I just wanted to talk about the SME sector as your assets under management have been hovering between Rs 4,500-5,000 crore and non-performing assets within that segment have shot up. What strategy are you going to implement for the SME segment going forward?
Rajesh Sharma: If we talk about the SME segment, some of the restructuring books have been opened, which has triggered some NPAs. But we are hopeful that by the end of the year, we will have a Lowest NPA from what it is today. Also, the SME segment will continue to grow by around 15% this year again. And if we talk about our retail product, other products, which are micro Lap, gold loans and affordable housing, will also continue to grow. So, overall, at the balance sheet level, our NPA will be well below 1.5% at the net NPA level.
But what about him? gold loan business Because it has been growing quite well. In fact, if I’m not mistaken, it’s closer to 30% right now. What is your expectation as to where it could grow further, because there was a bit of disruption in the industry and I guess you could have increased your market share as well?
Rajesh Sharma: The gold loan business is growing because we have opened a lot of branches. We have around 750 branches now. We will open another 50 to 60 branches this year. And with that, I think the gold loan portfolio will continue to grow by around 30% year-on-year. In the festive season, there will be a little dip because people tend to take out their jewellery and then buy it back once the festive season is over. But overall, we are aiming to achieve 30% growth in gold loans, and we should be able to achieve that.
Your NPAs in the SME segment are increasing from 3.5% that we had seen last year, and have now risen to around 4.9%. What has led to this sharp rise in NPAs? Where do you expect the SME-specific NPAs to go?
Rajesh Sharma: We have done loan restructuring during the COVID period because as per the Reserve Bank of India circular, some of the customers opted for the restructuring option available to them. When the restructuring book was opened as a normal book, once the restructuring was over, some of their accounts showed a slippage towards NPA.
Since all SME loans are backed by an underlying property, we are confident that we will be able to resolve the recovery or reversion to their regular account. Therefore, by the end of the year, we should have a lower NPA than we had at the beginning of April.
Can you give us a better idea of how the affordable housing segment is likely to grow as well, as it forms a small part of the portfolio at the moment and correct me if I am wrong, but with the advent of the PMAY scheme, plus the focus on affordable housing, do you expect that contribution to increase as well?
Rajesh Sharma: In the case of affordable housing, there is good demand, also, the state and central governments are implementing various incentive schemes and there is also a push from the developers, who are constructing a lot of smaller sized houses and are giving out loans. We expect this portfolio to grow by around 40% this year again and we have added a few more branches here. So, with all that and we have also invested a lot of money in the technology to speed up the turnaround time, with all these initiatives, we are confident of achieving 40% growth in the affordable housing segment not only this year but also in the coming years.Also, I wanted to get a better idea about the whole rate cut cycle and how it will affect you because my colleague kindly pointed out that around 85% of your loans are from banks, what percentage is at floating rate is what we wanted to understand and how much will the cost of funds and NIMs actually be affected once that rate cut cycle starts?
Rajesh Sharma: So, we believe that the Fed indicated last time that it would consider rate cut and I think the meeting will probably be later tonight so we will know whether the Fed is going to cut rates or not. And if the RBI follows suit, then once the Fed does so, the interest rate will come down and I think that will be passed on to the client. If we talk about the bifurcation between our floating and fixed portfolio, the floating is about 45% of the floating portfolio, where the rate cut will be passed on and we believe that the money that we borrow from banks, there too our interest rate will come down. So, ultimately, the client will benefit.
On a consolidated level, you’ve talked about a number of parts, but on a consolidated level, what will the AUM be in a couple of years? What kind of NIM profile should we expect from the company?
Rajesh Sharma: Our target is 25% to 30% growth per annum for the next three to four years. And at the current level, our portfolio should be in the range of about Rs 25,000 crore to Rs 30,000 crore in two years from now. We are adding more products and more branches to support that. If you talk about NIM, because the gold loan portfolio is growing and we have also launched the micro lap, both the products are high-yield products. So, we will see that our NIM should improve and at some point NIM should be in the range of about 8.5% to 9%.
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