for allowing again. Sir, I was just more from an industry standpoint, like I’m saying that the NBFC MFIs have been at least being transparent in terms of the numbers we know. We don’t know it for the other players. But if I go by the way you’ve been conservative and not lending to even going to the fourth lender also now, that number then from an industry standpoint maybe could be like 25% of the book for some of the large players, including maybe for yourself also. And then maybe there are some bit of the customers who are already unique and where we would have already been giving loans out.
So that combined becomes a very large pie wherein if we continue to lend more, that might maybe or rather there is a large pie, which if we are not continuing to lend more, how would the industry growth maybe pan out maybe looking more into ’26 and ’27? I think ’25 is something which we all maybe can, maybe understand, but how would the ’26-’27 growth rate look like, if at all — because if we now again look to lend to them, then we are back to the same situation?
Shalabh Saxena
So Ritika, see this is a problem. In a buoyant market, everything looks rosy and when things go down everything looks very grim. The life is in-between. You know there’s a gray and we have to thrive in the gray so one of the things that you said, there are two things. One of the biggest advantage that microfinance as an industry has is that this is the last mile delivery in-markets where you still don’t have — where customers still don’t have access to formal channel of finance. The alternate for this is only the money lender, to the best of my there isn’t anything in between, which obviously is not a choice. So the prudence or the discipline around has to be at an environment level, which includes both the players, which includes us, let me add, and the customers as well. The situation that we are in obviously is a reminder to everybody and also the customer.
We shouldn’t leave out the customers in this whole scheme of things where they will realize and I’m sure they will that a good credit score is important to maintain for you to get a subsequent funding. And that’s very critical. So that will — that should set in very fast because this is a working capital loan for a segment which is — which needs the capital to try and survive. So I wouldn’t really get into painting a doomsday scenario for ’26 and ’27, it is just that something triggered, something happened, which led to some bit of disruption in the discipline. And obviously, you know, we’ve been making this point around that you know, once you have a control on the number of lenders, there will be some — the regularization will happen much faster. So the demand is still intact. The addressable penetration of the addressable market is still at a 40% 45%. So you still have a headroom and India is still a very large country.
So it is just that a 40,000 from five lenders is not the most ideal. A 40,000 from three would be great. And then we — if you see the industry data also, in the past two years, the industry has added from a 4.8 crores — I think 8 crores is the unique customers that have kind of you know from a 5.8 crore to 8 crores, you know so the industry has added about 2, 2.2 crore customers or 20 million customers in a space of 24 months. So you are reaching out to newer fresher territories, all those things are there. So I — and that’s why in my comment also I made this point Ritika, that structurally there isn’t any — you know, I mean, this is a temporary disruption. This is a transitory phase.
Structurally, both the demand and the income level, see all this while we’ve been discussing the income levels, even if you — I mean we read this, if you see our deck and we’ve made it a point, look at the average you know, know, borrower outstanding, if you go to our Slide number 3, if you see the average borrowing at a customer level over the past two years has hardly gone up. I mean 8%, we are not even getting inflation here. You know 8% growth on a point-to-point basis. So annualized will be probably 3%, 4% or whatever that number is. Likewise, the ticket size also hasn’t seen has increased by 21% over two years, so which is what about 10%, 11%, 9%, 10% annualized.
All of this, if you see, you will have — I do believe that you know these are signs that things are — things structurally are okay. It is just that this whole and people who believe in the joint liability and we are one. So if you were to continue doing what is right and get to a stage where you are don’t increase the tenure. We don’t do a 36 and a 48, stick to shorter tenures, stick to lower loans, turn the loans around fast. I think we should be fine. Yes, we have to suffer from the collateral damage, but then you know, that’s — we will do everything to ensure that we also do some things which we should have done but did not do. So unfinished agenda plus wait for the industry to kind of we get right. We get this thing right.
Ritika Dua
Thank you so much. Thank you.
Operator
Thank you. Next question comes from the line of Aviral Jain with Siguler Guff. Please go-ahead.
Aviral Jain
Yeah. Thank you so much. Sir I have a couple of questions. One is on the collection efficiency. So has that stabilized because Q2 has been much worse than Q1, even for your weekly branches and that is the first time where you would see some sort of a stabilization wise. We have clearly said that we’ve not seen any trend as such, but any specifics around the collection efficiency at a gross or net level?
Ashish Damani
Yeah, so absolute high, Aviral, this is Ashish. Absolutes are something that we’ll not be able to disclose. But yeah, like Shalabh was explaining, trend-wise, it is similar. There has not been much improvement that we have registered or seen. But we’re very hopeful that by end of the financial year, we will see all of this going back to a normalcy. The reason is we have taken a lot of steps in terms of people adding a monitoring line in the branches and the guardrails have been implemented across the industry kind of will condition the behavior from the customer side and things should start looking better.
Aviral Jain
Yeah. So — and as a consequence, given you have deployed additional resources both at the branch level and you have more recovery team for 90 plus, would it be fair to — and this is not asking for a guidance, but you could still have more slippages from a 90 plus standpoint and also from a zero-plus standpoint going-forward in the next — this quarter, which is Q3 and Q4 as well. So it — would it be less accelerated? That’s my question.
Shalabh Saxena
Yeah, Aviral that would be getting into specifics all — and to be very honest, if we had a line-of-sight, we would have been very forthright. However, at this point in time, you know, as and if you see my commentary, we are cautiously optimistic. But however, the optimism is not one quarter, two quarters. I would not — even a four-quarter is good enough and we do believe that by end of this year, once we are out of this problem, you know this is — the stage where we are in, it is not a quarterly discussion, it is a two to four-quarter discussion. And I think we should look at this business at — even if you look at a two — while when ideally we should be looking at least a two-year horizon.
But even if a discussion sake, if we were to say to the specific point that you asked, a two to four-quarter if we were to discuss, we are reasonably optimistic that once we — once we reach the end of this year, I think we will be in a much better shape because these things see the reason why microfinance as an industry is said to be resilient as for exactly the various reasons points that I’ve been mentioning in the commentary and the answers that we’ve been giving and Ashish has been giving. The alternate product for the customer aren’t too many. There the demand is intact, the income levels haven’t been impacted. There could be some indiscretion here and there at a customer level too. All of that will — two quarters have already gone by where everybody is feeling the pinch, which is both enterprises and the customers. I think it should — it should turn around fast is our belief.
Aviral Jain
Okay. And —
Shalabh Saxena
But back to your question — back to your question, are we seeing trends here? The answer is no.
Aviral Jain
Sure. And so finally, the question of you mentioned that you expect to end up with an AUM, which is higher than what it was when you started the year with. So the acceleration in AUM would come from where newer customer recruitment or because industry would have weeded out all the borrowers who could not repay, so then a regularized credit cycle would start. And also on the supply side, I would believe that a lot of undercapitalized smaller NBFC, MSIs would be facing a lot more trouble because they won’t have the resources even when the industry situation normalizes to even — to be even able to give out the sort of on an aggregate basis, the overall supply potential in the industry would be reduced given lender will have challenges raising resources?
Shalabh Saxena
So, the growth will come at least for our company, I speak for Spandana. The growth will come predominantly from the existing base that we have for all the reasons that I have been mentioning until now in this call. We believe that’s a safer bet. That’s point number 1. Point number 2, Aviral is that this is for the past two quarters the demand — while the demand — nothing has gone, nothing has driven the demand downwards. However, the supply has been constrained for the reasons once again that we’ve discussed in detail. So there will be a pent-up demand which is there, which for now, instead of going out and acquiring a fresh set of customers, we believe that this quarter at least we will stick to focusing on our customers because we ourselves have a lot of potential within which we would not have explored in the past two quarters that we’ve been dealing with this.
So quarter four we will evaluate when we end the quarter three in terms of we go out, our impact on our belief on the fact that you know this is a segment, which predominantly is a good segment. Something has happened in the last two quarters, which we have reasonable — we are reasonably sure that things will turnaround. Plus apart from this, Aviral, you are aware, we’ve opened a lot of new branches. The weekly model itself, about 450 branches were opened in the last one year. All of them will start delivering. They are — the customers who we had acquired are now graduating into for a second loan, you know. So demand from our side is — when I say our side means the customer size is not an issue. It is just that we wanted to just bring some — we wanted to cool this whole thing down within. Once we are out of this, we will start and in fact, we’ve already started pushing the pedal on the disbursements.
Aviral Jain
And one last question is, what sort of recovery would you be able to see? Again, this could be difficult to project from today, but given your long experience in the industry, both you and Ashish, so you have a certain stock of 90 plus and there is a big write-off also that was taken some INR260 odd crores this quarter. So could there be — could there be recoveries, given you have also put in a recovery team, which is 300 people and then adding 200 more?
Ashish Damani
Hi, Aviral. Basically we — like you rightly said, it is difficult to project in the current environment, but if one has to you to just go by the previous experience of data, then it can be anywhere between 20% to 30% in terms of recoveries despite this thing. Since this is not necessarily all of — you know the hard bucket, which has flown into the GNPA, there will be customers who might have had temporary challenges, there will be customers who might have gone into the stress bucket because of, let’s say, our logistics issues, which you know kind of Shalabh was explaining earlier. So there are various kinds of customers who have moved into the GNPA market and thus there is an opportunity to collect higher than what one would have you know in a normal course connected from this bucket.
Aviral Jain
Thank you, sir.
Operator
Mr. Jain, are you done with your questions?
Aviral Jain
Yeah.
Operator
Thank you.
Aviral Jain
Thank you.
Operator
Next question comes from the line of Ashlesh Sonje with Kotak Securities. Please go ahead.
Ashlesh Sonje
Hi, team. Good evening. Hope you can hear me well. First question is on the weekly model. If I go back one year ago, you had roughly, actually slightly more than 20% branches in the weekly model. Do you see that at least in those branches, the behavior on collection is different?
Shalabh Saxena
Yeah. So our — if you see the slides, Slide number 10, you know our weekly collection efficiencies of right-hand bottom table, the gross collection efficiency is nearing 97% and the net is 94.2%. It is in line with the — while these branches are still in the same pockets or markets where a monthly branch is having slightly more stress, but clearly weekly branches are behaving well, better than the non-weekly branches. So this goes back to the point that we had made two years back that weekly branch is the way to cook, I think things did not work out for us. We started with a good intent, which was the project Parivartan. Yeah, things didn’t work out, but then at an appropriate time, our fundamental belief is that a weekly is the way to go for the institution.
Ashlesh Sonje
Understood, sir. Sir, and secondly, if I look at the data which you have shared on Slide number 6, are roughly 5% of the borrowers when you disbursed a loan to them had five lenders — had five lenders associated with those borrowers, right? So what gives — and given that average disbursement ticket size at the industry level is roughly INR48,000 for a loan, what kind of gives us the comfort when we disbursed being the fifth lender at that point in time, even for the 5% set of products?
Shalabh Saxena
So, Ashlesh, [Foreign Speech] not every customer would have peaked off at the peak when the lending is done. People would be at various — people would be at various stages of their rundowns of the specific loans. This is at a lender. So I could have five lend — I could have five loans from five different lenders, one with an outstanding of 5,000, 10,000, 15,000, etc. Ultimately, all of this converges into the fire which is calculated for the customer and she would have been eligible at that point in time. That is why we made — we walked that path. But nevertheless, we are wise now and which is goes back to and I am sure you would be listening to the — to the call that we’ve been on and we’ve been highlighting this point that forget the total outstanding at a customer level, but there is a very clear correlation of the number of lenders to the behavior or the portfolio quality. So that is irrespective of the indebtedness level.
So intuitively, yes, more number of lenders means more number of means a higher dollar value of borrowing. But even if I keep that aside, that might not be because when we further slice the — you know the slice, you further slice in the table, the same table that you are referring to on the left-hand bottom table, you still have in spite of the four lenders, you have a few of them at under 50,000. This is a factor of what stage their loan rundown is. So that is why we walk that path. But anyway, we are wiser now and I’ve been de-laboring this point that we need — we will consciously stay away from — this will be one of the criteria of deciding a loan, which is more number of lenders will probably shy away.
Ashlesh Sonje
Understood. Sir, and just a couple of data keeping questions. Can you share the SMA zero book? And give the proportion of borrowers — sorry, give the proportion of AUM which is sitting with borrowers having more than four lenders. If that 13.8% is actually based on —
Shalabh Saxena
What was your first part of the question? We missed it.
Ashlesh Sonje
SME zero book, that is one. And what proportion of AUM, which is with borrowers having more than four lenders. So assuming that 13.8% is on proportion of borrowers?
Shalabh Saxena
Yeah, so we can — if you can get in touch with us.
Ashish Damani
Yeah, we will — hi, Ashlesh, Ashish this side. We will share the data with you. So it’s not right now, but we’ll get back to you with that corresponding number on 13.8%.
Ashlesh Sonje
Yes. So this 13.8% is on number of borrowers, right?
Ashish Damani
Yeah, yeah, that’s right.
Ashlesh Sonje
Okay. Thank you.
Shalabh Saxena
Last question?
Operator
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Shalabh Saxena
Thank you for all of you who are on the call. Clearly, this was a quarter — it was a tough quarter. All of the industry as well as us have our own set of challenges. There are clear learnings as far as the — as the enterprise is concerned and we are doing our best to ensure that all the learnings are translated into action, be it execution, be it the credit policy, be it the model that you are following and so on. So we will continue to walk this path. As already highlighted to you. We anticipate things to regularize by end of this year. Until then, our job is very clearly to lend right and to collect right. So this is what we’ll keep doing. Thank you very much for all the support and best of luck and goodbye.
Operator
[Operator Closing Remarks].