Ind ndusInd sInd Bank nk and nd Bha harat rat Fi Fina nancial - PowerPoint PPT Presentation

Ind ndusInd sInd Bank nk and nd Bha harat rat Fi Fina nancial ncial Inc nclusion usion Me Merg rger er Upd pdate te Building A Sustainable Platform for Financing Livelihoods November 10, 2018

Agenda Merger Status Summary 1 Transaction Structure 2 Merger Rationale & Synergies 3 Update on Approvals 4 IBL & BFIL Performance since Merger Announcement 5 Fact Sheet 6 2

1. . Me Merg rger er St Status tus Su Summary mmary

Corporate Governance Pre-Announcement July 01, 2016 - IBL Sep-Oct 2017 October 14, 2017 September 11, 2017 May 01, 2017 - BFIL Board Authorization to Exclusivity Due Diligence, Evaluate Strategic Announcement for Negotiations, Board Approval Opportunities IBL & BFIL Merger Documentation  IBL and BFIL Board  IBL and BFIL entered into an  Appointment of advisors for  Audit Committees and Boards authorized the respective exclusivity arrangement to legal, financial, tax and inter alia considered business senior managements to explore potential combination operational diligence case, fairness opinions, evaluate various organic and valuation reports, diligence  Various rounds of discussion inorganic strategic growth reports, auditor reports etc. on transaction contours opportunities  Respective Boards approved the transaction unanimously 4

Approval Process and Indicative Timelines Regulatory Filings NCLT Filings & ROC Filings & Board Approval & Approvals Approval Share Issuance  Valuation / Swap Ratio  RBI  Filing of Scheme  Final approval of RBI  Approval of ‘Scheme’, matters  CCI  NCLT approval: Shareholders  ROC Filing therein and other legal approval, Creditors approval,  SEBI and Stock Exchanges (NOC)  Allotment of shares to BFIL documents other approvals – shareholders Shareholders’ and Creditors’  Execution of Implementation meetings Scheduled on Dec  Preferential Issuance of share Agreement 11, 2018 warrants to the IBL Promoters Transaction to take up to 2-3 months for closure 5

2. . Tra ransacti nsaction on St Stru ructur cture

Transaction Structure Issue of shares by IBL to shareholders BFIL 1. BFIL to merge into IBL under a Scheme of IBL Promoters of BFIL Shareholders Arrangement 2 2. BFIL shareholders to receive IBL shares as 4 consideration Pref Issue of Merger of BFIL Share Warrants into IBL 3. IBL to transfer the employees and the undertaking 1 BFIL IBL in relation to the Business Correspondent operations into IndusInd Financial Inclusion Limited* (IFIL) (a wholly owned subsidiary of IBL), making it a captive Business Correspondent Subsidarisation of BC 3 Operations 4. Preferential Issuance of share warrants to the IBL Promoters. The Promoters shareholding would be retained at ~15%. IFIL*, a wholly owned subsidiary * To be re-named as Bharat Financial Inclusion Limited post effectiveness of the Scheme 7

Transaction Structure BFIL assets and liabilities to merge into IBL’s assets and liabilities. • Resultant Structure BFIL operations to be part of IFIL, a wholly owned subsidiary of IBL. • • Subsidiary to act as a Business Correspondent of IBL Swap Ratio • BFIL shareholders to receive 639 IBL shares for every 1,000 BFIL shares • No change in the Board of IndusInd Bank Board MFI Advisory Committee to be set up for the Wholly Owned Subsidiary • Employees Continuity of all BFIL Management and Employees in current assignments • 8

3. . Me Merg rger er Ra Rationale onale and nd Sy Syne nerg rgie ies

Culmination of Existing Long Standing Relationship 314 BFIL Branches Rs 2,772 cr BC Business Correspondent (BC) for Over 6 years Exclusive to IBL Outstanding Compatible Culture Partnership for 2- Savings & Recurring Rural Distribution Wheeler & Home Integrated CRM Platform Accounts for Borrowers Service Points Improvement Loans Merger of Entities Focusing on “Livelihood Financing” Data as of 30 th September 2018 10

Creates Large and Complementary Network 5 Jammu and Kashmir Geographic Reach as of 30 th September 2018 Himachal Punjab 2 11 Pradesh 31 Chandigarh 58 111 11 13 10 Uttarakhand Haryana 38 109 IBL Presence : 1,466 Branches (includes 250 rural branches) New Delhi 48 2 Arunachal Pradesh 50 17 1 109 117 Sikkim 2 Assam 55 175 65 103 3 33 Total North Uttar Pradesh Nagaland BFIL Presence: 1,708 strong MFI Network Rajasthan East Bihar 16 43 4 2 201 Meghalaya Manipur 32 Tripura 5 2 110 Jharkhand Mizoram Vehicle Finance Presence: 932 Outlets (excluding Dealer Points) 3 Madhya Pradesh West Bengal 75 51 2 Gujarat 62 92 27 34 89 164 64 Chhattisgarh D and NH 9 2 55 35 1 75 Odisha 44 Daman and Diu 160 174 33 Maharashtra 198 Telangana 31 58 63 11 50 Merged Entity to have 4,000+ branches and outlets 26 95 75 Goa 10 51 Andhra Pradesh 182 Karnataka 1 Pondicherry 123 Tamilnadu Kerala 81 78 3 45 147 11

Financial Inclusion Pilots Showing Encouraging Results Savings and Recurring Deposits 5,10,000+ Savings accounts and 2,70,000+ Recurring deposit accounts • opened in 314 BC branches in Q2FY19 Retail Distribution and Service Points (RDSP) Pilot is rolled out in ~ 1,500 locations • Services offered are cash deposit & withdrawal, bill payments • and allied financial services Two Wheeler Loans Pilot is rolled out in 390 BFIL branches with portfolio • outstanding of Rs 25.1 cr as of Sep 30, 2018 Housing Improvement Loans Pilot is rolled out in 55 BFIL branches with portfolio • outstanding of Rs 1.9 cr as of Sep 30, 2018 12

IBL & BFIL together bridging the Financial Inclusion gap 1 Basic Banking Microfinance, Microinsurance, Savings Bank Services Accounts., Recurring Deposits Integrated CRM Technology Platform IBL’s Banking Increasing Sophistication of Financial Products Capabilities 2 Additional Services Mobile Banking, Micro ATMs, Debit Card, (Ease of Use) Value added services like Rural Insurance 3 Loans with Longer BFIL’s Large Presence Home Improvement Loans, 2 Wheeler, Tenure & Larger in Under Banked Areas Personal, Secured Asset Creation Ticket Size Across Country 4 ꞊ Bill Payment Services, Retail Distribution, Cost Tech. Products Answer the Rural Optimization Banking Need No Mission Drift: Committed to the Cause / Enhancement of Microfinancing 13

Saving Products Create Multiple Opportunities Enhanced relationship with customers Strong Liability Franchise Lower NPA % Loan products Higher Savings Bank based on customer Accounts Savings pattern retention Lower Cost to Income % Recurring Deposits 8.3 Million Members spread Cross-sell Asset across ~100,000 Fixed Deposits Products villages Cashless Propensity to collections to default by lead to better customer efficiencies reduces 14

Key Synergy Estimates Lower Cost of Funds Reduction of 2%-3% 100% Eligible as PSL Priority Sector Loans Fee income of 0.75%-1.5% on excess Capital Release 75% Risk Weight in Bank Liabilities Potential to penetrate >50% Customer Base 2-Wheeler Financing Home Improvement Loans Ancillary Products Fixed Usage Loans Micro Insurance Note: Synergies are management estimates and subject to transaction receiving all approvals 15

Creating Domain Expertise in Microfinance Furthering PC 4 Strategic Theme of “Rural Banking and Microfinance” For BFIL For IBL  Creates “Scale with Profitability” - Faster growth and  Provides ready banking platform to drive operating higher profitability vs IBL synergy  Provides access to best-in-class microfinance  Universal product suite for customers capabilities  Reduces risks and improves competitiveness vis-à-vis  Huge increase in outreach with ~1,700 well-spread recently licensed SFBs MFI outlets with 8.3 Mn customers  Continuation of the business without merger  Ability to leverage network, clients and capital interruption through a “lift and drop” approach  Transaction is key driver of “Bharat” Play (currently  Diversification for all stakeholders serving ~100,000 villages)  Access to stable and low-cost of funds at a bank  Portfolio eligible for Priority Sector Loans Transaction Accretive to All Key Vectors on Day 1 ! 16