AAVAS — earnings call
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Prepared remarks
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to Aavas Financiers Limited Q3 & 9M FY21
Thank you very much.
We will now begin the question & answer session.
The first question is from the line of Kunal Shah from ICICI Securities.
Please go ahead.
Aavas Financiers Limited January 22, 2021
Kunal Shah
Congratulation for good set of numbers.
Firstly in terms of this 1+ DPD last time it was 6.2%, though we highlighted that we are settling at that level much earlier than anticipated but how should we read into the movement after going up to 8.2% and finally last time you have said that 15% to 20% of it generally slipped into NPA, so then should we assume like 1.3% to 1.5% Stage 3 as we move forward or collection efficiencies is giving us a lot of comfort that it will settle at the current level?
Sushil Agarwal
Good afternoon Kunal, so 1+ number of September shows because this was after 5 months of moratorium or 6 months of moratorium, so the accounts which has not paid the September installment which is roll forward number which was 6.2% and you know in a normal business customer pays instalment as on time, but certain customer miss one instalment, certain customer will miss second instalment and that is where we have 1+ number, so as we have mentioned collection efficiency in September was 95% which is 98.8% in December and if you remove already NPA become account its 100% collection efficiency.
So, that is giving that now the account which are in whatever buckets are going to improve and secondly like we were having around 5,800 account which has not paid the EMI in September.
Now as of December only 2,000 accounts were there who has not paid the December instalment, so significant improvement and out of this also most of the accounts are in first bucket or second bucket, so whatever account was supposed to be 90+ or we cannot say 90% at this point of time, so Stage 3, so that has already happened and which is 0.8% as per IGAAP and 1% as per Ind-AS and that has already been fully provided in the balance sheet and over and above that still Rs.
190 Mn Covid provision is in the balance sheet, so first of all we always tell that whatever is 1+, 10% to 15% become NPA, so that is already reflecting 8.1% and 0.8% on IGAAP so that is already matching.
Going forward I think as we see the trend it will improve from this number because earlier also we have told that it will go up to 10% and it will come down to normal 5%-6% level in one or two quarters time so that is still holding true for us and second is this once this Supreme Court order will be there I think that will also help this roll down as quickly as possible.
Kunal Shah
So, with this Stage 3 we should be pretty much comfortable, it is very much reflecting this 8.2% of 1+DPD?
Sushil Agarwal
Yes.
Kunal Shah
Okay and just two more questions; on securitization, it was higher at Rs.
2.4 Bn along with much better yield and now it is almost 23% of the AUM and normally we used to keep it at 19-20, so what would be our plan out there or strategy should we be taking up further if there are like may be opportunities available to cross sell at a better yield, so that is first question and secondly just wanted to understand you mention something in terms of reclassification of this salaried which is leading to higher proportion from say the applicant to the earning member.
So, anything to read into this or this is just like the internal classification?
Sushil Agarwal
I will tell you, as we have told during this nine months we have improved filter on what we will fund or what we will not fund, so in the self employed side, we have improved filter and only Aavas Financiers Limited January 22, 2021
Ghanshyam Rawat
positive list was funded, so during this nine months salaried disbursements were higher, so the 3%-3.5% difference around 2%-2.5% difference is because this nine months higher disbursement on salaried class.
Around 1%-1.25% customer as we have told that we have talked to 100% of the customer during the COVID period and we have for the ECL classification also rechecked everything and in some of the cases like very few cases where we have mentioned first applicant which is business and we have mentioned the business but instalment were coming from salaried guy who was the main earning member of the family, so in around 1% or 1.5% cases those has been classified once we have checked during the ECL provisioning, so this is the difference so there is nothing to read in between on this classification; on this assignment side Ghanshyamji will explain.
Kunal, in this nine-months we have done an assignment of Rs.3900 Mn; last year we have done Rs.5640 Mn in the nine-month period.
I think in last earlier calls also we explained this thing that assignment securitization is one of our funding tool, we are consistently maintaining around 15% to 20%, it depends upon the market available and pricing available accordingly we figure out the deal with the bank institutions and we do that fashion.
And secondly, I want to update additional data point on that from our side.
If you see this quarter, we have shown profit on account of assignment transaction of roughly Rs.400 Mn in this quarter versus last quarter Rs.180 Mn, because in this quarter we sold pool which is having EIS spread of more than 6.5% and that is why higher income came but you compare nine month to nine month basis, I would update here also this is NPV of future income we book under Ind-AS accounting but as we move ahead in the next year, it get unwound automatically in the system, so if we take unwinding also in the account so in this nine month, we have net income of Rs.110 Mn versus last year nine months we have Rs.260 Mn, so still in this nine month apple to apple comparison we have a Rs.
150 Mn less income in this year.
Kunal Shah
Okay, thanks.
That is helpful and in proportion it will again be like 15% to 20% odd?
Ghanshyam Rawat
Yes, roughly this.
Kunal Shah
Okay.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Chirag Surekha from DSP Investment Managers.
Chirag Surekha
Actually, my question also was regarding that 8% number that we have seen on 1+ DPD, usually these numbers reflect either distress or change in banking behavior, what aspect of the customer behavior has caused this jump, that is the question that I had?
Sushil Agarwal
Say, from September to December four instalment accrued and most of the customer has paid three and even more than three; if somebody have not paid half of the instalment or one instalment he is not able to pay, so that has caused this but more or less I have told you we should see this in entirety that collection efficiency has increased from 95% to almost 100% and Aavas Financiers Limited January 22, 2021
Chirag Surekha
customer who have not paid instalment in September was 5800 and in December it was around 2,000, so significantly improved.
Sir, you are basically saying this is just a gradual unwind of the Covid disruption which we see?
Sushil Agarwal
Yes.
Chirag Surekha
Okay Sir.
Thanks a lot.
Moderator · Conference Operator
Thank you.
The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
Karthik Chellappa
Thank you very much for the opportunity.
Good afternoon.
I have three questions.
The first one is if I look at the 1+ DPD of 8% and the NPL ratio of 1%, which are the geographies which are above this ratio currently?
Sushil Agarwal
Karthik, all the geographies are below that except Maharashtra.
Karthik Chellappa
What would that ratio be for Maharashtra if you could share it?
Sushil Agarwal
Maharashtra is 12% then rest of the geographies are 8% or less.
Karthik Chellappa
Is it the same for the NPL as well?
Sushil Agarwal
I am just checking the number.
Ya, only Maharashtra.
Karthik Chellappa
Okay, so Maharashtra is also above 1% as far as NPL is concerned.
Okay, the second question is this shift in favor of salaried away from self-employed; which this quarter has probably seen the sharpest change in the mix, you said about 2.5% is because of the disbursements in the salaried segment, what are some of the early warning signals that you saw in the self-employed segment for you to turn a little bit more cautious?
Sushil Agarwal
No, Karthik there is no such kind of thing; as COVID came in and every quarter we recalibrate our funding depending on the segments which we fund so in self-employed as we have told you earlier there was only negative list we will not fund this and everything else we will fund; mostly 50 categories we track and when COVID came in we said that we will fund only this 20 positive category, rest we will see how they behave over a period of one or two quarter and then we will open up, so because of that I think salaried went a little bit higher, so out of the three categories which is most impacted was school and around the structures like stationary guys, school transporters, rented accommodation near the college and school uniforms, second was hospitality and tourisms which was also on the track, so these are the two industry which was mostly impacted, so school was the industry which has now opened up when government has announced that school is opening up.
Hospitality industry got opened up last quarter and there we have seen that most of the things are normalizing now but still we are cautious so 8 to 10 profile in this kind Aavas Financiers Limited January 22, 2021
Karthik Chellappa
of segments we have restricted and that is where the proportion, the disbursement number is same but the salaried and self-employed proportion got change for this quarter and let us see how the things plan up in next one and two quarter and then we will continue doing the same 35/65 or 40/60 depending on that but we still will prefer in our key business segment for funding.
Great excellent.
My last question is what Ghanshyamji just said it to the previous response, so if we look at the securitization volume on a year-on-year basis was only up about 15% odd but the income that we booked was up more than 50%, Ghanshyamji said that is because of the higher mix of higher yielding loans in the securitization volume, what exactly would these loans be would these be the home improvement loans which actually carry higher yield and that has been securitized with the higher portion this quarter?
Ghanshyam Rawat
No, it is not on account of any home improvement; it is simply selection of home loan pool which has a vintage of more than one year as per the assignment norms by the RBI.
So, pool’s yield was 14.1% these pools got sold at 7.56% so spread was 6.54%; if you compare with the last quarter spread was just 5%.
So, 1.6% extra spread has given a higher income on the assignment.
Karthik Chellappa
Okay, excellent.
Thank you, sir.
Thank you very much and wish you and the team all the very best.
I will come back in the queue for more questions if any.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Aditya Jain from Citigroup.
Please go ahead.
Aditya Jain
Sir, just to confirm the collection efficiency number includes the entire customer base including 1+ DPD and NPA’s?
Sushil Agarwal
Yes, so including NPA 98.8% excluding NPA 100%.
Aditya Jain
Got it, okay and the 1+ DPD reduction that we are expecting over the coming quarter; largely you are saying that is going to be driven by more people within that category coming back with two regular payments.
So, is that the right understanding?
Sushil Agarwal
Mostly it was because of one EMI dropped in last quarter and last four months; most of the guys I told you when we did case by case analysis mostly around school infrastructure system and some of the guys were in hospitality; both the segments have now started recovering and we are seeing that positive result also; hopefully I think it will be better.
And third one is again Supreme Court order; so once that will be there, I think things will improve but I think as a team when we see if anything new not coming in; it will be much better because I have told you collection efficiency significantly improved.
Any customer who has not paid that month instalment has reduced by 60% from 5800 to 2000 so that is a significant improvement.
Aditya Jain
Got it Sir.
Sir home loan NPA ratio is higher than the other mortgage loans.
Just out of curiosity what has driven this how would you see that phenomenon?
Aavas Financiers Limited January 22, 2021
Sushil Agarwal
No, but that is the same as last three quarters trend for us.
Normally if you see always because mortgage loans anyway average tickets are 8 lakhs you have housing property in which customer is living.
So, this is the normal trend if you see last one year-two years for us.
So, there is nothing change and nothing to read in between.
Aditya Jain
Got it Sir.
Just the last thing on the disbursement growth, so last quarter we had about 2%-3% basically we are same in this quarter year-over-year terms and last quarter I assume earlier months could have been very little disbursement compared to September.
So, exact growth rate might have been higher.
So, one would have thought that the year-over-year pick up could be more.
So, on quarter-on-quarter I am not looking at because there will be seasonality involved and Q2 has less disbursement.
So, how would you see that pick up in disbursement growth, kind of looks low?
Sushil Agarwal
No, I think this is as per our plan because as we have told 20%-25% AUM growth for year-on- year, so we are already at 24% growth.
So, we are doing in line, but sourcing has significantly improved.
But we have improved filter so I think we are on track as we have decided for this year till Q4 we will be little bit over cautious and then we will be on a normal growth path.
Aditya Jain
Got it Sir.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Piran Engineer from Motilal Oswal Financial Services Limited.
Please go ahead.
Piran Engineer
Hi!
Sir, congratulations on the quarter.
I have two-three questions.
Sir, my first question is you have almost Rs.
20,000 Mn liquidity on the balance sheet.
Now, over the next year you have borrowing repayment of Rs.
10,000 Mn; one year operating expense also Rs.2,500 Mn. So, even if we do not do single collection you have enough liquidity to manage debt repayments and opex for more than a year.
So, why are we keeping so much of liquidity; is it that the bankers ask for it or you raised NCD’s from the development financial institutions abroad are they asking you.
What is the rational for keeping such high levels of liquidity?
Sushil Agarwal
Piran, first thing there is no such ask from anybody; it is management and board decision which we take according to situation.
Normally we keep three to four months of future disbursement as cash in hand traditionally since last five-six years; due to COVID we thought we will increase it to five to six months and as the things will normalize, we will again come back to three to four months of disbursement as cash in hand and it is a conservative policy which we keep on doing and as management we are comfortable with this.
Piran Engineer
So, three-four months means about Rs.8,000 Mn - Rs.9,000 Mn - Rs.10,000 Mn may be; that much of liquidity you will tone down to?
Sushil Agarwal
Yes, disbursement rate will be around Rs.3,000 Mn to Rs.4,000 Mn; accordingly will be there.
Aavas Financiers Limited January 22, 2021
Piran Engineer
Okay, sir my next question; it is bit more strategic but I just wanted to understand now with Gruh becoming a bank now the differential between interest rate that Gruh or Bandhan bank offers versus what you offer is now more than 300 bps and even if I look at the branch network in some key states like in Gujarat there is an overlap of 90%-95% even the branches when I see there are just one-two km apart.
So, what is our competitive advantage now versus such players who can offer a much lower interest rate, and do you think yield pressure as the result of this not in the near term but may be over the next two-three years?
Sushil Agarwal
Yes, Piran as we always tell that when we started our journey also we were having the same apprehensions like when we entered in Gujarat 2013 that Gruh is the most powerful and whether we will be able to do business or not; after seven or eight years both are co-existing they are also doing around Rs.1,000 Mn of business and we are also doing Rs.500-600 Mn of business per month; branches are there but customer segment is different we are 70% self-employed, they are may be 70% salaried, they are having more apartment properties, we are having more independent houses, they have 100% sourcing from DSA/DMA, we have 100% sourcing in house.
But market is such large both can co-exist; yes, we always acknowledge there will be competition, there can be pressure on our balance sheet also which we are seeing last three years.
So, we always say that may be our yield can compress by 50 to 75 bps in next two to three years.
But we have sufficient depth available in the balance sheet where we can reduce our opex and we can sustain 2.5% ROA for medium to long term in our book.
Piran Engineer
Fair enough.
Sir, as my last question is a bit more strategic, but I just wanted to get your thoughts, so one of your competitors which is getting listed very soon.
They cater to the same sort of customers segment in affordable housing, but their business model is very different in terms of centralized underwriting and as a result of that they have a TAT of two days versus we have a TAT of 8-10 days.
So, is that something in the distant future, I wanted to understand from you what are the pros and cons of such a model and could we look to transform to such a model because that business will require only 15-20-30 credit managers, we have more than 600 credit managers.
So, it will be a more lean operating business.
So, I just wanted your thoughts on what the pros and cons will be.
That is my last question.
Thank you.
Sushil Agarwal
Piran if you can name the competitor?
Piran Engineer
Home First.
Sushil Agarwal
Okay, so totally different business model they have 86% salaried business, they have more concentration in metro and we say we do not want to work in metro because there are already top level guys, AAA guys exist and there will be lots of pricing pressure, lots of competition, lots of BT and over a period of last ten year we have created our niche in tier-3 to tier-5 where we can price the risk and now we have appraised almost 300,000 customers in that segment so we are comfortable with that kind of appraisal system and everybody’s business model have different kind of levers so I will not comment on others but in our business model we have sufficient spread.
We have very good asset quality which we can maintain, and we were able to generate Aavas Financiers Limited January 22, 2021
Piran Engineer
2.5%+ ROA over a period of last ten years.
So, I think we will continue with our kind of business segment.
Yes, last five years we have also infused lots of technology which is helping us out in operations and bringing down opex.
If you will see also over a period of last three years, every year we are able to reduce our opex by 30 to 40 bps and I think that journey will continue for us.
Okay, fair enough Sir.
Thank you so much and all the best.
Moderator · Conference Operator
Thank you.
The next question is from the line of Shreepal Doshi from Equirus Securities.
Please go ahead.
Shreepal Doshi
Hello Sir!
Good afternoon.
Sir, my question is with respect to the restructuring related request that we would have received, what is that if you can throw some color on that aspect?
Sushil Agarwal
First, like our 1+ & NPA numbers this is without any ECLGS disbursement without any restructuring; so it is clean and simple numbers.
In the process we have received around 100 to 150 restructuring requests, we have rejected at our end and communicated to the customers.
Some of the customers which was not happy with our decision they have moved out and did the BT from ourselves and rest of the customers either we have convinced them because it was not that their business is fully impacted and they need restructuring and since 97% of our book is less than Rs.
2.5 Mn and those were very smaller customers and with opening of schools and tourism industry most of the requests from that side so customer got convinced and we have not restructured any account in our book.
Shreepal Doshi
Okay, and incrementally also we do not see that happening?
Sushil Agarwal
Yes, now we cannot do because it was a process you need to do till 31st December and then implementation can be in last three months.
So, that is where I am saying that 1+ number, 90+ numbers these are plain simple numbers without any restructuring, without any ECLGS, without any supreme court number is shown in NPA but we have still provisioned and published all the numbers taking without any reference and beyond that further Rs.190 Mn as COVID provision is there in the balance sheet and any way we are making sufficient profits Rs.2,000 Mn for us.
So, every quarter we are making sufficient profit, so balance sheet is in a very strong position.
Shreepal Doshi
Thank you Sir, and the second question was with respect to the re-classification of the customer profile.
I understand that you say that there is not much to read, so is there a thought process to decrease the self-employed segment at the management level in the near term say from currently 70% to 65% or 60%?
Sushil Agarwal
No, that is not the scenario, it is evolution like when we started our journey, we were BBB- now we are AA- our borrowing cost is around 7.7% for 11 years and incremental borrowing the treasury team has done excellent job with 7% for 12 years.
So, with pricing coming in that also creates an opportunity for us to have a better customer segment while maintaining the spread but as a company we have three priorities; first asset quality, second maintaining the spread and third is growth.
So, maintaining all these three DNA of our company we will choose the segment for Aavas Financiers Limited January 22, 2021 funding; on account of classification it is only 1% or 1.5% impact.
So, that is not much and that is a very detailed exercise with everybody involved auditors etc. because ECL classification and we have most detailed kind of framework which we have created, so that is how it is.
Shreepal Doshi
Sure Sir.
Thank you, so much and good luck, for the next quarter.
Moderator · Conference Operator
Thank you.
The next question is from the line of Antariksha Banerjee from ICICI Prudential Asset Management.
Please go ahead.
Antariksha Banerjee
Hello Sir!
Sir, first question is on this DPD movement if you can just clarify it if I have understood it clearly; the 6.2 number that you had in September that included everything that was more than one day overdue including NPA, right?
Sushil Agarwal
Yes.
Antariksha Banerjee
Yes, if I compare between September and December most of that 6% excluding NPA would have been in the 1 to 30 bucket right, because they would have missed one instalment?
Sushil Agarwal
So, one plus when we say it includes 1 to 30 DPD, 30 to 60 DPD, 60 to 90 DPD and 90 plus accounts.
Antariksha Banerjee
So, can you give that 30 to 90 buckets for September and December I think that will clarify?
Sushil Agarwal
So, 30 to 90 right now out of this 8.2% is 3.8%.
Antariksha Banerjee
Okay, and September was how much?
Sushil Agarwal
September it will be negligible because last six months instalment is not there so only September instalment was, so like say your March to August was moratorium so no instalments accrued.
So, September month first instalment accrued, so any account cannot be moved to 31 to 60.
Antariksha Banerjee
Okay, so that amount will be very small negligible, that’s what I just wanted to confirm.
Sushil Agarwal
Yes, because no instalment accrued that point of time.
Antariksha Banerjee
Okay, and zero to 30 as per my understanding was about 5800 in terms of number of accounts in September and 0 to 30 is 2000 accounts in December broadly that is right?
Sushil Agarwal
No.
Antariksha Banerjee
No, sorry I mean 1 to 30?
Sushil Agarwal
Sorry?
Aavas Financiers Limited January 22, 2021
Antariksha Banerjee
The people who have not paid in September and people who have not paid in December that you said 5800 versus 2000 accounts, right?
Sushil Agarwal
Yes, correct.
Antariksha Banerjee
So, that is one bucket due that is all I wanted to confirm?
Sushil Agarwal
No, that can in any bucket.
It can be 1 to 30 also, 31 to 60 also, 61 to 90 also.
Antariksha Banerjee
Got it.
Okay, the second question is on the yield sir.
So, you have been seeing a sharp decline in cost of funds for quite a few quarters now.
When do you intend to pass it on the customers or is that on the table at all, spread is above your average for quite a few quarters?
Sushil Agarwal
Antariksha as per last quarter board meeting decision, we have already passed it on 10 bps from 1st of January and we will wait for another board meeting decision so, if things will be normalized by 31st March again some part of it we will release in may be April to June quarter.
Antariksha Banerjee
Okay, got it.
Thank you.
That is all.
Moderator · Conference Operator
Thank you.
The next question is from the line of Abhijit Tibrewal from Reliance Securities.
Please go ahead.
Abhijit Tibrewal
Hi!
Sushil Ji, Hi Ghanshyam Ji thank you for taking my question.
I just wanted to go back to the question which Antariksha was asking, while you suggested that about 5800 people have not paid their EMI’s in September and about 2000 accounts have not paid their EMI in the month of December.
What would this number be if you were to look at people who have not paid a single EMI till September and how many people have not paid a single EMI till December?
Sushil Agarwal
That has already become NPA.
So, 0.47% was NPA earlier, now 1% NPA and on IGAAP number it was 0.3% and 0.8% so, 0.5% of the total pool which has not paid a single instalment has become NPA.
Abhijit Tibrewal
Fair point which is to suggest that your proforma Stage 3 numbers includes everyone who has not paid a single EMI till December?
Sushil Agarwal
Yes, for us there is no difference in proforma and non-proforma.
We are straight we are saying that 1% people is NPA without restructuring, without ECLGS, without supreme court freezing decisions.
If supreme court freezing decision it is around 0.4% and we have also provided 100% as per our ECL norms for the entire 1%.
Abhijit Tibrewal
Correct one, thanks for that.
Now, going back to that question around where you are 1+ DPD and collection efficiency, so with 1+ DPD of about 8.2% and as you suggested collection efficiency of about 98.8% in December and if you exclude the GNPA that number would go up to 100%.
So, Sushil Ji, if we were to assume here that these people who have paid their EMI’s in the Aavas Financiers Limited January 22, 2021 month of December, if these customers continue to pay their EMI’s in the month of January February and March would it be fair to assume that your 1+ DPD numbers should come down drastically from 8% levels, unless otherwise there are a lot of customers who are still paying part instalments?
Sushil Agarwal
No, anyway we do not count part instalment to tame the DPD bucket first thing.
Second thing what we are saying that out of 120,000 live customers only 2,000 has not paid the instalment; rest must have paid more than two instalments that is where it is 100% collection efficiency.
Going by that trend if 118,000 continue to pay all the three instalments, because if they have paid in December, but collection does not happen that way there will be some roll forward and there will be some roll backward.
So, we can assume that roll forward will be less and roll backward will be high.
So, we should be in a much better situation in March as for 1+ DPD; NPA or Stage 3 numbers can significantly change only when the Supreme Court decision will be there.
Abhijit Tibrewal
Fair point.
So, which is to suggest that in your anticipation let us say if collection efficiency were to hold at these levels between 98.5% or 99 % then can we go back to our guided levels of less than 5% 1+ DPD?
Sushil Agarwal
We will attempt that; we cannot comment on that.
Abhijit Tibrewal
Okay, and Sir just one last question while a lot has been discussed about salaried and self employed mix this 4.2% spike in your salaried mix during the quarter.
So, while you were suggesting that over the last nine months you have been doing lot of these salaried disbursement.
This kind of a mix we have seen in this quarter itself till the last quarter you mix was holding steady at the same 35-65 kind of salaried self-employed in your mix.
What was there to suggest that and again you have been very kind you have given that break up that about 2%-2.5% differential is because of higher disbursements.
So, this differential because of higher disbursement will become only in Q3 itself because till last quarter your mix was holding steady?
Sushil Agarwal
Abhijit, every quarter we give AUM number 65-35 is AUM number, disbursement number we have not given, disbursement number anyway I think is more than that 45-55.
Abhijit Tibrewal
Okay, so that your mix has changed only in this quarter is it you are trying to suggest while we are doing higher disbursements in salaried?
Sushil Agarwal
Anyway, first three months there were no disbursements so, last six months that is there and as the economy will open, we will again be more on the self-employed side but during this month since we were very cautious about certain sectors in self-employed category.
So, this last six- month disbursement has this scenario.
Abhijit Tibrewal
Okay, and Sir just on last question if I may just squeeze in, so this re-classification that we have done studying the accounts which is the primary earning member of the family rather than the main applicant.
Is that the standard industry practice that it is there today or?
Aavas Financiers Limited January 22, 2021
Sushil Agarwal
Yes, it was with us also, its only 1% cases which has changed as I told you.
So, what happens in a case where you have funded Rs 1 Mn and there is an applicant which has Rs.15,000 or Rs.20,000 income and there is a salaried person who is co-applicant who has Rs.25,000 income or may be Rs.30,000 income and you have taken repayment from co-applicant from his salary account.
So, normal practice was from which account we have taken the repayment we will classify that account into that category.
For this 1% of the cases instead of that, the primary applicant which was like a business guy got tagged as a business category.
So, only this 1%-1.5% cases during when we were doing the ECL framework during the COVID and we were talking to 100% of the customers we find this inconsistency of 1%-1.5% cases where we have tagged them as a self employed rather than salaried person and instalment was coming from the salary account; because of the auditor’s observation and from our own re-checking it we have done that classification.
Abhijit Tibrewal
Okay.
Thank you very much Sushil Ji.
Thank you for patiently answering all my questions.
Wish you and the team the very best.
Moderator · Conference Operator
Thank you.
Due to time constraint that was the last question.
I now hand the conference over to Mr. Sushil Agarwal for closing comments.
Sushil Agarwal
Thank you all for attending the call and hope we have answered all your questions.
To summarize, at Aavas we continue to focus on improving customer service & being transparent with our customers.
As mentioned in the last Earnings Call, we have reduced Aavas Financiers Limited’s prime lending rate by 10 basis points with effect from 1st January 2021.
Thank you so much for your time.
For any further information we request you to get in touch with Himanshu in our Investor Relations Team or SGA our IR advisor and they would be happy to help you.
Thank you all for your participation in the call, showing interest and enthusiasm about asking questions, we will continue doing our best efforts to answer all your questions in future also.
Moderator · Conference Operator
Thank you.
On behalf of Aavas Financiers Limited, that concludes this conference.
Thank you for joining us and you may now disconnect your lines.