Yeah. Hi, Deepesh.

Thank you. Good evening, everyone, and welcome to the Q4 FY '26 results conference call of Utkarsh Small Finance Bank.

We would like to thank the management for giving us the opportunity to host this call. From the management, we have Mr.

Govind Singh, Managing Director and CEO; Mr. Sarjukumar Pravin Simaria, Chief Financial Officer; Mr.

Amit Acharya, Chief Risk Officer; Mr. Virender Sharma, Head Micro Banking; Mr.

Saurabh Ghosh, Head Consumer Banking; and Mr. Abhay Kataria, Head of Assets.

Now without further ado, I would like to hand over the floor to the management. Thank you, and over to you, Govind, sir.

Yeah. Yeah.

Thank you, Chintan. Thanks a lot.

Thanks for hosting this call. Yeah.

Thank you, everyone, for joining our quarter four FY '26 earnings call. The fourth quarter of FY '26 has been a period of renewed growth, proof of resilience and cautious optimism.

As a part of industry, we also went through adverse impact of MFI segment, as you are aware, guardrails for a longer period of 1.5 years. However, for us, FY '26 has been a year of deliberate choices, prioritizing stability over speed, quality over quantity, and resilience over short-term expansion, growing so that we emerge with a stronger fundamentally stronger, less cyclical franchise that can deliver sustainable returns over the medium and long term.

FY '26 began under the shadow of legacy stress and a cautious environment. Over the course of the year, we focused on stabilizing collection, tightening underwriting, and rebalancing the portfolio mix.

These actions were designed to arrest deterioration, reduce fresh slippages, and create the conditions for a durable recovery. By quarter four of FY '26, we began to see tangible green shoots.

Disbursement improved meaningfully, SMA pools contracted, fresh NPA slippages declined sharply, recoveries and upgradations increased, and collection efficiency strengthened, all of which point to the strategic measures taken taking hold. Concurrently, disbursement improved across both JLG and non-JLG segments in quarter four FY '26.

JLG disbursement grew 58% quarter-on-quarter and 2% year-on-year, while non-JLG disbursement grew 41% quarter-on-quarter and 51% year-on-year. These improvements will expand the portfolio base going forward and reflect a calibrated return to lending activity.

At the same time, our X bucket collection efficiency in the JLG segment improved to 99.7% in March 2026, up from 98.5% April 2025, the highest level in the last four quarters, a direct outcome of strengthened field execution and targeted collection initiatives. Fresh NPA slippages net of recoveries and and upgradations reduced to ₹710 crore in the quarter four of FY '25.

Our GNPA ratio improved by 330 basis points quarter quarter-on-quarter to 77 7.7% as on March '26. These are the early measurable signs that our corrective actions are beginning to deliver.

A central central theme of FY '26 has been structural de-risking of our unsecured exposure and a strategic pivot toward secured and higher-yield, lower-risk portfolios. This is deliberate long-term shift to reduce cyclicality in the credit cost and create multiple avenues for growth beyond JLG lending.

We have consciously moderated our JLG exposure to around 28% of the gross loan book and around 30 30% including BC JLG as on March 2026, down from nearly 88% and in 90% including BC JLG in March 2020. This reflection This reduction reflects both selective contraction of the JLG book, which declined by around 10% during the quarter, and a and a purposeful shift of new loan new flows into attractive products, alternative products.

As a result, secured lending now comprises 51% of our of our gross loan book, up from 43% a year ago. This structural shift is is already changing the risk profile of the bank and will over time enhance stability of margins.

Within microbanking, our microbanking business loan, targeted at graduated JLG customers with proven repayment discipline, have shown exceptional traction. MBBL portfolio grew 122% year-on-year and 40% quarter-on-quarter, and now represent 27% of our microbanking loan book.

Penetration remains below 15%, which gives us significant headroom to scale this product to a much larger share of our customer base while preserving asset quality. To further de-risk incremental flows, we have registered with CGFMU for credit guarantee coverage on eligible JLG and MBBL disbursement with effect from 17th March 2025.

45% of our our micro microbank finance book for disbursement till quarter three FY '26 already covered under the guarantee scheme, and counting quarter four FY '26 disbursement, 70 70% of the microfinance book is covered. This coverage materially reduces incremental portfolio risk on new disbursement and supports portfolio stability as we scale higher higher-quality secured products.

Diversification beyond JLG has been a key strategic priority, and FY '26 has been has seen healthy momentum across our non-JLG lending businesses. These segments not only broaden our revenue base, but also deliver attractive yields and more resilient collateral profiles.

MSME loan book expanded by 15% year-on-year to ₹4,456 crore, supported by the newly started Micro LAP segment, which is delivering disbursement yield of 18%. Housing loans grew by 8% year-on-year to ₹990 crore, and our BBG portfolio, Business Banking Group portfolio, fully secured against immovable collateral, grew by 19% year-on-year.

CV and CE segment also was indicating the need to look at the mix of new versus used vehicles, as the former was signaling riskier behavior. Therefore, the loan book contracted by 1% quarter-on-quarter to ₹1,090 crore, and the share of used vehicles grew to 30% almost 30% in FY '26 from less than 15% a year ago, reflecting our strategic tilt towards more resilient asset classes.

Collectively, these moves are increasing the share of secured assets in the book and improving overall portfolio resilience. On the liability side, our focus has been on building a granular, low-cost deposit base and aligning deposit growth with disbursement.

Total deposits were broadly stable, with 0.4% year-on-year growth and around 3% quarter quarter-on-quarter growth, while retail term deposit grew by 20% year-on-year. Our CASA deposits increased by 11% year-on-year and 13% quarter-on-quarter, lifting the CASA plus RTD ratio to 83% as of March '26 from 17% on March '25.

The CASA ratio improved to 24% as on March 2026. These improvements reflect better quality of account sourcing and a conscious reduction in in reliance on bulk deposits.

In response to the RBI repo rate cuts, we have phased reduction in interest rate on savings and term deposits remain competitive while optimizing cost of funds. These calibrated re-pricing have driven a reduction in our overall cost of funds by more than 45 basis points year-on-year and more than 25 20 basis points quarter-on-quarter, moving from 8.3% quarter four FY '25 to 8.1% in quarter three FY '26 and 7.9% in quarter four FY '26.

We expect cost of fund to reduce further as pricing continues to take effect re-pricing continues to take effect. We also maintain prudent liquidity buffers.

Our CD ratio declined to 83% as on March 2026 from 87% as on March 2025. We ended the quarter with surplus liquidity of almost 30 300 crore, ₹3,800 crore, and an LCR of 178%.

These metrics provide us the flexibility to support calibrated disbursement while preserving balance sheet resilience. Income compression led to elevated cost-income ratio for the financial year, which impacted the PPOP.

If adjusted for interest reversal due to fresh NPA slippages, then PPOP would be ₹140 crore. Despite pressure from legacy book leading to elevated credit cost and hence the loss, our capital position remains healthy.

We reported a net loss of ₹188 crore for the quarter, driven by providing the legacy stress driven by providing for legacy stress. Our capital adequacy ratio stood at 17.7% as on March 31, 2026, comfortably above the regulatory threshold.

To strengthen the Tier 1 base and support growth future growth, we successfully completed rights issue of ₹950 crore in November 2025, which which has been helping to for our capital cushion. In parallel, we proactively address legacy stress through the ARC sale of stressed JLG portfolio.

This was a deliberate, value-enhancing decision that improves balance sheet strength and positions the company on a much cleaner footing for sustainable growth. Following creditors and shareholders on the on the reverse merger part, following creditors and shareholder approval obtained in in accordance with the process of amalgamation, this the second motion petition was filed with the NCLT on April 5, 2026, for the scheme of amalgamation of holding company UCL with and into the bank.

The reverse merger is expected to complete in next few few months, subject to NCLT proceedings. Operational discipline has been a central pillar of our FY '26 response.

We expanded our collections workforce for JLG and MBBL to more than 1,200 as on March 2026, operationalized a specialized call center for overdue accounts, and split larger branches, larger microbanking branches, to improve oversight and control. Training programs for new frontline staff emphasized our core processes, such as center meetings and customer onboarding, ensuring consistent execution across the field.

These structural investments have contributed directly to the improved collection metrics and reduction in SMA and the fresh slippages we reported in quarter four FY '26. Technology and process transformation have also been critical.

Our Utkarsh 2.0 technology transformation project is delivering tangible benefits in automation, productivity, and risk control. Digital underwriting capabilities are are helping us avoid lending to overleveraged borrowers, with 360-degree control parameter mapping strengthens monitoring across the credit cycle.

Bank is also in the process of launching new CBS in quarter two of FY '27. These investments are not only improving the efficiency, but also enhancing our ability to underwrite and monitor risk at scale.

We also recognize the importance of our people. During FY '26, we incurred a one one-time impact related to new labor codes, LTIP and ESOP grants, and other employee benefit obligations in quarter three FY '26 and its incremental impact in quarter four of FY '26.

While this weighs on the near-term profitability, it reflects our commitment to compliance, employee welfare, and building a motivated, capable workforce to execute our strategy. Training, productivity initiatives, and organizational agility will remain central to our transformation journey.

Throughout FY '26, we took a range of decisions decisive actions to address legacy stress and position the bank for sustainable growth. These included tightened underwriting standards, calibrated disbursement, targeted recoveries and upgradations, selective portfolio resolutions, and measures to improve borrower discipline under the new guardrails.

We have also been proactive to de-risking incremental flow-through, as we mentioned earlier, through CGFMU coverage for eligible JLG and MBBL disbursement and by shifting new origination towards secured and higher-quality products. We also have taken steps to improve the quality of new account sourcing and to cross-sell asset products through our liability-focused general banking branches, thereby increasing product penetration per customer and improving wallet share.

These actions taken together are designed to reduce the reduce the probability of future stress and to create a more diversified, resilient earnings base. We view FY '27 as a consolidation year, a a period to convert the green shoots in seen in quarter four FY '26 into sustainable momentum while continuing to strengthen the franchise.

Our near-term priorities will be a to sustain improve collection performance, continued calibrated disbursement into higher-quality segments, deepen secured lending, and accelerate liability mobilization to support growth in the prudent manner. In the coming years, we are aiming for loan book growth of 25% to 30%, with secured lending comprising around 55% of the portfolio, maintaining NIM of above 8%, and delivering a ROE of around 15%.

Achieving these targets will require steady execution across underwriting, collections, product diversification, liability mobilization, and technology-enabled risk management. While sectoral headwinds and regulatory transitions may continue to influence near-term performance, we remain confident that strategic direction we have charted will deliver a stronger, more sustainable franchise over the medium term.

In essence, FY '26 has been a year of challenge and purposeful transformation. We have moderated risk, strengthened collections, diversified our portfolio, deepened our liability franchise, and reinforced our capital base.

The quarter has shown that the bank is on on the path of recovery and with increase in quality disbursement, better portfolio and deposit mix, improved asset quality with lesser stress slippages, and higher recoveries, upgradations, decline in SMA pool. We will continue to prioritize operational efficiency, disciplined execution, and our organizational agility.

Our strategy is not about chasing rapid growth at expense of stability. It is about building a fundamentally stronger institution that can withstand cycles, deliver sustainable returns, and create enduring value for all the stakeholders.

We thank you for your continued support and confidence. With this, I conclude, and now we are we'll move to question-and-answer session.

Thank you.

Yeah. Congratulations to the management for posting at least better set of earnings as compared to few quarters.

Sir, I had some few questions. My first question was related to our asset quality.

On the asset quality, you have mentioned the PCR on the bank level of around 59%. I wanted to understand what is the PCR that we're holding for secured, as well as unsecured both of them individually?

Sure, sir. Amit, if you can just mention that.

Hi. Amit this side.

If you'll see on the overall book, PCR is 59.3%, as you mentioned. On the entire secured book, it stood at 38.7%.

On entire unsecured, it stood around 65.4%.

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

Right.

For Only 65.4%. Sorry.

When I mention unsecured 65.4%, it includes all unsecured loans, including MSME.

Right, sir. Only for MFI, what is the PCR that we're holding, sir, now?

Only for JLG, if you see, it would be 66.3%.

Only for JLG. For MBBL?

MBBL as well as JLG mixed, then?

More or less on the same side, 66.3%, because for MBBL and for JLG, we do the same kind of provisioning.

Okay. Is it safe to assume that still some sort of provisioning is still left in the next two quarters especially for MBBL and JLG is concerned?

Because even if we want to recognize 80% provisioning, aging provisioning, still some sort of provisioning is left in the next quarters, right, for MBBL as well as JLG?

It is there.

So,

[both for?] 85% provisioning and some portion on 70% is still remaining there.

Okay. Now next year from FY '28 onwards, we are migrating to ECL-based provisioning.

What I wanted to understand that how well are we prepared for actually model our asset quality towards that? Because over in the ECL model, our provisioning has to be more aggressive, especially on the SMA-2 assets.

How ready are we? Have we figured out a model?

How ready are we for the ECL transition, sir?

This Ind AS beginning is from 1st April is actually SFBs are exempted. We still don't have to follow that.

I guess it will be some time before RBI brings us into the ambit. Having said that, while we have pro forma Ind AS that we do, and even, honestly, the provisioning for the last year in terms of slippages that has happened, I guess our ECL provisioning perhaps, our IG provisioning would be equal to or maybe higher.

Your question to be preparedness for Ind AS next year, it doesn't apply to us in terms of statute requirement.

Okay. Fine, sir.

My second question, sir, was related to the MSME portfolio. Our GNPA in the last quarter you mentioned was upwards of 12.5% GNPA on the MSME front.

Now it constitutes 23% of your total lending portfolio. What is the GNPA right now?

How is the real impact of the West Asia actually conflict is going to reflect in the coming quarter? What is the GNPA right now, and how well are we prepared to actually face that?

Are we facing stress in some of our existing portfolios?

See, if you'll talk about retail MSME portfolio, the gross NPA stood as on March '26 at 3.4%. If you'll see, we do fund to a very normal ticket size.

We do not fund like ₹20 crore or ₹30 crore kind of borrowers who have some export or larger export limits or the foreign currency exposure. As far as geopolitical situation is concerned, there has been no abnormal behavior in our portfolio so far, which we have been monitoring for last 2.5 months when Iran-US situation got worse.

We have a close monitoring on it. As far as it is concerned, there has been no issue or portfolio behavioral change in our portfolio as far as MSME is concerned.

Okay. MSME, the GNPA has come down to 3.5, sir?

3.4%.

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

Yeah. I just wanted to add one more point.

When we talk about this MSME portfolio, largely it is secured by hard collateral like residential or commercial properties. There is a security available to the bank in case of any defaults.

Okay. Just one suggestion, sir, from my end.

Within the MSME, you have around three segments. Within the MSME, you have for the secured business loans, you have unsecured business loan, and you have Micro LAP also.

If you can just give the break-up actually within your ₹4,456 crore worth of portfolio, that would be very helpful, sir, to understand that at what direction the bank is going actually. That will be very helpful.

Now, my third question, sir, was related to the disbursements. Disbursements in JLG are going up for the first time in almost I think in last many quarters actually.

What is the reason behind the same? Because the disbursements have three consecutive quarters of decline.

Now it has moved up to ₹1,310 crore. Where are we exactly finding the value?

Have we actually gone tough through the underwriting? How is the new portfolio doing actually?

What changes have you made in existing underwriting systems?

Thanks. This is Virender.

Just to answer your concerns, there has been, in April '26, MFIN 2.0 guardrails were implemented.

In

April '25, guardrails were implemented, and there was a sudden increase in PAR, which led to our focus of more onto the collection side and focusing on building up the collections. By third quarter or October-November, this had nearly stabilized on our collections.

We always had the distribution and the people to do that part. Once the collection in early buckets started stabilizing, we started putting the thrust on sales back, and we are adhering to all the guidelines as specified in MFIN 2.0 guidelines.

Even industry has seen a upward trend towards the disbursement, and our to FY '25-'26 portfolio after that this is behaving very well with respect to the collections also. It is, I will say, still we are only at a 70% optimum capacity of disbursement, and we should be stabilizing in the same ranges right now.

Okay. Fine, sir.

Lastly, what is the steady-state credit cost that we are eyeing for FY '27 and FY '28, sir? FY '27, sir?

Any target? Yes, in the previous call, we had mentioned about 2.5% steady-state, 3.5% or 3% to 3.5% for '27 and 2% to 2.5% in FY '28.

With this trajectory of slippages being arrested significantly, in terms of SMA going down significantly, with the background that the new disbursements are happening under the new guardrail, with the background that we have a CGFMU cover, I guess this is a very conservative number. We will still stick to the fact that it'll be around 3% for FY '27, 2% to 2.5% in FY '28.

We will do better than that. Assume the trajectory the way we are looking at and the industry, as well, is endorsing coming back of the disbursement and the collection being 99.5% plus, I guess this is a conservative number that I am giving you.

Fine, sir. Thank you so much, and all the best, sir.

Thank you.

Good evening, sir.

Sir,

I wanted to ask, what is the amount that we are going to get back in CGFMU cover in the last 1 year, that insurance that we have taken for MFI?

The way it happens that, I would say, the maturity of NPA, as we speak, I think, still it's not an NPA that the disbursement that we have started, while our portfolio as of 31st March, 70% is covered under CGFMU, but the maturity of claim has yet not arrived. I guess, I would hope it doesn't arise, frankly, but maybe a year and a half it takes the claim and the settlement.

We are also not even wanting to account this credit, and therefore, the entire numbers that we have said is without even considering the credit at this point because that's kind of a experience, and we don't want to set into a windfall gain. At the moment, the cost of premium is embedded in my P&L, and since we don't have the NPAs from the new book, well, it appears to be a cost of premium, but we're just protecting our future in terms of any adverse development for future.

For your question to say that is anything matured under CGFMU, the answer is probably too early to give a number on that.

Just to summarize that, we have taken the cost of CGFMU for last more than a year now since last Q4 of last year, but we have neither taken accounting benefit, and nor we have got any claim so far. Only expense have gone part, but in case something goes to that extent, in future we'll get the benefit.

In current one, we have not taken any benefit. Only expense has been taken into account.

Sir, how much of our capital got freed up because of that, as I know that the risk weightage is adjusted if we take the cover?

No, even that has not been done by us. As I mentioned, we have not taken any benefit of any of these guarantee scheme.

The accounting, we have done a very plain accounting where we have not taken any benefit of this. As I mentioned, whatever is there, only expense part is taken.

No benefit either in terms of getting any claim or any adjustment in the NPA or capital adequacy has not been done by us.

Sir. Sir, regarding our Prime Minister's comment in the previous few days, what is our stance?

We are trying to grow at 30%, and given the nature of the geopolitical situations, what is the segment that we are targeting, and how do we ensure that our credit cost doesn't increase?

You see, you are aware that last year has been a year where we could not grow, we are at the almost same level, we have a real low base right now from that perspective, and we have got a full infrastructure in terms of manpower, in terms of number of branches, and the lines of products and our channels. I think around 30% growth should not be a problem in the normal one.

Our focus remains on the one, obviously, we understand microfinance well, so that remains our focused area. Besides that, as you mentioned, there are various types of LAP products which we have been focusing upon, including the small ticket LAP and normal LAP, as well as the BBG products.

I think LAP and JLG will still remain our key products for going forward also. We have all obviously done something like gold loan, which we think that we'll be able to grow bigger this year.

There are some of the new area also which we started around 1 to 2 years' time. We think that there should be further growth in that part.

As far as the credit cost is concerned, we do understand the statement from the Prime Minister, but I don't foresee any challenge because I think most of our portfolio is for income generation and small-ticket size. We don't foresee much challenge, and anyway, I think we are on a recovery path and we have got a good machinery as far as collections is concerned.

We don't foresee any major impact because of that.

Sir. That was really helpful.

Sir, in the secured segment, if there is a default, what is the timeline in which we can get physical control of the asset and auction it off? What is the LTV value of the secured asset that we are lending to?

Hi, Amit this side. Normally, when we assess the NPA case and bank decides that we'll have to go on the SARFAESI route, from there, various processes are involved, and it takes around 6 to 8 months is a period.

Somewhere 6 months, somewhere 8 months depending on the situation, but that's the normal scenario, 6 to 8 months. You are able to dispose of the property completely by inviting the bid under the SARFAESI.

That is one. Second is the normal LTV if you will see on the portfolio side, it would be less than 65% around it should be there because mostly we do residential property on a loan value at 70%.

On outstanding portfolio basis, and including our all portfolio like Micro LAP, we offer only 50%, and we do not go beyond that also. Overall, it should be below 65% to 60%.

Sir, what is the average tenure of these loans?

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

Sir, what would be the risk weightage for this loan?

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

Sir. Thank you so much.

I'll join back in the queue.

Thank you.

Hi. Thanks.

Just one question. What are our capital raise plans?

Immediately we are not having any plans for capital raise. I know it is 17.7%, but I think this year this year we should be able to sail through on this capital base.

Our idea is to first, focus more on at least when I'm talking when I say capital raise means I'm not talking equity capital. Obviously, we have other means of taking capital like Tier 2 capital and sometime, offloading some of the balance sheet items also.

Idea is not to go to capital market this on immediate basis, and raise through Tier 2 or some other means this time, in case there are any shortfall or, immediate requirement is there, but not to capital market.

Okay. Understood.

That's all. Thank you.

Thank you.

Yeah. Thank you for taking my question.

Actually, my question only is that in the last concall, the management has mentioned that we are targeting for 15% ROE in FY '28. I want to know only that are we in line on that path?

Also know that I hope the worst is behind. That is the only question from my side.

I'll confirm that 15%, if you're looking FY '28, and certainly we are there. We'll exit FY '28 one, above 15% the ROE.

As far as worst is behind, yes, worst is behind us. You must have seen the type of provisioning what is even if we have to take for Q4 also, it was largely of the legacy portfolio.

We are getting and we are creating a new good portfolio because of guardrails also, and also we have got a guarantee coverage too. We don't foresee much challenge going forward.

Whatever provisioning you have seen off late or maybe in this quarter also, it is largely on account of the legacy portfolio.

Okay. Thank you.

Thank you.

Hi. By when we are planning to reach net NPA ratio of less than 1%?

How are we planning to provide provisions for the same?

Can you just repeat the question? We could not hear it properly.

Can you just repeat little louder, please?

Yeah. Can you hear me?

Now it's better.

Yeah. By when are we planning to reach net NPA ratio of less than 1%?

Because before the crisis, I guess we are operating in the range of 0.3% to 0.5%. How are we planning to provide provisions to reach this ratio?

Sure,

sure. I think FY '28 is what we expect that we should be, reaching this range.

One, obviously, through, reduction in the overall NPA, recovering, whatever are the NPA of past, whatever is percent is possible. Certainly, as you speak you can see here we have been providing also for the NPA in past also, and now we have gone to almost below 3.5% also.

Idea is to recovery, as well as providing for during, next whatever is the balance NPAs are there in next few quarter. Our estimate is that, quarter FY '28, we should be NPA net NPA in the range you just mentioned.

Of 0.3% to 0.5% or less than 1%?

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

Okay.

3.3% is our FY '28 net NPA. FY '26 is 3.3%, and the idea is to reach around below 1% by FY '28.

Okay. Thank you.

Thank you.

Good afternoon, sir. One question on the non-MFI slippages.

It has been running still higher 4-odd percent. If you could just kind of tell us what is driving this number?

Yeah. Hi, Mahesh.

Amit, our CRO, is just about to respond to you. Yeah.

Yeah. No issues.

See,

if you'll see the non-MFI space or retail space, wheels has been one of the problem area for us in the past, which we are trying to address. If you'll see the collection efficiency or the resolution percentages across the buckets in the last 3, 4 months since November onwards, we have controlled the NPA percentages.

Yes, we need to bring it down drastically. The resolution in the earlier buckets, flowing into NPA bucket, the SMA-1 and 2, we have tried to arrest it, and which we have done successfully.

Second is that the portfolio mix movement. The past more than 12 months, we are trying to move away from new and doing more of the used.

If you'll see the disbursement percentage contribution of the used, on the overall portfolio, you will see it hovers around 12%, whereas from last 7 to 8 months disbursement, if you will see, the needle has moved to close to 30%. So, 30% around the used business is being done.

Also, we did a lot of portfolio analysis last year, and we did a lot of policy norms and other parameter intervention basis the portfolio analysis. If you'll see the last 18 months disbursement, including new or used, whatever the bank has done the disbursement post-October '24, the last 18 months, the new portfolio is performing pretty well as compared to the earlier portfolio.

The NPA levels hovers below 2% post-'24 portfolio created.

Wheels has

been a major contributor in the overall. Otherwise, if you'll see the other portfolios like your housing or LAP or even Micro LAP portfolio, or our BBG, which is a working capital portfolio, again, all these backed by hard collaterals like residential or commercial properties.

They are under tolerance limit. Wheels has been the contributor in the overall retail lending, which you will see in at least another two quarters, this would also be in a very, very under controlled limit.

Perfect. Sir, Govind, sir, in your opening remarks, you had mentioned a PPOP number which is adjusted for I think the slippages in terms of the interest income reversal.

That number was ₹140 crore, did I hear that correctly?

That's right. We had a ₹59 crore of PPOP, and we had a reversal during the whole year, for all four quarters combined, of 81.

That adds up to 140. This is pure reversals on the slippages that happened during the quarter.

On the interest reversal.

All interest reversal. All interest reversal due to slippages that go into the quarter, you reverse the last 3 years' 3 months' income.

That's right, Mahesh.

That number is ₹140 crore for the quarter, if you adjust for slippages, interest reversal?

No. It is ₹140 crore for the full year.

Full year. Perfect.

Okay. In your assessment, this number for next year, how are you looking at it?

If you have some sense of it?

No, if the trajectory of collection efficiency, as we are seeing, remains, and the disbursement going around in the new guardrail, I guess this reversals should be arrested. It's a combination of your standard book going to GNPA, which you lose the interest,

Sure.

By and large, I guess your steady-state interest income, though not visible now, but that should find its revival in the coming quarters next four quarters. The reversals by the nature will be less, and you will see that is actual the book that the interest accrual actually has happened will be returning back.

Perfect. What would be outstanding stock?

If you look at your collection that you're seeing today, if you could just kind of give us a color on how much of recovery that you're currently seeing of the stock of bad loan which has been written off?

Written off collection, if I really, and I have done this back of the envelope, tried to save in my P&L, whatever is the credit for write-off versus the write-off number on inventory, it works out to 12% to 14% recovery.

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

That is right. I just want to add, Mahesh, here that we have this head count for collection that we ramped up primarily to arrest slippages from X bucket to SMA.

Now that normalization has already happened, or maybe a quarter more to worsen that, if that actually goes the way we are looking at, then the allocation of that head count, at least, some decent 30% kind of an head count will then be shifted for collecting the write-off or NPA. Therefore, I presume, in the sense that is the execution plan, the write-off collection should be better off in the coming years because that extra collection force should now get allocated to collect the legacy NPA or the write-off book.

Perfect. Just one last question.

Assuming that you are able to grow next year at 25% to 30%, adjusting for the collection machinery that is sitting there, any sense on how much of opex would be required against it?

How much of?

Opex. Opex, operating expenses.

Only for the collection team, you're saying?

No. I'm just saying, in your sense, given that you have built some machinery around all the other assets, is it safe to assume that the opex is going to be meaningfully lower than the loan book?

Just trying to understand some direction between the past investments made versus the growth that you're likely to see in the book next year.

As I said, that one way to look at is this collection force, when normalization happens, yeah. I guess the idea is to go on the write-off collection.

Even if it were to continue the cost, I guess the delta will be in multiple in terms of retaining them, taking their cost, and getting a credit on the P&L line for the NPA collections that I just mentioned to you, write-off and NPA.

Mahesh, I may not have exact numbers, but it will happen in two parts. First part is that I have got a cost, and I expect that I should be able to raise 20% to 30% growth in the portfolio with the same cost.

That is one thing will happen. Second, suppose I have around 1,200, 1,300 people who are hardcore collection people only.

Our expectation, and that is what is happening right now, the cost may be around 25% to 30%, whatever the amount they bring. Suppose they bring in ₹1 lakh, their cost may be around ₹30,000.

I'm giving a ballpark number. Because we have a large pool even which needs to be recovered, and we have seen in first 2 to 3 years' time, you are able to recover the chunk.

Thereafter, it is 1%, 2% only. Idea is that at least for next 1, 1.5 years, let us keep this team there, and whatever is their cost, at least three times of that I'll be able to recover from this collection team.

These are two numbers. I don't have the exact number the way you expect, but this is, I think, how it will happen.

Virender, you want to add something?

In the last quarter, we collected close to ₹50 crore of this NPA and write-off pool with this 900-odd people at that time in the field. Which is close to some 20% of the collected value from this pool.

This vertical or this collection will continue to be stable for at least next couple of quarters, which will give us an upside on that side.

Mahesh,

on

the other side, because our 50 case load has actually gone down significantly, it's in the range of now 330 to 350. Our expectation is that I'll be able to build, as I mentioned, additional 25% to 30% portfolio with the same cost.

My cost may not go down, but my income and my top line will go up by around 25% to 30% with the same cost. I think that is what will happen now.

That's what we're asking. Done.

That's fine. Thanks.

Thanks a lot. Thank you.

Thank you. Thanks, Mahesh.

Thank you. Thank you, I-Sec team, for this.

Thanks, all the investors, for your continued support. As you have seen, I think things have changed significantly during last few quarters, and we expect that next few quarters should be a significant improvement in the trajectory.

As we have mentioned, that for FY '28, at least next 2 years' time, we should back to 15% ROE and good return, overall good all KPIs. Thank you for your support, and keep exploring, and keep talking to you.

Thank you. Thanks a lot.