EARNINGS UPDATE Q2FY19

Transcription

1 EARNINGS UPDATE Q2FY19 OCTOBER 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 Disbursement 36 Loans for Home Improvement & Two-Wheeler (Pilot) 38 Q2FY19 Performance Highlights 42 Operational Highlights 47 Industry Update On Credit Quality 53 Review of Financials 55 Financial Architecture 73 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 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 Gross Loan Portfolio Growing Net Interest Income Largest microfinance company in India with gross loan portfolio of INR 15,482 Cr., 83 Lakhs members in Non-AP states and 1,708 branches Sub 20% lending rate Company s Portfolio grew by 46% (YoY) to INR 15,482 Crs. as of Sep 30, 2018 Profit after tax for Q2FY19 of INR 233 Crs (Previous GAAP Rs. 212 Crs) 12,575 9,150 7,677 4,171 2,016 2,837 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 INR Cr. 15,482 10,583 Sep-17 Sep ,277 INR Cr FY13 FY14 FY15 FY16 FY17 FY18 Q2FY18Q2FY19 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.) 3,602 Capital Adequacy 31.3% Efficiency and Profitability Marginal cost of borrowing # 8.7% Cost to income 40.0% Return on Asset^ 5.7% Return on Equity 27.0% Note: Above Data for Q2FY19 # includes on and off b/s borrowings (excluding processing fees) for Q2FY19 ^Assets includes securitized, assigned and managed loans Madhya Pradesh 4% Jharkhand 5% Kerala 6% Rajasthan 6% Uttar Pradesh 9% Maharashtra 9% Others 6% Note: Portfolio as of Sep 30, 2018 Karnataka 11% Odisha 16% Bihar 14% West Bengal 13% Amansa Capital PTE Limited Birla Sun Life Mutual Fund American Century Funds Top 10 Shareholders Reliance Mutual Fund Kotak Mutual Fund Route One Alliancebernstein DSP Blackrock East Bridge Capital Wellington Note: Shareholding as of Sep 30, % 3.5% 2.9% 2.8% 2.7% 2.7% 2.7% 5.6% 4.9% 6.6% 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 8 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 5.2% to PAT for H1FY19 Pan-India presence with no unbalanced geographic sectoral exposure Strong solvency (Capital Adequacy of 31.3% as on 30 th Sep 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 82,908 28,300 3,945 14% 14,600 13,832 17% * Net worth - Rs. 3,602 crs CAR % (RBI Requirement 15%) 1,229 Others BFIL Oct 10 June 12 June 18 8% *June 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% 40.0% FY14 FY18 Q2FY % Marginal Cost of Borrowing # FY14 FY18 8.7% 8.7% # On and Off balance sheet borrowings (excl. Managed Loans) including processing fees Q2FY

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% 54% Top three states share in GLP 53% 43% Mar-13 Sep-18 Sep-10 Sep-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 8 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 - All MFIs now use CB reports for disbursements No. of loan records Crore No. of borrower records 9.3 Crore No. of loan records (live) 7.6 Crore^ No. of borrower records (live) 4.3 Crore^ No. of MFIs reporting 183 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 78,230 June 18 82,908 # * Source: Equifax (as on Jul 18), Excluding A.P and Telangana # as per MFIN; June 18 - Includes data for NBFC-MFIs & SFBs ^ DPD. 20

21 STEADY-STATE ROA OF 4% CAN BE TARGETED Interest Income (EIR) # Tax 34% 4.5 Marginal Cost of borrowings for Q2FY19: 8.7%. Portfolio funded by debt: 80% Financial cost Operating cost Prov. & Write-off Taxes Profit Revenue #EIR is calculated based on weighted average portfolio mix of 44% IGL (1 Yr. loan), 26% LTL (2 Yr. loan) and 28% MTL (1.5 Yr. loan) 21

22 GROWTH ANATOMY 22

23 7.8 YEAR CAGR FOR THE SECTOR AND BFIL ARE 15% AND 18% RESPECTIVELY Industry GLP BFIL GLP 78,230 82,908 ^ 12,575 13,832 61,623 62,584 ^ 50,535 9,135 9,629 38,386 7,677 28,300 14,600 16,740 24,499 3,942 4,171 2,837 2,016 1,185 1,320 Oct'10 Jun'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Jun'17 Jun'18 Sep'10 Dec'11 Mar'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Jun'17 Jun'18 ^Industry portfolio includes NBFC-MFIs and SFBs only Source: MFIN Micrometer (Mar 13,Mar 14, Mar 15, Mar 16,Mar 17, Mar 18, June 17 & June 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 % 45% 42% 13% 2% 19% 22% 25% 14% FY 07-10* FY 10-13^ FY 13 - Q2FY19^ FY 07- Q2FY19* -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* 23% 20% 36% 29% 16% 27% 13% 13% 22% 18% FY-17 FY-18 Q2-FY18 Q1-FY19 Q2-FY19 FY-17 FY-18 Q2-FY18 Q1-FY19 Q2-FY19 Hit rate^ for all products* Rejection Reasons Q2FY19 % Mix ^ Hit rate = % of loan applications with matching record in credit bureau 88% 89% 95% 91% 90% Reasons IGL 1, IGL 1 + MTL 1 >=IGL 2 (excl. IGL1 + MTL1) LTL Loans from=>2mfis 45% - - Loans from => 2 MFIs / 3 Lenders (Subject to 2 MFIs Limit) - 46% 52% FY17 FY18 Q2-FY18 Q1-FY19 Q2-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 =>2MFIs and Outstanding Balance >60K 31% - - =>2MFIs / 3 Lenders and Outstanding Balance >80K - 15% 16% Outstanding Balance>60K 8% - - Outstanding Balance>80K - 23% 19% => Default History 11% 6% 4% Eligibility < Min Ticket Size 5% 11% 9% Total 100% 100% 100% *Note: Rejections are done based on data input from Credit bureau. Rejection data is calculated based on unique clients. 26

27 BFIL HAS NIL EXPOSURE IN SHG CONCENTRATED STATES SHG Concentrated States SHG Exposure <=5% State SHG Exposure* BFIL Exposure* Andhra Pradesh 29% Telangana 18% Karnataka 15% 11% Tamil Nadu 9% - West Bengal 8% 13% Kerala 5% 6% Bihar 4% 14% Odisha 3% 16% Maharashtra 3% 9% Uttar Pradesh 2% 9% Assam 1% - Rajasthan 1% 6% Chhattisgarh 1% 2% Madhya Pradesh 1% 4% Gujarat 1% - Jharkhand 0.5% 5% Puducherry 0.2% - Haryana 0.2% 2% Tripura 0.2% - Himachal Pradesh 0.1% 0.1% Uttarakhand 0.1% 0.2% Jammu 0.1% - Punjab 0.1% 2% Others 0.2% - *SHG Data as on Mar 18 (Source: NABARD Status of Microfinance in India-2018), BFIL data as on Sep18 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 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 Q2FY19 8.7* % 73% *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% 3.6% Assets* 2.0% 5% 90% 1.1% MFI Non - MFI Non-MFI Actuals Q2FY19 95% *Note: Core microfinance will continue to be more than 95% of credit assets 31

32 PILOT ON RETAIL DISTRIBUTION 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 8.3 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 BFIL is in the process of transitioning to Indusind KUA 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 RDSP Leveraging distribution strength Mobile Phones Solar Lamps Mixer grinders Sewing machines Cooker Cycles Cooking stoves Water purifiers Refrigerator Fan Two wheelers Tarpaulin Last mile for leading retailers OVER 74 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 Sep 18 35

36 UPDATE ON CASHLESS DISBURSEMENT 36

37 99% CASHLESS DISBURSEMENTS IN Q2FY19 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 97% 98% 99% Q2FY18 Q1FY19 Q2FY19 37

38 LOANS FOR HOME IMPROVEMENT & TWO-WHEELER (PILOT) 38

39 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/- 39

40 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 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 Operating Challenges in Rural 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 Sep 18 Rs. 1.9 Crs (no. of outstanding loans 103). The Pilot is currently rolled in 55 branches. 40

41 41 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. 1.5 Lac across all the lenders Ticket Size Rs. 37,350 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 Sep 18 Rs. 25 Crs (no. of outstanding loans 5,569) The Pilot is currently rolled in 390 branches.

42 Q2FY19 PERFORMANCE HIGHLIGHTS 42

43 HIGHLIGHTS OF Q2FY19 Operational Efficiency Healthy addition of 10.5 lacs customers in Q2FY19 Loan disbursements grew by 64% YoY and 13% QoQ to Rs. 7,049 Crs (Rs. 6,260 Crs in Q1FY19 and Rs. 4,288 Crs in Q2FY18) Gross Loan Portfolio grew by 46% YoY and 12% QoQ to Rs.15,482 Crs as of Sep 30, 2018 Credit Quality Cumulative Collection efficiency of 99.6% for loans disbursed amounting to Rs. 35,683 Crs between 1 st Jan 17 to 30 th Sep 18 Net NPA at 0.1% Financial Efficiency Marginal cost of Borrowings* at 8.7% for Q2FY19 Weighted avg. cost of borrowing** at 9.2% for Q2FY19 Incremental drawdowns of Rs.3,587 Crs (including securitization and assignment transactions) in Q2FY19 (growth of 42% YoY) BFIL also originated Rs.1,491 Crs under managed portfolio in Q2FY19 Completed two assignment and one securitisation transactions of Rs.1,354 Crs and Rs. 539 Crs respectively in Q2FY19 P&L Impact As per Ind AS, PAT for Q2FY19 is Rs. 233 Crs (Rs. 142 Crs in Q1FY19 and Rs. 135 Crs in Q2FY18) As per previous GAAP, PAT for Q2FY19 is Rs.212 Crs (Rs. 190 Crs in Q1FY19 and Rs. 119 Crs in Q2FY18) Rs. 98 Crs upfront income recognition on assignment transactions in Q2FY19 vis-à-vis no assignment transactions in Q1FY19. Key Balance Sheet Figures AUM of Rs.15,482 Crs as on Sep 30, 2018 Networth of Rs.3,602 Crs (Higher by Rs. 117 Crs compared to GAAP Networth) Capital adequacy at 31.3% as of Sep 30, 2018 Cash & Cash equivalent^ of Rs.302 Crs as of Sep 30, 2018 Deferred tax asset of Rs 32 Crs and MAT Credit of Rs. 178 Crs as on Sep 30, 2018 * 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 of INR 341 Crs, accrued interest of INR 17 Crs 43

44 NETWORTH IS HIGHER BY RS.117 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. 0.3 Crs 2 Income recognition on balance sheet assets Straight line amortisation of processing fees EIR (Effective interest rate) amortisation of processing fees Rs. 21 Crs 3 Financial expenses Processing fees on borrowings recognised upfront EIR -amortisation of processing fees on borrowings Rs. 7 Crs 4 Valuation of assets Loans were booked as at principal outstanding amount Fair valuation approach Rs. 54 Crs 5 Income recognition on assignment deals Recognised over loan contract Recognised on transaction date Rs. 99 Crs 6 Others Items Rs. 1 Crs 7 Tax impact on above items Net worth (As on Sep 30,2018) (Rs. 65 Crs) Rs. 3,485 Crs (A) Rs. 3,602 Crs (B) Rs. 117 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 117 Crs. as of 30 th Sep,

45 ..NETWORTH IS HIGHER BY RS.117 CRS WITH Ind AS Profit After Tax As Per Ind AS Profit After Tax As Per Previous GAAP INR Crs Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 FY18 H1FY19 Net Worth As Per Ind AS 3,602 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 FY18 H1FY19 (37) Net Worth As Per Previous GAAP 3,485 2,448 2,447 Q4FY17 Q2FY19 Q4FY17 Q2FY19 45

46 KEY PARAMETERS IND AS vs GAAP INR Crs. Ind AS GAAP Particulars Q2FY18 Q2FY19 YoY% Q1FY19 QoQ% Q2FY18 Q2FY19 YoY% Q1FY19 QoQ% Gross Loan Portfolio 10,583 15,482 46% 13,832 12% 10,597 15,508 46% 13,850 12% Revenue % % % 635 8% Net Interest Income* % % % % Operating expenses % 211 5% % 214 4% PBT % % % % PAT % % % % * 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 46

47 OPERATIONAL HIGHLIGHTS 47

48 HEALTHY ADDITION OF 10.5 LACS CUSTOMERS IN Q2FY19 VIS-À-VIS 6.3 LACS IN Q2FY18 Particulars Sep-17 Sep-18 YoY% Jun-18 QoQ% Branches 1,452 1,708 18% 1,639 4% Centers (Sangam) 2,95,140 3,76,561 28% 3,56,685 6% - Centers in non-ap States 2,46,253 3,27,234 33% 3,07,798 6% Employees (i) + (ii) + (iii) + (iv) + (v) + (vi)+(vii) 15,389 18,277 19% 17,415 5% Field Staff (i) + (ii) + (iii) + (iv) + (v) 14,716 17,673 20% 16,808 5% Sangam Managers* (i) 9,470 11,368 20% 10,380 10% Sangam Manager Trainees(ii) 933 1,246 34% 1,588-22% Branch Management Staff (iii) 2,841 3,337 17% 3,183 5% Area Managers (iv) % 322 1% Regional Office Staff (v) 1,200 1,397 16% 1,335 5% Central Processing Unit and Member helpline (vi) % 191-5% Head Office Staff (vii) % 416 1% Members in non-ap States (in '000) 6,336 8,273 31% 7,808 6% Members added (in the quarter) (in 000) 629 1,047 66% 1,065-2% Active borrowers in non-ap States (in '000) 5,318 6,745 27% 6,425 5% Active borrowers added (in the quarter) (in 000) % 913-2% No. of loans disbursed (in '000) 2,112 2,812 33% 2,862-2% Disbursements (for the quarter) (INR Crs.) 4,288 7,049 64% 6,260 13% Gross loan portfolio (INR Crs.) (A+B+C+D) 10,583 15,482 46% 13,832 12% Loans outstanding (A) 8,610 10,914 27% 10,574 3% Securitized (B)^ Assigned (C) 982 1,795 83% 1,234 45% Managed loans (D) 679 2, % 2,024 37% Operational Efficiency Non-AP : Off-take Avg (Disbursements/ No of Loans disbursed) (INR) 20,305 25,066 23% 21,875 15% Off-take Avg Excluding Cross Sell 24,514 28,526 16% 26,820 6% Gross loan portfolio/ Active Borrowers (INR) 19,898 22,952 15% 21,530 7% Gross loan portfolio/ No. of Sangam Managers (Rs. '000) 11,752 14,137 20% 13,895 2% Active borrowers / No. of Branches 4,032 4,280 6% 4,266 - Active borrowers / No. of Sangam Managers % 645-5% *Sangam Managers (SMs) are our loan officers who manage our centers (also called Sangams). As of Sep 18, we had 10,951 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. The securitised portfolio outstanding as on 30 th Sep 18 is Rs. 1,341 crs. 48

49 Q2FY19 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 7,049 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 Q2 FY19 Disbursement % for the year 17% 25% 22% 36% 20% 22% 25% 34% 26% 27% 20% 27% 20% 23% 26% 31% 24% 27% *Guidance Note: Demonetisation distorted the historical trend of seasonality in FY17 49

50 IMPROVING OPERATING COST AND FINANCIAL EFFICIENCY Best before AP MFI crisis Worst during AP MFI crisis FY14 FY15 FY16 FY17 FY18 Q2 FY18 Q1FY19 Q2FY19 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 11,752 13,895 14,137 Offtake Avg. 10,299* 9,237 11,849 12,273 15,024 18,676 20,316 20,305 21,875 25,066 Offtake Avg. (Excl Cross-sell) 10,383* 11,021 12,277 14,149 18,102 21,491 24,922 24,514 26,820 28,526 Cost Efficiency: Financial cost / Avg. Gross Loan Portfolio 6.6% 9.8% 8.3% 8.3% 8.5% 7.3% 6.8% 7.1% 6.0% 5.6% On B/S daily Wt. Avg. Cost of borrowings % 10.3%^ 16.0%^ 13.9% # 13.5% # 12.0% # 10.9% # 9.6% ## 9.9% ## 9.4% ## 9.8% ## Opex/ Avg. Gross Loan Portfolio % 10.4% 21.7% 9.6% 9.5% 7.1% 6.5% 6.6% 6.4% 6.4% 6.1% Cost to Income Ratio 52.4% 275% 74.5% 61.1% 48.3% 50.0% 49.0% 53.2% 51.2% 40.0%** Credit Quality - Non-AP: Gross NPA% 0.20%* 5.5% 0.1% 0.1% 0.1% 6.0% 2.2%^^ 5.1% 0.3%^^ 0.4%^^ Net NPA% 0.16%* 2.9% 0.1% 0.1% 0.04% 2.7% 0.1% 0.1% 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. ## based on quarterly Avg and includes amortised processing fees ** Cost to income based on previous GAAP is 42.7% 50 Note: FY18 and FY19 nos are based on Ind AS

51 PORTFOLIO MIX State % Odisha Bihar West Bengal Karnataka Maharashtra Uttar Pradesh Rajasthan Kerala Jharkhand Madhya Pradesh Haryana Punjab Chattisgarh Uttarakhand Delhi Himachal Pradesh Others* 2.1% 1.6% 2.1% 1.5% 1.6% 1.7% 0.2% 0.5% 0.1% 0.1% 0.1% 0.1% 0.01% - 6.4% 5.0% 5.5% 6.0% 5.0% 4.5% 4.1% 4.0% 9.4% 10.7% 8.6% 6.7% 13.4% 12.7% 11.3% 11.7% 15.9% 18.2% 14.1% 14.9% GLP Q2FY19 GLP Q2FY18 Note: Portfolio percentage are based on proportion of gross loan portfolio of respective states. *Others Include states of Tripura, Tamil Nadu & Telangana CONCENTRATION NORMS Metric % Cap on Disbursement POS % Cap of Networth State Category-wise (refer Table**) 75% District Branch NPA Collection efficiency <3 % 4% for Bihar & Odisha <1 % 1.25 % for Bihar & Odisha No disbursement to a branch with NPA > 1 % (5% of operating branches can go up to maximum 2% NPA) No disbursement to a branch with on- time collection efficiency of < 95% **State wise concentration norms: Category Concentration % States I 16% Odisha, Bihar & WB II 12.5% Karnataka, UP, Rajasthan & MP 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 ) III 10% MH, Kerala, Jharkhand & Chattisgarh IV 5% Haryana, Punjab, Uttarakhand, HP & Delhi V 0.5% TN, Tripura, Telangana, Assam & Gujarat Note: The above concentration norms are based on market size, asset quality, growth potential and competition intensity. 51

52 VINTAGE OF NON-AP BRANCHES IS 7.2 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 Gujarat Tamil Nadu Delhi Himachal Pradesh Tripura Total 1, *As of Sep 18 Livestock 45% Agriculture 11% Grocery stores and other retail outlets 10% 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 0.2% Trading of utensils, plastic items 0.2% Other income generating activities 3% 52

53 INDUSTRY UPDATE ON CREDIT QUALITY 53

54 98% OF BORROWERS HAVE INDEBEDTNESS BELOW RS. ONE LAC % Borrowers - Loans from Lenders % Borrowers - Indebtedness INR 69% 89% 21% 8% 3% 9% 3% 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 * 0.5% 0.3% 30+ DPD 60+ DPD * Loans disbursed from Aug 17 to July 18 Portfolio data as on July 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. 54

55 REVIEW OF FINANCIALS 55

56 STRONG SOLVENCY INR Crs. Networth Capital Adequacy 2,667 3,310 3,602 RBI Requirement 31.3% 15.0% Q2FY18 Q1FY19 Q2FY19 Q2FY19 Drawdowns* Cash and Cash Equivalent^ 3,913 3,587 1,652 2,529 1, Q2FY18 Q1FY19 Q2FY19 *Excluding Managed Loans Rs. 1,491 Crs in Q2FY19 Q2FY18 Q1FY19 Q2FY19 ^Excluding security deposit, accrued interest - INR 341 Crs and INR 17 Crs resp. in Q2FY19 56

57 GROSS LOAN PORTFOLIO GREW BY 46% YoY Disbursements Gross Loan Portfolio Gross Revenue 13,309 46% YoY INR Crs. 1,372 4,288 6,260 7,049 8,022 10,583 13,832 15, Q2FY18 Q1FY19 Q2FY19 H1FY18 H1FY19 Q2FY18 Q1FY19 Q2FY19 Q2FY18 Q1FY19 Q2FY19 H1FY18 H1FY19 Net Interest Income* Operating Cost PAT Q2FY18 Q1FY19 Q2FY19 H1FY18 H1FY19 Q2FY18 Q1FY19 Q2FY19 H1FY18 H1FY19 Q2FY18 Q1FY19 Q2FY19 H1FY18 H1FY19 * Net interest income = Interest income on Portfolio loans + Net gain on derecognition of loans sold under assignment transaction + BC Fee Financial Cost 57

58 PROFIT FOR Q2FY19 IS RS. 233 CRS Particulars Q2FY18 Q2FY19 YoY% Q2FY19 As % of Total Revenue Q1FY19 Interest Income (A) % 76% 554 4% Interest income on Portfolio loans % 74% 530 6% Interest on deposits % 2% 24-43% INR Crs. QoQ% Net gain on derecognition of loans sold under assignment transaction (B) % (2) - Fee Income (C) % 57 40% BC Fees % 35 81% Facilitation fees from Cross-sell % 2% 21-27% Other Fee income % % Recovery against loans written off (D) 1 6-1% 3 99% Other income (E) % % Total Revenue (F) = (A+B+C+D+E) % 100% % Financial expenses (G) % 27% 199 3% Personnel expenses % 21% Operating and other expenses % 8% 49 19% Depreciation and amortization % 0.5% 3 40% Total Operating Cost (H) % 29% 211 5% Impairment on financial instruments (I) ECL (1) 26-3% 19 39% - Total Expenditure(J)= (G+H+I) % 60% 429 5% Profit before Tax = (F-J) % 40% % Current Tax (I) % % Deferred Tax (II) 8 (4) % (106) -96% MAT Credit Entitlement (III) (32) Total Tax Expense (I+II+III)* % 41 83% Profit after Tax % 31% % Other Comprehensive income (4) % (0.04) - Total Comprehensive income for the period % 31% % *Tax expense is arrived based on estimated tax rate for FY19 58

59 P&L STATEMENT FOR H1FY19 Particulars H1FY18 H1FY19 YoY% H1FY19 As % of Total Revenue Interest Income (A) 827 1,130 37% 82% Interest income on Portfolio loans 777 1,092 41% 80% Interest on deposits % 3% INR Crs. Net gain on derecognition of loans sold under assignment transaction (B) % 7% Fee Income (C) % BC Fees % Facilitation fees from Cross-sell % 3% Other Fee income % - Recovery against loans written off (D) % Other income (E) % - Total Revenue (F) = (A+B+C+D+E) 933 1,372 47% 100% Financial expenses (G) % 29% Personnel expenses % 23% Operating and other expenses % 8% Depreciation and amortization % - Total Operating Cost (H) % 32% Impairment on financial instruments (I) ECL % 3% Total Expenditure(J)= (G+H+I) % 64% Profit before Tax = (F-J) % 36% Current Tax (I) % Deferred Tax (II) 53 (110) - -8% MAT Credit Entitlement (III) (45) Total Tax Expense (I+II+III)* % Profit after Tax % 27% Other Comprehensive income % - Total Comprehensive income for the period % 27% *Tax expense is arrived based on estimated tax rate for FY19 59

60 Q2FY19 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 Under Ind AS 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 Ind AS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under Ind AS Securitisation portfolio is recognised as on balance sheet financial liability and hence expense is also recognised under interest expense Amortisation of processing fees on borrowings Personnel expenses Actuarial adjustments reclassified to other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost Impairment on financial instruments/ Provisions & Write-offs Total Expenditure Profit before Tax Current Tax (2) Deferred Tax (Asset)/ Liability (4) - (4) Minimum Alternate Tax credit entitlement - (10) 10 Profit after Tax Other Comprehensive income 2-2 Total Comprehensive income for the period INR Crs Under Ind AS ECL methodology is used to arrive at impairment of loans Includes actuarial adjustments on gratuity and Fair value impact on financial assets 60

61 Q1FY19 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 (2) 72 (74) Fee Income BC fees Facilitation fees from Cross-sell Other fee income Recovery against loans written off Other Income Total Revenue (23) Financial expenses Remarks Under Ind AS 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 Ind AS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under Ind AS Securitisation portfolio is recognised as on balance sheet financial liability and hence expense is also recognised under interest expense Amortisation of processing fees on borrowings Personnel expenses Actuarial adjustments reclassified to other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost (3) Impairment on financial instruments/ Provisions & Write-offs Total Expenditure 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) Total Comprehensive income for the period (48) INR Crs 19 (3) 22 Under Ind AS ECL methodology is used to arrive at impairment of loans Includes actuarial adjustments on gratuity and Fair value impact on financial assets 61

62 Q2FY18 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 (30) 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 Ind AS 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 Ind AS Income from securitisation portfolio is recognised in interest income Total gain from the Assignments on the contract will be recognised on transaction date Under Ind AS Securitisation portfolio is recognised as on balance sheet financial liability and hence expense is also recognised under interest expense Amortisation of processing fees on borrowings Personnel expenses Actuarial adjustments reclassified to other comprehensive income Operating and other expenses Depreciation, amortization and impairment Total Operating Cost Impairment on financial instruments/ Provisions & Write-offs Total Expenditure (47) Profit before Tax Current Tax Deferred Tax (Asset)/ Liability 8-8 Minimum Alternate Tax credit entitlement (32) (32) - Profit after Tax Other Comprehensive income (4) - (4) Total Comprehensive income for the period INR Crs (1) 50 (51) Under Ind AS ECL methodology is used to arrive at impairment of loans Includes actuarial gains/losses on gratuity and Fair value impact on financial assets 62

63 PAT RECONCILIATION OF PREVIOUS GAAP VS Ind AS INR Crs Particulars Q2FY18 Q1FY19 Q2FY19 Remarks Profit After Tax as per previous GAAP Ind AS adjustments increase /(decrease) profit Expected Credit Loss Impact 52 (22) (8) Provisioning based on ECL methodology Effective Interest Rate impact on financial assets 3 10 (7) Change from Straight line amortisation of processing fees to EIR Effective Interest Rate impact on borrowings (1) (4) (3) Amortisation of processing fees on borrowings Assignment transactions impact (17) (51) 43 Total gain from the assignment deals recognised on the transaction date. Securitisation transactions impact (12) Total gain on securitisation deals prior to transition date recognised on the transaction date. Interest accrued but not due on securitised portfolio Actuarial gain/(loss) on gratuity (1) 3 (1) Reclassified to other comprehensive income Others (0.1) Deferred Tax impact on above items (8) 22 (9) Current Tax impact - (8) 5 Profit After Tax as per Ind AS Other comprehensive income (Net of tax) (4) - 2 Actuarial adjustments on gratuity and Fair value impact on financial assets Total Other Comprehensive Income after tax as per Ind AS

64 QoQ REVENUE VARIANCE ANALYSIS (1/2) INR Crs. Particulars Q1FY19 (A) Q2FY19 (B) Variance(B-A) Comments Interest income on portfolio loans Increase in income by 6% on account of quarterly Avg. Portfolio increase QoQ by 7% (Quarterly Avg. Rs.10,766 Crs for Q2FY19 and Rs.10,091 Crs for Q1FY19). Interest on deposits (10) Income from investments decreased by 43% on account of daily avg. interest yielding investments decreasing by 46% Net gain on derecognition of loans sold under assignment transaction (2) Upfront income realised in Q2FY19 on account of 2 assignment deals vis-à-vis no assignment deals in Q1FY19 BC Fees Increase in BC fees by 81% on account of increase in monthly average managed portfolio by 65% (Rs. 2,468 Crs in Q2FY19 and Rs. 1,492 Crs in Q1FY19) No of BC Branches in Q4FY18-240, Q1FY and Q2FY Facilitation fees from Cross-sell (6) No of units facilitated in Q2FY19 is 3.9 Lacs units vis-a-vis 5.8 Lacs units in Q1FY19 (due to change in delivery process) Recovery from write-offs Other income Total

65 QoQ EXPENSES VARIANCE ANALYSIS (2/2) INR Crs. Particulars Q1FY19 (A) Q2FY19 (B) Variance (B-A) Comments Finance costs Increase in Avg. quarterly borrowings cost (9.36% in Q1FY19 to 9.80% in Q2FY19) Decrease in Avg. quarterly borrowings (Rs. 8,461 Crs in Q1FY19 and Rs. 8,174 Crs in Q2FY19) Personnel expenses Other Operating expenses Rs. 2 Crs of GST write-offs Rs. 2 Crs due to increase in provisions against pending insurance claims Rs. 1 Crs increase in depreciation on account of purchase of fixed asset Impairment of financial assets (A+F) Provisions (A= B+C+D+E) (159) Stage I Provisions (B) 11 (4) (15) Stage II Provisions (C) Stage III Provisions (D) ECL Methodology is used to arrive at impairment of loans i.e. (~0.69%* Rs. 10,535 Crs for Q1FY % * Rs Crs for Q2FY19) ECL Methodology is used to arrive at impairment of loans i.e.~ 40% of increase in portfolio of INR 22 Crs ECL Methodology is used to arrive at impairment of loans i.e. ~70% of increase in portfolio of INR 8 Crs Provisions reversal in Q1FY19 on account of write-offs Managed Loans Provisions (E) 10 9 (1) 1% provisions on incremental managed portfolio Losses & Write-offs (F = G+H+I) (171) Loss on Managed (G) Losses settled against managed portfolio Loss on Securitisation (H) Losses settled against securitisation Stage III Write-offs (I) (176) Refer slide 51 for details on provisions 65

66 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 30 Sep, 2018 IGL Stage I (Current -30) Stage II (31-60) Stage III (>60) 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% 5, % 66.06% 64.78% 67.33% 82% 70% % 100% 100% 100% 100% 70% % Total 5, % * Weights ^Management overlay : Qualitative assessment of the portfolio based on historical observations. 66

67 Q2FY19 PROVISIONS BREAKUP ECL PROVISIONS INR Crs Period -> 30-Jun Sep-18 Q2FY19 Asset Classification: Amount Outstanding Provisions% Provision (A) Amount Outstanding Provisions% Provision (B) Incremental Provisions (B-A) Stage I (Current to 30) 10, % 73 10, % 69 (3.5) Stage II (31-60) % % Stage III (>60) % % Total 10, % 98 10, % MANAGED LOANS PROVISIONS (1%) Period -> 30-Jun Sep-18 Q2FY19 Amount Outstanding Provision (A) Amount Outstanding Provision (B) Incremental Provisions (B-A) Managed Loans 2, # 2, # Provisions against loans originated after April 1, 2017 CREDIT COSTS On-Balance Sheet Managed Securitised Managed Stage I Provisions Stage II Provisions Stage III Provisions Write-offs Loss Provisions Total Q1FY (40.6) (63.8) 35.6 Q2FY18 (6.8) (11.0) (7.4) (1.3) Q3FY18 (6.1) (4.9) (28.0) (9.5) Q4FY (2.3) (199.9) Q1FY (0.3) (179.7) Q2FY19 (3.5)

68 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 68

69 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 Sep, 2018 MAT Credit Entitlement Deferred Tax asset/ (Liability) (0.5) (76) 32 Total Particulars As on 31 March, 2018 As on 30 Sep, 2018 ECL impact (10) 53 EIR impact on assets (6) (7) Income recognition on assignment deals on transaction date and securitisation deals prior to transition date (38) (35) EIR impact on borrowings (5) (2) Impact on Fair valuation of loans (17) (19) Impact of ESOP disallowance - 38 Others (0.4) 4 Total (Deferred Tax asset/ (Liability) (76) 32 69

70 STRONG CAPITAL BASE AND ROBUST LIQUIDITY DRIVE BFIL BALANCE SHEET INR Crs. Particulars Q2FY18 Q2FY19 YoY% Q1FY19 QoQ% Equity share capital % Other Equity 2,529 3,462 37% 3,171 9% Total Equity 2,667 3,602 35% 3,310 9% Borrowings 7,499 7,721 3% 8,628-11% Interest accrued but not due on borrowings % 17 12% Employee benefits payable % 17 36% Payable towards securitisation/assignment transactions % Expenses & other payables % 37 45% Provision for gratuity and leave benefits % 31-10% Provision for Fraud Theft & Burglary % 2 72% Provision for Managed Portfolio % Current tax liabilities (Net) % Statutory dues payable % 12 7% Unamortised fee income % Liabilities 7,862 8,398 7% 9,322-10% Total Liabilities and Equity 10,529 12,001 14% 12,632-5% Cash and bank balances 2, % 1,599-59% Receivables Loans 8,610 10,914 27% 10,574 3% ECL provisioning (460) (109) -76% (98) 11% Investments Interest accrued but not due on portfolio loans % 23 22% Interest accrued and due on portfolio loans % Interest strip on securitisation transactions Interest strip on loan assignment transactions % Unbilled revenue % Security deposits % 4 3% Insurance deposit receivable % 4 - Advance to vendor (cross-sale) % 10-81% Claims Outstanding Receivable from Insurance Company % Loans to BFIL Microfinance Employees Benefit Trust Current tax assets (Net) % 42 - Deferred tax assets (Including MAT Credit) % % Fixed assets % 17 37% Intangible assets % 5 50% Other Assets % 34-40% Total Assets 10,529 12,001 14% 12,632-5% Note:1 Securitised^/Managed/Assigned Portfolio 1,973 4, % 3,258 40% 2. Gross Loan Portfolio 10,583 15,482 46% 13,832 12% ^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 70

71 ROA OF 5.7% AND ROE OF 27.0% FOR Q2FY19 Particulars Q2 FY18 Q1 FY19 Q2 FY19 Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio) Gross Yield (I) 19.1% 18.5% 20.7% Portfolio Yield* (a) 17.6% 17.1% 19.8% Financial Cost (b) 7.1% 6.0% 5.6% NIM on portfolio (a-b) 10.5% 11.0% 14.2% Operating Cost (c) 6.4% 6.4% 6.1% Impairment on financial instrument (d) -0.1% 0.6% 0.7% Taxes (e) 0.3% 1.2% 2.0% Total Expense II = (b+c+d+e) 13.7% 14.2% 14.4% Return on Avg. Gross Loan Portfolio (I) - (II) 5.3% 4.3% 6.4% Efficiency: Cost to Income 53.2% 51.2% 40.0%^ Asset Quality Non-AP: Gross NPA (Stage 3) 5.1% 0.3% 0.4% Net NPA 0.1% 0.1% 0.1% Gross NPA (INR Crs.) Net NPA (INR Crs.) Leverage: Debt : Equity Debt : Equity (Incl. Assigned & Managed Loans) Capital Adequacy: 31.0% 30.6% 31.3% Profitability: Return on Avg. Assets (Incl. Assigned & Managed Loans) ** 4.5% 3.7% 5.7% ROE ** 20.8% 17.6% 27.0% 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 ^ 42.7% based on previous GAAP 71

72 ROA OF 4.7% AND ROE OF 22.4% FOR H1FY19 Particulars H1 FY18 H1 FY19 Spread Analysis (as % of Avg. Quarterly Gross Loan Portfolio) Gross Yield (I) 19.1% 19.7% Portfolio Yield* (a) 17.5% 18.4% Financial Cost (b) 7.3% 5.8% NIM on portfolio (a-b) 10.2% 12.6% Operating Cost (c) 6.3% 6.2% Impairment on financial instrument (d) 0.7% 0.6% Taxes (e) 1.1% 1.7% Total Expense II = (b+c+d+e) 15.3% 14.3% Return on Avg. Gross Loan Portfolio (I) - (II) 3.7% 5.4% Efficiency: Cost to Income 53.2% 44.7%^ Asset Quality Non-AP: Gross NPA (Stage 3) 5.1% 0.4% Net NPA 0.1% 0.1% Gross NPA (INR Crs.) Net NPA (INR Crs.) Leverage: Debt : Equity Debt : Equity (Incl. Assigned & Managed Loans) Capital Adequacy: 31.0% 31.3% Profitability: Return on Avg. Assets (Incl. Assigned & Managed Loans) ** 3.0% 4.7% ROE ** 14.4% 22.4% 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 ^ 44.7% based on previous GAAP 72

73 FINANCIAL ARCHITECTURE 73

74 FINANCIAL ARCHITECTURE Lenders Mix* Devoid Of Dependence Risk Diversified Source Mix INR Crs. On Balance Sheet* Q2FY18 Q1FY19 Q2FY19 IndusInd Bank - 14% 13% Axis Bank 1% 8% 13% Yes Bank 7% 11% 10% SIDBI 7% 11% 10% ICICI Bank 4% 9% 8% HSBC Bank 4% 7% 6% Bank of India 9% 6% 6% Citi Bank 2% 3% 5% Standard Chartered Bank 4% 5% 4% RBL Bank 6% 5% 4% Dena Bank 7% 3% 4% Mudra 3% 3% 3% Kotak Mahindra Bank 6% 0% 2% IDFC Bank 6% 3% 2% Union Bank of India 3% 2% 2% Mahindra & Mahindra Financial Services Ltd 3% 2% 2% State Bank Group 6% 2% 1% Andhra Bank 3% 1% 1% South Indian Bank 1% 1% 1% Others 19% 3% 2% Total 6,684 7,095 6,386 * Includes Term loan and cash credit facilities Q2FY18 % Mix Q1FY19 % Mix Q2FY19 % Mix Term Loan 6,607 69% 7,095 58% 6,385 50% Managed Loans 595 6% 1,926 16% 2,765 22% Asset Assignment 1,087 11% 1,454 12% 2,044 16% Securitisation 533 6% 1,743 14% 1,544 12% CC 77 1% % CP 386 4% NCD 250 3% Total 9, % 12, % 12, % Investor Mix (Off B/S) Broad-based Securitised / Assigned Q2FY18 Q2FY19 State Bank Group 34% 34% HDFC Bank 3% 19% Yes Bank 18% 15% Bank of India 33% 14% Kotak Mahindra Bank 1% 10% IndusInd Bank - 6% Vijaya Bank - 3% IDBI Bank 9% - DCB Bank 1% - Total 1,620 3,588 74

75 SUB 9% MARGINAL COST OF BORROWING Funding Cost Analysis Metric FY14 FY15 FY16 FY17 FY18 Q2FY18 Q1FY19 Q2FY19 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) 12.2% 11.7% 10.1% 9.4% 8.6% 8.9% 8.3% 8.7% 12.6% 11.9% 10.2% 9.4% 8.7% 8.9% 8.4% 8.7% 12.9% 12.3% 11.0% 9.8% 8.8% 9.1% 8.6% 8.8% Monthly Average (Quarterly Avg for FY18 and Q1FY19 and Q2FY19) Wt. avg. cost of borrowing # on b/s loans (including processing fees)* on and off b/s loans (including processing fees )** on b/s loans (including processing fees)** 13.6% 12.6% 11.1% 9.9% 8.9% 9.2% 8.6% 8.8% 13.0% 12.2% 11.1% 10.1% 9.0% 9.5% 9.2% 9.2% 13.7% 12.8% 11.6% 10.7% 9.6% 9.9% 9.4% 9.8% Loan Processing Fees (INR Crs.) Drawdowns (INR Crs.) 3,503 5,020 7,317 6,900 9,977 2,529 3,913 3,587 Financial Cost^ 8.3% 8.3% 8.5% 7.3% 6.8% 7.1% 6.0% 5.6% * processing fees is amortized for marginal cost calculation. ^ Financial expenses to quarterly Avg. Gross Loan Portfolio. # Excluding Managed Loans. ** amortised processing fees for FY18,Q1FY19, Q2FY19 nos under Ind AS 75

76 POSITIVE ALM MISMATCH BENEFIT CONTINUES ALM Avg maturity of assets Avg maturity of liabilities FY14 FY15 FY16 FY17 FY18 Q2FY18 Q1FY19 Q2FY19 ALM data includes Securitized/ Assigned loans Interest Rate Mix of Borrowings* Floating Fixed 44% 61% 43% 54% 55% 63% 59% 66% 56% 39% 57% 46% 45% 37% 41% 34% FY14 FY15 FY16 FY17 FY18 Q2FY18 Q1FY19 Q2FY19 * Excludes managed loans 76

77 POSITIVE ALM GAP FOR ALL INTERVALS UPTO ONE YEAR INR Crs. Particulars < 1 month 1 to 2 months 2 to 3 months 3 to 6 months 6 months to 1 year 1 to 3 Years 3 to 5 Years > 5 Years Total Outflows Equity & Reserves ,602 3,602 Borrowing ,810 2,466 1, ,721 Others^ Total (A) ,810 2,466 1,772-3,782 12,081 Inflows Cash & bank Loans # 1,313 1,193 1,059 2,675 3,255 1, ,886 Others Total (B) 1,760 1,256 1,088 2,779 3,413 1, ,081 GAP (B-A) (301) 13 (3,481) - Cumulative GAP 867 1,587 1,853 2,821 3,769 3,468 3,481 - Note - Computation is based on RBI Norms on Structural Liquidity Statement Equity(> 5 Years), Provision (> 5 Years) ^ Others in Outflows includes provisions and other current liabilities # On B/s loans are assumed net of NPA provisions. 77

78 EXTERNAL ASSESMENT Rating Instrument Rating/Grading Rating Agency Rating Amount Limits (Rs. Crs.) Q1FY19 Q2FY19 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 7,500 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 Securitisation Pool CARE AAA (SO)^ CARE Ratings * ICRA AA (SO) # Provisional ICRA AA (SO) # ICRA Limited 2,237 2,775* *Amount aggregates to 1 transaction rated by CARE Ratings and 5 transactions rated by ICRA # Four transactions are rated as AA(SO) and one transactions has provisional rating of AA (SO). ^ One transaction upgraded to AAA (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 SEPTEMBER 2018 Reliance Mutual Fund Kotak Mutual Fund Route One Alliancebernstein DSP Blackrock East Bridge Capital Amansa Capital PTE Limited Birla Sun Life Mutual Fund Wellington American Century Funds Vanguard IDFC Mutual Fund Goldman Sachs Asset Management Blackrock BNP Paribas Arbitrage L&T Mutual Fund Mirae Mutual Fund Smallcap World Fund Kismet Microfinance OHM Stock Broker Pvt Ltd. SBI Life Insurance Credit Suisse Limited Singapore Kotak Offshore Kismet SKS II SBI Mutual Fund Copthall Mauritius Investment Limited Goldman Sachs P Note Mirae FPC Shivanand Shankar Mankekar Others 6.6% 5.6% 4.9% 3.5% 3.5% 2.9% 2.8% 2.7% 2.7% 2.7% 2.4% 2.3% 2.2% 2.0% 1.8% 1.8% 1.8% 1.6% 1.6% 1.5% 1.5% 1.5% 1.5% 1.3% 1.3% 1.1% No. of shares Crs. 1.1% 1.0% 1.0% 31.8% Domestic Individuals, 8.6% FII, 8.1% Foreign Corporates, 2.9% Domestic Corporates, 1.9% NRI, 1.4% SHAREHOLDING PATTERN FPI, 45.6% Domestic MFs, Insurance co's & FIs, 31.5% Excludes no. of Outstanding ESOPs 0.5 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 Q2FY % Stage II Q2FY19-40% Loss Assets 100% of instalments overdue* 100% of outstanding principal/ write-off* Stage III (GNPA) Q2FY19-70% 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 ANNEXURES - OPERATIONS 85

86 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. 86

87 Q2FY11 (PRE-CRISIS) Q2FY19 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 25,622 27,931 27,942 27,471 26,330 26,013 25,855 25,937 26,103 26,164 44,650 40,765 54,950 54,950 49,206 50,937 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 23,317 29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995 29,995 27,910 27,175 26,885 27,129 27,081 26,999 26,954 26,935 26,700 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 87

88 CYCLE WISE NON-AP LOAN BORROWERS Cycle Wise Q2FY18 Q1FY19 Q2FY19 IGL 1 30% 42% 43% IGL 2 23% 15% 13% IGL 3 8% 9% 9% IGL 4 3% 3% 2% IGL 5 1% 1% 1% IGL 6 1% 1% 1% IGL 7 1% 1% 1% IGL 8 1% 1% 1% IGL 9 and above 0.7% 1% 1% Total IGL Borrowers 68% 72% 70% LTL 1 16% 12% 14% LTL 2 3% 6% 7% Total LTL Borrowers 19% 18% 21% MTL 1 8% 6% 6% MTL 2 2% 2% 2% MTL 3 1% 1% 1% MTL 4 0.5% 0.4% 0.3% MTL 5 0.3% 0.2% 0.2% MTL 6 0.3% 0.2% 0.2% Total MTL Borrowers 12% 9% 9% Cross Sell 0.3% 0.2% 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 88

89 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-18) Portfolio O/S (Mar-18) INR Crs. Andhra Pradesh 29% 22,242 Telangana 18% 13,762 Karnataka 15% 11,126 Tamil Nadu 9% 6,648 West Bengal 8% 5,870 Others 21% 15,950 Total 100% 75,598 Source: NABARD 89

90 PRODUCT OFFERINGS IGL MTL LTL Other product offerings^^ Loan portfolio (INR Crs) / (% Mix) 6,864 (44%) 4,406 (28%) 4,071 (26%) 167 (1%) # 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 Q2FY19 26,531 24,769 43,223 2,815 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, Gas Stove, Induction cooktop, tarpaulin Sheets, Water-purifier(Excluding Two wheeler loans, Loans for home improvement and loans for refrigerator which are in pilot stage). # Portfolio Includes Two wheeler loans - Rs 25 Crs, Home improvement Rs. 1.9 Crs & Refrigerator Loans of Rs. 24 crs. ** With effect from 27 th November 2017 Note: Above numbers are based on Previous GAAP 90

91 PRODUCT WISE - DISBURSEMENT, PORTFOLIO OUTSTANDING AND TICKET SIZE IGL LTL MTL Others* Total Q2FY18 Q1FY19 Q2FY19 No. of Loans Disbursed in '000 1, ,112 % Mix 53% 5% 23% 19% 100% Amount of Loan Disbursed (In Crs.) 2, , ,288 % Mix 63% 10% 24% 2.1% 100% Portfolio Outstanding (In Crs.) 4,994 1,858 3, ,597 % Mix 47% 18% 34% 0.9% 100% Avg. Ticket Size INR 24,500 38,623 21,316 2,209 20,305 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 No. of Loans Disbursed in '000 1, ,812 % Mix 47% 13% 26% 14% 100% Amount of Loan Disbursed (In Crs.) 3,506 1,584 1, ,049 % Mix 50% 22% 26% 2% 100% Portfolio Outstanding (In Crs.) 6,864 4,071 4, ,508 % Mix 44% 26% 28% 1% 100% Avg. Ticket Size INR 26,531 43,223 24,768 3,708 25,066 *Cross sell products Note: Above numbers are based on Previous GAAP 91

92 LEVERAGING THE DISTRIBUTION STRENGTH FY15 FY16 FY17 FY18 Q2FY18 Q1FY19 Q2FY19 Total Total Total Total Total Total Mobile phone Solar lamp Pressure Cooker Mixer grinder Refriger ator Sewing Twowheeler machine Others^ Total No. of Units Facilitated (in Lacs) Gross Fees (after service tax) INR Crs. Less: Incentives INR Crs Net Fees INR Crs.* Loan Portfolio INR Crs. 0 Net Fee Income as % of PAT** 12.6 % 9.3% 13.5 % 6.8% 6.7% 8.0% 1.2% 1.0% 0.3% 0.4% 0.4% 0.1% 0.03% 0.03% 3.6% Loan Portfolio Mix 1.4% 1.3% 0.4% 1.2% 0.9% 1.1% 0.3% 0.2% 0.1% 0.1% 0.2% 0.03% 0.2% 0.01% 1.1% *Net fee post the incentive payout and sans transfer pricing of other operating cost and Post tax adjustment ^Loans for Gas Stove, Induction Cooktop, Tarapulin sheets, Bi-cycle, Water-purifier and Solar Fans ** 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 H1FY19 Cumulative past 5.5 years Solar Lamp 0.9% 4.7% 6.4% 7.4% 9.6% 3.7% 32.7% Mobile Phone 1.5% 5.3% 8.6% 4.7% 7.4% 2.9% 30.3% Mixer Grinder % 2.5% 5.5% Sewing Machine Pressure Cooker - 0.1% 1.6% 0.9% 0.8% 0.4% 3.8% % 1.9% 2.9% Others - 0.2% 2.2% 0.9% 0.2% 0.4% 4.0% Total 2.4% 10.4% 18.7% 13.9% 22.1% 11.7% 79.2% Frequency of Loans Based On Current Member Base Frequen cy of Loans (for the period) FY14 FY15 FY16 FY17 FY18 H1FY19 Cumulati ve past 5.5 years #1 1.5% 4.9% 8.6% 9.0% 16.9% 10.8% 29.7% #2 0.1% 0.5% 1.2% 0.5% 1.9% 0.5% 8.3% # % - 0.1% - 2.8% # % # % Total 1.5% 5.4% 9.9% 9.5% 18.9% 11.3% 42.3% Cumulative Cross-sell Penetration % among our existing Non-AP Member base of 8.3 mn for last 5.5 years is 42.3% 92

93 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 93

94 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,

95 ANNEXURES - FINANCIALS 95

96 CASH AND CASH EQUIVALENT BALANCES INR Crs. FY17 FY18 Q2FY18 Q1FY19 Q2FY19 Interest Yielding^ , Non Interest Yielding^^ Total 1,226 1, ,744 1,008 ^fixed deposits, excluding margin money deposits. ^^Includes current account and cash balances Note: Daily Average figures 96

97 ANNEXURES - TECHNOLOGY 97

98 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. 98

99 ANNEXURES HR 99

100 ATTRITION RATE AT SANGAM MANAGER LEVEL IS LARGELY CONTRIBUTED BY NEW JOINEES. EXCLUDING NEW JOINEES, THE AVG. VINTAGE IS 3.3 YEARS Sangam Manager Attrition % Who? When? 29% for H1FY19 (Annualised) Sangam managers who earn lesser average monthly performance incentive i.e. ~Rs. 5,800 vis-à-vis ~Rs. 9,600 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 H1FY19 Member Services %Mix < 6 Months 39% 6 Months - 1 Yr. 23% 1-2 Yrs. 18% 2-3 Yrs. 12% > 3 Yrs. 7% Avg. Vintage (Yrs.) As on Sep-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.18,500 pm) in the local milieu (1 st Govt. Job) High growth career path No lateral recruitments till 4 levels above loan officer. Senior Management 10.0 Middle Management 9.7 Branch Management* 7.6 Sangam Managers 2.3 (3.3^) ^ Avg Vintage of Sangam Managers (Excl. who joined in last one year) i.e. 63% of Sangam Managers is 3.3 Yrs. 100

101 ANNEXURES - COMPLIANCE 101

102 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 - 94% 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) 102

103 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: 9.4% for H1FY19 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. 103

104 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. 52 for details on purpose wise loan portfolio outstanding. 104

105 ANNEXURES INTERNAL AUDIT 105

106 INTERNAL AUDIT PLAYS A CRITICAL ROLE IN ASSESSING PROCESS CONTROLS Strength 255 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 1,708 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, 106

107 THANK YOU For any investor relations queries, please to 107