Q4FY26 absorbed the Rs. 646 crore fraud upfront.

Post the implementation of new microfinance guardrails, would you be able to provide some color on how the business trends have changed on the ground, either in terms of the approval rates, disbursements, collection efficiencies?

So in terms of the MFIN guidelines, which have come in from April, we had implemented it slightly prior to that. So these guidelines we made effective already from February. So to that extent, we also saw some impact on disbursements that came down to about Rs. 760 crores in the current quarter. So since we have already implemented, we don't see further impact as such to come on this front.

What's our blended SA rate now? And given we have built a very strong deposit franchise, how are we thinking about leveraging on that in a rate cut scenario? Do we expect a decent amount of SA rate cut in the coming months or quarters?

Yes, we are also planning to reduce our rates very soon, maybe in a day or two, you will see the numbers out there. We are trying to reduce, first of all, our fixed deposit interest rates. We are paying probably about 70 or 80 basis points more than the large big 4 banks on the fixed deposit side. But we want to literally go down to their rates.

What's the blended SA rate for us right now?

It's for the current quarter, it's about 5.9%. As I said, we made some changes in February. The full impact of that would play out into the next quarter. That, coupled with certain other changes which we plan to do, would further bring down the SA rates.

On credit cost outlook for FY 26. You have shown quite a decent or material improvement quarter-on-quarter on the SMA 1 and also on the non-MFI portfolio. So how should we think about credit costs for FY 26? And also, are we going to utilize or unwind some of that Rs. 300 crores of MFI provision in FY 26 when it's all over?

I mean, until this quarter, we didn't feel like doing it because the MFI thing is still playing out. Our experience is that we had already called out last quarter that we expect the peak of provision to come in Q4, which has already come. We expect provisions to come down next quarter and come down quarter after that and so on and so forth. We think of it like a wave that came and went and this is the peak of the wave that we had this quarter.

Do you mind provide us a run rate of credit cost that you see as of now for FY 26?

Yes. If you take this number for this year, FY 25, first of all, it was 2.46% for this year. And the 2.46% included the high impact of MFI and the Mumbai entry point, the toll accounts that came because state government changed the rules, etc. So all put together, it came to 2.46%. If you exclude these 2 events, the MFI and this one, it was about 1.85%. So next year, you should expect us to be somewhere in the zone of about 1.85%, 1.90%.

How should we expect margin to behave from here? So when also given your SA rate cut plan or TD rate cut plan, should we expect margin to at least stabilize from here?

The way we think about it this year, already 2 repo cuts have come. We expect at least 2 more repo cuts to come, of say, 25 bps each. So all put together, there is a certain reduction in the yield on the book, at least on the floating rate side. But on the other hand, there is going to be reduction in our own cost because they're cutting TD rates and also going to cut SA rates to an extent. So all put together. So net-net, blend, we are expecting the NIM to come down by about 10 basis points, all things playing with each other. Over the NIM of Q4 of FY25.

Firstly on the growth side, you said the overall capital raise would be more towards the growth. So with CD ratio of 94%, LCR at 107% and even like PSL requirements to be met. Now maybe how are we looking at the overall growth? Would we see some lag up on the growth side? Or can it still continue to be in this high teens to 20-odd percent kind of a range?

So Kunal, thanks for the question. So as we have guided earlier, we would want to grow in the 20% zone. It could be 1% here and there, but largely in that range going forward as well.

Coverage on MFI, yes.

Yes. So coverage on MFI. So during the quarter, we have not released any provision out of that Rs. 315 crores so SMA 1, SMA 2 put together and NPA, we would have a cover of about 72%.

On LCR, this new guideline, how much do we see the impact for us maybe compared to our average LCR today at 107%?

The LCR actually is 117% for the current quarter, and this was 114% in the previous quarter. So as we have guided earlier, our endeavor would be to maintain LCR around this range, about 115% and so on. Cumulatively, however, we are seeing a small impact of maybe about 1% to 2%, but that's not material in the overall scheme of things.

On the retail liabilities cost ratios. If I look at Slide 66, there is a sharp decline in the operating profit as a percentage of average liabilities there. While the cost ratios are getting better, what explains this sharp reduction in loss between FY24 to FY25?

Sometimes it can happen in one particular year that we got a solid improvement this year. But we don't promise this kind of massive improvement every year. But the thing is that if you see that from FY20 to FY21, it dipped massively to 3%. We feel that this 4.2% has come down to 1.2% over the 5 years and in the next 5 years, it should become 0.

On the overall cost-income ratio at the overall bank level, when you guide for a 65% cost income by FY27, what kind of absolute cost growth are you looking at over the next 2 years? And which segments will drive that decline?

Well, you should expect from us about 12%, 13% opex growth. While we want to grow the book by maybe 20-odd percent, give or take here there. So this is a very material 2, 3 years coming in front of us.

On the capital side, can you just give us some color on what was the thought process behind using the CCPS route? But more importantly, are there any other riders or structured securities attached to this that investors should be aware of?

Yes. Let me talk about the terms. CCPS was a choice made among the few other choices available. It probably made the investors more comfortable to come through this route because the conversion was linked to the stock price prevailing in the exchange. The terms of the contract are that if the stock stays above Rs. 60 for a period of 45 trading days, then it automatically stands converted. And in the interim, they will get an 8% return.

Why not kind of increase the growth target? And why this 20% target, there's a lot of runway, still your scale is too small.

You could, but it all comes with its own, we just find 20% is a nice stable number to go with, feels comfortable. Our engine can easily and comfortably deliver it. We don't have to strain any credit norms. We don't have to be aggressive at all. We don't have to relax any credit criteria.

Based on your modeling and experience with your customers, you're comfortable of defending the CASA ratio. You don't expect these rate cuts to impact the CASA ratios?

Yes, we think we'll maintain it. That's why we are not exactly going and cutting SA rates immediately. We are cutting FD rates because end of the day, money is money, whether we cut FD rates and get the P&L or we cut SA rates and get P&L. We are choosing to cut FD rates and get the P&L.

On LDRs from the current 93%, where do you expect to settle down? And what do you think is your steady state?

Yes, we should come down to the, our ratio is late 80s.

In MFI, what was the write-off we did this quarter versus last quarter?

No, but Sudhanshu you can give a straight answer. The credit cost of the full year for microfinance is about 10.5%.

Our CASA ratio of 46%, 47%, what's the mix of CA and SA?

So CA as a proportion of customer deposits would be about 7% to 8%.

On MFI, how has the April collection efficiency turned out?

So collection efficiency, as you would have noted that it was 99.2% for March month and ex Karnataka is at 99.4%, and we have seen a good rebounds in, I would say, a month or so, and the same trajectory is broadly holding up in April.

Opex now will be a key lever of ROA. So going ahead, credit card will be the key driver, right? It's not as if you would be cutting commissions or cutting other opex in other loan segments. So how sustainable is this 12% to 13% opex growth and how confident are you of that?

See, the best proof is the proof of delivery. So 4 quarters ago, 5 quarters ago, we told you in one of these calls that we will bring down costs because people were worried that our cost was growing at 27%, 28%. So that was a phase that the bank was going through. So the best proof of delivery we brought down, I read all the numbers to you that how it'd come down from 20% to the 12% now.

On the MFI proportion, where do you think it should settle? I mean, of course, it has been reducing. But at the same time, we have also increased the proportion of CGFMU. Where do you think it should be settling as a percentage of overall loans?

So we expect it to further come down because overall loan growth, we are talking of 20%. And given that the industry is still going through, I would say, some things are still settling down we feel that the MFI proportion may come down to about 3% to 3.5% into the next year. We are very cautiously monitoring this portfolio.

Sudhanshu, if you would have the proportion of fixed rate book and floating rate loan book, just a ballpark number will also do?

Yes. So we have about 61% of the book which is fixed rate, and which means 39% is floating. And within that 39%, about 30% is linked to repo and rest is linked to MCLR, T bills and so on.

In the presentation the fee and other income ex MFI has grown by 6.2% and including MFI the combined fee is also touching that line. But within that, the core fee growth seems to be lagging in single digit. I mean any reason, this 14.5% trajectory is feasible and there's no change in that?

Yes, but if you see fee to total assets for the full year, that's at 2.09%, right? So it's quite healthy in that sense. Our quarter-on-quarter movement could be a function of the disbursements in a particular quarter and so on. But we feel that we should be able to grow fees at around 14% to 15% even into the next year.