P.N. Vasudevan, Managing Director and Chief Executive Officer, Equitas Small Finance Bank (SFB), talks about the September quarter results, loan book and moratorium, segment-wise demand, during a candid chat with Mansee Dave, Zee Business. Edited Excerpts:

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Q: Very good performance has been seen in the September quarter and there has been a growth on all the factors. Can you throw some light on the recovery and what is an outlook for the future?
A: Equitas Small Finance Bank offers lending loans and 90% of the loans are given to the informal economic customers. Informal means those engaged in small businesses and we offer loans to them. If you look at these customers then 95% of our borrowers are borrowing for the first time form a bank. Unmet demand is very high in this segment and the financial traditional banks have not been able to lend to that segment. So that is the profile with which we deal with. Our collection was also very strong in September and is continuing to be very strong in October. This is something that has strengthened our confidence to do business and we should be looking at more business and disbursement in the third and fourth quarter. In the second quarter, our disbursement was 80% as compared to the last year’s second quarter. It should improve in the third quarter and reach the normalcy level by the fourth quarter. Collections are also good and our NPA stands at 2.39% but if you account for Supreme Court’s order than our actual NPA will be 2.76%. SO, we are very comfortable and our NPA remains between 2.7% and 2.8%, if you have a look on the last three years then it always remains between the same range and we are very comfortable on our NPAs and our collection is very-very strong. So, we look forward to getting back to normalcy by the fourth quarter.

Q: How much of your loan book is under moratorium at present?
A: There is no moratorium at present. There was no moratorium in September and October and it ended in August and till August, 35% of our clients were under moratorium. But in September our collection efficiency was 93% and in October it was 94.5%. If you look at both September and October then 6% of our borrowers have not paid both September and October. And, some people will now pay for November and December. And out of that 6%, 5% is secured loans and only 1% is unsecured. So, most of the people have started paying now after the moratorium has come to an end.

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Q: Name the segment where maximum demand was seen?
A: If we have a look on our asset classification than microfinance is 23%, small business loans, i.e. loans for small businesses and it is a secured loan and is offered by securing the person house property, it is 42%, we also finance commercial vehicles and maximum for used commercial vehicle and that is 25% and 5% is SME and 5% is miscellaneous. This is our spread and if we have a look at the demand then the demand is very high in the small business loan. The pent-up demand and the unmet demand is something about Rs 1 lakh crore as per various reports of the government. The unmet demand itself is expected in the range of Rs 1 lakh crore and the banks' loans are moving less in this segment. So, the demand we see from small businesses is very high. In the commercial vehicle, we see demand from light and small commercial vehicles and we see a good amount of traction and demand. The demand is not very high for microfinance, it is a reasonable demand. But, we see a very strong demand coming in the small business and light and small commercial vehicle segment.