Thank you, Abhijit. A very good evening, everyone, and a very warm welcome to discuss our second quarter and first half of FY27 business performance.

We reported our highest quarterly profit of ₹502 crore in this quarter, having grown fivefold over the past five years. Current financial year marks a clear turnaround, recording ₹995 crore PAT in the first half as against ₹778 crore PAT during the previous financial year.

Our H1 ROA stood at 5.9%, and ROE stood at 23.8%. We are delivering record profitability while remaining amongst the most competitively priced lenders across our product segments.

Our lending franchise today spans across group loans, individual business loans, secured business loans, affordable housing loans, and two-wheeler finance, with growth, margins, and asset quality all moving in the right direction. Our AUM grew 19.5% year-on-year and 2.1% quarter-on-quarter to ₹30,946 crore.

Disbursements stood at ₹6,355 crore, up 19.4% year-on-year and 4.1% quarter-on-quarter, taking H1 disbursements to ₹12,461 crore. We added 2.3 lakh new borrowers, of which 35% were new to credit, taking our H1 additions to 4.9 lakh customers.

We also opened 62, 60 new branches during the quarter, expanding our network to 2,326 branches across 460 districts. Digital collections rose to 26.3% versus 18.1% a year ago.

When we began building our retail franchise, our thesis was very simple: the customers we've served for years would need more than a group loan as their economic profile improves and financing needs expand. That thesis continues to be playing out at scale, with regulatory support in place.

Of the 45 lakh borrower base, 15% or 6.8 lakh borrowers belong to retail finance. Retail finance AUM grew to ₹7,200 crore, now 23.3% of the total AUM, up from 20.6% in Q1 FY27.

Within this, our secured book comprising of secured business loans, affordable housing loans, and two-wheeler loans grew 60.9% year-on-year to ₹695 crore. Our mortgage presence now spans across 300 GL and 128 retail finance branches, with two-wheeler loans offered through 950-plus group loan branches.

Our two-wheeler loan book witnessed strong traction, having crossed ₹60 crore compared to ₹20 crore in Q1. Further, our ability to meet evolving credit needs of our customers is also deepening their loyalty, with borrower retention rates improving from 85% in FY26 to 88% in H1 FY27.

Alongside, we're also strengthening our collection ability with a dedicated collection team comprising of 500-plus employees across operating geographies. Our group loan portfolio stood at ₹23,746 crore as of September 2026, a marginal decline of 2% from the start of financial year '27.

This was on account of write-offs and graduation. Most of the ₹614 crore portfolio written off in H1 FY27 consisted of group loans.

With write-offs normalizing and the seasonally stronger second half ahead and increase in customer acquisition during H2, we expect the group loan book growth to return to guided levels. Commenting on our asset quality, we saw a temporary increase in monthly PAR accretion rate during August and September, driven by excess rainfall and flooding in certain regions of Bihar, UP, Chhattisgarh, and Madhya Pradesh, along with seasonal festivities in a few geographies.

However, despite this, our asset quality is back to pre-crisis levels, at its best in the last 10 quarters. Gross NPA stood at 1.79%, net NPA at 0.59%, and PAR 90+ at 1.11%, each improving sequentially.

Collection efficiency excluding arrears stood at 97.9%, and ex-bucket collection efficiency for September stood at 99.71%. Credit cost for the quarter stood at ₹299 crore, or 0.99% on a non-annualized basis, of which 0.70% or 70 basis points was driven by new PAR and 29 basis points due to increasing ECL provisioning rates.

We further strengthened our ECL provisioning at 3.31% after building a macro-prudential buffer of 45 basis points or ₹137 crore. Our annualized H1 FY27 credit cost of 3.43% includes normative credit cost of 2.98% and 0.45% of macro-prudential buffer, which is well within our guided range.

Commenting on our margins, we saw our NIMs expand to 15.1% in Q2 from 14.4% in Q1, driven by lower interest reversals in group loan book, higher yielding individual loan book, stable cost of borrowing, and higher capital position. Our cost-to-income ratio improved to 28.2%, and PPOP grew 39.6% year-on-year and 11.2% quarter-on-quarter to ₹970 crore in Q2 FY27.

Our marginal cost of borrowings stood at 9.1% in Q2 FY27, while average cost of borrowing was stable at 9.1%. Our capital position strengthened further, with our capital adequacy at 26.9%, Tier 1 at 26.2%, and total equity base of ₹8,919 crore.

On the liability side, diversifying our funding mix coupled with focus on long tenor funds remains our medium-term strategy. We signed USD $175 million ECB loan in October, syndicated by Standard Chartered Bank and DBS Bank.

Despite global macroeconomic uncertainty and strong competition in the ECB market from FCNR(B) deposit mobilization by banks, the transaction received a strong response at a competitive pricing, with 10 financial institutions participating from across Asia, Middle East, and Africa. We see this as a clear reflection of international lenders' continued confidence in our business model and governance standards.

This is our fifth ECB syndication in the past five years. We also mobilized ₹940 crore of domestic NCDs through private placement process in this financial year.

ECBs and NCDs help us both in liability diversification as well as securing longer tenor of funding to strengthen our ALM. Basis our strong H1 FY27 financial performance, we've raised our profitability guidance for FY27: ROA of 5.2% to 5.8% versus 4% to 4.8% earlier, and ROE of 21% to 24% versus 16% to 20% earlier.

We retain our AUM growth guidance of 20% to 25%, supported by return to growth in group loan portfolio coupled with continued momentum in retail finance. We expect a NIM of 14.4% to 14.7% as against 12.8% to 13.2% guided earlier, driven by healthy asset quality, strong control over borrowing costs, and a higher capital position, even after factoring the 50 bps rate reduction applicable from October onwards.

We are best placed to protect our NIMs in an evolving macroeconomic environment. Our risk-adjusted NIMs are currently at highest levels.

Further, we can maintain our borrowing cost range-bound, supported by diversified lender base, high quality PSL book, and judicious borrowing mix between repo, MCLR, and fixed rates. Cost-to-income may range between 29% to 30%, as operating costs remain well under control despite inflationary trends.

We're retaining our credit cost guidance of 3% to 4%, and it should comfortably cover for any volatilities on account of evolving drought-related conditions in some operating geographies. We are seeing a few signs of drought-related challenges in October around certain pockets of Maharashtra, wherein the borrowers are requesting for additional time for repayment, including restructuring options.

At this point of time, we're not seeing any on-ground impact in any other geographies. We also note that northeast monsoons are expected to be normal, providing respite to southern peninsular India.

We'll focus on addressing the growing credit needs of our established, seasoned customers with a proven track record of repayment across credit cycles through renewals, group loan servicing, and targeted graduation to individual, secured lending products. New customer acquisition will be a key growth driver, with momentum expected to accelerate in the H2.

To conclude, CA Grameen today is stronger, more diversified, and more profitable than any point in its history, and we're executing with the discipline of a franchise that has been tested through cycles. As we enter the seasonally stronger second half, we do so with momentum in our business, strength in our balance sheet, and full confidence in delivering the guidance we've set out today.

We will now open the forum for questions. Thank you.

Hi, sir. Congrats on a good set of numbers.

Sir, just two things: one on this 50 basis point lending rate cut. When I look at the marginal cost of borrowing, which is already gone up by almost 25, 30 basis points sequentially, when there is a clear sign of likely increase in cost of borrowing going ahead, what is the thought process behind trimming lending rate now?

I can understand the better profitability must be driving this, but when we see a drought kind of a scenario spanning out, cost of borrowing likely to go up, just wanted to understand why to consider lending rate cut at this stage not waiting for maybe one more quarter.

Right. Renish, our current NIMs are at highest levels.

As the lending rate is guided by our pricing policy, which takes into account several factors, including your credit cost, including your cost of borrowing, as well as opex. Right?

Only a lever today is if credit costs increase, that is when we can retain this pricing. Now, the credit cost, since we are publishing within the guided range and being driven by the pricing policy, this will be range-bound.

We have earlier also indicated we will do a 50 basis points cut this quarter and probably 50 in the next quarter. The marginal cost of borrowing increase is largely because of the mix of borrowing that we've taken right now and not necessarily indicating a higher increase

at this

point of time. Right?

We do acknowledge that the repo rates have gone up, but it will be gradually passed, and that will go through. If, for example, the cost of borrowing goes up in next quarter, we have the right to reprice or not necessarily pass back the 50 bps that is planned for the next quarter also.

I'm saying it is something that we work on, but at this point of time, we need to pass this 50 basis points to the customer given that the credit cost is held at ground.

Got it.

Renish, Nilesh here, I'll add a couple of points here. Firstly, on the borrowing cost, we do have borrowings from a wide range of lenders.

There are more than 80 lending institutions from whom we borrow, and obviously, the borrowing rates will be within a range. That's where the blended rate, what appears on the balance sheet is around 9%.

In second quarter, obviously, we did a couple of NCD transactions. We had a couple of longer tenor funds, which obviously will come at a slightly higher rate.

At the same time, what we have to also look at is the loans what we are replacing. Even in third quarter, you will see the marginal borrowing cost will be higher because we have done a $175 million ECB in month of October, which will come at a higher rate.

It will also replace a $200 million ECB, which is going to expire in the same month. The new ECB what we have taken is at a lower rate compared to the previous ECB which getting replaced.

Now when I look at my borrowing for next six months, the amount what we are going to draw down is at a similar rate of the amount what we are going to repay. That's where we are of a view that our borrowing cost will stay in this 9.2% to 9.3% range till March.

While we do have certain repo-linked exposures, but around 30% of our borrowings are fixed, 45% are linked to MCLR, and balance 30% are linked to Even the loans which are linked to repo, they reprice at different points in time, it is not that it will immediately kind of add to the cost of borrowing. The MCLR-linked borrowings typically, they react with much lag.

Today, given the liquidity in the system, we have seen instances in couple of banks the MCLR has even come down. From that perspective, as of now, we have a visibility on the borrowing cost.

Then as Renish said, if there are any upside risks on the cost of borrowing, then maybe every quarter when we relook at the lending rate, we can reprice it.

That possibility we have

visibility on the NIMs.

Got it. We have flexibility to change our lending rate on quarterly basis.

Got

it.

Like we had said previous quarter, previous quarter we had said that we will pass on 50 bps in third quarter, fourth quarter, and next year's Q1. Now we have taken a 50 bps cut in the third quarter.

Now, the subsequent ratings lending rate decisions will depend upon how the credit cost is evolving and how the borrowing cost is evolving. There is no compulsion that we have to pass on.

It will only depends on the risk-adjusted NIM what we want to retain. Today, with a 14.5% to 15% NIMs, I mean on a H1 basis, our NIM is 14% 14.7%.

On a risk-adjusted basis, the NIM is more than, I mean it's closer to 11% or more than 11%, and we would want to retain a risk-adjusted NIM of 10% so that it allows us to achieve our targeted ROA of 4.5% to 5% on a steady-state basis. From that perspective, we have enough flexibility to manage our NIMs aligning with the evolving credit cost and

Got it. Okay.

No, this well understood. Thanks, Nilesh, anyway.

Secondly, on this credit cost trajectory, right, obviously, credit cost will remain between 3% to 4% for sure. I think in that the lower credit cost in Q1 will also help us.

From a trend perspective, do you see Q3, Q4 credit cost inching up from Q2 levels because, as you rightly mentioned, there are still some risk of a drought-related regions, and also maybe few of the larger player also indicating the same thing. What you guys expect internally?

The credit cost in Q3, Q4 should trend upwards and still remain within guided range, or how one should look at the trends going ahead?

Right. Renish, right now our expectation is that in Q3, it should probably inch up a little more.

However, on an overall year basis, we still believe that we're significantly positioned to be within the guided range. Right?

One is you also have festivals in October, November, and you also have certain drought-related situation emerging slowly in some districts of Maharashtra.

Other than that,

we don't see any stress right now. As we all know that we will know for clear only in this quarter.

Right? We'll have to

wait for how things evolve. We've estimated a certain inching up, but it is going to be range-bound within the guided range.

Got it.

Renish, for the first half, the credit cost run rate is 3%. In the second half, even if it slightly inches up, maybe even if we go to a 5% run rate, still for the full year, we should be within 4%.

Today, like I said in my previous response, the NIMs what we have, they are well enough to cover 4% kind of a credit cost and still deliver the ROAs what we are aiming for.

Correct. No, you are absolutely right in this.

Broadly what I just wanted to understand is that obviously FY27 will be taken care of. If my credit cost trajectory continue to inch up, then at some point, it might create a risk for FY28 wherein maybe we are expecting a credit cost to remain at 3%.

That's what we expect in a steady-state basis. If my credit cost continues to inch up, then FY28 credit cost could remain more than 3%, and hence, I'm more concerned about Q3, Q4 trajectory.

Right. I think we have to wait it out for Q3, Q4, and we have to kind of position ourselves for next year.

Like we said, because we have a significant pricing advantage, any inching up in credit cost can definitely be priced in what we're looking at.

Got it. Yeah.

Renish, if, for example, we take a scenario wherein the credit cost even stays elevated next year, in that case, we need not pass on any further price cuts. Like we had said in our previous calls, we have to pass on say 100 to 150 bps price cut, but we have already done 50 bps, we can stop there basis how the credit cost is evolving.

The profitability will be protected this year as well as next year.

Got it. Maybe can I squeeze one more last question?

Go ahead.

Yeah. Being an industry leader, what is your assessment in any drought kind of a scenario historically, how does the credit loss actually spans out?

Obviously interim, we can witness PAR portfolio going up. Ultimately, what kind of a credit losses you guys have witnessed in historical event when there is a drought situation?

See, historically, we've not seen this kind of drought, number one. Historically, our data at least indicates that we've not had any significant impact because of drought.

Now this year, we'll have to watch out because it's very widespread. Like I said, except for a few districts in Maharashtra, we are not seeing stress anywhere.

We'll have to watch out for November, December. The big plus is at least the northeast monsoon is holding up.

Right? That is also a good reprieve to look out to, and we'll have to watch out how things evolve.

Got it. This was helpful.

Thank you, and best of luck.

Thank you, Renish.

Thank you for the opportunity. I have two questions.

First is again going back to the drought situation. What are the operational changes that we are implementing at our branch level in Maharashtra where we are seeing drought situations?

Any change in incentive structure for the loan officers, any other process changes that you can highlight? Also, do we have any kind of credit guarantee schemes on our book, which can protect us probably if a certain portion of our book is impacted?

That's my first question. Second question is the impact of the insurance regulation reform, any commentary, if you've had any conversations with the regulator, anything that you can share with us on that matter?

Thank you.

See, first on the drought situation, right now it is around a few districts in Maharashtra, especially in the central part of Maharashtra. Right?

There probably we will not focus on sourcing new customers. We will focus on only our existing customers with respect to business.

We've strengthened our presence on the collection side with additional resources from across different teams, and that is going to help us in the short term. With respect to guarantee, we have not yet availed a guarantee for microfinance.

There is some budgetary approval which is pending. Though we've applied for it, we expect it to open up in a week or two.

As and when it opens, we will start enrolling ourselves into that. That is where we are.

We do have a smaller amount of guarantee that we've initiated for individual lending through CGTMSE as well as BCFI. With respect to insurance, right now, I think it's too early.

We've not had any direct discussions with regulators. However, we'll have to wait for the regulations to firm up.

We believe that it will be slightly moderated from current levels. I'm not sure about what levels it could be.

The impact we see is around 25, 30 bps on our ROA, which I think we are better placed than anyone else in case we need to cover it through pricing to protect our ROAs.

Right. Sir, just one follow-up on the credit life piece.

When you attach the credit life on your policies, you're only covering the woman of the house, right, with your

Today, it's a choice of the customer, both for herself as well as for the husband. Our preferred coverage would be for both the man and the woman, and predominantly, we achieve it.

Right? There will be a few thousand customers probably who've not availed both, or any one, or something like that.

Oh, okay. Okay.

All right. Sir, just to follow up on the first bit in terms of the collection efforts that you're building in, while the drought situation has only been in Maharashtra, I believe in the second quarter, some of your northern states would have also been impacted by floods, etc.

What has been the trajectory of behavior with the customers in those states? I just want to know whether the floods have been more temporary in nature, the drought situation may stretch out.

Yeah.

Yes. Typically, floods are temporary in nature.

We come back within two to three weeks,

and

this has been the scenario even this time. There is no other effect at this point of time anywhere else.

All right. It's only Maharashtra.

We don't have a big exposure in AP and Telangana, right?

Yeah.

Okay. Understood.

Thank you. Thank you, and all the best.

Thanks for the opportunity, sir. Sir, can you quantify with the number of districts which are impacted or percentage of portfolio which is exposed to those districts where we are seeing drought-related impact?

See, when I say impact today, there are customers who are coming out and asking for time or restructuring options. Right?

This is something which is developing. We are seeing this in around six districts, especially in central part of Maharashtra.

That is where we're talking about, right?

What portion of portfolio will be coming from these districts approximately, sir? See,

right now, I think I don't have the data in hand. We can take it up offline.

These

are very early signs, something we'll have to watch out for.

Sure. Sure.

That's it from my side. Thank you.

Thank you, Nidesh.

Hi, good evening. Congrats on good numbers for the quarter.

See, again on few of the states like UP, Bihar, and MP, Tamil Nadu, we did see some inch-up in PAR 15 accretion rate in September. Are you trying to imply that except for Maharashtra, everything else has kind of cooled off in October?

In October, the PAR 15 accretion in these states has kind of come back to usual levels?

Yes. More or less, see September spike was because of floods, like I said, as well as festivities in that particular month.

Other than Maharashtra, everywhere else we are normal at this point of time.

Even Karnataka and Tamil Nadu, we haven't seen any spikes as yet in October. Correct.

When I look at your credit cost guidance for the second half, which is implied because first half has already occurred, then are you and see your write-offs will come down significantly because since you're just having ₹550 crore of NPA at this point in time, write-off quantum will come down, so that credit cost will come down. The PAR 15 accretion so far is not changing, except for a few districts of Maharashtra.

There are you also trying to build in some more strengthening of ECL provisions in the current guidance level? If you can quantify that.

Is that a plan to take Stage 1 provision to certain higher level from where we are?

Stage 1 currently is around 1.88%. We've already built a macro buffer of around 45 basis points.

Right? That is something which we already have, totaling to around ₹137 crore.

It may inch up. The Stage 1 provisioning may inch up by maybe five to six bps every quarter in Q3 and Q4 basis the new data points setting in.

Okay. Okay.

That's it from my side. Thank you.

Thanks, Rajiv.

Sorry, can I just

Please go ahead. Yeah.

Just this one thing. I don't know whether if you can just clarify on the transaction which the promoter is trying to do, maybe some color, if any idea about where are we?

If you have any idea about what is the status of it, maybe from a timeline point of view, or the nature of it point of view, because I think that has been also a slight unnerving for a lot of people. Yeah.

Right. See, as currently the promoters are in active discussion for a strategic investor at the HoldCo.

That is where it is, and we should see some progress in the next couple of quarters.

Got it.

Is there anything else you are asking? Is this what you are asking for, right?

Yeah. Sure.

It is also subject to a rightful price discovery, right? There is no time-bound element to it.

If that is the clarification if you can make. Yeah.

Yes.

Okay. Thank you.

Hi. Am I audible now?

Is it better? Yeah.

Okay. Sorry, just before I get to my question, a couple of clarifications.

The strategic investor is at the HoldCo level, right, of the promoter?

Yes, yes.

Not at our level.

No, not at our level. Got it.

Got it. Also, sir, did I hear you say correctly that or maybe I didn't hear it correctly or didn't understand it correctly, but it'll be a 25 to 30 bps credit cost impact next quarter, higher credit cost?

No, 25 to 30 bps was the insurance commission contribution to ROA. That's what was That was the comment on insurance in case their commissions drop to indicated draft guidance, that we could have an impact of 25-30 basis points on our ROA.

Dude. Got it.

Sir, then could you just quantify when you say next quarter credit cost could inch up, broadly, can you give a sense of how much you think?

See, that's what right now, what we are saying is that even if we budget a certain amount of increase because of the drought situation, we don't see it go beyond our guidance in this entire year. Right?

Right now, if you remove the provisions that is the buffer that we've created of 45 bps, we are at around 2. roughly around 3% credit cost.

Right? Including the buffer, we are at around 3.45%.

Even if we see a inch-up in credit cost, we are not able to envisage a situation right now where our credit cost could cross our guidance. You should assume that it will be somewhere between 3.5%

to 4%. 3.5% to 4%.

Got it. Got it.

Just firstly now coming to my questions, the way we should think about the interplay between pricing of loans and cost of funds and credit cost is that over a cycle, you want to achieve a 4% to 4.5% ROA. Is that a fair statement?

Yeah. Piran, today, the way the pricing is structured is up to a certain credit cost, we can obviously price it.

Obviously, it's not a unlimited flexibility to price. Like you must have seen last year in FY26, with a 7% credit cost, we did a 2.7% ROA.

Typically, up to 4.5% to 5% credit cost, we can pass it on, and we can still protect our ROAs are of around 4.5% to 5%. If the credit cost spikes beyond 5%, then obviously we can't price it.

Maybe up to that threshold, we can protect our ROAs in a range of 4.5% to 5%. That's where I said that today on a risk-adjusted basis with a 14.5% NIM, we can absorb a 4% 4.5% credit cost and still do a 5% ROA.

Got it. Got it.

Just secondly, can you talk a bit about your IBL book because this has grown really fast? Are you seeing similar delinquency trends there, and also if you can clarify, all these are existing customers who were never in Stage 2 in the past?

I'm just clarifying, it is not IBL. It is individual business loans.

Sorry. I meant individual loans, yeah.

In this,

this is basically a graduation product. Right?

These are your high vintage customers with better credit profile as well as credit scores. For example, our prime product for graduation, which is Unnati, has an average tenor of customers over 7 years and an average credit score of more than 730.

This book, at the peak of the credit cycle in the last year, as well as on a continuous basis, the PAR 30 has never crossed what? 3%?

Yeah.

Okay. Okay.

Even now it's fair to say that delinquencies in this book are much lower than the MFI?

It is much lower than MFI.

Got it. Got it.

Okay. That's it from my end.

Thanks, and wish you all the best.

Thank you.

Hello. Am I audible?

Hi, Abhishek.

Yeah. Hi, Ganesh.

Hi, Nilesh. I have just two, three quick questions.

One is in terms of disbursements, across microfinance players, we've seen a little bit of a slowdown or containment sort of this quarter. What are you observing on the ground?

Is everybody sort of pulling back, and is that more pronounced in the states that are impacted? Is that still continuing or people are starting to disburse more?

What are the dynamics right now in terms of the states that are impacted by drought or flood?

You're talking about industry, you're talking about CreditAccess?

Industry, in your locations where you are. What is the competitive action currently?

What we've seen through the cycle, we can see that banks have significantly pulled back, and MFIs have garnered better market share. Right?

That is the trend that is emerging. Your NBFCs have also garnered better market share.

SFBs have contracted a little, but banks have significantly contracted on the microfinance side. Right?

Otherwise, I think it is business as usual. I don't see any contraction.

In our case, because majority of the write-offs in H1 was from group finance, and typically Q2, Q3 is your growth periods. You will see the microfinance book inch up in Q3, Q4.

If I see the H1 or Q1, Q2 also, compared to historical, our disbursements have been quite strong in both these quarters.

For you, I completely agree. Also, the people who are disbursing, is it just two or three large NBFCs or MFIs, or is it more broad-based?

See,

I think currently, as we start publishing, like I said historically also, the only reason probably growth is a little not feasible is because of liquidity aspects to smaller NBFCs. The large ones continue to do normal business.

As more liquidity kicks in, I think you should start seeing growth. Right?

That is where I see the challenge. Otherwise, I don't see any large player pulling back at this point.

Got it. Because if you think back to say 2024, due to elections, heat wave, or whatever other triggers, basically when everybody pulled back, there was a credit crunch, and that sort of led to a bit of a spiral.

We

don't see that kind of a caution.

I don't see that kind of a situation right now, and you may also have to take slightly different interpretation of microfinance growth going forward because now it is getting distributed between individual and microfinance. This graduation is something that everybody is kicking in.

Right? We'll have to monitor both individual business loans, and if at all we have data at some point of time, how many customers have moved from microfinance to individual and hence what is the drop.

Right? In my view, like us, industry also will be range-bound in microfinance growth, and you will see retail growth probably picking up.

Perfect. That brings me to IBL.

Have you also taken any yield cuts in IBL product?

Yeah. This 50 basis points is across all our products.

Across products. Right.

Except for mortgage and two-wheeler.

Got it. How long will it take for the yield cut to flow through into actual yield reduction?

Will it take a couple of quarters at least to start showing up? Four to six quarters.

Four to six quarters.

Suffice to say your yield broadly remains where it is this quarter or maybe even goes up next quarter because of the momentum of the back book, and then it starts coming down.

Yes. Yields have peaked out, Abhishek.

In Q1, Q2, the yields have peaked out. Yes, yes.

Okay.

The decline will happen over four to six quarters, like the 50 bps cut what we took, it will at least take four quarters for the entire 50 bps cut to flow in.

Of course. Then next quarter again you'll take a 50 bps, and that will also take four, the overlapping effect.

Theek hai. That is understandable.

Abhishek, the subsequent rate cuts will only happen if the credit cost holds at 3%. If there is any increase, then we may have to revisit.

Understood. Got it.

Theek hai, theek hai. Thanks so much.

Those were my questions, and all the best. Congrats for the quarter.

Thank you, Abhishek.

Hi, team. Good evening.

Few questions from my side. Firstly, just a clarification.

The increase in PAR 15+ accretion that we have seen in this quarter, especially in a few states like MP, that number is primarily due to the flood situation in those states. It has nothing to do with the drought situation thus far.

Is that understanding correct?

Yes, that's correct.

Understood, sir. Sir, and two more questions.

Firstly, the kind of disbursement demand that you are seeing today from the customers, has the demand for let's say smaller ticket loans gone up in the last few months, or there is no such trend right now?

There is no specific pattern I can relate to.

Understood. Sir, and lastly, in your borrower base, when you look at the overall leverage of the borrower not just for you, but across all MFI lenders, what proportion of borrowers would have roughly hit the ₹2 lakh limit of leverage?

I don't have this data off-hand.

Okay.

We can get back. Yeah.

Sir. Perfect.

Those were all the questions. Thank you very much.

Very, very few would have hit the limit.

Hi, sir. Good evening, and thank you for giving me the opportunity.

My question was largely on since you've started acquiring new customers actively now, what sort of a trend are we seeing in terms of the customers having exposure to gold loan as a category? Are we seeing that the newer customers that we are acquiring, larger proportion of them have exposure to gold loan versus a trend that we were seeing probably two years back or three years back?

See, right now, we did do some research on this data. Right now, what we're seeing is that it is stable at around 10%, 12% of our customers on a consistent basis.

We're not seeing any upswing or low swing at this point of time.

This 10% to 12% is for the new customers that we acquire or the existing customer pool that we have? On our overall customer base.

On our overall customer base, I don't have a cut of new customers' exposure to gold loan at this point of time. Because we study this every month, and the trend is range-bound.

I don't see that that is significantly increasing.

That is broadly at 10%, 12% versus what we had seen probably two, three years back. That is holding up.

Yes.

Yes. Yes,

if I'm able to understand your question right, why we do this research every month is also to see how the credit profiles are different for a pure microfinance customers as well as customers with retail exposure. Consistently for the last 12 to 14 months, we've seen that customers with retail exposure fare far better than that of pure microfinance customers.

Got it.

Got it. Second question was largely towards FY28.

How are we seeing that year shaping up in terms of growth because I believe margins, we will see moderation given our pricing strategy that we have. Overall loan growth as well as ROA trajectory, what is it that we are targeting?

28?

It should be similar in my view. We may have to probably guide this towards Q4.

I don't see a reason why we should have any stress on any of the margins that we are publishing right now.

Growth also confident of holding it in the range of 20% to 25%?

Yes, all the more today because you have a set of products that you picked up, and you're accelerating all of this. Say, for example, mortgage, which used to be run out of 120 branches, now we are doing plus today right now around 425 branches.

Right? We expect to scale up a few hundred branches every year as we know, gain more experience and train our employees in these.

Growth will be a combination of microfinance and retail. Retail will grow faster, microfinance, as we've said in our strategic plan, would be range-bound in the rate of anywhere between 10% to 12%.

Got it, sir. Thank you so much for answering my questions, and good luck.

Thank you.

Thank you for the opportunity, and congratulations for a good set of numbers. Sir, my question was about your borrower growth that seems to be in a single digit.

Is it that you're not acquiring new customers and is that the problem that you're seeing for the entire microfinance industry, or is it that now you're focusing more on the average ticket size increase post the imposition of the MFIN guardrails? If you can just explain how the borrower growth is going to be in the coming years and what basically explain the customer borrower growth for now?

Right. Firstly, a lot of our efforts today is towards ensuring that Q3, Q4, we start showing significant increase in number of customers.

There's a lot of effort going in that, and that should hopefully improve. This is also a result of higher graduation that is happening.

Right? One side, you're acquiring customers.

Second side, you're also graduating more customers into retail. Microfinance side, I think the momentum will start in the next two quarters.

It's a little bit of back, I agree. I'm saying Q3, Q4, you should start seeing us publish better numbers in customer acquisition.

So. Because what's happening is that right now you're focusing more on average ticket size or giving loan to the existing customer, and that basically also keeping your opex to AUM on a lower side.

To some extent, your ROAs also look far more higher. If you enter into a cycle where the borrower growth doesn't comes in or if you go for a higher borrower growth and your opex shoots up and then your credit cost also comes in, you will get into a situation where possibly ROA will come down faster than what one would have expected it to be.

Which is true, and in a certain way in a certain angle, I agree with you. What I'm trying to implicate is that it is not that the focus on customer acquisition is not there.

It's just that you've come out of very strong two years of credit cycle. It takes some time to catch up momentum.

Right? Hence, that is taking some time.

Along with that, the company is also doing various other things with respect to graduating customers, new products, processes, technologies, etc. Which I think is more or less streamlined today, and we're hoping that Q3 and Q4, we should actually see momentum in customer.

Ideally, we would like to publish more than 1 lakh customers every month, and that's the target that we're working on. We're right now around 80,000 customers per month.

Because I think most other guidances that you have given, I think you are overshooting, but I think the borrower growth and the AUM growth is where I think you're still undershooting.

Right. Yeah.

Anand, Gururaj here. See, even if you see last four quarters, we have added close to 10 lakh customers.

Even in Q1, we added 2.5 lakh customers, Q2, we added 2.3 lakh customers. It is not showing in the overall borrower numbers because of the write-off what we took.

The credit cycle, we are just out. Most of the write-off has happened during last one year, you don't see the borrower number going up because there is a natural attrition as well as write-off impacted the number.

Then starting from Q1 onwards, you can see little positive numbers coming in. In Q3 and Q4, it will be much more, I think from next quarter onwards, you can see the borrower numbers also.

Yeah. See, also to keep in mind, we're working on two fronts now.

One is that you're retaining your vintage customers longer, so that means your customers attriting will get better. You're already seeing that we've moved from 85% to 88%.

Second is that we kind of attrited 3 lakh customers because of write-off. With write-off kind of clearing up, the subsequent quarters, you will see lesser customers fanning down because of write-off.

That should also help along with stronger acquisition.

Sure. Sir, the NPAs in the mortgage book seems to be now going up.

Is it still within your tolerable level, or you feel that basically that is to some extent a concern? That

it is still within our tolerable level, and we're quite bullish about this business at this point.

Okay. Tell what will be the Like I said What's the broadly tolerable level in the mortgage book in terms of NPAs?

See, for us, industry is I think roughly around PAR zeros are around

Yeah, 5% to 8%.

Yeah, 5% to 8% in this book, but we've built a model where we've currently budgeted around a 2% credit cost in the mortgage book. Right?

That is where we are working to.

Sure. That's comforting.

Thanks. Thanks a lot, sir.

Hi, sir. This is Sonal Minhas from Prescient Capital.

I hope I'm audible.

Sure, sure. I have just a small question.

I see I'm on slide 28, and I see the customers' MFI exposure whereby CA Grameen + 2 has gone down from 17% to 15% quarter-on-quarter, and so has + 3. From a guardrail perspective or from a perspective of identifying new customers, is there a prudence there whereby we say that these kind of customers will see a CA Grameen + 3 will inch towards zero over time and will be will look for more higher quality customers?

Can you repeat the question? I didn't get your question clearly.

I'm on slide number 28, sir,

and You're talking about the 3% Grameen + 3, yeah?

Yes. The number when I compare to last quarter, Grameen + 2 and + 3 the + 3 number has gone down, basically.

+ 2 has actually gone down, too. Just wanted to understand from an operations perspective, what are you doing to guardrail the quality and the vintage of customers?

That's broader, simpler question I wanted to understand.

I think this will gradually keep dropping. I'm not sure that it'll go to zero.

It may remain probably at a certain level because there is various issues because of which it can be Grameen + 3 with respect to credit bureau, etc. What I'm seeing, projectedly it will continue to go down.

Second, I don't think there's a specific strategy to target customers who don't have enough penetration. The deeper you go, you will get better.

With our contiguous approach, we've always been able to kind of get a good new-to-credit customers. That is an effort will continue.

As we open more branches, go more deeper, we will continue to get a mix of both experienced as well as new-to-credit customers. New-to-credit customers in Q2 are around 35%.

Got it, sir. My second question is that as the earlier participant was saying that there you were mentioning that banks have vacated the space, some NBFCs and small finance banks have also vacated the space.

Is that giving you the confidence to finding new, better, unique customers and the growth that you basically can envision over the course of next one year or so?

I don't think banks have vacated the space. They've slowed down.

They've

stayed in their way outstanding. I feel all of this is temporary, right, because with repeated quarterly performances, the rest of them would also inch up gradually.

Right? Is what I feel, right.

Temporarily, we do have an advantage of slightly lesser competition is how I put it.

Got it, sir. That explains.

Thank you for answering my questions.

Thank you.

Hi. Am I audible?

Yeah. Just harping on a few points here.

First is your customer count, right? I'm seeing that a lot of it's going out through attrition, which means that say maybe a good quality customers transferring to a lower lending rate lender in the MFI space, and while if I just do a rough calculation, your book has grown by 19%, your customer count has grown by 1%, which means customer concentration has grown by 18%.

Just firstly, what steps are we taking to combat this attrition? Do we have any structural advantage or are we going to keep competing against lower rate lenders and lose customers in the future?

Secondly, what risk management metrics are we taking to manage this customer concentration risk, like checks at household-level debt versus household-level incomes? Do we have data being actually captured with higher accuracy for this?

That's my first question. I'll come to the second one after this.

Okay. Let me take the first one.

First point, we are one of the lowest price lenders in the microfinance industry. Right?

Hence, moving from us to somebody else for a lower interest rate is very unlikely. Number two, if you see our attrition, we've actually improved our retention from 85% to 88%.

What could possibly happen, like I said, is because we have written off a lot of customers. Customer count is dropping, number one.

Number two, customers could also be graduating, because of which your customer count could be dropping. Third could also be that customers are breaching guardrails, because of which we are not able to lend, because the limits have exhausted.

That can also be one reason. If you see our entire strategy for the next 5 years is to ensure that your good quality customers are able to stay with us for a longer period of time by hand-holding them through graduation products, which means they enter through microfinance, and as they become better profile, then we graduate them to individual business loans and secured business loans.

Even in those products that we've picked up, be it two-wheeler, mortgage, anything, we're quite competitive in this space from pricing perspective, and in the last quarter, we've been able to kind of bring around 90 customers from other mortgage players back into CA Grameen, who were not with us earlier. Pricing-wise, we are well-placed.

It's just a question of our acceleration towards individual lending. Like I said, because of heavier write-offs historically, the count also looks a little lower.

Since our write-off is more or less done, now you should see acceleration of customer growth in the upcoming quarters.

When you represent this 675,000 attrition number of customer count, this also includes customers whom you can't lend to because their borrowing limits are exceeded, or what is this number defining? Because the 300,000 I understand is people whom you don't want to lend to.

What is the remaining 700,000, 675,000 number?

Which means that customers who've left us, also including customers whom we've not been able to renew or roll over because of breach of guardrails or number of lenders and limits, etc. It could also have customers who don't want loans, right.

It could also have customers who don't want loans, because that is also a portion. Historically, when we analyze our attrition, we've seen that we used to have around 15% attrition.

When we analyze that, around 7%, 7.5% move up, and that is the bucket we're trying to hold back. Other 7.5%, either don't borrow or they have defaulted, because of which they're not getting a loan, and various other things.

Okay. Fine.

Maybe just split it next time into people who actually moved out versus people whom you aren't willing to lend more to. We get a more clearer picture maybe where actually competition is affecting us versus where we're not getting affected.

That's just one suggestion if it's possible to do that. If you could just come to the risk management piece, sorry.

I interrupted you all.

From a risk management perspective, we have a very well-evolved policy where we don't cross greater than 2% in any district exposure. That kind of restricts your per district exposure to not more than 2% of our AUM, number one.

Number two, we also have lending limits basis different districts with respect to per capita income, with respect to repayment rates in that particular district, etc. Right?

We have product-level controls for various products, broadly customer-level. One is vintage.

If the customer has higher vintage, then you have higher limits. If the customer has lower vintage, you have lower limits.

Then depending on the district they are present and the history of credit costs in those districts, there are also controls on what is the pricing, how much you can lend, etc.

No, I understand what our general credit underwriting is. What I'm trying to understand is that now because we are growing our book on the existing customers, right, we're going towards more individual loans rather than the group loans, right, people who were say borrowing ₹20,000, ₹10,000 are now getting affordable housing at ₹2 lakh, ₹3 lakh rupees.

First is their capability to repay.

I got your question.

Like household-level debt we are able to calculate or not?

Yes. Retail is a completely different ball game, right.

When we graduate customers from microfinance to retail, the underwriting is a lot more sharper. We have specific credit teams who visits and spend more than an hour to understand the profile of the customer, their cash flow, etc.

Credit score will also come into play. We factor all of these aspects before we take a call on a larger credit.

Like say for example, our graduation product, Unnati loan, like I said, the average credit score there is 730. The average vintage that they've spent with us is 7 years.

These are high quality, long vintage customers who are able to demonstrate better cash flow, without which they will not move up. That is why, though we have a 50 lakh customer base, this will grow at a much smaller pace.

It's not that everybody moves there. We are looking at around 6% to 8% of our customers on a yearly basis getting converted into individual, but with a combination of secured and unsecured individuals.

Okay. Fine.

I have some more, but let's move on to the second question that I had is this credit guarantee scheme, right? If you could just explain me the economics of it, how much does it cover in case of a default, and what is the cost, who bears the cost eventually?

Like we're going to pass it on, or we're going to pay the cost from our own opex or credit cost? I'm just trying to understand here.

Rishi, currently we don't have the guarantee scheme for microfinance. Yeah.

You told that you haven't enrolled, but you are in the process, right?

Yeah.

What will it end up being, any idea?

Typically, under the CGFMU scheme, the annual premium cost is around 1.3% to 1.5%. It covers around 75% of the losses which you claim for, and the total cap is 15% of the pool what you have insured.

Okay. This, I'm assuming, all SFBs and banks would also be applying for?

It's

It's

already in place. Significant portion of banks, SFBs have already covered their book through this scheme.

Okay. We haven't chosen to right now because we have better underwriting skills at this point,

correct? We'll be doing a few thousand crores in the next few years and scale it up basis the experience.

Fine. Great.

That's it for me right now. I'll reach out to the IR team in case I want more clarifications.

Thank you, guys.

Sure. Thanks.

Thank you all for the trust and confidence you've had in CA Grameen. I think we've done two good quarters this year, and we are working towards ensuring the annual guidance we've given is met with, and we're fully confident that the next two quarters would also see strong performance from our side.

Thank you so much.