Will move out of villages where there is no recovery, says Bharat Financial

He also mentioned that cost of borrowing is a direct benefit of merger with IndusInd Bank.

Below is the verbatim transcript of the interview:

Q: How much of this amount (Rs 470 crore of NPA) you hope to recover?

A: We have seen signs of improvement in Uttar Pradesh (UP) and states like Karnataka. It is a bit slow in Maharashtra. We have guided that our NPAs would be about Rs 432 crore. We will always be below that guidance while Rs 471 is a point in time number. We are confident that we will recover some of it. We are also confident that we will not cross Rs 432 crore number but this is a timing impact but in the next two-three quarters we will see signs of Rs 471 coming down to less  than Rs 432 first and a bit more also will come back to us.

Q: You spoke about a few states. So does that mean that your market now shrinks and therefore a few districts will be blacklisted or where you are seeing intentional defaults, you will pull off from that market?

A: Our approach has been that where a borrower has repaid his/her loan irrespective of where he/she is, let's say even in districts where we have higher number of defaults, where there is set of borrowers who have repaid on time notwithstanding demonetisation or the elections - that borrower for us is a very good borrower and therefore we will continue to lend to him/her. So we will not move out of any district or state but we will move out of those villages where there is no recovery happening. On the other hand in a village, let's say about 30-20 borrowers are repaying us; we will certainly continue to be there notwithstanding the fact that ten borrowers are not paying. We will not lend to those ten borrowers who are not paying but we will not walk out of that village. On the other hand if the entire village is not paying; we will not get into that village again.

Q: With the IndusInd merger cost of borrowings will reduce for you. How do you intent to pass on that customers and also how will you improve your product offering to customers once you have a banking product also available with you?

A: I think cost of borrowings is a straight benefit that we get but there are more benefits at an operating level that one gets. If we are able to open savings account for all the borrowers, which is a plan, if we are able to get these borrowers to park their small savings in terms of recurring deposits which we have done as a pilot and demonetisation has proved that people who opted for a recurring deposit product, their repayments were far superior in the same village, same centre as compared to the non-recurring deposit customer.