EARNINGS UPDATE Q1FY19

Transcription

1 EARNINGS UPDATE Q1FY19 JULY 2018 BHARAT FINANCIAL INCLUSION LIMITED (Formerly known as SKS Microfinance Limited ) BSE: NSE: BHARATFIN Corporate Identity No. L65999MH2003PLC This presentation is solely for viewing. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from BHARAT Financial Inclusion Limited.

2 CONTENTS Particulars Slide No. Update on Merger 3 Executive Summary 7 Investment Hypothesis 9 Company Overview 12 Clarity on Major Uncertainties Post AP MFI Crisis 17 Growth Anatomy 22 Future Strategy 28 Pilot on Retail Distribution And Service Points (RDSP) 32 Update on Cashless and E-KYC 36 Loans for Housing Improvement & Two-Wheeler (Pilot) 39 Q1FY19 Performance Highlights 43 Industry Update On Credit Quality 54 Review of Financials 56 Financial Architecture 74 Risk Management 79 Capital Structure 81 Annexures 83 With effect from 1 st April,2018, the company has adopted Indian Accounting Standards (Ind AS). Accordingly FY18 numbers have been restated from previous GAAP to Ind AS to make them comparable. Figures rounded off to the nearest digit across the presentation. Figures and ratios have been regrouped wherever necessary. 2

3 UPDATE ON MERGER 3 3

4 RATIONALE FOR MERGER FOR BFIL Access to savings & deposits products Enhanced relationship with customers Competitive edge with significant head start vis-a-vis SFBs Reduced impact of Political Risk Propensity to default by customers reduces in case of political events. e.g. In the 5 pilot branches, customers with RD(Recurring deposit) had lower overdues (>4 weeks at 0.08%*) vis-a-vis non-rd customers ( >4 weeks at 4.3%*) Create a robust Secured lending platform Banks expertise in 2-wheeler financing coupled with extensive distribution network of BFIL creates a significant opportunity Similarly, home improvement loans can be scaled up Cashless collections > Customer analytics > Consumer finance loan Retail Distribution Service Point Rollout (RDSP) Cashless collections > Time saved in center meeting > Improved Sangam manager productivity > Improved cost to Income ratio Cross-sell opportunity to Non-MFI customers Ex: Solar, Mobile, Sewing machines, etc. * As on 30 th Sep

5 TRANSACTION STRUCTURE 1. BFIL to merge into IBL under a Scheme of Arrangement Issue of shares by IBL to shareholders of BFIL 2 BFIL Shareholders 2. BFIL shareholders to receive IBL shares as consideration 3. IBL to transfer the employees and operations into a wholly owned subsidiary* making it a captive Business Correspondent Indusind Bank Ltd. Merger of BFIL into IBL 1 3 Subsidarisation of BC Operations BFIL * Subsidiary to be incorporated post RBI approval Wholly Owned Subsidiary 5

6 STATUS ON MERGER CCI,RBI,SEBI AND STOCK EXCHANGES APPROVAL RECEIVED Date of Announcement 14 th Oct months 1 month Board Approval Regulatory Filings & Approvals NCLT Filings & Approval ROC Filings & Share Issuance Valuation / Swap Ratio Approval of Scheme, matters therein and other legal documents RBI CCI SEBI and Stock Exchanges (NOC) Filing of Scheme NCLT approval: Shareholders approval, Creditors approval, other approvals ROC Filing Allotment of shares to BFIL shareholders 6

7 EXECUTIVE SUMMARY 7

8 EXECUTIVE SUMMARY Overview AUM Growth (Non-AP portfolio) Growing Net Interest Income Largest microfinance company in India with gross loan portfolio of INR 13,832 Cr., 78 Lakhs members in Non-AP states and 1,639 branches Sub 20% lending rate Company s non-ap Portfolio grew by 44% (YoY) to INR 13,832 Crs. as of June 30, ,016 2,837 4,171 7,677 9,150 12,575 9,629 INR Cr. 13, ,276 INR Cr Profit after tax for Q1FY19 of INR 142 Crs (Previous GAAP Rs. 190 Crs) Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Jun-17 Jun-18 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY17Q1FY18 NII = Interest income on Portfolio loans +Net gain on derecognition of loans sold under assignment transaction + BC Fee Financial Cost Financial Metrics Balanced Geographical mix Diversified Shareholding Strong Balance sheet and liquidity Net worth (INR Cr.) 3,310 Capital Adequacy 30.6% Cash & Cash equivalent (INR Cr.) Efficiency and Profitability 1,236 Marginal cost of borrowing # 8.3% Cost to income 51.2% Return on Asset^* 3.7% Return on Equity* 17.6% Note: Above Data for Q1FY19 Non-AP = excluding states of AP and Telangana # includes on and off b/s borrowings (excluding processing fees) for Q1FY19 ^Assets includes securitized, assigned and managed loans Jharkhand 5% Rajasthan 7% Kerala 6% Uttar Pradesh 8% Madhya Pradesh 4% Maharashtra 10% Others 6% Karnataka 11% Note: Portfolio as of June 30, 2018 Odisha 16% Bihar 14% West Bengal 13% Amansa Capital PTE Limited Birla Sun Life Mutual Fund Top 10 Shareholders Reliance Mutual Fund Route One Kotak Mutual Fund Wellington East Bridge Capital DSP Blackrock Blackrock Tree Line Note: Shareholding as of June 30, % 3.6% 3.3% 3.2% 3.1% 2.9% 2.8% 2.8% 4.8% 6.7% Figures rounded off to the nearest digit across the presentation 8

9 INVESTMENT HYPOTHESIS 9 9

10 INVESTMENT HYPOTHESIS Favorable Macros There is a huge demand/ supply gap for microfinance Entry barriers and supervisory standards are significantly enhanced thwarting future competition No credible alternative for microfinance emerges even after 7.9 years of AP MFI Act Regulatory Clarity RBI s comprehensive regulatory framework mitigates political and regulatory risks RBI and MoF acknowledge microfinance as a key component of financial inclusion PSL requirement of banks to enhance funding availability and value of the franchise Unmatched leadership BFIL is the most efficient and one of the low cost lender (interest rate at sub 20%) Impeccable track record of meeting financial obligations in a timely manner even during the black swan event of AP-MFI Crisis Diversified earnings stream with cross-sell / Non-Loan revenue contributing 8.0% to PAT for Q1FY19 Pan-India presence with no unbalanced geographic sectoral exposure Strong solvency (Capital Adequacy of 30.6% as on 30 th June 2018) and sufficient liquidity Steady state RoA of 4% is the highest among financial services play 10

11 THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE INR crore Micro-Credit Demand In India covered in part by moneylenders and informal sources, but largely untapped Rs. 5,40,000 Year 2015 Segment mn households in India with some assets (INR 90/day PPP) MFIs SHG Rs. 2,40,000 Year 2005 Rs. 62,575 24,017 38,558 Rs. 1,09,631 Rs.87,442 37,286 27,582 59,860 72,345 Rs. 91,228 38,781 52,447 * * FY14 FY15 FY16 FY17 * * Demand Segment -2 (BPL) 80 mn households in India with no assets (INR 55/day PPP) *Disbursement in INR Crs. Assumptions Target households: 150 mn Basis: World Bank poverty statistics, India Avg. credit requirement: per household Rs. 45,000 (2015), adjusted with inflation on per household Rs 20,000 (Year 2005) Basis: EDA Rural Systems, World Bank, Access to Finance Adjustment for service difficulties: 20% Basis: adjustment made to reflect inaccessible poor in rural areas (~7%) and half of underserved urban poor (0.5 x 26% = 13%) Source: World Bank; Sa-Dhan Bharat Microfinance reports 11

12 COMPANY OVERVIEW 12 12

13 BFIL USES GRAMEEN MODEL TO PROVIDE UNSECURED CREDIT AT THE DOORSTEP OF LOW INCOME RURAL WOMEN Put loan officers pic Survey a village Recruit members Deliver doorstep service Provide training 13

14 BUILDING BLOCKS OF TURNAROUND POST AP MFI CRISIS INR crore Balance Sheet Cleansed Supply-side Shock Managed Credit Growth Resumed AP exposure of Rs. 1,360 crore written off Drawdowns 2,875 3,503 3,526 Non AP Gross Loan Portfolio 2,837 1,484 1,185 FY 12 FY 13 FY 14 Q3FY11 Q3FY12 Q4FY14 Cost Structure Optimization Return To Profitability Q3FY11 Q4FY14 Var. Branches 2,403 1,255-48% 70 Other Opex (INR crore) % Headcount 25,735 8,932-65% Personnel Cost (INR crore) % FY12 FY13 FY14 (13.6) Bn (3.0) Bn 14

15 DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (1/2) Market Share Regained INR Crs. Capital Reinforced Non-AP Portfolio Outstanding 78,113 28,300 Net worth - Rs. 3,310 crs 3,945 14% 14,600 12,594 16% * CAR % (RBI Requirement 15%) 1,229 Others BFIL Oct 10 June 12 Mar 18 8% *Mar 18 Includes data for NBFC-MFIs & SFBs (source: MFIN) Technology Upgraded Efficiency Gains Yrs Installed Computers at all branches with In-House lending system All branch connectivity with daily data receipt (1,215 remote locations) Equipped Loan Officers with Refactoring of tablets In-house lending system Instant Credit Bureau check, E-KYC and cashless Disbursements done Retail Distribution & Service Points & Cashless Collections Cost to Income 74.5% 49.0% 51.2% FY14 FY18 Q1FY % Marginal Cost of Borrowing # FY14 FY18 8.7% 8.4% # On and Off balance sheet borrowings (excl. Managed Loans) including processing fees Q1FY

16 DURABLE FOUNDATION FOR SUSTAINABLE GROWTH (2/2) Political Risk Mitigation through interest rate reduction 29.25% 4.8% reduction since Oct % 23.55% 22.00% 20.75% 19.75% Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15 Interest rate on income generation loans Reduced Borrowing Dependence Lower State Concentration Share of borrowing from top 5 banks 74% 53% Top three states share in GLP 53% 43% Mar-13 Jun-18 Sep-10 Jun-18 Term loan and cash credit facilities GLP: Gross Loan Portfolio 16

17 CLARITY ON MAJOR UNCERTAINTIES POST AP MFI CRISIS 17

18 WHAT DOESN T KILL YOU, MAKES YOU STRONGER - POSITIVE DEVELOPMENTS POST AP MFI CRISIS Concerns Clarity Will there be multiple regulators? Regulatory clarity RBI to be the sole regulator Funding uncertainty? Priority sector status continues MFIs are the only indirect priority sector dispensation Will there be contagion? No contagion Since past 7.9 years no other state has followed suit Has the operating model been challenged? What will be the economics under regulated interest rate regime? Collection efficiency maintained despite disbursements being a fraction of collections during the wind-down mode i.e. Oct 2010 to June No alternative credit delivery model has gained currency. RoA of 3-4% on a steady-state basis 18

19 OPERATING MODEL VAILIDITY ESTABLISHED Non-AP Loan Portfolio Collection efficiency of 97% during wind-down mode dispels ever greening myth 3,942 3,526 INR crs 2,706 2,101 1,635 1,185 1,320 1,229 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY million borrowers repaid loans without incremental lending Internal generation -- and not incremental debt -- aids prompt repayment No. of non-ap borrowers who repaid on-time during this period No. of non-ap members who availed loans during this period No. of non-ap members who didn t receive any incremental credit from BFIL during this period in Millions MFI Industry non- AP Portfolio Outstanding (Rs Cr) Oct 10 28,300 June 12 14,600 19

20 COMPETITIVE LANDSCAPE CHANGES TO BFILS ADVANTAGE INR crore Snapshot of Equifax Credit Bureau*: Institutional Infrastructure Credit Bureaus- - Equifax & Highmark are functional - 95% of MFIs now use CB reports for disbursements No. of loan records Crore No. of borrower records 8.9 Crore No. of loan records (live) 7.1 Crore^ No. of borrower records (live) 4.0 Crore^ No. of MFIs reporting 173 Market Share Dynamics 3 rd, 4 th and 5 th largest MFI players with 33% Non-AP market share went under CDR. Sector outstanding Non-AP Portfolio Oct 10 28,300 Mar 14 24,615 Mar 15 40,138 Mar 16 50,534 Mar 17 61,623 Mar 18 78,113 # * Source: Equifax (as on May 18), Excluding A.P and Telangana # as per MFIN; Mar 18 - Includes data for NBFC-MFIs & SFBs ^ DPD. 20

21 STEADY-STATE ROA OF 4% CAN BE TARGETED Interest Income (EIR) # Tax 34% 4.4 Marginal Cost of borrowings for Q1FY19: 8.4%. Portfolio funded by debt: 80% Financial cost Operating cost Prov. & Write-off Taxes Profit Revenue *interest rate charged is 19.75% for new loans effective from 7 th Dec 15 #Processing fee is calculated based on weighted average portfolio mix of 48% IGL (1 Yr. loan), 23% LTL (2 Yr. loan) and 28% MTL (1.5 Yr. loan) 21

22 GROWTH ANATOMY 22

23 7.5 YEAR CAGR FOR THE SECTOR AND BFIL ARE 14% AND 17% RESPECTIVELY Industry GLP BFIL GLP ^ 78,113 12,575 ^ 61,623 50,535 7,677 9,135 38,386 28,300 14,600 16,740 24,499 3,942 1,185 1,320 2,016 2,837 4,171 Oct'10 Jun'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Sep'10 Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 ^Industry portfolio includes NBFC-MFIs and SFBs only Source: MFIN Micrometer (Mar 13,Mar 14, Mar 15, Mar 16,Mar 17 & Mar 18 data) 23

24 INDUSTRY GROWTH SKEWED TOWARDS URBAN, WHEREAS WE REMAIN RURAL FOCUSED Urban Rural MFI Industry- Mar'13^ 33% 67% Industry growth skewed towards urban MFI Industry - Mar'17* 57% 43% We are rural focused BFIL- June'18 20% 80% 0% 20% 40% 60% 80% 100% Source: ^Sa-Dhan Report 2013,*MFIN Micrometer 24

25 AUM GROWTH IS PRIMARILY LED BY CUSTOMER ACQUISITION OVER THE LAST DECADE 150% 124% CAGR % 44% 42% 13% 2% 19% 21% 25% 14% FY 07-10* FY 10-13^ FY 13 - Q1FY19^ FY 07- Q1FY19* -13% -15% Gross loan portfolio Active Borrowers Gross loan portfolio/ Active Borrowers *Enterprise figures ^ Excluding states of A.P and Telangana 25

26 CREDIT BUREAU DATA Rejection rate for All Products* Rejection rate for Long Term loans* 22% 23% 37% 36% 18% 16% 27% 26% 13% 22% FY-17 FY-18 Q1-FY18 Q4-FY18 Q1-FY19 Hit rate^ for all products* ^ Hit rate = % of loan applications with matching record in credit bureau 88% 89% 94% 89% 91% FY17 FY18 Q1-FY18 Q4-FY18 Q1-FY19 Indebtedness limit (INR) Maximum No. of Lenders Revised BFIL Guidelines # Pre Post # RBI Guidelines 60,000 80, MFIN Guidelines^^ Note: The revised guidelines pertains to JLG loans and does not apply to first time customers (IGL1). Guidelines continue to remain same for IGL1 customers ^^MFIN guidelines revised to 3 lender norms in Sep 17 and indebtedness to INR 80,000 in Apr 18 # With effect from 10 th June 18 Reasons FY-17 FY-18 Q1-FY18 Q4-FY18 Q1-FY19 Rejection Reasons Q1FY19 % Mix IGL 1 & IGL 1 + MTL 1 >IGL 1 or > MTL 1 (excl. IGL1 + MTL1) Q1FY19 1st Apr to 10 th to 1 st Apr to 10 th to 9 th June 30 th June 9 th June 30 th June Loans from=>2mfis 33% 46% - 54% - Loans from > 2 MFIs or Other lending entity =>2MFIs and Outstanding Balance >60K =>2MFIs or other lending entity and Outstanding Balance >80K LTL % - 54% 19% 31% - 29% % - 10% Outstanding Balance>60K 17% 10% - 6% - Outstanding Balance>80K % - 26% => Default History (club all type of defaults) 10% 9% 4% 7% 1% Eligibility < Min Ticket Size 22% 4% 7% 3% 9% Total 100% 100% 100% 100% 100% *Note: Rejections are done based on data input from Credit bureau. Rejection data is calculated based on unique clients basis. 26

27 BFIL HAS NIL EXPOSURE IN SHG CONCENTRATED STATES SHG Concentrated States SHG Exposure <=5% State SHG Exposure* BFIL Exposure* Andhra Pradesh 28% - Telangana 20% - Karnataka 13% 11% Tamil Nadu 10% - West Bengal 8% 13% Kerala 5% 6% Odisha 3% 16% Maharashtra 3% 10% Uttar Pradesh 2% 8% Bihar 3% 14% Madhya Pradesh 1% 4% Assam 1% - Rajasthan 1% 6% Jharkhand 0.5% 5% Gujarat 0.4% - Chhattisgarh 0.6% 2% Haryana 0.3% 2% Punjab 0.1% 2% Tripura 0.2% - Himachal Pradesh 0.2% 0.1% Others 0.5% 0.3% *SHG Data as on Mar 17 (Source: NABARD Status of Microfinance in India-2017), BFIL data as on June18 27

28 FUTURE STRATEGY 28

29 UNMATCHED LEADERSHIP Parameter Status Unique Operating Model Group Lending Rural customer base 100% ~80% Extensive Reach No. of districts No. of customers Mn Low Cost Producer Interest rate Sub 20% lending rate External endorsements Rating/Grading Highest MFI grading MFI 1 Highest Code of Conduct Assessment Grading C1 Corporate Governance rating at CGR2+ Highest safety Short-term rating at A1+ 29

30 THE MOST EFFICIENT MFI IN THE GLOBE Medium Term Strategic Priorities: Target % Metric Marginal cost of Borrowing Sub-20 Interest Rate to Borrower Cumulative next 2 years salary increase to field staff Cost to Income Ratio Annualised earnings growth Drivers Balance sheet strength Stellar repayment record Judicious sources mix Low marginal cost of borrowing Scale & Efficiency Productivity & Efficiency Technology initiatives Scale AUM growth Operating leverage Non-Loan revenue Status Q1FY19 8.4* % 195% *on and off b/s loans (including processing fees) 30

31 CREATIVE DISTURBANCE TO ASSET-REVENUE-EARNING CORRELATION Medium-Term Targets Earnings Revenues 10% 15% 85% 8.0% Assets* 3.5% 5% 90% 0.9% MFI Non - MFI Non-MFI Actuals Q1FY19 95% *Note: Core microfinance will continue to be more than 95% of credit assets 31

32 PILOT ON RETAIL DISTRIBUTION AND SERVICE POINTS (RDSP) 32

33 WE MEET OUR BORROWERS 52 TIMES A YEAR Center Meeting Unique Distribution Channel Door Step Delivery Providing Financial & Non-Financial Products Convenient Day: Monday to Friday Convenient Timings: Between 7 AM to 11 AM We meet 7.8 mn customer through 3 lacs centre meeting every week across the country AND WE UTILISED THIS CHANNEL FOR FACILITATION OF MULTIPLE FINANCIAL AND NON FINANCIAL PRODUCTS. DIGITAL AND PROCESS INITIATIVES HAVE HELPED REDUCE CENTER MEETING DURATION 45 mins 35 mins 20 mins More time for value added activities at center meeting EARLIER CENTER MEETING DURATION WITH TAB AND PAPERLESS WITH CASHLESS AND RDSP More center meetings per SM per day 33

34 With RDSP Current* RDSP CREATES A PARADIGM SHIFT IN CLIENT CONNECT AND PRODUCES MULTITUDE OF OPPORTUNITIES Cashless Coll., RDSP 1 Bank/ATM for cash deposit and withdrawal, travels 5-8 kms, spending up to 2 hours 2 80% of our members travel for electricity bill payment. Travels 2-5 km, spending up to 1 hour Travels to 3 88% of our members visit Kirana store for ration items, travels less than 0.5 km, spending up to 15 minutes Customer % of our members visit electronics store for DTH / mobile recharge, travels 1-5 kms, spending up to 30 minutes 51% travel to Municipality office for water bill payment, travels 1-5 kms, spending up to 30 minutes Online shopping, only 5% customer reported access to this RDSP CAN PROVIDE ACCESS TO THESE SERVICES AT THE SHORTEST DISTANCE THUS REDUCING MULTIPLE VISITS AND SAVES TIME FOR MEMBERS Deposits and withdrawals point Customer Travels to < 0.5 km *Source: 5,456 customers surveyed across Karnataka, Odisha and UP 1 RDSP Bill payments and recharges Allied and OTC financial services Cross sell and e- commerce Single window for all requirements 34

35 RDSP PILOT THE MODEL IS PROVEN THROUGH CENTER MEETINGS U N I T S I N L A K H S Mobile Phones 30 Solar Lamps 27 RDSP Leveraging distribution strength Mixer grinders Sewing machines Cycles Cooker Cooking stoves Water purifiers Refrigerator Two wheelers Last mile for leading retailers OVER 68 LAKH NON FINANCIAL UNITS FACILITATED* IMMENSE E-COMMERCE POTENTIAL WITH RDSP IN PLACE EXISTING PARTNERS POTENTIAL BUSINESS OPPORTUNITY E Commerce Railway ticketing OTC insurance *Cumulative units facilitated of non financial products as of Jun 18 35

36 UPDATE ON CASHLESS AND E-KYC 36

37 98% CASHLESS DISBURSEMENTS IN Q1FY19 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 90% 97% 98% Q1FY18 Q4FY18 Q1FY19 CASHLESS PROCESS CASHLESS DISBURSEMENT PROCESS Center meeting Proposal on TAB Customer Consent E- KYC Instant Credit Bureau E-sign ABPS based Loan disbursal Confirmati on to Customer Sangam Manager checks the willingness for a new loan in the center meeting Loan details are recorded in the proposal screen on the tab Customer consent is taken and the biometric details are captured E-KYC is done using online UID data check. This happens instantly in the center meeting Parallel CB check happens and the customers eligibility for the loan and the loan amount gets determined Loan amount is approved and loan proposal is e- signed Disbursement is done on the same day in the Aadhar linked bank account through ABPS Customer gets the disbursement confirmation through an SMS 37

38 E-KYC, E-SIGN AND INSTANT CB ROLLED OUT ACROSS ALL BRANCHES Benefits Immediate member authentication Eliminates risk of fake borrowers Instant Approval. Reduced Loan Processing TAT Increased Business Volume Time saving in center meeting and at the back office. Better competitive advantage. E-KYC Cashless Disbursem ent Instant CB E-sign Minimize the risk of theft and robbery. Minimize the risk of high volume cash carrying and transactions Digitized Loan Application Saves CM by reducing signature on Loan Application Step Forward to Paper Less 38

39 LOANS FOR HOUSING IMPROVEMENT & TWO-WHEELER (PILOT) 39

40 HUGE UNMET DEMAND FOR RURAL HOME IMPROVEMENT/EXTENSION LOANS Gap filled by: Own funds - 66%; Family, Friends & Money Lenders - 34%. Rs. 8,377 Crores ($1.3 bn) * Annual Disbursement Rs. 1,40,000 Crs. ($22bn) Annual Demand Assumptions Rural households: 166 mn Basis: Census 2011 Adjustment : 46 mn For service difficulties: 20% For rented houses: 5% (source: NSSO survey) For HHs with no house: 4 mn (Source: NSSO survey) Addressable HH: 120 mn Annual no. of HH : 14 mn % of HHs having spent on construction in last 1 yr (Source NSSO survey): 12% Avg. credit requirement: Rs 100,000 per household *FY15 disbursement of PSBs Rs.5,231 Crs and HFCs Rs.3,146 crs (< Rs.5 lacs ticket size) Source:(NHB Report on Trend & Progress of Housing in India 2015 ) Dollar Exchange rate for 27 th April 2017 Rs. 64/- 40

41 NO FORMAL LENDER DUE TO OPERATING CHALLENGES IN THIS SPACE PILOT DETAILS No Rural Focused Player Our Product Offering Metro Urban Semi Urban Rural Salaried Very High High Moderate No Competition Professionals High Moderate Low No Competition Self Employed Moderate Low Very Low No Competition Operating Challenges in Rural Purpose Home improvement and extension Eligibility Criteria Should have completed at least 3 IGL loan cycles Age between (18 to 55 years) Ticket size Rs. 1,00,000 to Rs. 3,00,000 Loan Tenure LTV (Loan to Value Ratio) Repayment Frequency 3 to 5 years Maximum 50% of the property value or 75% of the work estimate whichever is lower Monthly Lack of title deeds High Transaction costs Lack of skilled manpower for technical and legal assessment Note: Portfolio outstanding as on 30 th June 18 Rs. 1.2 Crs (no. of outstanding loans 53). The Pilot is currently rolled in 55 branches. 41

42 42 LOANS FOR TWO WHEELER Product Details Purpose Eligibility Purchase of Two Wheeler Member of Joint Liability Group Minimum Two IGL Loan cycle completed Should not have availed IGL/MTL/LTL in last 12 weeks Exposure to borrower capped to Rs. 1 Lac across all the lenders Ticket Size Rs. 33,044 to Rs. 54,950 Loan Tenure Loan To Value Repayment Frequency 104 Weeks Maximum 88.5% of on road price of the vehicle (subject to a maximum amount of Rs. 54,950) Weekly Note: Pilot resumed from April 17 Portfolio outstanding for Two wheeler loans as on 30 th June 18 Rs. 8.8 Crs (no. of outstanding loans 2,103) The Pilot is currently rolled in 323 branches.

43 Q1FY19 PERFORMANCE HIGHLIGHTS 43

44 HIGHLIGHTS OF Q1FY19 Operational Efficiency Healthy addition of 10.6 lacs customers in Q1FY19 Loan disbursements^^ grew by 68% YoY and 9% QoQ to Rs. 6,260 Crs (Rs. 5,738 Crs in Q4FY18 and Rs. 3,734 Crs in Q1FY18) Non-AP Gross Loan Portfolio^^ grew by 44% YoY and 10% QoQ to Rs.13,832 Crs as of June 30, 2018 Credit Quality Cumulative Collection efficiency of 99.8% for loans disbursed amounting to Rs. 28,634 Crs between 1 st Jan 17 to 30 th Jun 18 Net NPA at 0.1% Financial Efficiency Marginal cost of Borrowings* reduced to 8.4% in Q1FY19 ( 8.6% in Q4FY18) Weighted avg. cost of borrowing** at 9.2% in Q1FY19 Incremental drawdowns of Rs.3,913 Crs (including securitization transactions) in Q1FY19 (growth of 183% YoY). BFIL also originated Rs.1,367 Crs under managed portfolio in Q1FY19 Completed two Securitisation transactions of Rs. 1,366 Crs in Q1FY19 P&L Impact As per previous GAAP, PBT for Q1FY19 is Rs.245 Crs against Q4FY18 of Rs. 210 Crs and loss of Rs. 37 Crs in Q1FY18. As per Ind AS, PAT stood at Rs. 142 Crs in Q1FY19 as against Rs. 213 Crs in Q4FY18 and Rs. 48 Crs in Q1FY18, primarily on account of: 1. Upfront income recognition of Rs. 123 Crs on assignment transactions in Q4FY18 vis-à-vis no assignment transactions in Q1FY Tax expense of Rs. 41 Crs in Q1FY19 compared to Rs. 2 Crs in Q4FY18. Tax expense of 22% considered for Q1FY19, based on FY19 estimated tax expense percentage. Key Balance Sheet Figures AUM^^ of Rs.13,832 Crs as on June 30, 2018 Networth of Rs.3,310 Crs as on June 30,2018 (Higher by Rs. 94 Crs compared to Previous GAAP Networth) Capital adequacy at 30.6% as of June 30, 2018 Cash & Cash equivalent^ of Rs.1,236 Crs as of June 30, 2018 Deferred tax asset has been recognised on the balance sheet in Q1FY19. Deferred tax asset of Rs 30 Crs and MAT Credit of Rs. 285 Crs as on June 30, * Includes on and off balance sheet borrowings and including amortised processing fees. **Includes on and off balance sheet (Quarterly average) including amortised processing fees. ^ Excluding security deposit.. ^^Includes On balance sheet, securitised, assigned and managed loans 44

45 NETWORTH IS HIGHER BY RS.94 CRS WITH Ind AS (CONTD.) S no. Particular Previous GAAP Ind AS Impact on Net worth* 1 Loan Provisioning Company s policy subject to RBI compliance ECL (Expected Credit Loss) Rs. 8 crs 2 Income recognition on balance sheet assets 3 Financial expenses 4 Valuation of assets 5 6 Securitisation assets recognition Income recognition on assignment deals Straight line amortisation of processing fees Processing fees on borrowings recognised upfront Loans were booked as at principal outstanding amount Recognised as off-balance sheet Recognised over loan contract EIR (Effective interest rate) amortisation of processing fees EIR -amortisation of processing fees on borrowings Fair valuation approach Recognised as onbalance sheet Recognised on transaction date Rs. 28 crs Rs. 10 crs Rs. 51 crs - Rs. 57 crs 7 Others Items Rs. 3 crs 8 Tax impact on above items Net worth (As on June 30,2018) (Rs. 63 crs) Rs. 3,216 Crs (A) Rs. 3,310 Crs (B) Rs. 94 Crs (B-A) * Note: There could be negative variances between Previous GAAP and Ind AS while comparing for a particular period for the above items, but on overall basis the net effect of Ind AS Net worth is positive by Rs 94 Crs. as of 30 th June,

46 ..NETWORTH IS HIGHER BY RS.94 CRS WITH Ind AS INR Crs. Profit After Tax As Per Previous GAAP Profit After Tax As Per Ind AS Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 (37) FY18 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 FY18 Net Worth As Per Previous GAAP Net Worth As Per Ind AS 3,216 3,310 2,447 2,448 Q4FY17 Q1FY19 Q4FY17 Q1FY19 46

47 KEY PARAMETERS Ind AS vs PREVIOUS GAAP INR Crs. Ind AS GAAP Particulars Q1FY18 Q1FY19 YoY% Q4FY18 QoQ% Q1FY18 Q1FY19 YoY% Q4FY18 QoQ% Gross Loan Portfolio 9,629 13,832 44% 12,575 10% 9,631 13,850 44% 12,594 10% Net Interest Income* % 417 (13%) % % Operating expenses % 199 6% % 198 8% PBT % % (37) % PAT % % (37) (10%) Net worth 2,515 3,310 32% 3,141 5% 2,420 3,216 33% 2,999 7% * Net interest income(ind AS) = Interest income on Portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee Financial Cost * Net interest income(gaap) = Interest income on Portfolio loans + Excess interest spread on assignment/securitization + BC Fee Financial Cost 47

48 OPERATIONAL HIGHLIGHTS 48

49 HEALTHY ADDITION OF 10.6 LACS CUSTOMERS IN Q1FY19 VIS-À-VIS 4.8 LACS IN Q1FY18 Particulars Jun-17 Jun-18 YoY% Mar-18 QoQ% Branches 1,408 1,639 16% 1,567 5% Centers (Sangam) 2,86,259 3,56,685 25% 3,35,070 6% - Centers in non-ap States 2,37,372 3,07,798 30% 2,86,183 8% Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii) 15,284 17,415 14% 16,021 9% Field Staff (i) + (ii) + (iii) + (iv) + (v) 14,546 16,808 16% 15,418 9% Sangam Managers* (i) 9,251 10,380 12% 10,208 2% Sangam Manager Trainees(ii) 1,000 1,588 59% Branch Management Staff (iii) 2,831 3,183 12% 3,077 3% Area Managers (iv) % % Regional Office Staff (v) 1,193 1,335 12% 1,295 3% Central Processing Unit and Member helpline (vi) % 195-2% Head Office Staff (vii) % 408 2% Members in non-ap States (in '000) 6,847 7,808 14% 7,270 7% Members added (in the quarter) (in 000) 416 1,065-1,145-7% Active borrowers in non-ap States (in '000) 5,152 6,425 25% 6,188 4% Active borrowers added (in the quarter) (in 000) % 938-3% No. of loans disbursed (in '000) 1,894 2,862 51% 2,768 3% Disbursements (for the quarter) (INR Crs.) 3,734 6,260 68% 5,738 9% Gross loan portfolio Non-AP (INR Crs.) (A+B+C+D) 9,629 13,832 44% 12,575 10% Loans outstanding (A) 7,707 10,574 37% 9,528 11% Securitized (B)^ Assigned (C) 759 1,234 63% 1,971-37% Managed loans (D) 647 2, % 1,034 96% Operational Efficiency Non-AP : Off-take Avg (Disbursements/ No of Loans disbursed) (INR) 19,717 21,875 11% 20,735 5% Off-take Avg Excluding Cross Sell 24,037 26,820 12% 25,852 4% Gross loan portfolio/ Active Borrowers (INR) 18,689 21,530 15% 20,320 6% Gross loan portfolio/ No. of Sangam Managers (Rs. '000) 10,968 13,895 27% 12,866 8% Active borrowers / No. of Branches 4,041 4,266 6% 4,315-1% Active borrowers / No. of Sangam Managers % 633 2% *Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Jun 18, we had 9,955 SMs in Non-AP States ^ Securitised portfolio originated on or before 31 March, 2017, All securitization deals originated from 1 st April, 2017 are being recognised as financial asset on balance sheet as per Ind AS 49

50 Q1FY19 DISBURSEMENT IS IN LINE WITH HISTORICAL TREND OF SEASONALITY (EXCEPT FY17) INR crore FY15 - Rs. 6,860 FY16 - Rs. 12,063 FY17 - Rs. 14,667 FY18 - Rs. 18,472 FY19 - Rs. 26,000* 5,738 6,260 1,148 1,684 1,538 2,489 2,369 2,657 2,974 4,062 3,769 4,016 2,981 3,902 3,734 4,288 4,712 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Disbursement % for the year 17% 25% 22% 36% 20% 22% 25% 34% 26% 27% 20% 27% 20% 23% 26% 31% 24% *Guidance Note: Demonetisation distorted the historical trend of seasonality in FY17 50

51 IMPROVING OPERATING COST AND FINANCIAL EFFICIENCY Best before AP MFI crisis Worst during AP MFI crisis FY14 FY15 FY16 FY17 FY18 Q1 FY18 Q4FY18 Q1FY19 Productivity Non-AP: Borrowers/ SM 489* Gross Loan Portfolio/ SM ('000) 3,640* 1,320 6,275 8,994 12,141 10,574 12,816 10,968 12,866 13,895 Offtake Avg. 10,299* 9,237 11,849 12,273 15,024 18,676 20,316 19,717 20,735 21,875 Offtake Avg. (Excl Cross-sell) 10,383* 11,021 12,277 14,149 18,102 21,491 24,922 24,037 25,852 26,820 Cost Efficiency: Financial cost / Avg. Gross Loan Portfolio 6.6% 9.8% 8.3% 8.3% 8.5% 7.3% 6.8% 7.5% 6.3% 6.0% On B/S daily Wt. Avg. Cost of borrowings % 10.3%^ 16.0%^ 13.9% # 13.5% # 12.0% # 10.9% # 9.6% ## 10.0% ## 9.3% ## 9.4% ## Opex/ Avg. Gross Loan Portfolio % 10.4% 21.7% 9.6% 9.5% 7.1% 6.5% 6.6% 6.3% 6.6% 6.4% Cost to Income Ratio 52.4% 275% 74.5% 61.1% 48.3% 50.0% 49.0% 53.2% 43.4% 51.2%** Credit Quality - Non-AP: Gross NPA% 0.20%* 5.5% 0.1% 0.1% 0.1% 6.0% 2.2%^^ 5.9% 2.2%^^ 0.3%^^ Net NPA% 0.16%* 2.9% 0.1% 0.1% 0.04% 2.7% 0.1% 0.2% 0.1% 0.1% *Enterprise figures includes figures from AP state ^Cost of borrowing for Best before AP MFI crisis and Worst during AP MFI crisis calculated on monthly averages and daily Wt. Avg. Cost of borrowings % Includes processing fee for on and off balance sheet funding for the said periods, # Includes processing fee for on b/s funding only, for FY 14 Rs. 13 Crs, FY15 Rs Crs, FY16 Rs.10.5 Crs, FY17 Rs Crs ^^ Rs Crs, Rs Crs and Rs Crs write offs in Q3FY18, Q4FY18 and Q1FY19 respectively. ** Cost to income based on previous GAAP nos is 47.0%, ## based on quarterly Avg and includes amortised processing fees 51 Note: FY18 and Q1FY19 nos are based on Ind AS

52 PORTFOLIO MIX CONCENTRATION NORMS State % Metric % Cap on Disbursement* POS % Cap of Networth* Odisha Bihar West Bengal Karnataka Maharashtra Uttar Pradesh Rajasthan Kerala Jharkhand Madhya Pradesh Haryana Punjab Chattisgarh Uttarakhand Delhi Himachal Pradesh 16.1% 18.8% 14.3% 15.3% 12.9% 12.8% 11.2% 11.9% 9.8% 10.6% 8.2% 6.4% 6.4% 4.6% 6.0% 5.9% 4.9% 4.5% 4.1% 3.7% GLP Q1FY19 2.1% GLP Q1FY18 1.6% 2.0% 1.5% 1.7% 1.6% 0.2% 0.6% 0.1% 0.1% 0.1% 0.1% State District Branch NPA Collection efficiency <15% 17.5% for Bihar & Odisha <3 % 4% for Bihar & Odisha <1 % 1.25 % for Bihar & Odisha No disbursement to a branch with NPA > 1 % No disbursement to a branch with on- time collection efficiency of < 95% 75% (100% for Odisha) 5% (Only 5% of total operating districts can go up to 10% of Networth) 1% (Only 5% of the total operating branches can go up to 2% of Networth ) 15% Cap on portfolio outstanding for each state (17.5% for Bihar and Odisha) *Subject to tolerance limits Note: Portfolio percentage are based on proportion of gross loan portfolio of respective states. 52

53 VINTAGE OF NON-AP BRANCHES IS 7.3 YEARS PORTFOLIO OUTSTANDING BY ECONOMIC ACTIVITY State No. of Branches Wt. Avg. Vintage (in Yrs.)* Purpose % Mix Bihar Odisha Karnataka Uttar Pradesh West Bengal Maharashtra Rajasthan Madhya Pradesh Kerala Jharkhand Chhattisgarh Haryana Punjab Uttarakhand Delhi Gujarat Himachal Pradesh Tamil Nadu Tripura 1 - Total 1, *As of June 18 Livestock 42% Agriculture 14% Grocery stores and other retail outlets 9% Tailoring, Cloth weaving 8% Vehicle repairs 6% Trading of vegetable & fruits 6% Trading of agri. Commodities 3% Masonry, painting, plumbing, electrician, carpenter and related 3% Garments & footwear retailing 3% Eateries 2% Bangles shop 0.3% Trading of utensils, plastic items 0.3% Other income generating activities 4% 53

54 INDUSTRY UPDATE ON CREDIT QUALITY 54

55 92% OF BORROWERS HAVE LOANS FROM <= 2 LENDERS % Borrowers - Loans from Lenders % Borrowers - Indebtedness INR 72% 91% 20% 6% 2% 7% 2% 1 lender 2 Lenders 3 Lenders 4 Lenders <60K 60K to 100K >100K RBI Guidelines - 2 NBFC MFIs RBI Guidelines - 100K for NBFC MFIs Portfolio Quality * 0.7% 0.5% 30+ DPD 60+ DPD * Loans disbursed from May 17 to April 18 Portfolio data as on April 18 Note: Lenders include NBFC-MFIs and Banks Source : Equifax on Microfinance database as on Apr 18. Includes data reported by Banks under Microfinance database. 55

56 REVIEW OF FINANCIALS 56

57 STRONG SOLVENCY AND SUFFICIENT LIQUIDITY INR Crs. Networth Capital Adequacy 2,515 3,141 3,310 RBI Requirement 30.6% 15.0% Q1FY18 Q4FY18 Q1FY19 Q1FY19 Drawdowns* Cash and Cash Equivalent^ 3,771 3,913 1,703 1,860 1,236 1,384 Q1FY18 Q4FY18 Q1FY19 *Excluding Managed Loans Q1FY18 Q4FY18 Q1FY19 ^ Excluding security deposit 57

58 DISBURSEMENTS FOR THE QUARTER GREW BY 68% YoY Disbursements Non-AP Gross Loan Portfolio Net Interest Income* INR Crs. 3,734 5,738 6,260 9,629 44% YoY 12,575 13, Q1FY18 Q4FY18 Q1FY19 Q1FY18 Q4FY18 Q1FY19 Q1FY18 Q4FY18 Q1FY19 Operating Cost PBT PAT Q1FY18 Q4FY18 Q1FY19 Q1FY18 Q4FY18 Q1FY19 Q1FY18 Q4FY18 Q1FY19 * Net interest income = Interest income on Portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee Financial Cost 58

59 P&L STATEMENT Particulars Q1FY18 Q1FY19 YoY% Q1FY19 As % of Total Revenue Q4FY18 Interest Income (A) % 91% % Interest income on Portfolio loans % 87% % Interest on deposits % 4% 14 73% Net gain on derecognition of loans sold under assignment transaction (B) 38 (2) -105% % Fee Income (C) % 9% 41 39% BC Fees % 6% % Facilitation fees from Cross-sell % 3% 23-9% Other Fee income % 0% % Recovery against loans written off (D) 1 3-1% 2 52% Other income (E) % % Total Revenue (F) = (A+B+C+D+E) % 100% 647-5% Financial expenses (G) % 33% 189 5% Personnel expenses % 26% 150 6% Operating and other expenses % 8% 45 10% Depreciation and amortization 3 3-1% % Total Operating Cost (H) % 35% 199 6% Impairment on financial instruments (I) ECL % 3% 44-59% Total Expenditure(J)= (G+H+I) % 70% 432-1% Profit before Tax = (F-J) % 30% % Current Tax (I) % 3 - Deferred Tax (II) 45 (106) - -17% 2 - MAT Credit Entitlement (III) (13) (4) - Total Tax Expense (I+II+III)* % 7% 2 - Profit after Tax % 23% % Other Comprehensive income 9 (0.04) - 1% 2-102% Total Comprehensive income for the period % 23% % INR Crs. QoQ% *Tax expense is arrived based on estimated tax rate for FY19 59

60 Q1FY19 Ind AS VS PREVIOUS GAAP INR Crs Ind AS IGAAP Variance( Ind AS / Previous GAAP (A) (B) A-B) Interest income Interest income on portfolio loans/ Interest income on portfolio loans and Loan processing fee Interest on deposits Net gain on derecognition of loans sold under assignment transaction / Excess interest spread on securitization and Assignment (2) 72 (74) Fee Income BC fees Facilitation fees from Cross-sell Other fee income Recovery against loans written off Other Income Total Revenue (24) Financial expenses Remarks Under IndAS Securitisation portfolio is recognised as on balance sheet portfolio and hence income is also recognised under interest income Interest on loans is calculated using Effective interest rate Under IndAS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under IndAS Interest expense on securitisation transactions to be included in financial expenses Amortisation of processing fees on borrowings Personnel expenses (3) Actuarial adjustments reclassified in other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost (3) Impairment on financial instruments/ Provisions & Write-offs Total Expenditure (3) 22 Under IndAS ECL methodology is used to arrive at impairment of loans Profit before Tax (62) Current Tax Deferred Tax (Asset)/ Liability (106) (87) (19) Minimum Alternate Tax credit entitlement Profit after Tax (48) Other Comprehensive income (0.04) - (0.04) Includes actuarial adjustments on gratuity and Fair value impact on assets Total Comprehensive income for the period (48) 60

61 Q4FY18 Ind AS VS PREVIOUS GAAP Ind AS IGAAP Variance( Ind AS / Previous GAAP (A) (B) A-B) Interest income Interest income on portfolio loans/ Interest income on portfolio loans and Loan processing fee Interest on deposits Net gain on derecognition of loans sold under assignment transaction / Excess interest spread on securitization and Assignment Fee Income BC fees Facilitation fees from Cross-sell Other fee income Recovery against loans written off Other Income Total Revenue Financial expenses Remarks INR Crs Under IndAS Securitisation portfolio is recognised as on balance sheet portfolio and hence income is also recognised under interest income Interest on loans is calculated using Effective interest rate Under IndAS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under IndAS Interest expense on securitisation transactions to be included in financial expenses Amortisation of processing fees on borrowings Personnel expenses Actuarial adjustments reclassified in other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost Impairment on financial instruments/ Provisions & Write-offs Under IndAS ECL methodology is used to arrive at impairment of loans Total Expenditure Profit before Tax Current Tax Deferred Tax (Asset)/ Liability 2-2 Minimum Alternate Tax credit entitlement (4) (4) - Profit after Tax Other Comprehensive income 2-2 Includes actuarial adjustments on gratuity and Fair value impact on assets Total Comprehensive income for the period

62 Q1FY18 Ind AS VS PREVIOUS GAAP INR Crs Ind AS IGAAP Variance( Ind AS / Previous GAAP (A) (B) A-B) Interest income (5) Interest income on portfolio loans/ Interest income on portfolio loans and Loan processing fee (5) Interest on deposits Net gain on derecognition of loans sold under assignment transaction / Excess interest spread on securitization and Assignment (6) Fee Income BC fees Facilitation fees from Cross-sell Other fee income Recovery against loans written off Other Income Total Revenue (12) Financial expenses Remarks Under IndAS Securitisation portfolio is recognised as on balance sheet portfolio and hence income is also recognised under interest income Interest on loans is calculated using Effective interest rate Under IndAS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under IndAS Interest expense on securitisation transactions to be included in financial expenses Amortisation of processing fees on borrowings Personnel expenses (3) Actuarial adjustments reclassified in other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost (3) Impairment on financial instruments/ Provisions & Write-offs Total Expenditure (142) (140) Under IndAS ECL methodology is used to arrive at impairment of loans Profit before Tax 93 (37) 130 Current Tax Deferred Tax (Asset)/ Liability Minimum Alternate Tax credit entitlement (13) (13) - Profit after Tax 48 (37) 85 Other Comprehensive income 9-9 Includes actuarial gains/losses on gratuity and Fair value impact on assets Total Comprehensive income for the period 57 (37) 94 62

63 FY18 Ind AS VS PREVIOUS GAAP INR Crs Ind AS IGAAP Variance( Ind AS / Previous GAAP (A) (B) A-B) Interest income 1,774 1, Interest income on portfolio loans/ Interest income on portfolio loans and Loan processing fee 1,694 1, Interest on deposits Net gain on derecognition of loans sold under assignment transaction / Excess interest spread on securitization and Assignment Fee Income BC fees Facilitation fees from Cross-sell Other fee income Recovery against loans written off Other Income (1) Total Revenue 2,156 2, Financial expenses Remarks Under IndAS Securitisation portfolio is recognised as on balance sheet portfolio and hence income is also recognised under interest income Interest on loans is calculated using Effective interest rate Under IndAS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under IndAS Interest expense on securitisation transactions to be included in financial expenses Amortisation of processing fees on borrowings Personnel expenses (1) Actuarial adjustments reclassified in other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost (1) Impairment on financial instruments/ Provisions & Write-offs Total Expenditure 1,496 1,647 (151) (167) Under IndAS ECL methodology is used to arrive at impairment of loans Profit before Tax Current Tax Deferred Tax (Asset)/ Liability Minimum Alternate Tax credit entitlement (79) (79) - Profit after Tax Other Comprehensive income 7-7 Includes actuarial adjustments on gratuity and Fair value impact on assets Total Comprehensive income for the period

64 PAT RECONCILIATION OF PREVIOUS GAAP VS Ind AS INR Crs Particulars Q1FY18 Q1FY19 Q4FY18 FY18 Remarks Profit After Tax as per previous GAAP (37) Ind AS adjustments increase /(decrease) profit Expected Credit Loss Impact 140 (22) (43) 167 Provisioning based on ECL methodology Effective Interest Rate impact on financial assets (0.2) 10 (0.5) 4 Change from Straight line amortisation of processing fees to EIR Effective Interest Rate impact on borrowings (1) (4) 3 3 Amortisation of processing fees on borrowings Assignment transactions impact 9 (51) Securitisation transactions impact (20) 2 (2) (39) Total gain from the assignment deals recognised on the transaction date and derecognised in subsequent periods Total gain on securitisation deals prior to transition date recognised on the transaction date and derecognised in subsequent periods Actuarial gain/(loss) on gratuity 3 3 (1) 1 Reclassification in other comprehensive income Others (0.2) - (0.04) (0.5) Deferred Tax impact on above items (45) 19 (2) (72) Current Tax impact - (5) - - Profit After Tax as per Ind AS Other comprehensive income (Net of tax) Total Other Comprehensive Income after tax as per Ind AS Actuarial adjustments on gratuity and Fair value impact on assets 64

65 IMPACT ON NET WORTH ON TRANSITION DATE INR Crs Particulars 1-Apr-17 Remarks Net worth as per previous GAAP 2,447 Ind AS adjustments increase /(decrease) Net worth Expected Credit Loss Impact (137) Provisioning based on ECL methodology Effective Interest Rate impact on financial assets 13 Change from Straight line amortisation of processing fees to EIR Effective Interest Rate impact on borrowings 11 Amortisation of processing fees on borrowings Assignment transactions impact 37 Total gain from the assignment deals prior to transition date recognised Securitisation transactions impact 41 Total gain on securitisation deals prior to transition date recognised on the transaction date Fair value gain on financial assets 36 Others 0.4 Tax impact on above items (0.5) Net worth as per Ind AS 2,448 65

66 QoQ REVENUE VARIANCE ANALYSIS (1/2) INR Crs. Particulars Q4FY18 (A) Q1FY19 (B) Variance(B-A) Comments Interest income on portfolio loans Increase in income by 13% on account of Portfolio increase QoQ by 11% (Rs. 10,574 Crs as on Q1FY19 and Rs. 9,528 Crs as on Q4FY18). Interest on deposits Income from investments increased by 73% on account of daily Avg. interest yielding investments increasing by 69% Net gain on derecognition of loans sold under assignment transaction 122 (2) (124) Upfront income realised in Q4FY18 on account of 3 assignment deals vis-à-vis no assignment deals in Q1FY19 Loss of income on past assignment deals on account of pre-payment and death cases BC Fees Monthly Average managed portfolio increased to Rs. 1,492 Crs in Q1FY19 from Rs. 814 Crs in Q4FY18. Facilitation fees from Cross-sell (2) No of units facilitated in Q1FY19 is 5.8 Lacs units vis-a-vis 6.0 Lacs units in Q4FY18 Recovery from write-offs Other income (0.5) Total (36) 66

67 67 QoQ EXPENSES VARIANCE ANALYSIS (2/2) INR Crs. Particulars Q4FY18 (A) Q1FY19 (B) Variance (B-A) Comments Finance costs Increase in Avg. quarterly borrowings cost from 9.33% in Q4FY18 to 9.36% in Q1FY19. Increase in Avg. quarterly borrowings (Rs. 8,007 in Q4FY18 and Rs. 8,461 in Q1FY19) ~ Rs. 10 Crs = (9.36% * 8, % * 8,007) / 4 Personnel expenses Increase in employee headcount QoQ by 9% Other Operating expenses Impairment of financial assets (A+F) (26) Provisions (A= B+C+D+E) (149) (159) (10) Stage I Provisions (B) (39) ECL Methodology is used to arrive at impairment of loans Stage II Provisions (C) ECL Methodology is used to arrive at impairment of loans Stage III Provisions (D) Reversal in provision on account of write-offs wrt. Demonetisation Managed Loans Provisions (E) % provisions on incremental managed portfolio Losses & Write-offs (F = G+H+I) (16) Loss on Managed (G) Losses settled against managed portfolio Loss on Securitisation (H) (3) Losses on securitisation deals prior to April 1, 2017 Stage III Write-offs (I) (13)

68 EXPECTED CREDIT LOSS APPROACH Expected Credit Loss (ECL): probability weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument. ECL Calculation = Probability of Default (PD) (Adjusted for Discount factor (Df)) * Loss Given Default(LGD) * Exposure at Default(EAD) Forecast of Probability of Default (PD): Forecasted values of the chosen Macro economic variable Sensitivity of the historical Probability of Default (PD) data to the chosen macro economic variable Computation of Loss Given Default (LGD): LGD is % of Exposure that the firm expects to lose at the time of default. LGD is computed as {1-Recovery Rate (RR)} where Recovery Rate indicates % of Recovery post default. ECL CALCULATION FOR IGL As on 31 March, 2017 IGL Stage I (Current -30) Stage II (31-60) Stage III (>60) Base (68%)* As on 30 June, 2018 Probability of Default (PD) A Best (11%)* Worst (21%)* Df (B) LGD (C) EAD (INR Crs) (D) ECL (E= A*B*C*D) Weighted Average of Scenarios ECL% = E/D 0.16% 0.12% 0.21% 82% 92% 3, % 66.32% 65.09% 67.54% 82% 92% % 100% 100% 100% 100% 92% % Total 3, % IGL Stage I (Current -30) Stage II (31-60) Stage III (>60) * Weights Base (68%)* Probability of Default (PD) -A Best (11%)* Worst (21%)* Df (B) LGD (C) EAD (INR Crs) (D) ECL (E= A*B*C*D) Weighted Average of Scenarios ECL% = E/D 0.15% 0.11% 4.30%* 82% 70% 4, % 66.81% 65.54% 68.06% 82% 70% % 100% 100% 100% 100% 70% % Total 4, % Management overlay : Qualitative assessment of the portfolio based on historical observations. 68

69 DETAILS OF CREDIT COSTS Ind AS EXPECTED CREDIT LOSS METHODOLOGY Period -> 31-Mar-18 Pre-write offs (30-Jun-18) Post-write offs (30-Jun-18) INR Crs Asset Classification: Amount Outstanding Provision Amount Outstanding* Provision Amount Outstanding* Provision Stage I (Current -30) 9, , , Stage II (31-60) Stage III (>60)* Total 9, , , Adjusted against Net worth on Transition date (1 st Apr 17) (Difference between Previous GAAP and Ind AS) Stage I Provisions On-Balance Sheet Stage II Provisions Stage III Provisions Off-Balance Sheet Stage 3 assets & provision thereon reduced from 200 Cr to 23 Cr due to write-offs of 177 Cr Write-offs Loss Provisions Total Q1FY (40.6) (63.8) 35.6 Q2FY18 (6.8) (11.0) (7.4) (1.6) Q3FY18 (6.1) (4.9) (28.0) (9.4) Q4FY18 49 (2.3) (200.1) Q1FY (0.3) (179.5) (137) FY18 47 (58.7) (186.0) (56.6) 68.2 *Amount not adjusted against fair valuation of loans and EIR 69

70 GUIDANCE VS ACTUALS FOR FY18 AND GUIDANCE FOR FY19 INR Crs. FY18 FY18 FY19 Guidance Actuals Guidance Incremental debt requirement 14,500 11,167 18,500 Disbursement 19,500 18,472 26,000 Gross Loan Portfolio 13,500 12,594^ 18,000 PBT PAT (Incl. MAT Credit) ^ INR 208 Crs written off in FY18 Note: All the above numbers are based on previous GAAP 70

71 TAX IMPACT UNDER Ind AS INR Crs As per Ind AS As on 1 April, 2017 (Transition date) As on 31 March, 2018 As on 30 June, 2018 MAT Credit Entitlement Deferred Tax asset/ (Liability) (0.5) (76) 30 Total Particulars As on 31 March, 2018 As on 30 June, 2018 ECL impact (10) 44 EIR impact on assets (6) (5) Income recognition on assignment deals on transaction date and securitisation deals prior to transition date (38) (28) EIR impact on borrowings (5) (4) Impact on Fair valuation of loans (17) (18) Impact of ESOP disallowance - 34 Others (0.4) 7 Total (Deferred Tax asset/ (Liability) (76) 30 Note: As per Ind AS, PAT stood at Rs. 142 Crs in Q1FY19 as against Rs. 213 Crs in Q4FY18 and Rs. 48 Crs in Q1FY18, primarily on account of: 1. Upfront income recognition of Rs. 123 Crs on assignment transactions in Q4FY18 vis-à-vis no assignment transactions in Q1FY Tax expense of Rs. 41 Crs in Q1FY19 compared to Rs. 2 Crs in Q4FY18. Tax expense of 22% considered for Q1FY19, based on FY19 estimated tax expense percentage. 71

72 STRONG CAPITAL BASE AND ROBUST LIQUIDITY DRIVE BFIL BALANCE SHEET INR Crs. Particulars Q1FY18 Q1FY19 YoY% Q4FY18 QoQ% Equity share capital % Other Equity 2,377 3,171 33% 3,002 6% Total Equity 2,515 3,310 32% 3,141 5% Borrowings 6,846 8,628 26% 8,294 4% Interest accrued but not due on borrowings % 43-60% Employee benefits payable % 33-47% Payable towards securitisation/assignment transactions % Expenses & other payables % 21 79% Provision for gratuity and leave benefits % 28 8% Provision for Fraud Theft & Burglary % - - Provision for Managed Portfolio % Current tax liabilities (Net) Statutory dues payable % 13-4% Unamortised fee income % 2-22% Liabilities 7,155 9,322 30% 8,771 6% Total Liabilities and Equity 9,671 12,632 31% 11,912 6% Cash and bank balances 2,101 1,599-24% 2,173-26% Receivables % 11-43% Loans 7,707 10,574 37% 9,528 11% ECL provisioning (485) (98) -80% (268) -63% Investments Interest accrued but not due on portfolio loans % 20 12% Interest accrued and due on portfolio loans % % Interest strip on securitisation transactions Interest strip on loan assignment transactions % 88-49% Unbilled revenue Security deposits % 4 4% Insurance deposit receivable 4 4 4% 4-1% Advance to vendor (cross-sale) % 12-16% Claims Outstanding Receivable from Insurance Company % Loans to BFIL Microfinance Employees Benefit Trust Current tax assets (Net) % 41 2% Deferred tax assets (Including MAT Credit) % % Fixed assets % 16 5% Intangible assets % 5-10% Other Assets % Total Assets 9,671 12,632 31% 11,912 6% Note:1 Non-AP Securitised^/Managed/Assigned Portfolio 1,922 3,258 70% 3,047 7% 2. Non-AP Gross Loan Portfolio 9,629 13,832 44% 12,575 10% ^Securitised portfolio originated on or before 31 March, 2017, All securitization deals originated from 1 st April, 2017 are being recognised as financial asset on balance sheet as per Ind AS 72

73 ROA OF 3.7% AND ROE OF 17.6% FOR Q1FY19 Particulars Q1 FY18 Q4 FY18 Q1 FY19 Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio) Gross Yield (I) 19.3% 21.6% 18.5% Portfolio Yield* (a) 17.4% 20.2% 17.0% Financial Cost (b) 7.5% 6.3% 6.0% NIM on portfolio (a-b) 9.9% 13.9% 11.0% Operating Cost (c) 6.3% 6.6% 6.4% Provision and Write-offs (d) 1.5% 0.36% 0.5% Taxes (e) 1.9% 0.0% 1.2% Total Expense II = (b+c+d+e) 17.2% 13.3% 14.2% Return on Avg. Gross Loan Portfolio (I) - (II) 2.1% 8.3% 4.3% Efficiency: Cost to Income 53.2% 43.4% 51.2% Asset Quality Non-AP: Gross NPA 5.9% 2.2% 0.3% Net NPA 0.2% 0.1% 0.1% Gross NPA (INR Crs.) Net NPA (INR Crs.) Leverage: Debt : Equity Debt : Equity (Incl. Assigned & Managed Loans) Capital Adequacy: 31.8% 33.2% 30.6% Profitability: Return on Avg. Assets (Incl. Assigned & Managed Loans) ** 1.6% 6.1% 3.7% ROE ** 7.8% 28.3% 17.6% EPS - Diluted (INR) (Not Annualized) Book Value (INR) *Portfolio Yield = (Int. income on portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee ) /Avg. GLP ** Calculated based on Quarterly Average 73

74 FINANCIAL ARCHITECTURE 74

75 FINANCIAL ARCHITECTURE Lenders Mix* Devoid Of Dependence Risk Diversified Source Mix INR Crs. On Balance Sheet* Q1FY18 Q4FY18 Q1FY19 IndusInd Bank 1% 8% 14% Yes Bank 6% 5% 11% SIDBI 7% 11% 11% ICICI Bank 6% 6% 9% Axis Bank 2% 4% 8% HSBC Bank 4% 5% 7% Bank of India 10% 7% 6% RBL Bank 4% 6% 5% Standard Chartered Bank 5% 5% 5% Q1FY18 % Mix Q4FY18 % Mix Q1FY19 % Mix Term Loan 5,869 66% 7,416 64% 7,095 58% Managed Loans 584 7% 955 8% 1,926 16% Securitisation 550 6% 813 7% 1,743 14% Asset Assignment % 2,173 19% 1,454 12% CC % % - - CP 698 8% NCD 250 3% 200 2% - - Total 8, % 11, % 12, % Dena Bank 8% 5% 3% IDFC Bank 5% 4% 3% Mudra 2% 3% 3% Citi Bank 2% 3% 3% Union Bank of India 3% 3% 2% State Bank Group 7% 3% 2% Mahindra & Mahindra Financial Services Ltd 1% 2% 2% IDBI Bank 6% 2% 1% Others 3% 15% 2% Total 5,907 7,417 7,095 * Includes Term loan and cash credit facilities Investor Mix (Off B/S) Broad-based Securitised / Assigned Q1FY18 Q1FY19 HDFC Bank 6% 30% State Bank Group 55% 24% Kotak Mahindra Bank 3% 16% IndusInd Bank - 12% Yes Bank 11% 9% Bank of India 5% 6% Vijaya Bank - 4% DCB Bank 2% - ICICI Bank 1% - IDBI Bank 16% - Total 1,391 3,197 75

76 SUB 9% MARGINAL COST OF BORROWING Funding Cost Analysis Metric FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19 Marginal Cost of Borrowings on and off b/s loans (excluding processing fees) on and off b/s loans (including processing fees)* on b/s loans (excluding processing fees) on b/s loans (including processing fees)* 12.2% 11.7% 10.1% 9.4% 8.6% 8.9% 8.5% 8.3% 12.6% 11.9% 10.2% 9.4% 8.7% 8.9% 8.6% 8.4% 12.9% 12.3% 11.0% 9.8% 8.8% 9.1% 8.6% 8.6% 13.6% 12.6% 11.1% 9.9% 8.9% 9.2% 8.7% 8.6% Monthly Average (Quarterly Avg for FY18 and Q1FY19) Wt. avg. cost of borrowing # on and off b/s loans (including processing fees )** on b/s loans (including processing fees)** 13.0% 12.2% 11.1% 10.1% 9.0% 9.4% 8.8% 9.2% 13.7% 12.8% 11.6% 10.7% 9.6% 10.0% 9.3% 9.4% Loan Processing Fees (INR Crs.) Drawdowns (INR Crs.) 3,503 5,020 7,317 6,900 9,977 1,384 3,771 3,913 Financial Cost^ 8.3% 8.3% 8.5% 7.3% 6.6% 7.5% 6.0% 5.4% * processing fees is amortized for marginal cost calculation. ^ Financial expenses to quarterly Avg. Gross Loan Portfolio. # Excluding Managed Loans. ** amortised processing fees for FY18 and Q1FY19 nos under Ind AS 76

77 POSITIVE ALM MISMATCH BENEFIT CONTINUES ALM Avg maturity of assets No. of months Avg maturity of liabilities FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19 ALM data includes Securitized/ Assigned loans Interest Rate Mix of Borrowings* Floating Fixed 44% 61% 43% 54% 55% 61% 55% 59% 56% 39% 57% 46% 45% 39% 45% 41% FY14 FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19 * Excludes managed loans 77

78 EXTERNAL ASSESMENT Rating Instrument Rating/Grading Rating Agency Rating Amount Limits (Rs. Crs.) Q4FY18 Q1FY19 MFI Grading MFI 1 CARE Ratings N/A N/A Code of Conduct Assessment C1 ICRA Limited N/A N/A Corporate Governance Rating CGR2+ ICRA Limited N/A N/A Bank Loan Rating (Long-term facilities) CARE A+ CARE Ratings Bank Loan Rating (Short-term facilities) CARE A1+ CARE Ratings 7,000 7,500 Long-term Debt (NCD) CARE A+ CARE Ratings Short-term Debt (CP/NCD) CARE A1+ CARE Ratings Long-term Debt [ICRA] A+ ICRA Limited Short-term Debt [ICRA] A1+ ICRA Limited 750^ 750^ Securitisation Pool CARE AA (SO) CARE Ratings * ICRA AA (SO) # Provisional ICRA AA (SO) # ICRA Limited 1,402 2,237* ^Subject to Long-term borrowings limit of 300 Cr. *Amount aggregates to 1 transaction rated by CARE Ratings and 4 transactions rated by ICRA # Two transactions are rated as AA(SO) and two transactions has provisional rating of AA (SO). 78

79 RISK MANAGEMENT 79

80 KEY RISKS AND MANAGEMENT STRATEGIES Risk Management Key Risks Political Risk Concentration Risk Operational Risk Liquidity Risk Management Strategy Responsible lending and fair pricing Geographic & dependence norms Cash management system and process controls Liquidity metrics Low cost lender Voluntary Cap on RoA from core lending Robust Customer grievance redressal (CGR) Mechanism with Ombudsman Geographic concentration norms - Disbursement Related Caps - Portfolio Outstanding Related Caps Integrated cash management system Product and process Design ISO Certified Internal audit Well defined metrics for - Cash burn - Optimal liquidity test - Liquidity cap Calibrated Growth Borrowing dependence norms - Cap on borrowing from any single credit grantor (15% of funding requirement)* * Cap for Indusind Bank at 25%. 80

81 CAPITAL STRUCTURE 81

82 CAPITAL STRUCTURE AS ON 30 TH JUNE 2018 Reliance Mutual Fund 6.7% SHAREHOLDING PATTERN Route One 4.8% Kotak Mutual Fund Wellington 3.6% 3.6% FPI, 47.7% East Bridge Capital 3.3% DSP Blackrock 3.2% Amansa Capital PTE Limited 3.1% Blackrock Birla Sun Life Mutual Fund Tree Line Alliancebernstein 2.9% 2.8% 2.8% 2.7% Foreign Corporates, 4.0% MIRAE Asset 2.4% American Century World Mutual Funds 2.3% Goldman Sachs Asset Management 1.9% Ishana Capital Master Fund 1.9% BNP Paribas Arbitrage L&T Mutual Fund Kismet Microfinance OHM Stock Broker Pvt Ltd. SBI Life Insurance Kismet SKS II Smallcap World Fund Kotak Offshore 1.7% 1.6% 1.6% 1.5% 1.5% 1.3% 1.3% 1.3% Domestic MFs, Insurance co's & FIs, 28.4% FII, 7.9% Domestic Individuals, 8.5% NRI, 1.5% Domestic Corporates, 2.1% Societe Generale 1.3% Vanguard Emerging Markets Stock Index 1.2% Vanguard Copthall Mauritius Investment Limited 1.2% 1.1% No. of shares Crs. SIDBI 1.0% Shivanand Shankar Mankekar 1.0% Others 33.4% Excludes no. of Outstanding ESOPs 0.6 Crs. Note: The Investment under different accounts by a fund are clubbed under their respective names 82

83 ANNEXURES 83

84 OUR PROVISIONING POLICY RBI norms for NBFC-MFIs BFIL Policy (Earlier) BFIL Policy ( As per Ind AS) # Standard Assets 0-90 days 0-8 weeks Stage I 0-30 days Asset Classification Sub-Standard Assets days > 8 to 25 weeks Loss Assets >180 days >25 weeks and > 8 weeks expired contracts Stage II Stage III (GNPA) days >60 days Provisioning Norms (On-balance sheet^) Standard Assets Sub-Standard Assets 1% of overall Portfolio reduced by Provision for NPA (If provision for NPA < 1% of overall Portfolio) 50% of instalments overdue* 0.4%-1% depending on NPA or as stipulated by RBI, whichever is higher 50% of outstanding principal* Stage I Stage II ECL Methodology is used Loss Assets 100% of instalments overdue* 100% of outstanding principal/ write-off* Stage III (GNPA) Provisioning Norms for Managed loans 1% of overall Portfolio subject to the maximum guarantee given in respect of these arrangements. 1% of overall Portfolio subject to the maximum guarantee given in respect of these arrangements. * The aggregate loan provision will be maintained at higher of 1% of overall portfolio or as per company s provisioning policy. ^ Securitised portfolio is recognised as financial asset (on-balance sheet) as per Ind AS # As per Ind AS 109, Expected credit loss method should be used to forecast future expected credit loss 84

85 UPDATE ON DEMONETISATION 85

86 CUMULATIVE COLLECTION EFFICIENCY OF 99.8% FOR LOANS DISBURSED BETWEEN 1 ST JAN 17 TO 30 th JUN 18 DATA FOR LOANS DISBURSED BETWEEN 1 st Jan 17 to 30 th Jun 18 State Disbursements Gross Loan Portfolio (30-Jun-18) Cumulative Collection Efficiency Odisha 4,734 2, % Bihar 4,396 1, % West Bengal 3,872 1, % Karnataka 3,170 1, % Maharashtra 2,545 1, % Uttar Pradesh 2,198 1, % Rajasthan 1, % Kerala 1, % Jharkhand 1, % Madhya Pradesh 1, % Haryana % Punjab % Chattisgarh % Uttarakhand % Delhi % Himachal Pradesh % Total 28,634 13, % Note: Above numbers are based on Previous GAAP Constitutes 98% of Gross Loan Portfolio as on 30 th Jun 18 i.e. 98% = (Rs. 13,633/13,850 Crs) 86

87 ANNEXURES - OPERATIONS 87

88 GROUP UNDERWRITING AT WORK 75% 83% 11% 87% 7% LOAN CONVERSION TO NEXT CYCLE 84% 8% 87% 88% 88% 90% 91% 7% 6% 6% 6% 5% 14% 27% 48% 42% 42% 40% 43% 48% 51% 61% 45% 32% 35% 39% 41% 39% 37% 34% IGL - 2 IGL - 3 IGL - 4 IGL - 5 IGL - 6 IGL - 7 IGL - 8 IGL - 9 IGL - 10 Conversion from IGL to IGL Conversion from IGL to LTL Conversion from IGL to MTL Note: The above data is as on 30 th Sep 16 (Pre demonetisation period). Active IGL loans disbursed during Jan 15 to Mar 15 have been considered as base and loans disbursed in subsequent cycles over the next 1.5 yrs i.e. till Sep 16 have been taken and cycle wise conversion has been arrived. Only the next first loan taken by customer is taken into consideration for conversion. 88

89 Q2FY11 (PRE-CRISIS) Q1FY19 JLG MODEL ENSURES EFFECTIVE CONTROL ON AVERAGE INDIVIDUAL EXPOSURE, IRRESPECTIVE OF ACTUAL LOAN ELIGIBILITY Income Generating Loan 55,000 45,000 35,000 25,000 26,845 ^ ^ Eligibility Amount (INR) Avg. Offtake Long Term Loan 29,579 29,579 29,579 29,579 29,579 29,579 29,579 29,579 29,579 25,234 27,014 26,965 26,465 25,184 24,934 24,708 24,986 25,195 25,105 54,950 54,950 44,650 46,402 47,960 39,439 15,000 5,000-5,000 Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10 Cycle 1 Cycle 2 Cycle 3 Mid Term Loan 24,780 21,533 29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995 26,105 24,749 24,077 24,359 24,250 24,469 24,461 24,406 24,659 Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10 Income Generating Loan 36,000 42,000 50,000 50,000 50,000 50,000 50,000 50,000 12,000 24,000 15,120 16,920 18,060 18,500 19,000 19,500 21,000 22,000 21,000 10,200 Cycle 1 Cycle 2 Cycle 3 Cycle 4 Cycle 5 Cycle 6 Cycle 7 Cycle 8 Cycle 9 Cycle 10 ^ Note: Maximum Offtake eligibility for IGL (1 year Tenure) : June-11 to Dec 15 Rs. 15,000; Dec 15 IGL 1 Rs.20,000, IGL 2 Rs.30,000, Mar 17 for IGL 1 is Rs. 24,800 and IGL 2 is Rs. 29,800 and currently for IGL 1 is Rs. 26,845 and IGL 2 is Rs. 29,579 89

90 CYCLE WISE NON-AP LOAN BORROWERS Cycle Wise Q1FY18 Q4FY18 Q1FY19 IGL 1 33% 38% 42% IGL 2 21% 18% 15% IGL 3 7% 9% 9% IGL 4 2% 3% 3% IGL 5 1% 1% 1% IGL 6 1% 1% 1% IGL 7 1% 1% 1% IGL 8 1% 1% 1% IGL 9 0.4% 1% 1% Total IGL Borrowers 68% 72% 72% LTL 1 19% 11% 12% LTL 2 3% 5% 6% Total LTL Borrowers 21% 17% 18% MTL 1 7% 7% 6% MTL 2 2% 2% 2% MTL 3 1% 1% 1% MTL 4 0.5% 0.6% 0.4% MTL 5 0.3% 0.3% 0.2% MTL 6 0.2% 0.3% 0.2% Total MTL Borrowers 11% 11% 9% Cross Sell 0.2% 0.4% 0.2% Total IGL + LTL + MTL + Cross Sell 100% 100% 100% Note: Customers having IGL & MTL loans, have been grouped under respective IGL loan cycle Customers having LTL & MTL loans, have been grouped under respective LTL loan cycle MTL clients represents borrowers with only MTL loans Cross-sell clients represents borrowers with only cross-sell loans 90

91 DIFFERENCES IN LENDING MODEL BETWEEN SHG & JLG Model SHG Savings led (Members collectively save money for 6 months to avail credit) JLG (BFIL) Credit led (No savings required, members have an access to the finance as per the requirement) Borrowers Segment Women/Men Women Lending Methodology Group (Size members) Group (5 members) Loan Processing time 4 Months 1 week Repayment frequency Monthly Weekly Credit Decision Credit Bureaus Reporting Group leader decides the quantum of loan for the member Not much information available (RBI mandated the SHGs to share data from July 2016) Entire group and the center decides the quantum of loan Weekly sharing of the data with CICs SHG Concentration: Top 5 States % Mix in Portfolio (Mar-17) Portfolio O/S (Mar-17) INR Crs. Andhra Pradesh 28% 17,406 Telangana 20% 12,053 Karnataka 13% 8,149 Tamil Nadu 10% 6,047 West Bengal 8% 4,842 Others 21% 13,084 Total 100% 61,581 Source: NABARD 91

92 PRODUCT OFFERINGS IGL MTL LTL Other product offerings^^ Loan portfolio (INR Crs) / (% Mix) 6,629 (48%) 3,907 (28%) 3,164 (23%) 140 (1.0%) # Ticket size range INR 7,750 to INR 29,579 INR 7,185 to INR 29,995^ INR 30,900 to INR 54,950 INR 1,310 to INR 6,906 Avg. Ticket Size (INR) For Q1FY19 25,812 22,614 41,545 2,194 Eligibility* Completion of CGT / GRT Age limit 18 years to 58 years Maximum limit of INR. 26,845 for IGL 1 With IGL - Between 19th to 44th week With LTL Between 19th to 94th week Maximum limit of INR. 24,780 for MTL1 Minimum One IGL Loan cycle completed Maximum limit for LTL 1 post IGL 1 - INR. 35,190** Maximum limit for LTL 1 post IGL 2 - INR. 44,650** With IGL Between 4th to 44th week With LTL Between 4th to 94th week With MTL Between 4th to 71st week Tenure 50 weeks 75 weeks^ 104 weeks 25 weeks Annual effective interest rate 19.75% (w.e.f 7 th Dec 15 for new loans) 19.60% % Processing fee (Incl. Good & Service Tax) 1.18% for Non-BC branches For BC Branches % for Loan amount >Rs, 25,000 - Zero processing fee for loans <Rs. 25,000 for BC branches * Eligibility criteria over and above the criteria prescribed by the RBI 0.7% -1.18% ^^Loans for Mobile Phones, Solar lamps, Sewing Machines, Bicycle, Bio-Mass Stove, Water-purifier(Excluding Two wheeler loans, Loans for home improvement and loans for refrigerator which are in pilot stage). # Portfolio Including Two wheeler loans pilot of Rs.8.8 Crs, for loans for Home improvement Rs. 1.2 crs & Loans of Rs. 2.8 crs for Refrigerator. ^w.e.f Aug, 2016 Tenure has been changed from 50 weeks to 75 weeks and ticket sizes are changed. ** With effect from 27 th November 2017 Note: Above numbers are based on Previous GAAP 92

93 PRODUCT WISE - DISBURSEMENT, PORTFOLIO OUTSTANDING AND TICKET SIZE IGL LTL MTL Others* Total Q1FY18 Q4FY18 Q1FY19 No. of Loans Disbursed in ' ,894 % Mix 45% 6% 29% 20% 100% Amount of Loan Disbursed (In Crs.) 2, , ,734 % Mix 55% 11% 32% 2% 100% Portfolio Outstanding (In Crs.) 4,223 1,881 3, ,631 % Mix 44% 20% 36% 1% 100% Avg. Ticket Size INR 23,979 38,227 21,368 1,983 19,717 No. of Loans Disbursed in '000 1, ,768 % Mix 49% 9% 21% 22% 100% Amount of Loan Disbursed (In Crs.) 3, , ,738 % Mix 59% 17% 21% 3% 100% Portfolio Outstanding (In Crs.) 6,337 2,507 3, ,594 % Mix 50% 20% 29% 1% 100% Avg. Ticket Size INR 25,081 40,448 21,495 2,394 20,735 No. of Loans Disbursed in '000 1, ,862 % Mix 45% 10% 24% 20% 100% Amount of Loan Disbursed (In Crs.) 3,354 1,194 1, ,260 % Mix 54% 19% 25% 2% 100% Portfolio Outstanding (In Crs.) 6,629 3,164 3, ,850 % Mix 48% 23% 28% 1% 100% Avg. Ticket Size INR 25,812 41,545 22,614 2,417 21,875 *Cross sell products Note: Above numbers are based on Previous GAAP 93

94 LEVERAGING THE DISTRIBUTION STRENGTH No. of Units Facilitated (in Lacs) Gross Fees (after service tax) INR Crs. Less: Incentives INR Crs. FY15 FY16 FY17 FY18 Q1FY18 Q4FY18 Q1FY19 Total Total Total Total Total Total Mobile Phone Solar lamp Sewing Machine Cycle Others^ Total Net Fees INR Crs.* Loan Portfolio INR Crs Net Fee Income as % of PAT** 12.6% 9.3% 13.5% 6.8% 18.8% 6.6% 1.4% 3.9% 0.3% 0.02% 2.3% 8.0% Loan Portfolio Mix 1.4% 1.3% 0.4% 1.2% 0.7% 1.2% 0.2% 0.2% 0.1% 0.01% 0.4% 0.9% *Net fee post the incentive payout and sans transfer pricing of other operating cost and Post MAT adjustment ^Loans for Bio-Mass Stove, Water-purifier, Solar Fans, Two Wheelers, Mixer Grinder and Refrigerator ** PAT before MAT credit entitlement of Rs.97 Crs as on 31-Mar-16 for FY17. Penetration Based On Total No. Of Loans FY14 FY15 FY16 FY17 FY18 Q1FY19 Cumulative past 5.3 years Solar Lamp 0.9% 5.0% 6.8% 7.8% 10.2% 2.7% 33.4% Mobile Phone 1.6% 5.7% 9.1% 5.0% 7.8% 1.4% 30.5% Mixer Grinder 0.0% 0.0% 3.3% 1.8% 5.1% Sewing Machine 1.7% 0.9% 0.8% 0.3% 3.7% Bicycle 0.0% 1.4% 0.8% 0.2% 0.0% 2.4% Pressure Cooker 0.0% 0.0% 1.0% 1.2% 2.2% Others 0.4% 1.0% 0.1% 0.1% 0.1% 1.7% Total 2.5% 11.0% 19.9% 14.7% 23.4% 7.4% 78.9% Frequency of Loans Based On Current Member Base Frequen cy of Loans (for the period) FY14 FY15 FY16 FY17 FY18 Q1FY19 Cumulati ve past 5.3 years #1 1.6% 5.5% 9.5% 10.2% 18.4% 7.2% 30.8% #2 0.1% 0.5% 1.3% 0.5% 2.0% 0.1% 8.4% # % - 0.1% 2.7% # % # % Total 1.7% 6.0% 11.0% 10.7% 20.6% 7.3% 43.5% Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 7.8 mn for last 5.3 years is 43.5% 94

95 BFIL FINANCIAL INCLUSION COVERAGE Strong reach in under-banked areas 68% of BFIL branches are in RBI BFIL covers 68% of below average & under-banked district list low financial districts identified by 68% of SKS branches are in RBI under-banked districts list SKS covers 68% of below average & low financial CRISIL inclusion districts identified by Crisil SKS 296 districts RBI 375 districts* % CRISIL level of financial inclusion SKS Coverage of those districts High 18% Above average 15% Below average 51% Low 16% Grand Total 100% 68% Weaker & Minority section coverage Weaker & Minority section coverage Women Economically Weaker section Minority 16% 71% 100% * Source: RBI under-banked districts data [1] Source: CRISIL Inclusix: An index to measure India s progress on Financial Inclusion, June IS SUPPORTED BY ROBUST CUSTOMER CENTRIC PRACTISES Doorstep Service Financial literacy Dedicated customer service Doorstep delivery (i.e. at Center meetings) 2 day process consisting of hour-long sessions designed to educate clients on BFIL processes and credit discipline. Toll-free helpline number with seven different vernacular languages 95

96 WHAT ARE CLIENTS DOING POST THE ANDHRA PRADESH MFI CRISIS? Sources of Credit (in the absence of MFI Loans) Reasons for not repaying MFI loans 70% 60% 50% 40% 30% 20% 10% 0% 59% 37% 29% 22% 12% Money Lender SHG Pawn Broker Bank DFC Interest rates charged by informal sources (in the absence of MFIs) Willingness to repay Data relates to Andhra Pradesh & Telangana Source: What are Clients doing post the Andhra Pradesh MFI Crisis?, MicroSave,

97 ANNEXURES - FINANCIALS 97

98 CASH AND CASH EQUIVALENT BALANCES INR Crs. FY18 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Interest Yielding^ 929 1, ,240 Non Interest Yielding^^ Total 1,358 1,938 1,302 1,043 1,108 1,744 ^fixed deposits, excluding margin money deposits. ^^Includes current account and cash balances Note: Daily Average figures 98

99 ANNEXURES - TECHNOLOGY 99

100 TECHNOLOGY ADVANCEMENTS DRIVEN BY INDUSTRY LEADING PARTNERSHIPS Initiatives Technology Partner Solution Benefits Mobility driven Jandhan/Aadhaar compliant (JAM) Lending Management Software (LOS & LMS) In-House Team SKS SMART A robust framework that encompasses workflow/reporting and analytic engines Works in online/offline mode to mitigate connectivity challenges. TABLETS - Hand held device for field staff Enterprise Mobility Enhances Productivity of SMs- Reduced time spent at both center meeting and back office Paper less transaction - Pre-printed loan application form. JAM Compliant Agent Banking for Cash less transactions and Cross-Sell In-House Team SKS SMART Agent A Mobile, Jan-Dhan / Aadhar compliant door step banking solution with full eco-system is in place ERP Implementation ERP ERP - Automation of financial accounting/ investment management, procurement and payment process. Migrated from on-premises system to hosted exchange Office 365 Enhanced security, 99.99% uptime, On mobile office 365 access. Additional products such as One-Drive, Enterprise Skype etc. for easy access of data and better communication. Data Centre Migration to Cloud Data Centre Hosting On-demand capacity scale-up. Business Continuity Plan. 100

101 ANNEXURES HR 101

102 ATTRITION RATE AT SANGAM MANAGER LEVEL IS LARGELY CONTRIBUTED BY NEW JOINEES. EXCLUDING NEW JOINEES, THE AVG. VINTAGE IS 3.4 YEARS Sangam Manager Attrition % Who? When? 26% for Q1FY19 (Annualised) Sangam managers who earn lesser average monthly performance incentive i.e. ~Rs. 3,800 vis-à-vis ~Rs. 8,400 for other Sangam Managers. Majority of the staff who leaves the job, decides to leave within first year from joining date. Vintage of SMs Exited Q1FY19 Member Services %Mix < 6 Months 36% 6 Months - 1 Yr. 26% 1-2 Yrs. 20% 2-3 Yrs. 11% > 3 Yrs. 8% Avg. Vintage (Yrs.) As on June-18 Why? Retention Strategy * Includes Promoted Sangam Mangers Work conditions such as : Average distance travelled per day is ~30 kms. Work location is different from home location Branch Reporting time at 6:30 AM 2 nd Best paying job (~Rs.17,500 pm) in the local milieu (1 st Govt. Job) High growth career path No lateral recruitments till 4 levels above loan officer. Senior Management 9.3 Middle Management 9.4 Branch Management* 7.6 Sangam Managers 2.5 (3.4^) ^ Avg Vintage of Sangam Managers (Excl. who joined in last one year) i.e. 68% of Sangam Managers is 3.4 Yrs. 102

103 ANNEXURES - COMPLIANCE 103

104 COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (1/2) RBI norms for NBFC-MFIs BFIL compliance NBFC MFIs Qualifying assets to constitute not less than 85% of its total assets (excluding cash and bank balances) At least 50% of loans for income generation activities Qualifying assets - 95% Income generation loans 99% Pricing Guidelines Income of Borrower s Family Rural : <=Rs.100,000 Non-Rural : <=Rs. 1,60,000 Ticket Size <= 60,000 1 st cycle <= Rs.100,000 Subsequent cycle Indebtedness <= Rs. 100,000 <= Rs. 80,000* Tenure If loan amt. > Rs.30,000, then >= 24 months Collateral Without collateral Repayment Model Weekly, Fortnightly and Monthly * Rs. 60,000 for 1 st cycle loans (IGL 1 or IGL 1 + MTL 1) 104

105 COMPLIANCE WITH RBI NBFC-MFI REGULATORY FRAMEWORK (2/2) RBI norms for NBFC-MFIs BFIL compliance Pricing Guidelines Interest Rate^ A. Margin cap 10% above cost of borrowings B. Avg. base rate of top 5 commercial banks X 2.75 Margin: 9.6% for Q1FY19 Lower of the A and B. Interest rate 19.75% w.e.f 7 th December 15 for new loans Processing Fees <= 1% of loan amt. Insurance Premium Actual cost of insurance can be recovered from borrower and spouse Administrative charges can be recovered as per IRDA guidelines Penalty No penalty for delayed payment Security Deposit No security deposit/ margin to be taken BFIL has never taken security deposit/ margin ^ W.E.F April 1, Quarterly Margin Cap will be followed- Average interest rate on loans sanctioned during a quarter shouldn t exceed the Avg borrowing cost during the preceding quarter plus margin cap. 105

106 BFIL LOAN PORTFOLIO QUALIFIES FOR OVERALL PSL TARGET OF 40% AND ALL SUB-TARGETS UNDER NEW PSL NORMS RBI S.no. Sector Category Target for Banks % 1 Agriculture Target 18% - Direct Agriculture* Sub-target ~13.5%* - Direct Small & Marginal farmers* Sub-target 8% Qualifying Portfolio of BFIL % BFIL Explanation 56% Livestock, Agri & Allied 2 Weaker Target 10% 100% 3 Micro-enterprises Target 7.5% 100% 100% Loans are to women beneficiaries (with less than Rs.1 lac). Further, Minority communities constitute 17% and economically weaker sections 72% of loan portfolio. Loans to MFIs for on-lending to microenterprises. Note: * Banks are also directed to ensure overall direct lending to non-corporate farmers, which should not fall below the system wide average of last three years achievement, which is notified as 11.78% as per RBI notification dated 21 st September They should also continue to maintain all efforts to reach the level of 13.5% direct lending to beneficiaries.. Refer Slide no. 53 for details on purpose wise loan portfolio outstanding. 106

107 ANNEXURES INTERNAL AUDIT 107

108 INTERNAL AUDIT PLAYS A CRITICAL ROLE IN ASSESSING PROCESS CONTROLS Strength 236 strong headcount ISO 9001:2015 certified process All branches are inspected monthly based on a 4 tier grading system Top 25 disbursement branches are audited twice in a month Incentives/appraisals of field staff linked to branch grading Internal Audit of branches are fully automated Process Consulting & IT applications review Pre Post Benefits MS-Excel Offline audit & control Automation of Internal Audit Automated risk based audit Real time control for Managers Improved Audit quality Improved Audit supervision Scope Branches 1,639 Branches per Internal Audit staff 7 Regional Offices 38 7 branches per IA staff 8 branches per IA staff by FY19 Efficiency gains Scope of Audit Audit area IGL Branches Regional Offices Frequency Client Acquisition Center Meeting Process Document verification (KYC, Loan utilization check etc.) Monitoring process by supervisors Adherence to Process / Policies Statutory Requirements (Credit bureau, Fair practices etc.) Client Visits* High Risk items (Frauds etc.) Monthly Quarterly Head office** Quarterly Note: * Approximately 20% of the clients are covered by Internal Audit in an year during the branch audits. Clients visited on a sample basis to check for Loan confirmations, Loan utilization (LUC), arrears and awareness on Client Protection Principles (CPP) ** Head Office Audit is co-sourced with Deloitte Haskins & Shell LLP, Hyderabad 108

109 THANK YOU For any investor relations queries, please to 109