A ₹35 Crore Target, Four Officers and a Capacity Wall
A branch carries a FY2024-25 disbursement target of ₹35 crore, to be met from two products only: home loans (HL) and vehicle loans (VL). Q1 closed at HL ₹4.80 crore and VL ₹2.20 crore; Q2 closed at HL ₹5.40 crore and VL ₹2.95 crore. The branch has four loan officers. Because an HL file needs twice the appraisal work of a VL file, one officer can handle at most 6 HL files or 12 VL files in a quarter. Average ticket size is ₹30 lakh for HL and ₹8 lakh for VL. In the half-yearly review the manager decides that HL will be held at the Q2 run-rate for the second half and that the entire shortfall against the ₹35 crore target will be closed through VL. She asks for the VL run-rate this implies, whether the branch can deliver it with the present staff, and the maximum disbursement the branch can actually achieve.
1. Assuming HL stays at the Q2 run-rate, what quarterly VL disbursement is required in H2 to meet the ₹35 crore target?
Read the worked answer
H1 actual: 4.80 + 2.20 + 5.40 + 2.95 = ₹15.35 crore.
H2 requirement: 35.00 − 15.35 = ₹19.65 crore.
HL held at Q2 rate: 2 × 5.40 = ₹10.80 crore for H2.
VL needed in H2: 19.65 − 10.80 = ₹8.85 crore, i.e. ₹4.425 crore per quarter.
Sense check: Q2 VL was ₹2.95 crore, so ₹4.425 crore is a 50% jump (4.425 ÷ 2.95 = 1.50) on the very next quarter, and a growth that would have to be sustained. Full-year VL would become 2.20 + 2.95 + 8.85 = ₹14.00 crore, against ₹5.15 crore in H1 - the VL book would have to more than double in two quarters. Reaching ₹4.425 crore is arithmetically clean but commercially implausible as a planning assumption; the next task tests whether it is even operationally possible.
2. Convert that requirement into files and test it against the branch's appraisal capacity.
Read the worked answer
Required VL files per quarter: ₹4.425 crore ÷ ₹0.08 crore = 55.3, so 56 files (55 files yields ₹4.40 crore, still ₹2.5 lakh short).
Current VL files per quarter (Q2): 2.95 ÷ 0.08 = 36.9, i.e. 37 files.
Capacity available:
- If all four officers did only VL: 4 × 12 = 48 files - already below the 56 required.
- But HL must also be produced. HL of ₹5.40 crore ÷ ₹0.30 crore = 18 HL files per quarter, and 18 ÷ 6 = 3 officer-quarters. That leaves one officer, i.e. 12 VL files, or ₹0.96 crore per quarter.
Conclusion: the plan needs 56 VL files a quarter against 12 available - a shortfall of about 44 files per quarter. The constraint is not demand but appraisal capacity, so sanctioning more VL proposals would only create a backlog, not disbursement.
3. What is the maximum FY disbursement the branch can achieve if HL is protected at the Q2 level, and what does that imply for the target?
Read the worked answer
Capacity allocation: 18 HL files per quarter consume 3 officer-quarters (₹5.40 crore); the remaining officer can clear 12 VL files = ₹0.96 crore per quarter.
H2 maximum: HL ₹10.80 crore + VL ₹1.92 crore = ₹12.72 crore. FY maximum: 15.35 + 12.72 = ₹28.07 crore. Shortfall against target: 35.00 − 28.07 = ₹6.93 crore (19.8%).
Implication - where the lever actually is: one officer-quarter produces 6 × ₹30 lakh = ₹1.80 crore of HL but only 12 × ₹8 lakh = ₹0.96 crore of VL. HL is therefore about 1.88 times more productive per officer-quarter. Pressing VL to close the gap is the least efficient available response. The realistic choices are (a) reallocate appraisal capacity towards HL rather than VL, (b) add capacity - each additional officer adds at most ₹1.80 crore a quarter, so about four extra officer-quarters would be needed to close ₹6.93 crore, or (c) formally reset the target. The manager should present the capacity arithmetic, not a promise to 'push harder on VL'.