Ladies and gentlemen, good day and welcome to the CreditAccess Grameen Limited Q2 and FY 2026 earnings conference call hosted by Motilal Oswal Financial Services 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 call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Thank you and over to you, sir. Thank you, Danish. Good evening, everyone. I am Abhijit Tibrewal from Motilal Oswal, and it is our pleasure to welcome you all to this earnings call. Thank you very much for joining us for the CreditAccess Grameen Limited call to discuss the Q2 FY 2026 earnings. To discuss the company's earnings, I'm pleased to welcome Mr. Ganesh Narayanan, Managing Director and Chief Executive Officer, Mr. Gururaj Rao, Chief Operating Officer, Mr. Nilesh Dhalani, Chief Financial Officer, and Mr. Sahib Sharma, Deputy General Manager, Investor Relations. On behalf of Motilal Oswal, we thank the senior management and the Investor Relations team of CreditAccess Grameen Limited for giving us this opportunity to host you today. I now invite Mr. Narayanan for his opening remarks. With that, over to you, sir. Thank you, Abhijit. Very good evening to all of you. I warmly welcome all of you to discuss our second quarter and first half of FY 2026 business performance. We are pleased to report an improving trend in second quarter performance, reflecting consistent business momentum and stabilizing asset quality. Despite the seasonally weaker nature of Q2, the outcome built on the strong trajectory established in Q1 FY 2026 demonstrates the underlying strength of our customer-centric business model. We continue to operate in an evolving macro environment, and it is encouraging to note that the economic indicators remain supportive. Healthy monsoons, strong agricultural output, and strengthening rural ecosystem trends are expected to drive robust on-ground demand in the second half of FY 2026, resulting in stronger loan portfolio growth. We disbursed INR 5,322 crore in Q2 FY 2026, a 32.9% increase year on year. In H1 FY 2026, we added 440,000 new borrowers, out of which 220,000 borrowers were added in the second quarter. Notably, 39% of borrowers added in Q2 were new to credit, reflecting our customer acquisition strength. With a healthy proportion of our new-to-credit customers being added each quarter, the portfolio share of unique borrowers has risen to 41% compared to 27% in August 2024. We continue to strengthen our last-mile reach as we opened 150 branches in H1 FY 2026, including 96 that were opened in Q2, taking the total branch count to 2,209. As stated in slide 3 of the presentation, the retail finance portfolio share now stands at 11.1% of the AUM at the end of Q2 FY 2026 versus 6.8% in Q1 FY 2026. Firstly, the RF percentage share optically appears higher, given a temporary decline in GL book due to accelerated write-offs. As the GL book growth picks up in H2 FY 2026, the RF share is expected to show a stable trend. Secondly, the retail finance growth also reflects a well-calibrated strategy driven by disciplined underwriting, stabilizing PAR trend across GL branches, and higher regulatory limit for non-MFI asset classes is enabling us to expand individual business loans through an increase in GL branches more effectively. Loan renewals of high-vintage group customers with better incomes through individual business loans are also supporting stronger borrower retention. With 45% of the GL book being three-year loans, there is a good probability of graduating these customers to retail finance in the future. The graduation to retail finance would also help in better asset quality, as the individual business loans are displaying relatively superior asset quality due to vintage customers and better underwriting. Our employee base grew from 21,333 in June 2025 to 21,701 in September 2025, with an annualized attrition rate of 28.9% in Q2 FY 2026. Employee engagement and morale remain strong as we continue to drive steady growth while maintaining a consistent focus on asset quality and profitability. The deleveraging trend is moving on the expected lines, with the GLP percentage of borrowers with greater than three lenders at 6.9% in September 2025 versus 25.3% in August 2024. The GLP of borrowers with greater than INR 200,000 unsecured indebtedness stood at 7.2% as of September 2025 compared to 19.1% in August 2024. Further, the average total unsecured debt of CreditAccess Grameen borrowers and average monthly obligations have declined by 2% quarter on quarter. PAR 15+ in case of borrowers with four lenders stood at 15.1% as of mid-September 2025 versus 14.3% in mid-June 2025. Similarly, PAR 15 in the case of borrowers with more than four lenders stood at 30.2% versus 31.1% as of mid-June 2025. This shows that the delinquencies have largely crystallized in the case of borrowers with more than three lenders, while around 80% of these customers continue to make regular repayments. Our accelerated write-off journey has served its intended purpose by cleaning the legacy stress book and strengthening the foundation for sustainable growth in H2 FY 2026. In Q2 FY 2026, we undertook write-offs of INR 683 crore, including an accelerated write-off of INR 554.7 crore related to 180 DPD non-paying accounts, leading to an additional credit cost of INR 172 crore for the quarter. The share of credit costs due to new PAR attrition is consistently declining since Q3 FY 2025. The company continues to hold 156 basis points or INR 383 crore higher provisions over PAR 90, 268 basis points or INR 681 crore higher provisions compared to IRAC Prudential loans, and INR 89 crore higher provisions compared to NBFC Provisioning loans. Our collection efficiency, excluding arrears, stood at 94.5% for Q2 FY 2026. PAR 90 stood at 2.5%. GNPA of 3.65% and Net NPA of 1.26%, both predominantly measured at 60 DPD. Net interest income grew 4.2% QoQ to INR 976 crore, with portfolio yield at 20.7% and interest spread of 11.1%. Our average cost of borrowings continues its downward trajectory, having declined 11 basis points to 9.6% at the end of Q2 FY 2026. During Q2 FY 2026, we raised INR 3,519 crore with marginal cost of borrowing at 8.9%. Our foreign borrowings stood healthy at 23.7%, progressing towards our medium-term target of achieving 25% - 30% of foreign borrowings by FY 2028. NIM remained steady at 13.3% for Q2 FY 2026. Cost-to-income ratio stood at 32.5%, while PPOP stood at INR 695 crore in Q2 FY 2026. The liquidity levels, including cash and cash equivalents, were adequate at INR 2,176 crore, amounting to 7.9% of the total assets. Additionally, we have sanctions in hand of INR 3,455 crore and another INR 6,200 crore worth of sanctions in the pipeline. The capital adequacy remained comfortable at 26.1%. We delivered a PAT of INR 126 crore for the second quarter, leading to an ROA of 1.8% and an ROE of 7.1%. The past few quarters clearly show that the industry has navigated challenges with remarkable resilience and discipline. Portfolio quality continues to improve, supported by prudent underwriting, focused collections, and sharper risk management across the ecosystem. We remain in the forefront of this upward trajectory, creating sustainable value for stakeholders while reinforcing confidence in the sector's long-term growth. The PAR 15 attrition rate trajectory remained range-bound during the quarter due to the temporary impact of heavy rain floods across operating geographies. Since the PAR attrition rate is 40 - 45 basis points against the 25 - 30 basis points expected, every month of delay in PAR attrition improvement is resulting in an additional credit cost of 15 basis points. Due to this delayed improvement, we expect additional 40 - 50 basis points credit cost in FY 2026. Further, we also anticipate an increase in our ECL provisioning rates in line with recent monthly PD and LGD data points. This would result in an additional 30 - 40 basis points of credit cost impact in FY 2026. Hence, overall for FY 2026, we may see credit cost deviation in the range of 70 - 100 basis points against our initial performance guidance. Further, as we move into FY 2027, we anticipate another 70 - 80 basis points increase in ECL provisioning rates due to the inclusion of recent monthly PD and LGD data points. Hence, overall credit cost may range around 4% - 4.5% in FY 2027, including one-time ECL rate revision of 70 - 80 basis points. Post this revision, the ECL rates should remain range-bound. Amidst the evolving market environment, we continue to leverage our risk-based pricing strategy, low cost of borrowings, and efficient operating structure to protect our ROA within the 4 - 4.5% range, while being one of the lowest-cost lenders in the industry. Before concluding my remarks, I'm pleased to share with you all a significant development in our board. Mr. Manoj Kumar has been appointed as the Chairman and Independent Director. He's been a member of the board since 2019, and Manoj brings a rare blend of strategic foresight and entrepreneurial depth. He's the founder of Social Alpha, which is at the forefront of technology-led innovation, tackling critical social and environmental challenges. He's the founding trustee of the Data Institute of Genetics and Society. With more than two decades of experience spanning banking, capital markets, and fintech, Manoj brings a blend of integrity and a purpose to his leadership role. Thank you for your patient hearing. We now open the forum for questions and answers. Thank you, sir. Ladies and gentlemen, we'll begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Danish, can you please unmute me? Hello? Yes, sir. Yeah, Danish, the thing is, none of the investors or analysts have been able to join. They're still hearing music, and that's why you're not seeing anyone in the Q&A. Give me one minute. They didn't hear the entire speech, is it? Sir, that's what I think. A lot of investors and analysts have texted me, saying that we are still hearing music. We were trying to get in touch with the operator for the last seven, eight minutes. Okay. Okay. 200 people who have logged in, are they able to hear? Yes, okay. Allow me one minute, please. Next time we should check if my calling audit variable here. Okay. No, we're back. I No, we're back. I think it was not audible to anybody. Please recheck once. We'll do it again. Yes, sir, I don't think anyone heard, at least. Hello? Many people have messaged. Hello? Yeah. Yeah. Yeah, Danish. Yes, hi. We can start again. I guess there is some technical issue that occurred. Okay, now I guess it's fixed. Can you reconfirm to the participants that this is audible? Yes, sir. Some people have texted back saying that it's audible now. Okay, okay. Okay. Okay. We'll start again now, sir. Okay. Okay. Okay. Abhijit? Yeah, we'll start again. Sir, just give me one minute. I just want to drop a message on the group asking everyone who could not join to join. Just give me one minute. Okay, this is all good. Anything I can give? Okay, okay. I think it's audible now, is what you're saying. Yes, sir, it's audible now. Heard anything? Yeah, I haven't heard anything. Yes, sir. No, sir. We'll start again, sir. Yeah, I think we can start all over again. Sorry for the technical. Ladies and gentlemen, good day and welcome to the CreditAccess Grameen Limited Q2 and FY 2026 earnings conference call hosted by Motilal Oswal Financial Services 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Abhijit Tibrewal from Motilal Oswal Financial Services Limited. Thank you and over to you, sir. Thank you, Danish. Good evening, everyone. I'm Abhijit Tibrewal from Motilal Oswal, and it is our pleasure to welcome you all to this earnings call. Thank you very much for joining us for the CreditAccess Grameen Limited call to discuss Q2 FY 2026 earnings. To discuss the company's earnings, I am pleased to welcome Mr. Ganesh Narayanan, Managing Director and Chief Executive Officer, Mr. Gururaj Rao, Chief Operating Officer, Mr. Nilesh Dhalani, Chief Financial Officer, and Mr. Sahib Sharma, DGM Investor Relations. On behalf of Motilal Oswal, we thank the senior management and the Investor Relations team of CreditAccess Grameen Limited for giving us this opportunity to host you today. I now invite Mr. Ganesh Narayanan for his opening remarks. With that, over to you, sir. Thank you. Thank you, Abhijit. Very good evening to all of you, and I warmly welcome you all to give you an update on our second quarter and first half of FY 2026 business performance. Firstly, my apologies. This looks like a retake. We finished the entire opening remarks, and as I understand, there was some technical snag due to which you could not hear me, so we are just repeating the speech once again. My apologies for that. We are pleased to report an improving trend in second quarter performance, reflecting consistent business momentum and stabilizing asset quality. Despite the seasonally weaker nature of Q2, the outcome built on strong trajectory established in Q1 FY 2026 demonstrates the underlying strength of our customer-centric business model. We continue to operate in an evolving macro environment, and it is encouraging to note that the economic indicators remain supportive. Healthy monsoons, strong agricultural output, and strengthening rural ecosystems trends are expected to drive robust on-ground demand in the second half of this year, resulting in stronger loan portfolio growth. We disbursed INR 5,332 crore in the second quarter, which is a 32.9% increase year on year. In H1 FY 2026, we added INR 4.4 lakh new borrowers, of which INR 2.2 lakh borrowers were added during the second quarter. Notably, 39% of the borrowers added in Q2 were new to credit, reflecting our customer acquisition strength. With a healthy proportion of new-to-credit customers being added each quarter, the portfolio share of unique borrowers has risen to 41% compared to 27% in August 2024. We continue to strengthen our last-mile reach as we opened 150 branches during the first half of this year, including 96 during the second quarter, taking our total branch count to 2,209 branches. As stated in slide 3 of the presentation, the retail finance portfolio share now stands at 11.1% of the AUM at the end of Q2 FY 2026 versus 6.8% in Q1. The RF percentage share optically appears higher, given a temporary decline in GL book due to accelerated write-offs. As the GL book growth picks up in H2 FY 2026, the RF share is expected to show a stable trend. The retail finance growth also reflects a well-calibrated strategy driven by disciplined underwriting, stabilizing PAR trend across our group loan branches, and a higher regulatory limit for non-MFI asset classes is also enabling us to expand individual business through our group loan branches more effectively. Loan renewals of high-vintage group customers with better incomes through individual business loans are also supporting stronger borrower retention. With 45% of the group loan book being three-year loans, there is a good probability of graduating these customers to retail finance in the near future. The graduation to retail finance would also help in better asset quality, as the individual business loans are displaying relatively superior asset quality due to vintage customers and better underwriting. Our employee base grew from 21,333 in June 2025 to 21,701 in September 2025, with annualized attrition rate of 28.9% in Q2 FY 2026. Employee engagement and morale remain strong as we continue to drive steady growth while maintaining a consistent focus on asset quality and profitability. The deleveraging trend is moving on the expected lines, with the GLP percentage of borrowers with greater than three lenders at 6.9% in September 2025 versus 25.3% in August 2024. The GLP of borrowers with greater than INR 200,000 unsecured indebtedness stood at 7.2% as of September 2025 compared to 19.1% in August 2024. Further, the average total unsecured debt of CreditAccess Grameen borrowers and the average monthly obligation have declined by 2% quarter on quarter. PAR 15 in case of borrowers with four lenders stood at 15.1% as of mid-September versus 14.3% in mid-June. Similarly, PAR 15 in the case of borrowers with more than four lenders stood at 30.2% in September versus 31.1% in mid-June. This shows that the delinquencies have largely crystallized in the case of borrowers with greater than three lenders, while 80% of these customers continue to make regular repayments. Our accelerated write-off journey has served its intended purpose by cleaning the legacy stress book and strengthening the foundation for sustainable growth in the second half. In Q2 FY 2026, we undertook a write-off of INR 683 crore, including an accelerated write-off of INR 554.7 crore related to 180 + DPD non-paying accounts, leading to an additional credit cost of INR 172 crore for the quarter. The share of credit costs due to new PAR attrition is consistently declining since Q3 FY 2025. The company continues to hold 150 basis points or INR 383 crore higher provisions over PAR 90, and 268 basis points or INR 681 crore higher provisions compared to IRAC Prudential loans, and INR 89 crore higher provisions compared to NBFC Provisioning loans. Our collection efficiency, excluding arrears, stood at 94.5% for Q2 FY 2026. Par 90 stood at 2.5%, GNPA of 3.65%, and Net NPA of 1.26%, both predominantly measured at 60 + DPD. Net interest income grew 4.2% QoQ to INR 976 crore, with portfolio yield at 20.7% and interest spread of 11.1%. Our average cost of borrowing continues its downward trajectory, having declined 11 basis points to 9.6% at the end of Q2 FY 2026. During the second quarter, we raised INR 3,519 crore, with the marginal cost of borrowing stood at 8.9%. Our foreign borrowings stood healthy at 23.7%, progressing towards our medium-term target of achieving 25% - 30% foreign borrowings by FY 2028. NIM remained steady at 13.3% for the second quarter. Cost-to-income ratio stood at 32.5%, while PPOP stood at INR 695 crore in the second quarter. The liquidity levels, including cash and cash equivalents, were adequate at INR 2,176 crore, amounting to 7.9% of total assets. Additionally, we have sanctions in hand of INR 3,445 crore and another INR 6,260 crore worth of sanctions in the pipeline. The capital adequacy remained comfortable at 26.1%. We delivered a PAT of INR 126 crore in the second quarter, resulting in an ROA of 1.8% and an ROE of 7.1%. The past few quarters clearly show that the industry has navigated challenges with remarkable resilience and discipline. Portfolio quality continues to improve, supported by prudent underwriting, focused collections, and sharper risk management across the ecosystem. We remain at the forefront of this upward trajectory, creating sustainable value for all stakeholders while reinforcing confidence in the sector's long-term growth. The par 15 attrition rate trajectory remained range-bound due to the temporary impact of heavy rain floods across operating geographies. Since the par attrition rate is 40, 45 basis points against 25, 30 basis points expected, every month of delay in par attrition improvement is resulting in an additional credit cost of 15, 20 basis points. Due to this delayed improvement, we expect an additional credit cost of 40 - 50 basis points in FY 2026. Further, we also anticipate an increase in our ECL provisioning rates in line with the recent monthly PD and LGD data points. This would result in an additional 30, 40 basis points credit cost impact in FY 2026. Overall, for FY 2026, we may see credit cost deviation of 70 - 100 basis points, as against our initial performance guidance. Further, as we move into FY 2027, we anticipate another 70, 80 basis points increase in ECL provisioning rates due to the inclusion of recent monthly PD and LGD data points. Hence, the overall credit cost may range between 4% - 4.5% in FY 2027, including the one-time ECL rate revision of 70 - 80 basis points. Post this revision, the ECL rates should remain range-bound. Amidst the evolving market environment, we continue to leverage our risk-based pricing strategy, low cost of borrowings, and efficient operating structure to protect our ROA in the range of 4% - 4.5% while being one of the lowest-cost lenders in the industry. Before concluding my remarks, I'm pleased to share with you all a significant development in the Board. Mr. Manoj Kumar has been appointed as the Chairman and Independent Director, a member of our Board since 2019. Manoj brings a rare blend of strategic foresight and entrepreneurial depth. He's the founder of Social Alpha, which is the fourth technology-led innovation tackling critical social and environmental challenges. He's the founding trustee of the Data Institute for Genetics and Society, with more than two decades of experience spanning banking and capital markets and fintech. Manoj brings the blend of integrity and purpose to his leadership role. Thank you for your patient hearing. We now open the forum for questions and answers. Thank you, sir. We'll now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is from the line of Abhijit from AB Capital. Please go ahead. Hello. Am I audible? Yes. Yeah. In Q1, you had indicated that we will grow the book by around 12% - 14% in FY 2026. Now that in this quarter it was by 3%, can we expect in H2 we will have more than 20% growth, robust growth we will expect? Yeah. Abhijit, we do have visibility on the growth front. In the first half, while you see the disbursements have grown at 27% on a YOI basis, it has not resulted in growth because of accelerated write-offs. In the second half, we will have a normative write-off trajectory. That is where the disbursement growth will translate into portfolio growth. Largely, we do see we'll be able to meet the growth guidance we are given. Okay. The PAR in MT was showing that it is gradually increasing. Is it something to worry about, or is it normal? This is something that we are watching. There is a little bit of rain impact here, and also, there has been a slight movement in PAR here, but I think there is nothing to worry at this point of time. Okay, thank you. Thank you. Our next question is from the line of Ramesh from ICICI Bank. Please go ahead. Yeah. Hi, sir. Congrats on the setup number. Sir, just two, three things from my side. One on this, you know, the entire credit cost guidance you have shared. Sir, you know, if I read it correctly, you said that in FY 2026, our credit cost will be higher by 70 - 100 basis points than the earlier guidance range. Is that correct? Yes. Okay. Now, moving to the FY 2027, wherein you did mention about the credit cost remaining at 4.5%, which is again 70, 80 basis points higher. I'm not able to understand when you said that the ECL impact, you know, it will be there. I mean, what should lead to this higher credit cost? When you say ECL refreshment, it is basically you are saying your PD, LGD will go up because this year delinquency data will be there in next year's ECL model. Is that what you are referring to? Yes. Basically, the PD and LGDs are moving up, and hence your provisioning rates will also move up because of the recent data points that will go through the ECL model. We are envisaging that the next year credit costs would be in the range of 4.5%. Ramesh, in this, we will see, like even if you have seen from Q1 to Q2, there has been an increase in our stage two and stage three provisioning rates. That has primarily happened because of an increase in the LGD data points. Even in the second quarter, if you see, out of the INR 525 crore of credit cost, there is a INR 35 crore credit cost impact on account of an increase in LGD rates. Now, in the third and fourth quarter, we believe that even the new PD points will start getting included in the workings. That will result in the stage one, two, three provisioning rates slightly inching up. Next year, again, there will be inclusion of the PD points. We don't see any larger change in LGD, but yes, in PD, we will see an increase, which will result in an increase in the ECL rate. Out of the 4, 4.5 credit cost, maybe around 70, 80 basis points is the impact because of ECL, which is a one-time impact. The remaining 3, 3.5 or 3.3 to 3.6, whatever that range is, that is considering the new par attrition. We have made a little conservative estimate considering that the new par attrition stays around 35 basis points per month. If we are able to improve the new par attrition to the range of 20, 25 basis points per month, then maybe the number may come lower. As of now, we have given this figure basis the current trend we are seeing. We may come up with revised numbers maybe along with our fourth quarter results if we see that there is any improvement in the monthly par attrition rate. Got it. Okay, just to follow up on that, when you say that there will be a one-time impact of this entire ECL refreshment in 2027, in 2028, going ahead also, that PDs will remain in ECL, right? Even if it is on a rolling basis, I'm sure you must be using what? Yeah. ECL gets calculated on a longer time period, right? If you have better performance during the next year, subsequent year, the rates could moderate, but it may take some time to come back to normalcy still. It may not go up because, Ramesh, it may not go up further because this year, I mean, the current year's 12 data points will already be part of the computation in the next year. If next year, if we see the trend reversing, then obviously in FY 2028, we'll see the ECL rates coming down. Are you using 24 months rolling basis or 36 months rolling basis? 36. 36 months rolling basis. 36. Got it. Okay. I know this is helpful. Secondly, again, on the growth side, I mean, adjusted for write-off and all, you know, will be delivered 14% or 15% growth this year. What should be your target for next year in 2027? It should be in the range of 20% + combining our retail finance and microfinance. I think we should look at guidance by the end of the year. At least the prime FAC, we are confident because we've added branches and the momentum is coming back. Par is normalizing across all geographies. We should see momentum and we should see growth quite reasonably. Okay. Got it. Got it. Just a last clarification, sorry. You said ROA at 4.5% even after adjusting 4.5% of credit cost in 2027? Yes. Yes. Okay. Thank you. That's reflecting. Yeah. Yeah, yeah, Nilesh. Ramesh, basically, this will largely be achieved through better operating profit. Even this year, if you see, even in the second quarter, despite the 8% annualized credit cost run rate, we have given a 1.8% ROA, which means that we are doing close to 9.5% - 10% of PPOP. We still see some upward levers in our PPOP because the yields will keep improving as the interest reversal quantum keeps coming down. In the first half, we had a sizable interest reversal quantum. Almost INR 1.76 billion of interest got reversed, which will not reoccur in the coming quarter. We will see yield going up, plus our borrowing cost is coming down every quarter. That will also help us to strengthen our NIMs. Even the operating cost will keep coming down because in the first half, the operating cost is higher because we have added almost 150 new branches, and the portfolio has kind of stayed flat over the four to six quarters. As the growth picks up, we believe the operating cost will again start trending towards our earlier 4.6% - 4.7% levels. All these factors will offset the higher credit cost. We believe we should still be, maybe our PPOP will cross 10%, and it will still be able to absorb the credit cost impact and give us the intended ROA. Got it. Got it. Okay. Thank you, Nilesh, and best of luck. Thank you, sir. Our next question is from the line of Abhijit M. from HSBC. Please go ahead. Yeah. Hi. Good evening. Actually, my question was pretty much just answered by Nilesh Dhalani, that you know the second half should still see the 4.5% ROA achievement, which you had guided for last quarter. That's just sort of reconfirming. Abhijit, this 4.5% we are seeing on a steady state basis, but maybe third and fourth quarter, it may be slightly lower because the credit cost, I mean, the revision in the PD rates will reflect into a slightly higher ECL in third and fourth quarter. The benefit of pricing will only come gradually. The benefit of pricing, the benefit of borrowing cost, these will play out largely in next year. Though we will still see yields sequentially improving in third and fourth quarters. We have also seen the yield improving by almost 40 basis points in the second quarter. We should see the yields keeping, they will keep improving in third and fourth quarter, but I think we may do maybe kind of 4-ish kind of ROAs. 4.5% kind of ROAs may be possible next year. Okay. Because your cost of borrowing should also fall quite a bit because your marginal cost is nearly 70 basis points below your weighted average, plus your yield is improving 30, 40 basis points, plus the interest reversal almost accounts for 140 basis points of yields. Even if that were to come down, you would get a fair bit of release over there. I thought that it would still be enough to sort of counter your 70, 80 basis points or 90 basis points higher credit cost. Don't you think that? It may, it will happen. Abhijit, yeah, you know. It will happen, Abhijit, it should play out, but the only thing is like it will be a more gradual process. While the borrowing cost is coming down, if you see the weighted average borrowing cost is down by 20 basis points in the year, it's not that the entire benefit has flown as of now because if you look at our borrowings, there is a 65% floating rate borrowings which are linked to MCLR. These MCLR resets happen over a period of 3 months, 6 months, and 12 months. We have still not seen the entire repricing benefit. Whatever benefit you are seeing, which is appearing in our weighted average cost of borrowing, is on account of the marginal borrowing cost coming down. The existing borrowings will also get repriced over a period of time as we keep hitting the reset dates. That's where we believe that maybe this year our weighted average borrowing cost started at 9.8. Maybe we end the year somewhere at 9.5. Next year, we start at 9.5, and maybe we may have an average borrowing cost of around 9.3. From that perspective, you will see an entire 50 basis points of benefit in our cost of borrowing in the next financial year. Plus, even on our yields, we will see a similar 50 basis points of benefit, and even the OpEx will come down by 20 basis points. That's where we see around close to 100 basis points of better operating profit, which will offset the credit cost. This full impact will play next year. This year in third and fourth quarter, partial impact may play. Understood. The second question, Nilesh, is on this write-off. If I look at the presentation, I think it's INR 680 crore or so overall. I think it is INR 680, right? Last quarter, INR 690. It's INR 680 roughly. When do you see that number coming off more materially? Should we expect that to start coming off in Q3? How much of that PAR 2.5 now, you know, you are there, how much of it is eligible for accelerated write-off? We are largely done with the accelerated write-off cycle. There may be some portion of Karnataka book which we have to see, but largely, we are done. You will not see these figures in third and fourth quarter. The figures will be much lower, much, much lower. The INR 170 crore accelerated write-off should come off materially, and the remaining INR 510 crore should also see an improvement because now your PAR and forward flows and all of that should be coming down. Right. Right. Got it. The third thing is to. Sequentially, you are seeing that the new PAR credit cost due to new PAR attrition is coming down, right? In one of the slides you will see, quarter on quarter, the contribution of credit cost due to write-off and PAR attrition is falling down. It's expected to fall down further in Q3. Since we've done away with most of the accelerated write-off, you will see a much lesser component going forward in accelerated write-off also. Ramesh, this one thing is confusing me. Maybe I'm looking at it wrong. Your write-off is INR 690 crore in the first quarter, and additional accelerated write-off out of that is INR 192 crore. INR 500 crore of normal write-off. No. Second quarter. No, Abhijit, you are reading it wrongly. In the second quarter, out of the INR 680 crore total write-off, the accelerated write-off is INR 554 crore. In the first quarter, out of the INR 692 crore total write-off, around INR 600 crore is accelerated write-off in the first quarter. The 192 and 172 figures are basically the credit cost impact because when we write off, it will not entirely hit the P&L. Only the unprovided portion will hit the P&L. Typically, we'll have 70% provisions in place. The third question is your OpEx. Now, if you look at your OpEx to assets, last five, six quarters, it had troughed at roughly 4.4% last year, Q1. From then, it has continued to go up. Partly, I think it would be because of your base. Is there any other part of the OpEx which can sort of start coming down? What parts can you save on and which you are hoping to drive that improvement in your cost to asset next year? It is largely due to the AUM decline, right? Otherwise, you increase branches, you increase employees, your increments have gone up, but your base has fallen. As we start building the portfolio size, it should fall back to normalcy in some time. There's no other component which is under. Understood. Got it. Thank you. Yeah, those were my questions. Thank you. Thank you, sir. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit the question to two per participant. Should you have a follow-up question, please rejoin the queue. Our next question is from the line of Deekshant from DB Wealth Management. Please go ahead. Thank you so much for taking the question, Manoj. The first question is that the recent sort of environmental damage that we are seeing in Maharashtra, is that concerning to you? How are we modeling for this right now with the current guidance that we are giving? You're talking about the rains, right? Yeah, correct. The floods and the rains. Yeah. Typically, during these periods, some of these geographies do see rains, including the Chennai rains that are happening as we speak, right? Right now, all of this is a part of our ECL model. There's nothing specific that we are working on. Typically, we've seen any rain impact is short-term in nature for us, and it typically comes back roughly around three to four weeks. Okay. So no sort of. The point I'm trying to say is all these cycles of rains, etc., which are in a yearly pattern and what happens because of that, all of that goes into our ECL model itself, right? It does take care of it to a certain extent. Otherwise, we are not currently seeing a product, something like a natural calamity insurance or something which we've explored. We think at this point of time, we may not look at something like that unless we see a substantial benefit to the customer from it. Okay. The second question is, it seems that from the inference of our conversation fully that we might now start pressing the accelerator on loan disbursement. Is that the right assumption from our end? Are we now in a confident state that we can now start pushing the accelerator? Part B to this question is, what kind of acceleration are we seeing in this current quarter post-September? That means how has Diwali been for us? See, ideally, for us, Q3, Q4 are strong quarters. With the situation normalizing at ground, what we are saying is that we are confident of meeting the guidance that we have given, at least from the AUM perspective, right? While the credit cost is going up, the growth perspective, I think the company is confident that we should reach the AUM guidance that we have given. No, just clarity is that, of course, the credit cost right now will be seeing a little higher, but at some point, we are going to be going back to the downward trajectory. Does this sort of give us the confidence to now sort of start pushing the accelerator because 20% is what we should be, at least 20% is what we should be doing in the H2 to get to our number? Yes. That's what I think. Even if you look at Q2, right, Q2 typically is not a great quarter. Both Q1 and Q2 this year, we've done reasonably well, right? If you look at year-on-year comparison, we are saying that we are 30% up in Q2. Q3 and Q4 typically are our strongest quarters. With the field situation improving, we should see AUM growth as guided. That means we are talking about 20% in H2 to reach the guidance that we have given. We are confident of doing that. I hope I answered your question, right? Yeah, 100%, sir. Any sort of thought process when we will start seeing this credit cost reasonably start coming down? Is it going to be in Q4 onwards? I think for us right now, like we said in Q2, it has been range-bound, right? October, again, you have large festives. November, December, we are hoping that we should start seeing some downward trajectory. We'll have to wait and watch. At least the indicators right now say us that November, December should be a good month to start expecting better recovery trends from a new par attrition perspective. Okay. Thank you so much. Thank you so much. Thank you. Thank you, sir. Our next question is from the line of Shreepal Doshi from Equirius. Please go ahead. Hi, sir. Thank you for giving me the opportunity. My first question was on the pricing side. Since, let's say, we are seeing a rising PD and also the overall ECL, are we trying to, you know, also take the interest rate upward? I mean, all of us have moved to risk-based pricing, at least in the MFI space as well. Would we see that sort of a trend playing out? If it will, then by how many basis points or percentage would we see that improvement in, let's say, second half of FY 2026 and then in FY 2027? Right. Given all the points that we've discussed so far and the visibility that the credit cost is going to be elevated, in the last pricing review committee, the company has increased the pricing for group loan by around 75 basis points. Okay. Is this already incorporating the incremental rise that you will see in the LGDs and the risk-based risk that we see, or does this further take more increase? See, pricing is reviewed every quarter, right? At this point of time, this is the visibility and data point. The pricing has been moved up by 75 basis points. As the situation improves or depending on data points, every quarter we do review pricing. I think given a combination of the pricing increase that we've already taken in and the reduction of pricing cost of borrowing we expect, I think this is good enough for us to take care of this increase in credit costs that we have predicted. Got it. Just the second question was, if we look at the entire issue this time around that came up in the industry, it was pertaining to over-leveraging, and that has been answered with the help of the guardrails. However, one issue was also pertaining to duplication of ID proofs, right? Has there been any initiative or measures taken by us or by the industry to overcome that problem? The majority of the industry has now moved to voter ID validation with whatever solution which is possible, right? While voter ID duplication is a problem, it is not, in my view, a very large percentage to talk about, right? It is a very low number. Combined with both field checks practices as well as your validation options already available today, this is controllable to a large extent. Okay. Okay. Just the last question was on some of the statewide colors. There is an increase in delinquency visible in Maharashtra, Bihar. Are we seeing which are the other states where we believe there has been a rise in delinquency in, let's say, September and then early October, apart from these two states? Except for MP and Maharashtra, we don't see any impact at this point of time. Other things are range-bound, right? To a certain extent, yeah, Bihar has also gone up. I think Maharashtra, MP, Maharashtra largely due to rains, MP partially due to rains, and also probably a trend that is recent. We are seeing a slight uptick, but we'll have to watch it. We think it will get corrected shortly. Got it, sir. Got it. Just on the growth front, I mean, I think the last quarter, the guidance slide reflected a growth guidance of almost 14% - 18%. Is it fair to assume that it will be at the lower end of the bracket? Yes, yes, we should assume at the lower end of the bracket. Got it, sir. Got it. Thank you so much for answering my questions, and good luck for the next quarter. Thank you. Thank you very much. Request everyone to please limit your question to two questions per participant. Our next question is from the line of Shweta Daptardar from Elara. Please go ahead. Thank you, sir, for the opportunity. Sir, correct me if I'm wrong. Don't you think next year your growth per se should exceed 20% to relieve that kind of extra offsetting factor to achieve that 4% ROA from current 1.8%? Because, like Nilesh Dhalani mentioned, there might be a max little over 100 basis points per release from ECL and cost of funds improvement. I'm just trying to wrap my head around these calculations. Sorry for harping on it. You're talking about growth, right? Yeah, in my rough calculations, yeah. The current indicators tell us we should be in the range of around 20% +, right? You also have to take into account that there are guardrails now, and there are higher rejections. I think an accelerated growth rate is quite difficult at this point of time to predict. We'll have to watch for some time. At this point of time, we maintain that we should be in the range of around 20% +. Okay. In that scenario, even if I were to assume on a roughly little closer to 20% kind of growth, still that 4% ROA looks slightly daunting for next year. Shweta, how are you trying to link this to the growth aspect? Yeah, because growth will also give you that lower OpEx to assets number. Both these factors have to completely offset the credit cost of 4.5% to achieve that 4% + ROA, which you're guiding for FY 2027, right? I'm still wrapping my head around that whole math. Yeah. In this, the OPEX-related factor will play in the fag end of FY 2027 because maybe this year we end at somewhere around 4.8, 4.9. Next year, we start at that and end somewhere at 4.6, 4.7. OPEX, we may see around 20 basis points of benefit and balance coming from the pricing and borrowing cost. Even when it comes to yield, the entire benefit is not because of pricing. There will also be benefit coming from lower interest reversals because this year, the proportion of interest reversals is much higher compared to the normal levels. Okay. That's fairly answered. My second question is, given the fact that now the group lending model has slightly destabilized and our retail finance share has also climbed to over 10%+, what is the strategy now to grow the non-group lending portfolio? Where do you see this mix stacking up to contribute materially to growth going forward? Thank you. See, Shweta, we will see continued momentum in retail finance because one thing is obviously now since the business is settling down at microfinance branches. It gives us a good time to open more, and it gives us good time to launch the retail finance products from more and more microfinance branches. Even in the second quarter, we have added almost 150. We have launched the individual business loans from almost additional 150 branches. There is a pipeline of another 200 branches in the third and fourth quarter. Gradually, this will keep increasing because overall, we have almost close to 2,000 microfinance branches. Today, only 800 branches have started doing the individual business loans, two-wheeler loans, etc. Gradually, we are also focusing on starting the mortgage products selectively through the microfinance branches in addition to the retail finance branches we have. While there are standalone 116 retail finance branches which will purely be focusing on mortgage, we will also be leveraging our microfinance branches for offering retail finance products. Obviously, as we scale these products across more and more microfinance branches, we'll get that delta. We should be on track to whatever guidance we have kept. We are looking for maybe 15% kind of retail finance. We should be moving towards that. Initially, you will see more of unsecured share in that proportion. Unsecured loans typically run down faster. Over a period of time, as the mortgage book catches up, then we will see a more balance between secured and unsecured products. That's very helpful, Nilesh. Thank you. Thank you. Thank you. Our next question is from the line of Rajiv Mehta from YES SECURITIES. Please go ahead. Yeah. Hi. Good evening. What is the PAR 15 attrition rate for the loans that are disbursed in the recent quarters? I mean, in the last three quarters, post the implementation of all the guardrails, you would have done loan disbursements of INR 15,000, INR 16,000 crore. On that portfolio, is the PAR 15 attrition rate not better than the overall portfolio reported number? The recent disbursements are showing better performance from an MOB perspective as well as roll forward, if that's what you're asking. The recent disbursements are definitely showing a much better trend, and we will have to see further improvement. As I said, if we have better performances in November, December, January, then it can improve. Right now, I think between Q1 and Q2, it's kind of range-bound. No, because you know a lot of players are giving us two collection efficiencies for the new portfolio and for the legacy portfolio. They are saying that the blended number will improve because the new portfolio collection efficiency, yeah, the attrition rates are much better. I'm just thinking from us also, while we are assuming that par 15 attrition rate will remain where it is right now. Mathematically, as the new portfolio becomes a larger portfolio, should it not directionally improve? It should directionally improve. It has improved compared to the peak, right? All that I'm saying is that between Q1 and Q2, there is not a significant improvement. However, the new disbursements, as you say, as we age a little more, we'll have better visibility. At least it's trending towards betterment. Okay. On the new borrower addition, I think that has been pretty stable. I was of the view that maybe it should actually improve, with the borrower leverage having corrected a lot across the board. Even for your borrowers, when I look at the matrix, the borrower leverage has come down significantly. The second is also the fact that some of the large competition in the market have taken a back step from the biggers for the time being. How do we see this new borrower addition run rate changing? How should it kind of move up your overall growth rate? Yeah. Ideally, we would like to add close to around 100,000 customers every month, right? We are right now trending around 70,000, 75,000, and we should expect it to improve as the ground situations improve further, right? That's where we are. We are hoping to inch this up, but we'll have to wait and watch. Yeah. Ganesh, I just have one last clarification. On this, you know, there is a footnote saying that about INR 285 crore of, you know, group loan borrowers were reclassified into retail finance on, you know, on a reassessment of their household income, which was more than INR 3 lakh. They were given individual loans. Was this household income reassessment being done when a vintage group loan borrower is coming up for a renewal and asking for a higher ticket loan? That's when you evaluate him for an individual loan? Yes. When such reassessments will keep on happening? Yes. When a customer asks for a new loan, we need to reassess income, right? There is a certain profile of vintage customers where we are seeing the income has gone up, but there is also an existing GL loan running, right? The incremental loan that we are giving to them is classified as retail finance, and once the GL loan runs down, any further lending to this customer will become a full-play retail finance. Understood. This can happen every quarter also, right? I mean, as the vintage borrower? It will happen on a continuous basis, yes. Got it. Okay. Yeah. Thank you. Thank you. Our next question comes from the line of Ashlesh from Kotak. Please go ahead. Hi, team. Good evening. I have a few questions. I'll just pose them upfront. Firstly, are you still seeing rejections in your group loans for your existing borrowers because of the inflation guardrails? That is one. Secondly, if I look at your disbursement, you've declined sequentially quarter on quarter. Why was that the case? June is typically a seasonally weak quarter, plus you also had the three-lender cap getting implemented from April onwards. Do you expect the disbursement trend to materially improve from here on? Lastly, if I look at the AUM growth in Madhya Pradesh, that has remained steady year-over-year for the last three, four quarters. This is a little disproportionate to the overall AUM growth. Why is that the case? That was the last question. Okay. The first question, yes, there is rejection due to guardrails on a continuous basis. Like I said, for the question where. You We were asked about why not more growth and why not more customers. The rejection rates are quite strong due to guardrails, and hence, you will have to work harder to get new customers as well as disperse even for existing customers, right? That is the first part. Second part, seasonally, yes, Q1 is weak, but this year we did have the best Q1. Once again, Q2, again, because of the COVID impact, right? We always have a lower base for renewals. In spite of that, we did quite well in Q2. If you see, year-on-year basis, we are upwards of 30%. Q3, Q4 is typically your growth quarter, and we expect it to be much better than Q2, dispersements. Mm-hmm. Yeah, even growth in MVs because you're organically growing there, right? It is a smaller base compared to your core geographies. How's the lull post-COVID, which is coming back now, right? As you gain more vintage in a particular geography, your AUM keeps going up. There is no particular reason, or there is no spike that is not organic in nature. Understood. Okay, just one follow-up. If I look at Bihar, that portfolio is much smaller for you. Yeah. That portfolio has been declining. That's what I'm trying to understand. Bihar, you know that last year we reported there are issues internally with respect to more attrition in specific pockets of Bihar. We said that this is more internal, and we will correct it. If you see the correction with respect to performance in collections, it's significant in Bihar over the past few quarters. When you are taking such actions to kind of take control of a situation, typically your growth rate is not normal, right? You may not see significant growth, but the performance of the portfolio has been significantly better. Once things continue to stay the way it is, we will see growth, probably post this quarter, yeah. Understood, sir. Thank you very much for the clarification. Thank you. Thank you. Thank you, sir. Our next question comes from the line of Prithviraj Patil from Investec. Please go ahead. Yeah, hi. Thanks for the opportunity. I had a question on the percentage of portfolio that's under CGFMO, if there is any. We don't have anything at this point of time. Okay. Thank you. Also, another follow-up question. Is there any stress in the tariff-impacted regions or in the Bihar state due to the elections? Say that again. Can you explain your question again? After the implementation of the tariffs, are we seeing any stress in those particular geographies like Gujarat or? No, no, no, no. We don't see any significant impact because of tariff in the pockets where we operate. Again, due to elections in Bihar, there is no impact at this point of time. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Aravind Ravichandran from Sundaram Alternates. Please go ahead. Sir, thank you so much for the opportunity. Just to clarify, you mentioned about, you know, one-time nature of ECL, but the data is going to be driven by 36-month ruling. Should it, like, you know, affect, let's say, 2027 and 2028 also for FY 2027 and FY 2028 ECL guidance also? Arvind, we need to see. Whatever ECL levels we reach in FY 2027, they will only increase in FY 2028 if FY 2027 also stays elevated. If FY 2027 we see stabilization, obviously the ECL rates will also settle at the FY 2027 level. It purely depends upon the rolling data. The data pertaining to FY 2025, sorry, the data pertaining to FY 2026 will already be part of the ECL computations next year. Okay. Only next year should be, like, you know, having that impact, as you mentioned, not 2028. I mean, like, Yeah. If data come, I mean, like, if things improve. Yeah. Okay. Yes. Yeah. Okay. Thank you, sir. Thank you. Our next question comes from the line of Hitaindra Pradhan from Maximal Capital. Please go ahead. Good evening, sir, and thank you for giving the opportunity. Most of the questions have been answered, just one bit on the insurance part. I think in the industry, a lot of players are moving towards sort of getting this cover, because also the premiums are probably attractive compared to the normalized credit cost as of now. What is the thinking that we have, if you can elaborate a little bit more on not getting this insurance cover? Thank you. Are you talking about CreditAccess Grameen Limited, right? Yes. Okay. We're currently exploring it. This year we will take a certain part of our disbursements covered. So far we've not taken it. Mm-hmm. This year we may take some of these options available to see how this pans out. If we think it is meaningful and the experience is favorable, we may scale it up going forward. Right now, we are trying to see a certain volume to see how this works and whether it helps us. Okay. Sir, secondly, on the question of the growth, which is, you said 20% for FY 2027. Now, you know, in the past also, like, whenever the industry has sort of flexed its muscles in terms of growing fast, we have had an episode. Being the market leaders, what kind of normalized growth do you see, and will growing at 20% eventually again lead to problems in the industry? Yeah, I got your question. What you have to see when we guide a growth of 20% is also the fact that we've already moderated our growth percentages for microfinance, right? Even in the medium term, we are saying that the microfinance growth will continue to be in early teens, and the rest of the growth will come from retail finance. When we say 20%, it's a combination of both retail finance and GL, and group loans, like I said, will be probably in early teens. Okay. What would be the yield difference between, let's say, your retail finance as it's becoming a bigger part of your portfolio versus the microfinance portfolio, which might be at 21% or 22%? Right. Majority of the retail finance portfolio does not have an impact on the yield because it is similar in nature. Why? It is range-bound, but the average portfolio yield is similar to microfinance, except for home loans, which is in the range of around 16% - 17%. Other than that, there is no other project that kind of dilutes our returns. Okay. Okay. Okay. Thank you, sir, and all the best for the coming quarters. Thank you. Thank you so much. Thank you, sir. In the interest of the time, that was the last question. I now hand the conference over to the management for the closing comments. Okay. Thank you. Thank you all for your time and interest in the performance. The company is looking at a very strong performance in Q3, Q4 compared to our Q1, Q2 performance. We have demonstrated this continuously over the past few quarters, and we are hopeful of kind of coming back with a good set of numbers in Q3. Thank you so much for your time. Thank you, sir. On behalf of Motilal Oswal Financial Services Limited and CreditAccess Grameen Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.