Fino Payments Bank Limited (FINOPB) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Fino Payments Bank Ltd. Q4-FI26 Earnings Conference Call, hosted by Go India Advisors. As a reminder, all participant clients will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance, please signal for an operator by pressing star and zero on your touch-tone telephones. Please note that this conference call is being recorded. I now hand the conference over to Ms. Sheetal Khanduja from Go India Advisors. Thank you and over to you, ma'am.

Thank you. Good afternoon, everyone, and welcome to the Q4 FY26 Earnings Call of Eno Payments Bank, hosted by GoIndia Advisors. We have on the call Mr. Catan Merchant, Interim Chief Executive Officer, Mr. Anup Agarwal, Interim Chief Financial Officer, Mr. Selesh Pandey, Chief Business Officer, and Mr. Tejas Mania, Chief Digital and Liabilities Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request the management to take us through the financials and the business outlook, subsequent to which we will open the floor for Q&A. Thank you and over to you, Ketan.

Thank you, Sheetal. A warm welcome to all of you joining us today for our bank's quarter for FY26 and full-year FY26 earnings call. Well, FY26 has been in many ways the most defining year in Fino's journey since inception. We came into the year on the back of a landmark FY25 with a clear focus on risk-calibrated growth in what we knew would be a challenging operating environment. What followed was a year that tested franchise on multiple fronts, and I am pleased to share that it has emerged stronger on every parameter that matters to long-term value creation and our focus on differentiated SFB, that is, Small Finance Bank. Let me set the context briefly. Through FY26, the broader ecosystem witnessed heightened regulatory scrutiny, industry-wide efforts to tackle digital fraud, the rise of mule accounts in banking system, and the tightening of operating environment. In addition to these industry-wide factors, the bank also navigated an unprecedented event in Q4, 2026. As a part of our steadfast commitment to timely disclosure and transparency, we have provided detailed disclosure on these matters through our regulatory filings across the month of March and April. And if I am not mistaken, we put around 40 disclosures in the month of March and April, a testimony of our transparency towards our stakeholders. I want to take a moment to thank each of you, our board, investors, analysts, customers, merchants, regulators, and the entire team at Kino, for the trust and patience you have extended to the institution through this period. Through all of this, our approach has remained very clear and simple. We have consciously chosen sustainable and compliant growth over short-term acceleration. We've taken measured path and prioritized building a stronger and a more resilient institution for the long term. And the results, I believe, speak for themselves. On the governance front, I want to be second but absolutely clear. Throughout the second half or the quarter four of FY26, the bank has acted institution first at every step coupled with keeping in mind mid- and long-term objective intact. The board swiftly convened within 24 hours to ensure continuity through interim leadership arrangements approved by the Reserve Bank of India. Now, in the lifespan of an organization, specifically a bank, the most important aspect is robustness of its business continuity plan, i.e. BCP. For us, March 26 turned out to be a testimony of our execution on BCP and amidst all this what came out is resilient business model of ownership reflected in accounts being opened and increase in deposit balance in March 2026. In addition to these business parameters, what was successfully tested was the stability and level-headedness of the leadership team in keeping mind-focused amidst the chaos and thereby not deterring from mid-to-long-term vision of the organization. Let me come to what I believe is the single most important development in FY26 on the business front. Yes, this is the strength of our deposit franchise. Our customer base stood at 1.75 crore by the end of March 26, growing 22% on a year-on-year basis. We've added approximately 6.9 lakh new CASA accounts in Q426 alone. Eclipsed by this event in end February 26, Focus for the month of March was on CASA and liability generation. In this context, in the month of March 26, we opened 3.2 lakh new accounts. Yes, this is 3.2 lakh new accounts, highest in last three years. Our total deposit balance increased all-time high of 2,957 crores. Post-event and the sustaining of that has been consistent across after achieving the highest possible peak. I want to emphasize this point because it speaks directly to the quality of the franchise we have built and in compliance-driven culture being implemented for long-term value creation. Our renewal income in Q4 26 reached 62.2 crores, the highest single quarter renewal in the bank's history. For the full year, renewal income grew by more than 25% year on year. This is not transactional revenue, but customer-owned ownership revenue. The most authentic measure of the trust of our 1.75 customers have placed in this institution and also corroborates our plans for journey towards Small Finance Bank. Coming to our digital and transaction business, through the second half of FY26, we further heightened our deliberate risk calibrated approach. We tightened merchant onboarding and strengthened transaction monitoring. We exited certain partnerships on Suomoto basis and certain merchant categories, where the risk-return profile was no longer aligned with where Pino wants to be as an institution. The result in short term was moderation in our digital throughput and our transaction-led business as well. Throughput from B2B digital payments were down approximately 17% sequentially in quarter 4-26. It is exactly the kind of decision a prudent bank should make when its business associate risk framework meets an overhaul, and we made it on our own, at odd, being aware of the short-term impact on our profitability. Let me come to technology. As committed in earlier calls, our core banking system migration to Finagle has been completed in this quarter. This was an investment of around 200 crores for the bank and one of the most consequential technology projects we have undertaken and it has gone live within our anticipated timeline. Alongside Pinnacle, we have also developed hollow the core modular architecture which decouples high-frequency transaction handling from the core. This significantly reduces the failure rate, enhances traceability, and crucially provides us with technology backbone that is ready to cover scale and complexity of small finance banks. We expect significant improvements in ease of doing business, faster product launches, and better customer experience over the coming quarters as new platform stabilizes. Now, moving on to another important aspect of FY27, that is small finance banks. As you are aware, on December 5th, the Reserve Bank of India granted us in principle approval to convert from payment bank to SFB. We are the first payment bank in India to receive such approval and we are deeply grateful to Reserve Bank of India for the trust they have recourse on us in the institution. Further, RBI's framework, we have defined window to satisfy stipulated condition for final SFP license, including the thresholds of network, capital adequacy, promoter shareholding, branch rollout, and overall, a differentiated business plan. I want to assure you that execution is on track on every front. On lending side, we made steady progress on our referral book, which is a proof of concept for our lending franchise. We will eventually... which we will eventually own as an SFB. FY26 referral business stood at approximately 1300 crores, with Q4 alone contributing around 592 crores, a 97% sequential increase. The referral mix is heavily aligned to the kind of secured priority sector aligned lending that an SFB model is designed for, and that is the model which we are also looking at. Housing loan, affordable housing, gold loan, loan against property, and MSME are the key products which we are looking at. Our intent, as I stated in the earlier call, is to build a differentiated SFB focused on secure asset and an asset-like model that can deliver superior return on equity. To re-trade, our business model for SFB revolves around three primary modes. First one is our cost of fund advantage over traditional bank, wherein we are looking at around 300 basis points advantage on our cost of funds. The asset-line model, which will be predominantly through our merchant network, 20 lakh plus merchant piece, we already have it currently, and a strategic edge on our technology and digital platform, which we built. To summarize, FY26 has been a year that has asked franchise to demonstrate two things. Deposit base is durable through a difficult environment and that the institution can execute on SFB transition on every condition that the regulator has set. On board counts the answer in numbers. As I have repeated in my earlier calls as well, our priority continues to be steady, sustainable, and a predictable bottom-line growth rather than pursuing exponential top-line expansion along with a sound base going towards a small finance bank transition. With this, I will now hand over to Anup, who will take us through the financial performance for the quarter and full year in detail. Over to you, Anup.

Good evening, everyone. Thank you, Ketan. As mentioned, FY26 has been the year of challenges, but let me assure you, FINO has emerged stronger and more resilient with single focus on building prudent franchise with governance-first approach. Let me take through our Q4 and FY26 financial performance. The total revenue for the quarter dropped by 31% year-on-year and full year by 14%. The causes are discrete and largely external. The regulatory-driven contradiction in digital payments from Q2 onwards, the industry-wide collapse of bank-led DMT remittances following the November 24 RBI circular has caused the decline. Further, on our B2B business, because of the slumber in the MFI sector, the revenues have declined for the quarter and for the year. None of these reflect customer attrition or a loss of market position. Our margins expanded by 250 bps for quarter and quarter and 500 bps on a full year basis. This itself demonstrates the shift from a low margin to high margin and ownership business. Our CASA base reached 1.75 crore accounts as of 31 March 26, up 22% year-on-year. We added nearly 7 lakh accounts during Q4 alone, despite tightening our onboarding framework and overall difficulty in the ecosystem conditions. The headline metric I draw your attention to is the renewal income. Q4 FY26 renewal income reached Rs.62.2 crores, the highest in the quarter and in the history. Full-year renewal income grew 25% to 237 crores from 190 crores in FY25. Renewal income is the cleanest measure of our customer ownership. It reflects customers actively choosing to stay with Fino. 25% increase in a year of industry disruption tells you something durable about this franchise. Our cost of funds remain structurally low below 2%. On the core CASA book, entering our SAP phase with approximately 2,800 crores of low-cost liabilities, it gives us a cost of funds advantage of approximately 300 basis points relative to our typical small finance bank. That is the foundation of our lending business skills. Coming to digital, the revenue decline from 63 crores in Q3 to 41 crores in Q4 reflects a deliberate de-risking of high-margin program manager flows in response to the regulatory environment, not a loss of platform capacity. We have intentionally trimmed down on this segment as we recalibrate our approach. Reflecting in our active client base declining from 347 in December 25 to 229 in March 26. Operating cost discipline has remained tight throughout the year. FY26 operating expenses including depreciation grew only by 9% year-on-year, absorbing the finical migration investment. Which is a proof of concept for the lending franchise we will eventually own as an SFB. F526 referral disburses to debt approximately 1300 crores with Q4 alone contributing around 592 crores and 97% sequential increase. The referral mix is heavily aligned to kind of secured priority sector lending SFB model is designed for. Housing, Gold, Lab, MSME. Our intent, as I have stated in earlier calls, is to build a differentiated SFB focus on secured assets and an asset-like model that can deliver superior return on equity. To reiterate, our business model for HFV revolves around... It revolves around three modes, which is the cost of funds advantage, asset light model, and cutting edge of our technology. In summary, FY26 has been a year of a lot of challenges. We have navigated through those challenges coming through the difficult times in Q4, and FY27 will look forward to building a prudent franchise of liability and preparing ourselves for the SFB.

Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star followed by one on their touchtone telephones. If you wish to remove yourself from the question queue, you may enter star and two. Participants are requested to please use only 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 Ankit Kanodia from Zen Nivesh. Please go ahead.

Thank you for the opportunity. So, my first question is related to the SFB transition. So, if I understand the business correctly, we are currently doing a few services or products which will probably be... In a conflict of interest, when we start lending as an SSB, so for example, when we look at our cash management business or our business correspondence business, I think a lender basically takes this business, basically gives this business to us. Now, how do we make sure that there is no conflict of interest? That is number one. Number two, we are also doing a lot of some of co-lending with other lenders. But when we start our own lending book, won't there be a conflict of interest on that part as well? That is my first question.

But coming back to your question, and I'll take the second question first about your call ending. Thank you. We put some statistics on, actually, it's not co-lending. It is about lending referral. You know, the amount which we've done for the last quarter of 597 crore of dispersal. There is no intent of co-lending, as if we are also not allowed co-lending. Before we migrate and before the launch of operations starts, this is our way. To establish a proof of concept or a pilot that how our differentiated model, which we are doing through merchant, what kind of demand it can raise. So it is actually showing a very good traction. It is helping us to prepare the guardrails. Once this, essentially, it is not a revenue or creative business currently, but it is a business which is being prepared for getting the railroads, establishing the potential of our differentiated channel, and that seems to be going on the right direction. So that's where our lending referral will translate itself into our... A HFB loan book. Through our differentiated channel. Coming to your first point, you know, conflict of interest. In the past also, we have actually said it many times. We are not going to go into a brick and mortar small finance bank with multiple, you know, branches and traditional cost of funds and traditional business models. We intend to continue our payment business, which are regulatorily allowed. You had used the example of cash management services. Yes, we do have some of the financial institutions where we act as cash management services. But in addition to financial institutions, the industry is far and wide. It's logistics, it's operations, it's quick commerce. So there might not be an impact. If your question eludes towards that, is it either and or? The answer is no. From a regulatory standpoint and from a business plan perspective as well, our CMS will essentially continue. Coming to the second example which you said, business correspondence, yes, that business approximately has a revenue number of around 140 odd crores in FY26. That is a business which we are not allowed to do in small finance bank and we have made our business model after factoring that. So, once we transit into a small finance bank, the business model has envisaged all the business which will continue barring this business correspondence which will be separately dealt with. I trust this clarifies your point.

That was very helpful, sir, and I read a news article that you are planning to sell this business correspondence, so do we have any progress on that front, anything which we want to share in this call regarding any progress?

I typically do not answer on any media articles, but we are looking at strategic options which we can look at for this business, and we will provide an update on this as things progress out.

That would be great, sir. And for one last question, if I may. Again, I think we have mentioned in the past that as for the transition to FAB, we will be doing a fund raise. So any timeline, any valuation or any kind of dilution numbers which we have internally chalked out and we want to share with the investing community right now?

Okay, no, I think you mentioned it all for that. As we currently speak, our capital adequacy ratio is in 83%, if Anup can validate that for me, we serve 15% regulatory requirement. We have made our business plans until FY30, which will be, you know, a fee-based business plan coupled by the secured lending book as well. So, as things stand now, from a business projections perspective, we are technically not requiring to have capital. So, our SFB launch is not dependent on any capital based on the business plan which we have drawn up for us. How do we take it forward? If and all, whatever happens, we will keep an update on that.

And RBI doesn't mandate us to reduce our promoter holding, because our promoter holding is 75% today in the company. So, is there any mandate by RBI to reduce it once we transition into SAB?

So, Ankit, as mentioned in the speech, whatever the conditions RBI has laid down from implementation point of view or promoter shareholding point of view or like exiting certain business or whatever the requirements, we are in process of We are progressing on the same, and as and when things progress, it will be updated to the relevant stakeholders, including the stock exchange.

Right. That was very helpful, sir. One last question. One of the payment bank licenses has been... Actually, it was cancelled long back. It has been just executed recently. Any particular, as in, I know you would not want to comment on any other.

I'm sorry to interrupt, but could you please return to the question queue?

Sure.

No problem.

Thank you so much. Participants, if you have any questions at this time, you may enter a star, followed by one on your touch phone telephones. We have the next question from Anand Dhamma from MK Global. Please go ahead.

Uh, hi, thank you for the opportunity. Uh, what explains the drop in the Casa opening, uh, uh, in Q4? Uh, I understand digital payment business, but, uh, Casa was a smooth business, uh, where we had a strong funnel, uh, for the DMT and the, uh, non-DMT customers. So what explains the fall in the Casa account opening in fourth quarter?

Hi, Anth.

So, the answer to your question regarding the CASA slowdown in Q4, other than the digital business. So, during the Q4, we had initially in the first month, within January, we had a core banking system migration. So, for around four to five days, there was a disruption in terms of the technology switchover. That's one of the causes that. Second, at an overall level, as mentioned in Kekam's speech, Also, comments that we are now focusing on a high-quality customer with higher balances, which will enable us to lay the foundation for our SAB plans. So, these are the two factors which led to the CASA account opening debt in Q4.

Anand, just one thing to add, if you're looking at it from a representative way forward, I think our focus is fully on retail and CASA as we had seen across in the month of March as well. So that momentum is expected to continue in FY27 in the manner which Anup just explained.

It should be expect that FI 27 or particularly first quarter FI 27 should be a normal quarter where we don't have any technical issues and so the Casa Momentum should again pick up.

Yes, yes, Anand, as I said, the technology change, et cetera, was already completed in Jan and Feb. March was a testimony of that, and our focus remains back to, you know, going back into the CASA and retail momentum, and that is our high focus.

And in the digital payment segment. The customer cleanup that we have done in the fourth quarter, in the third and the fourth quarter, most of these customers were largely related to real money gaming business, or there were other customers also that we have done a cleanup in terms of either profitability or regulatory issues, whatever it is.

Yeah, I'll ask Silas to just take this one.

Thank you, Kiril. So, if you recall, the real money game was actually stopped in August 2025 as per the regulation issued by the Government of India. So, the cleanup was at that point. Immediately the next day, we had blocked all the merchants who were doing real money gaming as per the circular. And the current quarter four changes which we have done is belonging to merchants which are predominantly within the program manager ambit.

So, in that case, and I think Ketan mentioned about that, we're looking at better profitability and better profitable customers. Does that mean that the margins of the DMT business now that we've done the cleanup should be better incrementally?

So, I think, Anand, you are, I think maybe, there are two products which we are talking about. One is... One is a digital payment, which is a UPI P2M product, which is where the real money gaming was there. Whereas now in your question, I think you mentioned about DMT. Sorry, that was a digital payment. My mistake. It was about digital payment. Digital payments. Sorry. So digital payments. So what? Sorry, then can you just repeat your question? Sorry.

So we're saying that we have done a team up in the digital payment business now and somewhere I think you said that you're looking at now more of a profitable customers. So does that mean that incrementally the margin of the digital payment business should be better?

Hi, hi, Anand.

Oh, sorry, this confusion because of digital payment and DMT, you are saying that Should, going forward, our digital payment margin be different from what we have seen in the FY26? Correct? That is your question. Yes. To answer to that, I think what we have essentially done, you know, based on March is we have taken a pause. We are re-looking at our processes, recalibrating our risks, and so on and so forth. On the digital payment as and when we progress after the reviews which we are doing internally and otherwise as well, we'll just keep and update it on the entire business model in later part of the quarter or towards the end of the quarter.

So then how should we model FI 27 in terms of our various business lines, where should we expect improvement and where we should see the acceleration in terms of the business, except for, you know, BC business, which we know that that would undergo a change, but other business lines, how should we model it in terms of throughput, revenue and margins?

So, I'm not going to, you know, we're not putting currently any guidance, but however, I can just provide a direction in what we were looking at. Perhaps in the previous question also, this came up. Our focus for FY27 is driven into three parts. One is the CASA accounts, which we had seen an historic high in the month of March after a relative slumber in Jan because of the reason which we explained. So that is one of the growth factors which we'll come across. Anup earlier mentioned we are looking at the corresponding liability balances, which is essentially there as well. So that is an important part and our focus essentially is going out there. Digital payment, I have earlier mentioned it. We are also looking at, you know, our transaction business typically has been a challenge on account of what Anup said in his note, but we are looking at an upside coming across in our Aadhaar-enabled payment system. And, uh, uh, that is also, we are looking at our CMS business, which will, you know, uh, uh, bounce back from the slumber, which you see. So if you're asking about the growth levers and all of these four growth levers, along with, I'm not repeating the lending referral, which is not from a modeling perspective, but from a business model perspective, all of this taken together is our priority for FY27.

And, and to add on to that, uh, since the product mix. It is moving towards more CASA-driven focus and liability-driven focus. The margins also will be dependent and moving in that line as well.

So typically, high product margins will lead to an improvement in the margin is what he is saying in a nutshell.

And is it possible for you to tell us, like, you know, what kind of commission that we make on this business, I mean, referral business that we do for loans?

So, again, typically, the referral business, as I said, is not driven essentially by the P&L, but we around make 100 basis points on the lending referral business, which we are currently doing.

Thank you. The next question is from the line of Sai Kiran from Pulwarthi Finsov. Please go ahead.

Yeah, hi. Just a few years, extending the conversation, or rather, referring to your April 13th press release about Mr. Rashidupka being unavailable for more than 45 days, and then you explicitly mentioned that the board as well as RBI will take a call on his fit and proper status. Just trying to understand what is the procedure which, as an organization, has to apply to get this, what I can say, this assessment to be done. If you can just help us with the timeline also, that will be really helpful.

Hi, Ketan here. As you rightly highlighted to a stock exchange disclosure, in addition to the stock exchange disclosure, which we said you mentioned before, I think there was an earlier stock exchange disclosure of 7th March as well, if I'm not mistaken, where the Reserve Bank of India had approved the interim management structure and, you know, helped us in terms of directional way forward, you know, to a fit in proper and their review. So, as we speak, the way things have progressed across as well, the bank and the board is evaluating the guidance and the prescription which the Reserve Bank of India has given, and we will be working towards that. At the current stage, this is under work in progress and is being evaluated by the bank board. That's where I should stop at.

I think the fix in that conversation is, if I may ask, whether the bank and board had done any special audit, appointing any external agency, and is there any findings regarding the thing? Of course, subject to the subjuries and as well as the regulatory team, but of course, if you can comment anything which the bank specifically had done to address this issue.

Yeah, it's a fair point. I should have covered it in my listing as well. We are doing a special review of the product and process in contention. That review as we speak is currently on, and as you rightly said, the bank and the board are evaluating various options, including the outcome of the special review, and we'll take the step forward.

Got it. And one last question from my side is that this event has happened late in the quarter. Just curious if you can, and also you mentioned that in the last quarter, the account openings were very large. If you can just try to break the quarter between pre-this event and post-this event, have you seen any slowdown in the account openings or the business? If you can just comment on.

I think I mentioned it in one of my notes as well. The account opening for the full quarter was around 6.9 lakhs. Anup earlier explained the January and February month. In the month of March, which as we say it as post-event, we've opened around 3.2 lakhs account, which is a historic high of last three years. And our deposit balances also reached a stage of, I think, total deposit of 2.957 crores, which was again one of the historic high which we've seen. So the customer confidence, the business model resilience, and perhaps on account of all of this business parameters, retail business parameters, the business for the month of March and thereafter has been going as business as usual on account of retail banking.

Great. Thanks, Dr. Ketan. Really appreciate it. Thank you very much.

Thank you very much.

Thank you. Our next question is from the line of Siddharth Gupta from Voyager Capital. Please go ahead.

Good afternoon. Congratulations, Ketan, Anup, and the entire team on this result. I just have a few specific questions. Firstly, over the past few months, and this is directly in line with the problems that we're facing on the management end, have we lost merchants or noted a slowdown in merchants being onboarded with us? And just to clarify, on page 31 of the presentation, in context of Soundbox, the merchant numbers mentioned as 2951. Is that an absolute figure or a scale figure? I just wanted to understand the difference because according to slide 10, we have about 20, like 84,000 merchants. And just wanted to understand the difference. If you could answer this and then I can take up the other couple of questions that I have.

Hi, Siddharth Anup here. So to answer your question on that soundbox thing, so the 20 lakh merchants are the physical merchants network which we have across India, covering 98% PIN codes. The soundbox, we started as a strategy for our SAP foundation saying that we want to provide a soundbox and capture more data points from our existing merchants who are having better transactions. That's where we implemented soundbox. And these are absolute numbers and not in any scaling. So, out of that universe of 20 lakhs, we have deployed Soundbox for these merchants. Hope that answers your question.

Right. If you could, just a couple of follow-up on this. So, are we pursuing soundbox as a revenue strategy that will form part of our, like, rental income from these soundboxes? Are we charging anything or anything along those lines? And the other bit that I wanted to understand, are we recipients of the UPI incentive from the government, given that there's a lot of UPI throughput that goes through, if yes, if you could quantify the amount received in the last financial year or provision to be received for the last financial year?

Let me just take the first one. Soundbox strategy is not a revenue creative strategy. This is to something, you know, the way I explained the lending referrals where we are building our guardrails so that, you know, it essentially can, we can leverage all of this at the time of small finance banks launch. On the second point, perhaps you are looking at a UPI incentive, Anup is a better person to answer that.

So, although, you know, so the incentive from the Government of India only came in till FY25. FY26, although they announced something in January, but till date we don't have any line of sight unless any further communication is there from the Government of India on this. I don't think we will be able to comment on that.

No, so, Siddharth, I think if your question is towards a UPI incentive, I think increasingly it's going towards the nature of the merchant, the small merchant, and the mid or the large merchant as well. As we are understanding, most of the banks which are operating may not be coming under the umbrella of the small merchant. So, as Anup explained, it is not currently factored into our model, or neither it is there in Fi26, neither factored in Fi27.

Great. Just last two quick questions.

I'm sorry, Mr. Gupta, could you return to the question queue, sir? Thank you. Ladies and gentlemen, if it's a request, please limit your questions to two questions per participant. The next question is from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.

Hi, I just quickly wanted to understand in terms of the... The account openings. How has been the month of April? Is it been similar to March or is it similar to Jan, Feb? Because we are also one month additional which has passed.

I think I am not commenting or divulging the numbers of April currently. However, earlier someone had asked the question of whether the momentum which is being picked up, is that a momentum which we intend to continue for the quarter and coming year? The answer is yes, CASA account opening is the fulcrum of all our strategy coming across and we expect the momentum to continue.

Okay. Secondly, in terms of the merchant partners that we have, we see that there's a big drop from December to March in terms of total number of merchants. Is it fair to say that a lot of that is already behind, that we have discontinued the whole merchant program and now it's only direct merchants or there's still some more cleaning up needed?

This, are you, I presumably, you're referring to our digital business app. Yeah, I can get Silesh to answer that, please.

Thanks, Ketan. Hi, Ashish. We have been following a risk-related growth strategy for our UPI P2M business. And, you know, we have highlighted that in our earlier calls also. What we have been doing as we move in FY25, the management team, you know, in its internal discussion has decided on a sumoto basis that, you know, we will do a comprehensive review of the residual payment business. As we empower on this journey, I think we have decided to pause the UPI P2M business, which means the existing merchants will not be able to transact as well as will not be onboarding any new partner as well as merchants. The objective actually is to strengthen the overall monitoring systems and develop a long term sustainable business model in alignment with our overall strategy of the bank. So currently, we are pausing the business and we will come back, you know, as we complete the entire week.

Shailesh, when we say pausing, does it mean that the revenues are near zero in the month of April?

April, there will be some revenue which will happen, but from now on, it will be zero.

Yeah, Ashish, so just to give a context to everyone and be clarified off, as Silesh said, and I earlier alluded to this as well, it is like a pause, look at rehaul, look at the ecosystem, get the reviews done, and then we will announce a separate plan, as I earlier said, maybe towards the end of the quarter or thereabouts. In terms of our digital plan. Until then, the focus very persistently remains on the four items which I had earlier alluded towards.

The second question was in terms of depreciation and interest. We see a large jump, quote-on-quote, on that. Is that because of the new IT system being capitalized? How much would that have been the impact because of that?

So, Ashish Anoop here. So, to answer your question first, yeah, depreciation is completely, primarily the impact on account of the core banking system, migration, completion, and capitalization of the same in Q4. That is one. Second, in terms of the interest cost increase, it's primarily on account of the leveraging in terms of the license which we have in terms of participating in reverse repo and other.

I understand, Anup, on that. So how much is the increment on depreciation?

So depreciation, the complete increase on account of that.

Okay. And that would be continuing, I guess.

No, the next year will be a larger impact because here, this quarter, this year only you had around two and a half month impact, whereas...

So I'm saying this quarter, what is the depreciation for this quarter?

Sorry, the depreciation for this quarter.

So that's going to be your run rate going forward, probably.

Probably a little bit. Yeah, and this, Anup, explained already factors in the migration of our core banking system is what we were essentially saying. So, Ashish, and maybe for us rest, we can just draw the attention on slide number 12. Where if you see until EBITDA level, despite a benign business implication and everything what we've discussed earlier, EBITDA has largely been impacted only by around 6-7 crores. And this is where, you know, when we come down to PBT and PAD, the impact gets larger because of the investment which we've done and which has been something which we've been telling about for a while as well. And that is the capitalization which is happening in the month of January.

Once with questions, may enter star and one. Our next question is from the line of Shahzad Shroff from Dvita Advisors. Please go ahead.

Thank you for the opportunity. My first question is, given the management disruption that we saw in the last quarter, do we expect this 2028 launch of our lending business getting impacted? That's one. Second, what regulatory milestones do we... We need to get cleared over the next 12 months to get to our SFB launch. And third would be, we've broadly given out the 20% RV target, but if it's possible, if you can break it up into expected yields, names, OPEX costs, that would be helpful. Thank you.

Let me just take the first question is about the challenges in SFP launch. As I had mentioned earlier, and maybe we had referred it in earlier calls as well, RBI has given us in principle approval on 5th December and has given us a specific timeline. If I'm not mistaken, we have actually articulated a timeline and I'll just give a reference of The slide as well. If you go to slide 22, this is exactly the same water you've been asking across. There is no change in our SFB plants. And as we speak, the work is essentially happening. We are going towards a differentiated SFB. We've given our thoughts in terms of the assets and liabilities as well, liabilities being core. So, in a nutshell, to answer your first point, the SFP functioning or SFP preparation, if at all, has further intensified for FY27, and the timelines currently, as we see, are completely intact. Second aspect which you asked about was the regulatory milestone. I think this is no different for us. After RBI gives an in-principle approval, there is a timeline which is given across and which we have attempted to capture in flight number 22. As we speak, the major part of our technology upgrade is already done, and we will be adding some more technology levers and the relevant specialized staff as well, and that is being progressed. After that, the process, RBI defines the process that we'll apply for, or we will tell them about the final launch preparation, and that's how it will go through. As regards to your third point on the yields and the kind of products, if I take on the liability side, if I just take everyone towards light 18, and I mentioned it, or rather Anup mentioned it in his note as well, that one of the key aspects which we are essentially looking at is the cost of funds. In FY30, around 3.9% based on current. So that will be around 300 basis points. So we are getting skewed towards the CASA liability. That is our strength. The point to remember is we are not starting. Whilst we have put an articulation of around 13,300, we already have some 2,800, 900 crore of deposit, which is anywhere there. And with us. Payment bank license evolving into small finance bank. There are other avenues which we can go into in terms of our low-cost liabilities. As we mentioned it often, it is there on the slide around two-thirds or more business is expected to come on the liability side from our merchant model, which is our current existing model. And then, of course, that will be dovetailed by with some of our brand setting as well. As regards to the yields and the NIMS, I think in the past, either we've given or we'll just come back, we have listed down products which we are looking at, largely secured, 90% secured portfolio, which we are looking at, affordable housing, MSME, gold loans, lap, micro lap, and a bit of personal loans. We will, as we progress towards, we will be providing a much more detailed impact or detailed strategy on how are we essentially building. This is also going to happen through our asset-like model or the merchant-led model. As regards to broadly NIM, and if I just recollect it off, NIM, we have been putting it across because of our low-cost deposit base, which we have is anywhere in the range of around 8% to 10% is what we are looking at.

Okay, thank you.

Thank you. We have a follow-up from the line of Ankit Kanuria from Zen Nivesh. Please go ahead.

Yeah, thank you for allowing me a follow-up. Sir, one last question, which is related to our PPT, where we have mentioned about our KASA revenue of 629 crores in FY26. Just a request, sir, if it is possible to give a break-up of how much

of note income is included in this? Hi, Ankit.

Anoop here. So, to answer your question, yeah, out of the 630 crore of the CASA revenue, we have 130 crore of load revenue in this.

Okay. Thank you so much, sir. That was my only question, and all the rest.

Thank you. The next question is from the line of Siddharth Gupta from Voyager Capital. Please go ahead.

Sir, two quick questions. One on the reverse merger with the promoter entity, which we had announced back in 2023. Any updates that you can share with us? And second, I wanted to know the renewal percentage of our CASA subscribers.

On the reverse merger, yes, we have updated on our earlier call as well. At the time of the application, our intent was to have a reverse merger as well as a small finance bank application. As things stand now and consistent with what we said in the previous calls as well, currently we are on the path of a small finance bank which will proceed, and a reverse merger is something which, if it's regulatory allowed, will be explored subsequently, as in when the small finance bank will proceed. Bank comes through. On your second point, on the CASA renewal percentage, Anup, you want to say it?

Yeah, so Siddharth, on the question on the CASA renewal, we are maintaining the renewal rate of around 60 to 65% for the CASA subscription.

Okay. Thank you so much.

Thank you. We will take the last question from the line of Nitin and the individual investor. Please go ahead.

Hi, Ketan. So, I know that you said you won't be giving any guidance, but if you look at the slide number 22, and you know you have consistently said that you were looking at ROE of 20% as part of your SFB plan. Is this 20% something that you're looking by F530, or you're planning to achieve that much earlier as per your business plan? Also, this 100 crore of investment that you're going to do, is that also basically on your branch expansion, or it includes all other expenses like staff, et cetera?

So, let me just take the second question first. The investment which you quoted about or rather we quoted around 100 crores is primarily around the technology infrastructure enhancement which we are doing over and above the core banking which we have done across. So primarily or the larger part of that will be on the digital and the technology parts. On the branch, as I have earlier said, it's our business model or larger part of our asset and liability franchise will be on a variabilized cost model, which is the merchant. We will open branches, but not in comparison with a traditional brick and mortar business. So that perhaps answers the second question.

Which is fine, but that will incur more, whatever, even if we open few branches. So that cost is not part of the standard cost.

That will be on top of standard cost. I essentially said primarily it was the technology driven. So if we are looking at 100 crore, that is the overall capex at this stage which we are looking at. But the branches from a business model perspective may not be material is what I am saying. Your first question on slide 22 was about 20% and Anup is jumping on his chair.

I mean, the thing is, see, we talked about TAM, and we talked about so much, you know, in our earlier presentations. I've been an investor for a very long time now. But unfortunately, last year's events of, you know, remittance going out, mule accounts, then what happened with Rishi, a lot of other things, you know, investor confidence is certainly down, which you all know. What are you really doing? So, you know, get that confidence up, and just 20% is definitely something that will, you know, help towards that, basically.

Let me just answer your second point now in terms of definitely, as I said in my note as well, it has been a redefining year for us, you know, risk calibration, sewer motor moderation, and the event which we are talking about. But one thing which has happened, and maybe I am reiterating it off, and this also resonates or maybe answers some of the earlier questions as well, from a management intent and from a management or the stability of the organization, March has been an historic high for us. So there is definitely a retail business and it is institutionalized. The processes are institutionalized and not essentially person-dependent or a person-heaviness as well. And our focus is going towards... The SFB, which we are looking at. As regards to your specific questions of ROE, by which time? So, before Anup answers that, I think we recognize, you know, people who have been standing with us in all of this, and we are working towards that, and we are making a differentiated SFB. Not many will have a 300 basis point advantage of cost of funds, which I am essentially saying it off. So there is an element of definitely a differentiated model which is being worked out.

So, Anup here, to answer your question on the ROE, the ROE of 20% is what we aim to achieve by FH30, and there are three main factors for aiming that ROE. We, our asset-light model, so two-thirds of our business, whether it be liability or an asset, will be sourced through the merchant network which we already have, which is already established.

Yeah, I think I know all of that, but what I'm trying to really understand is how fast are we working? Because, see, the thing is, we should have been monetizing everything that we worked for the last three, four years. We've been seeing this investment for a very long time now. So all I'm trying to understand is how soon are we looking at, you know, our profits are down like from 100 crores to 60 crores, you know, and we know the reason, but we still need to, you know, really move ahead and try to get back, you know, where we were, which I understand it's asset light and we're differentiated. We know all of that very well by now. I'm just trying to understand how soon are we going to get some ROI, which, you know, will bring back the confidence in the station, because that's what investors look at. At the end of the day.

No, so Nitin, as Ketan mentioned, we are completely, the whole entire management and the board is working towards the same. One thing we can assure you is... We are working on operationalizing SFB at the earliest. What we have given the time is based on what RBI has also given us. We are working towards the same. Second, in terms of getting the higher profitability, we are maintaining that cost discipline. If you see overall, the variable bias cost model has led to this profitability also for us. So, we are, as a management, we are trying to overcome those challenges around the same, and we can assure you that we are completely working towards the same.

And you're not going to give any guidance for this year at all in terms of what we are planning to achieve in terms of delivering you?

I'm sorry to cut you off, but due to time constraints, we would need to close the call now. All right. I now hand the conference over to the management for closing remarks.

Thank you. Thank you, everyone. As I have said earlier, It's been quite a task on this quarter, but there have been a lot of positives which have come across, and I'm not repeating them, but just to give an assurance to everyone, our focus continues to remain on our retail, casa, liabilities. AAPS, and more importantly, how we are building towards SFP. There has been some amount of events which have happened, but the management is completely resilient and working towards this, and when I'm saying this across, the entire bank is rallying towards the commitment which we have made towards our stakeholders. So I thank every one of you and we are doing our best to increase the momentum and FY27 would be again a redefining year for us in terms of going towards an SFP. Thank you, everyone.

Thank you. On behalf of Go India Advisors, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.

Thank you. Thank you for having me.