AU Small Finance Bank Ltd to Discuss Management Changes Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sushant Bhansali - Ambit Investment Advisors - Analyst : Sanjay, I've been meeting you for now almost 9-odd years, and I've seen how you've converted the whole franchise from NBFC to a bank now. One critical question comes to my mind in terms of how you are building the organization is we all understand that when organization is into such a high-growth space, there will be change of culture, there will be systems and processes which probably will reinvent themselves over a period of time. How long do you think probably at the size of your balance sheet or in terms of number of years from here on, where it will be a much more structured place than it has been as part of your journey?

Question: Sushant Bhansali - Ambit Investment Advisors - Analyst : Yes. And Sanjay, no doubt, I think -- I don't think any of us have any doubt in your capability to hire talent or to invent or probably grow the organization. I think I was more about that -- because this is (inaudible) which your bank is really high-growth rate, whereas you rightly said that from the asset side, you are now moving to strengthen the liability side, right? And as you will add more products over a period of time, probably more things and more processes and more people will need to be added. And...

Question: Sushant Bhansali - Ambit Investment Advisors - Analyst : People-driven organizations have challenges all the time, right? We all face them.

Question: Sushant Bhansali - Ambit Investment Advisors - Analyst : So the churn in the employee, I would say, is never a challenge, because organizations are built on processes, right, and not on people. People will come and go (technical difficulty), right? So the question was more on to that can we look at more stable processes 5 years or probably when the balance sheet is about 1 lakh also. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 01, 2021 / 3:00AM, AUFI.NS - AU Small Finance Bank Ltd to Discuss Management Changes Call Raj Vikash Verma - AU Small Finance Bank Limited - Independent Non-Executive Part-Time Chairman Sanjay, I have (inaudible).

Question: Sushant Bhansali - Ambit Investment Advisors - Analyst : The best thing we like about you is being transparent and coming up-front and to resolve any things which are in people's mind. So thank you so much for your time, again.

Question: Rasona Bilvash - DSP Blackrock Investment Managers Pvt Ltd - Analyst : Sanjay, I'll probably state the 2 sort of optics, which are not looking very good and get your feedback on that. Number one is when the bank is talking about being digitally ready, why is location a problem? Why can't people be based out of Bombay or Bangalore or wherever and work in a bank like AU? And second question is how are the optics of -- I mean without going into the merits of the person, and I'm sure he's very experienced. Globally, it's not a great example when somebody who has been responsible for business lines, for example, in this case, the CEO, then becoming a CRO. Those kind of optics don't really gel well because one can always ask whether risk is the utmost importance or is it taking a back seat if somebody is coming from the business side and then taking over this responsibility. So these are the 2 sort of optics which I want you to address.

Question: Kunal Merav - NLB - Analyst : Sanjay, as a prospective investor in the bank, there was 2 things I'd like to get your thoughts on. One, when you talked about transparency, we struggle with the extent of transparency purely because there's been a significant lag in the disclosure of all the resignations. And they've been teed up pretty close to fundraising quarterly events. So help us understand how you're going to change that transparency going forward for prospective investors because I think it's a really big deal despite all the platitudes all the previous investors have handed to you. Second, Sanjay, in the recently concluded RBI audit, were there absolutely any exceptions noted or red flags raised by the RBI that you think investors ought to know?

Question: Kunal Merav - NLB - Analyst : I appreciate the clarification and the details. The only thought I would leave you with, at least for the prospective investors, because you certainly have a very loyal bench of existing investors. But for prospective investors, we struggle with while you're meeting the letter of the law, the spirit is not there purely because it has happened more than once. It has happened around critical times, and it doesn't sync up when we are trying to look at data about the bank's performance. So there is compliance with the letter of the law where you have 100 out of 100. There is compliance with the spirit of the law, which I think has shaken the confidence of a lot of us who are incremental investors. So I'll leave you with that as you identify areas for further improvement. But once again, I echo the sentiment that we appreciate the transparency, the efforts of transparency and the willingness to get on a call.

Question: Kunal Merav - NLB - Analyst : Certainly. Sanjay, I appreciate you taking the time and best wishes with the family regarding the health situation. Take care.