Highlights:

The rural economy was the severely affected by the second wave of the covid-19 and only 19 days were available for the business during the quarter ended June 2021. However, the situation has changed and sentiments are moving towards positivity.

The dealerships and mandis were shut. The harvest was good but the farmers could not sell it as mandis were shut in May 2021.

Many customers had the money but could not come to pay or the company could not go to collect. The customer also preferred to save the money for medical emergencies.

The normalcy is returning both at branch level as well as consumer level.

OEMs are very positive on the back of good monsoons and government supporting infrastructure segment.

The company expects a turnaround after the onset of festival season

The company expects the disbursements to pick up from Q3 onwards.

The company aims to reduce net NPA ratio to 4% by the end of March 2022. The company also expects GNPA to decline and there would not be further requirement of provisioning.

Within the company, around 3,000 employees were infected by the covid-19 and 60-70 employees lost their lives.

The company has not gone for major repossession of assets in the quarter ended June 2021.

The customers did not wait for structuring loans while they were wishing for the Moratorium but finally the customer accepted restructuring and they would take six months to bounce back

Many customers had money but they were not able to come to the branch or the company was also not able to go to the customers to collect

The margins of the company have been impacted due to interest income reversals of Rs 200 crore and high liquidity on the books. The company do not expects any further cost of funds ahead.

The write-offs stood at Rs 300 crore in Q1FY2022.

The collection efficiency declined from 72% in April 2021 from 67% in May 2021, while it recovered to 90% in June 2021. The collection efficiency is expected to improve further in July 2021.

As per the company, many customers did not want to commit themselves to long term restructurings with the hopes of faster returning to normalcy due to confidence to bounce back. The customer wished for moratorium instead of restructuring.

The segment such as taxi aggregators, tourist cars and bus service providers has opted for restructuring.

however, the company expects substantial reversal of NPA contracts over the next 9 months. The company believes that the NPAs built during Q1FY2022 are reversible NPAs and do not require further provisioning.

The company also expects a significant part of the overlay provisions to be reversed.

The company has engaged a consulting firm to go deep dive into the reasons behind higher NPAs.

the company expects to reduce stage 3 stages from current level of 15-16% to 8-9% by end March 2021. The company also expects to reduce net stage 3 assets from 8% to 4% by end March 2022.