#1IndusInd Bank - Analyst Day 27th July 2022#2IndusInd Bank - Analyst Day Presentation-3 Microfinance/BFIL IndusInd Bank#3Introducing Bharat Financial Inclusion Founded in 1997, over 24 years experience in serving the underserved Started as an NGO, we evolved into an NBFC and later became a part of IndusInd Bank in 2019 We provide micro-loans and banking services to bottom-of-the-pyramid segment to help them improve their income levels Our Ethos • Responsible lending - Customers Investors Strong risk culture High social impact Our Strengths Deep rural reach Clearly articulated processes Agile technology & digital infra Humane employee practices We manage Rs. 318 Bn Assets Rs. 15 Bn Liability balances IndusInd Bank BHARAT ✔ SUPER SHOP BHARAT MONEY Microfinance Joint Liability Group (JLG) based lending model Digitally powered by Indusind Bank Loans to merchants Liability servicing point TM IndusInd Bank#4We serve customers with high aspiration though low on literacy and moderate on tech quotient • • Profile of Our Customers Rural women entrepreneurs and nano-retailers high on aspiration though low on literacy levels Largely bottom-of-the-pyramid segment. We are the only financier for 56% of our customers • • Where are our customers from? Predominantly rural base ~80% Spread across 23 states, 517 districts and 132000 villages Involved in Agri and allied activities, animal husbandry, handloom & handicrafts, rural trade etc., 2025 2020 2019 2018 2017 2016 *Source: Statista; Leveraging the J-A-M Trinity Smartphone penetration in India* (%) 78.4% 54.2% 46.4% 35.4% 29.5% 23.0% IndusInd Bank#5Highly phygital customer journey Customer base that requires assisted banking services Pm Physical Sourcing Physical sourcing of customers given the understanding of banking services is low Phygital On-Boarding Assisted on-boarding by feet-on-street given the low levels of literacy and willingness to adapt to technology Phygital Servicing Customers are serviced Phygitally. Approximately 2m transactions are carried out seamlessly each day IndusInd Bank#6Highly phygital customer journey A O E BFIL's unique capabilities to serve this customer base AGILITY - Agile and flexible operations that can serve the last mile customer at their door-step COST EFFICIENT OPERATIONS - One of the most cost-efficient operator in the industry EXECUTION CAPABILITY - Can quickly convert plans into actual business opportunities IndusInd Bank#7Microfinance BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#8High customer connect Weekly Install. LUC Weekly center/ Meetings/ FUL/ Banking Product Village Survey Projection Meeting BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited Disbursement Loan application Peer Group Lending • Exclusive women borrowers Group selects members and underwrites loan Progressive loans - Ticket Size increases with customer vintage CGT Asset & Liability Solutions • Core lending is for income generation activities Loan Utilization Checks done to ensure discipline Liability products (SB, RD,FD) being offered to promote savings GRT DO Repayment & Delivery Framework Small, weekly repayments mimic cash flows - and make it easy to "carry" if needed Product solution offered at the customers door-step 1st Center Meeting Process Orientation Intensive customer financial literacy training conducted periodically Rigorous employee training and process orientation IndusInd Bank#9High customer connect Center Meeting (Distribution Channel) High Engagement 40 mins Avg. Center meeting; Attendance compulsory Center meeting days Monday to Friday Doorstep Delivery Financial services - Microloans, Consumer Durable loans & deposits IndusInd Bank#10Sustained growth amidst macro shocks 84% IBFIL Marketshare (%) BFIL Growth (%) 10% 9% 9% 7% 47% 46% 45% FY15 FY16 Demonetization Nov Dec 2016 9% -Industry Growth (%) 10% 38% 38% 32% 29% 27% 26% 19% FY17 FY18 Kerala floods 2018 Odisha Cyclone 2018-2019 9% 11% 29% 19% 11% 10% 9% FY19 FY20 FY21 Covid-19 waves 1,2 & 3 FY22 IndusInd Bank#11Sustained growth amidst macro shocks 77 Loan Book (Bn) 25% CAGR 298 || FY16 FY17 FY18 FY19 FY20 FY21 FY22 4.6 Borrowers (in Mn) 8% CAGR 7.3 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Branches (#) 13% CAGR 1,146 2,422 Loan Officers (#) 17,094 18% CAGR mi|||mi||| 6,243 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17 FY18 FY19 FY20 FY21 FY22 IndusInd Bank#12Bharat Super Shop BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#13Giving wings to nano retailers - ~550,000 retailers across 300 towns We lend to 38 identified trades • Bakery, 2% • Opportunity Nano retailers who have no access to institutional credit • Others • Meat Shop, 3% Dairy Parlour, 2% Footwear Store, 2% Electrical Shop, 2% Identified trades 38 trades where risk is low; in Tier II & III cities Growth Services Offered Plans to grow the book ~2.5x in FY23 Doorstep Banking Zero Bal. Current Account | Recurring Deposit Product Features Unsecured Business Loans | Tenure upto 104 Wks. Payment solutions QRUPI Handle *Other activities includes Electronic shop, Photo Studio, Furniture Store & Sweet Shop etc. Fancy Store, 3% Medical shop, 3% Hardware Shop, 3% Retailers mix Others, 34% * General store, 23% Garments store, 10% HOTEL До % ** Accessories (Two & Four wheeler), 4% Hair Saloon/Beauty Parlour, 5% по Hotel, 6% Mobile phone & Accessories, 6% _Tailoring Shop, 5% IndusInd Bank#14Giving wings to nano retailers - ~550,000 retailers across 300 towns दिव्याशी मेडिकल स्टोर Shell, beha दवाईय We lend to micro-retailers in Tier II & Tier III cities (300+) INI FOR HAKE WORKS Medical Store Tailoring Shop Kirana Store Fancy Store Garment Retailer Footwear Retailer IndusInd Bank#15Scaling up FY2020 - FY2022 Scale FY2022 Locations 306 | Branches 382 Retailers - ~5.5 lakh | Active Borrowers 3.2 lakh No. of loans disbursed 6.2 lakh | Amount disbursed Rs. 3,252 cr. Advances Rs. 1,943 cr | Liability Bal. Rs. 487 cr Stable Credit costs 99% paying customers • 0.6% GNPA Managed Covid events with <1.5% credit cost The book is maturing Completed 4 loan cycles Customer Acquisition (A/Cs opened) Amount Disbursed (Rs. Cr) No. of loans disbursed Pilot Scale-up 1,54,235 2.5x 3,81,654 6X 2,744 5.5 X 5,09,338 Advances ENR (Rs. Cr) 5x 1,943 93,333 376 477 10,134 11,821 31 11 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 IndusInd Bank#16Bharat Money Store BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#17Solving the last mile question (Rural IndusInd Customers & walk-in clients) Travels TM BHARAT MONEY STORE BANK 5 - 8 Kms & invests upto 2 hours for cash deposit and withdrawal at Bank / ATM 2 - 5 kms, spending upto 1 hour for electricity bill payment 1 - 5 kms to Municipality office for water bill payment spending up to 30 minutes 1 - 5 km and spending up to 30 minutes to visit electronics store for DTH / mobile recharge <0.5 km, investing up to 15 minutes to visit Kirana store for ration items Online shopping, only 5% customer reported access to this Deposit & Withdrawal Point E Bill Payment & Recharges Allied & OTC Financial Services 9: Assisted E-Commerce IndusInd Bank#18BMS 1.0 since 2017 FY18 FY19 FY20 FY21 FY22 Enrolled Merchants: 244 Enrolled BMS Merchants: 1,376 Active BMS: 156 Active BMS: 1,070 Transaction value (Cr): 56.8 Transaction value (Cr): 1.6 Services offered • AEPS Services offered Enrolled BMS Merchants: 23,286 Active BMS: 13,953 Transaction value (Cr): 1,531 Services offered Enrolled BMS Merchants: 51,379 Active BMS: 23,600 Transaction value (Cr): 2,245 Services offered Enrolled BMS Merchants: 86,027 Active BMS: 46,976 Transaction value (Cr): 4,060 Services offered AEPS • AEPS • AEPS . AEPS • Utility Bill payments • Utilities BBPS • • mPoS Utilities BBPS mPoS . Utilities BBPS mPoS • Tata Power Open market Savings, FD/RD Ac Savings A/c: 2,35,532 FDs: 10,841 RDs: 18830 IndusInd Bank#19BMS 2.0 - Strong rural branding focus Flanges & Standee at the main entrance Fra Facenfars Indusind Bank Available Services Money Transfer Cash Withdrawal Cash Deposit Bill Payments Mobile Recharge Loans Fixed Deposits Savings Account Recurring Deposit Debit Cards Accepted Omkar Stationary & Online Center 2022/4 BHARAT IndusInd Bank FIXED DEPOSIT Get Higher Interest Rates % SHIRE St Indusind Bank Arc -Sen Wacon 1WY •Forwa Facesford of NOx w fet fo মণিজা কসমেটিক এ স্টেশনারী স্টোর G IndusInd Bank#20BMS 2.0 - Strong rural branding focus BHARAT BHARAT Indusind Bank Indusind Bank BHARAT IndusInd Bank Available Services Posters on the glass FIXED DEPOSIT Get Higher Interest Rates % .Money Transfer • Cash Withdrawal .Cash Deposit .Bill Payments • Mobile Recharge • Loans • Fixed Deposits • Savings Account • Recurring Deposit • Debit Cards Accepted Nearest Indusind Bank Branch: Begumpet, Hyderabad Foster 3 Available Services Money Transfer I Cash Withdrawal & Deposit I Bill Payments I Mobile Recharge Loans I Fixed Deposits I Savings Account I All Debit Cards Accepted C BHARAT Indusind Bank F2P-345 ডিপোজিট উচ্চ সুদের হার 96 প্রাপ্ত করু oney Transfer ash Withdraw ash Deposit obile Rechar ill PaymenES oans Facility INDUSIND BANK CUSTOMERSERVICE POINT D.RO & ED Accent ONLINE BANKING SERVICES Jl Bank Debit card LAMINATOR पे তথ্য মিত্র কেন্দ্র NO SMOKING NO SMOKING गान Ficine fiows ফিক্সড ডিপোজিট উচ্চ সুদের হার % প্রাপ্ত করুন Payt Bank IndusInd Bank#21IndusInd Bank's rural touch points, highly visible BHARAT MONEY STORE BMS 1.0 000 Current Account Welcome Kit with Debit card Platinum Bo Store Display • . BC Certificate Display Boards 0000 1234 9876 0000 20/0120/15 NAME SURNAME A@PS► AADHAAR ENABLED PAYMENT SYSTEM Do Current Account Balances enhanced with QR code BMS 2.0 0000 1234 9876 0000 20/0120/12 RAME SURNAME Indusind Bank Transactions Deposit, Withdrawal, IMPS, Bill Payment IndusInd Bank Branding sharper focus FIXED DEPOSIT Get Higher Interest Rates % LOAN Merchant Loan RD based 1st Cycle Loan, Non-RD Based Loan Liability Services SA, RD & FD Account opening A@PS► AADHAAR ENABLED PAYMENT SYSTEM IMPS IMMEDIATE PAYMENT SERVICE BBPS BHARAT BILL PAYMENT SYSTEM BHARAT BILL PAYMENT SYSTEM ANYTIME ANYWHERE BILL PAYMENT Transactions Deposit, Withdrawal IMPS, Bill Payment IMPS IMMEDIATE PAYMENT SERVICE BBPS BHARAT BILL PAYMENT SYSTEM BHARAT BILL PAYMENT SYSTEM ANYTIME ANYWHERE BILL PAYMENT MATM Transactions Cash Withdraw Balance Enquiry TM BHARAT MONEY TATA POWER Plan & Roadmap Domestic Money Transfer (DMT) MPOS Card withdrawal IndusInd Bank#22A strong risk culture BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#23A strong risk culture Credit Risk Stringent Credit norms in comparison to Industry to mitigate risk of unsecured lending Number of Other Lenders ■ Existing customer <=2 New Customers <=1 Client exposure Existing platinum center customer <=1.25 L ☐ Other Existing Customers <=1.0 L ☐ New Customers <=80 K ■ High customer connect through weekly repayment (100% weekly vs 35% weekly Industry) Geographical Concentration Norms - ■ 5 categories of states with differential norms based on Asset Quality, Market Size, Growth Potential & Competition Parameters (Ranging from 0.5 % to 16%) District level cap - 2% Risk based Segmentation Customer/village level segmentation based on repayment behaviour to mitigate risk of defaults ■ Disbursement Restriction in branches with performance below set threshold levels ☐ ☐ ☐ Operational Risk JLG continues to mitigate risk for micro-credit portfolio. Savings & extended banking services to strengthen client relationship Robust Consumer Grievance redressal mechanism Fraud & Transaction Monitoring Branch risk assessment to identify specific branch-level parameters New Products & Services - Scale subject to satisfactory performance of controlled pilots Customized process controls ■ Incident Reporting ☐ Alert system for Key exceptions Customer Risk Profiling Market intelligence by identifying specific industry trends Macro-sectoral trends Micro - at pincode level Effective Risk Monitoring through customized & versatile BI ☐ ◉ Daily performance tracking of KPIs ◉ Aggregate & granular analysis capabilities Automated Alerts to key stakeholders Data led insights New Product development Continuous enhancement in Credit criteria ☐ Growth Market identification Outcome ☐ Early warning signals ☐ Comparison with industry on KPIs IndusInd Bank#24Delinquency trend - BFIL vs. Industry 8.4% 0.2% FY16 Demonetization Nov-Dec 2016 21.7% 11.3% 8.7% % BFILO+DPD % Industry 0+DPD 3.3% 2.7% FY17 FY18 Kerala floods 2018 Odisha Cyclone 2018-2019 7.2% 16.1% 15.0% 15.7% 2.2% 1.3% FY19 FY20 FY21 Covid-19 waves 1,2 & 3 6.3% FY22 IndusInd Bank#25BFIL has conservative ticket sizes Industry Ticket Size Over €45,000 States Included: Andaman & Nicobar, Assam, Dadra & Nagar Haveli, Delhi, J&K, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, West Bengal Unique entities: 30 to 82 *40,000 - 45,000 States Included: Arunachal Pradesh, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Kerala, Manipur, Tamil Nadu, Uttarakhand Unique entities: 40 to 92 Less than 40,000 States Included: Andhra Pradesh, Chhattisgarh, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Telangana, Uttar Pradesh Unique Entities: 66 to 104 Note: Industry Data is as of Mar'22 from Equifax BFIL Market Share 7% €72,101 Industry *47,811 Cr 93 % *45,342 93 % 86 % 7% 14% Ticket Size *43,343 Industry: *99,202 Cr *40,145 *25,758 BFIL *19,174 *29,439 BFIL *22,832 *37,635 *29,141 Industry: *1,38,310 Cr BFIL *33,839 *25,489 IndusInd Bank#26Agile Technology BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#27Agile technology, capability to handle large volumes Lead Generation Customer Data Entry Underwriting Workflow Rules Engine Customer Creation Product Set up Core Levers NPA Branch EOD Processing Collection Loan/RD Schedule - Loan Creation Disbursal Work Flow Sangam Manager Tablet Call Center Loan Officer Operating Model Digital Capability - EKYC - KYC Verification Improving Productivity - Center meeting - Proposal on TAB - Improving Customer Experience Instant CB - - - BCM Confirmation NEFT/IMPS based Loan disbursal Loan document Design Scalable Architecture Digitization across BFIL business verticals Digitally enabled for sourcing of new products Improved customer experience - Data Analytics Collections Scalability to support business growth IndusInd Bank#28Employer of Choice BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#29Strong foundation of People - Culture - Performance Very high degree of internal talent sourcing For the field staff, talent is hired ONLY at the Sangam Manager (entry) Level. Internal talent development process ensures growth for the next 5 levels till GM. This has proved to be a high success factor in building the organizational culture and ethos. Employer of choice Consistently ranked in Top 100 Great Places to work in India for last eight years. 91% of our employees said – “I would strongly endorse my company to friends & family as a great place to work". Training program Strong mix of class-room and On-The-Job training with well defined certification process. Continuous communication with the field staff at all levels In FY21-22, 2.75-million-man hours of training was provided. Best Workplaces in BFSI Great TM Place To Work. INDIA 2022 TM IndusInd Bank#30Internal Audit Ensuring process controls BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#31Internal Audit - Critical role in ensuring process control • ISO 9001:2015 certified process • • Strength • All branches are inspected monthly based on a 4-tier grading system Communication of Audit Findings at all levels - Branch, Region and Senior Management Branch Grading linked to incentives/appraisals of field staff • Internal Audit of branches - highly automated • Coverage • • Total Branches - 2422 (MFI), 404 (BSS), 45,368 (BMS), 76 (Regional Offices) Risk Based Audit Methodology by Onsite and Offsite monitoring mechanism Branches per Internal Audit staff - 10 Scope of Audit Monitoring process Adherence to Process/Policies Regulatory Requirements (CB, FPC) Audit area Frequency Client Acquisition Center Meeting Process Document verification by supervisors MFI Branches Monthly V V BSS Branches Monthly V v Regional Offices Quarterly Head office Quarterly V V V V V V Client Visits Fraud Investigation IndusInd Bank#32Member Helpline BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#33High customer connect - Member helpline evolving with times 0000 Excellent Good Average Poor Member calls MHL Helpline Agent wishes the caller and takes brief on query/complaint/request Agents check details in CRM and other applications. Provides resolution and closes the call Effective system in place to receive and resolve client complaint on time IVR in 8 vernacular languages Enquiries Resolutions FAQ's Product updates If unable to resolve, select status as open and closes call by giving tickets no. and TAT and ends call Follow up team extracts open tickets from CRM and escalates to concerned SPOCS for resolution MHL PROCES Customer outreach Voice blast to customers • Jingle through voice blast / IVR Traditional village announcements Wall paintings Follow up team shares resolutions received from concerned SPOCS with MHL team Proposed service initiatives to improve information access Loyalty Programs • Customer profiling Value based segmentation Customized programs Agent makes out call to the member and informs about the resolution and closes the call IndusInd Bank#34Towards becoming a Micro-banker BHARAT Financial Inclusion Ltd Prayaas se pragati A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#35Towards becoming a Micro-banker from a Micro-lender . • RBI framework Wind under the wing Comprehensive Principle-based RBI regulations announced in March 2022 Microfinance loan is defined as an unsecured loan given to a household with an annual income less than 300,000 Cash flow-based lending envisaged - assessment of household income, household expenditure and cap on loan repayment obligations put in Industry will move towards cash flow assessment- based lending as against exposure size JLG lending may get saturated but there is a large scope for lending to individual borrowers graduating from JLG model . . Near term growth strategy Playing to strengths Evolving from a micro-lender to a micro-banker offering a wider suite of products to meet evolving customer needs - Individual loans to graduating JLG customers Scaling up of Consumer durable loans, cattle loans & two-wheeler loans Launch of Rural affordable housing, rural LAP Liability & Insurance products Building on loyal and sustainable customer relationships IndusInd Bank#36Leveraging BFIL's distribution to diversify offerings to Bharat Building on BFIL's deep rural distribution in Bharat and acquiring new customers Scaling up loans to nano retailers Current Loan Book 6% JLG Loans 94% Loans to Merchants Graduating women entrepreneurs from JLG based loans to individual loans Our FY26 Ambition Individual Loans Two Wheeler Loans Affordable housing and rural LAP Two wheelers and other consumer durable loans in deep rural geographies Affordable LAP IndusInd Bank#37Sambhav Hai! It's possible! BHARAT Financial Inclusion Ltd Prayaas se pragati IndusInd Bank A 100% subsidiary of IndusInd Bank Limited IndusInd Bank#38Disclaimer This presentation has been prepared by IndusInd Bank Limited (the "Bank") solely for information purposes, without regard to any specific objectives, financial situations or informational needs of any particular person. All information contained has been prepared solely by the Bank. No information contained herein has been independently verified by anyone else. This presentation may not be copied, distributed, redistributed or disseminated, directly or indirectly, in any manner. This presentation does not constitute an offer or invitation, directly or indirectly, to purchase or subscribe for any securities of the Bank by any person in any jurisdiction, including India and the United States. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. Any person placing reliance on the information contained in this presentation or any other communication by the Bank does so at his or her own risk and the Bank shall not be liable for any loss or damage caused pursuant to any act or omission based on or in reliance upon the information contained herein. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. Further, past performance is not necessarily indicative of future results. This presentation is not a complete description of the Bank. This presentation may contain statements that constitute forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially include, among others, future changes or developments in the Bank's business, its competitive environment and political, economic, legal and social conditions. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The Bank disclaims any obligation to update these forward-looking statements to reflect future events or developments. Except as otherwise noted, all of the information contained herein is indicative and is based on management information, current plans and estimates in the form as it has been disclosed in this presentation. Any opinion, estimate or projection herein constitutes a judgment as of the date of this presentation and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The Bank may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes. The accuracy of this presentation is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the Bank. This presentation is not intended to be an offer document or a prospectus under the Companies Act, 2013 and Rules made thereafter, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended or any other applicable law. Figures for the previous period/year have been regrouped wherever necessary to conform to the current period's/year's presentation. Total in some columns/rows may not agree due to rounding off. Note: All financial numbers in the presentation are from Audited Financials or Limited Reviewed financials or based on Management estimates. IndusInd Bank