Capital Small Finance Bank Limited — Q3 FY26

Capital Small Finance Bank Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=tPMV6in-HXE Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Capital Small Finance Bank Limited Q3 and 9M FI26 earnings 0:09 9 seconds conference call. As a reminder, all parts lines will remain in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:20 20 seconds Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone telephone. 0:29 29 seconds Please note that this conference is being recorded. 0:33 33 seconds I will now hand the conference over to Mr. Salvajjit Samra from Capital Small Finance Bank Limited for opening remarks. Thank you and over to you. 0:43 43 seconds Thank you. 0:45 45 seconds Good afternoon everybody and thank you for joining Capital Small Finance Bank Limited's earnings call. Our financial 0:53 53 seconds results and the investor presentation have been filed with the stock exchanges and are available in the public domain. 1:00 1 minute We trust you have had an opportunity to review them. Joining me today are Mr. 1:07 1 minute, 7 seconds Manish Chan, executive director, Aim Mahajan, Chief Financial Officer, Raga Baggharwal, Chief Risk Officer, Sahil Vijay, head of Treasury and investor 1:15 1 minute, 15 seconds relations, Bharti Babuta from our investor relations team and our IR advisor, SGA. 1:22 1 minute, 22 seconds I will begin by sharing our perspective on the operating environment and macroeconomic backdrop during the quarter 3 financial year 26. After which 1:32 1 minute, 32 seconds we will discuss the bank's performance and outlook in greater detail. 1:38 1 minute, 38 seconds During quarter 3 financial year 26, India's economic conditions continue to demonstrate stability and momentum with real GDP growth at 7%. 1:49 1 minute, 49 seconds Economic activity during the quarter was aided by reforms and consistent domestic consumption, a gradual recovery in rural demand. 1:58 1 minute, 58 seconds High high frequency indicators across manufacturing and services reflected steady trends reinforcing the underlying underlining strength of the economy. 2:10 2 minutes, 10 seconds Inflation during the quarter 3 fresher year 26 remained benign with well within the Reserve Bank of India's comfort 2:18 2 minutes, 18 seconds range. Headline CPI moderated significantly during the quarter supported by easing food prices, the 2:25 2 minutes, 25 seconds impact of GST rate rationalization and relatively stable input cost. While in 2:32 2 minutes, 32 seconds inflation edged up modestly towards the end of the quarter, overall price pressure remained subdued, helping 2:40 2 minutes, 40 seconds preserve household purchasing power and sport consumption demand. This benign inflation environment also contributed 2:47 2 minutes, 47 seconds to stable business sentiment particularly cross semi-urban and rural markets which form a key part of our operating footprint. 2:57 2 minutes, 57 seconds On the policy front the Reserve Bank of India reduced the rapor rate to 5.25% reinforcing its intent to support growth 3:06 3 minutes, 6 seconds while maintaining macro stability. While lending rates have largely adjusted on the asset size, the transmission on 3:14 3 minutes, 14 seconds deposit is evolving more gradually, reflecting the lag inherent in liability repricing amid intense competition for deposits. 3:25 3 minutes, 25 seconds Banks across the sectors continue to prioritize deposit growth to fund credit expansion resulting in persistent 3:33 3 minutes, 33 seconds pricing pressure particularly on term deposits. In this environment, institutions like us with a well- diversified retail deposit base and 3:42 3 minutes, 42 seconds strong customer relationships are better positioned to manage funding cost in a measured way manner. 3:50 3 minutes, 50 seconds The system at the system level liquidity conditions were broadly balanced during the quarters supported by the Reserve Bank of India's liquidity operations. 4:00 4 minutes Banking system liquidity buffers and LCRs remained comfortably above regulatory requirements. 4:07 4 minutes, 7 seconds The banker banking sector witnessed healthy growth in advances in the third quarter of financial year 26 compared to 4:14 4 minutes, 14 seconds the same period last year supported by improving economic activity and full impact of GST rate rationalization. 4:22 4 minutes, 22 seconds During the quarter, credit demand was led by skewed retail, MSME and agriculture segments aided by festive 4:30 4 minutes, 30 seconds season spending and posth harvest cash flows in the rural markets. 4:35 4 minutes, 35 seconds As a result, credit growth for most lenders continue to outspace outspace deposit growth reflecting sustained demand across key lending segments. 4:45 4 minutes, 45 seconds For Capital Small Finance Bank, these conditions align well with our business model. a strong presence in semi-urban 4:53 4 minutes, 53 seconds and rural markets. A predominantly skewed and retail focused loan book and and granular relationship led deposit 5:01 5 minutes, 1 second franchise position us favorably to participate in the ongoing economic recovery while maintaining disciplined growth and robust risk management. 5:10 5 minutes, 10 seconds Coming to our quarter 3 financial year 26 performance. The quarter saw steady deposit mobilization, balanced credit 5:18 5 minutes, 18 seconds growth and stable margin supported by disciplined exe execution across our core business. Total deposit stood at 5:28 5 minutes, 28 seconds 9931 crores growing 18.5% yearonear with CASA at 35.9% 5:35 5 minutes, 35 seconds underlying the underlining the strength of a retail deposit franchise. 5:41 5 minutes, 41 seconds Gross advances grew to 8164 cr up 19.8% year-on-year supported by robust 5:49 5 minutes, 49 seconds dispersement across MSME mortgage and agriculture segments. 5:56 5 minutes, 56 seconds Quarterly dispersements rose to 919 cr up 21% yearonear aided by festive demand 6:04 6 minutes, 4 seconds and strong rural cash flows. Asset quality remained stable with gross NPS 6:10 6 minutes, 10 seconds at 2.68% and net NPS at 1.35% supported by prudent credit practices. 6:18 6 minutes, 18 seconds Our strategy continues to focus on secured profitable growth, productivity improvement at the branch level and 6:25 6 minutes, 25 seconds measured geographic expansion with focus on attractive sum semi- urban markets. 6:32 6 minutes, 32 seconds With that, I would now like to hand it over to Mr. Munich Chan who will take you through our quarterly financial and 6:39 6 minutes, 39 seconds operational highlights in detail. Thank you. 6:43 6 minutes, 43 seconds Thank you Mr. Shamra and warm welcome to all. 6:47 6 minutes, 47 seconds Let me begin by sharing the highlights for the quarter and 9 month ending December 2025. 6:54 6 minutes, 54 seconds As of December 31, 2025, our gross advances stood at 8164 KES reflecting strong and consistent credit expansion. 7:05 7 minutes, 5 seconds This translate into a yearon-year growth of 19.8% and quarteron quarter growth of 3.3%. 7:12 7 minutes, 12 seconds Fully aligned with overstated guidance of 20% plus advanced growth for FY26. 7:20 7 minutes, 20 seconds The growth in advance continued to be driven predominantly by our secured lending products and around 99% of the 7:29 7 minutes, 29 seconds loan book being secured with around 90% of our non-corporate portfolio is collateralized by immovable property/bank FDRs. 7:39 7 minutes, 39 seconds The average ticket size of our portfolio stoods at 17.8 8 lakhs against 17.1 7:46 7 minutes, 46 seconds lakhs at the end of Q2 FY26 reflecting over granual retail focused and risk conscious approach 7:55 7 minutes, 55 seconds our continued emmesis on well collolateralized asset reinforced the quality resilience and risk mitigated 8:02 8 minutes, 2 seconds credit portfolio during the quarter fresh dispersement stood at 919 cr 8:09 8 minutes, 9 seconds registering a robust 25% year-on-year growth for year-to- date that is for 9 month up to December 31, 2025. Total 8:17 8 minutes, 17 seconds dispersement stood at 2590 KES reflecting 25% growth. The growth 8:25 8 minutes, 25 seconds driver for the quarter is MSME/ business segment grew by 10% on quarteron quarter 8:32 8 minutes, 32 seconds and 42% on year-on-year basis and LAP which grew 3% on quarteron quarter and 8:39 8 minutes, 39 seconds 18% on year-to-year basis. This sustained momentum underscores the continued strength in demand across our 8:47 8 minutes, 47 seconds key lending segments and the effectiveness of our focused business approach. From a portfolio mixup 8:54 8 minutes, 54 seconds perspective, business loan increased to 25% up from 23% in Q2 FY26. 9:02 9 minutes, 2 seconds The agriculture segment moderate marginally to 28% from 30% in Q2 FY26 while the mortgage and the corporate 9:10 9 minutes, 10 seconds segment remain stable at 26% and 14% respectively during Q3 and Q2 FY26. 9:19 9 minutes, 19 seconds Within the mortgage lap accounts for 15% and housing loan accounts for another 11%. 9:26 9 minutes, 26 seconds Overall, the portfolio remained well diversified across sectors that have demonstrated resilience across credit 9:34 9 minutes, 34 seconds cycles supporting stability and balanced growth. 9:39 9 minutes, 39 seconds Geographically, growth outside over home state of Punjab continued to outpace the overall bank growth. Advances out of 9:47 9 minutes, 47 seconds Punjab grew at more than twice the bank growth rate on year-on-year basis demonstrating the deepening strength and 9:56 9 minutes, 56 seconds increasing traction across over newer operating geographies. out of advance out of Punjab advanced portfolio 10:04 10 minutes, 4 seconds constituting 24% as on December 31, 2025 compared to 21% at the end of Q3 FY25 10:13 10 minutes, 13 seconds and 23% at the end of Q2 FY26. 10:18 10 minutes, 18 seconds During the quarter, yield on advances stabilized at 11%. The same was also 11% in Q2 FY26. 10:28 10 minutes, 28 seconds Asset quality showed marginal improvement during Q3 of by 26. Gross 10:34 10 minutes, 34 seconds NPA and net NPA stood at 2.68% and 1.35% respectively improving sequencially by 10:42 10 minutes, 42 seconds two basic points and three basic points from September 30th, 2025 levels. 10:48 10 minutes, 48 seconds The slipage ratio improved to 1.21% 21% against 1.73% in 10:56 10 minutes, 56 seconds Q2 FY26 while write off remain almost nil during the quarter. Credit cost for the quarter 11:03 11 minutes, 3 seconds remain stable at 0.2. The same was also 0.2 in Q2 FY26 in line with our 11:10 11 minutes, 10 seconds historical levels. This highlights our prudent credit risk management, effective recovery efforts, consistent 11:18 11 minutes, 18 seconds portfolio performance and reaffirming the quality and resilience of our portfolio. 11:24 11 minutes, 24 seconds On the liability side, our total deposit base crossed 9,931 11:31 11 minutes, 31 seconds crores registering a strong 18.5% yearon-year and 7% quarteronquarter growth 11:40 11 minutes, 40 seconds reflecting the growing strength of our retail franchise. The growth continue to be granual core and of retail centric 11:49 11 minutes, 49 seconds deposits and retail deposit constituting more than 90% of the total deposits reflecting strong retail liability 11:58 11 minutes, 58 seconds franchise. The CAS ratio improved and remain healthy at 35.9% 12:04 12 minutes, 4 seconds against 33.9% in the last quarter. The average ticket size of the saving bank has increased to 52,000 against 46,000 a 12:13 12 minutes, 13 seconds year back. indicating higher customer engagements and account depth. The cost of deposit has beun to trend downward 12:23 12 minutes, 23 seconds declining to 5.86% against 5.92% in Q2 FY26. 12:29 12 minutes, 29 seconds This reduction reflects the initial impact of the term deposit repricing. We expect the benefit of repricing to acrue 12:36 12 minutes, 36 seconds more meaningfully over the next 6 months. Additionally, the saving bank rate was optimized to 3.1% 12:44 12 minutes, 44 seconds from if November 2025 and the benefit of which will also flow through in the subsequent periods. 12:53 12 minutes, 53 seconds The average CD ratio stood at 80.4 in Q3 against 81.5 in Q2 FY26 with outstanding CD ratio being 82.2%. 13:05 13 minutes, 5 seconds reflecting efficient fund deployment balanced growth across advances and deposits. 13:13 13 minutes, 13 seconds Moving to profitability during the quarter, the impact of earlier interest rate reduction seems to be fully reflected in the advanced 13:20 13 minutes, 20 seconds portfolio with yield on advances stabilizing at 11% during Q3 FY26 and Q2 FY26. 13:30 13 minutes, 30 seconds While the benefit of deposit repricing is still in the early ages and yet to be completely realized, the cost of deposit 13:37 13 minutes, 37 seconds during the quarter has marginally declined to 5.86% 86% against 5.92 a quarterback and the nymph for Q3 FY26 13:47 13 minutes, 47 seconds remained stable and stood at 4% and in Q3 and Q2 FY26 13:55 13 minutes, 55 seconds net interest income grew by 11% yearon year to 1119 cr. Same was 107 cr in Q3 14:03 14 minutes, 3 seconds FY25 and non-interest income grew by 46% yearonear to 27 cr against 18 cr in Q3 14:12 14 minutes, 12 seconds FY25 non-interest income remain strong at 0.9% calculated as percentage of average 14:21 14 minutes, 21 seconds total assets during Q3 FY26 OPEX as percentage to average asset stood at 3% this excluding the one 14:29 14 minutes, 29 seconds charge against 3.1 in Q3 FY25. OPEX growth during Q3/9 14:37 14 minutes, 37 seconds month FY26 is consequent to one-time charge for past employee services 14:44 14 minutes, 44 seconds valuing 5.13 crit to new labor code implementation we referring it as exceptional item. The cost to incomes to 14:54 14 minutes, 54 seconds debt 60.9% against 61.7% in Q2 FY26 and 62.1 in Q3 FY27. 15:05 15 minutes, 5 seconds The same reflects over sustained focus on cost optimization, process effectiveness and operational discipline. The cost income ratio with exceptional item is 64.4%. 15:16 15 minutes, 16 seconds Pre-provision operating profit rose to 57 KES without the exceptional item 15:23 15 minutes, 23 seconds against 48 KES in Q3 FY25 marking a 20% growth on zeronar basis and 21% on 15:30 15 minutes, 30 seconds sequential basis. The PPOP with exceptional item is 52 crores. Profit after tax stood at 38 cr without the 15:39 15 minutes, 39 seconds exceptional item up 12% zero year supported by healthy operating performance and disciplined cost management with the exceptional item. 15:48 15 minutes, 48 seconds The same being 34 cr rupes return on asset remain stable at 1.3 without the 15:54 15 minutes, 54 seconds exceptional item. During Q3 and Q2 FY26 the same works out to be 1.2%. 2% with 16:02 16 minutes, 2 seconds exceptional item over capacity ratio remained strong at 21.6% with average LCR for the quarter stood at 215.8%. 16:14 16 minutes, 14 seconds Reaffirming of a strong liabil liquidity position and providing ample headroom for future growth. 16:23 16 minutes, 23 seconds As of December 25, our branch networks stood at 203 branches spread over five states and two union territories further 16:31 16 minutes, 31 seconds strengthening our presence particularly in rural and semi- urban market which continue to be our key growth driver. 16:38 16 minutes, 38 seconds The suru branches accounts for 76% of the total branch network and contributing 75% to the deposit base. 16:47 16 minutes, 47 seconds During the quarter, we had initiated partnership-led lending with FLG framework and appropriate risk broads 16:54 16 minutes, 54 seconds and signed off with couple of our partner NBFCs targeting high yielding secured landing opportunities. 17:02 17 minutes, 2 seconds To sum up, Q3 FY26 reflects a period of disciplined execution, steady business momentum and resilience 17:12 17 minutes, 12 seconds amid temporary margin pressures, positioning the bank well for stronger performance in the period aheads. 17:20 17 minutes, 20 seconds As we look forward, we plan to organically grow our secure loan book at the rate of 20% plus for FY26 and 17:29 17 minutes, 29 seconds further accelerated the growth rate to achieve an advanced book of over 16,000 cr by FY29. 17:37 17 minutes, 37 seconds We aim to expand our footprints by deepening presence in contiguous states and intensifying penetration within the 17:45 17 minutes, 45 seconds existing market with a target of 300 plus branches by FY29. 17:51 17 minutes, 51 seconds We expect new expension supported by a continued moderation in the deposit cost from repricing and improving CD ratio 17:59 17 minutes, 59 seconds during the quarter. The impact of the earlier rate decline seems to be fully reflected on the advanced portfolio and Z loan advance got stabilized at 11%. 18:09 18 minutes, 9 seconds The same was 11% for Q3 and Q2 FY26. 18:15 18 minutes, 15 seconds However, the benefit of deposit repricing has started showing initial sign and yet to be realized. Cost of 18:23 18 minutes, 23 seconds deposit during the quarter has declined to 5.86% 86% in Q3 FY26 from 5.92% in Q2 FY26. 18:34 18 minutes, 34 seconds The reduction reflects the initial impact of the term deposit repricing. We expect 18:42 18 minutes, 42 seconds the benefit of repricing to acrue more meaningful over the next 6 month. 18:49 18 minutes, 49 seconds We intend to continue to improve operating efficiencies and cost to income ratios to that 60.9% without the 18:57 18 minutes, 57 seconds exceptional item against 61.7 and we expect continued improvement thereof 19:04 19 minutes, 4 seconds to achieve rot expansion in the coming year with a target to make it 1.6% plus by FY 29 with ROE expansion of 15% plus. 19:16 19 minutes, 16 seconds We remain deeply committed to creating long-term value for our stakeholders while contributing meaningfully to 19:23 19 minutes, 23 seconds Indian growth story through responsible banking, customer centric innovations and sustainable financial inclusion. With 19:33 19 minutes, 33 seconds this, I would now request uh the operator to open the floor for Q&A. Thank you. 19:42 19 minutes, 42 seconds Thank you. 19:42 19 minutes, 42 seconds Thank you, ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to ask a question may press 19:50 19 minutes, 50 seconds star and one on the touchstone telephone. 19:53 19 minutes, 53 seconds If you wish to remove yourself from the question queue, you may press star and two. 19:59 19 minutes, 59 seconds Participants are requested to use your handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question symbols. 20:11 20 minutes, 11 seconds We take the first question from the line of Anish Diwari from Vicaria Investment Management. Please go ahead. 20:19 20 minutes, 19 seconds Hey uh this uh NVFC uh book you have the corporate loans um it seems that this 20:28 20 minutes, 28 seconds quarter I'm seeing some growth as well in the third quarter or second quarter for non MFI business. So maybe what are 20:37 20 minutes, 37 seconds you observing there in terms of uh uh your quality of the uh demand uh are you 20:46 20 minutes, 46 seconds comfortable there and second the NVFC MFI account which sort of gave you some credit cost in Q1 uh is there any 20:54 20 minutes, 54 seconds development in terms of uh recovery from there or any either uh positive or negative development of that account? 21:03 21 minutes, 3 seconds Yeah, if you pick up the first part that is the from the NBFC non MFI during the quarter we just seen a small traction 21:10 21 minutes, 10 seconds and uh just to clarify we are presently targeting a high rate well leveraged or I mean to say highly capitalized and 21:18 21 minutes, 18 seconds lowle leveraged NBFC for our landing who are more in a secure landing franchise statistically 72.1% of our NBFC clients 21:28 21 minutes, 28 seconds are a rator and above so we are a high rator lender so we are seeing a quality perspective from the outcome from the 21:36 21 minutes, 36 seconds quality side we are getting comfort from this particular portfolio and no early signs and are there no signs of any 21:44 21 minutes, 44 seconds asset quality constraint coming from NBFC non-MFI segment and if we talk about uh NBFC MFI segment the segment is 21:53 21 minutes, 53 seconds now remain only 48 KES which is around 0.58% of the portfolio out of this the 22:00 22 minutes net NPA which is in a value basis left is only 7 Ks. The existing uh portfolio 22:07 22 minutes, 7 seconds which was being uh in the falls to the given as uh challenges in the Q1 the 22:13 22 minutes, 13 seconds recovery has started uh we are able to come at a understanding with the clients and the as per the understanding we have 22:21 22 minutes, 21 seconds recovered a decent amount in the Q3 and we are expecting the recovery as we move forward in the Q4 and the coming period 22:29 22 minutes, 29 seconds also. So that particular pain which we have seen in Q1 we strongly believe is over and we are looking forward for uh 22:36 22 minutes, 36 seconds the moving ahead of this and coming out of this very very shortly almost we are out of it with not material amount left 22:44 22 minutes, 44 seconds uh within this portfolio as well as of the net book. 22:49 22 minutes, 49 seconds Got it. and this uh credit uh uh supply uh let's first cover the nonfi piece uh 22:56 22 minutes, 56 seconds are you seeing the other uh let's say banks or other larger institutions also being comfortable lending to the smaller 23:04 23 minutes, 4 seconds NVFC's nonfi or you are the early ones who are who are taking that uh leap 23:12 23 minutes, 12 seconds uh we are a lender not to a small or early age NBFC lander we are a lander to a midsized and a mid-aged NBF NFC. So we 23:21 23 minutes, 21 seconds are not an starter lander to any of the NBFC. So we are being lander to those set of NBFC in which he there are a lot 23:28 23 minutes, 28 seconds of other landers available and for a and that NBFC is of a particular size. So we are preferring presently a good NBFC only in our portfolio. 23:39 23 minutes, 39 seconds Got it. On this NFI account, how much was the original amount? Let's say if there are 100 how much did you provide for and how much is left now? 23:49 23 minutes, 49 seconds If the original amount we have typically the both the if you can just hold for a 23:56 23 minutes, 56 seconds second I think the we we recovered good amount the pending uh net NPA is only 7 24:04 24 minutes, 4 seconds crores right what was the original loan outstanding with that uh company 24:12 24 minutes, 12 seconds I I trust that should be something around 21 or 22 odd crores got it How much provisions you had to take on this? 24:22 24 minutes, 22 seconds Uh so we have provided for certain amount of provisions and certain recovery and the pending value which is 24:29 24 minutes, 29 seconds left in the shape of the unaccounted for is around 7 to 7 and a half. 24:35 24 minutes, 35 seconds Great. The last one question I can ask you is SMA 1 and SMA 2 pool if you look at it has increased quarter over quarter 24:43 24 minutes, 43 seconds even compared to Q1 it is at a higher level. Although your slippages are down, your trends are positive. So here uh how 24:50 24 minutes, 50 seconds are you interpreting this? Can you help us understand uh this pool SMA 1 and SMA 2? Why is it increasing? Is there some 24:58 24 minutes, 58 seconds lag before it improves or something else we should interpret? 25:03 25 minutes, 3 seconds Uh so SMA 1 and two for this particular period and ending is around 6.46%. 25:10 25 minutes, 10 seconds This is basically a seasonality trend. 25:12 25 minutes, 12 seconds If you look into the December last year, this number was again 6.05. 25:17 25 minutes, 17 seconds Reason being Punjab, Hana and this north India is predominantly the economic uh flow cash flow is coming from the 25:25 25 minutes, 25 seconds agriculture and there is always this being a harvesting period when the agriculture produce money start pouring in in November and December and the 25:34 25 minutes, 34 seconds transition from that account to the MSME client's account or to the other self-employed people there is some lag 25:42 25 minutes, 42 seconds of some period so which typically translate into some temporary SMA boost increase at the end of this 25:50 25 minutes, 50 seconds quarter which is always the case. It is not the first time it happened but that there is no early science available and 25:56 25 minutes, 56 seconds as per the internal assessment we are quite confident of bringing it back again sub 5% level by March 31 2026 26:06 26 minutes, 6 seconds great why your fiscal 26 quarters typically have a lower level of SMA 1 26:12 26 minutes, 12 seconds and two compared to fiscal 25 quarters every quarter. So if you want to compare 26:22 26 minutes, 22 seconds SMAS are always you will see slightly elevated in June quarter and December quarter. Reason being in that particular 26:30 26 minutes, 30 seconds period transition of the agree cash flow to the full economy is not completed. So 26:37 26 minutes, 37 seconds that is getting completed in with some lag that is typically July August and January February. So that's why there is 26:45 26 minutes, 45 seconds a temporary increase in SMA1 levels in that particular period June and December which gets solved very quickly and uh we 26:54 26 minutes, 54 seconds come back again to the rightful levels uh whenever you see the September and March. Now there I meant to ask you that 27:02 27 minutes, 2 seconds third quarter 26 is lower than third quarter 25 SMA pools uh second quarter of 26 is lower than second quarter of 27:10 27 minutes, 10 seconds fiscal 25 is there is some there's a positive development year-over-year u is there although there was a stress in in 27:18 27 minutes, 18 seconds the system so is there a reason for this to be lower uh can you explain that year-over-year basis 27:25 27 minutes, 25 seconds and if you look into the number uh the number is almost identical just there may be some marginal difference that is 27:31 27 minutes, 31 seconds 6.46 versus 6.05. So the gap is very very marginal. So and even if you look into any of such number the number the 27:39 27 minutes, 39 seconds gap is very very very marginal. So that's that that's not the scenario which we are seeing even uh for the June 27:47 27 minutes, 47 seconds June 2025 versus June 2024. 27:53 27 minutes, 53 seconds Right. Okay. Great. So margin tap is almost a thing and we are continuously improving other. 28:00 28 minutes Okay great thank you. Yeah thank you. Thank you Ainas. 28:07 28 minutes, 7 seconds Thank you. We take the next question from the line of part Kota from plus 91 asset management. Please go ahead. 28:15 28 minutes, 15 seconds Hi sir thanks for taking my question. So just one conceptual understanding majority of our loan aum is to 28:23 28 minutes, 23 seconds agricultural loans. Um so how do we secure these loans considering majority of our loan book is secured loans. 28:32 28 minutes, 32 seconds Uh let me just clarify part agriculture accounts for 28% of the portfolio. So our majority of the loans are not 28:39 28 minutes, 39 seconds agriculture. We are 28% agriculture and uh 72% non-aggriculture. That is a one statement that is a one clarification I 28:48 28 minutes, 48 seconds like to place on the record. Point number two, agriculture is secured by 28:54 28 minutes, 54 seconds mortgage of the land. We are not making any agriculture loans without mortgage 29:01 29 minutes, 1 second of his physical land that is the land and with the name being recorded in the revenue records that is a mutation being 29:09 29 minutes, 9 seconds entered in the revenue records. So we collateralized the agriculture landing with the real asset that is the land. So the that is 29:18 29 minutes, 18 seconds what we typically do with the LTV of downward of 50%. That is we look forward for twice the value of the land and that 29:27 29 minutes, 27 seconds you valued at the collector rate not at the market price. So that is the safety questions we have done as a collateralization for the agriculture 29:36 29 minutes, 36 seconds and we are lendered to the agriculture who is a middle- income group lender borrower that is whose financial need is anything between 5 lakh rupees to 25 29:44 29 minutes, 44 seconds lakh rupees and being our ATS also being 12 lakh rupees in the agriculture. So these are the few points I like to 29:51 29 minutes, 51 seconds mention that uh uh the agriculture being 28% and we are primarily now a 29:58 29 minutes, 58 seconds non-aggriculture lender with MSME book of around 25% mortgage including housing on a lab book of around 26%. 30:08 30 minutes, 8 seconds Perfect sir. Uh just I think you would be better aware than I am but uh taking charge of an agricultural land is not an 30:18 30 minutes, 18 seconds issue if the loan goes bad. Right? I mean uh from a from understanding and there's always a structure there is 30:25 30 minutes, 25 seconds there is always a process which is being followed. There is always a process being followed and we are a Londoner now for more than 26 years in agriculture. 30:34 30 minutes, 34 seconds over last 26 years over uh we have never had any material rights of in 30:41 30 minutes, 41 seconds agriculture portfolio and the present book which is showing is purely recovery effort based this uh I'm not saying it 30:49 30 minutes, 49 seconds is is cakewalk to recover the land it is not a cakewalk for any of the landing but since you are collateralized and 30:57 30 minutes, 57 seconds your name is mortgaged and you are LTV is in your favor is the initial LTV on the collector rate is less than 50 with 31:05 31 minutes, 5 seconds the market price around 30 to 35 and with the repayment this LTV will going to improve further. So with the LTV 31:11 31 minutes, 11 seconds within your favor and uh you have a full legal rights available. So we in a 26 31:20 31 minutes, 20 seconds year history and with the landing for the purpose with the right underwriting practices to the farmer who is a middle- income 31:28 31 minutes, 28 seconds group farmer not a below poverty line that is a politically sensitive segment neither to the large farmer. So with the 31:35 31 minutes, 35 seconds identified size with the identified niche and with the safety questions we put in place. So we are able to 31:43 31 minutes, 43 seconds demonstrate a consistency in the quality of the book within agriculture as well. 31:49 31 minutes, 49 seconds Thank you sir. Thanks for the detailed answer. Just one last question in the same uh same stream of question is uh the new geographies that we are 31:57 31 minutes, 57 seconds expanding would would it be correct to understand that these would be primarily non-aggricultural loans or we would be doing agricultural loans also in the new 32:04 32 minutes, 4 seconds geographies but we are a multi-product organization. 32:08 32 minutes, 8 seconds We have having agriculture, we are having mortgage, we are within mortgage, we are housing loan, we have a lab, we have MSM, we have a consumption. So 32:16 32 minutes, 16 seconds depending upon the geography, whatever is the potential available in that geography, we are pushing that like 32:24 32 minutes, 24 seconds Delhi is MSME market, uh, Hana being a MSME mortgage market, Punjab being an agriculture market, Rajasthan being a 32:33 32 minutes, 33 seconds mortgage as well as MSME market. So depending upon the potentiality of that geography that product push is there. It is not that everywhere we want to go and 32:41 32 minutes, 41 seconds lend the agriculture and within Punjab one some portion of Hana. It is not agriculture is done from all the branches. Rural branches may be doing the agriculture urban branches may be 32:50 32 minutes, 50 seconds having a 0% agriculture. So being a benefit of a multi-product organization. 32:55 32 minutes, 55 seconds So whatever is the potential available or the opportunity available in that marketplace is what we try to capture 33:02 33 minutes, 2 seconds and take it in our portfolio. Sure sir that that's very helpful. Thanks thanks for the detailed answer once again. 33:10 33 minutes, 10 seconds Yeah thank you part thank you we take the next question from the line of krish mata from enam holdings please go ahead 33:18 33 minutes, 18 seconds thank you for taking my question sir I just had two questions the first is on the deposit front we've shown very strong ability to kind of increase our 33:27 33 minutes, 27 seconds kasa this quarter you know at 36%. So I wanted to understand more on the point you mentioned on the lag and repricing on the deposit book if you could provide 33:35 33 minutes, 35 seconds some sense on the bridge to where you see like a cost of deposit settling eventually and um where you can maintain the kasa level. 33:44 33 minutes, 44 seconds Yeah. Uh Chris I divide the question into two part. Firstly the bigger component the the we strongly believe over liabilities are one of our biggest 33:52 33 minutes, 52 seconds assets. So which we are demonstrating that increasing the deposit with continue to be retail semantic at a consistent manner with a good growth 34:01 34 minutes, 1 second rate we having a carer of 19% since we inception and the current year also we grow by 19%. with a continue to be a 34:08 34 minutes, 8 seconds cost of deposit over last couple of years sub six level. Yes, we look forward for a optimization of the cost 34:16 34 minutes, 16 seconds of deposit. Current quarter we start seeing the early signs of correction that our cost of deposit has reduced 34:22 34 minutes, 22 seconds from 5.92% to 5.86%. Now if I talk statistically our total term deposit 34:30 34 minutes, 30 seconds consist of presently 64% of our present term deposits are the term deposit which are our earlier deposits which repricing 34:39 34 minutes, 39 seconds shall give us a benefit of interest rates. Out of this 23% are getting due in Q4 FY26 for repricing. 34:50 34 minutes, 50 seconds 46% are getting due in Q1 FY27 and 27 being in Q2 FY27. 34:58 34 minutes, 58 seconds So the deposit which are presently within our present term deposit book 64% which are our old pre-interest rate 35:05 35 minutes, 5 seconds hikes or be higher pricing are there which are getting due for repricing over the next three quarters in 23 46 and 27% 35:15 35 minutes, 15 seconds respectively on a data perspective which as per the assessment we should be able 35:21 35 minutes, 21 seconds to see the NIM expansion of around maybe 3 to five basic basic points in Q4 35:30 35 minutes, 30 seconds from the present level of around 10 basic points in Q1 and around 15 basic points in Q2 FY27 35:40 35 minutes, 40 seconds I'm talking from the deposit repricing benefit second point uh the presently we just optimized on SB rate also from 35:49 35 minutes, 49 seconds November so that SB rate pricing and also going to acrewue will helping us in improving our name so with the repric 35:57 35 minutes, 57 seconds izing benefit which we has just started which we always seeing in our last calls also the bigger benefit we will see in 36:04 36 minutes, 4 seconds Q1 and Q1 is constituting what 6% repricing as we are seeing on 36:11 36 minutes, 11 seconds statistically so with that thing insight so that is the gliding path I can show you for the cost of deposit and 36:18 36 minutes, 18 seconds consequent improvement in the NIM over the next three quarters thank you sir that's very helpful and the second question I had was in the 36:27 36 minutes, 27 seconds loan book. We've shown an impressive yield on advances being maintained at 11% even this quarter with the interest rate decline. So how do you think about 36:35 36 minutes, 35 seconds the comparative intensity in the geographies that we're operating in and our ability to kind of hold on to this 11% going forward? 36:44 36 minutes, 44 seconds Uh Chris uh the 11 so as far as the competitiveness is concerned so we are well competitive and keeping an eye on the competition and the present run 36:52 36 minutes, 52 seconds rate. If we talk about the MSME, MSME is the flavor for the quarter. We are able to grow it on a year on year 42%. Which 37:00 37 minutes is quite decent from any standpoint and also we are able to improve lap which is a high yielding product by 18%. So so 37:09 37 minutes, 9 seconds competitive landscape we are well placed to take the competition with our outreach programs with our customer connects and also the rightful pricing. 37:18 37 minutes, 18 seconds As far as of carrying forward this 11%. 37:21 37 minutes, 21 seconds It all depends upon how the monetary policy will take the shape. But we have one advantage I'm seeing even if 37:29 37 minutes, 29 seconds whatever the view the monetary policy take since our repricing is coming of the deposit post that period that is February. 37:39 37 minutes, 39 seconds So any repricing there will be autoc correction in the deposit date. So automatically renewal will also done at 37:46 37 minutes, 46 seconds a further reduced price. So zeal on advances versus cost of deposit. My target is to see how the NIM can look 37:55 37 minutes, 55 seconds forward for upward tary. So I believe Q4 we will see some NEM improvement very very 38:03 38 minutes, 3 seconds I will say directional it will not be a big count a directional NEM improvement we will witness in Q4 with a good name 38:11 38 minutes, 11 seconds improvement visible in Q1 followed by a decent NEM improvement in Q2. So whatever the way the monetary policy 38:18 38 minutes, 18 seconds moves now, balance sheet seems to be in the right position to capture that if even if some surprise comes on the rate 38:26 38 minutes, 26 seconds cuts in the February monetary policy review since the repricing is getting due of our deposits post that particular date. 38:36 38 minutes, 36 seconds Thank you so much and good luck. Yeah, thank you Chris. 38:41 38 minutes, 41 seconds Thank you. We take the next question from the line of Shrial Doshi from Aquarius Securities. Please go ahead. 38:49 38 minutes, 49 seconds Hi sir. Uh thank you for giving me the opportunity. Uh my question was pertaining to the geographical uh 38:56 38 minutes, 56 seconds expansion that we're doing. So while we are entering in states like Rajasthan, Himachel as well as JNK, what what 39:05 39 minutes, 5 seconds segments are uh here which are seeing higher growth in terms of the product portfolio that we have? So I understand that of course in Rajasthan it would be 39:13 39 minutes, 13 seconds more of MSME and trading but in in in states like JNK, NCR, Himachel which products are doing well and also if you 39:22 39 minutes, 22 seconds could uh throw some light on particularly in Rajasthan how are you seeing the rejection rates or or which 39:30 39 minutes, 30 seconds customer profiles are we are we not targeting and which customer profiles we targeting from from our learning perspectives. 39:39 39 minutes, 39 seconds Firstly the first question if we look into the geographically that is Delhi NCR we look forward we are looking a better traction coming from the business 39:48 39 minutes, 48 seconds book that is MSME followed by the mortgage and similar is the situation for Rajasthan Rajasthan also we are seeing a good traction from the mortgage 39:56 39 minutes, 56 seconds sorry MSME and business loan followed by the uh modap uh so as far as that is what we are seeing in the all the three states you 40:05 40 minutes, 5 seconds mentioned Jammu Rajasthan as well as the Delhi So we are seeing a higher traction in MSME and uh followed by the mortgage 40:14 40 minutes, 14 seconds within the lab within the mortgage book that is the traction we are seeing in all the three thing which is a common between all the three thing together. 40:22 40 minutes, 22 seconds Now as far as the Rajasthan is concerned Rajasthan is a market in which we just uh had over branch in the headquarter of 40:30 40 minutes, 30 seconds the Rajasthan in the last year uh and we are starting penetrating about that particular center. It will be too early 40:37 40 minutes, 37 seconds to me to comment upon the customer segment. We are in advanced stage of customer centralization but presently we 40:44 40 minutes, 44 seconds are seeing a reasonable traction from the trading port community from the Rajasthan and uh that is what we are targeting there. But it will be too 40:53 40 minutes, 53 seconds premature to comment key what profile we are saying yes or no. Just in the we are always conscious that rather than 41:02 41 minutes, 2 seconds writing anything and everything which is coming on the table we all understand that geography well which we 41:10 41 minutes, 10 seconds internally call it a centralization area sanitization period. So we are in the last stages of the sensitization period in the Rajasthan which will take some more time to give me the precise answer. 41:22 41 minutes, 22 seconds Yes, we are quite ambitious for Rajasthan and I believe Rajasthan specifically business loan middle income 41:31 41 minutes, 31 seconds group business loan and the lab portfolio in Rajasthan is going to give us a very good outcomes. 41:39 41 minutes, 39 seconds Got it. So just a feedback if you could start giving uh statewise uh loan mix that should help while I understand that 41:46 41 minutes, 46 seconds these these new states are having significantly lower share but uh just helps from from you know how we are seeing the growth coming in those states 41:54 41 minutes, 54 seconds from product portfolio point of view as well we have started giving basic feedback uh the split between the Punjab and out of 42:03 42 minutes, 3 seconds Punjab as we move forward we try to make it more extensive. 42:08 42 minutes, 8 seconds Got it. Got it sir. So the second question or rather more on guidance front is pertaining to how are we seeing 42:16 42 minutes, 16 seconds let's say while you have indicated 16,000 cr advances book by FI29 uh but what is the kind of let's say 42:24 42 minutes, 24 seconds loan book mix that we are aiming at by FI29 since that's the year that you are looking at so what is the kind of let's 42:30 42 minutes, 30 seconds say loan ker we aspire over the years to FI29 as well as the loan book mix and pertaining to ROA we've been 42:39 42 minutes, 39 seconds highlighting that you know we would want to reach anywhere between 1.5 to 1.6% 6% ROA. So when is that timeline in terms 42:47 42 minutes, 47 seconds of quarter? If you can give us some indication there that's these are the broader questions. So I had that as the second question. 42:56 42 minutes, 56 seconds Firstly if I talk about uh the mix and the kagger uh current year we given a kagger of 20% growth for the advance. 43:03 43 minutes, 3 seconds Next year we want to accelerate this growth rate. Uh we given a guidance of 16,000 which translate into 23 to 24% kagger. Next year number for the precise 43:13 43 minutes, 13 seconds number for FY27 we will announce in the first earning call. So after getting the requisite internal approvals this 43:20 43 minutes, 20 seconds overall basis we given a guidance that we look forward for doubling down by 2029. 43:25 43 minutes, 25 seconds As far as the mix is concerned, Shipal G, we are quite uh uh confident and we intend continue to be middle income 43:34 43 minutes, 34 seconds group, secured landing franchise and these three products or within the three I call it four products agriculture, 43:41 43 minutes, 41 seconds housing loan, lab, business loan are going to be continue to be 80% uh types of the portfolio 75 to 80% of the 43:50 43 minutes, 50 seconds portfolio. within these three depending upon the economic conditions like uh post GST 4.0 43:57 43 minutes, 57 seconds post direct tax benefit. So we seeing a traction in the middle income group MSME we try to capture that. Similarly some 44:05 44 minutes, 5 seconds opportunities coming and knocking for the mortgage portfolio at the right uh root profiling we will be going to 44:13 44 minutes, 13 seconds capture that. So within that our overall principally we will continue to be secured middle- income group baselander. 44:21 44 minutes, 21 seconds uh I as looking at the situation as on date for next 12 month I believe business loan is going to lead the pack 44:29 44 minutes, 29 seconds business loan will continue to be growth at the elevated levels which will be supporting over growth for the next 12 44:36 44 minutes, 36 seconds month so we are keeping a eye on the present macro environments and the operating environment so depending upon 44:43 44 minutes, 43 seconds the opportunities we don't want to miss any opportunity coming on the site and like to capture it so overall the principally We want to maintain these 44:51 44 minutes, 51 seconds three sectors put together to be 75% plus levels within this for next 12 month MSMA is going to lead the pack. 45:01 45 minutes, 1 second Got it. And with respect to the RO8 trajectory. 45:05 45 minutes, 5 seconds Yes. Rate trajectory this current quarter if I exclude the exceptional item we are typically around 1.3 with 45:13 45 minutes, 13 seconds exceptional 1.2. So for the debate I'm taking 1.3 because that is a one of the item. So from uh Q1 next year 45:21 45 minutes, 21 seconds we will intend to see firstly we want to take this towards 1.4 in the next fiscal 45:29 45 minutes, 29 seconds that is the FY next fiscal that is FY27 we want to take it to the 1.4% level and you will start seeing I believe the not 45:38 45 minutes, 38 seconds the correct number five basic points improvement from Q1 and another five from Q2. So that is the what we strongly 45:47 45 minutes, 47 seconds believe. So it is not that strongly crystallized. This is what I strongly believe keeping in with the present environment since the interest rate 45:54 45 minutes, 54 seconds environments is in the hand of the my monetary policy. So if I talk about the today's interest rate environment without any further cuts. So that is 46:02 46 minutes, 2 seconds what we are. So we look forward as a first stage improvement from 1.3 to 1.4 46:09 46 minutes, 9 seconds in the Q2/Q3 FY27 is visible. is quite visible then we'd like to improve it towards 1.6 level by FYI 29. 46:24 46 minutes, 24 seconds Got it sir. Got it. That is helpful. 46:27 46 minutes, 27 seconds Thank you so much sir for answering my questions and good luck with that. Thank you. Thank you. 46:33 46 minutes, 33 seconds Thank you. We take the next question from the law line of Gorav Purohit from systematics group. Please go ahead. 46:42 46 minutes, 42 seconds Uh hi sir. Thank you for taking my question. Uh I have two questions. First one is on the partnerships that you mentioned in your opening remarks. So 46:51 46 minutes, 51 seconds can you please give us a flavor of you know how the economics would work in this partnership and uh will it be margin accative to you or will it be 46:58 46 minutes, 58 seconds neutral? Is it just to push growth? So that is one and maybe some color on you know how you have selected the partner 47:07 47 minutes, 7 seconds that you're working with. Uh second question is on the credit cost. the credit cost has slightly aged up in this 47:14 47 minutes, 14 seconds quarter. any specific reason for that or any particular segment that is the increment 47:21 47 minutes, 21 seconds and what would be the normalized uh uh level in Q4 these are the two questions thank you 47:29 47 minutes, 29 seconds thank you Gorov Gorov if I pick the first one that's a partnership this uh we were the partnership the objective is to look forward for a secured lending 47:38 47 minutes, 38 seconds opportunities the in the geography where we don't have a very very thick branch presence say Rajasthan 47:45 47 minutes, 45 seconds And we want to capitalize that opportunity through the partnershipled model. And these are the partners who 47:52 47 minutes, 52 seconds were banking with us for a while now like uh to whom we have landed in book. 47:57 47 minutes, 57 seconds So we have got a sufficient time period to or analyze their profile portfolio behavioral how their portfolio was 48:05 48 minutes, 5 seconds behaving over a longer period of times with the various events happening. So which is they are our portfolio companies within which we picked up some for our partnership uh led lending also. 48:16 48 minutes, 16 seconds So this partnershipled lending is uh within FLG framework that is with the credit risk with the partner to the as 48:24 48 minutes, 24 seconds per the permissible under the law. So we are purely FLG driven and their variable their incentives or their commission is linked with the quality of the 48:33 48 minutes, 33 seconds portfolio. So we have a two line of defense. One the varial is purely linked with the quality of the portfolio. 48:40 48 minutes, 40 seconds Secondly in addition to that we are having an FDG. So we are making our self guard well guarded uh both in selection 48:47 48 minutes, 47 seconds and uh the their portfolio performance over a long period very deep portfolio as our portfolio company and then also guarding legally and the within FLG 48:57 48 minutes, 57 seconds framework. this particular book we intend I'm not saying that is going to be very very significant in our dis 49:04 49 minutes, 4 seconds distribution but yes they will be making some impact in our distribution and it will be P&L positive since it will be a 49:12 49 minutes, 12 seconds high rot business uh with the credit cost with the partner so uh this particular b the we the current quarter 49:20 49 minutes, 20 seconds this is the first quarter in which we start distribution we signed off with the couple of our partner NBFCs now we 49:27 49 minutes, 27 seconds are uh in the process of watching it more closely at the ground for the quarter 4 then we'd like to as basis our 49:36 49 minutes, 36 seconds feedback bases our experience we want to accelerate it to the mole partners as we move forward from Q1 or Q2 next fiscal 49:44 49 minutes, 44 seconds so this is going to be a P&L positive booster and also a growth booster in the geographies in which we have a not a 49:52 49 minutes, 52 seconds very very thick branch presences that is the point number And point number two regarding the 49:59 49 minutes, 59 seconds credit cost uh just to clarify Gorov G over credit for the quarter being 0.2 it 50:06 50 minutes, 6 seconds was also 0.2 2 last year if you compare with optically with the last year Q3 you 50:12 50 minutes, 12 seconds can see it was 0.1 that is the reason because at that time there was a not a good decent growth in the advances so 50:21 50 minutes, 21 seconds with the growth in advances the provision for the standard loans also come into the place so which is also being there so I 50:30 50 minutes, 30 seconds strongly I I believe moni I'm comparing on advances not on average so I'm that I the similar number I'm 50:38 50 minutes, 38 seconds telling to say if you look into the advances over credit cost for this particular period is 0.2%. 50:46 50 minutes, 46 seconds If you look into the any of the period if if you look into the last quarter Q2 it was 0.2 in the Q3 last year it is 0.1 50:57 50 minutes, 57 seconds and and the and and we always intend to keep it range bound between 0.15 to 0.25 25 and we we are confident to keeping it 51:06 51 minutes, 6 seconds range bound between 0.15 to 0.25 as we move forward over the period to come. 51:15 51 minutes, 15 seconds Okay, fair enough. Uh one last question if I can squeeze in. 51:21 51 minutes, 21 seconds Please go ahead Gorov G. So on the margin side uh while I understand that you have drivers uh in the form of cost 51:29 51 minutes, 29 seconds of deposits uh agree mix is also expected to go up right in Q4. So how 51:36 51 minutes, 36 seconds much of the benefit do you see from the yield side? I understand that there is competitive pressure and also you know 51:43 51 minutes, 43 seconds RBI can take further rate action but uh with the information you have currently uh how much benefit you expect on the 51:52 51 minutes, 52 seconds yield side primarily from the agree book going up this agree book just it agreebook statistically yes will be improving in 52:01 52 minutes, 1 second Q4 uh so there will be some benefit of that coming flowing in uh but the I believe the leader in this pack will be the 52:10 52 minutes, 10 seconds deposit cost. So there will be some benefit we can get it from the agriculture book growth. But the leader of this pack is that since in the Z loan 52:18 52 minutes, 18 seconds advances we are yet to be absorbing one rate cut which done in December. So we are also to absorb that in quarter Q4. 52:26 52 minutes, 26 seconds So with that thing in sight Q4 I still believe we will be seeing some positive change in name but not a very very 52:34 52 minutes, 34 seconds significant that will be a directional change but we will start seeing a good name change uh in Q1 uh but the we will 52:42 52 minutes, 42 seconds be optimizing in Q2 on the NIM in which over majority of the repricing happen again I just like to reiterate over 52:51 52 minutes, 51 seconds repricing of the deposit which is 63% high cost is slated to be done in Q4 Q1 52:59 52 minutes, 59 seconds and Q3 Q2 which is 23% 46% and 27% respectively 53:06 53 minutes, 6 seconds so and in Q4 the majority of this is happening in the month of March so that I'm not going to see much benefit that 53:14 53 minutes, 14 seconds will be very very limited benefit so Q4 we will be seeing a directional change in the NIM not a very very large 53:21 53 minutes, 21 seconds directional change but Q1 we will see I I as per my assessment my calcul calcation we can see a 10 basic point upliftment in the name. 53:32 53 minutes, 32 seconds Got it. And when do you think uh your LDR will start to move up uh meaningfully towards the 85% mark 53:40 53 minutes, 40 seconds because I think it has come down this quarter again uh when we are seeing the current quarter current quarter we've seen a 53:49 53 minutes, 49 seconds good opportunity on the retail casa franchise when we start increasing our suru batch based transaction and the 53:58 53 minutes, 58 seconds customer engagement uh practices to in ghetto get ourself more penetrated. So which give us a better deposit growth 54:08 54 minutes, 8 seconds and deposit growth which is what we always look forward for a retail centric and a price efficient. 54:14 54 minutes, 14 seconds So at that point of time we were not worried about just a CD ratio and like like to take that deposit growth which 54:21 54 minutes, 21 seconds is of a good quality deposit growth. So over uh I believe uh we will be seeing some meaningful upward directional 54:29 54 minutes, 29 seconds towards 85% or 87%. In a medium-term basis next year you will see a on a yearly basis I will not giving any 54:37 54 minutes, 37 seconds quarter for this on a yearly basis you will see the LDR ratio improvement in the next fiscal on both on average and outstanding basis which will be pouring in towards the NIM and the ROA also. 54:50 54 minutes, 50 seconds Okay fair enough sir. Uh thank you for patiently answering all my questions and best of luck. Thank you. Thank you V. 54:58 54 minutes, 58 seconds Thank you. We take the next question from the line of Chin Nema from Preient Capital. Please go ahead. 55:06 55 minutes, 6 seconds Hi sir, hope I'm audible. 55:08 55 minutes, 8 seconds Yeah, you are audible. Chin may uh sir could you share the gross NPA numbers on the agree book and the MFI book? 55:19 55 minutes, 19 seconds uh agree and the MFI MFI MFI is presently just uh split down and now today our MFI book is just 48 55:28 55 minutes, 28 seconds KES so there may be a gross portfolio outered there if you can just hold for a second I just try to give you the gross 55:36 55 minutes, 36 seconds NPA number for that agree over gross NP around 4.7 types and 55:44 55 minutes, 44 seconds in MFI the it will be I'm not 23 28%. 55:56 55 minutes, 56 seconds I get that and uh also if you would give some uh color on the broader health of the agri book because if I look at uh 56:05 56 minutes, 5 seconds growth of the book for the last five six quarter it has been sub 5% and uh the 56:12 56 minutes, 12 seconds trend in NNPA has been upward. So what are you seeing on that book if you could share that 56:20 56 minutes, 20 seconds agriculture book is typically yes we are not uh very very aggressive on the agriculture for some time now but we have started looking this book in a more 56:28 56 minutes, 28 seconds favorable way quarter three the growth was not there for a genuine reasons because the flows of the funds are 56:35 56 minutes, 35 seconds coming in agriculture. So despite the dispersement have been done in this book but there has been a natural decline because of the recovery basis the cash 56:43 56 minutes, 43 seconds flow in that particular uh pro portfolio going forward agriculture book if you look into the slippage if I talk about 56:51 56 minutes, 51 seconds the gross slippage our gross slipage in the agriculture book is always 50% of our overall gross slipages so we are 56:59 56 minutes, 59 seconds always having a subdued or submuted gross lipages ratio but we typically follow a strategy of recovery and not writing it 57:07 57 minutes, 7 seconds So the agriculture loan book so we typically and since the growth is not coming in agriculture book so optically you will see some gross increase in the 57:16 57 minutes, 16 seconds gross NPA but even if you look into the comparison period now so there is not any significant increase in the value of 57:23 57 minutes, 23 seconds the NPA but since the agriculture outstanding has declined this number look optically high 57:30 57 minutes, 30 seconds so we are quite we and the yields on this particular portfolio is also better than my overall yield overall yield 57:37 57 minutes, 37 seconds being 11 and yield on the agriculture being 12.62. 57:41 57 minutes, 41 seconds So we are in control of the things and this particular book the slippages are well in control and uh with the momentum 57:50 57 minutes, 50 seconds uh in the agriculture we are just very bit cautious in the landing earlier because of the floodlike condition in 57:56 57 minutes, 56 seconds Punjab for a long period for that the last year in the current year. So we were not that aggressive in the agriculture landing which we started but 58:04 58 minutes, 4 seconds we just hold in on the guards. Now teaching situation is normalizing. So we I'm not saying very aggressive on 58:11 58 minutes, 11 seconds agriculture but yes we want to increase this book. This book is not showing any sign of weaknesses or weaknesses on the 58:18 58 minutes, 18 seconds quality side. On the contrary gross bases rotadriven this portfolio is giving a better rot business but just we 58:25 58 minutes, 25 seconds want to make an optimum outcome of the same. 58:30 58 minutes, 30 seconds Got it. And uh the quarterly provisions are they also uh pro in proportion to the slippages. So 50 to 60% of 58:38 58 minutes, 38 seconds provisions do they come from agree would that be a fair assumption? 58:43 58 minutes, 43 seconds No because there is no growth similar growth in agree NPA. So it will be on the incremental NPA. We follow a simple 58:50 58 minutes, 50 seconds provision coverage ratio policy of keeping it upward of 50. Current quarter we slightly improved our PCR ratio. The PCR is now 50.46. 59:00 59 minutes uh against which we which was a bit 49.5 around a quarterback. So we improved our PCR also. So we can't say that the increase in this is towards agriculture. 59:10 59 minutes, 10 seconds So that is as per our principal strategy of maintaining a PCR of upward of 50%. 59:17 59 minutes, 17 seconds Got it. And sir on the MFI book this 6 to 7 crores uh of outstanding uh do you see how how should one think about 59:26 59 minutes, 26 seconds recoverability on this uh sum? Do you see it flowing to uh provisions in the coming quarters? 59:33 59 minutes, 33 seconds I believe uh at as per the situation existing as of date out of this 7 K which is the present ANA provided for we 59:42 59 minutes, 42 seconds believe loy share of it will be recovered. 59:46 59 minutes, 46 seconds So bigger surprise on the provisioning is expected. I'm thinking law and share but still this is uh going forward this 59:55 59 minutes, 55 seconds is assessment this is the situation as on date understood and uh sir the 30 whips uh 1:00:02 1 hour, 2 seconds improvement on the ROA that you've guided for in uh in uh 2029 could you give some highle color on what what the 1:00:11 1 hour, 11 seconds bridge should look like so this 30 structural improvement where would this come from 1:00:18 1 hour, 18 seconds uh if you look into the rota from I talk about the segment which will contribute to this particular bank. So I 1:00:25 1 hour, 25 seconds believe the largest contributor here will be the NIM expansion. NIM is today four. We want to take it upward of 4.2 1:00:32 1 hour, 32 seconds to 4.3 levels. So that will be the largest beneficiary which will be coming to the thing and the biggest thing which is available for us is the cost of 1:00:40 1 hour, 40 seconds deposit and the CD ratio expansion which is going to be the driver for the NIM expansion. Second, we will be seeing some optimization of the OPEX. OPEX 1:00:49 1 hour, 49 seconds being at 60.9% cost to income ratio basis and 3% on the ratio to the assets. 1:00:55 1 hour, 55 seconds So these two bridges I believe are the largest contributor for our rotator tree expansion and on a time horizon basis we 1:01:04 1 hour, 1 minute, 4 seconds are looking forward for a 30 basic point increase over next three years. I strongly believe it will be very evenly split on yearly basis also. 1:01:15 1 hour, 1 minute, 15 seconds Understood. Okay. And uh lastly uh just wanted to uh check the the 2x growth guidance that you've given for uh for 1:01:24 1 hour, 1 minute, 24 seconds the entire book. Uh in the medium-term does that also hold for the agree book or the would the agree book continue to uh grow at a more measured pace? 1:01:35 1 hour, 1 minute, 35 seconds Uh no we will not be talking about the agree will be also doubling down. So I believe the presently the lead in the pack will be done by lap book and the 1:01:43 1 hour, 1 minute, 43 seconds MSME book agree will be growing not at the doubling down the pay rate but it will be growing but not at the equal 1:01:50 1 hour, 1 minute, 50 seconds proportionate since over concentration in the other states are not agree so the agree will not be growing at the great rate of the total advance book. 1:02:02 1 hour, 2 minutes, 2 seconds Understood sir that is very helpful. Thank you. Yep. Thank you. Thank you chin ma'am. 1:02:09 1 hour, 2 minutes, 9 seconds Thank you. We take the next question from the line of Vun Dubet from Share India Securities. Please go ahead. 1:02:17 1 hour, 2 minutes, 17 seconds Uh good afternoon sir and congratulations on your strong set of numbers. Although majority of my questions has been answered but uh just 1:02:25 1 hour, 2 minutes, 25 seconds wanted to understand a few things. First among them is what is the term deposited rate that the bank is offering and you know uh in this how much of the 1:02:33 1 hour, 2 minutes, 33 seconds reduction was the bank able to take because in your initial comment you have also said about uh competition and you know uh some kind of temporary margin 1:02:42 1 hour, 2 minutes, 42 seconds that could be witnessed. So if you can throw some light on that and my second question would be on the cost to income ratio because in this quarter there was a burn because of which the cost income 1:02:51 1 hour, 2 minutes, 51 seconds ratio my apologies my apologies your voice is not audible there seems to be some eco there I'm not able to 1:02:58 1 hour, 2 minutes, 58 seconds understand the question please one second hold on hello can you hear me now sir 1:03:07 1 hour, 3 minutes, 7 seconds yeah now better okay sir so just wanted to understand upon uh the term deposit rates that the bank is offering. I mean you spoke about 1:03:15 1 hour, 3 minutes, 15 seconds some competitive pressures you know building up because of the overall uh pricing in the environment and that could impact the uh you know margin 1:03:24 1 hour, 3 minutes, 24 seconds pressure temporarily. So what is the term deposit rate that the bank is offering and how much reduction was the bank able to take in this quarter and 1:03:32 1 hour, 3 minutes, 32 seconds also the cost to income ratio because this quarter if you exclude the oneoff it has been around 60.9%. So to what 1:03:39 1 hour, 3 minutes, 39 seconds level do you uh you know intend it to take or exit the FI26? 1:03:45 1 hour, 3 minutes, 45 seconds uh as far as if I take the point number two first cost income ratio is 60.9 which I believe for the current quarter is quite optimal and I believe in the Q4 1:03:54 1 hour, 3 minutes, 54 seconds it will be range around a similar levels just we want to take cost income ratio towards the downward level over the medium-term basis over the three-ear 1:04:02 1 hour, 4 minutes, 2 seconds basis and over the three-year basis it will be showing the downward trajectory as it has been shown in the current fiscal so that is what I see if in a 1:04:10 1 hour, 4 minutes, 10 seconds medium-term it will be showing a declining trend and a consistent declining trend each of the Point number two, as far as the term deposit is concerned, there are the two 1:04:18 1 hour, 4 minutes, 18 seconds slices of this question. One, what we are presently offering and the leg room for further reduction. Second, what is 1:04:26 1 hour, 4 minutes, 26 seconds the present portfolio versus the present offer date? If I talk the second portfolio first, if I what is the 1:04:34 1 hour, 4 minutes, 34 seconds present rate of we offering? What is the and second what is the contract we are having contracted with us which are 1:04:40 1 hour, 4 minutes, 40 seconds running contract is statistically as I said earlier I'm just for the sake of repetition I'm repeating 63% of the same 1:04:48 1 hour, 4 minutes, 48 seconds is on a price which is much more than the price which is present offer term deposit which is getting repriced over 1:04:55 1 hour, 4 minutes, 55 seconds the next three quarters and our high that that is going to give us a benefit on the cost of deposit as well as the 1:05:02 1 hour, 5 minutes, 2 seconds name. Second point, we are presently offering around 7% for a one-year contract on the tom deposit and around 1:05:10 1 hour, 5 minutes, 10 seconds 7.1% for our highest eding that particular thing. Current period we have optimized it. If the current year 1:05:18 1 hour, 5 minutes, 18 seconds is concerned, we started the current year when we were offering around 7.6 in a one-year maturity. Now we have done 1:05:26 1 hour, 5 minutes, 26 seconds it seven. So we have already cut around by 60 basic points over last 9 month. So we are keeping an eye open on what is happening on the monetary policy front. 1:05:38 1 hour, 5 minutes, 38 seconds So basis the monetary policy outcomes we will be reacting towards that. But despite that particular fact there are 1:05:45 1 hour, 5 minutes, 45 seconds the opportunities available for the NIM enhancement and the rotman and rot 1:05:53 1 hour, 5 minutes, 53 seconds enhancement through cost of deposit optimization basis contractual maturities on repricing. 1:06:02 1 hour, 6 minutes, 2 seconds So that is the big lever available. In addition to this the other lever will get unfold as we move forward. 1:06:09 1 hour, 6 minutes, 9 seconds Okay sir. uh but uh how much was the reduction in Q3 and how much more reduction in you know the term deposit do you emphasize in Q4 as well? 1:06:18 1 hour, 6 minutes, 18 seconds Then at this stage offering answering this question is not very honest or you can say possible for me. It all depends upon the market dynamics. In Q three we 1:06:28 1 hour, 6 minutes, 28 seconds made a reduction in the one-year contract I think by 15 basic points or 20 basic points. 1:06:35 1 hour, 6 minutes, 35 seconds Okay. Okay. Okay. That answers my question sir. Thank you very much sir. 1:06:38 1 hour, 6 minutes, 38 seconds And once again uh congratulations on your good set of numbers. Thank you. Thank you Vun. 1:06:45 1 hour, 6 minutes, 45 seconds Thank you ladies and gentlemen. Due to time constraint, we take that as a last question and we conclude the question and answer session. I now hand the 1:06:54 1 hour, 6 minutes, 54 seconds conference over to the management for their closing comments. 1:06:59 1 hour, 6 minutes, 59 seconds I would like to thank everyone for being part of this call. I hope we have answered your questions. If you need more information, please free feel free 1:07:08 1 hour, 7 minutes, 8 seconds to connect uh to our investor relations team or SG investor relation advisors. 1:07:14 1 hour, 7 minutes, 14 seconds Thank you once again and have a good day. Thank you. 1:07:18 1 hour, 7 minutes, 18 seconds Thank you. On behalf of Capital Small Finance Bank Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. 1:07:28 1 hour, 7 minutes, 28 seconds Thank you.