Ujjivan Small Finance Bank Limited (UJJIVANSFB) Q1 FY23 Earnings Concall Transcript

Ujjivan Small Finance Bank Limited (NSE:UJJIVANSFB) Q1 FY23 Earnings Concall dated Jul. 26, 2022

Corporate Participants:

Alpesh Mehta — IIFL Institutional Equities — Analyst

Ittira Davis — Managing Director and Chief Executive Officer

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Ashish Goel — Chief Credit Officer

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Shreepal Doshi — Equirus Group — Analyst

Vibhas Chandra — Business Head, Micro Banking

Martin Pampilly — Chief Operating Officer

Carol Furtado — Chief Business Officer

Nidhesh Jain — Investec India — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Mocherla Durga Ramesh Murthy — Chief Financial Officer

Renish Bhuva — ICICI Securities — Analyst

Gautam Jain — GCJ Financial Advisors — Analyst

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

Ashlesh Sonje — Kotak Securities — Analyst

Vikram Subramanian — Spark Capital Advisors — Analyst

Eric Chan — Buena Vista Fund Management — Analyst

Moin Danawala — Tata Opportunities Fund — Analyst

Vijay Karpe — Bryanston Investments — Analyst

Akash Jain — MoneyCurves Invesments — Analyst

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sameer Bhise — JM Financial Ltd — Analyst

Operator

Ladies and gentlemen, good day and welcome to Ujjivan Small Finance Bank Q1 FY ’23 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Alpesh Mehta from IIFL Securities Limited. Thank you, and over to you, sir.

Alpesh Mehta — IIFL Institutional Equities — Analyst

Thank you, Lizan, and I welcome all of you to the Ujjivan Small Finance Bank 1Q FY ’23 results conference call. From the management side we have Mr. Ittira Davis, MD and CEO; Ms. Carol Furtado, Chief Business Officer; Mr. M.D. Ramesh Murthy, CFO; Mr. Martin PS, Chief Operating Officer; Mr. Ashish Goel, Chief Credit Officer; Mr. Vibhas Chandra, Head, Micro Banking; and Deepak, who heads the Financial Planning and Investor Relationship.

Now, without much ado, I hand it over to Mr. Davis for the opening comments and post which we will have a Q&A session. Thank you, and over to you, sir.

Ittira Davis — Managing Director and Chief Executive Officer

Thank you, Alpesh. Good evening, everyone. I am delighted to welcome you to our Q1 FY ’23 earnings call. Hope all of you are keeping safe.

It’s been more than nine months since we started on our recovery path with a four-fold objective of strengthening the leadership team, growing business volumes, increasing collections and improving asset quality. We are pleased with the outcome of our efforts on all four counts. We stabilized our business in Q3, turned around in Q4 and this quarter marks growth and profitability. Q1 business volume kept pace with the mammoth fourth quarter both in terms of assets and deposits. On the deposit side, we focused more on growing granular retail base and also curtailing the overall cost of funds. On the asset quality side, we have maintained the traction as collections are inching up [Technical Issues] with slippages being under control, recoveries and upgrades are helping us reduce our PAR and GNPA every quarter. In fact, every month.

We have already taken the provisions upfront and thus, we do not expect major credit quality challenges this year. As of June ’22, our NNPA is just at INR18 crore or 0.1%. Also, our SMA book, as well as restructured book have shrunk further indicating the reduced stress. The outcome of all this put together is the highest-ever quarterly profit for Ujjivan, which is more than INR203 crores on the back of a strong of PPoP of INR271 crores and a negligible credit cost. We are maintaining healthy CRAR of 20%. This quarter, we have considered INR30 crore for floating provision as part of Tier 2 capital and INR220 crores for netting off from the gross GNPA. The entire floating provision continues to be on the books and can be utilized in the future for making specific provisions in extraordinary circumstances with, of course, prior approval from the RBI. Including INR250 crores of floating provision, total provision of gross advances are at INR1,290 crores.

Now, we have achieved the objectives we started out with, we have put our sights on growing the platform further. This year, we would look to restart expanding our physical presence across the country. Though, we look to make a modest beginning with around 25 branches, largely focused on the liability rich catchment areas. Physical reach would be supplemented by a strong and focused investment in digital platforms to grow our business volumes, both assets and liabilities, services to improve processes and the overall reach to our customers. Our focus this year is to consolidate our business and make them profitable, invest in new avenues of growth.

Our economy is recovering, the credit demand has picked up. This is evident from our performance over the last three quarters. We look to grow our gross advances by around 30% this year with deposits growing faster than advances. We are monitoring our costs very closely and aim to bring in efficiency through process improvement and productivity enhancement. We look to hold our cost-to-income ratio at the current levels.

Credit cost, we have already guided would be contained well below 1% as the declining trend in NPA and PAR would continue for the balance of the financial year ’23. Return on assets should be north of 2.3%. The risk to this guidance is the inflationary pressure that’s brewing up in the economy and the results in rate hike movements. Also, we are monitoring the global geopolitical scenario. Overall I see financial year ’23 as a strong comeback year for Ujjivan, which would create a solid platform for the next growth cycle.

I will like to stop here and request the operator to begin with the question and answers.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Good evening. I’m glad to note the optimistic tone. I’ll just touch upon the issue that you raised of inflation and the two-pronged recovery, especially in the Micro Banking segment of your customers. How is the restructured book doing? I know the customers cannot make more than one EMIs typically. So, do you expect recoveries from this book with a lag or the customers still feeling a lot of pain? That’s my only question. Thank you.

Ashish Goel — Chief Credit Officer

Yeah. Hi, Ashish here. On the restructured book, let me answer that question first. We — under the Resolution Framework 2.0, which was the May 5 guideline, May 5, 2021 guideline, we had restructured about INR944 crore in the Micro Banking book and a small amount in the housing and the MSE book. Out of the INR945 crores, we have already recovered INR580 crores from the customers, in fact almost 1.6 lakh customers have also closed their accounts. And we currently have an outstanding of about INR360 crores on the RF 2 book and we continue to collect from there. In fact, what we have seen is that, post restructuring and the moratorium that we had given for about three months and immediately post the lockdown, customers had indeed started paying very well, and our collection efficiency in the restructured book continues to be above 80%. The current quarter we have ended about 79%. So this trend has continued. In fact, out of the INR360-odd crores, we have INR148 crore in NPA, which is fully provided. So we don’t see any incremental risk in this portfolio. In fact, we see that the portfolio will do even better as we go into the remaining part of the year, because our paying customers are actually paying at a very healthy rate of 80%.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Sir, if I can just dwell on that NPA part, are there also — is it because they are just more than three months dues? Or is it more accounting or the customers do you feel that they’re going to be more written off and they’re not going to come back as paying customers?

Ashish Goel — Chief Credit Officer

No. On the NPA portion, we have seen that about 30% of our customers are paying on a month-to-month basis. The only thing that they are not — the only problem is, they are not able to recover the past EMIs and the arrears, which have got built up over a period of time. So even on the NPA portfolio we have not — we are not saying that we will write-off. There will be a small portion of write-off, which may happen. However, as I was saying, 30% of our NPA customers are paying month-on-month. So we don’t see write-off happening in that segment.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Excellent, sir. Good to know. And wish you all the best.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Vivek, also one more thing, given that what Ashish mentioned, NPA is quite high in that INR360 crores, but the overall collection efficiency is 80%, which means even the NPA customers are paying, where NPA because three-month overdue is there and then they’re paying one EMI at a time. So it’s not that that entire amount whatever is NPA in anyway is 100% provided for will be written off or there is any — which is why we believe there is no pressure on that book.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Okay. Thank you so much. Thanks for the clarification. Thank you.

Operator

Thank you. The next question is from the line of Shreepal Doshi from Equirus. Please go ahead.

Shreepal Doshi — Equirus Group — Analyst

Hello, sir. Good evening. Thank you for giving me the opportunity. Sir, firstly on the microfinance side, our ticket size has gone up significantly in the last two quarters to almost INR56,000. So, could you please throw some color as to what would be the reason behind the same?

And in the MFI segment, are we continuing to focus on the urban side only or would — or are we also exploring of increasing our share in the rural side?

Vibhas Chandra — Business Head, Micro Banking

Hi. Thank you for the question. As we mentioned in our last quarterly call also, that our ticket size went up, mostly because of — after the lockdown mostly focus on repeat loans, the customers who were paying during the pandemic period and we were not able to provide them repeat loans, as you know, that in microfinance, and if you show the ticket size in the higher side. So first two quarters went on serving the customers who were — we were not able to serve during lockdown. And as we have moved in the quarter one and we have already served the pending customers, we have moved our focus to new customer acquisition as well. If you compare from the last quarter, last quarter NCA was — our new customer acquisition was close to 24%, which is now closer to 32% this quarter. So our focus has changed and NCA the ticket size is on the lower side, which actually has yielded into lower ticket size, average ticket size in the current — in the last quarter, Q1 of this year. So that is one thing.

And second, as you mentioned that whether we are focusing on urban only, so as — after conversion to bank, we have also opening branches in bank rural location, which is 25% of bank presence and we have started focusing on rural areas as well, though. And we have not only microfinance product, we are selling other products also which is relevant and logical to the rural market. And apart from that, we also sell liability product to — in these branches. So our focus is both in urban as well as rural.

Shreepal Doshi — Equirus Group — Analyst

Just one follow-up there. So what would be the ticket size bracket for our more than, say, five-year vintage customer that we would be having?

Martin Pampilly — Chief Operating Officer

It values [Phonetic], we hope to INR1 lakh for repeat loans after the third or fourth cycle and the average ticket size is close to — for the repeat ticket sizes [Technical Issues] but the range is from, say, INR50,000 to INR1 lakh.

Shreepal Doshi — Equirus Group — Analyst

What is the maximum that we give to a group loan customer?

Martin Pampilly — Chief Operating Officer

INR1 lakh is the maximum group loan.

Shreepal Doshi — Equirus Group — Analyst

Okay. Okay. Got it. Sir, on the — the other — the question was on the housing side. So that’s another segment wherein we are seeing strong growth. So if you — so there the ticket size is 1.2 million. And so, if you could just give some color as to which geographies are we targeting or is it a product available at all the branches? And what is the strategy going ahead with respect to the sharing the overall book mix?

Carol Furtado — Chief Business Officer

Hi. This is Carol. On the housing side, our focus has now moved a little bit from the informal to semi-formal and the formal segments. And what we have also done is that, we have got into state-wise policies, which is helping us get better results there. And yeah, I mean — so informal is very low as a percentage, but we are focusing on the semi-formal and formal segments.

Shreepal Doshi — Equirus Group — Analyst

Got it. And ma’am, geography-wise, we would be broadly doing business in all our states or like have we…

Carol Furtado — Chief Business Officer

[Speech Overlap] geography-wise, we are focusing mainly on the semi-urban areas.

Shreepal Doshi — Equirus Group — Analyst

Okay. Okay. Got it. Ma’am, just need some few data keeping questions. So, on the NPA side, so if you could give us the slippage recovery upgrade and write-off number for the quarter?

Ashish Goel — Chief Credit Officer

INR156 crores — the upgrade was INR215 crores. And we did write-off of about INR63 crores.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

That’s the technical write…

Ashish Goel — Chief Credit Officer

That’s the technical write…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

The total write-off is around INR79 crores.

Shreepal Doshi — Equirus Group — Analyst

The slippage numbers, I think I missed that number.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

INR156 crores.

Ashish Goel — Chief Credit Officer

INR146 crores.

Shreepal Doshi — Equirus Group — Analyst

Okay. Okay. Thank you, sir. One last question on the provisioning side. So what is the provision that we are having on the restructured NPA book?

Ashish Goel — Chief Credit Officer

So on the restructured book we have — on the NPA side, we have about INR148 crore of NPA in RF 2, on which we are holding full provision. And in RF 1, we have about INR130-odd crores of NPA, again, on which we are holding full provision.

Shreepal Doshi — Equirus Group — Analyst

Basically, we are having 100% coverage on the restructured NPA bucket.

Ashish Goel — Chief Credit Officer

That is right.

Shreepal Doshi — Equirus Group — Analyst

Okay. Thank you, sir. Thank you so much for answering my questions and good luck for the next quarter.

Ittira Davis — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Nidhesh from Investec. Please go ahead.

Nidhesh Jain — Investec India — Analyst

Thanks for the opportunity, sir. Two questions. First, if you can share the number of customers and group loans and individual loans in the Micro Banking at the end of June ’22? That would be the first data point question.

And secondly, if we look at the segment-wise collection trends, we have seen sharp improvement in collections in Micro Banking, but in MSE and Affordable Housing, our collection trends have not improved. They have remained at around 95% for housing, and I think 84%, 85% for MSE. So what is the reason behind that?

Ashish Goel — Chief Credit Officer

Okay. I’ll take the question on the collection trends. Now, the collection that we see is a blend of non-delinquent and NPA collections. So in secured book, which is the MSE book, we have elevated NPAs as of now. It is in the range of 10%. So therefore, our overall blended collection is in the range of 85%. Although we have seen some significant improvement in upgrades in the MSE portfolio also, there is a quarter-on-quarter decline in the gross NPA there. And on the housing side, the collection continues to be in the range of 95% and above. Again, a reflection of a much lower GNPA in the housing book. On the non-delinquent portfolio, we continue to have a collection efficiency of more than 95% in both the products.

Nidhesh Jain — Investec India — Analyst

And sir, also just a follow-up on this, sir. If I look at additional collection, additional connection is as high as the collection that we are doing against the due per month, sir, for MSE and Affordable Housing. Does it indicate the balance transfer happening in this portfolio? How should we look at the additional collection which are happening on MSE and Affordable, which are relatively [Phonetic] high?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

[Speech Overlap] which is happening, Nidhesh, take that there is, whatever NPA — out of NPA, whatever collection we are getting and all that, like Ashish mentioned, there is good amount of upgrade that happened in the MSE also, so that amount was totally roughly around INR40-odd crore for this quarter.

Nidhesh Jain — Investec India — Analyst

Okay. Sure. And just the first question on number of customers and group loans.

Ashish Goel — Chief Credit Officer

We don’t share segment-wise, product-wise numbers. So we can’t share…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Number of customers…

Ashish Goel — Chief Credit Officer

We don’t share that.

Nidhesh Jain — Investec India — Analyst

Because I was just looking at the loan outstanding per customer, loan size, sir, in group loans, specifically. Because ticket size sometimes — ticket size, I am assuming is based on disbursement that we have done in this quarter. So I was just — I was more interested in looking at the loan size outstanding. That’s why I was asking that number. So if you can just share that number wise the loan outstanding per customer in — only in group loans, that would be useful.

Ashish Goel — Chief Credit Officer

So at any point in time, we would have repeat, as well as new customers coming into the bank. And as regards for sharing that there is a repeat loan, which is in the range of 63,000 and new loans in the range of 44,000 and the blended average of both the [Technical Issues] together is in the range of 55,000, 56,000.

Now, in terms of the average ticket size, these are short tenure loans, about 22 months is the average tenure. So typically the loan outstanding per customer should be in the range of INR30,000 to INR35,000 because they would have amortized by about 50% in the last six to nine months.

Nidhesh Jain — Investec India — Analyst

Sure. That’s it from side.

Operator

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello?

Ashish Goel — Chief Credit Officer

Hi, Deepak.

Deepak Poddar — Sapphire Capital — Analyst

Yeah. Hello, sir, and congratulations for good set of numbers.

Ittira Davis — Managing Director and Chief Executive Officer

Thank you.

Deepak Poddar — Sapphire Capital — Analyst

And sir, I just wanted to understand. Now, I think you spoke about cost-to-income holding at current level with good growth, as well as the credit cost well below 1%. But why we are still guiding for ROA of 2.3% plus, as compared to this quarter, I think, it was about 3.4%? So is that a conservative kind of our outlook that we have given on ROA front?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Deepak, we are baking in like Mr. Davis mentioned in his remarks, we are baking in a little bit of a credit inflationary pressure and swaps hike on the repo rate hike and cost of funds hike and all that, that’s why we are keeping that at a little conservative side.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Yeah. So that’s a little conservative number, but we do expect our NIMs to — what sort of outlook we have on NIMs actually?

Mocherla Durga Ramesh Murthy — Chief Financial Officer

So overall, yield should be improving, even if we do not take any kind of a rate hike on our lending rate, yield should continue to improve as the NPAs goes down and we expect the declining trend on the NPA in part to continue. With that, even if the cost of fund is stable, the NIM should be stable or upward trajectory. But we take that plus or minus as a stable NIM for the year.

Deepak Poddar — Sapphire Capital — Analyst

Oh that’s great. That’s great. And my second query is on your cost-to-income over next two to three years. So I think earlier we were kind of targeting 50% kind of a cost-to-income on a little medium-term basis. So, any thoughts on that would be helpful.

Mocherla Durga Ramesh Murthy — Chief Financial Officer

So that — I would put it like this, 50% is the first milestone that we want to achieve within a short-term and then the journey should continue beyond that.

Deepak Poddar — Sapphire Capital — Analyst

Is the first milestone and what’s the timeline we are looking at?

Mocherla Durga Ramesh Murthy — Chief Financial Officer

Short-term milestone that we booked at that.

Deepak Poddar — Sapphire Capital — Analyst

Short-term, maybe so two years maybe something like that?

Mocherla Durga Ramesh Murthy — Chief Financial Officer

I don’t want to put a year to that right now.

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. Fair enough. Okay, sir. That’s it from my side. All the very best.

Mocherla Durga Ramesh Murthy — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Renish Bhuva from ICICI Securities. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah. Hi, sir, and congrats on a great set of numbers. First question is on the — this new MFI regulation in terms of the process alignment. So, sir, where do we stand currently in terms of the process migration as per the new regulation?

Vibhas Chandra — Business Head, Micro Banking

Yeah. Thank you very much for this question. You know that the new MFI regulation came into force on 1st of April and — which is sitting on the RBI also for this, too. That clarifies that implementation date is 1st of October. On — now, as this regulation came into force and communication came in the month of March, fortunately, most of the items which have mentioned in RBI policy, we were all already following it for last 10 years. So it is just a confirmation of what we were doing for the 10 years is something RBI also want to follow. Yes, some items which needs time. For example, the check rate bureau or customer household, there are some [Technical Issues] that needs to happen at PAR 0 [Phonetic] and also. For that, RBI has allowed us time till 1st of October.

And apart from that, we didn’t face any issue in the month of April. We were normally — we would normally able to do business in the month of April as well, which is a good thing that has happened to us, whatever we have done over a period of time in microfinance business as we are a very old player in microfinance business, that has helped us in following the RBI regulations. And we are online with the pending items which needs to be delivered, where the timeline is 1st of October, hopefully, we’ll be able to do that well within the timeline.

Renish Bhuva — ICICI Securities — Analyst

Got it, sir. Just a follow-up on this. So, on this 50% FOIR, have we seen higher rejection rate once we have implemented the new process?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

No, in fact, our rejection rates in Q4 and Q1 have been exactly the same.

Renish Bhuva — ICICI Securities — Analyst

Okay. Okay.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

So there has been no uptick in rejection rates. In fact, we were also thinking what would be rejection rates look like post the F-O-I-R our implementation. But we found that the rejection rates have not gone up — not have they gone down. They have remained to be the same.

Vibhas Chandra — Business Head, Micro Banking

And perhaps the reason is that, as I mentioned that, we were holding most items which were prescribed by RBI. But we have [Technical Issues] so we already — all this process and rejection were based on customer income and their business [Phonetic] income. So that has led to now a situation where our rejection rate has not gone up based on the FOIR [Phonetic] calculation.

Renish Bhuva — ICICI Securities — Analyst

Got it. Got it. And sir, a second sort of question is kind of repeating. So on the MSE and the Affordable Housing piece, even if we look at the gross NPA number and PAR 0 number. PAR 0 appears to be on the higher side. So, I mean, in terms of the process, what we have changed, let’s say, during COVID to make sure that the incremental growth in both these segments should be of a better quality than what we have seen during COVID?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Okay. So I’ll answer this question in two parts. One, what was the portfolio composition when COVID two happened, and therefore, what was the reason for the increase in GNPA? So when COVID two happened, most of our portfolio, about 58% to 60% of our portfolio was from the informal segment, which got hit very hard due to income-related reasons. So people were not earning that income due to the lockdowns. So that led to a very sharp increase in the GNPAs. During the same time, we also started to recalibrate our strategy — started planning for a shift in our customer segments from informal to semi-formal and formal. And during the last one year we’ve made significant progress. In fact, on MSE, we had a 8% formal segment. We are now at 22% and the incrementals on a quarter-on-quarter basis, has been 48% in the formal segment. So therefore, the change of composition of the book has been very significant in the last one year. So we — and if you ask me about the delinquencies we have seen in the last 24 months, the GNPA is less than 0.5%.

Renish Bhuva — ICICI Securities — Analyst

Okay. This is for the MSE business, right?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

That’s right.

Renish Bhuva — ICICI Securities — Analyst

Okay.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

On Affordable Housing, if you were to ask me about our change of strategy, we have, in the last four quarters, done significant work on our salaried segment. So the salaried segment pre-COVID used to be in the range of about 38%, which is now almost 47% of the book. And our quarter-on-quarter disbursements are almost 54% to 55% on the salaried segment. Therefore, the book composition has also changed and therefore, business composition has also changed in that — in the entire portfolio. Again, I would want to say that, in the last 24 months, our — the book that we have disbursed has GNPA of less than 0.5% in the housing portfolio as well.

Renish Bhuva — ICICI Securities — Analyst

Okay. Okay. And sir, just last data point. Again, on the MFI book. So if you can, let’s say, highlight the number of borrowers who are unique to us. And maybe the borrowers having plus one lender?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Okay. On the unique segment, we have almost 35% of the customers that we have are unique to Ujjivan and 65% of the customers have multiple borrowing arrangements.

Renish Bhuva — ICICI Securities — Analyst

Sorry, 35% is unique and 55 is…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

65% customers have unique borrowing arrangement — sorry, multiple borrowing arrangement.

Renish Bhuva — ICICI Securities — Analyst

And would you like to highlight, let’s say, Ujjivan plus one lender if you have that data with you?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

I would not have…

Renish Bhuva — ICICI Securities — Analyst

Okay.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

It would be there in plus one or plus two. It can’t be more than that.

Renish Bhuva — ICICI Securities — Analyst

Got it. Okay. Okay. That’s it from my side, sir. Thank you very much.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you so much.

Operator

Thank you. The next question is from the line of Gautam from GCJ Financial. Please go ahead.

Gautam Jain — GCJ Financial Advisors — Analyst

Good evening, sir. Many congratulations for very impressive numbers.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you, Gautam.

Gautam Jain — GCJ Financial Advisors — Analyst

Yeah. My question is related to your growth expansion plan since you have stabilized and now you’ve started growing. Can you throw some light on your branch expansion plan going forward?

Ittira Davis — Managing Director and Chief Executive Officer

Gautam, in which regard you want the expansion? Is it branches or is it book? What is your — what’s the focus?

Gautam Jain — GCJ Financial Advisors — Analyst

Branch expenses?

Ittira Davis — Managing Director and Chief Executive Officer

The branches, yeah, this — our strategy is both brick and mortar and digital. So we will grow the branches in areas where we think it’s good to be there. For example, this year we will be entering Telangana. We have not been in Andhra and Telangana. So this is an area for us which we need to look at. So we are entering Telangana this year. But we will continue to grow the branch network as required. But we are trying to push more and growing business through the digital route.

Gautam Jain — GCJ Financial Advisors — Analyst

Okay. Okay. And second question pertains to deposit. The deposit growth was very slow in this quarter. I think sequentially we have added only INR156 crore. So is — I mean, my question is, I mean, what is our strategy to grow deposit in line with our loan growth? And what’s the steps we are taking to raise the deposit in an upward interest market?

Ittira Davis — Managing Director and Chief Executive Officer

Yeah. See, the thing is that, it’s important that we have a granular retail growth because that is the type of deposits we would like to have long-term as against bulk deposits. So that is the focus. We have got our branches now working full gear to increase the deposit base. And we are also looking at different segments in that, including government and local municipalities and all of that. So we have got a very good strategy in place. And I think the coming quarters will show the growth on that front.

Gautam Jain — GCJ Financial Advisors — Analyst

Have we raised the deposit rates?

Ittira Davis — Managing Director and Chief Executive Officer

Sorry?

Gautam Jain — GCJ Financial Advisors — Analyst

Have we raised the deposit rates this year?

Ittira Davis — Managing Director and Chief Executive Officer

Yeah. We raised the deposit rates after RBI changed the repo rates by 50% and then 40 basis points. So we have made a slight adjustment in the deposit rates.

Gautam Jain — GCJ Financial Advisors — Analyst

Okay. Okay. And the last question is on — since microfinance industry is doing very good post-COVID and we are doing, I think, one of the best among the industry. I would like to hear your qualitative comments on overall collection and how long this industry will continue to do like this? And is there any change in competitive landscape, I mean, pre-COVID and post-COVID? Any small players left the ground or just your comments on that?

Vibhas Chandra — Business Head, Micro Banking

Yeah. Thank you for the question. What we see a real — microfinance industry has gone through various crisis. This is one of them, before that we have also seen demonetization and other crisis. And what we have seen that after each crisis, the customer segment that we serve in microfinance is — we have seen that they bounced back very quickly and at the same time, at the industry level, we have also seen that after any crisis, there are lot of consolidation that happens, especially the businesses [Phonetic] who are weaker. We see a lot of opportunity going forward after this crisis in terms of customer acquisition and market share and we are all set as a microfinance lender, we don’t only lend good [Phonetic] loan, we have full basket of products that we offer to customers, not only in [indecipherable] but constantly in liabilities. And thankfully, we have also done a lot of activity around digital for these customers. So we are seeing sometime very, very positive and in terms of growth — growth in microfinance we see coming few — sometime very, very positive for microfinance growth in Ujjivan.

Ittira Davis — Managing Director and Chief Executive Officer

And to add to that, I can say that to the microfinance customer base, we will be looking at adding some of the secured products as well. So we see this as a good base for us.

Gautam Jain — GCJ Financial Advisors — Analyst

Okay. Thank you so much. And all the best for the future.

Ittira Davis — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital Advisors LLP. Please go ahead.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Yeah, hi. Thanks for the opportunity and congratulations on very good set of results. My first question was regarding the restructured book. If you can give a little more color on the customer behavior as to how some of them are able to repay? Is it that their businesses have rebounded or they are able to borrow from other banks or NBFCs or something else? So that would be just helpful.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

So on the — I would not like to see the restructured book as behaving any differently from our overall book. When there was a lockdown, there was a need for customers who had lost their income to get some kind of relief from the bank and therefore, we had done the restructuring under RF 2.0. Post the lockdown opened, we saw that customers incomes had come back to normalcy. And therefore, we started seeing some very — repayment rate from the overall book, as well as from the restructured book. So I would say that the restructured book has not behaved very differently from the overall book because the customer segment was the same and the incomes had gone back to normal. So therefore, I would say that restructured book has behaved very well for us, and it was indeed the set of customers who are looking for some kind of relief had been given relief.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Right. But if they are lagging in their payments and they have prior EMIs, obviously, they will have to have extra money or extra funds to pay that back. And where is that coming from? If you have any sense on that?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

I’m sorry. There was a little bit of disturbance in the line. Could you please repeat the question?

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Sure. Is it better now?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

So what I was saying is that, when the book was restructured, they probably would have prior EMIs that were unpaid at that point in time. So as their businesses are coming back, are they coming back that strong that we can clear all the past dues as well very quickly? I mean, I’m just trying to get a sense whether they are borrowing more from other institutions to clear dues with you? Or some informal sources or it’s just that their business has come back very, very strong?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

So, there are increase, I would say that about 5% to 7% of the customers who went back into NPA because their incomes had not come back to normal, but we have not seen any behavior in the restructured book which is any different from the overall book. So, as I was saying, the restructured book behaved quite well in spite of the first three or four months of setback that the customers have had and they have continued to pay their EMIs. In fact, as I was saying, from the INR945-odd crores, we have collected INR580 crores already. But overall book has go down INR360 crores now.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Wonderful. Okay. And my second question, any guidance on the fund raise?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Fund raise, okay. So the fund raise that enabling resolutions we have taken, we have taken two, one on the equity side and one on the debt side, both are enabling resolution and we’ll see as and when we want to get the funding from the market. Right now, we don’t want to give any timeline to any of the activity.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Okay. All right. Thank you and all the best.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

[Speech Overlap] have a timeline of December that by December we need to meet the SEBI requirement of minimum public shareholding. So we will meet the SEBI requirement.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Got it. Thank you.

Mocherla Durga Ramesh Murthy — Chief Financial Officer

We are also –. Sorry. This is Ramesh Murthy. Apart from the equity side, which Deepak has covered, we’re also looking to raise some sub-debt. But as Deepak has mentioned, we won’t like to right now put a timeline to it, but it’s very much on our radar and very much on our cards here. And we have the enabling resolutions as he has mentioned before.

V.P. Rajesh — Banyan Capital Advisors LLP — Analyst

Understood. Thank you so much. All the best.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you.

Mocherla Durga Ramesh Murthy — Chief Financial Officer

Thank you.

Operator

Thank you. The next is from the line of Harsh Shah from Dimensional Securities. Please go ahead.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

Hi. This is Harsh here. So I just wanted to understand the macro situation that is going on in the rural and semi-urban side because we hear a lot of commentary from the FMCG companies that there is some sort of slowdown that is happening. So just wanted to get a sense from your side, I mean, it’s interesting that the credit demand is picking up. How is the business environment that is there in the macro — in the rural India?

Carol Furtado — Chief Business Officer

On the rural areas, we are mainly in the unbanked rural areas and that is our licensing condition also, where 25% of our branches need to be in unbanked rural areas. We are not seeing a slowdown there. We are seeing that the credit demand is equally high and things are going on well there. We are, in fact, opening branches in these unbanked rural areas here again. On the semi-urban side also, as of now, we do not see any [Technical Issues]. We are going strong in those areas, too.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

Okay. And when we guide this growth rate of 30%. So is it the entire industry is going to grow at that rate or is it Ujjivan who is going to take the market share and will it be from the organized player or from the unorganized to organized that sort of migration are we expecting?

Ittira Davis — Managing Director and Chief Executive Officer

I think the 30% is a reasonable level as far as I — I don’t know about the full industry, but the small finance banks, which are active in the micro banking area, as indication in a recent seminar, which was held a couple of days ago 30%, 35% is seems to be a rate which is doable. So for the SFBs who are operating in the micro banking areas. But MFIs, I don’t have any figure on that.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

Okay. Sir, when we say SSBs growing at 30%. So I just wanted to understand, sir, where is the demand is being generated? Because the — I mean, we have the GDP, which is growing at 10%, 11% at the best. Then how is the 30% growth coming in? Is it that the unorganized segment is too large and some demand is coming out from where?

Ittira Davis — Managing Director and Chief Executive Officer

The one thing you have to keep in mind is that, last year was a very slow year because there was COVID. So from that base when you say 30%, it looks reasonable. So I think we’re not — when industry gets back to a normal run, then 30% maybe — number which looks ambitious if the environment is not strong, but in a condition where you’re coming from a low some people de-growth to some extent, 30% in this recovery year looks reasonable.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

Okay. And if everything remaining stable, what kind of growth can we see over the next five years or so? I mean, just a ballpark guess.

Ashish Goel — Chief Credit Officer

That’s too futuristic to comment, Harsh.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

No. I mean, just — if there are no hiccups, no major hits in…

Ittira Davis — Managing Director and Chief Executive Officer

Harsh, industry has had a good — if you look back at a period when there was no constraints, the industry has done very well. If you look at the 2014, ’18-’19 period before demonetization, it was okay.

Harsh Shah — Dimensional Securities Pvt. Ltd. — Analyst

I get it. Thank you. Thanks a lot.

Operator

Thank you. The next question is from the line of Ashlesh Sonje from Kotak Securities. Please go ahead.

Ashlesh Sonje — Kotak Securities — Analyst

Hi, team. Good evening. Just one question from my side. I want to assess the ex-NPA provision buffer that we are carrying. So, of course, there is a floating provision of INR220 crores…

Operator

Sorry to interrupt. Mr. Ashlesh, your audio sounding very soft.

Ashlesh Sonje — Kotak Securities — Analyst

Yeah, sorry. I hope this is better.

Operator

Much better. Thank you.

Ashlesh Sonje — Kotak Securities — Analyst

Yeah. I just wanted to get an assessment of the ex-NPA provision buffer that we are carrying. There is, of course, INR220 crore floating provision. But outside of that, what is — what are the standard asset provisions and the restructured asset provisions, outside of NPA?

Ittira Davis — Managing Director and Chief Executive Officer

Yeah, Ashlesh, just a second.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

So the total provision that we have on the book is INR1,290 crore. Of that INR1,290 crore, INR909 crore is my NPA provision and INR250 crore is my floating provision and the balance is my standard asset provision, roughly INR131 crore would be my standard asset provision.

Ashlesh Sonje — Kotak Securities — Analyst

Okay. And the restructured provision would be part of the standard assets, is that right?

Ashish Goel — Chief Credit Officer

It is part of the NPA provision. As I have said, so we are carrying the 100% provision on both RF 1 and RF 2 book, which has turned into NPA. So that is part of the INR990 crore, which Deepak mentioned.

Ashlesh Sonje — Kotak Securities — Analyst

Got it. Thank you. That’s all.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

There is a small portion of the restructured provisions which is there in the standard asset provisioning, not very big portion, but a very small portion.

Ashlesh Sonje — Kotak Securities — Analyst

Yeah. Understood.

Operator

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

Vikram Subramanian — Spark Capital Advisors — Analyst

Am I audible? Hello? Am I audible?

Ittira Davis — Managing Director and Chief Executive Officer

Yeah. Yeah, Vikram, you’re audible.

Vikram Subramanian — Spark Capital Advisors — Analyst

Yeah. Hi. Congrats on a good set of number. So…

Ittira Davis — Managing Director and Chief Executive Officer

Thanks, Vikram.

Vikram Subramanian — Spark Capital Advisors — Analyst

So I just wanted to…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Vikram, can you be a little louder?

Vikram Subramanian — Spark Capital Advisors — Analyst

Yeah. Is this better?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah.

Vikram Subramanian — Spark Capital Advisors — Analyst

I just wanted to get some clarity on the equity raise that you had mentioned. So I know it was an enabling resolution, but this equity raise would be completely towards meeting the NPAs requirement, right. So do we at least have a number of shares logged in, in terms of how much we would be raising?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

No, we don’t have any number of shares logged in that we’ll be raising, so and so number of share. It is — but your understanding is correct that the reason for doing this equity raise right now is for meeting NPAs requirement. However, I will also add that given the kind of growth that we’re expecting, it’s always better to have a little extra capital and thus, we are looking for this equity raise and like Ramesh mentioned, we might also look to supplement with a little bit of sub-debt, if required.

Vikram Subramanian — Spark Capital Advisors — Analyst

Okay. Okay. Got it. And — but I think you had mentioned…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Nothing concrete right now. So we wouldn’t be able to give quantum and timeline for either of those things.

Vikram Subramanian — Spark Capital Advisors — Analyst

Got it. And I think you had mentioned something like December to be a deadline by which we might do the equity raise.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah, that’s the three-year time period that we have from SEBI because we got listed in December 2019 and within three years you need to meet the NPAs requirement. So our three years ends on 11th of December 2022. So as per the regulatory requirement, we need to finish this equity raise by that time. And we are hopeful we’ll be able to meet the regulatory requirement.

Vikram Subramanian — Spark Capital Advisors — Analyst

Okay. Okay. Got it. Thanks. That’s it from my side.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you.

Operator

Thank you. The next question is from the line of Eric Chan from Buena Vista Fund Management. Please go ahead.

Eric Chan — Buena Vista Fund Management — Analyst

Good afternoon, management. Congratulations on a strong set of results. I have two questions. The first question is on the strong disbursement in 1Q. Can you talk about what did you do? How do you adjust your process to take care of the RBI harmonization requirements for income and liability check per household in microfinance?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Eric, actually — Vibhas actually mentioned a couple questions back that we have been following all the norms required by RBI under the new requirement and thus, we did not have to tweak our processes to comply with that. And thus, we were able to do the disbursement in line with whatever we have been doing so far.

Ittira Davis — Managing Director and Chief Executive Officer

And, Eric, the other thing is that, we have disbursing over INR4,800 crores in the previous two quarters. So this space is that is now sustainable.

Eric Chan — Buena Vista Fund Management — Analyst

Sorry, I was under the impression that the RBI INR3 lakh household income check and the 50% maximum service regulation. What’s the new requirement that came out in March this year?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah. The requirement is new, but Ujjivan as a process has been following it for a very long time. So as for our process, it’s in line. For the industry, it is new and thus, a lot of other players will have to make shift and make arrangements or changes in their process to comply with the requirement. And like also mentioned, RBI has recently announced that the regulations are implemented with an effective date of 1st of October.

Eric Chan — Buena Vista Fund Management — Analyst

Got it. Second question is, can you talk a bit about your PSL certificates? We hear that RBI has been tightening their audit checks and now require for some of the MFI loans to have various paperwork and support proof. For example, agri loans require proof of idle land ownership or net lease contracts. I wanted to just check whether you have been seeing some of that challenges and how has that impacted your PSLC eligibility.

Ashish Goel — Chief Credit Officer

Yeah. Thank you for your question. As far as PSL is concerned, we have been following RBI policy around that in letter [Phonetic] and spirit both in microfinance and other books, including housing and MSE and whatever business we do. We don’t see any challenge in that. We have a robust process and mechanism to qualify our loans into different PSL categories. So we have also heard what you were telling in the market. But at the same time, we are confident that whatever we have ways and process we have to qualify loans into different categories is something which are in line with RBI requirements.

Eric Chan — Buena Vista Fund Management — Analyst

Great. Thank you. I have no further questions.

Operator

Thank you. The next question is from the line of Moin Danawala from Tata Opportunities Fund. Please go ahead.

Moin Danawala — Tata Opportunities Fund — Analyst

Thank you, operator. Congratulations on fantastic set of numbers. I have two questions. Question number one. Will you be able to provide us a summary of the overall kind of actual plus estimated losses that we would have seen from the time COVID started to today?

And question number two would be, can you [Phonetic] give us an update on the merger?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

I’ll answer on the merger part and while Ashish frames his answer on the first part. He’ll have to do a little bit of digging on the number. On the merger, the first step is to meet the NPAs requirement. And like I had mentioned to the previous — to previous caller’s question that we would be meeting the SEBI requirement by December as the timeline is there and only post that we can take ahead the reverse merger process. In a parallel process, which we have seen, we have not seen that the SMB had any challenge in getting the regulatory approval from RBI or SEBI on exchanges. So that process should not take much of time.

Ashish Goel — Chief Credit Officer

On the overall impact during the year, we had overall slippages in both Micro Banking, as well as the other segments, housing, as well as MSE. And on Micro Banking, specifically, because the slippages were high, we had an overall slippage of in the range of about INR1,500 crores. We recovered INR700-odd crores from the NPA pool and we had a write-off of about INR780 crores. So the total inventory has actually come down by about INR60 crores between March to June — between March of last year to June 30 of this year. This is what we would say as the first year that is the last full financial year and the first quarter of this year.

In terms of write-offs, I could give you the number, it was above INR780 crore that we did in the last financial year. But one more important data I would want to share, out of the INR780-odd crores of write-off, we have actually also recovered INR65 crores in the last four quarters. So the write-off, as I was saying earlier, is not something that would not come back. We are seeing some signs of recovery from there and close to 8% of the overall write-off for the year has been recovered already.

Moin Danawala — Tata Opportunities Fund — Analyst

That’s great news. So would it be right to summarize this as saying that we would have approximately INR1,715 crores of write-offs between April ’21 to today and the year prior to that?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

No, I don’t know how did you get a INR1,700 crore of write-off. We had roughly INR780 crore of write-off last three years…

Ashish Goel — Chief Credit Officer

INR63 crore this quarter.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah. Total INR80 crores this quarter, including everything. And prior to that, the write-off amount was very limited. So the write-off amount if you’re looking at would be roughly INR870-odd crore, not more than that. And like Ashish mentioned, out of that INR870-odd crore, roughly INR70-odd crore has been recovered already and we expect that recovery should continue as this year proceeds.

Moin Danawala — Tata Opportunities Fund — Analyst

That sounds great. Thank you.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thanks, Moin.

Ashish Goel — Chief Credit Officer

Thank you.

Operator

Thank you. The next question is from the line of Vijay Karpe from Shriram Life [Phonetic]. Please go ahead.

Vijay Karpe — Bryanston Investments — Analyst

Yes, sir. Thanks for giving me this opportunity. And congratulations for good set of numbers.

Operator

Sorry to interrupt. Mr. Karpe, we are not able to hear you clearly.

Vijay Karpe — Bryanston Investments — Analyst

Just hold.

Ittira Davis — Managing Director and Chief Executive Officer

Yes, Vijay.

Vijay Karpe — Bryanston Investments — Analyst

Am I audible now?

Ittira Davis — Managing Director and Chief Executive Officer

Yes, much better.

Vijay Karpe — Bryanston Investments — Analyst

Much better. So thank you for the opportunity and congratulations on a good set of numbers. I had two questions, one was if you could talk about your top state which is Tamil Nadu and also if you could talk about Uttar Pradesh and Bihar in terms of business environment there and also in terms of disbursements, AUM growth and collections?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Sorry, Vijay, we didn’t get your first — the first part of the question.

Vijay Karpe — Bryanston Investments — Analyst

Yeah. So my question was, how has been the business environment in the state of Tamil Nadu, Bihar and UP? And also how has been the disbursements, AUM growth and collections there?

Vibhas Chandra — Business Head, Micro Banking

Yeah. I think you are coming from the point that these states are retained, I mean, in terms of OSP and these are first, second and third state in terms of OSPs or both, top five base belong to, I think, Tamil Nadu and Bihar in top three in terms of OSP, however [Phonetic], market is concerned. We always had a policy that we don’t grow to a certain extend in any state and that is why we have grown in almost everywhere in the country. And these states also have that limit. We don’t grow beyond certain limit. We don’t grow beyond 10% to 15% of our OSP is not residing in any particular state.

As far as the business environment is concerned, as we mentioned earlier that we — most of the branches are urban and semi-urban focus as they were — it was microfinance and then [Phonetic] converted into bank. And we don’t see any particular challenge in terms of credit quality or political risk in these states, Tamil Nadu, West Bengal, Bihar and UP. In terms of portfolio quality also all these states are in line with or little better than our overall portfolio quality at pan India level.

Vijay Karpe — Bryanston Investments — Analyst

Great. And how has been the collection efficiencies in these three states?

Vibhas Chandra — Business Head, Micro Banking

So as we mentioned that — I don’t have exact number, but all these states are performing like the overall pan India’s performance, if not better, especially Bihar and UP is much — a little better than our national average. Tamil Nadu is in line with the — our organization [Phonetic] level. So there is no much difference.

Vijay Karpe — Bryanston Investments — Analyst

Got it, got it. And the last question from my side. So, in December, the dilution, which we are doing. Will there be a fresh issue or will it be also an OFS?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

It will be completely fresh issues.

Vijay Karpe — Bryanston Investments — Analyst

Okay. Okay. Great, great. Thank you so much and best of luck.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you, Vijay.

Operator

Thank you. The next question is from the line of Akash Jain [Phonetic] from MoneyCurves. Please go ahead.

Akash Jain — MoneyCurves Invesments — Analyst

Yeah. Am I audible, sir?

Ittira Davis — Managing Director and Chief Executive Officer

Yes, you are.

Akash Jain — MoneyCurves Invesments — Analyst

Yeah. So first of all, I think congratulations for the team. I think, excellent set of numbers. I think we are very quick to criticize management when numbers are bad, and I think it should be equally open to congratulating them when the numbers are good. So huge congratulations.

So I have just two clarifications, one is, when you say 80% collection efficiency on the restructured book, so is it on that month’s EMI or is it on the whole base [Technical Issues] past EMIs are also being considered?

Ashish Goel — Chief Credit Officer

It is on that month EMI, Akash.

Akash Jain — MoneyCurves Invesments — Analyst

So if I — so in that case, there would be slippages coming from the restructured book into GNPA on a monthly basis, right? So that is how — so there will be some slippage from restructured book on a monthly basis on the NPA book and then there will be some recoveries potentially from the GNPA book? That’s the way this whole strategy [Phonetic] will work, right?

Ashish Goel — Chief Credit Officer

Understanding is correct. Yes, Akash.

Akash Jain — MoneyCurves Invesments — Analyst

Okay. And…

Ashish Goel — Chief Credit Officer

One point I would want to make sure is, our — the SMA book, SMA 0, 1 and 2 on the restructured book is in single digits. So we — even if there is any slippage, it’s a very minor small number.

Akash Jain — MoneyCurves Invesments — Analyst

No. But when there is 80% collection efficiency, then theoretically 20% of the book is [Technical Issues] the non-provided book is going into GNPA every quarter, right?

Ashish Goel — Chief Credit Officer

So, let me put it this way. So the 80% collection efficiency is a blend of non-delinquent and the NPAs. If I were to look at the collection efficiency on the NPA, that would be in the range of 30% and the collection efficiency on the non-delinquent and the SMA book would be in the range of 98%, 99% [Technical Issues]

Operator

Ladies and gentlemen, the line for the management has got disconnected. Please stay connected while we reconnect the management.

Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.

Ashish Goel — Chief Credit Officer

So, Akash, as I was saying, the collection efficiency of 80% on the restructured book is a blend of non-delinquent, as well as NPA collection. And out of the INR360-odd crores of restructured RF 2 book, we have — INR148 crores already in NPA, that is giving a 30% collection efficiency. The non-delinquent book is giving more than 96%, 97% collection efficiency. So the overall average comes to about 80%.

Akash Jain — MoneyCurves Invesments — Analyst

Okay. So because we have already provided for, practically the whole restructured NPA part, we do not see too much slippages coming from the non-NPA book because there the collection efficiency is in — broadly in line with the overall book as well.

Ashish Goel — Chief Credit Officer

That’s right, that’s right. So, in fact, as I was saying, our SMA book SMA 0, 1, 2 is in single digits. It’s a very small number.

Akash Jain — MoneyCurves Invesments — Analyst

And on the NPA book, I think earlier you guys had mentioned that 30% of the customers are giving every month EMIs, but if I just broadly want to understand what is the collection efficiency of the GNPA book including the GN — including restructured book GNPA, as well as the overall book GNPA, what was that collection efficiency number look like?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Akash, let me put it like this. The entire book that we have NDA or PAR or GNPA or restructured, everything put together collection efficiency is 99%. So whatever NPA also or restructured also is there, there is very limited scope where the payment is not coming. Rest, the overall collection is 99%.

Akash Jain — MoneyCurves Invesments — Analyst

So if I want to clarify one thing here. So when we talk about 99% collection efficiency on our slides, I think 21, you — it basically means all the customers were — which are 0 to 90 and even more than 90, which have not been fully provided for. Is that the base that we have to take into account?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Everything that was due for that month is counted. So if you look at the June number on that Slide 21 that is INR1,121 crore includes every money that is due in the month of June, for the month.

Akash Jain — MoneyCurves Invesments — Analyst

I got it. One last question here, sir. So unfortunately with the way the RBI regulation is that once a customer goes into delinquency, even if he has paid one or two past EMI still remains in — as our delinquent customer. If I once forget or ignore the RBI requirement and just want to understand how many of the actual book, not from RBI norm, sir, how much of the actual book is actually 90 days less? Is that number significantly different from the 5.9% we have, as per RBI norms?

Ashish Goel — Chief Credit Officer

So it will not be very different. See, when customers miss two or three EMI and they start touching 91 or 121 DPD, they could actually pay one or two EMIs and come back to 61 or maybe 31. But they still continue to be tagged as NPA customers because till the time, as you said, the yields are completely repaid. We will not be upgrading any of these two standard assets. So therefore, the quantum of customers who are in 30 or 60 DPD, it’s a small number. I would say, it is not more than INR40 crores to INR50 crores.

Mocherla Durga Ramesh Murthy — Chief Financial Officer

The overall SMA book itself is…

Ashish Goel — Chief Credit Officer

The overall SMA book itself is 1%. I would say, this is a fraction of that, maybe 0.2%, 0.3%, which is NPA but with maybe two EMIs pending.

Akash Jain — MoneyCurves Invesments — Analyst

Okay. Okay. Okay. So most of the customers are barely able to pay — even on the NPA book they are barely able to meet the — that EMI requirement for that month and hopefully over a period of time, they will be able to pay but asking them to pay more than one EMI is a difficult scenario for an MFI [Technical Issues].

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Yeah. Because also, Akash, there would be customer with an NPA about more three EMIs payable.

Akash Jain — MoneyCurves Invesments — Analyst

Okay. Got it. Thank you so much. That’s very useful. Thank you so much.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you.

Ashish Goel — Chief Credit Officer

Thank you.

Operator

Thank you. We’ll move onto the next question, that is from the line of Jai Mundhra from B&K Securities. Please go ahead.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Thanks for the opportunity. Sorry for…

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Hi, Jai. Jai, can you be a little louder, please?

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Yes, sir. Hi. Is it better, sir?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

A little better. Yeah.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sure. So, apologies, sir, if this question has been answered earlier. I wanted to check what is the total stock of provisions in the balance sheet which is specific plus floating plus restructured? Is this what you have given on Slide 23?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Jai, the total provision on the book is INR1,290 crores. Of that INR1,290 crores, INR131 crores is standard asset provision, INR909 crores is my NPA provision, specific NPA provision, and INR250 crore is my floating provision. So out of that INR250 crore of floating provision, INR200 crore is being counted for my PCR calculation and INR30 crore is being used for my Tier 2 capital.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Total is INR1,290 crores?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

INR1,290 crores. If you see Slide 23 — on the bottom of the Slide 23 we have mentioned that INR1,290 crores.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sure. Sure. And second question is, sir, on — one of your peer banks had shown that RBI in their inspection had called out for people who have taken MFI loan. But they did not qualify for PSL because of, let’s say, inconsistent lend record, etc. Is that — I wanted to check if you would have faced similar problem or could that be a potential sort of risk?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

So we have not had any such observation from RBI. What I understand is one of the recent peer bank’s call, there was a discussion regarding agri book being classified at PSL and they are needed some bit of a documentation and all. So there — and this question was also discussed and we got clarified of the requirement came in September ’20 onwards. And we have all the documentation required wherever it is required. And also, there is an RBI point where the documentation is required for agri allied only if the ticket size is above INR2 lakh. For us, the ticket sizes are not there. So for that category, for SMF category, we would not require that documentation.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Understood. And last question, sir. Just wanted to clarify, the RBI new recent guidelines on MFI lending, which asked you to calculate the household saving, etc. This clearly does not seem to have any impact, right, because your disbursement has been fairly good. But I just wanted to double check that did — I mean, does this new regulation had any business impact if at all?

Vibhas Chandra — Business Head, Micro Banking

Yeah. So as I mentioned earlier that household income or household liability, etc., this is something which we are retaining practice in a given customer [Phonetic]. So that is something we are already doing. So we didn’t have to stop for that. There are certain changes, which is — for which RBI has allowed time till 1st of October, which — on which we and another partner [indecipherable] are working and we’ll be on — we’ll meet the requirement on time. But yeah, as far as income and liability calculation is concerned, this was already in place before the RBI came out with their own requirements, the policies.

Jai Mundhra — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sure. That’s very helpful, sir. Thank you so much.

Vibhas Chandra — Business Head, Micro Banking

Thank you very much.

Operator

Thank you. Ladies and gentlemen, we’ll be taking the last question, that is from the line of Sameer Bhise from JM Financial. Please go ahead.

Sameer, your line is on the talk mode. Please go ahead.

Sameer Bhise — JM Financial Ltd — Analyst

Hello?

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Hi, Sameer.

Sameer Bhise — JM Financial Ltd — Analyst

Yeah, yeah. Hi. Thanks for the opportunity and a strong quarter for Ujjivan. I just wanted to get a sense on the provisioning policy. Would it be more prudent to create some buffer given that we’ve kind of had a significant stress in the past? We are probably heading into very good times in terms of growth and profitability. So I just wanted to get management’s thoughts there. Right now, I think the floating provision buffer is around INR250 crores. Would it be more prudent to create some more buffer before just to kind of shield off some of the unforeseen events in the future?

Ittira Davis — Managing Director and Chief Executive Officer

Yeah. I think at the moment, you’re right, we have the INR250 crores that is sufficient for the time being. They are coming out of crisis. But in the future, we will look at the model again and see what we have learned from the COVID situation. And if required, we set aside, if our model is to be continuing to focus substantially on the Micro Banking, we will look at the risk factors from that perspective and set it up accordingly. This is something that we plan to discuss at our Board level.

Sameer Bhise — JM Financial Ltd — Analyst

Okay. But it’s on agenda. But so far I think nothing is finalized. Is that a fair assessment?

Ittira Davis — Managing Director and Chief Executive Officer

And right now we are continuing with the guidelines, which we had from before, which I think is also quite prudent because it takes care of all the risks at the present time. But whether we need to prepare for another COVID situation, that is something that we can look at later on.

Sameer Bhise — JM Financial Ltd — Analyst

Okay. Okay. Thank you and all the best.

Deepak Khetan — Head, Financial Planning, Strategy and Investor Relations

Thank you.

Ittira Davis — Managing Director and Chief Executive Officer

Thank you.

Operator

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

Ittira Davis — Managing Director and Chief Executive Officer

Yeah. Thank you very much. I appreciate all the questions that we received and the interest shown by the participants. I appreciate the support provided by IIFL. So thank you very much.

Operator

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