Ladies and gentlemen, good day and welcome to the Q1 FY26 earnings conference call for Bajaj Finance Limited. 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 this conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Kumar from JM Financial. Thank you, and over to you, sir. Thank you, Dorwin. Good evening, everyone. This is Ajit Kumar from JM Financial. Welcome to the 1Q FY2026 Earnings Conference Call of Bajaj Finance Limited. On behalf of JM Financial, I would like to thank the management of Bajaj Finance for giving us this opportunity to host the call. From the management team today, we have Mr. Rajeev Jain, Vice Chairman and Managing Director; Mr. Sandeep Jain, Chief Operating Officer and Chief Financial Officer; and other senior members of the management team. We will have opening comments from the management team, post which we will open the floor for Q&A. With that, I would like to transfer the call to Rajeev, sir, for his opening remarks. Over to you, sir. Thank you. Thank you, Ajit. Thank you, JM, for hosting this call. Good evening, all. I have with me my colleagues here. I have the three Deputy CEOs. I have the two Chief Operating Officers here. I have the CRO, and I have a few of my president colleagues. I'm referring to the certain sections of the investor deck, which has been uploaded on the website. I'll be referring to that. Let's just jump right over. Let's go to page four. That's one quarter gone by. Overall, I would say it's a good start to the year, a good quarter on volume, assets under management, OPEX, profitability, ROE, and ROE. Credit costs still remained elevated in Q1 as well. Overall, AUM growth came in at INR 24,789 crore to INR 441,450 crore. We booked a record 13.5 million loans and added 4.7 million new customers in Q1. Customer franchise stood at 106.5 million, as we've just outlined in the AGM as well. We had a record 650,700 people in the AGM today, I think. In terms of physical presence, we believe that FY2026 will be a defining year for FinAI transformation, a strategy that we outlined in December or January quarter to the shareholders. FinAI capabilities, I can just tell you, have started to go live across the company, both below the iceberg and soon on the digital assets as well. You'll start to see it. Right back to financial numbers, AUM grew 25%, OPEX to total income came in at 32.7%, PBT grew 21%, PAT grew 22%, and ROE came in at 19%, and net NPA came in at 50 basis points. Just some quick points on page five. Geographic footprint stood at, I'll cover points that I've not covered. One to three are covered, four are covered, five are covered. Six, geographic footprint stood at 4,192 locations. Gold loan branches stood at 1,254 locations, and MFI dedicated branches are now 337 branches. We added 85 standalone gold loan branches in Q1. Active distribution footprint is at just a tad below 240,000 distribution points. Important point to cover is liquidity and cost of funds. Liquidity buffer stood at just a tad below INR 15,000 crore as of 30th June. Cost of funds came in at 7.79%, an improvement from a sequential standpoint of 20 basis points. In FY2026, overall, we estimate cost of funds to come in at 7.60%–7.65%. This is not taking into account any further cuts that may come at this point in time. However, on the other hand, what you will see correspondingly is that the deposit contribution to the balance sheet may go down to 17.0%. From where it was 20% to at this point in time at 19%, it'll probably go down to between 15%–16%. It's possible depending on the growth momentum. For the next 12 months, there'll be higher reliance on NCD, ECB, and bank borrowings to ensure we deliver rightful cost of funds to the business. On panel six. NIM grew 22%, net total income grew 21%. OPEX to total income I've talked about. We started to deploy AI capabilities to improve productivity. Employee headcount stood at 65,528, and employee attrition in Q1 was 16.9%, a little higher than what it was on a year-on-year basis. It's higher by 100 basis points. 100 basis points, I think. The fixed-term contract staff stood at 44,335. Credit cost, let me, there are five points I do want to cover all of them here. That at a firm level, what we see is that consumer leverage continues to remain an area of concern. Company across lines of businesses continues to take several actions across all products to reduce contribution of customers with multiple loans. That's the single univariate pain point that we have identified, which has significant high bearing on loan loss and provisions. Business by business, since January, we've been pruning. In most businesses, we've actioned what we would have wanted to do, except in MSME, which is still a work in progress. Loan losses still grew by 26%, came in at 2.02% in terms of loan loss to average AUM. Credit costs are principally elevated in two-wheeler and three-wheeler business, which is a winding down business. That's good news. It is the captive book. Has given us a lot of trouble or continues to give us trouble. It'll wind down to virtually 3,500-4,000 by March 2026. MSME business has shown some strain since February, so it's come in a little too suddenly. We've taken a whole host of actions to prune business. It's likely that both these businesses will grow a lot more slowly in the current year. Starting second quarter. Point number 20 is important. The overall stage two and stage three assets came in at INR 878 crore. You have to keep that in mind that of that, stage two assets increased by INR 324 crore, primarily on account of these MSME customers to whom, to mitigate their short-term cash flow issues and to assist them, we have begun to offer them restructuring options. So close to INR 219 crore. INR 219 crore of customers were assisted with a restructuring option. Who were in standard account? Who were standard account, but who were offered restructuring, and relevant provision was taken on these clients. On panel seven, we are, as I said, except MSME, the metric that we're looking at is not current portfolio. The metric that we're looking at is what is the 3MOB, 6MOB, 9MOB, and 12MOB of the business since January, February this year. If we see improvement, the book itself churns fully. The behavioralized maturity of the consolidated book is 22 months. Standalone book is 19 odd months. The standalone book is 19 odd months. If the early vintage is improved, then it's just a matter of time everything will improve. 3MOB and 6MOB, we started to see, and the principal track there is go back to pre-COVID levels. That's a high bar that we have set for ourselves. We will get there. GNPA and NPA stood at 1.03% and 0.5%. Profitability, I've talked about. ROA, I've talked about. ROE, I've talked about. Capital adequacy remains strong. Tier 1 capital was at 21.19%. Just two more updates before I go to a few panels later. Was the conversion of bonus and split that happened on 16 June 2025. As you're aware, we've done an announcement as well that my colleague Anup tendered his resignation as MD and director of BFL for personal reasons. And board, and upon the recommendation of NRC, have noted and accepted the resignation. And we wish to place on record our sincere appreciation for Anup's valuable contribution during his tenure. He spent seven and a half with the firm and extends our best wishes for his future endeavors. To ensure continuity, unfortunately, I had said last time that last quarter that this is my last call, but to ensure continuity and to ensure stability of the firm, I've had to come back as in an operating role. I don't want any ambiguity on this. It is till March 28. Closer to that, we'll take a view on what is the succession planning. Of course, board has asked us to create a succession plan, but because we don't want any ambiguity. Given the growing size and complexity of the firm, you will get to know about any change only closer to March 28. Quickly for BHFL, balance quarter. The results were published yesterday. Good quarter for them. Assets. But there's intense competitive activity. I'm sure Atul has talked about it. I'll just cover only this panel. Intense competitive activity is leading to pressure on volumes and leading to pressure on attrition. This level of intense attrition we have not experienced in building the mortgage business out for the last 15 years. Having said that, I think company did a commendable job. PAT grew 21% and delivered ROE of 2.3% in line with Q1 FY25, and asset quality remained healthy. Quickly on BFSL, small company but continues to make good progress. Good quarter in AUM. PAT and new customer addition. Delivered AUM of INR 6,100 crore. PAT grew 37%, and they added 77,000 customers to the franchise in Q1. They continue to remain steadfast. We are on course to. Last year, the company grew in terms of its four-year-old company. It should start to come into being as we traverse this year. Let's go to. I'm on panel 29. These are overall financials. I think I've covered everything here. There is one question that you may have, which is on the others line item, which looks on a year-on-year basis 23% lower. It's mainly last year, same time we had sold. And we had done an NPA sale. This quarter, we have not done any. That's the reason you're seeing that number go down. Sandeep, any other number that you want to capture so that. The other number is the net gain on fair value change, where we have INR 79 crore of additional gain on account of MTM. That is one thing. Second, we found quarter one to be very, very attractive given that rates were being cut to park money in mutual funds. All the gains on mutual funds sit in this particular line versus sitting in the interest income line when we park money in government securities. As a result, you may see some level of small compression in margin. It's mainly on account of this. Adjusted for this. Adjusted for this. The number is flat on a sequential quarter basis. On a sequential quarter basis. I thought I'll just make that point. Rest, all the numbers have been talked about. I've gone to panel 41. This is a customer franchise. We continue to make good progress. I think the top of the funnel is extremely important. As long as we continue to originate customers through the door, even at this size, I think we have the product range to be able to meet all the financial services needs of the consumer. The top of the funnel continues to remain pretty active, ensuring that we have a strong roadmap ahead of us. I've jumped to panel 46. This is the consolidated AUM composition. In general, on a year-on-year basis, you hardly see any movement. You see, we have just organized this in the order of high to low. Mortgages is the largest portfolio, followed by urban B2C, followed by MSME, followed by—so this is a new frame that you will see. It's in the order of highest to lowest. Highest in mortgages, and MFI is the lowest at 0.4% of the balance sheet. Gold loans is now 2.3% of the balance sheet. The largest balance sheet on a consolidated basis remains mortgages at just a tad below 31%. On a year-on-year basis, other than two-wheeler and three-wheeler, which you're seeing degrowing, there is no composition change in the balance sheet on a year-on-year basis. Actually, if you took even a three-year view, you will, other than two-wheeler and three-wheeler, which is as a result of winding down, you will not see too much of a change. Maybe 2 odd percent during this period of the balance sheet has more than doubled. I'm on panel 49. You see GNPA moving marginally on both sides, but the biggest movement is in two-wheeler and three-wheeler, as you can see on a year-on-year basis, more from 3.4%– 6.38%. It's a little confusing number because the balance sheet is winding down. That's an important point I must make that it's a number which is—but the absolute loan losses, bases our estimate and plan, were also ahead by 70–75 odd crore in a winding down book. That's not necessarily good news. The only other second line that I would outline is MSME lending that on a sequential basis moved from 1.48% to 1.76%. Otherwise, the impact of rest of the movement is not, as you can see, urban sales finance was flat. Urban B2C is 5 basis point movement, and so on and so forth. You see MSME moved sequentially from 1.48%– 1.76%, and two-wheeler and three-wheeler moved from 5%– 6.38%. I think that's really all. This is panel 53, just last three panels, which cover portfolio quality. The reason they are stamped white and two-wheeler, three-wheeler is because of winding down book. While open architecture is also sitting there, but a year ago, the captive business used to do 65,000 accounts. Right now, we're doing only 35,000 accounts, given, as I said, the entire focus on MOB management or early MOB vintages. We want to be at a design level half of what we used to be in the captive business. Let me make that point reasonably clear. That is really what our intent broadly is. Over cycles, the business used to give a 5% loss rate. We want to run the business at between 2.5-3% loss rate. That's really what our focus is. That's just one point I want to make. Panel 55. Business and professionals, rightfully, as you can see, this number, even in February 2020, was 99%. Right now, it's at 98.25% current. It has moved a little too quickly for our comfort in the last four or five months, and we are navigating through this. Rural B2C, it's not yellow in that sense, but because it's lower than it used to be earlier. There, the only point I would make is adjusted for Karnataka, which has caused trouble in all rural parts of our businesses, not just rural B2C. And Karnataka, unfortunately, is not a small contribution. It's 11% of the total balance sheet. So is Maharashtra, which is higher. So is Tamil Nadu, which is higher. If any of the large southern states see a change like this, it does have an unintended impact on the portfolio. We've stopped doing some of the businesses. We have cut business by 40–50% in Karnataka because for the first time, we are experiencing what I would call political risk, which we don't know how to navigate. We can't even stop business, but we can't also continue business. It's a little tricky place. Wherever we are able to prune, we have pruned. MFI, at this point in time, we have stopped. We have cut business by 35–40% in two-wheeler, rural B2C, even urban B2C. Even rural B2B. We are watching. Rest is all fine. MFI is not yellow. It's green. That's fine. It's okay. 100% will have to go down only. That's it for me. Happy to take questions between me and the management team, whatever you have. 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 the touch-stone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Viral Shah from IIFL Capital. Please go ahead. Yeah. Thank you for the opportunity. Rajeev, I have three questions. First, to begin with, I would say it is glad to have you back, but just wanted to understand what have been the learnings of, say, this transition process we had planned, I would say, two to three years back, and what is it that incrementally you have in mind as to how to approach this, say, two, three years down the line so that we see a more smoother transition. That would be my first question. I have two to three questions on the business, if I may. Viral, the only point I would like to make is that every incident must have learnings and a course correction plan. There are learnings that we've taken. The NRC and the board have extensively discussed this matter and have provided necessary guidance. I have to go back to the board and the NRC in the next six months' time with a detailed succession planning process. That is all I would like to comment at this point in time on this point, Viral. I hope you appreciate the sentiment. Get it very well, Rajeev. My second question is more for Sandeep. Sandeep, on the financial front. When I look at, say, the cost of fund guidance that you have given, say, now 15-20 basis points is the reduction that you anticipate. For the year, given that's the moment that we are seeing from Q4– Q1, do we now anticipate, say, a 5–10 basis points kind of a NIM expansion on a full-year basis versus flat earlier? Yeah. I think, Viral, this question was asked last quarter as well. We had given a guidance on flat NIM for the current year. Given the trajectory of rate cuts that we are seeing from RBI, we did comment that there could be a –10 basis point of positive bias on the NIM number. Given that there has been 50 basis point rate cut in the last round and the 20 basis point overall improvement in the cost of fund that we are seeing in the current quarter, I think we are reasonably confident that probably 10 basis point of NIM expansion could happen by end of the year. Got it. Secondly, Sandeep, on the, say, your growth guidance numbers on the non-interest income and also the credit cost for the full year, are they broadly still, do you retain them, or how do you see them panning out? I think on the fee income side, we have guided for 13%–15% for the current year. We did allude in the last quarter's earnings call as well that we have taken significant actions on fees and charges in the previous year, which will have a full-year impact in the current year. As a result, there will be a reset to the 13%–15% number in the FY2026 outcome. That continues to hold true. As far as credit cost is concerned, I think 2.02% as a number for the current quarter was 5 basis points higher on a sequential basis, largely flat on a year-over-year basis. We continue to hold 185-195 basis points of guardrail for the current year on a full-year basis. You will see a sideways movement probably in Q2 if all goes well, and probably a decline from quarter three and quarter four onwards. Having said so, I think one of the important drivers will be the autofinance vertical, which will start to become smaller and smaller quarter by quarter. That itself will start to give 5-10 basis points improvement to us on the overall loan loss to average tha number. Last point I want to make that. The fee income grew 17% just to add to what Sandeep is saying because B2B had a much stronger quarter. That is why the volume moment was a little better. Otherwise, to the point Sandeep is making, overall guidance is for 14–15%. Last year's quarter was partially impacted by embargo as well. To the extent, on a via basis, the numbers are not necessarily comparable. I think 13%–15% as a number for full year is probably a rightful expectation to have. Got it. My last question, Rajeev, is for you. On the SME portfolio, you pointed out that we are seeing meaningful stress. Can you point out which subsegment within this is showing this? Is it, say, unsecured business loans or LAP or term loans? Are we also seeing, say, percolation of stress from unsecured to secured segments, like in gold loans and home loans? Not between unsecured to secured. Anyway, it's a tail effect. The secured gets a tail effect. Let me make that point. That does not mean it won't come to secured because what we find, as I said earlier in the call, is that more number of loans is a single univariate driver. And that may include secured and unsecured, both, or unsecured and secured. Let me just spend two minutes on MSME to make the point. We principally track 17 key industries in MSME, out of which 13 that we are seeing are exhibiting signs of slowdown. Three, actually, so in a way, it's all 17. It's other than one. Three are actually showing contraction. Clearly, slowing economy and a drop in credit supply is, at one level, it's good because when we used to look at the business loan lending, we used to wonder the market is not large enough to be of that size. From a longer-term standpoint, it will give lessons to everybody. Some lessons we'll also learn in the process. I must make a point that market is not that large, especially for business loans, to grow from pre-COVID, the market used to be INR 2.5 billion-INR 3 billion. It's grown to INR 11 billion. Right now, it's at INR 9 billion-INR 9.5 billion-INR 10 billion a month. Sorry. It's come down to 7,000. It's contracting. That contraction, to begin with, troubles, and then starts to be better. Is the only point I would make. We are looking at early vintages and just going about it. Got it. Makes sense, Rajeev. Thank you so much. Thank you. In fact, Viral, in the same context, I think it's important that we call out MSME business will see one of the slowest growth in the current year. Of course, autofinance is anyway on rundown mode. These are the two lines of business which are where we are taking actions. Got it. Very clear. Thank you so much, and all the very best. Thank you. Our next question comes from the line of Piran Engineer from CLSA. Please go ahead. Hi, Piran. Congrats on the quarter. Actually, my question was kind of answered here where you mentioned that it's more to do with economic slowdown. Just to get more clarity on unsecured business loans, how do I think about leverage at that promoter level? Because he might have taken a business loan from you, but a personal loan from some bank, etc. How do you think about that? Any statistics you can share there? No, the only way to do it is to offer him remediation. That is why, as when I talked about it, we never did restructuring. That is the only thing that we can do for a customer who is honest, who principally got, if I may say so, leveraged. And mind you, we all know that MSME is as financial literate as it gets. The only thing to help him is to, for good guys who are going through an intermediate period of stress, is to offer them restructuring. We have done INR 240-odd crore. We may do another INR 150-odd crore over the next one-odd quarter. From there on, it should settle down. Not that we never used to do, we used to do in a quarter INR 40–50 crore. Okay. That is the only thing, Piran, that can be done. Tighten lending standards, one. Two, help the customer with restructuring option to reduce his outflow. Hope to not repeat it again. Okay. Okay. Fair enough. Also, on the B2C side, earlier, we used to share metrics on what percentage of the portfolio had three or more lenders. I believe it used to be 7–8%. Sorry? 4% now. 4%. That is what it used to be. Was it 7%, 8% pre-COVID? No, no, no. It was five and a half an h our. That is down to four. It went up to 11, 12, right? Yes. That we had published. Perfect. Now it's 4. Yeah. Okay. All businesses, this metric is being tracked. The only thing, and where we have got partially, if I may say so, a little stump, because the BL business, even pre-COVID, used to have 14–15% of the customers who had multiple loans. This is a working capital loan rather than a consumption loan, a BL loan. It was very common, and I have done business loan for 30 years. A customer gives a file, not in one, in three places. We know that he does take, in general. So 14% of the customers used to have multiple loans. That went all the way to 21%. We have now brought it down to 17%, and we are watching it. It is a univariate metric, even for BL, that seems to be working. Leave a consumer loan. In the card business, like multiple cards, it is multiple loans and multiple business loans. Okay. Fair enough. Just lastly on growth, or just in terms of scale-up. In car loans, what percent? I'm just trying to think about our distribution reach right now in car loans. We are in 60 cities. Okay. Yeah. Go ahead. Oh, yeah. I mean, I thought you said the loan book is very small. I just want to get a sense of the distribution reach and how big we can become over medium to long term. We are in 60. It We are in 60. It can be very big. Piran, the issue is used car and new car put together must make 13–14% ROE. If it does not make, I can grow the business of new car. It took us five years to get to INR 300 crore. It took us only one and a half years to get in used car. It is down to INR 200 crore right now, given the pressures in used car in the last six months. New car is holding very well, I must say. There There is very little money to be made. We have artificially held the business at INR 350 crore of new origination a month. It is not allowed to do more than that. Got it. Got it. Okay. That's it from my end. Thank you and wish you all the best. Thank you. Thank you. We have our next question from the line of Kunal Shah from Citig roup. Please go ahead. Yeah. Thanks for taking the question. Sorry, again, touching upon the leadership transitioning, you indicated that the board has indicated that over six months, you need to give a detailed succession planning. At the same point in time, you indicated that to avoid any ambiguity, it will be closer to FY2028, wherein the plans will be revealed. Is that correct? Maybe over like two and a half years, it will just be again like preparing the transitioning. Last time, maybe three years back, we made it public in terms of how it is happening. I think this time it will be more internal and it will not be made public. Is that the correct reading? Yes. As Viral said, what are the learnings. John, are the learnings. Okay. Anything with respect to the corporate structuring, maybe it was quite multilayered in terms of, say, a lot many changes have happened. So would we. That's true. Kunal, there are no changes in envisaged at all. No changes in terms of the corporate structure which has been planned or maybe which was indicated over the last couple of years. Yeah. None. Yeah. Sure. Secondly, with respect to MSME, you indicated maybe that is going through this stress. When we look at it in terms of the recognition where we are and provisioning also, I was just looking at it maybe in terms of the coverage ratios across stage two and stage three, it is coming up. I believe that is because the newer pool, which is sitting in that and which would call for a lower provisioning. Maybe with the seasoning of the portfolio, do we see again the provisioning requirements going up in the MSME because of the stress you had indicated? The overall provisioning coverage is based on multiple facets, including the composition of the overall balance sheet because different products have different coverage ratios. That's one thing. Second, as Rajeev alluded to, we have done INR 219 crore worth of standard accounts restructuring. These accounts generally carry a lower provisioning compared to normal stage three accounts. That has also pulled down the overall PCR number from 53.73%– 52%. That's the only reason. Otherwise, there's no structural change in the provisioning coverage ratio. I have to assume this restructuring is in SME because that's the only SME and commercial lending is the only place wherein provisioning coverage is coming up. I believe commercial lending is more of a recovery, but MSME is because of restructuring. Yes. MSME mainly. Yes. Okay. Got it. Perfect. Yeah. Thanks. Thanks a lot. Yeah. Thank you. Our next question is from the line of Kuntal Shah from Oaklane Capital. Please go ahead. Hi. Thanks for taking my call. And Rajeev, thanks to have you back on the call. We heard Bajaj just fired up with that, which was supposed to accelerate our customer franchisee and increase the reach also. And Elijah also talked about 200 million kind of numbers targeted. When you look at year-over-year, our customer addition momentum has slowed down, and so has cross-selling, I believe, from 3.8– 3.2 and 3.3– 3.1. Can you throw some light on that? The second is, you said AI is a transformative year this year, 2026. We see insurance, AMC, healthcare, etc., all sitting in parent. Broking, distribution, lending sitting in your company. How does this work, AI strategy in terms of synergies, cost reduction, cross-sell? Shouldn't it be a common stack and common outcomes? How do you achieve that? Yeah. Kuntal, a 4.7 million new customer acquisition after last two years of record 15 million and 16 million. Even I'm a little surprised at times. Thank God, desh me population is okay. As much in a lighter vein, as on a serious point, I think we have built distribution which is able to generate that kind of top of funnel. Mind you, in the private sector, there will be only two, three players, and we are much younger who are above 100 million franchise. We can see a clear roadmap. This year will probably end at 120 million. That is just one. This will be the run rate, Kuntal, between 14 million and 16 million, plus minus, is how you should pencil the number. We are working on strategic partnerships and so on and so forth. There is lots in the, there is a lot of dry powder that is being, still being built to ensure that we can generate this momentum. Whether it is just, let me give you texture on this, as to one is strategic partnership. Second is, you could not take a CD loan approval on the app. You could always say, earlier, the approval rate used to be 5% because the risk engine used to be distinct from that of what runs at the store. Now, it was a very complex, technically very complex architecture, which took us, if I may say so, a few years to build. We have taken 18 months to build that out. When it struck us that this can be a large engine, that not everybody wants to buy an Insta EMI Card. Some people may just want to take a phone loan for a phone and so on and so forth. It has just gone live on the app for 10%. We are right now at 15%. 15% of the customers. We foresee that this could give us 2–3 million new customers a year who would take the approval on the app exactly for the same product, walk into the store, and out in. Sorry. We are continuing to invest in top of the funnel to make sure that it remains active and energized. On the second point, Kuntal. The way the group is organized, it is a federal structure. We allow companies to be independent. We allow companies to make their own decisions. Some of the companies which have larger profit pool are significantly, and profit pool leads to investment pool. Investment pool leads to ability to deploy, as I just presented in the AGM, 150 people we dedicated on January 1 to AI. Not too many companies would have the profit pool to deploy that level of talent on a given day. We are there to assist group companies, and we are assisting them as they traverse through their journey on AI. We will lead the way is what I can reasonably tell you. Does it answer, Kuntal, partially, mostly? Partially yes, but a common unified super app was what I think makes sense from a tech standpoint. Okay. Let me make the point. If you're on Apple now, if you go to share market on the app, you are seeing very tightly integrated. In the next three months, it would have completely—you would be able to see a portfolio on a static basis in the app. BALIC has gone live on our app. See, our app, to that extent, will be the—is the super app, if I may say so, because it will have, ending this year, 90 million customers. It has a distribution infrastructure. In the process of working with the respective group companies, we are elevating their standards. If that is what you mean indirectly, let me make that point. It has helped elevate BFSL. They did not have this infrastructure of this scale. With BALIC, over the last nine months, we have done the same thing. We are working company by company. We have gone open architecture on home loans, let me tell you. If you go to our app, you will actually see that we offer five home loan companies. Not just group company. We have gone open architecture. I never use the word super app, but my ambition, or our ambition as a firm in 2020, was always that. I always told people, "You do not make super app, you become super app." I think there is a distinct difference. You cannot say, "I want to be super app." You have to do a set of things over a long period of time. Like government services has just gone live. You can access a whole host of government services, I think ending July. Ending July, a whole host of government services you can access on the app. That is really what Alibaba, and when we looked at it in 2020, we never talked about it. That is what we looked at, that Alipay was offering a whole host of government services integrated. ABHA ID to—sorry, go ahead, go ahead. ONDC, we are now doing 30,000 orders a month on ONDC. I think we will become super app one day if we stay at it. Rajeev. Does it mean you will tie up with more fintechs, which have a lot of customers in payments, in moving money from A to B? No, no. No profit pools and nothing like that because you have profit pools. No, sir. No such thing. No. Okay. Okay. Thanks. Thank you. We remain focused on financial. All the best. Thank you. Yeah. Thank you. Thank you. Our next question is from the line of Abhishek M from HSBC. Please go ahead. Yeah. Hi. Good evening, and thanks for taking my question. Good to have you back, Rajeev. The first one is going back to SME. Can you give some color on the book? How much of it is unsecured? How much of it is professional loans? Are those the parts where you're seeing basically maximum stress? Also, what are the credit actions you have taken? Any examples you can give that will help us understand what's happening? The third is just, is it going to remain slow, or are there sub-segments or some other segments there which you can accelerate going forward? As I said, Abhishek, at this point in time, it'll remain slow only. I think, as I said, 17 industries we track, 13 are showing slowdown, and 3 are showing contraction. The credit supply has got choked. It's virtually a perfect storm in a way, and it's come to settle. Let me make the third order point, that it's come a little too suddenly. That itself doesn't prepare you for it. It is what it is. Thankfully, we are reasonably diverse. In that, let me tell you, to the point you asked a rightful question, just go to invested MSME portfolio is 60. Just go to. 50,000 crores. 50,000 crore. In that, principally, doctors is 15,000. Doctors is 15,000 crore. Even there, we are seeing pressure, let me tell you. This segment did not trouble us even in COVID, actually. I mean, they went slow, but they never—this segment is also suddenly troubled us, 52,000 crore. Out of that, what you see on panel 46, the 15,000 crore is doctors. It is virtually a $2 billion business. You run that for 15 years. It has always been 99% current kind of portfolio. That problem is smaller than MSME. Let me make that point. The BL problem is a little more pronounced. What we are doing is, as I said earlier, MOB from bounds to 3 MOB, to 6 MOB, to 9 MOB. That is not just for—I will reinforce the point—that is not just for SME, for across businesses since February, I would say we are going hammer and tongs. We do not care about what does that mean to growth. We have to just—this is what has to go all lines, 3 MOB, 6 MOB, 9 MOB, and 12 MOB have to go below pre-COVID. Okay. How much would be the total unsecured in this book? In the INR 50,000 crore? Entirely unsecured, Abhishek. Entirely unsecured, right? Nothing secured. The mortgage sits in mortgage and so on and so forth. If you see in that panel, you see BFL mortgage, right? You see INR 27,000 crore. And so on and so forth. The classification is exactly as it is. So the other—yeah. Sorry. Go ahead. Sorry. Please go ahead. Sorry. No, go ahead. Go ahead. Go ahead. No, so the other observation I had is that since it is mostly unsecured, typically when you see an unsecured GS2, GS3 provisioning, it jumps from 40-50% in GS2 to around 70-80% because a lot of it flows forward. In MSME, it is 42 going to 49. There is not much provision buildup that has happened in the book when it has flowed forward from GS2 to GS3. Is it safe to say that that buildup will happen given that most of the forward flows are unsecured. Abhishek, that's what I was trying to clarify earlier as well because the number of customers who have been or amount of customers who have been restructured from stage one and have been accordingly classified stage three has actually pulled on the provisioning of stage three. These customers have higher probability of revival, and that's the reason why those customers were chosen for restructuring. That is exactly the reason. Understood. Yeah. Okay. Got it. Got it. It's a fair point. The second question is on—yeah. The second question is on growth. If I put all the comments together. So, A, BHFL has also indicated slightly slower growth this year. Obviously, MSME is slowing. Two, three wheelers will remain slow. Are there any other segments where you're looking to pick up slack? Or do you think 2026 by nature is going to be a slow year, and then you get back to your medium-term growth trajectory in 2027? 2026, you will probably underachieve or be lower than that growth trajectory. How are you thinking about the year? I'll give you one more quarter, Abhishek, before. We give you a very clear view. Right now, I would hold between 23%–24%. We would also have a clearer view as we complete Q2. Just hold your breath for Q2. [Foreign language] You guys are used to guidance now on decimal. I'm talking percentage. I have to manage expectations. We'll run like that. Okay. Okay. Thanks so much. Thanks for the information. Thank you. Thank you. Thank you. Thank you. The next question comes from the line of Chintan from Autonomous. Please go ahead. Hi. Good evening. Thanks for taking my question. Can I come back on the NII? If I see this quarter, 4.8% growth in NII, 5.9% growth in AUM, so implicitly, it's a 10 basis point NIM decline. You highlighted this mutual fund investment. Is that the liquidity buffer which has gone down 20% that's been parked in that mutual fund investment that's causing this NIM decline? How long will you hold that on the book? Yeah. You're bang on, Chintan. I think the liquidity buffers were deployed more in terms of mutual funds in the last quarter. The mutual fund income goes and sits in a separate line item, which is net gain on fair value change. Adjusted for that, NIM was largely flat-ish on a QOQ basis. How long will you hold this position? Is it duration of time? I think that was specific to the quarter because as the rates were coming down, the mutual fund returns were far, far better compared to government securities. We moved money from government securities to mutual funds, locked those gains, and then we have moved back the investment into government securities and T-bills, which is what we normally do. Sandeep, why should this go back up? Because if it becomes liquidity buffer again, it'll go into G-Sec, which is also lower NII, lower NIM. Why should there be a—is it just the denominator excludes? It's the interest income line, right? What you see as NIM, it interests us. So it'll go into interest income. Yeah. The cost is always sitting there. Fair enough. The income is sitting somewhere else. Got it. Then the second one was on MSME. You gave some numbers. 2.5 went to 11 and then came down to INR 7,000 crore. What were you talking about? Are these monthly disbursements you're talking about on MSME? Of business loans as published in Bureau. Yes. Monthly disbursements. Okay. Do you have a view on why this has happened? Because we haven't heard any of the other kind of banks talk about it. You're talking about it as a clear pain point, not just for yourself, but also the industry. Just wondering if you have some visibility on. Is it the customer group that NBFCs target versus banks, or is it something specific that you are seeing? Look, business loans, we've done for 18 years. We have seen, other than one lender in the private bank space who has done this consistently, we are the only two lenders who have done this consistently over the last 18 years. This is a business which is two steps forward, one step backward, two steps forward, one step backward. That is how the nature of the business is. There is nothing to read in the business. Is it a little bit of overexuberance? And this segment takes, unfortunately—let me make that point—this segment does take what is offered. It is, as I used the word politely, that it is as financial literate as it gets. So it is leverage that you should read as a principle driver. But it's come a little too suddenly. It didn't come slowly; it came a little too suddenly is the only point I would make. We are also a little surprised by it. I mean, it's primarily unsecured. So I suppose that's why the banks aren't talking about it. What do you see as the turning point then? What causes it to kind of improve? Because the slowdown that you talked about on the macro is very broad-based. We can see it in a lot of economic indicators. And it is quite—it's already slowed down quite a lot. So I'm just wondering, incrementally, how does this evolve over the next kind of six, nine months? I think, as I said, Chintan, earlier, we are just focusing on early MOB. As the portfolio turns, this will improve. That is the only way. That is why I said this is likely to grow. Probably single digit. AUM may grow 15-odd%, as Siddhant is saying. In terms of disbursement growth, we are going to be flat-stroke lower for the rest of the year. Okay. The final one, perhaps for Sandeep, could you just give us some sense of how much of the rate cut has passed through the liability side already and some color on the asset side as well? Asset is slightly easier. Liability is where I would like some color. Yeah. For the liability side, very clearly, NCD has seen almost 90 basis points of improvement in rates. We are borrowing NCD at 8% corridor. We are now borrowing between 7-7.1% mostly. That's one. Clear pass-through has come in. That's for incremental, right? Old book sits at old rate only. Banks, we have 85% of the bank money is on external benchmark rate. That has seen transmission as we speak today, full transmission of 100 basis points. The balance 15% of bank money is on MCLR, where partial transmission so far has come. CPs get repriced very quickly. It's a market-driven instrument. It all depends on liquidity position, etc. We have seen 80 basis points, 90 basis points improvement in CP rates as well in the recent times. Pass-through, they've started coming in liabilities. Because the liability book also needs to churn, the overall improvement that we have seen in quarter one is 20 basis points. The pass-through on assets also is moving in tandem. All the customers who are variable in nature, if they are linked to repo or external benchmark, they have seen the full pass-through. If the customers are linked to Bajaj FRR, they are seeing the pass-through as the cost of fund for the company is easing out, which is how banks transmit MCLR cuts as well. As a result of that, the margin for quarter one remained broadly same as quarter four. Quarter one Quarter one remained broadly as quarter four. Okay. So the NIM improvement is now driven by the better liability transmission as we go forward. Yes. Just to reinforce the point. Thank you so much for your. That's why the decision even on slowing down deposits, so that whatever gains we can accrue. In fact, that's an important one. I forgot to make that point. Deposits, we were originating almost INR 1,400 crore-INR 1,500 crore deposits on a monthly basis. Retail. Retail deposits. We were paying probably 70, 80 basis points higher than the monies that we are borrowing through a combination of bank and NCDs. We have priced now retail deposit exactly the same price as the NCD and bank money is for us. As a result, the volumes have come down for now. It is at one-third the volume where we were earlier. We are quite happy at this point in time because the idea is also to ensure that we proactively take care of NIM pricing as well for the customers. In that context, bringing down deposit at this point in time seems a rightful option for us to pursue. The number has come down on contribution basis from 20% and 19% on a consolidated balance sheet. This will go down to probably 16% by end of this year. Thank you for all that color. Thank you. The next question is from the line of Abhijit Debrewal from Motilal Oswal. Please go ahead. Yeah. Thank you for taking my question. I've stepped away from my desk for a couple of minutes, so let me know if any of my questions are a repetition. I can look up the recording. Two things I want to understand. First, a clarification. Rajeev sir, you said AUM growth guidance of 23–24%. Versus 24–25% that we guided last quarter. Is it factoring in the lower guidance given by Bajaj Housing Finance yesterday where they. They're saying, [Foreign language]. Don't read anything into it. Wait till Q2 end. We'll also have greater clarity. Got it. Right now, as Sandeep likes to say, it's not guidance, it's assessment. The assessment is. What we published as part of Q4 holds. Got it. Look, sir, the only reason why I was asking is. In the past, we have seen that whenever certain segments have shown stress, like what you're seeing in maybe MSME and two-wheeler, we have consciously slowed down, which we have shared. So I mean, are there other levers in other product segments that we can flex to deliver on the assessment that we made in the last quarter? Earlier, also a question was asked. I mean, gold loan is adding net INR 2,000 crore of AUM a quarter now. Let me make a point. Auto is still adding. There are the lab, CV, tractor, affordable home loans we are building, that is bringing to add INR 75-80 crore of volume per month. In the last three years, I just want to reiterate that in the last three years, we launched all that we wanted to launch. Now the entire focus is on optimizing and ensuring that they start to deliver the goal with which they were set up, which is to generate diversification and to deliver profitability. No more investments are being given to any of the new lines of business. We have given them enough investment capital. Now they have to deliver goods, which they are all committed to or at least are committing to deliver. I have some of them sitting in front of me. That is what I mean, the point. We have enough firepower to be able to generate the AUM growth. We have to balance it with profit growth. That is the only point, Abhijit, I would make to you. Got it, sir. The second question I had was about this working capital loans/business loans. I think you yourself acknowledged that every such MSME business owner, right, typically gives out these files to three, four lenders. We have heard from multiple DSAs in the past that there was a time, and not very long back, where, I mean, if I were to just quote them, right, SK Topi Ustesar. What I am trying to understand is now that you acknowledge that. This storm was sudden, which is where we are slowing down. I am just thinking aloud here that if everyone starts rationing credit in business loans/working capital loans, do you think that we might again kind of get into some kind of a credit cycle in this segment? The reason I ask is we saw that in all unsecured, all other unsecured segments earlier, be it credit cards, be it microfinance? No, the only difference I would make, this is a customer between INR 70 million–INR 150 million of turnover. So he is not the credit card and he is not the consumption loan customer. I think it is just extremely important for you to note that. He had the ability to borrow, let's say, INR 60 lakhs, INR 70 lakhs and pay INR 60 lakhs, INR 70 lakhs. This is not an average self-employed customer. This is a INR 7 crore– INR 15 crore plus minus customer who can over-leverage at times, but he will not fall. The floor rates will not be, like if you are alluding, let me make that point clearly, it is not like STPL conversation. Okay? It is a much better customer quality. That is the nature of the customer. That is why we are offering, we do not offer restructuring in our consumption loans because if he flows, he flows. Here is a business person who needs to tide over. That is why we are offering restructuring as an option. We used to do earlier. We used to do lesser. Now we are doing more. We have latitude available to be able to do so. We need to help that customer because he is a good customer. It is very different from the past, what we have seen, STPL or credit card customer or a PL customer. Got it, Rajeev sir. And then just a related question, because you spoke about leverage, even building up in this customer segment where you said, I mean, turnovers between INR 7 crores–INR 17 crores. 7 crore-INR 15 crore. Just trying to understand. Just trying to understand, I mean, we saw that in a small ticket earlier, right? And now even businesses with higher turnovers kind of showing that over-leveraging stress. If all of this is because of weak macroeconomic slowdown, what is it telling us now about the health of the MSME segment in India? As I said, it has come a little too suddenly, Abhijit. Wait for one more quarter. We will have a lot greater clarity. It is all I would say. I think we have discussed MSME as the next frontier today quite a lot. It is not that amplified to be given that much time. It is an issue, but not. I mean, our bar is very high. We are watching, let me tell you, just let me make one point that I have not made so far. We are watching offers data on these customers. That is not necessarily giving a good picture. It is the only point I would leave you with. It is a biased sample. It is a biased sample. I am looking at those who are bouncing, how is their performance? To be fair, while I made that point earlier, it is a biased sample. The biased sample is not stating a good story. We should do it on full portfolio to see. Yeah. I was just making a point to Fakhari. If you have a point to make, you can make on full portfolio. If we just add to what Rajeev was saying, and I know that we've discussed MSME a lot. Two things, as we've talked about, macro is shrinking. Thirteen out of the seventeen industry segments are shrinking. Credit supply, even when you look at credit deployment reports of RB I, across these industries are shrinking. As a result of that, what could be tending to happen is these businesses are facing a higher working capital cycle requirement. At the same time, given the stress that has been coming through with their repayments, banks are slowing down. Lending to them, particularly in the unsecured space. It has created a perfect storm. We just need to ride through this, as Rajeev said, continue to watch the vintages, continue to take action in terms of people who are demonstrating leverage levels or affordability levels in terms of their cash flows or debt servicing capabilities, and take corrective action. That's all. Exactly. Got it. This is very useful, Anand. Thank you so much. Thank you, Abhijit. Thank you. Are we done for the day? Yes. That would be our last question for today. I would now like to hand the conference over to Mr. Ajit Kumar for closing comments. Over to you, sir. Thank you, Rajeev sir, Sandeep, and Bajaj Finance team. Do you want to make any closing comments before we conclude? No. Good No. Good night. It's the only closing comment. Long day. Long day. Thank you all. Thank you. Thank you. On behalf of Bajaj Finance Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.