Creditaccess Grameen Ltd. · NSE:CREDITACC
Creditaccess Grameen — Investor Presentation (May 2023)
87 slides from Creditaccess Grameen's investor presentation, May 18, 2023
Slide 1: Exchange filing cover letter
Ref: CAGL/EQ/2023-24/23 May 18, 2023 To BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers The Exchange Plaza, C-1, Block G Dalal Street Bandra Kurla Complex Mumbai - 400001 Bandra (East), Mumbai - 400051 Scrip code: 541770 Symbol: CREDITACC Dear Sir/Madam, Sub.: Investor
Slide 2: Investor & Analyst Meet 18th May 2023
CreditAccess Grameen Limited Investor & Analyst Meet 18th May 2023 Building A Stronger, Scalable & Sustainable Rural Financing Growth Engine www.creditaccessgrameen.in
Slide 3: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by CreditAccess Grameen
Slide 4: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise 3 - Mr. Balakrishna Kamath CFO Powered By Robust Technology Stack 4 - Mr. Sudesh Pu
Slide 5: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 6: Where Do We Stand Today
Where Do We Stand Today Largest Pure-Play Microfinance Institution In India Gross Loan Portfolio (INR Cr) Active Borrowers (‘000) CAGR 31% CAGR 15% 21,031 4,264 4,055 3,912 3,824 16,599 13,587 11,996 2,470 7,159 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 www.creditaccessgrameen.in 5
Slide 7: Where Do We Stand Today
Where Do We Stand Today Largest Pure-Play Microfinance Institution In India Branch Network Employee Base CAGR 28% CAGR 20% 16,759 15,667 1,786 14,496 14,399 1,635 1,393 1,424 8,064 670 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 www.creditaccessgrameen.in 6
Slide 8: Where Do We Stand Today
Where Do We Stand Today Aiming To Build Market Leadership Across Various Geographies Over Medium To Longer Term Karnataka Maharashtra CA Grameen: INR 6,977 Cr CA Grameen: INR 4,390 Cr MFI Industry (Dec-22): INR 28,399 Cr MFI Industry (Dec-22): INR 24,896 Cr CA Grameen Market Share: 22% CA Grameen Ma
Slide 9: Where Do We Stand Today
Where Do We Stand Today Demonstrating Strong Operating Profitability Net Interest Margin (%) Operating Efficiency (%) PPOP (INR Cr) Pre-Provision Operating Profit 1,506 20.0% 19.4% 18.8% 18.3% 18.9% 5.0% 4.9% 4.8% 4.9% 4.7% 1,078 952 12.7% 12.2% 38.1% 39.0% 35.6% 11.6% 33.9% 36.7% 690 10.7% 10.9% 57
Slide 10: Where Do We Stand Today
Where Do We Stand Today Consistently Delivering Best-In-Class Cross Cycle Return Metrics Cross-Cycle ROA (%) Cross-Cycle ROE (%) Strong Cross Cycle FY17-FY18 FY19 FY21 FY22 Performance Despite Demonetisation, UP Floods, Covid Covid Several Crisis farm loan waiver NBFC crisis Wave 1 Wave 2 5.1% 22.2%
Slide 11: Where Do We Stand Today
Where Do We Stand Today Nurturing Both Customer & Employee Relationships High Customer Retention Low Employee Attrition Vs. MFI Industry 87% 85% 87% 84% 88% CA Grameen (Dec-22) 41% 32% 17% FY19 FY20 FY21 FY22 FY23 Loan Officer Branch Manager Sr. Field Staff Increased Share Of High Vintage Borrowers
Slide 12: Where Do We Stand Today
Where Do We Stand Today Consistently Displaying Strong Asset Quality Trend Only 2.3% Write-offs (Net Of Recoveries) Over The Past 13 Years, Of Which ~80% Is Attributed To Covid Excluding Covid Period, Effective Write-offs Were Only 0.5% Of The Total Disbursement Over The Past 13 Years Performance Ov
Slide 13: Where Do We Stand Today
Where Do We Stand Today Our Asset Quality Trend Was Superior To MFI Industry During Covid Period CA Grameen MFI Industry 11.4% 14.1% 15.0% 8.9% 9.1% 10.0% 9.3% 4.7% 6.9% 4.0% 9.2% 2.1% 2.6% 4.5% 3.7% 1.6% 2.0% 1.2% 5.8% 3.8% 1.1% 1.9% 2.1% 0.7% 1.2% 1.1% 1.6% 0.1% 3.7% 3.3% 3.7% 0.2% 0.7% 2.2% 2.0%
Slide 14: Where Do We Stand Today
Where Do We Stand Today Our Q4 FY23 Performance Indicates Strong Operating Profitability Trend In Future Profitability Metrics Q4 FY23 GLP Growth % 26.7% NIM % 12.2% NII INR 690 Cr PPOP INR 503 Cr PAT INR 297 Cr ROA 5.5% ROE 24.0% www.creditaccessgrameen.in 13
Slide 15: Where Do We Stand Today
Where Do We Stand Today 2 3 Continuous Technology Strong Parentage Of Enhancement To Drive CreditAccess India B.V. Efficiency & Scalability 1 4 Unique Business Model Integrating Risk High Customer & Our Key Differentiators Management In Employee Loyalty Every Operating Process 6 5 Access To Growth E
Slide 16: While MFI Industry Has Matured, There Is Still A Long Runway
While MFI Industry Has Matured Over the Years, There Is Still A Long Runway Microfinance Industry Is No More Micro Indian Microfinance Industry GLP (INR Cr) 35% CAGR over Mar-13 to Dec-22 Covid Covid Wave 2 2018 Floods, Wave 1 Demonetisation, UP NBFC crisis farm loan waiver 3,20,584 2,85,440 2,59,37
Slide 17: While MFI Industry Has Matured, There Is Still A Long Runway
While MFI Industry Has Matured Over the Years, There Is Still A Long Runway Microfinance Industry Is No More Micro Comparing Microfinance Sector With Other Retail Lending Segments INR Lakh Cr GLP as on FY22 15.0 (MFI + SHG) crossed 8.0 7.9 INR 5 Lakh Cr 6.2 as on Dec-22 4.7 4.6 4.4 1.8 0.8 0.3 Affor
Slide 18: Industry Penetration Still At Only 35-38%
While MFI Industry Has Matured Over the Years, There Is Still A Long Runway Industry Penetration Still At Only 35-38% Addressable Borrowers Rural Urban Total States HHs HH Dec-22 Penetration Penetration Penetration (Cr) (Cr) (Cr) % % % Tamil Nadu 2.1 1.5 0.8 49% 59% 53% Bihar 2.1 1.2 0.9 67% 88% 69%
Slide 19: Potential To Grow >2.5x Over Next Five Years
While MFI Industry Has Matured Over the Years, There Is Still A Long Runway Potential To Grow >2.5x Over Next Five Years Industry AUM Active Borrowers Avg. O/S Per Borrower Mar-15 INR 0.4 3.1 Cr INR 13,160 Lakh Cr 10% CAGR 22% CAGR 32% CAGR Industry AUM Active Borrowers Avg. O/S Per Borrower Dec-22
Slide 20: Conducive MFI Regulatory Environment
While MFI Industry Has Matured Over the Years, There Is Still A Long Runway Conducive MFI Regulatory Environment Uniform Regulations: Level Playing Field • Improved customer protection and consistent practices across all lenders Tighter Risk Control: Household Leverage • 50% FOIR ensures sufficient
Slide 21: CA Grameen's Right To Win In Microfinance
CA Grameen’s Right To Win In Microfinance Ability To Deliver Sustained Growth In Customer Base Over Longer Term Deep Rural Presence 1,786 Branches 352 Districts 3,00,000+ Villages 5.1 Branches Per District Along With Strong Borrower Retention: Strong New Customer Acquisition: • Healthy share of high
Slide 22: One Of The Lowest Loan Pricing In Microfinance Industry
CA Grameen’s Right To Win In Microfinance One Of The Lowest Loan Pricing In Microfinance Industry Why Is CA Grameen Able To Offer One Of the Lowest Interest Rates To The Customers Low Cost Of Borrowing 150 – 200 bps below competition 100 Low Operating Cost/GLP Ratio Competitive Lending Rate 50 – 200
Slide 23: Highly Motivated Team, Strong Management Foresight
CA Grameen’s Right To Win In Microfinance Highly Motivated Team, Strong Management Foresight And Execution Strength Management Team with Decades of Experience across Banking and Finance Industries Udaya Kumar Hebbar Ganesh Narayanan Balakrishna Kamath Managing Director & Deputy Chief Executive Offic
Slide 24: Geographical Diversification Will Drive Growth Beyond Core Markets
Geographical Diversification Will Drive Growth Beyond Core Markets Share of Top 3 States to Reduce From 74% in FY23 to 55-60% Over Next 5 Years Branches Borrower GLP Geographical Diversification FY23 - States (‘000) (INR Cr) Karnataka 311 1,121 6,977 85% 89% 76% 74% Maharashtra & Goa 302 853 4,402 6
Slide 25: What Makes Us Think Beyond Microfinance
What Makes Us Think Beyond Microfinance To Be The Preferred Financial Partner The Head Room Of 25% Assets Under Of Indian Households Lacking Non-microfinance As Provided By The Access To Formal Credit, Regulator, Provides Us The Opportunity Providing Convenient And Reliable Our To Diversify Our Lend
Slide 26: Aiming 20-25% CAGR To Cross INR 50,000 Crore GLP
Aiming 20-25% CAGR To Cross INR 50,000 Crore GLP Over Next 4-5 Years • Microfinance: 85-90% • Non-Microfinance: 10-15% (60-65% secured book) 1 Asset Strategy • Growth: 8-10% Branch, 10-15% Customer, 20-25% GLP • Diversify across domestic & foreign sources • Diversify across institutional & retail so
Slide 27: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 28: Understanding Our Customer's Needs & Aspirations
Understanding Our Customer’s Needs & Aspirations Key Customer Survey Insights Household’s Income / Assets Profile Income 54% > INR 20k p.m. 72% Kar, 46% Mah, 74% TN-Kr, 26% Bihar, 19% MP-CG Wage 53% Labour 41% Agri 32% Business 31% Livestock 20% Salaried 85% TV 85% Smartphone 68% Two-Wheeler 41% Ref
Slide 29: Understanding Our Customer's Needs & Aspirations
Understanding Our Customer’s Needs & Aspirations Key Customer Survey Insights Household’s Financial Habits & Preferences 53% Active Banking Users 57% Invest in Income Generating Assets (Livestock, Inventory) 26% Monthly Savings > 4k 48% Debit Card Users 48% Invest in Gold 61% HH Indebtedness < 1 Lak
Slide 30: Understanding Our Customer's Needs & Aspirations
Understanding Our Customer’s Needs & Aspirations Key Customer Survey Insights Household’s Aspirations 82% Grow HH Income 91% Home Improvement 83% Construction of Better House 63% Purchase Vehicle 62% Purchase Land For House Construction 68% Better Child Education Household’s Consumption Patterns 84%
Slide 31: We Are Best Placed To Capitalise On The Rural Financing Opportunity
We Are Best Placed To Capitalise On The Large Untapped Rural Financing Opportunity Customer’s Typical Financing Journey → Supporting Household Financial Needs For Better Lifestyle & Aspirations Financing For Business / Income Generation Informal Unsecured Unsecured Secured Lending (JLG) (Individual)
Slide 32: We Are Best Placed To Capitalise On The Rural Financing Opportunity
We Are Best Placed To Capitalise On The Large Untapped Rural Financing Opportunity 1 Vast distribution & reach in rural markets 12,000+ FOS traversing over 2 3,00,000 villages every week 3 Localised know-how, ability to drive Our Key collections in informal segments Operating Highly efficient cost s
Slide 33: Potential To Tap Large Rural Financing Opportunity
We Are Best Placed To Capitalise On The Large Untapped Rural Financing Opportunity Potential To Tap Large Rural Financing Opportunity ~43 Lakh MFI Customer Base Offers Significant Rural Financing Potential Beyond Microfinance 23% Of Our Existing Customers Have Availed Retail Loans Beyond Microfinanc
Slide 34: Individual Unsecured Loans: Our Operating Model
Individual Unsecured Loans: Our Operating Model Product Roll-out Through Existing MFI Branches, Leveraging Existing MFI Customer Relationships Key Metric FY23 Target • Graduated MFI customers with enhanced funding needs Customer • 2+ years of vintage, having multiple sources of income 192 Number of
Slide 35: Mortgage-Backed Secured Business Loan: Our Operating Model
Mortgage-Backed Secured Business Loan: Our Operating Model Product Roll-out Through Retail Finance Branches Across Our Existing Markets • Graduated MFI customers + open market customers Key Metric FY23 Target Customer • Self-employed individuals 82 Number of (Rollout At branches • ATS: INR 6 – 8 Lak
Slide 36: Affordable Housing Loan: Our Operating Model
Affordable Housing Loan: Our Operating Model Product Roll-out Through Retail Finance Branches Across Our Existing Markets Target • Graduated MFI customers + open market customers Customer • Salaried and Self-employed individuals • ATS: INR 6 – 8 Lakh, LTV: <=75% Product • ROI: 14% - 16% Features • T
Slide 37: New Two-Wheeler Loan: Our Operating Model
New Two-Wheeler Loan: Our Operating Model Product Roll-out Through Existing MFI Branches, Leveraging Existing MFI Customer Relationships Key Metric FY23 Target • Existing MFI customers with vintage > 1 year Customer 55 Number of (Rollout At Existing branches • ATS: INR 80k , ROI: 22.5% MFI Branches)
Slide 38: Gold Loan: Our Operating Model
Gold Loan: Our Operating Model Product Roll-out Through Retail Finance Branches Across Our Existing Markets Key Metric FY23 Target • Existing MFI customers within 50km radius from retail Customer finance branch Number 15 of (Rollout At • ATS: INR 36k, LTV:<=75% branches Retail Finance Branches) Prod
Slide 39: Internal Capabilities Built For New Lending Products
Internal Capabilities Built For New Lending Products Robust Income Assessment • HH income assessment Agile Technology 01 • Localised understanding of • Adapt to evolving market needs repayment capacity • Automation / digitization / 02 • Conservative FOIR filters enhancements • API led 3rd party inte
Slide 40: Internal Capabilities Built For New Lending Products
Internal Capabilities Built For New Lending Products 82 Dedicated Branches 700+ Retail Finance Employees 500+ Field Employees (Loan Officers, Branch Managers, Area/ Regional/ Zonal work-force) 170+ Credit Appraisal Team at Branch/ Area/ Regional/ Zonal/ Centralized Technology Stack Customer Onboardi
Slide 41: Meeting Non-Credit Needs Of Our Customers: Insurance
Meeting Non-Credit Needs Of Our Customers: Insurance Key Metric FY23 Hospicash: Wage/ income loss protection Number of branches ✓ Flagship scheme exclusively designed for our members 346 (roll-out) and their spouses (18-65 age) Members & Spouses Enrolled 1,42,605 ✓ Annual premium at only INR 245 per
Slide 42: Meeting Non-Credit Needs Of Our Customers: Cash Withdrawals
Meeting Non-Credit Needs Of Our Customers: Cash Withdrawals Key Metric FY23 Number of branches 718 Grameen Pay: AEPS Enabled Cash Withdrawals (roll-out) Number of Cash Withdrawals 1,54,731 ✓ Cash withdrawal from bank account & mini statement at Amount of Cash Withdrawn INR 61.7 Cr centre meeting Num
Slide 43: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 44: Liability Strategy To Support Our Asset Growth
Liability Strategy To Support Our Asset Growth Funding Diversification • Diversify across both domestic and global markets • Expand wholesale funding base - banks, NBFCs, DFIs, SWFs, & impact investors • Strengthen access to domestic retail/ HNI investors • Diversify across instruments – term loans,
Slide 45: Liability Strategy – Progress In FY23
Liability Strategy – Progress In FY23 Shift In Liabilities Mix: Lower PSL, Higher Foreign, Higher Retail/HNI, Higher Long Term FY22: INR 14,051 Cr FY23: INR 17,787 Cr 62% 60% 67% 50% 40% 21% 24% 13% 14% 8% 9% 8% 11% 9% 4% 1% Domestic - Domestic - Domestic - Domestic - Foreign - Short Term Medium Ter
Slide 46: Liability Strategy – Progress In FY23
Liability Strategy – Progress In FY23 Diversified Funding With Strong Control on Cost Of Borrowing FY23 Drawdowns: INR 13,432 Cr FY23 Cost Of Borrowing Trend 8.9% 9.1% 9.2% 8.9% 9.6% 10.2% 9.5% 9.4% 8.4% 8.7% Foreign, 16% Domestic, 84% Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Weighted Avg. COB M
Slide 47: Liability Strategy – Progress In FY23
Liability Strategy – Progress In FY23 Significant Progress In Mobilisation Of Successful Completion of Maiden Foreign Funds Public NCD Issuance USD 245 Mn Foreign Funding Mobilized in FY23 INR 500 Cr Raised In Tranche I In Nov-22 • Overwhelming Response with subscription of 3.03x • USD 20 Mn, 5-Year
Slide 48: Liability Strategy – Progress In FY23
Liability Strategy – Progress In FY23 Highest Standalone Credit Rating In Microfinance Industry Increasing Confidence Of Rating Agencies: Rating Upgrade From ICRA And IND-Ra And Outlook Upgrade From CRISIL CA Grameen FY23 FY22 FY21 FY20 Credit Rating – ICRA AA- (Stable) A+ (Stable) A+ (Stable) A+ (S
Slide 49: Key Banking Relationships
Key Banking Relationships Key Key Banks Banks Top 25 Lenders = 80% Of Total Borrowings As On Mar-23 Type Of Lender Name Of Lender Bank Of Baroda Bank Of India Punjab National Bank Domestic PSB State Bank Of India UCO Bank Union Bank Of India Axis Bank Bandhan Bank HDFC Bank ICICI Bank Domestic PVB I
Slide 50: Strong Promoter Support Through Patient Capital
Strong Promoter Support Through Patient Capital Focus On Supporting Growing Continued Financial Support Aspirations Of Rural Households Through via Patient Capital Bespoke Financing & Insurance Solutions • CreditAccess India B.V. (CAI) specialises in Micro • Invested through multiple rounds of capit
Slide 51: ESG Compliance Opens Access To Larger Pool Of Impact Funds
ESG Compliance Opens Access To Larger Pool Of Impact Funds 1 Inherent Business Strengths 2 Strategic CSR Initiatives • 99.9% loans with positive E & S impact • Mobile health check-up vehicles • Responsible Lending at one of the lowest interest rates • Improvements in rural health infrastructure • 99
Slide 52: Social Bond / Loan Framework: For Socially Relevant Funding
Social Bond / Loan Framework: For Socially Relevant Funding Second Party Opinion (SPO) From Sustainalytics Sustainalytics Is Of The Opinion That The Ca Grameen’s Social Bond & Loan Framework Is Credible And Impactful And Aligns With The Social Bond Principles 2021 & The Social Loan Principles 2023 S
Slide 53: Target Funding Mix Over Next 3-5 Years
Target Funding Mix Over Next 3-5 Years Target Funding Mix FY23 FY26 FY28 Banks (PSL Funding) 60% 50-55% 45-50% Foreign Sources (ECB/NCD) 14% 20-25% 25-30% Domestic NBFCs / FIs 13% 5-10% 5-10% Domestic Public NCDs 4% 5-10% 5-10% DA / Securitisation 9% 5-10% 5-10% Total 100% 100% 100% Why Are We A Pre
Slide 54: Target ROA/ ROE Profile Over Next 5 Years
Target ROA/ ROE Profile Over Next 5 Years Profitability Metrics FY24 FY25 - FY28 Sustainable Growth Engine Capable GLP Growth % 24% - 25% 20% - 25% To Grow At 20-25% CAGR NIM % 12% - 12.2% 12% - 12.2% Cost-to-Income Ratio % 35% - 36% 33% - 35% Operating Costs / AUM % 4.8% - 4.9% 4.5% - 4.7% Strong I
Slide 55: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 56: Rising Significance Of Robust Technology Stack
Rising Significance Of Robust Technology Stack Being Highly Responsive To Evolving Business Requirements And Achieving Growth Targets Managing 1,786 Branches Concurrently Accessing The Core Banking System Analyzing Income / End-to-end Servicing Of Household Credit 88 Lakh+ Credit Life Information Fo
Slide 57: Rising Significance Of Robust Technology Stack
Rising Significance Of Robust Technology Stack Significant Rise In Daily Transaction Volumes of Over 20 Lakh 9k – 10k Customer applications & KYCs 40k – 50k Credit Bureau enquiries 10 – 11 Lakh Credit Bureau data submissions 25k – 30k Loan applications 12k – 15k Loan disbursements 10 – 11 Lakh Loan
Slide 58: "High Tech High Touch" Model, "Mobile First" Approach
“High Tech High Touch” Model, “Mobile First” Approach Customised Quick Faster On-Time Scalability Improved Offerings Responsiveness TATs With Limited Downtime User Experience Customer Digital Field Application on-boarding Core Banking System Credit Customer, Group & Loan Mgmt. & Branch SMS Newgen Bu
Slide 59: "High Tech High Touch" Model, "Mobile First" Approach
“High Tech High Touch” Model, “Mobile First” Approach Our Technology Stack Overview Technology Technology Technology Partner Partner Fintech Partners Solution Solution Solution T24 CBS ERP Whatsloan Retail Managed Karza Finance Infrastructure Mobility Cloud Digitap Solution Infrastructure Network &
Slide 60: Key Initiatives To Improve Agility, Scalability & Efficiency
Key Initiatives Taken To Improve Agility, Scalability & Operational Efficiency Partnering Improving Managing Aligning With Increasing Expanding & Enabling Customer & Covid Induced Changing Application & RPA Across Other Employee Business Regulatory Infrastructure Multiple Business Experience & Exige
Slide 61: Data & Technology Transformation Strategy
Data & Technology Transformation Strategy Data Platform Forecasting & Data In-house & Analytics Modelling Visualisation Development • MIS Automation • Enhance decision making • Enhance management • Build in-house abilities level dashboards & development team on • Build data marts for reporting with
Slide 62: Data & Technology Transformation Strategy
Data & Technology Transformation Strategy Agile Robotic Process Scalability & Digital Lending Technology Automation High Availability Pilot • Low-code platform for • Build in-house Centre of • Enhance infrastructure & • Building customer self- enterprise mobility Excellence (COE) for RPA high availa
Slide 63: Taking Cognizance of ESG
Taking Cognizance of ESG Focusing On Energy Efficiency Through Use of Renewables At Our Data Centres Kyndryl Ctrl-S • Solar power generation • On-site solar roof top plants / Windmills • Cold Aisle Containments • Recycling wastes through Govt. approved recyclers • Sensor based taps • Signed contract
Slide 64: Business Scalability
Our Tech Mantra: Being Agile, Consistent, & Scalable Daily Transactions Scaling From Over 20 Lakh To Over 50 Lakh MOBILE FIRST APPROACH H I W Digital Lending G CREDIT BUREAU HITS E E PREDICTIVE CAPABILITIES Q C H A - Cashless Disbursements K U L I L T Machine Learning L E ENTERPRISE SERVICE BUS Y C
Slide 65: Technology Excellence Awards
Technology Excellence Awards Best Technology Of The Year 2022 – Financial Services Impactful Contribution In Financial Inclusion: Elets 12th NBFC 100 Tech Summit Best In Enterprise Mobility & Data Centre: Technology Senate – Indian Express Group www.creditaccessgrameen.in
Slide 66: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 67: Risk Governance Structure
Risk Governance Structure Board of Directors Risk Committee of Audit MD & CEO the Board Committee Chief Risk Officer Chief Business Officer Chief Audit Officer (CRO) (CBO) (CAO) Business Support Field Risk Risk, Policy & Information Technology Internal Audit Risk Analytics (Quality Control) Manageme
Slide 68: Credit Risk Management Process
Credit Risk Management Process Inherent Identification Delinquency Guiding Challenges & Monitoring Management Parameters • Informal / un-organised • Daily/ Weekly/ Monthly • Control slippages from • Extensive customer customer segment delinquency early delinquency buckets engagement, robust CB monit
Slide 69: Conservative Provisioning Approach Based On Risk Segmentation
Conservative Provisioning Approach Based On Risk Segmentation Expected Credit PD Estimation: Loss (ECL) ECL Components • Stage I: 12 months PD ECL staging • Stage II: If residual loan tenure < 2 years ECL = EAD * PD * LGD Group Lending: then 12 months PD, else lifetime PD • EAD (Exposure at Default)
Slide 70: Conservative Provisioning Approach: ECL Back Testing
Conservative Provisioning Approach Based On Risk Segmentation ECL Back Testing: To Check If ECL Provision Is Sufficient To Cover Write-off In The Next 12 Months Write-off Net of ECL Provisions Recovery in Next Write-off as Period (POS) Remarks 12 Months % ECL Provisions (INR Cr) (INR Cr) FY18 63 55
Slide 71: Strong Credit Filters To Control Asset Quality
Strong Credit Filters To Control Asset Quality Microfinance New Customer & New Loan Applications – Approval Rate Analysis H2 FY23 New Microfinance Customer Microfinance Loan Approval / Rejection Analysis – H2 FY23 Approval / Rejection Analysis – H2 FY23 CB Fail 30% Reject – Loan spacing policy 10% -
Slide 72: FY23 Slippage / Recovery Analysis
FY23 Slippage / Recovery Analysis Particulars (INR Cr) Stage I Stage II Stage III Total Gross Carrying Value - March 2022 14,555 186 559 15,299 New Loan Assets Disbursed 18,424 0 0 18,424 Loan Assets derecognised / repaid -13,570 -77 -98 -13,745 Loan Assets Written-off 0 0 -587 -587 Movement between
Slide 73: Operational Risk Management Process
Operational Risk Management Process • Risk & Control Self Assessment ( RCSA) to identify the largest 1 Identification operational risks - frequency, severity and existing control • Monitoring KRIs 2 Monitoring • Root cause analysis basis the risk events database - process lapses, customer protection
Slide 74: Interest Rate & Currency Risk Management Process
Interest Rate & Currency Risk Management Process Interest Rate Risk arises on account of interest Currency Risk arises when the Company rate related fluctuations which could have a borrows in foreign currency from institutions potential impact on earnings if the assets and abroad, while the loan ass
Slide 75: Liquidity Risk Management Process
Liquidity Risk Management Process • Future cash flows in different time buckets 1 Measuring • Sufficient liquidity buffer to fulfil immediate obligations & disbursal on loans committed • Cumulative mismatches across time buckets vs. internal limits 2 Monitoring & • Report breaches to the ALM Committ
Slide 76: Key Initiatives On Integrated Risk Management
Key Initiatives On Integrated Risk Management Implement Rule Engine For 01 Agile Underwriting Using Develop Credit Scoring Data Analytics Models For New Products, 02 Services & Cross-selling Explore Methodologies For Refine Credit Policy, Build 03 Robust Income Estimation Data Granularity, Expand Th
Slide 77: Discussion Summary
Discussion Going From Summary Strength To Strength 1 Discussion Summary - Mr. Udaya Kumar Hebbar MD & CEO Tapping Rural Financing Potential - Mr. Ganesh Narayanan 2 Deputy CEO & CBO Building Solid Liability Franchise - Mr. Balakrishna Kamath 3 CFO Powered By Robust Technology Stack - Mr. Sudesh Puth
Slide 78: Internal Control Philosophy
Internal Control Philosophy ✓ Bad News First! Good news can wait ✓ Build policy, process and controls that hold good during bad times ✓ Loan officer’s behaviour and attitude, he being face of the company, is key to shape customer perception ✓ Continuous reiteration of discipline and transparency at
Slide 79: Internal Control Structure: Three Lines Of Defence
Internal Control Structure: Three Lines Of Defence 3rd line of defence: Internal Audit team 2nd line of defence: Risk team 1st line of defence: Field & Quality Control teams Zonal Manager / State Head Zonal Manager handles 100 – 120 branches Regional / Divisional Manager Regional Manager handles 40-
Slide 80: Quality Control / Business Support: 1st Line Of Defence
Quality Control / Business Support: 1st Line Of Defence Quality Control / Business Support Team • Reports to state heads • Protects the quality side of the business • Oversees continuous, proactive and comprehensive review of processes, documentation and information in the field • Ensures process ad
Slide 81: Field Risk Control: 2nd Line Of Defence
Field Risk Control: 2nd Line Of Defence • 1 Field Risk Officer for every 20 branches • Branch / Center/Customer visits are conducted based on risk triggers 67 • Minimum 50% branch coverage every quarter Field Risk Team Branch Operations Customer Survey Local Intelligence Risk Monitoring • PAR custom
Slide 82: Internal Audit: 3rd Line Of Defence
Internal Audit: 3rd Line Of Defence Risk Based Internal Audit Framework Acts As A Strong Guardrail For Our Business Governance & Audit Structure Audit Charter approved by MD & CEO Audit Committee the Board clearly articulates the positioning and importance of the audit function Chief Audit Officer F
Slide 83: Agile Internal Audit Approach
Agile Internal Audit Approach Branch and Field Operations Head Office Functions Fully automated audit process Risk based audit policy Field intelligence sharing analytical data support Independent and skilled audit resources High frequency of audits Emphasis on kendra meeting visits Full understandi
Slide 84: Branch Grading & Audit Frequency
Branch Grading & Audit Frequency Grading Ensures Continuous Adherence To 154 Check-points Across, 12 Key Audit Parameters Systems, Policies & Procedures Cash Controls Grading Is Valid Only Till The Next Audit Kendra Meetings Grade Risk Weighted Score Audit Frequency % Of Branches Member Onboarding A
Slide 85: Audit Structure Built to Scale
Audit Structure Built to Scale • End-to-end audit process is digitized • Decentralized - one audit person per 5-6 branches ✓ 320+ strong audit team • All branch audits are surprise in nature, over 6-10 man-days ✓ 41% of audit staff have vintage of >5 years • Snap audits or special audits to review ✓
Slide 86: Risk Based Internal Audit Strategy
Risk Based Internal Audit Strategy Transforming Internal Audit - Integrated Technology, Analytics Driven And Collaborative Approach • Implement automated audit system for entire audit life cycle management Technology • Implement integrated analytics and dashboards 1 Driven • Upgrade field monitoring
Slide 87: Thank You
Thank You www.creditaccessgrameen.in 86
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