Ladies and gentlemen, good day and welcome to the CreditAccess Grameen Limited Q3 FY 2026 Earnings Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Shinde from HDFC Securities. Thank you, and over to you, sir. Good evening, everyone, and welcome to the Q3 FY 2026 earnings call of CreditAccess Grameen. Today, we have with us the senior management team of CreditAccess Grameen, represented by Mr. Ganesh Narayanan, Managing Director and Chief Executive Officer, Mr. Gururaj Rao, Chief Operating Officer, Mr. Nilesh Dalvi, Chief Financial Officer, and Mr. Sahib Sharma, Head of Investor Relations. On behalf of HDFC Securities, I would like to thank the CreditAccess Grameen management team for giving us this opportunity to host the call. I will now hand over the call to Mr. Ganesh Narayanan for his opening remarks, and then we will open up the floor for Q&A. Over to you, sir. Thank you, Deepak. Just checking if it's audible for everybody from the... Yes. I'll go ahead. Yes, sir, you are audible. You may proceed, sir. Okay, thank you. Thank you. Thank you. Thank you all for joining the call today. Let me start by wishing you all a very happy and prosperous and fulfilling New Year. Today, we are here to discuss our third quarter and the first nine months of FY 2026 business performance. Our performance this quarter reaffirms the strength and stability of our business model. We are witnessing a very clear normalization in the asset quality trends across operating geographies, enabling renewed focus on growth. Our expected collection efficiency stood at 99.71% in December 2025, while monthly PAR 15 accretion declined sharply to 18 basis points in December 2025 from 47 basis points in September 2025. FY 2026 continues to show similar trends. The improvement is visible across our operating geographies, with Karnataka showing a notable recovery, with asset quality reverting to its historical levels, supported by tighter credit oversight. The disbursements for Q3 FY 2026 stood at INR 5,767 crore, increasing by 13.4% YOY, with the exit month December crossing INR 2,200 crore mark. As a result, we've seen sequential portfolio growth of 2.6% to INR 26,566 crore, and 3.3% QoQ adjusted for accelerated write-offs at INR 181 crore. Borrower acquisition remains central to our growth strategy, as we added 2.1 lakh borrowers in Q3 FY 2026 and 6.4 lakh during the nine-month FY 2026 period, of which 50% came outside of the top three states. While October 2025 saw a temporary run in business momentum due to festive seasonality, the momentum accelerated meaningfully thereafter, with December 2025 recording 90,000 new borrower additions. We continue to maintain a healthy new-to-credit ratio of 39%, which is reflected in the increase in the share of unique borrowers to 43.4% in December 2025 from 26.4% in August 2024, positioning us well for quality growth ahead. We added 15 branches in the quarter, taking our infrastructure to 2,222 branches. The retail finance portfolio continued to scale steadily, with its share now at 14.1% of AUM at the end of the third quarter versus 11.1% in the second quarter, reflecting structural progress. While part of the increase is optically driven by slower normalization in the group lending book, importantly, the expansion is driven by a shift of quality JLG customers towards individual business loans to meet their growing credit need. Our employee base remained firm quarter on quarter at 21,701 employees at the end of December 2025, and employee addition moderating to 30.3% in the nine-month FY 2026 versus 35.2% in nine-month FY 2025. As indicated in slide 10 of the investor presentation, the deleveraging trend has largely played out with end-to-end guardrails in place over the last six quarters. The GLP of borrowers with greater than three lenders merely stood at 4.9% in December 2025 versus 25.3% in August 2024, while the GLP of borrowers with greater than two lakh unsecured indebtedness stood at 7.8% as of September 2025 compared to 19.5% in August 2024. The average total unsecured debt of CA Grameen borrowers and the average monthly obligation have increased by 3% quarter on quarter. PAR 15 plus in case of borrowers with greater than three lenders stood at 20.4% as of mid-December versus 19.5% in mid-September, while PAR 15 plus in borrowers greater than two lakh indebtedness came down to 6.9% in mid-December from 9.7% in mid-September. The implementation of end-to-end guardrails has meaningfully strengthened the overall quality of the microfinance ecosystem, as visible in slide 11. PAR buckets 0 to 30, 30 to 60, 60 to 90 having clearly improved on a sequential basis, led by lower new PAR accretion, while PAR 90 witnessed forward flows in Q3 FY 2026. We wrote off 259 crore worth of loans in Q3, which includes 181 crore of accelerated write-offs pertaining to 180 DPD non-paying accounts, leading to an additional credit cost of 59 crore in Q3 FY 2026. The credit cost for Q3 FY 2026 stood at 343 crore, which includes 59 crore due to accelerated write-offs and 37 crore due to additional impact due to increase in ECL rates. The provisioning rates for the past quarters are figured in slide 12, helping quantify the increasing various stages. Excluding the impact of ECL provisioning rates and accelerated write-offs, credit cost non-annualized stood at 96 basis points for Q3 FY 2026. This is in line with our new PAR 15 plus accretion of 109 basis points during Q3 FY 2026. Our FY 2027 credit cost guidance of 4-4.5% reflects a new PAR 15 accretion rate of 30-35 basis points per month. If we are able to demonstrate a monthly PAR 15 plus accretion rate of 20-25 basis points, it would translate in lower credit cost in the future. We shall monitor the monthly PAR trend for the next three to four months for revisiting our credit cost assumptions. We continue to hold 132 basis points or INR 335 crore higher provisions over PAR 90 and 280 basis points and INR 733 crore higher provisions compared to IRAC prudential loans. Our collection efficiency, excluding arrears, stood at 95.5% in Q3 FY 2026. PAR 90 stood at 2.94, GNPA of 4.04, and Net NPA of 1.36%, both predominantly measured at 60 DPD. The operating profitability continues to gain strength driven by improving yields and lower average cost of borrowings. We incurred a one-time impact worth INR 18 crore on account of new labor codes pertaining to the employee benefits obligations. It is important to note that the company actually moved towards this 50% salary levels, including DA and basic, to meet this guidance proactively, leading to a big impact during this quarter. Net interest income grew 13.4% year-on-year to INR 977 crore, with portfolio yield of 21% versus 20.7% in Q2 FY 2026. Our average cost of borrowing continues to trend lower, reflecting disciplined liability management, having declined 26 basis points quarter on quarter to 9.4% at the end of Q3 FY 2026. In Q3 FY 2026, we raised INR 3,917 crore with a marginal cost of borrowing, which stood at 8.9%. Our foreign borrowing stood healthy at 24.3%, moving closer to the medium-term target of 25%-30% by FY 2028 as we scale out the year. We maintain ample liquidity at INR 2,397 crore, amounting to 8.4% of our total assets. Our funding position remains strong with INR 3,431 crores of sanctions in hand and INR 5,781 crores sanctions in background. We will increase by 60 basis points quarter on quarter to 13.9% in Q3 FY 2026. Cost-to-income ratio stood at 34.1%, and adjusted figure at 32.3%, excluding the labor code impact. PPOP stood at INR 680 crore in Q3 FY 2026, while adjusted figure stood at INR 699 crore. PAT doubled quarter on quarter to INR 252 crore, while adjusted figure stood at INR 266 crore, translating to an ROA and ROE of 3.5% and 13.8% respectively. If the labor code impact is excluded, the ROA would have been 3.7%, and ROE will be at 14.6%. We would also like to update you all on our Grameen Mahi, our customer digital handle. With close to 1 million downloads, the platform is seeing strong adoption and reflects a meaningful shift in how our customers choose to engage with us. It enables instant digital loan eligibility checks for group loans, generates targeted reach for retail offerings, and seamlessly integrates collection with your cashless ecosystem, playing a key role in achieving 20% digital collections at the end of December 2022. This also helps us build more trust and transparency among our customers. With normalized asset quality, a stronger balance sheet, and a motivated team, we are well-positioned to achieve robust business growth and improving return ratios. Together, we are confident in nurturing business that consistently delivers returns, enhances stakeholder value, and sets new benchmarks of excellence in our industry. Thank you for listening. We will now open the floor for questions and answers. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Shreya Shivani from Nomura. Please go ahead. Yeah, hi. Hi, good evening. Thank you for the opportunity. I have three questions. Congratulations on a great set of improvement numbers that we are seeing in the quarter. I was just wondering, while Karnataka and Tamil Nadu have done, the improvement has been quite good. Can you give some color about trends in Uttar Pradesh, Bihar, and Madhya Pradesh compared to the April 24 number that you had given us last year? They are still probably 15-20 basis points higher currently. So anything that has, what is the trend over there? That will be my first question. My second question is on the state of Karnataka. While you guys have reported great numbers, etc., some of the non-MFI lenders' commentary earlier this quarter, or maybe even closer to December, was that the credit discipline in Karnataka state, which got disturbed after the MFI ordinance came into place, which impacted our retail loans also, is still not back. So I am quite surprised with the great improvement that we are seeing in Karnataka. Some comments around that would be helpful. And my third question is, while you guys have done quite well on the cost of funds, there was a media article, and I understand it may be more relevant for some other NBFC MFIs, which did mention that the bank borrowings, the lines are drying up for many NBFC MFIs. Even if the lines are available, they're coming at a significantly higher cost of funds. So if you can speak to us about any challenges or any areas that we are struggling with our bank borrowings or our bank relationships. Those are my three questions. Thank you. Okay. Thank you, S hreya. With respect to trends in states like UP, Bihar, and MP, all states, as demonstrated in our slides, are continuously coming down. But however, we have also earlier indicated that our non-core states generally have slightly higher credit scores than our core states. So I think this is just playing out. It's just a matter of time. And we are consistently seeing that all states are trending downwards. Just to actually associatively refer to the earlier data for these states. So as I see April, May, June 2025, UP, Bihar was around. April 24 data, which you used to give in last year. You had given those numbers. So I was just comparing with. Yeah, yeah. Okay. Very much. So I think we are very much close to it, but I mean, we have come out of a large cycle. So given some more, maybe in the upcoming months, we should see this trend getting better. Sure, okay. Yeah. But if I compare it on a YOI basis, before the crisis, those numbers were around 40-50 basis points in UP, Bihar, and MP, which is now in the range of 25-30 basis points. Yeah, yeah. YOI is quite good. With respect to April 24, I felt there is still more improvement that is a possibility in these states, right? Yeah. So Karnataka spiked up faster. It's come back faster also. That has also been a behavior that we've seen because that's our core state. Other states, I think all of them are trending downwards. It's just a matter of time. We'll have to see for the next three, four months where it settles down. With respect to credit discipline in Karnataka, I think we have strongly come back. We will have to watch the next two or three months. January is trending with a similar nature, and we are seeing such improvements across microfinance, mortgage, as well as unsecured lending. Karnataka is coming back very, very strong to our normal levels. So it's only a question of time if others are indicating that it has not come back to normalcy. With a few more months, the rest of them will also come. You should appreciate that Karnataka is our home state, and probably every 30 kilometers, we have a branch, and we've been here for the last 20 years, and probably we have a little more connect than the rest of them, but I think the industry would follow. Sure. The third point with respect to bank borrowing, I think when the industry is going through a credit cycle, it is natural for banks to kind of pull off a little. But fortunately, some of us have never had this situation because our diversification strategy has a very important role to play here. I think we are one of the few NBFCs which has bank terminal borrowing dependency of less than 60%. And we've been continuously able to access bank funds. It has not impacted us during the entire credit cycle. And we continue to access more funds as we move ahead. Sure. I think this is useful. For any follow-up question, I'll get back in the stream. Thank you so much. Thank you. Our next question comes from the line of Abhijit T ibrewal from Motilal Oswal. Please go ahead. Yeah. Good evening, sir. Hope I'm audible. Yes, Abhijit. Yeah. Thank you, sir. So the first thing on the industry, most of the players talk about a very high rejection rate today, especially after the implementation of guardrails. So if you could just help us understand how have our rejection rates trended over the last maybe two, three quarters? That is the first question that I have. The second question that I had was that maybe next year onwards, maybe FY 2027 onwards, we'll look to start growing at 20-21% thereabouts. So within this, what will be the split of the growth that will come from MFI and what growth can we expect from retail finance? Just trying to understand the way things are today very, very clearly. Like you mentioned earlier, December, we saw very good improvement in PAR accretion, and like you mentioned, continues in January as well. I'm hoping that gives you a lot of confidence to start accelerating on disbursements and growth, which is where that question of how are you thinking about the split between MFI and retail finance, or does it still remain fungible in terms of growth? And lastly, sir, I mean, you just mentioned about Karnataka came back very, very strongly. And like you rightly said, your home state as well. So I just had one observation and just wanted to pick your brains on this. Yourself as well as other two MFIs have been talking about very strong recovery in Karnataka, collection efficiency. The ones who are still not seeing improvement, can it be a little bit to do with the fact that MFIs have already written off a large part of the loans which are problematic in nature, and which is where on a zero DPD collection efficiency or expected collection efficiencies looking very good, while for some others who have not written off, they still are facing problems in Karnataka? Yeah, okay. So let me try and answer all the three. So I think the first and second are also slightly linked to each other. So rejection rates, definitely, yes, they have gone up. Current approval rates for new borrowers, so that is new borrower entry in CA Grameen, is around 55-60%. And our existing renewal rates are around 45-50%. Just for comparison, this used to be around 65% before the guardrails. So it has fallen significantly. That also means that you will have to put more effort on acquiring customers to maintain some amount of growth rate in microfinance. And yes, since we are coming out of the cycle, and another quarter of performance will give us the confidence to accelerate in the next year for sure. However, as we had indicated in our medium-term goals, the growth rate of microfinance would be lagging in early teams, and the rest of the growth will come from retail, and we are also seeing that retail is actually outperforming our guidance a little bit, growing a little more faster than what we anticipated, so it's possible that retail will have a little more share than what we anticipated in the growth trajectory, but that's something that we will see over the next few quarters, I think, and with respect to Karnataka, what was the question? I'll just add it, so Abhijit, on Karnataka, you were saying that there are other players who have not done write-off. That's why the collections are looking lower. I believe that was your question. Yes, yes. So all I was just trying to understand is, I mean, there are today players who are there in predominantly the small ticket loan segment who still talk about weakness in Karnataka. While if I look at us and a few other players who are present in MFI segment, they have been talking about Karnataka having come back in a big way. Can it so happen that a lot of the problematic pool for us in Karnataka has already been written off? So on an ex-bucket basis, collections are indeed looking good, while for some others, because the problem pool is still there, we're still not able to see that. I get your question, but I think you may also have to see what is the new PAR addition there again. I'm not sure. I don't have the data right now. For us, like I said, across retail including mortgage as well as unsecured business loans, Karnataka is showing a sharp reversal. So like I said, it's taking time for some people. Probably it's just a matter of time. But it does look like on the ground, things are coming back to normal. Got it. And just one last clarification on your opening remarks. You had shared that this FY 2027 credit cost guidance of 2 to 4.5 is factoring in monthly PAR accretion of about 30-35 basis points. So in case, like you mentioned, if the PAR accretion is lower than that, then there are downside risks to these credit cost guidances. Yes. So it's possible. So we'll need to watch it for a few more months. And probably by along with May, we will try and come back with a more clearer guidance. So it's too early. So it held good and demand set, sorry, in December and January. We'll have to watch it for a few more months to ensure that the pattern is stable and it will remain that way. It looks like that, but we'll have to come back with some guidance in May. Got it. This is useful. Thank you very much, and I wish you and your team the very best. Thank you, Abhijit. Thank you. Our next question is from the line of Nidhesh from Investec. Please go ahead. Thanks for the opportunity, sir. So on the retail finance, can you give some more details on the portfolio? Nidhesh, sorry to interrupt, but your volume is very low. I request you to please come closer to the mic. Yeah. Hello, sir. So my question is on retail finance. Can you give some more color on retail finance, how much of the book is secured and how much is unsecured? And we have seen very strong growth in this business. If you can also share some data about client profile, how much is unique to CredAgg and what is the total, let's say, sector outstanding on those customers, etc. Sure. So the retail finance portfolio today roughly comprises of around INR 3,780 crores, of which we have two types of unsecured loans extended to customers, graduating customers. One book is our product called Unnati Loan, which is profile of customers are significantly higher income earning. They are able to demonstrate better cash flow. We are able to visibly see proper business premises, the scale and size, etc. So that book is around INR 1,700 crores. We also have a lighter version of the individual lending product, which is INR 1,600 crores. They could have higher income, but if we have certain difficulties in ensuring that it is demonstrable or the size of the income is not clear or it's not visible to the level that the customer is saying, so we graduate to a slightly lower ticket size. So that is around INR 1,600 crores. Both these books put together is around 3,300 crores. Both these books, PAR 30, is well under control, under 2% as we speak. We have 266 crores of mortgage business loans. We have a home loan book of roughly around 200 crores and a two-wheeler book of around 13 crores. So in secured loans, we are at a PAR 30 lower than 2% once again. So these books, while they are new, they have done around two, three years of intake. They're holding good so far, yes. Got it. So the secured portfolio will be around INR 500 crores? Yes, it's 500 crores. And secondly, can you give some guidance on the margins? I think margins should keep on improving. What is the trajectory that you foresee for next year in terms of margins? Yeah. So Nidhesh, we should see some improvement in margins because even as you saw in third quarter, the NIM has improved because of maybe there has been around 30 basis points improvement in yield on account of the lower interest reversals. And the cost of borrowing is down by 20 basis points. So maybe for next year, we should see the NIM anywhere between maybe 14%-14.5% in that range for some time because borrowing cost incrementally, we do see dropping by 10 basis points every quarter for at least next two to three quarters. Then it should settle down. And also one thing we need to understand is the current NIM profile is basically the current credit cost trend, what we are seeing because we had taken a pricing increase in third quarter. This is the current credit cost trend. So maybe going forward, if we are able to see a relatively lower credit cost trend, then obviously it will translate into lower pricing benefit to the customer. So from that perspective, we will try to maintain our ROAs in 4-4.5% range. And NIMS will vary depending upon how the underlying risk is shaping up. But as of now, considering the current trend, we believe NIMS should be around 14% range for some time. And then they may again revert basis of change in pricing. Got it. Understood. Thank you. Thank you. Our next question is from the line of Rajiv Mehta from YES SECURITIES. Please go ahead. Yeah. Hi, good evening. Congrats on very strong performance. Sir, my first question is on the new customer acquisition. That count is slightly even lower than Q2. And the industry has been continuously deleveraging. So when do we see this new customer acquisition picking up for us? Because eventually that number has to go up and keep growing for us to even grow higher in the JLG model. Because I mean, as we see that the ticket sizes of the portfolio is increasing largely because of bulk of the growth coming from the renewals of existing customers. But eventually, in the longer run, this lever has to pick up of new customer acquisition. So what is the outlook on that? Okay. So I think new customer acquisition will pick up traction in Q4 itself. So we believe we should see some significant improvement as we move ahead because you have cleared historical par now, and the field-level sentiments are a lot more positive now, and people have more time to do new business. There are specific efforts that are targeted towards increasing these numbers. And I think in Q4 itself, we should be able to demonstrate that the run rate is picking up. And can you segregate the December disbursement number? And can we further build on that number as a run rate in Q4? Yeah, so we did 2,200 in December, and we should hopefully do slightly better in Q3, sorry, in Q4 because Q4 generally comes with our best performance, so we will try and see if we can meet our historical Q4 numbers similar to those. Okay. And just last thing on the credit cost. So this quarter's credit cost did have some impact because of our ECL provisioning rate, which I believe will remain. But you also had some balance or residual accelerated write-off of 187 crores which will not repeat in Q4, right? So that impact will not be there in Q4. Yeah. So we did accelerate write-off only in October. So it stopped from there, right? So we're not anticipating anything in Q4. However, we'll have to. So if we have the leftover, yeah, then the implied write-off for November, December, would that be the normal write-off run rate now? Yes. So we should see probably Q4 will have similar credit cost as that of Q3. And it may take some more time to see where it stabilizes around. Yeah. So Rajiv, maybe I'll add a couple of points here. So largely, whatever new delinquencies which came up in the first quarter, that is month of April, May, June, those delinquencies will come for write-off in the fourth quarter because we do the write-off after nine months. So you may get some indicative trend. It may be in line with whatever new par, I mean, the new par which came out in the Q1. Maybe 70%-80% of that may come for write-off in the fourth quarter. But I mean, anyways, we have 70% provisions on that. So the residual will come into the PM. And yeah, on the ECL front, maybe we should see, as we had indicated in the second quarter call, we should see the stage one provisioning inch up closer to 1.5. So that should happen in fourth quarter. Got it. Perfect. Thank you so much. Yes. Thank you. Our next question is from the line of Shreepal Doshi from Equirus. Please go ahead. Hi sir. Thank you for giving me the opportunity. My question was on the retail portfolio. Sorry to interrupt, Shreepal, but your line is not clear in between. Yeah. Am I audible now? Yes, you're audible. Please go ahead. My question was on the retail portfolio. That portfolio is quite diverse in terms of the product bouquet. What is the kind of, let's say, the default in terms of margins and credit cost and ROA on a BAU basis that we're trying to sort of reach to over the next two to three years' time period? Okay, so I think we've discussed this earlier, Shreepal. Thank you for the question, so most of these products are very close to the pricing of microfinance, right? So except for housing, where the average interest rate is around 16.7%, and mortgage is anywhere north of 21%, similarly two-wheeler, so all of them should have similar margins as that of microfinance, but as we discussed over a period of time, it will actually be a little more contributing once it reaches a certain amount of scale, and we are able to kind of see the benefit of explaining. Got it. Got it. Got it. I'll just look at that effect in the call. The other question was on the microfinance side. So what is the range of ticket size disbursement that we are doing for more than six years and three to six years customer vintage? No one can tell you microfinance product range. It starts anywhere from INR 25,000, INR 35,000, depending on geography. And it can go all the way up to INR 1.75 lakhs, depending on the vintage of the customer and the credit history. Got it. Got it. Got it. I have more questions. I'll come in the queue. Thank you so much. Yeah. But I would also like to add that customers greater than 1 lakh outstanding is less than it's almost in a single-digit%. It is generally not that high. So more than 1 lakh ticket size customers would be, as you said, what percentage? Yeah, more than one lakh. Yeah. Yeah. So it would be under 10% max. You mean single digit, Shreepal? Got it. Got it, sir. Thank you. It's less than 1 lakh. Thank you. Our next question is from the line of Chintan Shah from ICICI Securities. Please go ahead. Yeah. Hi, sir. This is Renish here. Congrats on the set of numbers. Hi, sir. Good evening. So just two things. So one on the credit cost side, right? So if I refer to slide number 12, the credit cost ex accelerated write-off and higher ECL provisioning is 0.96%, right? So anyways, very close to 4%, which we have been aiming for FY 2027, right, earlier. Right. Right. But this is again, I'm assuming this will be more because of the hard delinquency in October and November. And December credit costs ideally should have been much lower. I mean, that's what our PAR 15 acquisition trend suggests. Right. So in that case, our FY 2027 credit cost ideally should be lower than what you have guided for, right? Yes. So that's what we wanted to be here, Renish. But I'm just saying it's too early. It's just December, January we've seen. We'll have to maintain the trend. So if we are able to maintain the trend in February, March, April will come back with a better guidance in May, right? So it gives us a few more months of visibility to ensure that we are trending on the right direction. But it does look like there is a possibility that it can be lower than that at this point of time. Okay. Got it. So it is fair to assume that at least the January first half trend is as good as December? Yes. It is as good as December. Got it. Got it. And lastly, again, on the AUM growth side, so obviously Q4 should be a strongest quarter. And in this quarter as well, we have seen book growth, right, versus book declined for the quarters. So what is the aspiration level for us in 2027? And if you have to break that into, let's say, JLG versus non-JLG, what are our internal plans in terms of AUM mix and AUM growth for FY 2027? Okay. So like I said, we will look at microfinance growth early days, maybe 10, 11, 12. So we'll have to finalize our business plans in a few months from now. But it does look like retail will have a stronger growth momentum, probably contributing. So we should be able to reach something over 20% that we want to grow to meet our median turnover goal. So that's something that we are working on. It will be a good mix of both retail and microfinance. But microfinance will be lower compared to historical levels for sure. Got it. And may I ask one last question, if possible? Yes. Yes, sir. Yeah. So again, on this retail finance slide, right? So I was just looking at the outstanding per borrower, which is steadily coming down, right? I mean, it fell more by 40%-50% to INR 92,000 versus INR 168,000 earlier. So just wanting to understand what have we changed in last Q4 quarter, which is leading to this steep fall in the outstanding per borrower in the retail finance? Right. It's basically because of the second variant that I spoke about, which is called retail individual loans, where we are seeing that the income has gone up beyond INR 3 lakhs. But we are not seeing the level of demonstrability of the income by the customer. That means we look at size of business. We look at cash flows. We look at whether we are able to see cash flows in bank statements. We underwrite about INR 3 lakhs in individual loans, but a smaller ticket size. Average there is around INR 80,000 because of which your average ticket size has fallen. That means if you see our main graduation product, which is Unnati, the average ticket size is still around INR 1.7 lakhs. Mortgage loans, the average ticket size is around INR 6.5-7 lakhs. Okay. Got it, so basically, you are highlighting that incremental growth in Retail Finance is actually coming from existing customer, but for all regulatory purposes, we are considering microfinance. Yes. So around 10% of our customers every year will move or graduate into Retail Finance. This is our estimation at this point of time. But in that graduated customer, the ticket size will be higher, no? Yes. Right. So there are two types of graduation. One is where there is clear demonstrability of the customer with respect to their cash flows. Business has to be visible, has to be certain size. The living standards should be certain of certain categories. There are a few other credit parameters that are important where you underwrite a larger ticket size. If some of these are not available, but you still see the income is greater than 3 lakhs, then that's a smaller ticket size. So we do graduate them, but with a smaller ticket size loan. That's the reason. Got it. Got it. But then in that case, the customer will still come in center meeting? Or I mean, how you will still meet that customer? For individual products, the customers have access to the center meeting as a payment point. But they are not a part of the JLG structure. Got it. So basically, you will move out from the JLG part. Yes. Got it. So, Renish, just to add, so, see, largely hello? Go ahead. Yeah, yeah, yeah. Please go ahead. Yeah. So Renish, what we assess is based on the customer profile, maybe every year around 4%-5% customers will move into the mid-ticket individual loan, which is the research loan. And maybe 2%-3% moves into the high-ticket Unnati loan bucket. So we should see that 5%-6% or 5%-7% transition happening from JLG to retail. I heard you. So that's where the balance 10-12% growth comes from retail. And overall, we cross 20% growth. So that's the scheme of things. I'm assuming interest rate will be about 20%? Yeah, it will be. Got it. Okay. Cool. Okay. Thank you and best of luck, sir. Thank you. Thank you. Our next question is from the line of Manav Bhavin Shah from Spiral Consultancy. Please go ahead. Manav, your line has been unmuted. You may proceed with your question. As we're not receiving a response from the current participant, we will move to the next participant. Our next question is from the line of Chinmay Nema from Prescient Capital. Please go ahead. Hi, sir. So just wanted to confirm, firstly, did I hear correctly the growth target for FY 2027 would be 20%? So like I said, maybe we will give some more clearer guidance in May. However, we need to do at least a 20% growth every year to reach our medium-term goal. And hence, things getting to normalcy, we believe that even next year we should be able to. But we'll have to come back with a confirmed guidance in May. Understood. Secondly, sir, just wanted to understand if I look at the quarter-on-quarter trend in for 90-plus. So while 0 to 90 has come down quarter-on-quarter, there has been some stickiness in 90-plus. So basically, how should one interpret this increase in slippages in Q3? Okay. So basically, it means that customers who are going through stage two and stage three, that flow forward rate and model has remained same, right? So however, the new par accretion is reducing. Hence, what will flow forward going forward will also reduce. I hope I answered your question, right? So new par accretion rate is important to note because even if you see our par 15, we provide quite heavily after par 15, right? So that is based on our historical experience that once the customer does not pay for 15 days, then it does move to the next stage predominantly. That's why you provide around 60%-65% in that case, right? So that means that so far, par accretion rate was also quite high. So all those things are moving forward. But the new par accretion for the last two months is quite stabilizing. So that means going forward, it is stabilized. And that is what we tried to show on the second graph in the PAR sheet. You will see that the early buckets have started dropping. So hence, going forward, you'll also see drop in the late buckets. Got it. Got it. Thank you. Thank you. The next question is from the line of Jay from NBIE. Please go ahead. Hello, sir. Thank you for the opportunity. And congrats on the good set of numbers. So just one question on the retail book. So can you just help me? What is the percentage of your loans coming from Tier, coming from below Tier ECG? Tier to Tier below. Predominantly Tier because we are doing business only in our catchment, right? So we are not at any Tier 1, Tier 2. We are not even present much in Taluk headquarters. So we'll be below that. So most of our business will be in Tier 3, probably some bit in Tier 2 or lesser. Okay. And so one more follow-up on the same. So where do we see our retail finance going? So currently, we are at 14%. So do we see somewhere around 16%-18% in the medium term, or this is where you would like to be? See, at the current growth rate, it does look like that. But then, like I said earlier, it is also looking at 14% now because your microfinance book has dropped. So once you start showing microfinance growth, the moderation is little. But like I said, we had guided around 15% for 2028. But I think we will inch up a little further to that is what we will. Okay. Thank you. Thank you so much, sir. Bless you. Thank you. Our next question is from the line of Rajakumar Vaidyanathan from RK Invest. Please go ahead. Hello. Can you hear me? I see you are audible. You may proceed. Thanks for the opportunity. So just a couple of questions. First one is on the ROE guidance of 4%-4.5% that you mentioned. That is the annualized ROE we are looking at for FY 2027, or it's going to be more an exit ROE? Yeah. So we're talking about annualized guidance for next year. Should be, sorry. So the indicator is somewhere around that. So we will come back with guidance in May of what we are seeing. But at least it looks like a stable period. So credit cost stabilizing. Our normal guidance is also that we will be in that range, right? So with no extraordinary event present, we should be in similar range. But we will have to come back to you in May. Yeah. Sir, but you had already done 3.8 in current quarter. So your guidance looks very conservative given that you will not be having a significant credit cost go forward. So is it fair to assume that it's a conservative number, or you want to kind of grow your volume rather than the ROE? So we'll argue with. It's not like that. So it's not like that. not like that. So what Nilesh answered, we want to reduce the new PAR. Am I audible? Okay. So what we are saying is that our principle is that our ROE will be around 4.5%, right? So hence, even though there's an opportunity, there could be a momentary increase for a quarter or two more than the estimated return. But if you're actually making more returns, we would moderate our pricing is what we are saying, right? So you should assume that as a company, we'll be in the range of around 4.5% ROE, even in a good time. Okay. Yeah. Sorry to labor on the same question. So my question is, you want to have kind of fix the ROE between 4% to 4.5%, but then have a larger volume. Is that the preference you would want, or you would still shoot for a higher ROE? I do not understand the question. Can you just help me understand and tell us more? No, no. I'm asking the question is, you want to improve the absolute bottom line number, higher bottom line number, but however maintain ROE of 4 to 4 and a half? You don't want that ROE number to go up significantly. See, Rajakumar, the way we are looking at it is that if you see historically, we have done a cross-cycle ROE of 3.5% and ROE of around 14-15%. So going forward with a better ability to price the risk, we would want to do a cross-cycle ROE of 4% and an ROE of around 16-17% on a cross-cycle. Maybe in a good year, it may cross 4.5%, and ROEs may inch closer to 20%. And in a bad year, like what we have seen in this year and the previous year, it may be in the range of around 2.5%. So if the ROEs cross a certain range, like for example, you may see a couple of quarters wherein it reaches closer to 5%, then obviously, we have to revisit our pricing because at any point in time, we always ensure that we give the best pricing to our customer. So from that perspective, pricing is always a derivative of our credit cost, operating cost, and borrowing cost. So that is what we will keep over in. Now, growth is a different parameter. We have already defined that we will be looking for 20% plus growth. So both the parameters will go hand in hand. Yeah, I mean, as of now, we have not reached a stage wherein we have to cut pricing to do higher growth because the segment where we are operating, there's a lot of scope to provide formal source of credit. So we do see there is good potential for growth while maintaining our margins and profitability. Okay. Thank you so much, sir. Sir, if you permit me, can I ask one more question? Please go ahead. Yeah. Sir, this question is on the unique customers that you added. You have added significant customers. That's what the presentation stated. My question is, what would be the age profile of those customers? Are they very young customers, or they are middle-aged? Because the reason for asking this question is, if they are really unique, I mean, new to credit, then they should be really young people, right? Yeah, I understand. But unfortunately, I don't have this data, and I will share it across with you. Yeah. Okay. Thank you so much. Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, we have no further questions at this time. I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen. Thank you. Thank you, Mr. Thank you all for being a part of this discussion. And we are hopeful of closing Q4 once again with a strong performance and move towards good normal year next year. And we'll see you in the next few weeks, sir. Thank you so much. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.