Ladies and gentlemen, good evening and welcome to Bajaj Finance Limited Q3 FY 2026 Earnings Call hosted by Morgan Stanley. This event is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley disclosure website at www.morganstanley.com/researchdisclosures. Please note that this call and your questions will be recorded and may, in certain circumstances, be distributed to clients and/or made publicly available. By participating in this event, you consent to such recording, distribution, and publication. All participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I will now hand the conference over to Mr. Subramanian Iyer with Morgan Stanley. Thank you, and over to you, sir. Thank you, Emily. Good evening, everyone. This is Subramanian Iyer from Morgan Stanley. Thank you very much for joining us for the Bajaj Finance Q3 FY 2026 Earnings Call. To discuss the earnings, I'm pleased to welcome Mr. Rajeev Jain, Vice Chairman and Managing Director, Mr. Sandeep Jain, CEO and CFO, and other senior members of the management team. On behalf of Morgan Stanley, I would like to thank Bajaj Finance management for giving us the opportunity to host them. I now invite Mr. Rajeev Jain for his opening remarks, post which we'll open the floor for Q&A. With that, over to you, Rajeev. Thank you, Subu. Thank you, Morgan Stanley, for hosting this call. I have with me in the room Sandeep Jain, the three deputy CEOs, and the other two chief operating officers. Good evening. Welcome, everybody, to the earnings call. I'll be referring to the investor deck, which has been uploaded on our website. I hope you had a chance to go through the same. I'll focus on key updates for the quarter we move to, Q&A. So I hope to take 15-odd minutes. I'll cover 8, 10 panels very quickly. Overall, from a commentary standpoint, I would just say I'm in panel 4, that the core performance of the company, eliminating one-time charges of new labor code and the accelerated ECL provision that we've taken in Q3, remained pretty strong. So let me cover that. There'll be a follow-through panel that I'll cover after that. So the core performance remained pretty strong across all key metrics, namely AUM growth. AUM grew by INR 23,622 crores. OPEX to NTI came in at 32.8. Core profit growth came in at 23% growth. And PAT, as I said, which grew by 23% as well. ROE at a core operating level before the one-time accelerated ECL provision and one-time charge of new labor code came in at 19.6%. Net NPA came in at 47 basis points. The one-timers in the P&L are principally two that we've actually taken. Firstly, to enhance balance sheet resilience amidst a volatile global economic environment, the company has further strengthened its provisioning framework by implementing a minimum loss given default floor across all lines of our businesses. And we'll cover that in detail as I cover through the presentation or part of Q&A. I must make an important point that it's purely done as a proactive and voluntary measure by the company, and it's a permanent change to further bulletproof our balance sheet and the resilience of the firm. Going forward as well, the company will continue to apply the defined LGD floors as you've determined in the future as well. So one, it's one-time. And two, it'll have some level of impact as well as a small annualized impact as we get into next fiscal. The company has principally taken. Let me just cover the INR 14.6 crore provision that was made on an accelerated basis. The Stage one PCR, as a result of this, moved from 74 basis points to 98 basis points. So that's I mean, virtually 1% of the assets are now in stage one as you acquire, which is the point I was referring to earlier that would have an annualized impact as well as we get into future years as well. Stage two PCR has been increased from 30.1% to close to 37%. Stage three has moved from 52%-61%. As I said, these changes are principally permanent in nature. Strengthen the balance sheet creates further resiliency to the business model and to the firm amidst the volatile global environment that we think we are principally in. The second impact is the one-time exceptional charge of INR 265 crore that we've taken towards increasing gratuity liability on account of the new labor code released by Government of India on 21st November. This will also have an annualized impact as we get into next fiscal. We'll cover that based on the Q&A. The annualized impact is expected to be between INR 100 crore-INR 125 crore annually. These items principally had an impact, of course, on both AUM and profit numbers. I'm in panel 5, which talks on the left-hand side about the before-accelerated charges, and on the right-hand side about the after-accelerated charges. I've covered panel 5 clearly. I can take so and what we are more focused on principally is the core operating performance. These two are one-time charges that we've taken, given as I explained, one is gratuity related, another being voluntary in nature. Takes me to the third important event in the quarter, which is gain on sale of BHFL shares. This is another exceptional item that's figuring in the financials of Q3. It's recognized in the standalone P&L statement of BFL. On a consolidated basis, it's a below-the-line item. As part of MPS compliance, 2% of BHFL's stake was sold by block sale. As a result, the BHFL shareholding by BFL in BHFL now stands at 86.7%. The resultant gain was INR 1,416 crore and has been recognized in standalone financials as an exceptional item. Let me now jump to the more routine metrics that we principally talk about, which is panel 6. As a result of the INR 1,416 crore, you will see two lines. There's a change. You will see on top the reported number, which is 22%, the core growth number, which is 23%. The INR 1,416 crores also gets knocked off. INR 1,406 crores also gets knocked off from the AUM, and that's why you see two numbers there. We are focused on core operating performance. AUM was up 22%. New loans booked were up 15%. We booked a record 14 million loans in Q3 versus 12 million loans that we did in last year Q3. Customer franchise, just we added 4.76 million customers. We are virtually adding 4.5 to between 4.2-4.5 million new customers every quarter. We now expect 17-18 million customers to be added to the franchise in FY 2026. It'll be on back of 17 million customers we added in the previous fiscal as well. The overall franchise stood at 115 million. We are well on course to cross a 120 million franchise in the current year. The cross-sell franchise continued to expand and stood at 74 million. Geographic presence, as I've made a point in the past, that we have mostly peaked out. It's deepening rather than broadening. That's happening. More products in geography rather than new geographies, which should, as you can continue to see, also be resulting in operating leverage as a firm. Active distribution, 241,000 is where we are present in. Liquidity buffer stood at INR 15,100 crore. Cost of funds came in at 7.45%. It was an improvement of 7 basis points sequentially. COF is expected to be we had outlined at the beginning of the year from a guidance standpoint, the number to be between 7.55%-7.65%. We are likely to be between 7.55%-7.6% in terms of cost of funds as we exit the year. The deposit book, as we had outlined that as part of the strategy in the current year to optimize that deposits' growth will be slower. Deposits contributed to 17% of consolidated borrowing as of December 2025. In terms of outlook, I would just, in terms of operating efficiencies, just on that from an outlook standpoint, given that we are in FY 2024, the year is virtually coming to an end. Overall, we've taken a view that the top-line growth or AUM growth will gravitate between 22% and 23%, but more likely it'll be 22% on a full-year basis. Given the actions that we've taken in the MSME business, that's something that we'll see, which has grown in quarter three only by 11%. We think it'll still take us two to three more quarters before we're back to 20s growth in that business. So based on the conscious decision that the company has taken to slow it down, we will have some level of impact. And the second-order impact is on account of the captive two-wheeler financing book, which is winding down. Based on both these, we think that the overall full-year growth will be between 20%-20%. Operating efficiencies continue to deliver benefit, came in at net interest income grew by 21%. NIMs was steady. That's an important point. NTI grew by 19%. OPEX to NTI grew, continued to improve, came in at 32.8%. The AI implementation, and for the first time, we have now started to cover metrics on AI, which I'll cover in a few panels down the line. We have now started to metricize. AI is moving to what I would call gear two in the company where from innovation, we are now tracking implementation and the benefits that it's delivering to the business. And we thought its time has come post-second LRP or the investment that we did that we'll start to publish AI benefit metrics to the street. Full-time employees stood at 69,000, virtually 70,000, including all the three companies. Fixed-term contract folks stood at 78,000. Let me just go to credit cost, which has been an important metric of profit growth or the direction of the business, came in at INR 3,625 crore. The core metric came in at INR 2,043 crore, a growth of 9%. So as I said, we are tracking core because 14 and 16 is principally a voluntary decision that we've taken, a permanent voluntary decision that we've taken. Year-on-year basis, loan losses and provisions grew by 9%. Annualized number came in at 1.91%. After a while, we've seen a sub-2% number. And we think from here on, the number will continue to slide down as we get into next fiscal as well. In Q3, the point number 17 is important. The Stage two and three was, on a net basis, down INR 93 crore. The provision had been slowly going down, but there was a decrease after a while. In the current quarter, came in at INR 93 crore. Stage two decreased by INR 287 crore, and Stage three increased by INR 194 crore, net-net leading to a decrease of INR 93 crore. The vintage credit performance, which is what we've been tracking since February this year, has across 3MOB, 6MOB, and 9MOB. And that's what gives us significant confidence as we get into next fiscal from a credit cost optimism standpoint that we are in a we are in a good corner as a firm from a credit cost standpoint. GNPA and NNPA, principally an outcome metric, stood at 121 basis points and 47 basis points. Pre-provision profit grew by 19%. That's a core metric in that sense. And PBT grew by, as I've already covered that, by 23%. Adjusted for one-timers, it actually degrew by 6%. ROA came in at 4.6% at a core level. ROE came in at 19.6%. Capital adequacy came in at 21.45%. Let me just quickly shift now to the FinAI transformation. I'm on panel 9. This is the first attempt that we're making to start to democratize AI implementation that we're doing to the investors. The way you should read it is at a starting level, there's data for AI. Then there is product and service discovery. Then there's customer engagement. Then there is what are we doing at point of sale and branches? What are we doing for customer onboarding? So it's a full lifecycle of a customer, as I've been saying to everybody, that we are not testing AI. We are deploying AI across the board, across lifecycle. I'm going back to panel 9 to give so that's the structure. These are few metrics we thought which are relevant and important, which demonstrates how AI is beginning to change the business. Voice-to-text conversion of all customer interactions that we do, AI listened to 20 million calls and converted voice to text and gave us data. Text-to-data conversion happened for 5.2 lakh customers. And as a result of that, we generated 100,000 new offers on which we did not have information earlier. That's the way and how you're seeing it move, that the first capability did not exist in Q1 and Q2. It just got deployed. We'll be able to listen to 100 million calls next year, and we'll be able to convert voice to text as you move forward, in beginning for sales, then for service, and then for DMS. Similarly, in terms of 100% of videos are now generated by us using AI. 100% of banners are generated using AI. 270,000 videos were generated. 120,000 banners were generated. At customer engagement level, we have 11 AI textbots that are live that engage with the customer. So rather than sending dumb SMSs for 11 products now, we have an AI bot which allows you to engage and interact and respond to your queries. The company has 26 products. All 26 will be live between April and May of 2026. So there'll be no communication that we'll be doing which will not have a whether service or sales, which will not have a conversational bot embedded in it. At branch and point of sale, existing customer face match that we're doing, we did 46 million face matches to ensure this is the same customer if it's an ETB customer who had actually principally come in, giving us much better control over identity. Customer onboarding in terms of document, ensuring that autofill of document happens, whether it's PAN card or it's Aadhaar. There are 43 such documents that the company is now mapped, which an image extracts with a 95%-96% accuracy data and populates it in our platforms, delivering significant productivity for our employees. Just on panel 7, auto quality check of documents is now 41%. We intend over the we believe that as we sharpen the model, it'll take us to between 85% and 90% over a period of next 50-odd months. The loan disbursements through AI call center came in at INR 1,600-odd crore. Data converting data from those calls led to another INR 325 crore of volumes. So this is just our first attempt. On technology development, we are clearly seeing between 25% and 45% efficiencies emerging in terms of the development process. Depending on if it's a legacy platform, then the benefit is much lower or rather, I would say none. But if it's a digital infrastructure, then the efficiencies can be as high as 45%-47%. So significant work being done. On panel 11, it'll just give you texture on where we are principally headed over the next six months. We are investing very deep in agentics. We believe that the company would have 800+ autonomous agents across sales operations, HR, IT, risk, and DMS in the next fiscal. That's one of the things we are most excited about. The second thing we are excited about is consumer AI, which is on the app and web on the app only, not on the web. App. You will see AI injection, AI summaries start to emerge between May and June. We are building an altogether new consumer AI platform in addition to the current 82 million app installs that we have. We expect that by May, June, 2027, we'll have an altogether new consumer AI platform for us as a firm, which may allow the same 100 million customers I expect then to go into the classic mode or into an AI mode. So it'll not be another platform. It'll allow the customer to choose an option between an AI platform or a classic platform. Data intelligence, we are continuing. We'll significantly we're investing very deeply in data annotation across voice, data, text, images, and structured data to improve our intelligence on the consumer significantly so that the velocity of the business can improve. So that's really on FinAI. We'll continue to provide update on a quarterly basis from here on to you as to how we are transforming the business. BHFL has already done its results yesterday. They've had a very good quarter. AUM grew 23%. And despite very high competitive intensity and higher portfolio attrition, and the PAT growth was 21%, and ROA was 2.3%, asset quality for them remained quite healthy at 27 basis points and NNPA 11 basis points. BFSL had a very good quarter. AUM grew 63%. Profits grew 74%. And they added 104,000 customers in the quarter and delivered an ROE of 13%. Lastly, I'll just make a point on some of you were there for the annual investor day. I would just request you all to go through our annual investor deck, which covers in detail as to what on a rolling basis is our ambition as a firm, which is to be a customer-centric company serving all needs of the customer. We foresee that we will be a 200 million customer company in the next 3-4 years' time. The market share of this franchise, current franchise or the future franchise, is very, very large. We want to have a larger and larger share of that customer's wallet. We want to be clearly a technology leader in financial services in India. And you can see that conversation leading to the earlier FinAI point that I was making. And we want to clearly be the lowest-risk business in India. In a way, it demonstrates the balance sheet resilience action that we have taken is coming in from these three are all connected. They are showing up in Q3 financials in that manner. And you will continue to see acceleration of these three areas as we progress well into FY 2027. I think that's really I'm 21 minutes into it. I think that's really all from me. And we are happy to take questions. Yeah. But I just want to clarify. On web as well? Oh, it's on web as well. Okay. Next week. I was just confirming. AI injection will be on app and web. Perfect. Perfect. Perfect. Thanks. Thanks. I do want to cover just before Subramanian opened up questions, last point which I usually do, which is on panel 58, 59, and 60, other than business and professional loans and 61, we are principally all green. In general, we are quite optimistic about the credit cost outlook as we step into FY 2027 as well. How I would conclude. Happy to take questions. Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Before asking the question, please introduce yourself providing your name and your organization name. Please limit yourself to a maximum of two questions so we can accommodate as many as possible. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question today comes from Viral Shah with IIFL Capital Services Limited. Please go ahead. Yeah. Hi. Thank you for the opportunity for letting me ask the question. So Raju, first, with regards to the ECL provisioning, I'm sure I think that will be the one thing that people are going to ask. But I was wanting to check and get a sense of the structural change that you mentioned in your commentary. What we are seeing is that there is an increase in stage one and two PCR. So does this mean that your steady-state credit cost could look higher than what otherwise it would have been? And if yes, then basically, what would be your, say, guidance for FY 2027? And secondly, if you can just comment with regards to your growth outlook more for FY 2027. That's two questions on my end. I'll give the easier one first. The first one requires a little longer explanation. We'll provide FY 2027 guidance along with Q4 results, which is normally what we do every year. I mean, so we'll provide that guidance along with Q4 results. Coming to, I'd rather let Sandeep give an answer. I've already spoken for 25 minutes. So answer the same. So don't worry. Yeah. So I think as Rajeev called out, these are the actions that we have taken on voluntary basis. We looked at all the products in the company, their current coverage ratios. We looked at where we want the coverage ratio to be as we go along from here. Rather than making a provisioning in one of the stages, we ensured that we follow the process. We redefined the loss given default metric by defining a floor across businesses and ensured that that is uniformly applied across all the stages. I'll give an example. So for example, for a business, we defined LGD floor at 80%, which means that the moment customer goes into NPA, we would have at least 80% provisioning coverage done. The ECL for stage one, stage two gets calculated as a combination of probably the default, exposure to default, and LGD. We'll ensure that the LGD, even for Stage one and Stage two, is revised to 80% to ensure that it also reflects the rightful provisioning at that level as well. So it has been done on a holistic basis across all businesses by redefining the LGD floor. That's point number one. Point number two, yes, this will have a cascading impact because as the balance sheet grows, we will have additional impact coming on account of higher coverage ratios that we want to incrementally maintain. However, I would say that those numbers will not be significant, significant nature. All goes well in the next year. Based on the estimates that we have done, the number could range between INR 300 crore-INR 400 crore of additional provisioning, which will ensure that not only are we taking action in the current year, we are also continuing to take the similar action as we go along from here. The incremental impact will not be significant. It will be spread across the year, which is over the quarter, and will ensure that the resilience point that Rajeev referred to is continued to be maintained as we go along from here. Got it. That's very clear, Sandeep. We could have taken a view to do an overlay given the environment, global environment, not local environment. We took a view to do a permanent provisioning change. I think it's an extremely important point that I must make. Over and above, and creating a floor that, at a design level, that this is what because look, ECL models need 10-year data to be built. I mean, at the end of the day, that's really how they and logically should not have events, which both are not true. So after considerable thought process, we have taken this decision. And it's permanent in nature. As the board and committee approved the change, I think they were also very clear in communication that we should make permanent change and continue to follow it on a go-forward basis. They would not like to have a judgment coming into play, which could have been the case had we created this in the form of overlay. I think that's another point. Got it. And just an additional thing over here. So I understand that this was a decision by the board to do this. But is there any, I would say, timeline wherein they will periodically want to revalidate whether this is the new normal could be, say, a year or two, three years down the line, or this is basically cast in stone? I don't want to correct you. I don't want to correct you. This is by management, point number 1. 2, fully supported and ratified by the board. 3, we've taken a view that this is how we'll run for 2-3 years and then take a view. The question is correct. Got it. Very clear, Raju. Got it. Very clear. Perfect. Thank you. The guidance we'll give you along with Q4. Yeah. Sorry. Thank you. The next question comes from Abh Tibrewal with Motilal Oswal. Please go ahead. Yeah. Good evening and thank you for taking my question. Just two things. One is, Abhishek, you just explained this was a management decision. This was fully supported and ratified by the board. But just trying to understand, I mean, why this decision now and you spoke about this decision being taken in the context of global uncertainty. I mean, if you look at it, right, I mean, yesterday, we concluded the U.S. tariff deal, right? I mean, so to that extent, things might actually start looking better from here. Plus, if we think about it, last two to three years, India on the retail side of lending, right, has seen a credit cycle in almost every other retail product but for home loans, LAP, and maybe gold loans. So what is it that really prompted this? While I appreciate the fact that it just gives more resilience to your balance sheet, but the fact that we are now looking at higher LGDs on each of the products. What was the rationale behind doing it and doing it now? Sandeep. As you would recollect, the recent times have been extremely volatile, not only in terms of just the external environment, also in terms of how the credit quality in general has behaved for various players. We have seen issues coming in and going from unsecured business to MFI to MSME and so on and so forth. We want to ensure we want to use this opportunity to ensure that the balance sheet and the P&L are shockproof. And one of the ways of doing that is to create a permanent journey ECL model and ensure that we are more than adequately covered from a provisioning perspective. And that's a call that we have taken in the current quarter. This could have been done in quarter four, could have been done in previous quarter, could have been done one year down the line. Whenever we would have done the same question, we would have been asked, "Why now?" There can never have been an answer for why now. I think as we found the last two quarters to be highly volatile, and given that we were not aware about what's happening, what's going to happen last evening, we were quite clear that given the volatile macroeconomic and global environment that we were living in, it was important for us to protect ourselves with additional provisioning. Got it. Got it. And then, I mean, look, let me make a point. I'll just make an added point so that the question is, in addition to why now, to the direction of travel on credit cost. Okay. We foresee that the number next year as we enter could be anywhere between 165 and 175 basis points. That's the number including the permanent provision that you're talking about. That's the direction that we are principally headed in. You will see that now, it could be 165, 170, 175, but I'm just giving you direction that that is there. And I made the point in the past many times that I'm chasing as a firm 19-20. That is really where we used to be. Next year, it will be 4x at size. So that's something that, and as a result, the several cuts in the business and so on and so forth that the firm has taken over the last 12 months to ensure that credit is our business and we get that right and must reflect in the annualized number that we are talking about. So just break this to what we've done now, including the permanent change, the number would look between 165 and 175 basis points. At this juncture, is how we think about it. I think on a lighter note, Rajeev, there could not have been a better occasion to communicate and give the message to deputy CEOs and CROs than making them accountable on an earnings call. We will deliver that. Yeah. Got it. I wanted to say that. Got it. And then just a follow-up on. Sorry. No, go. Sorry. Sorry. Thanks for that. Just a follow-up on that. I mean, this quarter may be perhaps just a coincidence that, I mean, we sold a stake in BHFL and like we've seen in the consolidated that comes below the line, that given that over the course of time, you will have to kind of keep reducing your stake in BHFL to meet the MPS. Can we expect that rather than that kind of accreting to your net worth, will predominantly be utilized for further improving the resilience of the balance sheet? Yeah. We are expecting that this question will be raised regarding the timing of the provisioning. I think as I recollect, same time last year, I think this was quarter two earnings call when we had done IPO of BHFL, the same question was asked, "Why not utilize the exceptional gain in terms of making incremental provision?" I had noted on the point. I'm not saying that the points are correlated, but this was a point asked last time as well. We did have a gain of INR 1,416 crore, and we did make a provision through a floor introduction for LGD of INR 1,406 crore in the current quarter. I think I'll stop here, I think. The most important thing is as we get more opportunities in future in whatever ways and means, we would like to further enhance our provisioning resiliency from a balance sheet perspective to again ensure that we are shockproof and resilient as a business model. Got it. Thank you so much. I just want to raise one last question on business. Yes, yes. That's right. Just one last question on business. On the MSME side, I mean, you've explained for the last couple of quarters that whatever we've been seeing in unsecured MSMEs predominantly because of customer overload, really. Was there some problem or some customer cohorts which are also impacted by tariffs and which could get better now that this U.S. tariff reduction got announced yesterday? In other words, what I'm trying to understand is U.S. Resource and pocket, not material. Not material. So it is yet to play through. We are mostly, as I was making a point, that over the next 2 quarters, we think we'll be done. As you're looking at the 3MOB, 6MOB, 9MOB of the MSME business, we think by June quarter or so, that business should also be back in between July and September quarter, that business should also be back in the 20s growth. Yeah, if I may just add on the MFI point, I think we have called out this last quarter as well that looking at the portfolio, looking at the information at industry level, leverage, location, bureau, and so on and so forth, we had taken a set of policy actions on underwriting and trade policy, which led to about 25%-30% reduction in volume. We are clear that until the time that we see full revival of the portfolio, we call it incipient stress, but we have to see full revival of the portfolio. Early readings are looking good. We would like to continue to hold the trade policy as tight as possible. Maybe sometime in Q1, Q2 next year, as we see full revival, we will be more than happy to grow the business again. Thank you. Before we take our next question, as a reminder, we ask that you please limit yourself to one question per person. Our next question comes from Piran Engineer with CLSA. Please go ahead. Yeah. Yeah. Thanks. Congrats, and thanks for the extra slides on FinAI. Before my question, just to confirm, when you say the stake sale gain in the consolidated financials is below the line, so it's part of the net worth. It directly goes into the net worth, is it, Sandeep? Yeah, Piran, you're right. It goes and directly sits in the reserves. It doesn't come in the P&L at all. The full 1,400, or is there a tax impact? The entire amount net of tax goes and sits in the reserve line. It's obvious, right? In the consolidated financial statement, Bajaj Finance, Bajaj Housing Finance, and Bajaj Financial Securities is one entity. I cannot make profit by selling myself. That goes and sits in the reserve rightfully by accounting standards as well. Yeah. I mean, it's like a revaluation. But anyway, I don't want to argue on that. Just secondly, now that you've put a floor on your LGDs in various segments, does this also mean you will accelerate the transition from this floor to 100% provision? Or in other words, would you accelerate your write-off policy also because of this? I think as regards write-off policy is concerned, Piran, we are now reasonably prudent. We ensure that all kinds of secured, unsecured loans get written off at six installments overdue, barring mortgages, which has a very long tail, and some of the other businesses which have a high amount of or high reliable value on the collateral front. So barring those businesses, we do write off at six months overdue. At this point in time, we have defined a floor that we felt appropriate. I'll give examples. For some of the businesses, we would have defined a floor at 75%-80%. For some other businesses which are secured in nature, have very strong collateral, the floor may be 40%-50%. We'll keep revisiting it on an annual basis. And wherever we feel appropriate to intervene and enhance the LGD coverage, we would probably take those actions. Whenever we take those actions, we'll call out as well. Got it. And just secondly, your fee income growth of 30%, why am I? It's pretty strong compared to what we've seen in a very long time. And that too, when the festive season was partly in 2Q, partly in 3Q. So is there some one-off or is this the rate of growth that one should expect? Piran, this should gravitate closer to from the next fiscal, gravitate closer to between 18%-20% from next fiscal onwards. It's just normalizing is what we would say. Okay. Yeah. I'll get back in. If at all, there were one-timers last year. There were one-timers in the last year. We had some INR 80 crore of gain sitting in the other operating income on account of sale of return of portfolios. We don't have any such gains in the current quarter. In fact, if at all, there was one-timer, the one-timers were sitting in the last year same time rather than the current quarter. No, Sandeep, I'm referring only to the fee and commission line item, the INR 1,960 crore value line item. There's no one-timer. This is core growth. Yeah, core growth. And as Ajay valued it too, as we get into FY2027 and onwards, this number should be ranged about within 17%-20% growth on a volume basis. Got it. Got it. Okay. Yeah. That's it from my end. Thank you. Our next question comes from Abhishek Murarka with HSBC. Please go ahead. Yeah. Good evening, and thanks for the opportunity. So two questions. One, just on cost of funds, can you talk about how much scope is there for it to come down further? There would be some backbook repricing left, or largely, it's passed through? Second thing is on vehicle finance. Sorry. Sorry. Sorry, Abhishek. Sorry. Yeah. Sure. Sure. So it goes sideways. Not much. Yes. You had a second question, right? So the second one was on vehicle finance specifically. Now, your disbursement market share, etc., is quite low across used car, new car, tractors, all of that. Just from maybe a two-year perspective, do you have an AUM target in mind or size or scale in mind or disbursement market share in mind, something from the point of view of how it can accelerate or grow from here? And the second thing is broadly, if we look at vehicle finance across the industry, the ROAs are lower than what you make on a consolidated basis. So if you're going to grow faster in vehicle finance, how do you propose to offset the ROA impact in the whole book from this? So just wanted to get some sense of your plans in that section. No, no. The plan is very clear. If you actually go to the first nine months of growth in AUM, okay, I mean, MFI is small, but otherwise, our gold loan is, of course, growing at industry level. We foresee businesses growing between 23 to between B2B business, because given its size, would probably grow in mid-teens, but rest should all grow between 20s. Okay? It could be a lower end of 20 to a higher end of 20. It could be barring aside, leave gold loans, and MFI would also normalize next year. I think gold loans will continue to grow as long as the price holds. We are increasing distribution on a sustainable basis in gold loans, so we foresee that continuing to grow. But leaving aside gold loan, every business has nuances. We are very clear that just grow them organically in the 20s. If you have strong tailwind on the P&L off that line of business, it can grow faster. If it has headwinds on the P&L, it'll grow slower. So like new car finance, margin is very, very fine. So the business needs to grow what it can sustain. If you see it grew 26%. Okay. Overall, car loans grew 26%. Used car actually is not here, probably degrew because credit was not holding. The new car grew 38%-39%. So we have a long-term plan for each one of these lines of businesses. As I say, if in five years' time, they're not minimum INR 2 billion in size each, we won't get into the business. But in addition, at a philosophy level, each business must deliver a sustainable ROE that has been benchmarked within the firm to ensure that they can get capital allocation for that business. So that discipline, we want to ensure. So now, let me summarize the point. So then what does that mean? That means that new car financing next year would probably still grow in the early 30s. Used car may grow still slowly in the first half of the year. Second half of the year should be better. We are now in control of credit in used car. CV and tractor, they are small but should grow 30%, 35%, 40%. As they generate profitability for each line, they get the capital allocation, they grow. That's our philosophical view from a capital allocation standpoint. Don't want to chase. If we chase, we have seen it leads to it is not necessarily beneficial to the firm or to the business as well. I hope that it's not. If you're targeting a profitability. If you're targeting a profitability metric, it's more ROE than ROA. It is ROE and ROA both. I mean, we give the same amount of leverage to each business other than the mortgage business in the company. So just as a prudence of capital standpoint. So I mean, we can take this offline conversation. Somebody may argue why or why not, but we give the same amount of capital to each business at a leverage standpoint and also establish rightful benchmarks for ROA and ROE to ensure that they can go out and deliver it. That's all. Understood. All right. Thank you for that. Thank you. Thank you. Our next question comes from Shreya Shivani with Nomura. Please go ahead. Yeah. Thank you for the opportunity. I have two questions. My first question is on the urban B2C or rural B2C, these two books. Urban B2C, rather. The growth here has come down to about 20% or so. Is there any competition increase in this segment that we could highlight or any other color that we can give on this book? My second question is on the gold book, which has been growing quite well. So the branch count has crossed 1,200, I think, in this quarter. What is our plan for the next year? And yeah, any details around the gold book going ahead? No. I think just related to businesses, and I want to refer back to even Abhishek's point I wanted to just make. And I want you guys, when you get time, to refer to. Is it showing? It's showing right now. If you go to panel 91 of the deck that we have actually of the Q3 deck, you'll principally see what our market share is. And as I outlined, see, our overall market shares across each one of these lines of businesses remain small. So whether you take urban B2C or rural B2C, give you an answer, the personal loan market share is at 8%, whereas our franchises are 30%. Similarly, for Abhishek's question, his question is absolutely right, and my answer was correct that I have a 1% market share. Now, I can go to 4% because my franchise is doing 36%. Okay? BFL's franchise, annually of the cars or loans done in the country gets 36% of the loans. Our share is only 1%. So opportunity is tremendous. It must make rightful economic sense for that line of business to do so. We actually think the customer-centric strategy that we have outlined would deliver that. Principally, look, the biggest issue in financial services anywhere in the world remains cost of acquisition. We have a 120 million franchise. As we integrate in AI transformation, as we integrate digital transformation, take digital transformation deeper, as we deliver discovery much better on the web, we have the franchise to be able to mine, farm, deliver lower credit cost. That's really the overall customer-centric strategies. It leads to whatever market share we get to. We don't have a problem of growth. 8% number a year ago, 7%. In FY20, mind you, it was at 9%. Okay? It was at 9%, went down to 7%. It's back at 8%. It must meet the hurdle rate of risk and the profitability for us as a firm to grow these to grow volumes. That's the point. And I should have mentioned that even as part of Abhishek's question. It's there on 91. So there's nothing. Nothing in urban B2C. We are pretty comfortable with the mid-20s and the late-20s growth stance depending on how we think credit moves. It's not a franchise problem at all. I hope that answers Shivani. So just to follow up yeah, just to follow up. So you're saying that pre-COVID from 2019 till now, our market share probably in this segment has been in this range only, under 10%, right? Yes. Yes. Yes. Yes. Yes. That's correct. Between 7% and 10% is what it's gravitated around. Sure. Which, mind you, Shivani, if I may make a point, we know the competitive intensity in 1920, and we know the competitive intensity now. I would say it's 3x of the entire public sector banking ecosystem didn't participate in urban B2C, rural B2C at all, I may say so, or was a much smaller participant. It is the largest personal loan lender in India in terms of market share as we are today, and so on and so forth. So the competitive intensity has magnified significantly, not just across personal loans, across each one of these lines of businesses. We've continued to grow. That's one part. Continue to maintain market share, second part, and continue to ensure that we sustain the return on assets and return on equity. I think that's the most important part because growing balance sheet in our business is not a problem. Growing profitability on a sustainable basis while we grow is really where the proof of the pudding is. So then that probably explains the revision in the LGD floors. Would that be correct, what you're talking about, the 3x increase in competitive intensity out there? Partially, it's true. Would that be correct? I mean, if there's only one red flag that I would have is that the overall consumer leverage remains an area of concern. It's not directly attributable, Shivani. I would just make a point. But if there is only one red flag that I continue to have is that consumer leverage continues to remain an area of concern. Thankfully, on a year-on-year basis, as far as the bureau data shows, it's not grown. It's flat. I think after a while, it's flat on an aggregate basis. We'll wait for March numbers to come by June or so. But it seems at this point of time, on a year-on-year basis, for the first eight months, consumer leverage is flat. So that's a good sign. But that's a red flag that I continue to have. That's all. It's indirect. I want to make sure that the point is not mingled. Just for the LGD piece, I think exists the slide number 54 where we have provided provisioning coverage ratio by business. We've already taken the urban B2C to 80% provisioning coverage ratio. So to the point that you were asking on LGD, we've already taken it at 80. Even if there's a worsening that we see in the market, NPL keeps going up. We may not see impact in our portfolio because of the actions that we have taken. You're done. We are done. We are done, I would say, at 80% PCR ratio. Got it. So just my question on the gold loan. What will be the strategy for next year if you're going to share now, or will you share it in the fourth quarter? No, sustained distribution expansion. That's one part. We will continue to expand. We foresee business continue to grow strongly. But gold prices have so we will do what is in our control, which is distribution expansion. As AI transformation happens, our existing branches will continue to and customers have no need to walk in. As I've said in the past, that 3% of the franchise used to walk in, given what we've delivered on app and the digital transformation and now on the bot, less than 0.6% is walking in. Existing branches will continue to morph into gold loan branches. That's one part. Two, we will continue to expand on a sustainable basis, our gold loan branches. That's the second part. And if this business is directly related to distribution and we now know how to do this business well, I would say the benchmark ROE and ROA metrics are in line with what the best in the industry are delivering, then we just want to make sure we grow distribution in a sustainable manner, which we are committed to. So could it grow at the same rate of the current year? Could be. Could it grow a little slower? Could be. I mean, it's a little volatile right now. I mean, from 5,500 to 4,500 in one week makes it even hard for me to do a budget planning session. Got it. Got it, sir. This is useful. Thank you and all the best. Thank you. Our final question today comes from Chintan Joshi with Autonomous. Please go ahead. Hi. Hi. Thank you for taking my question. Can I come back on the ECL? Perhaps an academic point, but why was LGD different in Stage one and Stage two? I would have thought it would be the PD that would be different and not the LGD. And presumably, that means that a future credit cycle might look different. If you had the last 3 years in the next 3 years, the trajectory might look different on the credit cost. And I know you said it jokingly, the 165-175 basis point credit loss guidance, but the analysts have occupational hazard of picking that up. Is that kind of more like a business outlook because things are looking better, or is there something more tangible that you are seeing in the business? Yeah. I mean, I've used the word quite optimistic, if you see, in my investor deck as well. So we are quite optimistic. And as I said, we are looking for the last 12 months on 3MOB, 6MOB, and 9MOB metrics. That's one part. The second part, which is important for you may say what also gives you the confidence on 165 and 175 is also our AF portfolio, which is 1% of the balance sheet, but still 8-9% of the credit cost, right, in the third quarter would be down to 1,700 for the balance sheet by September. If there's no balance sheet, there's no credit cost. So it's 1.14% of the let me just get my numbers right. 1.14%. 1.14% of the balance sheet and 9% of the credit cost and 14% of the GNPA in absolute numbers. This will be this balance sheet will be done and over with by September. It'll be left with INR 1,700 crore. I mean, even as we exit March, it'll be left with INR 4,200 crore. So that is the natural wash that's happening. In addition, the core businesses, we are tracking three, six, nine MOB gives us quite a high degree of confidence in being able to do so. Environment, I don't know about environment. Quite honestly, I am not that much of a macro person. I am a micro person. I think we control who we do unless it's an event. Event is different. Okay? COVID was an event. DeMon was an event. Non-event, I would like to believe we control what we choose to do, and that's how we would like to continue to run the firm. Yeah. And to your point on LGD, your understanding is absolutely right. The LGD that we apply applies across all stages uniformly. So when I give an example of 80% as a number, that 80% not only applies for stage three. It applies to stage two and stage one as well. What moves the provisioning number in stage one and stage two is the probability of default and exposure at the time of default. These are all calculated using empirical data based on a complicated model that Risk Team runs for doing development of ECL models. However, the LGD rates, whether it is stage one, stage two, or entry into stage three, remain exactly same across businesses. Thank you. By business line. Yeah. I might have misunderstood you then before. Perhaps one last one on LRP since we didn't get a chance to question on that. What were the main deltas for you, both positive and negative, as you did your LRP in compared to the last year? Sorry? On the LRP, what were the main delta, positives or negatives? Sorry. What is the main delta? The differences. Negatives. Yeah. As you compared the two LRPs, you went through the exercise. What did you think was more positive, and what did you think was less positive or negative? No. So all LRPs in general or any management strategy is on a continuum. Okay? It's on a continuum. At a design level, acceleration of AI is on a continuum. If you're four, you're going to take it to seven. That's one part. The big thing which will define the company over the next 3-5 years is the customer-centric strategy that we have principally outlined because that gives us INR 500,000 crore to whatever, INR 1,100,000-1,200,000 crore balance sheet outlook. Point number one, gives us existing customers easy to do business with, whether sell or cross-sell, gives us OPEX benefits, and gives us credit cost benefit. So as much as we've been focused on hunting on the continuum and farming, we increased the weight of farming virtually from I would say we were 60/40 hunting-farming. We'll probably go to 40/60 hunting-farming in the next 3-4 year arrival. Because as we get to 200 million customers, as our data said, India has only 302 million households. And by FY 2030, we foresee we'll be doing 100 million loans a year. And we would have had we would have had 200 to 200 million franchise. That's 20% of active households in India we would have ever lent to at a point in time by FY 2030. And they have a large wallet share. That means you just got to do more with them. That would have been a good 20-23 years of a strategy running, which is 60/40 acquire, cross-sell. It goes to cross-sell and acquire for the next probably 10. That's the big fundamental shift is what I would like to make to you. It'll all be transient. It'll happen over a period of 3-4 years because I don't want, as one of the analysts said earlier, saying we have a habit of picking it up. We are not going from hunting to farming. We were hunting and farming. We are hunting and farming on a continent. We're just slowly gravitating to what the needs of the business are and shift the mix, nothing else. So that's what. Thank you. You should take away from LRP. Yeah. Please. Yeah. I understand. There is plenty to unpick there, but we don't have the time. Thank you so much. Yes. Thank you. Thank you so much. Thank you. Thank you. Those are all the questions we have time for today. I'll hand the call back to Mr. Subramanian Iyer for concluding remarks. Thank you, Rajeev. Thank you, Sandeep. Any closing remarks from your side? No. Thank you. I would just say, focus on core operating performance. Remain strong. And we are quite excited about the medium term, is what I would say, just as a closing remark. Thank you, Morgan Stanley. Thank you. On behalf of Morgan Stanley, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.