Ladies and gentlemen, good day and welcome to the AU Small Finance Bank Q3 FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prince Tiwari, Head of Investor Relations. Thank you, and over to you, sir. Thank you, Sagar, and good evening, everyone, and welcome to AU Small Finance Bank's earnings call for the third quarter of FY 2025. If we haven't spoken earlier, then happy New Year to all of you. We thank you all for joining the call today on this Friday evening. On today's call, we have our founder, MD, and CEO, Mr. Sanjay Agarwal, our Executive Director and Deputy CEO, Mr. Uttam Tibrewal, our Deputy CEO, Mr. Rajeev Yadav, and other senior members of the management to answer any questions that you may have. We'll start today's call with a 20- to 25-minute opening remarks by Mr. Gaurav Jain, President, Finance and Strategy, highlighting the bank's performance, positioning, and outlook. We will then follow it up, though we'll then follow the opening remarks with 40- to 45 minutes of Q&A for the participating analysts and investors. For the benefit of all the participants, I would humbly request each participant to restrict the number of questions to two so that everyone can take the call. We can take questions from everyone, and then if you have further questions, you can kindly join back in the queue. If you have any data keeping questions, you may reach out to the IR team at any point after this call, and we'll be happy to assist. With that, I will now request Gaurav Jain, President, Finance and Strategy, to share his opening remarks. Gaurav, over to you. Thank you, Prince. Good evening, everyone, and thank you for joining us today. I will start with an update on the operating environment. We saw uptick in the economy at the end of Q2, continuing in the festive month of October. Post-October, however, there was a slowdown in economic activity on the ground. While there are some signs of bounce back in rural consumption and government CapEx, overall momentum remains below expectation. In the banking system, liquidity continues to remain in deficit despite the CRR cut in December 2024. Additionally, persistent inflation has also kept interest rates higher for longer. The economic slowdown has affected overall credit demand, and we remain watchful in our underwriting. Despite these economic headwinds, our bank is in good shape overall. Let me talk about each of our businesses in detail, starting with our deposits franchise. We assess the performance of our deposits franchise in terms of the following key metrics: growth, CASA ratio, LCR, proportion of stable deposits, CD ratio, and cost of funds. Our aim is to optimize across these core metrics, keeping in view banks' overall strategy and prevailing market conditions. Our deposits franchise is scaling well, and total deposits stand at INR 112,000 crores. This financial year, we have delivered growth of around 15% year-to-date in total deposits and 9.4% in CASA. This growth rate is nearly twice the growth rate of total deposits in the banking system and faster than the growth rate of private sector banking peers. While we benefit from our smaller scale, as a new bank on the SFB platform, we have to work harder to gather deposits. On a quarter-on-quarter basis, our deposit book grew by 2.3%. However, there was an outflow of 3% in CASA, primarily due to withdrawals from certain government accounts, which were transactional in nature. Despite this, average quarterly balances of CA and SA deposits increased by 5.9% and 4.4%, respectively, on a quarter-on-quarter basis. Our CASA ratio stands around 31%. We maintained an average LCR of 115% during the quarter, which was an increase of 3% from last quarter. Our stable deposits, which include CASA, retail term deposits, and retail non-callable deposits, stand at 80% of total deposits and our CD ratio, excluding refinance, stands at 81%. Throughout the year, we have maintained a strong focus on securing the right mix of deposits at optimal pricing and effectively managing our cost of funds, which stands at 7.05% year-to-date and 7.06% for the quarter. Notably, our incremental cost of funds has improved, declining from 7.7% in FY 2024 to 7.4% year-to-date. However, the current market conditions are challenging. Liquidity remains tight, and competition for deposits continues to be intense. This week, we adjusted our savings and fixed deposit rates to market conditions, introducing a 10 basis point increase on our peak fixed deposit rate and widening the slabs in savings accounts, offering a 7.25% interest rate. Even with this increase, we expect to be at the lower end of our guided range of 7.10%-7.15% for cost of funds for the year. We are mindful of the ongoing pressures on liquidity, inflation, currency, GDP growth, and external headwinds. If these pressures persist and lead to a delay in easing cycles, our cost of funds would be impacted in the coming quarters. Now, in terms of our key initiatives around deposits franchise, our branch banking strategy is focused around driving growth in top 20 cities, which contribute around 57% of total deposits in the country. 75%-80% of our deposit book is from 400 urban branches, of which 60% are located in top 20 cities. Within these cities, such as Delhi, Bangalore, and Jaipur, we are doing very well, and we are working on improving productivity in cities like Mumbai, Chennai, Hyderabad, and Calcutta. We have fully integrated 100-plus urban deposit branches from Fincare in terms of people, product, process, and technology. Now, our efforts are focused on driving productivity, and we expect these branches to drive growth from next year onward. Additionally, we plan to open around 70 to 80 new branches in the next year, mostly in top cities, with a focus on raising deposits, and enable another 75 existing asset centers in district and Tehsil headquarters to start taking deposits. In terms of our product breadth, on the savings account side, we have established a strong proposition backed by cutting-edge digital channels. We have industry-leading deposit products for various segments, which include recently launched remittance products and comprehensive wealth and insurance distribution platforms. Our wealth AUM has scaled to around INR 1,250 crores, and in our insurance business, we are partnering with most of the leading insurance companies. On the current account side, we are working to create a right-to-win in terms of products, services, and distribution. This is a tough market, and results will take some time. We also did a lot of work on improving branch profitability. 44% of branches which were in existence in December 2023 were profitable in Q3. This was driven both by higher productivity and focus on overall cost efficiency in overhead and marketing spend. Further, all the key building blocks like people, leadership, technology, and customer service are in place for growing the franchise sustainably. Now, moving on to our assets franchise. Our loan portfolio has reached around INR 109,000 crores, with a growth of 13% year-to-date, which is 1.6x the system loan growth and faster than the growth of private sector and banking peers in similar periods. As you know, we have four broad asset classes: retail secured assets, commercial banking, inclusive finance, which includes MFI, SMF, and FPO, and digital retail unsecured, which includes credit cards and personal loans. I will take a moment to talk about each of these businesses. Our retail secured assets book, which stands at around INR 73,000 crores and forms 67% of our total loan portfolio, includes Wheels, mortgages, and gold loans. This is our flagship franchise with a vintage of over two decades, and it is a unique combination of scale, growth, high yield, and strong asset quality. We have a very strong right-to-win in this business, with our deep distribution and underwriting expertise in informal segments in semi-urban and rural areas, strong operational processes and collection framework, and robust people practices. This segment is performing very well with growth of 14% year-to-date. We have a long-run growth runway in this segment as we expand gradually to Pan India. We will particularly benefit from increased distribution through Fincare touchpoints in South India. Asset quality remains broadly in line with our expectations. We are not seeing any signs of contagion with unsecured assets. December was strong from an asset quality perspective, as is historically the trend, and we expect asset quality to improve further in Q4. Now, let me talk about the key products within retail secured. First is Wheels. Our Wheels book is around INR 34,000 crores, which is 32% of our total GLP. It includes personal and commercial cars, SUVs, LCVs, tractors, and two-wheelers. Wheels GLP grew by 7% quarter-on-quarter and 19% year-to-date. Growth for the full year is expected to be more than 25% and remains in the top tier of peer banks and NBFCs. Book yield has increased by 25 basis points over FY 2024 and is north of 14% year-to-date. Asset quality also remains broadly in line with credit cost of 1.1% year-to-date annualized. Slippages were higher in the festive period as per trend, with some parts of the book, such as SCVs and LCVs, which are given to small transporters impacted by market slowdown. December was strong, and we are expecting further pullback in Q4. Wheels book is present in around 570 touchpoints, which is only 35% of our total touchpoints, excluding BO/BC outlets. This implies significant room to expand distribution within our existing network. By the end of FY 2026, we are expecting to expand to another 250 to 300 touchpoints, including UP and South India. Second product within our retail secured franchise is our mortgages product, which stands at around INR 36,000 crores and forms 33% of the total GLP. It includes micro business loans and home loans. These are both granular products with average ticket size of INR 12 to 13 lakhs and yield around 15% and 12%, respectively. There is no comparable peer operating. Scale and yield in MBL. Growth remains on track, with the book growing by 10% year-to-date and 4% quarter-on-quarter. Within this, MBL and home loans respectively grew by 8% and 16% year-to-date. For the full year, MBL is expected to grow in low teens and home loans in a range of 20%-25%. Asset quality remains robust, and there is no major impact from the slowdown. Credit cost is 0.6% year-to-date annualized. In terms of our strategic initiatives in mortgages, we have a big opportunity to expand our distribution. We are present in around 900 touchpoints in MBL, which is 55% of our total touchpoints. In FY 2026, we would expand our presence by another 130 to 150 touchpoints. In home loans, we are present in around 600 touchpoints, and the business tends to follow MBL with a lag. We are also fully integrating Fincare's mortgage business, which was started six to seven years back. Teams are already integrated, and integration of product processes and technology would finish by March end. This significantly accelerates AU's entry into key southern markets of Karnataka, Tamil Nadu, Telangana, and Andhra. The third product within retail secured assets is gold, which has a GLP of around INR 2,000 crores and forms 2% of the total loan portfolio. Expertise in this business comes from Fincare, which has done a good job in building distribution franchise and processes. Gold portfolio grew by 29% year-to-date and yields around 16%. We believe the latest RBI guidelines on gold loans create a level playing field for banks to compete against NBFCs. We remain compliant with the guidelines and believe there is an opportunity to build and scale our gold franchise. We are working on our strategy and will update the market in the next one to two quarters. The second key asset segment is Commercial Banking, which is 21% of the total loan portfolio and includes five businesses: business banking, agri banking, NBFC, real estate, and transaction banking. We started lending to NBFC and real estate businesses 11 years ago and business banking and agri banking around seven to eight years back. Our competition is mainly with other private sector banks. We have developed a full product suite and tech capability, including the AD-I business, which we started earlier this year. Growth and asset quality remain on track with some cyclical challenges in agri commodity-linked businesses. Total GLP grew 22% year-to-date and 6.4% quarter-on-quarter and is expected to grow north of 30% for the full year. Credit cost for nine months was 46 basis points annualized. The commercial banking businesses are important from a liability franchise perspective as well and generated around INR 11,000 crores of deposits. We plan to move this business to Mumbai over the next one to two years, which will provide an opportunity to stitch this business even more closely with our deposit franchise and other asset businesses. We are expanding our distribution in Fincare deposit branches. This year, we have started business in a few locations of Andhra, Telangana, Tamil Nadu, and Karnataka, and plan to expand deeper in southern states and other existing geographies within our overall distribution network next year. Further, we have created dedicated teams for specific sectors such as renewable energy and infrastructure. We believe there is a large opportunity to grow in these segments. Our AD-I business is gaining traction. This is an important business for cross-sell, current account float, and export-import. Forex flows in this quarter increased by more than 50% quarter-on-quarter and achieved a run rate of greater than 2,000 crores. These include flows from export-import, NR, and retail remittances. With most of the products being already live, we will continue to scale this business. The third asset book is our Inclusive Finance Book for bottom-of-pyramid customers, which includes MFI and lending to small marginal farmers and FPOs. This book is key for fulfilling our financial inclusion charter and meeting our PSL obligations in SMF and agri. Total book is around INR 7,400 crores, which is around 7% of total GLP. MFI is the biggest product in this segment with a GLP of INR 7,150 crores. We have a strong MFI franchise with conservative underwriting policies and strong operational processes. We have one of the lowest average exposure in industry at 25,000 per customer. Our book is well-diversified across more than 60,000 villages. Top three districts contribute around 6%, and all remaining districts are less than 1.5%. No state has more than 13% concentration. MFI industry continues to face the challenge of customer indebtedness, which has resulted in elevated slippages, lower disbursements, and high credit costs. However, we believe that the long-term fundamentals of the industry remain sound, and we are cautiously optimistic of a gradual turnaround. We expect MFIN guidelines to improve overall industry discipline, and with tighter underwriting being prevalent in the industry for the last few months, customer indebtedness should gradually reduce as well. Additionally, we have taken some corrective actions in terms of strengthening our collection efforts and increasing disbursements under the CGFMU guarantee scheme, with 60% of Q3 disbursement covered in CGFMU. We expect this to increase to 70%-75% in Q4. This will help reduce both risk weight and future credit costs. In terms of our financial performance in this segment, MFI GLP declined by 10% year-to-date and 6% quarter-on-quarter in line with the industry. Credit cost was 5.4% for nine months annualized. GNPA stands at 4.1%, and SMA pool is around 4.4% at the end of Q3. There are some signs of collection efficiency having bottomed out with marginal improvement in Q3 versus Q2. December month saw some improvement in both collection efficiency and disbursement versus November, and we expect the improvement to continue in Q4. Slippages are expected to stay elevated in Q4 as well, and credit costs will remain elevated for the next two to three quarters due to lower collection efficiency in the earlier quarters. We are keeping a close watch and will provide a further update in next quarter's call. The fourth asset segment is Retail Digital Unsecured, which includes our credit card and personal loans business. Total GLP is around 4,000 crores, which is 4% of the total portfolio, and credit cost on this book stands at 9.2% year-to-date annualized. Personal loan GLP is around 1,000 crores and is primarily for our existing customers. This book is performing broadly in line with industry from an asset quality perspective. We have tightened the underwriting criteria for asset customers, and as a result, the book has degrown by 10% year-to-date. In our credit card business, we got a few things wrong, which included not getting digital underwriting correct, higher reliance on card-for-card sourcing, and issuing higher credit limits. There are some industry-level challenges as well, driven by over-leverage, inflation, and misuse of certain merchant categories through FinTech aggregators. But our performance has been worse than the industry leaders. Total outstanding book has declined by 2% year-to-date and 9% quarter-on-quarter as a result of recalibration of our business. Getting this business right is important from a long-term perspective as it provides a hook for deposit customers and increases banks' brand. We have taken a number of corrective steps. These include strengthening credit team, tightening underwriting criteria to include documented income only, and reducing credit limits both for new issuances and existing cards based on risk assessment. We have also done a detailed evaluation of existing customer base and taken appropriate preemptive actions on potentially delinquent customers. We have strengthened daily transaction monitoring to identify and restrict misusing customers and merchants, and have proactively blocked certain misused categories of merchants such as rent and education. These actions will take a couple of quarters to have an impact. We will update on the progress, including future outlook in the next one to two quarters. Now, I will update on our profitability for the quarter. Pre-provision operating profit increased by 6% quarter-on-quarter, driven by strong control on operational costs and growth in interest income. Profit after tax was down 7% quarter-on-quarter at INR 528 crores due to higher credit costs in MFI. EPS for nine months is up 24%, and book value per share is up 23% year-over-year. We achieved an ROA of 1.6% year-to-date and 1.5% for Q3. Net interest margin declined by 23 basis points from 6.1% in Q2 to 5.9% in Q3. This was driven by a higher mix of investment book on average during the quarter, which had an impact of 10 basis points. Adverse loan mix because of lower MFI and higher cost of funds, which had an impact of 9 basis points. Interest reversal on NPAs, which had an impact of 4 basis points. Other income was in line with Q2 after adjusting for lower treasury gains. Core fee income continues to be robust with contributions from assets, banking fee, third-party distribution, as well as credit cards in AD-I businesses. Insurance distribution income in this quarter saw some impact due to changes in IRDAI regulations around revenue recognition on general insurance and surrender value in life insurance. We continue to focus on managing our OpEx, which declined by 3% from Q2. Cost-to-income ratio was 54% in Q3 and 57% year-to-date. The saving on OpEx has been achieved through merger synergies, control over manpower and overhead costs, and tech-led efficiency gains. Expenses in next quarter would be higher as per seasonal trends, and we expect to finish the year at a cost-to-income ratio of 57% to 58%. Credit cost was elevated and came in at 1.5% of GLP for nine months annualized. As mentioned earlier, this was primarily driven by higher credit costs in MFI and credit cards. Overall, our strong performance in OpEx and sustained performance in other income was offset by underperformance in asset quality. In terms of outlook for the next quarter, credit costs will stay elevated, driven by unsecured, but we expect to be within the striking range of our ROA guidance of 1.6%. Overall, GLP growth is expected to be around 20%, with secured assets growing around 23%-24% and continued degrowth in MFI and credit cards portfolio. Finally, regarding our universal bank license application, we are in touch with the regulators on the progress of our application. As you would be aware, the Reserve Bank of India has recently announced the setting up of a Standing External Advisory Committee, which will evaluate applications for universal banks. While we don't have clarity on timing, this is a welcome step and should speed up the process of evaluation of our application. To conclude, as we have mentioned earlier, it takes about 10 years for a bank to settle fully. We are now successfully completing eight years, and the bank is shaping up well across all key areas of product, distribution, operations and technology, people, and governance. Our brand is improving. Both customers and peers are noticing us on the street, and we continue to focus on strengthening our foundations and executing well to create a sustainable forever bank. With this, I will hand it back to Prince for Q&A. Thank you, Gaurav. Sagar, we can now open for Q&A. Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Also, in order to ensure that the management is able to address queries from all the participants in the conference, please restrict your questions to two at a time. You may join back the queue for follow-up questions. Our first question comes from Kunal Shah from Citi group. Please go ahead. Sir, particularly on the MFI side as well as PL and credit card, where we are in terms of the cycle and you indicated in terms of, say, improving collection efficiency, but at the same point in time, we have almost like 4.4% in SMA as well as 17% of loans wherein there are more than three lenders. So even during the transitioning, that could have an impact. So what is maybe the extent of, if you can just help in terms of understanding what could be the extent of the pain that has to be further recognized and how you have built up the collections out there? Yeah. Hi, Kunal. From the MFI side, we have Rajeev and, of course, Mayank on this call so they can elaborate further. But my take on MFI is this: this is not an event risk. This is more about over-leverage and maybe irrational lending to that sector. A lot much has been arrested in the last two quarters. That's my personal understanding and personal belief. We already have gone to the level of what now 5.4% credit cost in our balance sheet, and the way we have handled it in terms of overall, we just want to take one more quarter to really have the full color on it, but I think we are expecting our credit cost overall, yearly basically, we are north of 6%. It might touch 7% too. That is why we have commented that our overall credit cost of the year would be in the range of 1.55%-1.6%, right, but I think you have to give us one more quarter because it's just 7% of our book, so we are not heavy loaded there. There are green shoots in terms of overall approach, like the guideline from MFIN, the way the customer is responding, the H2 is better than H1, and those segments itself is getting some money through various things. The activity has been started. We are focusing more on collection than on disbursement. Of course, it's an important book for us because it gives us SMF, which is the obligatory to do lending on us. I would only say that the quarter two or quarter four has some maybe heat going on, but next year, you have to give us one more quarter. Then Then only we'll have the clarity. Same thing is in credit card. Not much has been arrested there too. The entire team has come on the subject. We have also not building up credit card on digital mode anymore. We are doing underwriting basis now, physical applications or physical data. We have stopped a lot many payment systems available online, which actually people don't use money for the merchandise or for services. They were more about cash out. We have reduced the credit line there. So I think this quarter, in my opinion, will be peak there. And then you will see us coming back next year on this subject. But overall, if you see, if you move away from this 10% of our book, the 90% book is well in control where the whole strength of our organization is there from so many years, be it secured assets or commercial assets. People are expecting that there would be some pain or there could be some kind of contagion effect, but that has not seen. Quarter three has become more stronger than the H1. I believe that overall, the 90% of assets by the end of March would be much better in entire look and shape. Both the books should be also good enough for next year. Rajeev, you want to add on or on the subject? Mayank, you want to add on something on this point and anything? Okay. Just to add what Sanjay said, this is Mayank. I manage credit cards. What we have done is we have not only contained the existing portfolio, but we have worked a lot on our underwriting capabilities on the new acquisition. Both the things simultaneously we are working out. Wherever the digital capabilities were not enough to manage the underwriting this thing, we have contained them and tightened our credit underwriting criteria. So I think another one or two quarters will help us to give a better picture on it. But yes, things should come under control after these tightening controls. Sure. And in terms of the numbers, so as you indicated, 6% credit cost for the full year. So that clearly suggests 8%-10% in MFI continuing. Same way on credit card, if we look at it like still being more than 10% or percent for this quarter, so would that run rate also be still there maybe getting forward? So are we yet to? So this quarter, yes. This quarter, yes. Okay. In Q4 also, this will continue? Yeah. That's why we said that overall, we will be touching around 1.55-1.6% overall credit cost because we believe that the other asset classes will perform better than the quarter three. Sure. Got it. I got it. Okay. Yeah. Thanks and all the best. Yeah. Thank you. The next question comes from Renish from ICICI. Please go ahead. Renish, your line is unmuted. Please proceed with your question. As there is no response from the line of current participant, we'll move on to the next question. Our next question comes from Rohan Mandora from Equirus Securities. Please go ahead. Good evening, sir. Thanks for the opportunity. I just want to understand what's the provision that we are currently carrying on the MFI SMA book. That's one. And second, the OPEX central that we are seeing on account of merger synergies, how should one think on that for FY 2026? And related question was that we have given a slide wherein we are talking about the addition of touch points across products, across geographies in next year. So how should one look at the interplay between OPEX on these two things? So I think your question is around the Fincare integration. It's going on perfectly well. As we stated in our presentation that from 1st January, the entire MBL, AHL, which is Affordable Housing and Gold Loan, has come under the one umbrella of secured retail assets. So the north, south, east, west has been fully integrated. And the integration plan is in place. Rajeev is now looking after tech and, of course, the entire MFI business. And of course, by this year-end, this calendar year-end, we'll be integrating in terms of our tech also. So that is there in terms of integration. Not much operational efficiency has come in because now the leadership has been aligned with the verticalization. So there was so many leadership at Bangalore under Fincare unit, which has been now aligned with the entire verticalization of AU. So we are saving not much cost there. And so I would say by this quarter end, we won't be having much cost because of this two-unit existence. Entire cost will be aligned with the bigger umbrella of AU. So the operational efficiency will be achieved in next year, next financial year. In terms of the distribution, Fincare had an amazing 1,200 kind of touch point to operate for their microfinance business. Out of the 1,200, the 800 branches were used for microfinance. In that, 70% were around Tehsil headquarters, 20% were on districts. And Tehsil headquarters actually gives you a lot much opportunity to build deposit in those markets where we were not in. We want to use the entire 800 branches of microfinance to really build the other product line and also the deposit franchise. In that, close to maybe 80 to 90 branches will actually experiment this year. I think that full integration will be on because of the availability of the distribution in that sense that is there. The other question was around the SMA. Rohan, Prince here, on the MFI book or any book for that matter, on the SMA, we only have standard provision. On the MFI book specifically, we had created a INR 17 crore contingency. That continues. We haven't utilized it. Yeah. Just the last point on what Sanjay added into your question, on this entire product expansion into existing geographies that you referred to, we have given on Slide 22. These are all existing infrastructure. As of yet, we are not planning to add any newer infrastructure in these places. Probably there'll be some cost in terms of people and manpower and systems, but no infra cost is expected. We have also articulated that we are going to open 60-70 newer branches. That's where the OPEX will come in. But that's a regular BAU business. Sure. Just on that. Yeah. Just on that synergy piece, see, if I look at the quarterly run rate in the first three quarters, we have been holding around that INR 14.7 billion, INR 14.3 billion kind of run rate. And we have been gaining some benefits. So just into next year, what kind of a cost escalation will we see on the core business? Or how should we look at it with the synergy benefits? How should that move into FY 2026? That's what I was trying to understand on the OpEx part. Cost to income. Cost to OpEx, right? So I think cost to income is overall for nine months is around 57.7%. So for quarter four or entire year, I'm expecting to be north of 58%, but of course, lesser than 60% because the quarter four will have more expense because we'll have more business and everything. So this is not a standard number which we have given you for quarter three. But the idea is to really look for lesser than a 55% cost to income in the next two years. So let's go through this quarter, figure out our realistic cost to income, which will be around 58%, 59%. And then, of course, look for some kind of, I would say, effort or the room available for us. But definitely, the focus has come back strongly on working on an operational efficiency. We are not using much digital. We are using productivity now. We don't want to hire people for the sake of hiring. The whole expansion has been put with a purpose. So I think you will see us more calibrated, organized in terms of our cost to income. And we'll be keeping it around because there's not much variable. So it's difficult to predict, but the approach is this: that our cost to income has to go around 55% in the next two years. And it has to be based on a best-case basis because there are quite many things we don't control as we move forward. But a lot more sincerity has come in. I can assure you about that only. Sure. Thanks. Thank you. Thank you. The next question comes from the line of Sameer Bhise from JM Financial. Please go ahead. Yeah. Hi. Thanks for the opportunity. I have a couple of questions. I mean, I understand we are banking on the secured side of the book to kind of do well incrementally as well, but if I see there are some minor changes on asset quality there sequentially on a growing book. So how confident are we that that 4 Q could actually be better? While I understand it is seasonal, but I just wanted some confidence around that, and then I'll come back with a follow-up question. No, I think I just want to give one assurance to the street that secured retail asset we are doing from last now close to two decades, and we have seen the cycles. We have gone through every type of challenges. This year is no different about it. You know about it that we were actually hoping that our country will grow by not just 7%, but we might grow only by 6%. We are not excluded in every sense, right? It is a relatedness, and the pain is there in that kind of segment where we actually lend because this is more of an informal segment. We touch and feel. We back ourselves. We back our credit team. We back our operational efficiency. We back our collection team. There are certain things which might go here and there, but overall, it is a secured book built on productive assets, small ticket. We price the risk. I think I would say that we are fairly confident that this will remain our strongest point in terms of our entire asset classes, and we should not go wrong there. And we neither have gone this year too. If you see our data in terms of comparison with the competitors, you will find us far, far better there. So I think I would only say that this looks very promising. And this has also, December, remained a very strong month in terms of everything. I would say the collection efficiency for this particular December month has surprised us a lot. And I hope that that will continue for this quarter too. And we have also wanted to build more expansion in this business so that the growth, the yield, the ROA, and of course, with the strong asset quality, which is the hallmark of us over the years. So remain there. Remain there. Thank you. That's helpful. Just wanted to get a sense because it's quite a fluid situation in the segment that we operate. No, I don't think so. I don't think so. This is a fluid situation, honestly. Again, want to repeat that 90% of our asset class remain very strong. Because I'm again saying that we are not excluded. We are relative, right? The market also has not gone so bad. We expect that quarter three, quarter four, and the GDP also will recover, right? So if it recover, then you will see not much better performance of us in these books. These are secured books. Rohan, if I, sorry, if I can add, if you go back to our last quarter commentary, I think we had mentioned at that time as well that typically first half is relatively not so great for retail secured assets. Second half, October, November, generally festive seasons, you see slippages. Then December onwards, December, January, February, March, DJFM, as we call it, you start seeing the better performance, recoveries, resolutions, right? Economic momentum also supports that. If I follow the same theory and I look at the numbers internally, the same thing has played out. October, November, we did see some higher slippages, and that's what you were seeing. By December, as Sanjayji said, across be it collection, be it your credit cost, be it your slippages, across all the secure retail asset buckets, we have started seeing a decent jump, right? That gives us hope that historical DJFM will play out in January, February, March as well. Precisely. That's why I asked that it sticks to the playbook. Secondly, on OpEx, now, obviously, if we enter this kind of an economic environment, you would want to invest more on collections. How are we positioned there, especially in some of the core categories? Are you investing more on that? And how does that kind of drive overall OpEx numbers? I reckon Sanjay just mentioned that this year would be upwards of 58%. So just wanted to, if you could sharpen a bit on that. My friend, if you see our last year data, we were around 63-64. And what our endeavour is this year is that if you want to be in the range of 58-59, it will be a super achievement because in spite of such a headwind in terms of the deposits, in terms of unsecured book, we already invested a lot in our every aspect. I don't think that by putting an extra 100 people for collections will have even a needle shift in our book because we already become a large balance sheet. We have a large budget for our expense. But the idea is not about not putting money on the right purpose, right? We will always put the money on the right purpose and right cost because that's the way business should be. But the idea is to really be very cognizant of the other factors that we should not just unnecessarily build for the future, right, when things are not clear at this point of time. So I don't think that we want to be. It should be lesser than what we have done this year. So the understanding is that next year, the cost to income should be lesser than maybe 1% or 2% of this year, right, so that we can achieve the ultimate goal of 55% in near term. Sure. This is helpful. Thank you and all the best. Thank you. Thank you. Thank you. The next question comes from the line of Madhuchanda Dey from MC Pro. Please go ahead. Hi. Good evening. I have two questions. The first question is a little long term. See, you have had an excellent track record with what you understand best, which is secured assets. With Fincare, you got the MFI principally, and that met with the sectoral headwinds. Then you yourself admitted that your experience with credit card, the way you have done the business, has not been that great. Going forward, will it make you recalibrate your strategy with respect to lending? You will kind of stick to what you understand best, which is secured. In that context, how would you like to revise or give a roadmap of your aspired ROA of 2%? No, no, great. Good evening. That's a good question. So I would say that when I started my career in lending, I started with Wheels, right? Over the period, we got to know about the lending around mortgages. Then we built on the commercial banking business. Then we built on the branch banking distribution, right? So it's never been so easy, honestly. And I won't say that it was an honest confession that we might have made some mistake in building up the credit card, but the environment was also not so good, right? Because everything was given through digital only. Everybody was really backing on the credit score card, right? And we were not knowing that people can misuse the credit card online through some, I don't know the word, but sorry. Yeah. Because I never believed, honestly, that people can take cash out so easily, which we all know that is a risk, right? But we have taken those corrections. And I strongly believe that credit card still is one of the most important payment methods, and we need to correct it. We can't go away with that. But it's a curve we are going through. And I still want to back my team and learn from these mistakes. This is not that large mistakes, maybe 100 crore here and there. But this is the way the bank should give the cost or the learning cost comes in. So I still believe that if we really want to be a good bank, we need to learn about unsecured lending and, of course, unsecured products, which we'll keep on doing it, keep on doing it. But I think this learning will give us not much, I would say, the assurance that we should not do mistakes, which is very evident. That's about credit card and unsecured piece. As we always remain very strong in terms of our commitment that microfinance business is very important for our whole inclusive kind of framework, and they give us a lot of SMFs in this INR 7,000 crore also. INR 4,000 crore is the SMF, which helps us to build our 18% obligation, right? We have also seen that in the last two quarters, we want to build now MFI through the other secured measures like there are MFIN guidelines. There is credit guarantee available on this book. We are actually now building up around 50% incremental under that umbrella, right? There's no challenge around risk weight on that book. I think as a cyclical business, we understand. If you take my number, right, we would have expected that this book should have given us a 4% ROA this year. They might be giving us a 1%, 1.5% ROA this year instead of that. So it's fine, right? They are not giving us net loss in that basis on a yearly done. So I think, again, we have to learn about it. It's a big balance sheet. Every big bank has to do their SMF obligation. We have a growth aspiration. We will need to learn it, master it, and then, of course, build it for the future. So the long-term strategy won't be so dramatically different. We always have said to you that it will be a cap on our unsecured exposure. When we acquired it, we said that it will be a cap of 10%. As of now, it's 7%. Overall, the cap of unsecured lending is 15%, is around 11%. We want to stick to that. Of course, for some time, it may go below that, the whole guided number. But I believe next year onwards, we will be looking at this book in a way differently. That's my say. And on your, sorry, on your guidance of the ROA, when do you see that? Of course. So ROA, of course, again, we have the aspiration because that's the gold class, in my opinion, in the banking system. But we are new in the banking system. We want to be in that bracket as soon as possible. But you know about that. We are, again, living in a very relative world. If India is around 6.4 this year, and with this kind of tight liquidity, this kind of inflation, there's no room we are expecting of rate cut. So one of the things which needs to come down to make us 2% ROA bank has to be the cost of money. It has to be less than maybe 50 basis points from here what we are actually doing. We know that asset, we can grow, we can manage our asset quality. I think 10% book should not give us so much of headache going forward. So I think if you ask me, the moment we start seeing the interest rate cut and our cost of money getting to a right level, you will see us reaching 2% ROA. I have another question, if you may allow. This is not your bank specific. This is my—I mean, I am picking your expertise on this. Like every other player in the industry, whoever was lending to MFI, they're fast withdrawing from that market, right? So how do you see this crisis ending? And we are getting a kind of confusing guidance. Someone is saying, "Wait for one more quarter." Someone is saying, "Wait for two more quarters." Someone is saying, "Three more quarters." What is the basis of saying that, "Wait for two more quarters"? What is that likely to change on the ground for you to say that this is the peak of the crisis from here on? I understand. You want my comment or you want that? Yeah. I want, I mean, your house comment, basically. Okay. So let me try and then review your supplement if I mishear something. So for me, this business has been only one year old. And I like this space to be very precise because it allows a bank to do their PSL obligation, and this is the last-mile customer on the ground. And we need to do that customer also to really fulfill the entire banking dharma, right? And what I have seen this year is this: that it is more of an executive-driven challenge than a customer-driven or a market-driven challenge. If you lend irrationally without understanding customers, then this will happen, right? This will happen even in secured assets, right? But secured assets, you always back on the asset so that you can cover up any kind of mislending in whatever, right? But this market does not allow you that. But I think a lot much has gone in the last two quarters. A lot much discussion has happened. Irrational lending has been completely stopped. Customers know about it that if they don't repay it, they won't get the money. And this time, industry has come very seriously. That is why the 10% reduction is there in the overall asset base in this market. Government also does not want to disturb this market so much because this is there where the entire space for inclusive banking is there, right? We need to be there because we are not heavily, heavily, heavily on the microfinance book for our asset building. If any institution which is heavily dependent on the microfinance book as their asset, then they might be looking to withdraw or reduce their exposure. We are already at 7%, right? I think if you are one of the small components in the overall scheme of things the bank or institution can manage, this is, again, one of the temporary challenges which will need to be addressed once the overall average customer goes away. For example, in our case, 55% customers have the zero exposure, right? We were the only lender in that segment with that customer at the time of disbursement, right? In the new one, right? And then 27% customers, we are the second lenders, right? It is good to be in that bracket, right? So I think industry will become mature. The customer will become mature. And this book gives you 4-5% ROA when things are good, right? And in a bad term, it gives you a 0% or a minus ROA, right? So you have to really balance your view that this book might give you sustainable basis, 3% ROA, provide every year about 3% ROA, and build the cushion so that in case of the eventualities, you can use that buffer for your maintenance, right? So if you do all these things, a well-diversified book in terms of your overall, build buffers in the good times, be rational in terms of lending, build around the guardrails of MFIN, build the discipline around lending, and the entire culture of the MFI business has to be there. I believe you can handle with maybe 5%-8% kind of book in any balance sheet. Thanks a lot and all the best. And I said, "You want to add?" Because Rajeev has handled it for the last 12 years. It's good to hear him do. Yeah. So just for the benefit of everyone, and you asked a very specific question on this two-quarter versus three-quarter and why should we expect more optimism going forward. Fundamentally, and this is coming from experience of having seen demonetization as a cycle, COVID, two waves of cycles. Fundamentally, the product is a two-year product, and once some problem comes into the product, be it an external event or be it an over-leverage event like this, there is a certain segment of customers which are over-leveraged, and that's where the flow is coming from over the last six months or nine months now, and that's why we are seeing the credit cost that we are seeing in the period at this point of time, so there are two or three things which happen naturally in the industry. One, in a matter of two or three quarters, the difficulty of the problem starts disappearing. Two, the industry comes together and builds something, and this has happened earlier also, and this is happening right now, and fundamentally, all the players in the industry stick to those guidelines and then try and correct the problem, whichever was causing the problem. In a larger context, we have seen it by vast experience. The typical problem, the harder part of the problem lasts for six months on an operating basis, although the provisions will come in with a four- to six-month lag. And for AU, we provide 50% at the time of the NPA creation, and we pretty much provide 100% in the next three months, which is at 180 DPD. So the typical credit cost comes with a lag of four to six months. And therefore, what we are experiencing at this point of time, the industry is also experiencing, is a better outcome on operating efficiency starting from December. Early green shoots, I would say, were in October, but we had more confidence that we derived from the December data. And by very logical nature of the product, the way we are building a new book, the way the industry is working together on this, I am reasonably confident January, February, March will be operating-wise better. But the benefit of the credit cost will obviously be lagged with about four to six months of what we do. So is it realistic to assume that by the second quarter of FY 2026, we would again be somewhat in a much better frame as far as MFI is concerned? Yes. I would say at an industry level, and I'm very confident of ourselves, that it will be a better frame. But for going back to the precision of three cycles, we'll have to see whether it takes a quarter more. But I think by Q2, we should largely be behind over-leveraged credit cost problem. Thank you. Thank you. That's really helpful. Thank you. Thank you. The next question comes from the line of Prakhar Agarwal from Elara Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just two, three questions based on the outlook that you have given. First, in terms of growth outlook, that you have essentially brought down to around 20% from 25% within a quarter. And this time around, we have mentioned that secured will be around 23%-25%. And essentially, looking at the mix, unsecured is only 10%. So have we lowered our growth in secured segments as well, or how is the math working around from 25% to 20% growth guidance cut in one quarter that we have done? So Prakhar, again, because you know that by last quarter, we were all expecting that India to grow by 7.4. Now we are expecting India to grow by 6.34, right? The size we are operating in, we don't want to take unnecessary risk. Our two books, which is Credit Card and MFI, everybody knows that we don't want to grow it again with the mindset of growth. We want to really want to grow that book with the mindset of rationality. So that two books are out of the action for this quarter. Other than that, secured retail assets are growing in the range of 20%-24%. Commercial banking is growing in the range of 30%. So that remained intact. And all put together, it's around 20% because still 20% is 2x of the industry average. So I'm very happy that, of course, it's below what we have guided, but a lot much has changed in the last nine months in the entire ecosystem. So we have to respect that. Of course, if we even grow by 24% our deposit, because why we want to grow more than what the asset requires? We want to keep our CD ratio around 85% or maybe in the range of 80%, right? So that is why we also want to really manage the cost of money by not going that kind of deposit. So again, it's a balance, but very happy to lower our guidance so that in this tough time, we don't get much hiccups later on. Okay. Just two more things on this, just a follow-up on this as well. So the other guidance that we have said is on funding cost, which when we have said that it will now be around 7.10%-7.15%. What has changed in a quarter in our favor to have seen this sort of benefits? Because the system seems to be struggling in managing that funding cost, and we are essentially going out and saying that we have lowered our guidance for funding costs. What exactly has played out in your favor? No, no. So if you see our cost of money for last quarter is around 7.05%. And we were actually expecting that cost around 7.2-7.25% in the beginning of the year. But we really played our franchise there. And as I told you, that entire strengthening, the product range, the distribution range, the focus on deposit franchise has been there so strong that in spite of this growth ourselves in 15% on a YTD basis, we have not gone above the mark. We have seen more tighter positioning in quarter four. That is why we have increased our bucket in the savings account. We also have inched up our FD rate by 10 basis points. So we are expecting that our cost of money should be in the range of 7.7%-7.8%, not really 7.11% and 12%. But I think the focus has remained so strong, Prakhar, over the year on the deposit franchise that we really want to build it more sharp and more effectively so that in the longer run, the entire game changer would be our cost of money. That's my belief. And so we are really focused on our cost of money. Every paisa is being watched out. Every person is being watched out. Every product has been being watched out so that we remain effective there. So that is why I think I would say that this year has given us a lot of confidence that we can grow our deposits and that too at another cost level. Got it. And just one last question. We earlier gave a slide wherein we mentioned in last quarter guidance for March 2027. We seem to have not given this this time. Has those guidelines still remained, or we have chosen to withdraw that as we speak? And lastly, on this deposit, we seem to have also not given deposit growth guidance for this time for FY 2025, which probably we gave last time. So just last two bits on these two. No, no. FY 2025, we are saying 23-24% deposit growth, 20% asset growth. We are very clear that where we are heading for March 2025. We have already given you the guidance about growth, the expected OPEX, the expected credit cost. So I think March 2025, largely, we have given you. But it's difficult to predict next year because, again, a lot much variable. We have also taken cognizance that we are not absolute. We are relative. On this size where we are balanced, it would be 1.5, 1.6. Whatever happens to the country, it will happen to us, right? Let's see how the entire interest rate cycle moves from here, how the credit cycle of unsecured business behaves for the next two quarters at least. Then only we can provide the longer guidance. I can only assure you that the way we are building our bank in terms of the entire verticalization, be it branch banking, be it secured assets, be it commercial banking, our digital framework, AD-I license, even the credit cards, even the MFI, we are on top of everything, right? We are watching every book, every step so closely that in the next two years, what we are saying that it takes 10 years to really build a bank, you will see us a very formidable institution in place. Prakhar, if I can just add to your point on the slide. See, March 27 strategy is something which is out there, which we had presented on March 18th of March last year. We continue to be guided by that. I think what we had given in September is the progress around that. We'll keep updating you every half year on how we are progressing. But I think the biggest thing that Sanjay ji articulated and which we probably would like to articulate on this call as well is when we had put that guidance out, the overall outlook on the economy was very different compared to where we are. And given that there has been a complete slowdown or a very clear slowdown in the economy, we obviously have to adjust and focus on prioritizing asset quality over growth. So I think that's what is playing out. But we'll again come back to you in March because that will be the next six months, and we'll update you where we are. So that is it from my side. Thank you so much. Thanks, Prakhar. Thank you. The next question comes from the line of Pranuj Shah from JPMorgan. Please go ahead. Hi, sir. Thank you for the opportunity. So two questions. One is we have clearly seen our MFI growth overall slow down and for good reason, and general feedback from the industry players is that even in FY 2026, at least even if asset quality recovers, growth at an industry level is likely to remain slow. So if we overlay that on your in general, assuming a 25% overall growth in FY 2026, MFI continues to taper off. So does that impact your PSL objectives for FY 2025 and FY 2026 also? And a subsequent question to that, will that impact your overall cost ratios also? Because some of the efficiencies, like you said, you had with the Fincare merger in FY 2025, those are unlikely to be present in FY 2026. And plus, you will also have branch expansion over there. So just something from the OPEX perspective, trying to tie up a 1% cost to income reduction that you're expecting for FY 2026. Yeah. So again, I think very detailed kind of expectation on this call from us. But let me figure out. I would say the whole integration is in place. And the Fincare was running their own head office based out of Bangalore. They had their own IT system. They had their own control functions. All has been integrated largely in this year. Maybe by next half year, we'll be doing entirely done. So there would be a lot much saving on the scale basis because the business has come to us. We have fully integrated their branches, branch banking branches to us, fully integrated now the entire Fincare unit of lending except microfinance. So I think synergy has been out there. The size has been there. The markets are there. So if we would have done on a standalone basis, this expansion would have required a lot of CapEx, a lot of time to do it. But we have ready hands with us now. So once we integrate with the entire umbrella under one umbrella, then these things start coming day one, right? So that's the way we want to see that picture. In terms of SMF, we have a microfinance book. We do have the agribanking book. We do have the SMF lending. Then we do have the FPO lending. All put together by the support of the government guarantees also. We don't expect that we should have the SMF deficit. And we should not do that, right? But in case it is there, there can be a cost there. But it's difficult to predict as of now because it's a long way to go. You're talking about the next five quarters, right? We have to do that kind of decision in next March. So I think it's a long ball for us to play. And in terms of what was the other question? So that's why I'm saying to you that there is nothing. So we don't want to do much kind of OpEx based on our expectation that we need to build this book, or we need to build this branch, all those things. Everything is now BAU. We want to really build more our digital efficiency. We're really working on our digital labor, right? We want to introduce the digital labor internally so that we don't depend on a human effort rather than depend more digital effort, right? So I think a small, small thing. But the hope is this that we might be we should be lesser than cost to income what we will do this year so that we remain on the path to become a 55% cost to income in next two to three years. Understood. Thank you, Sanjay sir. That was very helpful. And second question, Rajeev sir, just on the MFI book, you have mentioned non-overdue collection efficiency of 98.5% as of the third quarter. Would it be possible to disclose how much this was as of December end? This is the non-overdue part. And even on the slippages in the MFI book from SMA to NPA, are you seeing an improvement there also in December? Yeah. So the December number inched up to 98.7%. And that was the second best number in the calendar year H2. So it was, and we can see that it's a stable outcome, and we should work forward on that number. On the SMA books also, because of our strong staffing now in the recovery vertical, which we have done over the last six months, we have increased our headcount from 600 that we had on the recovery vertical as of June. We have reached a number of about 1,500. And we now have a higher trained and stabilized team. So because of that, our efficiencies coming from the SMA book, coming from the NPA books has also started seeing improvements. So fundamentally, improvements on both sides. And the December number was about 98.7%. Got it. Thank you. That was very helpful. That's it from my end. Thank you. The next question comes from the line of Ritika Dua from Bandhan. Please go ahead. Hi Sanjay, just one question. In your opening remarks, there was a comment about the gold loan business, wherein you were saying that the changing regulation by RBI would help you. Ritika, your audio is not very clear. Can you just? I'm so sorry. I'm just saying that on your opening remarks, you made a reference on the gold loan business and how you faster there because of a regulatory change. Could you just elaborate on that? That's the only question I have. Thank you. Gold loan regulatory changes. So there were two, three items in the gold loan circular came through RBI in the month of somewhere in October. One was your BC model have to be revamped as per the new RBI guidelines. They said the business has to be done only through branches. BC have to come your branch, and customer have to come your branch and storing and everything, valuation, everything have to have you done in branch. So that model has been shifted from that BC model to on-branch model. The customer is now coming to your branches. And the second part that came in the circular was that the renewal which were happening in the industry will now move to the customer have to repay the whole loan, and then only the new loan will be given to the customer. Renewal has been completely stopped in the industry. So that came in the RBI circular three months back. So for that, sorry. Ritika. Ritika. Ritika. So of course, Deepak has given you a little bit, but my understanding is this that first, the LTV of the gold has been now standardized. Whether it be a bank or be it NBFC, you can't give above 75% throughout the loan tenure. If there is no renewal, then loan generally has only one year or maybe 18-month period. Now, of course, NBFCs were operating on a different terrain. Banks were different. We do not have any risk to it as a bank because we are doing something against gold. The practice of those guidelines has been now stringent, right, by the action of the RBI. I think nobody will take the chance. We have the two advantages as a bank. One, we have the cost of money. Second, we have a storage facility. Customers generally have more belief in banks. Where the bank lack is the delivery time of a loan, right? Because where the NBFC has made their expert because they have a very separate gold shop and all those things. So we are also thinking about it that how we can master ourselves now when there's a level playing field available now, right? And we have the advantage of cost. We have the advantage of risk weight. And we have the advantage of brand. And so I think now it's a level playing field. And I think many banks would be doing this now, in my opinion. But being with Fincare, Fincare is doing this business for the last four to five years. So they have actually expertise in terms of delivery in maybe half an hour time, half an hour kind of thing. So we want to really replicate that to many of our centers, right? So we have a distribution. We have expertise. We have a level playing field. We have certain advantages like I already commented about no risk weight and, of course, the cost of money. So that should allow us to build a decent franchise there. But we are working on it. We are working on it. A lot of things have to be done to really come out with the final print. Great. So just one clarification on the same. So when you say that for the industry, and I'm assuming whatever the circular is, it's applicable now for banks and NBFCs combined. Yes. Yes. Okay. Great. And so secondly, when the rollovers have to stop, I don't have an exact percentage. What was the percentage which was getting rollover? But I'm assuming it will be majority. So now does the customer? 50%. 50% loan of gold loan was getting rollover by the existing lender. So sir, now customers say, "Today, I have a repayment due today. So I'll come and pay the bullet today." So then is it like now there should be a cooling period? Somebody has to if the customer has to pay, somebody has to take over. Okay. But for the same lender to repay, to again give the loan to the borrower, "I repay you today," and then is there a cooling period, and then I'm eligible to get the? No, I think that's too technical. That's too technical. But largely, once you are dealing on a scale, it doesn't happen like this that somebody will have bridged the repayment and again the company can come back because you know that nowadays how regulatory is. So when they split also, you also have to comply. Understood. Great. So thank you so much. Thank you. Yes. Thank you, Ritika. Thank you. The next question comes from the line of Shailesh Kanani from Centrum Broking. Please go ahead. Thanks for the opportunity, sir. Sir, just wanted to understand our strategy for CGFMU cover. We are increasing the percentage over there, the cover. So what is the strategy? How high we are going to go? Because it will entail some cost as well, right? And have we factored in that? Yeah. Yogesh will answer this. Yeah. So So hi, Shailesh. So we know that our microfinance loans are eligible for this guarantee cover. We were doing for some of our micro business loan, unsecured micro business loan, and we were getting that guarantee. And these guarantees are very seamless. We are getting money. So basically that experience now from this financial year, we have covered our microfinance loan. So first quarter, it was lesser. Now maybe going forward, maybe around 90% portfolio of microfinance will be covered in this guarantee program. Yes, cost is there, but if we see the overall benefit of coverage versus the cost, right, it is much, much beneficial. Then, of course, there is no provisioning requirement if we cover under guarantee program. Then we see the working of these guarantee organizations, right? There is a lot of awareness, and they also want to help, right, to reach the real financing to these people. To add on, Shailesh, right? Shailesh, to add on to Yogesh, so my personal understanding is this that government really want to help a lot much borrowers in this space, be it a microfinance, FPO, SMF lending, Mudra loans, all those things. We as a bank are there for a distribution, right? So I think a lot much efficiency has been built in entire guarantee scheme from the COVID time. And I think there is a realization in the government that by giving a guarantee, it does not mean that there will be too many defaults because as a private sector, we do a lot much due diligence before we lend the money, right? So I think it's a combination of the private and the public partnership in terms of creating that atmosphere where we lend it carefully. In case customer goes bad, the government comes and helps us. And I think there is a lot much efficiency has been built in that whole credit guarantee system where you don't have to fight with the government because there is ample fund available, and there is an allocation through budget, right? And they also have a target so that the retail lending can happen, right? And recently, we saw the budget giving you that subsidy on the affordable housing space, right? And there are a lot of state schemes nowadays, right? So we as a banker are beneficial, in my opinion, where we need to understand those schemes, really try to implement through our distribution system and see how customers get benefit. And in case of any default, we can actually rely on this guarantee so that we remain secured. So we as a bank have taken this very seriously because this is the way India is, right? Something will be taken away from us, and something will be given to us, right? So we need to understand both things equally and then build on, right? So we are serious, but it won't be a very large book, right? As of now, also it's around not more than 4% book is covered under this, right? So we want to remain there, but not that much also that entire thing has been based on the government guarantees. So just a follow-up means as you have highlighted in the past and today as well, that Fincare acquisition will kind of strengthen the SMF portfolio. And currently, I think we are going towards or at least we highlighted that we might even take 90% CGFMU cover for the MFI business. But as I understand, the CGFMU will cover you specifically for non-agri businesses. So can you clarify how these two aspects would align and contribute means? It's covered. SMF is also covered. It's covered. Okay. We have taken the clarification. And just to elaborate more, if you take a guarantee, guarantee commission can be paid by customer to the agency. We can lower our rate because it's a coverage on our default, and we can take our service charge, and there's no risk weight. So if you see the industry was suffering from the higher rate kind of narrative, then we were suffering from what type of risk weight would be there on the MFI book, and then how much charges we charge from that book. That all will be addressed by one stroke of the guarantee offered by government, right? So we can lower our rates. We can charge judiciously, and there won't be any risk weight because of government guarantee. So basically, in nutshell, even the agri business is covered. That is what I wanted to understand. Yes. Yes. Yes. Yes. Okay. Fair enough. Sir, just last question from my side. Sir, on the Wheels front, there has been some. Shailesh, may we request you return to the question queue for follow-up questions? This call has become more general knowledge call, right? No problem. Thanks a lot. Thank you. Best of luck. Thank you. The next question comes from Piran from CLSA. Please go ahead. Yeah. Hi. Congrats on the quarter. Just one question I had regarding this MFI industry rule from four lenders per borrower to three, which is coming from 1st April. Has the industry proactively started with three, or are there first and second? We have started. Brother, we have started. We have started. We can't comment on the industry. We have started. Okay. Okay. Fair enough. And when you say that December was better than October and November, you're talking only about collection efficiency on standard loans. Sorry? Sorry? Yes. That's correct. Yeah. Yeah. When When you said that December was better than November, you were referring to the collection efficiency on non-overdue loans? Yeah. So this is Rajeev. So it was better on the SMA bucket collection efficiency also for MFI. And also, it is better on the disbursement. So pretty much when you look at all the key variables, it was a better month, and directionally, it was indicating that we should have a better outcome in quarter four. Got it. And this 98.7, what would it be in a normal scenario, let's say one year back or two years back? So FY 2024, we were about 98.4 on that metric. 99.4% on that metric. Okay. Okay. So you still have like 76 per month turning overdue more than usual. Versus last year? Yes. That is the correct number. Understood. Okay. Okay. Fair enough. That's it from my end, and I wish you all the best. Thank you, dear. Thank you, Piran. Thank you. Thank you. Thank you. We'll take the last question from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Mr. Aggarwal, your line is unmuted. Please proceed with your question. Audible now? So, yes. Yeah. Nitin. Yeah. Hi. Good evening, everyone. Firstly, congrats to the entire team on a resilient performance in current environment. I have two questions. Hi, Nitin. I have two questions. First is on the cost income outlook. If I look at very commendable cost control, that has certainly helped in delivering rightfully on the profitability front. So while you have given a full-year outlook, but how should one look at the forward years? Because earlier, we were looking to do 60% cost income this year, and now that has changed to 57%-58%. So will this cost-to-income improvement sustain, and will we improve further in the coming years, or will we stagnate here or go up from here? So how should one look at it? That's the first question. Nitin, that's our belief, and that's the way we want to work upon that our cost-to-income should reach 55% as soon as possible. But I can't define as soon as possible right now because there are too many variables, right? But we are not doing anything in our expectations. So we have become more in terms of reality that let's manage today because there is always a charm in bank to do new things. But we already have built so many product lines, so many verticals, and we need to get the scale in that level, right? We want to build more secured asset class. We want to build more commercial banking. We have AD-I. We have the wealth business. We have the insurance business. We have the credit card. We have the MFI. So there's a lot much is there on the table for us, and we just want to be more focused there. Our IT has done a lot of investments. People, we have already done well with them in the last seven years. So now the idea is to be more effective, right, through the monitoring, supervising, asking questions, even introducing the digital efficiency through digital labor or AI and all those things. So that already has begun, right? So the idea is to really be lower than this current year. But this current year, we can be around 58% or maybe 59%, 1% here and there. But next year, our focus should be that we should be lower than this. But still, we need to be crossing this quarter four hurdle and then regroup ourselves and see our growth aspiration. And of course, in that relation, build your OpEx, right? But there is our focus on that particular piece, and you have seen our effort in last now nine months, and that will continue. Right. Thanks for that. And second question is, we have been moving pretty close to our full year ROA guidance. However, if you look at our on-book PCR ratio, it has moderated over the year to now 61%. So what are your thoughts on managing this trade-off between the ROA and the PCR and any particular level that you will wish to maintain for the bank? So Nitin, our PCR is coming down because there is a new fresh of loans which is becoming an NPA. We are not carrying the legacy. If you write back the technical write-off in our PCR calculation, we are north of 80%, right? But we have very prudent write-off policy also so that we don't hang on the bad assets on the balance sheet. So if you ask me, and if you carefully see the internal calculation, which is not available to you, our secured asset is around 60%. Our unsecured asset is around 80%. Even our MFI business is around 67%-68%. So in my opinion, it's well covered. And as we move more deeper and deeper, we will guide the market. But endurance is to keep around 70%, to be honest. But let's see how we want to reach to that level because there are challenging times as of now. There are not many write-offs, and we just want to clean up our balance sheet every time. So it's not a worrisome for us. It's a tactical number which can be addressed as we move forward. Right. Got it. Thanks so much, and really, I wish you all the best. Thanks, Nitin. Appreciate it. Thank you. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Thank you, Sagar, and thank you, everyone, for joining this call on today, Friday evening. And thanks for all your questions and your support. In case you have any further questions, you can reach out to the IR team at any point. Thank you, and look forward to seeing you again next quarter. Thank you so much. And we didn't wish you, but very happy New Year too. Thank you so much. Thanks, Sagar. You can close the call. Thank you. On behalf of AU Small Finance Bank, that concludes this conference. Thank you for joining us. You may now disconnect your lines.