Utkarsh Small Finance Bank Limited (UTKARSHBNK) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Utkash Small Finance Bank Limited Q4 FY26 Earnings Call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chintin Shah from ICIC Securities. Thank you. And over to you, sir.

Yeah. Hi, Ditesh. Yeah, thank you. Good evening, everyone, and welcome to the Q4 FY26 results conference call of Utkash Small Finance Bank. We would like to thank the management for giving us the opportunity to host this call. From the management, we have Mr. Govind Singh, Managing Director and CEO. Mr. Sarju Kumar Praveen Simaria, Chief Financial Officer, Mr. Amit Acharya, Chief Risk Officer, Mr. Virendra Sharma, Head Microbanking, Mr. Saurabh Ghosh, Head Consumer Banking, and Mr. Abhay Kataria, Head of Assets. Yeah, so now without further ado, I would like to hand over the floor to the management. Thank you, and over to you, Govind Shah.

Yeah, thank you, Chintan. Thanks a lot. Thanks for hosting this call. Yeah. Thank you, everyone, for joining our quarter 4 FY26 earnings call. The fourth quarter of FY26 has been a period of renewed growth, proof of resilience and cautious optimism. And as a part of industry, we also went through adverse impact of MFI segments, as you are aware, regardless for a longer period of one and a half year. However, for us, FY26 has been a year of deliberate choices, prioritizing stability over speech, quality over quantity, and resilience over short-term expansion growing, so that we emerge with a stronger, fundamentally stronger, less cyclical franchise that can deliver sustainable returns over the medium and long-term. FY26 began under the shadow of legacy stress and a cautious environment. Over the course of the year, we focused on stabilizing collection. Titling, underwriting, and re-balancing the portfolio mix. These actions were designed to arrest deterioration, reduce fresh lippages, and created the conditions for a durable recovery. By Q4 of FY26, we began to see tangible green shoots, disbursement improves meaningfully, SMA pools contracted, fresh NP slippages declined sharply, recoveries and upgradations increased, and collection efficiency strengthened, all of which point to the strategic measures taking hold. Concretely, disbursement improved across both JLG and non-JLG segments in Q4 FY26. JLG disbursement grew 58% quarter-on-quarter and 2% year-on-year, while non-JLG disbursement grew 41% quarter-on-quarter and 51% year-on-year. These improvements will expand the portfolio base going forward and reflect a calibrated return to lending activity. At the same time, our X-bucket collection efficiency in the JLG segment improved to 99.7% in March 2026, up from 98.5% in April 2025. The highest level in the last four quarters, a direct outcome of strength and field execution and targeted collection initiative, fresh NPA slippages, net of recovery and upgrades reduced to 170 crores in quarter four of FY26, against 710 crores in the quarter four of FY25, and our GNPA ratio improved by 330 basis points, quarter and quarter, to 7.7 percent as on March 26. These are the early measurable signs that our corrective actions are beginning to deliver. A central theme of FY26 has been structural de-risking of our unsecured exposure and a strategic pivot toward secure and higher-yield lower-risk portfolios. This is deliberate, long-term shift to reduce cyclicality in the credit cost and create multiple avenues for growth beyond JLG lending. We have consciously moderated our JLG exposure to around 28% of the gross loan book and around 30% including BC JLG as on March 2026, down from nearly 88% and 90% including BC JLG in March 2020. This reflection, this reduction reflects both selective contraction of the JLT book, which declined by around 10%. During the quarter, a purposeful shift of new flows into alternative products. As a result, secured lending now comprises 51% of our gross loan book, up from 43% a year ago. This structural shift is already changing the risk profile of the bank and will, over time, enhance stability of margins. Within micro banking, our micro banking business loan targeted at graduated. JLG customers with proven repayment discipline have shown exceptional traction. MBBL portfolio grew 122% year-on-year and 40% quarter-on-quarter and now represent 27% of our micro banking loan book. Penetration remains below 15% which gives us significant headroom to scale this product to a much larger share of our customer base while preserving asset quality. To further de-risk incremental flows, we have registered with CGFMU for credit guarantee coverage on eligible JLG and MBBL disbursements, with effect from 17th March 2025, 45% of our micro bank finance book for disbursements till Q3 FY26 already covered under. The Guarantee Scheme and counting quarter 4 FY26 disbursements, 70% of the microfinance book is covered. This covered material reduces incremental portfolio risk on new disbursements and supports portfolio stability as we scale higher quality secured products. Diversification beyond JLD has been a key strategic priority and FY26 has seen healthy momentum across our non-JLD lending businesses. These segments not only broaden our revenue base but also deliver attractive yields and more resilient collateral profiles. MSME loan book expanded by 15% year on year to 4456 crore supported by the newly started micro lab segment which is delivering disbursement yield of 18%. Housing loans grew by 8% year-on-year to 990 crore, and our BBG portfolio, business banking group portfolio, fully secured against immobile collateral, grew by 19% year-on-year. CV and CE segment also was indicating the need to look at the mix of new versus used vehicles as the former was signaling riskier behavior, and therefore, the loan book contracted by 1% quarter-on-one-quarter to 1090 crore, and the share of used vehicles. Grew to almost 30% in FY26 from less than 15% a year ago, reflecting our strategic tilt towards more resilient asset classes. Collectively, these moves are increasing the share of secured assets in the book and improving overall portfolio resilience. On the liability side, our focus has been on building a granular, low-cost deposit base and aligning deposit growth with disbursement. Total deposits were broadly stable with 0.4% year-on-year growth and around 3% quarter-on-quarter growth, while retail term deposits grew by 20% year-on-year. Our CASA deposits increased by 11% year-on-year and 13% quarter-on-quarter, lifting the CASA plus RDD ratio to 83% as of March 26 from 17% on March 25, and the CASA ratio improved to 24% as of March 2026. These improvements reflect better quality of account sourcing and a conscious reduction in reliance on bulk deposits. In response to the RBI repo rate cuts, we have phase reduction in interest rate on savings and term deposits remain competitive while optimizing cost of These calibrated repricing have driven a reduction in our overall cost of funds by more than 45 basis points year on year and more than 20 basis points quarter on quarter. Moving from 8.3% quarter 4 FY25 to 8.1% in quarter 3 FY26 and 7.9% in quarter 4 FY26. We expect cost of funds to reduce further as pricing continues to take effect. Repricing continues to take effect. We also maintain prudent liquidity buffer. Our series also declined to 83% as on March 2026 from 87% as on March 2025. And we ended the quarter with surplus liquidity of almost 3,800 crore and an LCR of 178%. These matrices provide us the flexibility to support calibrated disbursement while preserving balance sheet resilience. Income compression led to elevated cost-income ratio for the financial year, which impacted the PPOF. If adjusted for interest reversal due to fresh NPA slipages, then PPOF would be 140 crore. Despite pressure from legacy book, leading to elevated credit costs, and hence the loss of our capital position remains healthy. We reported a net loss of 188 crore for the quarter, driven by providing the legacy stress. Our capital and the cost ratio stood at 17.7% as on March 31, 2026, comfortably above the regulated threshold. To strengthen the tier 1 base and support future growth, we successfully completed the rights issue of 950 crore in November 2025, which has been helping for our capital cushion. In parallel, we proactively addressed legacy stress through the ARC sale of stress JLG portfolio. This was a deliberate value-enhancing decision that improves balancing strength and positions the company on a much cleaner footing for sustainable growth. Following creditors and shareholders on the reverse merger part, following creditors and shareholder approval obtained in accordance with the process of amalgamation, the second motion petition was filed with the NCLT on April 5, 2026, for the scheme of amalgamation of holding company, UCL, with and into the bank. The reverse merger is expected to complete in the next few months, subject to NCLT proceedings. Operation discipline has been a central period of our FY26 response. We expanded our collections workforce for JLD and MBBL to more than 1200 as on March 2026. Operationalized a specialized call center for overdue accounts and split larger micro-banking branches to improve oversight and control. Training programs for new frontline staff emphasized our core processes such as center meetings and customer onboarding, ensuring consistent execution across the field. These structural investments have contributed directly to the improved collection matrices and reduction in SMA and the fresh leverages we reported in quarter 4 FY26. Technology and process transformation have also been critical. Our Utkash 2.0 technology transformation project is delivering tangible benefits in automation, productivity, and risk control. Digital underwriting capabilities are helping us avoid lending to over-leveraged borrowers. With 360 degree control parameter mapping strengthens monitoring across the trade cycle. A bank is also in the process of launching new CBS in quarter 2 of FY27. These investments are not only improving the efficiency but also enhancing our ability to underwrite and monitor risk at scale. We also recognize the importance of our people. During FY26, we incurred a one-time impact related to new labor codes. LTIP and ESOP grants and other employee benefit obligations in quarter 3 FY26 and its incremental impact in quarter 4 of FY26. While this weighs on the near-term profitability, it reflects our commitment to compliance, employee welfare and building a motivated, capable workforce to execute our strategy. Training, productivity initiatives and organizational agility will remain central to our transformation journey. Throughout FY26, we took a range of decisions. It's decisive actions to address legacy stress and position the bank for sustainable growth. These included tightened underwriting standards, calibrated disbursement, targeted recoveries and upgradations, selected portfolio resolutions, and measures to improve borrower discipline under the new guidelines. We have also been proactive to de-resync incremental flow-through, as we have mentioned earlier, through CGFMU coverage for eligible JLG and MBBL disbursements and by shifting new originations toward secure and higher quality products. We also have taken steps to improve the quality of new account sourcing and to cross-sell asset products to our liability-focused general banking branches, thereby increasing product penetration per customer and improving wallet share. These actions taken together are designed to reduce the probability of future steps and to create a more diversified, resilient earnings base. We view FY27 as a consolidation year, a period to convert the green shoots seen in Q4FY26 into sustainable momentum while continuing to strengthen the franchise. Our near-term priorities will be to sustain improved collection performance, continued calibrated disbursement into higher quality segments, deepen secured lending, and accelerate liability mobilization to support growth in a prudent manner. In the coming years, we are aiming for loan book growth of 25-30% with secured lending comprising around 55% of the portfolio, maintaining a name of above 8%, and delivering a ROE of around 15%. Achieving these targets will require steady execution across underwriting, collections, product diversification, library mobilization, and technology-enabled risk management. While sectoral handprints and regulatory transitions may continue to influence near-term performance, we remain confident that the strategic direction we have charted will deliver a stronger, more sustainable franchise over the medium term. In essence, FY26 has been a year of challenge and purposeful transformation. We have moderated risk, tension collection, diversified our portfolio, deepened our lively franchise, and reinforced our capital base. The quarter has shown that the bank is on the path of recovery and with increase in quality disbursement, better portfolio and deposit mix, improved asset quality with lesser fresh slippages, and higher recoveries, upgradations, declining SMA pool. We will continue to prioritize operational efficiency, discipline execution, and organizational agility. Our study is not about changing rapid growth at expense of stability. It is about building a fundamentally stronger institution that can withstand cycles, deliver sustainable returns, and create enduring value for all these stakeholders. We thank you for your continuous support and confidence. With this, I conclude, and now we will move to question and answer session. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shagar Shah from Spark Capital. Please go ahead.

Yeah, first of all, congratulations to the management for posting at least a better set of earnings as compared to a few quarters. Sir, I had some few questions. My first question was related to our asset quality. On the asset quality, you have mentioned the PCR on the bank level of around 59%. I wanted to understand what is the PCR that we are holding for secured as well as unsecured, both of them individually?

Mohammed did this mention there.

Okay, so 64.5% that you are saying is for, is it safe to assume that includes MSME unsecured as well as MFI, right?

Yeah, right. But for own... Unsecured, 65.4%. It includes all unsecured groups, including MFI. Right, sir.

So only for MFI, what is the PCR that we are holding, sir, now? Only for JLG, and for MBBL, MBBL as well as JLG mix then?

More or less on the same side. For MBBL and for JLG, we do the same kind of provision.

Okay, so is it safe to assume that still some sort of provisioning is still left in the next two quarters, especially for MBBL and JLG is concerned? Because even if you want to recognize 80% aging provisioning, still some sort of provisioning is left in the next quarters, right, for MBBL as well as JLG? Okay, so now next year from FI 28 onwards we are migrating to ECL based provisioning. So what I wanted to understand that how well are we prepared for actually model our asset quality towards that. Because over in the ECL model, our provisioning has to be more aggressive, especially on the SME2 assets. So how ready are we? Have we figured out a model? How ready are we for the ECL transition, sir?

This index beginning is, from 1st April, is actually SLVs are exempted. So, you know, we still don't have to follow that. I guess it will be some time before RBI brings us into the habit. Having said that, you know, while we have proper index that we do, and even, you know, honestly, the provisioning for the last year in terms of... CPEGs that have happened. I guess our ECL provisioning, perhaps, you know, or the accounting IK provisioning would be equal to or maybe higher. But your question to be preparedness for India next year, it doesn't apply to us, you know, in terms of statute requirement.

Okay, fine, sir. My second question, sir, was related to the MSME portfolio. Our GNPA in the last quarter you mentioned was upwards of 12.5% GNPA on the MSME front. So, now it's considered 23% of your total lending portfolio. So, what is the GNP right now, and how is the something like still now, the real impact of the West Asia conflict is going to reflect in the coming quarter. So, what is the GDP right now and how well are we prepared to actually face that? Are we facing stress in some of our existing portfolios?

If you talk about retail MSMB portfolio, the gross NPA stood as on March 26th at 3.4% and if you see, we do fund to a very, you know, normal ticket size. So, we do not fund like 20 crore or 30 crore kind of borrowers who have some export or larger export limits or the foreign currency exposure. So, as far as geopolitical situation is concerned, there has been no, you know, the Good morning, everyone. Abnormal behavior in our portfolio so far, which we have been monitoring for the last two and a half months, when Iran-US situation got hurt. So we have a close monitoring on it. As far as it is concerned, there has been no issue or portfolio behavioral change in our portfolio as far as MSME is concerned.

Okay, so MSME, the JNPA has come down to 3.5, sir.

3.4%.

3.4. It was at 12.2% you mentioned in the last quarter.

Yeah. And just when we talk, I just wanted to add one more point. When we talk about this MSME portfolio, largely it is secured by hard collateral like residential or commercial properties. So there is a, you know, security available to the bank in case of any default.

Okay, so just one suggestion, sir, from my point or from my end. Within the MSME, you have around three segments. So, within the MSME, you have the secured business loan. So, you have unsecured business loan. You have market overlap also. So, if you can just give the break up actually within your 4,456 crore worth of portfolio, that would be very helpful, sir, to understand at what direction the bank is going actually. That would be very helpful. Now, my third question, sir, was related to the disbursements. Disbursements in JLG actually are going up for the first time in almost, I think, in the last many quarters, actually. So, what is the reason behind the same? Because the disbursements have three consecutive quarters of decline. Now, it has moved up to 1310 crores. So, where are we exactly finding the value? Have we actually found something like, still, have you gone tough through the underwriting? What is the new portfolio? How is the new portfolio doing, actually? And what changes have you made in an existing underwriting system?

Just to answer your concerns, there has been, as you know, that in April 26, MFIN 2.0 guardrails were implemented, and there was a sudden, what you call, increase in power, which led to our focus of more on the collection side and focusing on bringing up the collections. By third quarter, or October, November, we... We had nearly stabilized on our collections. We always had the what you call distribution and the people to do that part. Once the collection in early buckets started stabilizing, we started putting the thrust on sales back. And we are adhering to all the guidelines as specified in MFIN 2.0 guidelines. Even industry had seen an upward trend towards the disbursal. FY25-26 portfolio after this is behaving very well with respect to the collections also. So, I will say that still we are only at a 70% optimum capacity of dispersal and we should be stabilizing in the same ranges right now.

Okay, sir. Lastly, what is the steady state credit cost that we are eyeing for FI27 and FI27, sir?

Any target? Yes, in the previous call, we had mentioned about 2.5% steady state, 3.5% to 3.5% for 27% and 2% to 2.5% in FY28. With this trajectory of sleepages being arrested significantly in terms of SMA going down significantly, with the background that the new disbursements are happening under the new guardrail, With the background that we have a CGM, if you cover, I guess this is a very conservative number, but we will still stick to the fact that it will be around 3% for FY27 to 2.5 in FY28. We will do better than that. Assume the trajectory the way we are looking at in the industry as well is endorsing coming back of the disbursement and the collection being 99.5+. I guess this is a conservative number that I am giving you.

Okay, fine, sir. Thank you. Thank you so much and all the best, sir.

Thank you. A reminder to all the participants that you may press star and 1 to ask a question. The next question is from the line of Shivam Singh, an individual investor. Please go ahead.

Good evening, sir. Sir, I wanted to ask what is the amount that we are going to get back in Fiji MFQ cover in the last one year, that insurance that we have taken for MFI?

So, the way it happens that, you know, I would say, you know, the maturity of NPA as we speak, I think, you know, still, it's not an NPA that the disbursement that we have started while our portfolios of 31st March, 70% is covered under CJMFU, but the maturity of claim has yet not arrived. I guess, you know, I would hope it doesn't arise, frankly, but maybe a year and a half it takes, you know, the claim and the settlement, but we are also not even wanting to account this credit, and therefore the entire numbers that we have said is without even considering the credit at this point, because that's kind of an experience, and we don't want to set into a windfall game. At the moment, the cost of premium is embedded in my P&L, and since we don't have the NPAs, you know, from the new book, well, it appears to be a cost of premium, but we're just, you know, protecting our future in terms of any advanced development for future. So for your question to say that is anything met, sure, unless CJ Matthew, the answer is probably too early to, you know, give a number on that.

Just to summarize that, you know, we have taken the cost of CJFM for last more than a year now, since quarter four of last year, but we have neither taken accounting benefits and now we have gotten a claim so far. So only expense has gone apart, but in case something goes, you know, to that extent, in future we'll get the benefit. But in current one, we have not taken any benefit, only expense has been taken out, taken into account.

And how much of our capital got keyed up because of that? As I know that the risk weightage is adjusted if we take the cover.

Look, even that has not been done by us. So, as I mentioned, we have not taken any benefit of any guarantee scheme. We have done a very plain accounting where we have not taken any benefit of this. So, as I mentioned, whatever is there, only expense part has been taken. No benefit either in terms of getting any claim or any adjustment in the NPA or capital adequacy has not been done by us.

Okay, sir. And, sir, regarding our Prime Minister's comment in the previous few days, what is our stance like? We are trying to grow at 30%, and given the nature of the geopolitical situations, what is the segment that we are targeting, and how do we ensure that our credit score is such a little increase?

So, you see, I mean, you are aware that last year has been a year where we could not grow. So, we are at the almost same level. So, we have a real low waste right now from that perspective. And we have got a full infrastructure in terms of manpower, in terms of number of branches and the lines of trucks and our channels. So, I think around 30% growth should not be a problem in the normal one. And our focus remains on the one, obviously, we understand microfinance well, so that remains our focus area. And besides that, as you mentioned, there are, you know, various types of LAP products which we have been focusing upon, including the small ticket LAP and normal LAP, as well as the BVG products. So, I think LAP and JLG will still remain our key products for going forward also. We have all, obviously, we've done something like, you know, Gold Loan, which we think that we'll be able to grow bigger this year. There are some of the new A new area also which we started around one to two years time. We think that there should be further growth in that part. As far as the credit cost is concerned, we do understand the statement from the Prime Minister, but I don't foresee any challenge because I think most of our portfolio is for income generation and smaller ticket size. We don't foresee much challenge. And anyway, I think we are in recovery path and we have got a good machinery as far as collections are concerned. So we don't foresee any major impact because of that.

Okay, sir, that was really helpful. And sir, in the secured segment, like if there is a default, what is the timeline in which we can get physical control of the asset and auction at all? And what is the LTV value of the secured asset that we are lending to?

Hi, I'm with this side. So, normally, you know, when we assess the NPA case and bank decides that we'll have to go on the surfacy route, from there, various processes are involved and it takes around six to eight months is a period. So, somewhere six months, somewhere eight months, depending on the situation, but that's the normal scenario. Six to eight months, you are able to dispose of the property completely by inviting the bid under the surfacy. So that is one. Second is the normal LTV if you will see on the portfolio side, it would be less than 65% around it should be there because mostly we do residential property on a loan value at 70%. So on outstanding portfolio basis and including our all portfolio like Microlab we offer only 50%. We do not go beyond that also. So overall it should be below 65 to 60%.

And sir, what is the average tenure of these loops?

Tenure, you see, because smaller borrowers opt for a longer tenure, so the average tenure would be around, you know, 12 to 13 years would be the average tenure given. But if you see the entire portfolio largely secured in housing and MSME, customer, you know, takes this loan on an average of 8 to 9 years and dispose of or foreclose the loan within this particular period.

And sir, what would be the risk weightage for this?

When we talk about LAP, it is 75% is the risk weight, largely.

Okay, sir. Thank you so much. I'll join back in the team. Thank you.

Thank you. The next question is from the line of Rahul Kumar from Vicaria Fund. Please go ahead.

Yeah, hi. Thanks. Just one question. What are our capital raise plans?

Actually, we are not having any plans for capital rates. I know it is 17.7% but I think this year... This year, we should be able to sail through on this capital base. Our idea is to first, you know, focus more on, at least when I'm talking, when I say capital raise means I'm not talking equity capital. Obviously, we have other means of taking capital like tier 2 capital and sometime, you know, offloading some of the balance sheet items also. So, idea is not to go to capital market on an immediate basis and raise through tier 2 or some other means this time in case there are any shortfall or, you know, immediate requirement is there. But not to capital markets.

That's all. Thank you. Thank you.

Thank you. The next question is from the line of Utpal Saikya. As an individual investor, please go ahead.

Yeah, thank you for taking my question. Actually, my question only is that in the last call, the management has mentioned that we are targeting for 15% ROE in FY28. I want to know only are you in line on that path and also know what I hope is behind. That is the only question from my side.

Yeah, so I'll confirm that, you know, 15%, if you're looking at FY28, and certainly we are there, we'll exit FY28, you know, above 15% capital, sorry, the ROE. And as far as worst is behind, yes, worst is behind us. I mean, you must have seen, you know, type of provisioning, what is, even if you have to take for quarter four also, it is largely above the legacy portfolio. So, I mean, we are getting, we are creating a new good portfolio because of guardrails also, and also we have got a guarantee cover issued. So, we don't foresee much challenge, you know, going forward, and whatever provisioning you have seen off late or maybe in this quarter also is largely on account of the legacy portfolio.

Thank you. The next question is from Bhumeen Shah from Equatus AMC. Please go ahead.

Hi.

So, by when we are planning to reach net NPA ratio of less than 1% and how are we planning to provide provisions for the same?

Can you repeat the question? Can you repeat a little louder, please?

Yeah, can you hear me?

Now it is better.

Yeah, by when are we planning to reach net NPR ratio of less than 1%? Because before the crisis, I guess, we are operating in the range of 0.3 to 0.5%. And how are we planning to provide provisions to reach this ratio?

So what I hear that...

Yeah, sure, sure. I think FY28 is what we expect that we should be, you know, reaching this range. And one obviously through, you know, reduction in the overall NPA, recovering, you know, whatever are the NPA of past, whatever percent is possible. And certainly as you can see that we have been providing also for the NPA in past also. And now we have gone to almost below 3.5% also. So, idea is to recovery as well as providing for during, you know, next, whatever is the balance, NPAs are there in next few quarters. So, our estimate is that, you know, quarter FY22 should be NPA, net NPA in the range you just mentioned.

Of 0.3 to 0.5 or less than 1%?

No, less than 1%, within 1%, yeah.

Okay.

3.3

is our FY28, you know, net and fee. FY26 is 3.3, and ID has to reach around below 1% by FY28. Okay, thank you. Thank you.

Thank you. The next question is from the line of Kiran Roy, an individual investor. Please go ahead.

Kiran sir, please go ahead. Kerenso, can you hear me? Sir, please unmute yourself and go ahead. As there is no response, we move ahead.

Reminder to all the participants that you may press star and 1 to ask a question. The next question is from the line of MB Mahesh from Kodak Securities. Please go ahead.

One question. On the non-MFI slippages, it has been running still higher, about 4-odd percent. If you would just kind of tell us what is driving this number?

Hi, Mahesh. Amit Savas-Tiaro is just about to respond to you. Yeah.

Yeah, yeah. No issues.

We are trying to address and if you see the collection efficiency or the resolution percentages across the buckets in the last 3-4 months since November onwards. We have controlled the NPA percentages, but yes, we need to bring it down drastically. But the resolution in the earlier bucket, so flowing into NPA bucket, the SMA 1 and 2, we have tried to arrest it, and which we have done successfully. Second is that the portfolio makes movement. So the past more than 12 months, we are trying to move away. From new and doing more of the used, so if you see the disbursement percentage contribution of the used on the overall portfolio, you will see it covers around 12%, whereas from last 7 to 8 months disbursement, you will see the needle has moved to close to 30%. So 30% around the used business is being done. And also, we did lot of portfolio analysis last year and we did lot of policy norms and other parameter intervention. This is the portfolio analysis. And if you see the last 18 months disbursement, including new or used, whatever the bank has done, the disbursement post October 24th, the last 18 months, the new portfolio is performing pretty well as compared to the earlier portfolio. The NPA levels hovers below 2% post-24 portfolio created. Thank you very much. Wealth has been the contributor in the overall. Otherwise, if you see the other portfolios like your housing or lab or even microlab portfolio or our BBG, which is a working capital portfolio, again, all these are backed by hard collaterals like residential or commercial properties. So they are under, you know, tolerance level. Wealth has been the contributor in the overall retail lending, which you will see in at least another two quarters, this would also be in a very, very under control league.

Perfect. Govind, sir, in your opening remark, you had mentioned a PPOP number, which is adjusted for adding the stepages in terms of the interest income reversal. That number was 140 crores. Did I hear that correctly?

That's right, that's right. We had a 59 crore of P-pop and we had a reversal during the whole year, all four quarters combined of 81. That adds up to 140. This is pure reversals on the slippages that happened during the quarter. On interest reversal, all interest reversal due to slippages that go into the quarter, then you reverse the last three years, a three-month income. That's right, Mayesh.

So that number is 140 crores for the quarter, if you are just a slippage, an interest reversal.

No, no, it is 140 crore for the full year.

Ah, perfect, perfect. And in your assessment, this number for next year, how are you looking at it? If you have some sense of it?

No, if, you know, the trajectory of collection efficiency as we are seeing, you know, remains and the disbursement going around. You know, in the new guardrail, I guess, this reversal should be arrested. It's a combination of your standard book going to GNPA, which you lose the interest, which should be why you go up. So, by and large, I guess, your steady-state interest income, though not visible now, but that should find its revival in the coming quarters, next quarter. So, the reversals by, you know, the nature will be less, and you will see that as actual, you know, the boom that the interest accrual actually has to happen will be returning back.

Perfect. And what will be outstanding stock? If you look at your collection that you're seeing today, if you would just kind of give us a color on how much of recovery that you are currently seeing of the stock of battle, which has been written off.

Return of collection, if I really, and I've done this back up the envelope, try to say that, you know, in my B&L, whatever is the credit for write-off versus, you know, the write-off number on inventory, it works up to 12 to 14 percent recovery.

But that has not changed as yet. It continues to remain in the same range.

That is right, but I just want to add to my share that, you know, we have this headcount for collection that is aimed up primarily to erase the pages from X bucket to SMA. Now that normalization has already happened, or maybe a quarter more to watch on that, if that actually goes the way we are looking at, then the allocation of that headcount, at least, you know, some decent 30% kind of headcount will then be shifted for collecting the right-off for NPA. And therefore, I presume in the sense that in the exhibition plan, the right of collection should be better off in the coming year because that extra collection force should now get allocated to collect the legacy of the NP or the right of.

Perfect. And just one last question. Assuming that you are able to grow next year at 25% to 30%, adjusting for the collection machinery that is sitting there, any sense on how much of OPEX would be required against it?

How much of OPEX? OPEX, OPEX. Operating expenses. Only for the collection team, you're saying?

No, no, no. I'm just saying, in your sense, given that you have bid some machinery around all the other assets, is it, say, presume that the OPEX is going to be meaningfully lower than the loan book? Just trying to understand some direction between the past investment made versus the growth that you're likely to see in the book next year.

So, you know, whatever the, I mean, as I said, that one way to look at it is this collection force, when normalization happens, you tend to, yeah, but I guess the idea is to go on the right of collection. So, even if it were to continue the cost, I guess the delta will be in multiple in terms of returning them, taking that cost and getting a credit on the P&L line for the NPA collection that I just mentioned to you, right of an NPA collection.

So, I may not have exact numbers, but it will happen in two parts. First part is that I have got a cost, and I expect that I should be able to raise, you know, 20 to 30 percent growth in the portfolio, which is the same cost. So, that is one thing will happen. Second, suppose I have around 1,200 to 1,300 people who are hardcore collection people only. Our expectation, and that is what is happening right now, the cost may be around 25 to 30 percent, you know, whatever the amount they bring. Suppose they bring in 1 lakh rupees, their cost may be around 30,000 rupees. I'm again a ballpark number. So, and because we have a large pool, you know, which needs to be recovered, and we have seen in first two to three years' time, I mean, you are able to recover this chunk. Thereafter, it is one person, two person only. So, idea is that at least for next one, one and a half year, let us keep this team there, and whatever, you know, is there cost, at least three times of that, I will be able to recover from this collection team. So, these are two numbers. I don't know the exact number the way you expect, but this is, I think, how it will happen.

Viren, you want to add something? Yes, so in the last quarter, we collected close to 50 crores from this NPI and write-off pool with this 900 odd people at that time in the field, which is close to some 20% of the collected value from this pool. This vertical or this connection will continue to be stable for at least the next couple of quarters, which will give us an upside on that side.

And Mahesh, the other side, because our case road has actually gone down significantly in the range of now 330 to 350, our expectation is that I will be able to build, as I mentioned, an additional 25 to 30 percent portfolio with the same cost. So I may not, my cost may not go down, but my income and my top line will go up by around 25 percent. 30% with the same cost. I think that is what is happening now.

Yeah, that's what you're asking. Thanks a lot. Thank you.

Thank you.

In the interest of time, we'll take that. That was the last question for the day. I now hand the conference over to the management for closing comments.

Thank you, thank you, ISAC team for this, and thanks all the investors for your continued support. As you have seen, I think things have changed significantly during last few quarters, and we expect that, you know, next few quarters should be a significant improvement in the trajectory, and as we have mentioned that for FY28, at least in the next two years' time, we should be back to 15% ROE and, you know, good return, you know, overall good all KPIs, KPIs, so thank you for your support, and keep exploring and keep talking to you. Thank you, thanks a lot.

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.