Any comment on credit cost and how should one look at it going ahead?
While specific guidance is difficult, credit cost will substantially improve and Q4 should see lower loan loss provisioning. Rajeev Mantri reaffirmed the FY27 exit guidance of 1.6%-1.7% overall credit cost and 2.5%-3% for EEB.
How do you foresee margins for the next four quarters?
Difficult to give a number but green shoots are visible - large additional ARC-related provisions won't recur, cost of funds will improve as fixed deposits mature into lower-rate buckets, and slippages reducing should support NIM. Rajeev Mantri added that NIM saw a bottom in Q2, cost of funds improvement could deliver 35-50 bps NIM benefit over next 2-3 quarters; the December repo rate cut will create an adverse 11 bps impact from January as repo affects ~45% of advances; lower interest reversals and CASA improvement are additional supporting levers.
Post-IPO, the bank made over Rs 36,000 crores in provisions while shareholders have lost ~50% of net worth. How will the bank build robust risk management and restore profitability?
The microfinance segment which dominated the book at 80%+ proved vulnerable to climatic, epidemic and political risks - corona stressed 70% of the book. Risk mitigation has been to diversify into a balanced universal bank model with microfinance now at ~35% and unsecured at 43%; the bottom in profits was September 2025 (Rs 112 crores PAT). Wholesale banking is now 31% with 85% of corporate credit rated A and above. Returns will take time but the trajectory is set right.
Any ballpark impact for the further labour code rules pending?
Cannot quantify yet because the rules are not out.
Can you give credit cost guidance for FY26 and FY27?
Guidance is for FY27 exit at 1.6%-1.7% credit cost; no specific guidance is provided for FY26 or FY27 full year.
Could you specify EEB slippages during the quarter and recoveries on the EEB NPA movement?
EEB slippages in Q3 were Rs 942 crores, a significant improvement of about Rs 170 crores from Q2 (Rs 1,118 crores) and Q1 (Rs 1,089 crores). Rajeev Mantri added that EEB recoveries were Rs 113 crores, making net slippage Rs 829 crores.
Is there any restatement of last quarter's SMA 0 because of the ARC sale or something else?
There is no change in the overall SMA 0 number; some state-wise reclassification occurred which makes percentages look different but the total SMA 0 figure remains unchanged. Rajeev Mantri and Partha Pratim Sengupta confirmed this.
What is your assessment of EEB asset quality in the near term given declining slippages and pickup in disbursements?
Multiple positive trends are visible - disbursements going up QoQ, slippages coming down, and slippages from recent vintage books over the last year remaining very low. Vishal Wadhwa added that regular collection efficiency reached 99.6% in November and December showing strong green shoots.
Can you confirm the treatment of the ARC transaction - the written-off portfolio of Rs 3,700 crores and the SR investments received?
On the Rs 3,165 crores NPA sale, the deal value was Rs 570 crores (18%), with Rs 303 crores cash from the ARC (53.25%) and Bandhan Bank's investment in SR was Rs 266 crores (46.7%). The Rs 303 crores cash was used to bring down NPA figures and the Rs 126 crores from the written-off portfolio went to Other Income.
Can you once again explain the ARC details, the Rs 570 crores from sale, the Rs 303 crores cash, and Bandhan Bank's share?
Two pools were sold - the NPA pool of Rs 3,165 crores got 18% deal value (Rs 570 crores), with Rs 303 crores cash component (~53%) and Bandhan Bank investment of Rs 266 crores (~47%). The write-off pool of Rs 3,707 crores was sold to Phoenix at 9% deal value (Rs 332 crores), with Rs 126 crores cash (~38%) and Bandhan Bank investment of Rs 206 crores (62%).
On mortgages, growth is slowing and NPAs are going up - what are you doing to reverse this?
We have separated on-boarding, underwriting and operations into independent functions, are streamlining the underwriting process toward rules-driven decisioning, are shifting away from personal data to structured information backed by bank statements, ITR and GST returns, and are increasing the salaried segment share which is now 56% of housing loans. The major change of converting legacy GRUH Finance centres into branches has taken place with 57 housing centres now converted, and further integration is ongoing.
But these process changes would impact growth, while NPAs have been going up every quarter - what is the diagnosis?
These NPAs are mainly because of underwriting issues from the legacy book where the same person was doing on-boarding and underwriting. Once an independent underwriter assesses the loans, the quality improves.
What are the yields in commercial banking and retail loan books, and have you hiked microfinance yields like competitors?
Wholesale banking gross yield is just below 9%, blended secured book yield is around 10%. Partha Pratim Sengupta added total yield on advances is 13.33% and EEB yield is 21%-22%. Vishal Wadhwa confirmed EEB rates have not been increased and the bank is currently evaluating.
On collection efficiency, West Bengal saw a minor uptick while SMA 1 jumped sharply to 1.4%. What is the situation? What is the West Bengal MFI book share, and any tightening for upcoming Bengal elections?
We are making a paradigm shift in underwriting from localized to centralized understanding with business rules-driven decisioning and revamping family tree and double-credit checks. Vishal Wadhwa added the West Bengal blip was solely due to 5 holidays in October pulling regular OTR from 99.5% to 99.1%; November and December collections rebounded to 99.5%+. Partha Pratim Sengupta added West Bengal is among the best-performing states with only 2 of 42% of MFI branches classified as underperformers. Rajeev Mantri also noted ARC sale reduced the denominator inflating SMA percentages.
What proportion of total MFI is West Bengal now?
West Bengal is 42% of MFI, also confirmed by Vishal Wadhwa.
Since March '24 MFI portfolio has come down 20% but employee count has remained stable - shouldn't headcount come down to control costs?
We expect EEB AUM to recover so cannot take hard staff measures; MFI talent is mobile across NBFCs and would not return easily. We have rationalised by moving Relationship Officers from booking to collection roles. Vishal Wadhwa added the gross book including write-offs we collect on is larger than a year ago and employee productivity is being closely tracked. Rajeev Mantri added the bank is investing in talent for the fast-growing secured business.
There have been a few exits at vigilance and audit executive levels - can you clarify what is happening?
There are no issues with management or regulators - the executive resigned solely because his family resides in Bombay and personal compulsions forced the decision. He stated he would not have opted to resign in normal circumstances.
Is the team settled now or is there a risk of further senior exits, given the housing-side departure?
The housing-side exit was a given decision and is completely separate. As of now there is no indication of any senior executive leaving and the team is more or less stable, though the market is open and good opportunities can take anyone.
Did you make any additional provisions for the NPA sale, given provisions to slippage ratio looked overdraft?
PCR with SRs is around 74%; standard book provisioning is 62% (vs IRAC 25% unsecured / 15% secured), D1 78%, D2 onwards ~100%, plus 1% standard asset provision on EEB. The ARC sale required close to Rs 528 crores of additional provisions. Rajeev Mantri added without the additional provision PCR would have come to 50-55% post-sale; net NPAs are 1% (down from 1.4%).
What was the coverage on the NPA sold to ARC?
The portfolio sold was 100% provided. Rajeev Mantri added that since 100%-provided portfolio gets sold off, PCR naturally comes down requiring top-ups.
Beyond the Rs 120 crores gratuity labour code impact, are further provisions expected for leave encashment, pension or PF in Q4?
Leave encashment is already structured to not require further provisioning; gratuity provision of Rs 120 crores was the key item assessed. State-level rules under the labour code are awaited and any further implications will be assessed and communicated.
Has RBI supervision been completed and were there any PSL classification qualifications, similar to what some banks faced?
RBI supervision is completed with no remarkable qualifications since the bank is prudent in PSL classification. Rajeev Mantri added there has been no divergence on PSL pointed out by RBI.
Given growth is led by lower-yielding wholesale book, has the mix change been factored in margin improvement, and should MFI grow in line with overall loan book?
The book has reached a balanced position ahead of the FY27 plan and we want to maintain ~40% unsecured / 60% secured. EEB grew Rs 1,100 crores (~2% QoQ) ex-ARC effect and growth is expected to continue. Rajeev Mantri added non-EEB growth is 25% while EEB is -10% YoY; sequential improvement is expected and pace of secured-mix change will be lower going forward.
How should we see deposit growth picking up and what is the loan growth guidance?
Retail deposit share rose from 66-67% to 72%; bulk deposits cut from 45-48% to 38% of term deposits; CA growing positively though SA lost Rs 4,000 crores due to rate moderation impacting Rs 18,000 crores of chunky institutional balances, replenished by Rs 14,000 crores retail core. Target is to return to 31% CASA in 1-2 quarters via revamped mobile/internet banking and customer engagement initiatives. Rajeev Mantri reiterated the 15-17% advances CAGR guidance with deposit growth running ahead, over 2-3 years.
On product tweaks - bimonthly/monthly collection options and elongated tenures - can you elaborate, and could the choice options confuse customers?
From January, fortnightly and monthly repayment pilots have started for group loans; SBL individual loans always had monthly repayment. Fortnightly addresses customer flexibility and the holiday-repayment issue. Weekly remains an option, with customers in homogeneous groups gradually moved from weekly to fortnightly at renewal over more than a year.
What about the elongation of tenures?
Earlier tenures were 12 and 24 months; now flexible extensions to 18 and 36 months for the highest ticket sizes. Partha Pratim Sengupta added the elongation prevents pressure on customers when shifting from weekly to fortnightly which doubles installment amounts.
Any impact from West Bengal election news and immigrant-related disturbances reported in the press?
Districts where issues were reported continue to show over 99% collection efficiency on regular loans. Vishal Wadhwa added the bank monitors this on a daily basis and the news has not affected operations in any way.