Ladies and gentlemen, good morning and welcome to the earnings call of Equitas Small Finance Bank Limited's financial performance for Q3 FY 2023. We have with us today Mr. P. N. Vasudevan, MD and CEO, Mr. Sridharan N., CFO, Mr. Murali Vaidyanathan, Senior President and Country Head, Branch Banking Liabilities Product and Wealth, Mr. Rohit Phadke, Senior President and Head Assets, Mr. Natarajan M., President and Head Treasury, Mr. Dheeraj Mohan, Head Strategy and IR, and Mr. Rahul Rajagopalan, DVP Strategy and IR. As a reminder, all participant lines will be in 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 and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. P. N. Vasudevan. Thank you, and over to you, sir. Thank you. Good morning to all of you. Hope you all had a great beginning in the new year. On the macro level, India's GDP growth has been resilient despite global uncertainty. GST collections and other high-frequency indicators all point to an increase in the economic activity. The financial system has remained stable, and although inflation is still high, it has moderated from its peak. As per RBI's estimate, the next year inflation is expected to further moderate to around 5.3%, combined with a fairly strong, robust GDP growth expected of around 6.4%. The strong growth in system credit has intensified the competition for deposits, which has led to an increase in deposit rates for all commercial banks in the third quarter. As systemic liquidity continues to reduce, interest rates remain a key variable, and our ability to optimize cost of funds remains a key priority. Murali and Natarajan will speak in detail on the bank's liability and treasury strategy. The credit demand in our areas of operations, like small business loans, commercial vehicle finance, microfinance, and affordable housing finance, remains strong. Rohit will speak in detail on our asset performance, followed by Sridharan commenting on the financials. Our focus over the years has been to build a stable, sustainable, and scalable bank. Towards this, we have taken many initiatives. With most of them falling into place, the bank is seeing the resultant benefits. I would like to highlight one fact to show the resilience that we have built in the bank. During demonetization, 53% of our advances representing microfinance was impacted, while the rest of the book had no impact. Our ROA went down to the lowest level of 0.3% for the year ended March 2018. During COVID, the entire advances book of the bank was impacted, and yet the lowest level that our ROA went down to was 1.1% for the year ended March 2022. Further, after demonetization impact, it took us 7 quarters to get to the over 2% annualized ROA for the quarter. But after COVID-19 impact, it has just taken us 3 quarters to get to that over 2% ROA. Having built a resilient base, our focus now is to build modes around specific segments and leverage digital, both for efficiency improvement and creating new digital business models. As you know, lending to small businesses in the informal economy space is one of the focus areas of the bank. Let me first provide some sense of the industry size. The addressable market for the residential property-backed small business loan is estimated to be around INR 2,200,000 crore. We have given some data around this in our slides number 10, 11, 12 of our investor presentations. This segment continues to remain significantly underserved by the banks. We at Equitas started this business in 2013 as an upsell to our eligible microfinance customers with a INR 50,000-INR 5 lakh rupee ticket-sized product and gradually expanded, and today we offer loans up to INR 25 lakh to this segment. As you know, Equitas is among the few banks who operate in this segment. Today, our book size stands at over INR 9,300 crore with over 5 lakh customers, and we have grown at a CAGR of 48% from FY15 to FY 2022. Over the years, the institutional knowledge in credit assessment that we have built has helped keep the GNPAs below 4% despite being hit by two black swan events. Apart from term loans to merchants, recently we introduced a working capital in the form of an overdraft facility to merchants. The response has been very encouraging with a book size which has already crossed INR 150 crore. We are the sole banker to all these merchants, and the data that we are gathering on their cash flow through our current accounts is going to be of immense help in profiling and offering further products and services to them. In order to cement our position further among the merchants, we are building a tech-led merchant ecosystem that will connect merchants, distributors, payment solutions, customers, and other players in the bank. The merchant app, to be launched shortly, will enable us to achieve this. The end-to-end digital current account opening process slated for launch this quarter is going to be one more element of this seamless ecosystem. We are confident that with our continued investment in the merchant space, Equitas will be able to create a niche in serving this segment, and over the next few quarters, we will give some updates in our progress. The second strategic initiative is revamping our various tech platforms and creating digital assets. Some of these, like the LOS loan origination system for lending, which have gone live in phases, and the InsurTech platform, which will go live this quarter, should help improve team productivity, while others, like the revamped CRM system or the new IB/MB native app, are going to enrich customer experience. The digital customer self-onboarding and acquisition app is also under progress and hopefully should build out over. Mr. Vasudevan, sorry to interrupt. Is it on the NRA segment? Your voice was breaking, sir. Am I clear now? Yes, sir. Last 10 seconds you missed. Yes, sir. Okay. Given that our products and service offerings have found a good resonance with the mass affluent and NRA segments, we would be opening a few marquee branches in major towns to enable us to give them a differentiated experience and also further improve the branding of the bank in that town. On the amalgamation of the holding company with the bank, you may be aware that the record date was 3rd of February, and yesterday the board met for allotment, and it was done. We should be completing the corporate action during this month, and we would be happy to welcome the shareholders of the holding company to the bank. On the guidance front, we guided on two counts: loan growth of about 25% and credit cost of 1.5%. We remain confident of meeting both of these for the year. As I wrap up, the momentum is quite strong. I believe we have all the required things in place to support sustainable growth, and we look forward to your continued support in this exciting journey. Thank you once again. I now hand over the call to Rohit. Good morning to you all. On the asset side, our advances grew 27% year-on-year and 9% quarter-on-quarter. Our last quarter disbursements grew 68% year-on-year to INR 4,797 crore. This marks the highest-ever disbursements in a quarter. Strong disbursement was witnessed across all product segments, with the bank's flagship product, SBL, clocking a year-on-year disbursement growth of 73%. We continue to see strong demand across segments. Disbursements in new products, that is, affordable home loans, used car loans, and merchant overdrafts stood at 12% for this quarter. Small business loans, the bank's flagship product, at 37% of the advances, continues to be the largest business for the bank. As Vasudevan mentioned, we are one of the largest lenders in this segment, and we want to maintain our dominance in the small business lending space. We have launched a new loan origination system for the business, which we are piloting in 15 branches, and hope to adopt it across the country in the next 3-6 months. This will help in both productivity improvement and cost reduction. In small business loans, we see a strong demand for retail loans, as indicated by the increased number of logins. The vehicle finance business has come back strongly, riding on the back of the growth in CVs. Overall, operator economics are working fine, with freight demand remaining good and improvement in the availability of return load. Collection efficiency continues to be stable and back to pre-pandemic levels. We have seen an increase in the prices of used vehicles, indicated by the reduction in loss on sale of repurchased vehicles. Loss on sale of repurchased vehicles declined from 48% in Q4 of FY 2022, that is, last year, to 31% in Q3 of FY20, that is, the last quarter. Equitas has grown this business steadily over the years, and now we are witnessing disbursement growth pick up. As I had highlighted in the last quarter, our revamped LOS went live, and average monthly disbursements have grown by 50%. The newly entered states of Kerala and Uttar Pradesh have started to contribute well, will continue to deepen our existing geographies and enter geographies of strategic importance. CVs have grown at 46% year-on-year for the period April to December. CV goods have grown by 40%, and CV passengers have grown by 177%. Even in January last month, that is, January 2023, sales have grown by 16% over January 2022. The affordable home loan business that we launched initially in Gujarat and Maharashtra has now expanded its presence in southern states of TN, AP, TG, and Karnataka. We are now present in five states. On the affordable housing piece, ICRA estimates a portfolio growth of 10%-12% for the full year FY 2023. The microfinance business is seeing good traction on all fronts across the country. Collection efficiencies across have seen a marked improvement. The overall overdue declined to 10.9% in Q3 from 12.66% in the previous quarter. MF has also seen a very strong growth in collections. The explicit collection efficiency for microfinance has increased to 99.5% from 98.9% in the previous quarter. Small business loans and vehicle finance have also seen strong growth in collection efficiencies. Explicit-wise, small business loans were at 99.6%, and for vehicle finance, it was at 97.9%, up from 99.3% for SBL and 97% for VF in the previous quarter. Generally, the last quarter of a financial year is better than the earlier quarters. Coupled with these strong growth indicators, the probability of churning out good numbers definitely exists. I see a strong possibility of continuing the 25% advances growth and the strong momentum in collections. Thank you. I'm handing it over to Murali. Thanks, Rohit. Good morning all. I think, like Mr. Vasudevan mentioned clearly, there are headwinds and tailwinds which we are seeing at the mobilization of deposits. But the good sign is our mass affluent segment, which we keep seeing as Elite as a program for HNI, is showing growth, and that actually complements our relationship management structure, which we have put in branches through relationship management and virtual RM, which we are keeping. I think combined effort of relationship management, branding, and the sustained innovation in the product is helping us, and now that is INR 11,500 crore RV at this point of time. Adding to this is the middle-class focused and salary-class focused approach which we have taken. Wings, as a high-end product, has now reached INR 3,000 crores. So in totality, it is the retail customers who are contributing towards 84% of the SA book, and a very important part is now we have hit 30%-40% of customers holding a product holding of two and above. This shows two things. One is the strength in the proposition, and two, our continued investments and efforts that are going towards the relationship management structure. The second thing is NR as a segment is showing a lot of hope and a lot of sign, and NR book has crossed close to INR 1,200 crore. And here again, the expansion of market, that is, spread-of-market scheme, now we can comfortably say we are present in almost 20 countries, and we are using aggressively digital mode to actually reach out to consumers and then doing face-to-face execution. And here again, relationship management plays a very key role. The third important thing what I want to highlight is current account with a dedicated focus on supply chain management. What we are doing at this point of time, at the lower and mid-end of corporates as well as traders, has started yielding good results, and current account, we are seeing some lot of good green shoots across, and predominantly playing in MCA segment is definitely helping us. So our solution-centric approach of current account is giving us a technical edge at this point of time. We have innovated and improvised and implemented WhatsApp banking at this point of time, so consumers can use WhatsApp banking actually for service, which is one quantum leap, and this shows our dedicated presence on not only digital sourcing and virtual RM, also on continued service. So on digital sourcing, it is complemented by vKYC and full KYC, and now our ability to maintain long-tail management, and most importantly, getting value out of digital accounts is enhanced considerably. Today, we have close to INR 1,100 crore of our book coming in from digitally sourced accounts, and this is end-to-end. We want to back it up by digital solutions. Yes, we focused on bulk TD in the last quarter. As we are aware, there is a fundamental shift of savings account to TD happening at the retail end, but the good part with bulk TD is 95% of our bulk TD is non-callable, which means these are LCR-friendly A and duration-centric B. So we are able to manage, despite all these things, a cost of fund which is within our striking distance, and we continue to improvise and innovate. Just to share with you, like Vasudevan was saying there, we wanted to enter into InsureTech. InsureTech is a self-do-it-yourself and assisted mode platform we are creating for consumers to consume the range of insurance companies which we are in tie-up with and where we are going to tie-up with to enable fair and transparent mode of getting quotes and selecting by itself. Premium liability branches is one thing which we will launch at 18-20 branches. The most important thing is on the merchant app, where we are having current accounts, as well as we are also already present in acquiring space of merchant, and where I think, as per last RBI listing, we are in top 16 in terms of merchant acquirers, and that will help us to strengthen the proposition in terms of payment transaction solution-centric. I think that, coupled with digital core, will be a very interesting proposition for the front-end traders. Overall, yes, situations are challenging, but the money will shift from one pocket, but there is enough optimism and enough work going around to get the digital and new products right. Let me hand it over to Nat to give us the view on treasury. Hi. Good morning, everyone. The calendar 2022 has been a challenging one with the steep and consistent interest rate hikes by global central banks. Current year, hopefully, with the peak of inflation behind us, we are now seeing slower rate hikes by central banks, although in the smaller quantum as well. And the optimistic section of the market is also expecting a possible rate cut by Fed later this year. As per IMF report, the global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, with possible rise back to 3.1% in 2024. With China also opening up, recovery is expected to be faster than anticipated earlier. On the Indian economy, it is a relatively better place with respect to the global background. As far as inflation and the growth of projections are concerned, IMF predicts India's growth is set to decline to 6.1% in 2023 before picking up again to 6.8% in 2024 with the resilient domestic demand despite external headwinds. RBI is also penciling in a growth forecast of 6.4% for next fiscal. Domestic tax collections have been robust, with both direct taxes and GST collections showing very strong upticks throughout the year. Domestically, with a 25 basis points hike yesterday, RBI continued to demonstrate that they will not fall behind the curve. The stance continued to remain withdrawal of accommodation. I think that's more because the system still has surplus liquidity. While the base case is for RBI to begin a long pause from April MPC, it will largely hinge on global trends and inflation trajectory as well. RBI's decision and commentary were on expected lines, so which gave comfort to bond markets. Yields are steady around 730-735 range. Coming to Equitas Treasury performance last quarter, this has been another stable performance. Profit on sale of investments was INR 7 crore with no MTM depreciation in this quarter. With bond yields nearing peak levels, treasury used the opportunity to fill our HTM portfolio. RBI has given a dispensation of 23% we can keep in HTM, so banks utilized the opportunity to fill that gap. We were able to make some profits out of IPOs during the first half of Q3 as well. Then the market turned back, so we stayed away. Our liquidity position is adequate with strong and steady deposit growth. Our funding profile is stable with opportunities available to raise funds in the form of both refinance as well as IBPC as a backstop. With this, I hand it over to Sridharan. Thank you, Nat. Good morning to everyone. Our net interest income came at INR 647 crores as compared to INR 541 crores during the same quarter last year, registering a growth of 20% year-on-year. Other income came at INR 127 crores as compared to INR 95 crores in the same quarter last year, a growth of 34% year-on-year. Net income grew at 22% year-on-year and came at INR 774 crores for the quarter as compared to INR 636 crores during the same quarter last year. On the operating expenditure, the total operating expenditure came at INR 495 crores as compared to INR 411 crores during the same quarter previous year, a growth of 20% year-on-year. The employee expense increased by 21% year-on-year, and 90% of the employee additions in FY 2023 have been in the business team as the bank is investing for the future. Other operating expenditure decreased Q on Q basis by INR 5 crores. On PPOP, which is pre-provision operating profit, came at INR 279 crores as compared to INR 225 crores during the same quarter previous year, registering a growth of 24% year-on-year. PPOP, as a percentage of average assets, expanded year-on-year to 3.62% from 3.52%. PAT for the quarter came at INR 170 crores as against INR 108 crores during the same period last year, registering a growth of 57% year-on-year. Now moving on to asset quality and provisions. The bank carries a total provision of INR 580 crores with NPA provision of INR 438 crores and Standard Assets provision of INR 142 crores. The bank in this quarter has utilized INR 36 crores of COVID restructured loan Standard Assets provision during this quarter and continues to hold INR 60 crores in Standard restructured loan provision, which may be utilized in the following quarters as and when it gets released. In order to strengthen the PCR, the bank made additional provision of INR 27 crore towards COVID restructured retail LAP loans that have become NPAs. GNPA improved by 93 basis points year-on-year and came in at 3.46% in Q3 FY 2023 as compared to 3.82% in Q2 FY 2023 and 4.39% in Q3 FY 2022. NNPA came at 1.73% in Q3 FY 2023 as compared to 1.93% in Q2 FY 2023 and 2.38% in Q3 FY 2022. The provision coverage ratio stands at 50.84%. As of December 31, 2022, the total CRAR is at 24.28%, comprising of Tier 1 at 23.74% and Tier 2 at 0.54%. With this, I would like to hand over to operators, and we'll be happy to take questions from you all. 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 the touchscreen telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands up for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Anyone who wishes to ask a question may please press star and one. The first question is from the line of Jay Mundra from B&K Securities. Please go ahead. Hi, sir. Good afternoon. Jay, your voice is not audible. Can you come a little closer and use the handset, please? Yeah. Hi. Is this any better? Yes. Please go ahead. Yeah. Hi, sir. Congratulations on a great set of numbers and on your reappointment also. Firstly, sir, if you would like to share any key changes in your terms of employment or remuneration detail, if any you would like to sort of shed some light there. See, the board has recommended a three-year renewal of my term, and that has been given to RBI, so we'll be awaiting RBI approval for that three-year extension. In terms of the terms of appointment and all that, all these terms are subject to RBI approval, and there is no significant change in the terms of appointment. So whatever was there earlier or whatever is there currently, it'll be on similar lines with only the normal marginal increases that normally happens in compensations year-on-year. Right. Okay. Thanks, sir. Secondly, sir, on your cost of deposit, right, so your CASA deposit cost is 6.25% and TD is 6.6%, right? So what is the thought process of the bank in terms of now the business has become I mean, the business growth should become, let's say, normalized at above 25%. How do you want to what is your strategy on the funding mobilization? Where would you look more incrementally between TD and CASA because the cost is not that the cost differential is not that significant? So how should one look at your relative importance on CASA versus TD? See, basically, the focus of the bank would continue to be to mobilize CASA as much as we can as a first priority because of not just the fact that it may be at a lower rate of interest, but also because it also gives you a lot of other relationship with the depositor, and so you always look for that. But then in a scenario like today where the interest rates on deposits are increasingly getting further away from the interest that's available on a saving, well, people are bound to put their money from savings to deposits. So we'll have to live with that reality for some time to come now. So what we should see is that we are currently 46% to CASA, and we'll have to see how much we can try to retain it at anything in the range of 45%. I think that'll be a great achievement if we can do that with the remaining coming in in the form of deposits. Right. No, so what I was trying to understand, sir, now if you have to increase the deposit rate because your growth should also be reasonably strong, would you be tempted to increase the SA rate also from here onwards, or the SA rate is more or less similar, they will not be too much tinkering, and then you may look at raising TD to fund incremental growth? Yeah. I mean, I don't think there's no particular plan today to touch the SA rates at this point in time. So largely, the rate changes will be on the TD part of it. Sure, sir. And last two questions. On the restructuring, sir, now we have given the entire 1+ DPD book, but if you can quantify the restructured book as of December? I think last quarter, it was in 700 something. Yeah. Yeah, Jay, this is Rohit here. So the restructured book stands at INR 730 crore with INR 244 crore in GNPA and only INR 76 crore in 61 to 90. Okay. Sorry, sir, if you can repeat that. I think the total number is 730, right? Total number is INR 730 crore. Right. And of which, how much is already NPA? 244 is already NPA, and 76 is in 61-90. The rest is all lower than in the lower buckets. Okay. Understood. And any provision the INR 60 crore provision is outstanding against the INR 730 crore minus INR 244 crore of standard assets standard restructured book? Yes. Yes. Right. And last question, sir, on this corporate restructuring when do people get the shares of the holding company in their demat account? I mean, rough indication. See, yesterday, the allotment has been completed by the board for the shareholders. So we have to now do the credit of the shares to the Demat account of shareholders. I am told that it might happen in the next about 10 days or so. After that, we'll apply for listing, and it should get listed. So I think in about a couple of weeks, I think the whole action should be completed, subject, of course, to a lot of processes that need to be completed with the NCA as well as with the stock exchanges. Subject to all of that, I think in about a couple of weeks, the shares should be available for trading. Sure. Understood. Thank you so much for your time. Thank you. Thank you. The next question is from the line of Deepan Shankar from Trustline PMS. Please go ahead. Good morning, everyone. Thanks a lot for the opportunity, and congrats for a great set of numbers. Firstly, I wanted to understand this microfinance disbursement has grown substantially well during the quarter after many quarters. Are we started seeing profitable growth visibility in the microfinance segment, and do we expect this growth trend rate to continue in the coming years? Hi, Deepan. Rohit here. So yes, microfinance is profitable. It was profitable last quarter also. We'll continue to see the growth, but we have always said that as a part of the total advances, we will keep the microfinance book restricted between 15%-20%. So that remains our stance. Now with microfinance, vehicle finance, and SBL picking up in disbursement growth, so do we foresee strong credit growth in excess of 30% over the next 3-5 years? We've always I mean, you're talking about for all the products? Yes. Yes. Yeah. So see, we've always said that we'll grow at 25%, and we'll maintain at that if more comes through. I mean, aspiration is definitely more, but 25% is something that we stick to our status. Okay. Okay. Thanks a lot on all this. Thank you. Thank you. The next question is from the line of Renish Bhuva from ICICI Securities. Please go ahead. Yeah. Hi, sir. Congrats on a good set of numbers. Sir, just two questions from my side. One is on the merchant acquisition strategy. Sir, I mean, what is the sourcing strategy, or let's say, what are the tools we use to acquire merchants? Hi, Ranesh. Rohit here. So as we had said last time also, this merchant OD product is offered to small merchants. Currently, we were offering it to our own customers. So we have a huge base. We had shortlisted about 70,000 customers with CIBIL scores of more than 700. And the way we acquire SBL loans in the market through references and direct calls, so similarly, the same thing happens with acquisition of merchant OD also. But we also plan to now do a digital acquisition through QR codes, but that's in the future. Currently, we are sourcing merchant OD business as we source the current SBL. Basically, this is a cross-sell product for SBL? It's not a cross-sell product. We started off by testing it with the SBL customers, and now we are in the open market acquiring merchants across. Murali, can you also elaborate on the digital acquisition part? Yeah. Hi, Murali here. See, there are two sides to it. One is what we are doing it through merchant OD where we have an existing set of customers, and we go to open market and do door-to-door. Second is targeting only those set of customers who are interested in payment transaction and settlement sort of things, which means you will give some solution of POS or QR or payment gateway. So today, for getting these customers to get into the transaction mode, we use direct sourcing. That is our sales team and branch team. Then we also have an aggregator model where we have tied up with one or two of the people to merchants. We are going and onboarding into us and then opening their current account for settlement. Third is we have limited opportunity on payment gateway. We have given up to 100 payment gateway solutions. Now, on QR, every current account customer, if they classify as traders, the instant delivery of checkbook goes along with the QR. So the instant transaction mode and the settlement mode happens. So today, just to give you a rough figure, we have close to 17,000 POS machines already running, which is giving you an Equitas slip. We have 45,000 active QR in the market where we are doing sending, collecting, and doing transaction for these merchants through current account QR and POS machines. And third is close to 100 customers who are our payment gateway. This is on one side where we go on debt-free customers and payment and transaction mode through digital sourcing. For existing current account customers and for existing SBL customers, we cross-sell this merchant OD as an opportunity for traders. These are the two legs of merchant acquiring strategy. And now, to enhance that, we are creating a merchant app, which, sir, we're saying whereby quarter, we'll go for a trial and then limited market exposure wherein a person or a trader can download the app and start transacting. And if he wants to link it to his existing account, he can, and he'll be given a choice to open a digital current account also. See, it's a long-run strategy on physical, aggregator, and direct-to-market through digital mode. Got it, sir. Got it. I think I have a few more questions on this side, but I will take it offline. Thank you. So secondly, in terms of the profitability, and thanks for sharing a few more details on the SBL side. So now, if we look at the ROA metrics for us, I mean, so as per our PPT, SBL ROA is close to 4.5%, which is 33% of the book. MFI, I'm assuming it will be since the cycle has normalized, and if you look at the PRS ROA, it would be anything more than 4%. So in a nutshell, almost 50%-55% of our AUM is generating above 4% ROA, wherein if you look at the blended ROA of 2%, essentially, which means that the vehicle financing profitability metrics will be much lower. I mean, if you can just throw some light on this segment-wise profitability, it will be helpful, sir. Yeah. Renish, this is a little early, so I think this is the first time we have given an indication on the SBL ROAs, mainly because it's linked to our internal transfer pricing, which is today not equal to the cost of funds which we publish because we add the landed cost or the cost of mobilizing deposits, which is why we don't give segment-wise profitability. You can compare it with the industry. Vehicle finance, there are enough of peers to compare it. Small business loan, again, there are some NBFCs which are in similar segments. Microfinance, anyway, is a well-researched space. So you can do a rough sum of parts, but I think we are not at this point in time wanting to give segment-wise ROAs. However, it's safe to assume that, yes, on the asset side, the core or the main flagship products, ROAs will look good given that the credit cycle has turned, credit demand is there. However, the bank is also investing in future growth in new products like we had spoken about, the merchant OD. Affordable housing is in limited branches. So that's also places where the bank is investing apart from technology. And also what Murali had spoken about, the plans around the premium branches, etc. So you'll have to adjust for all of that, but we are hoping that we can sustain this level of profitability and see ROE expansion. Yeah. Okay. Got it. So again, a follow-up on that is in this quarter, our credit cost is sort of abnormally lower than what we expect to be on a steady straight basis of 1.5%. So how confident we are we'll sustain this 2% plus ROA in coming quarters? See, on credit cost, while you said it's abnormally low, what we would like our steady-state credit cost, if you exclude the Black Swan events, were close to about 1%. And what we had said is we would try to trend towards that. So next year, hopefully, we will have business as normal and look at a credit cost, hopefully, in that range. So I think we are yet to give next year's guidance, but hopefully, business, everything remains normal. So today, we are at 0.84% is the credit cost. So the margin to revert back to normal is not that far away. So it's not that we have got an extremely abnormal credit cost. And also from a credit cost perspective, we would like our PCR to go up to about 60%, hopefully, by FY 2025. There is some bit of that intent which will start showing in terms of provisions. Got it. Okay. So just correct me if I heard you right. So you are saying the normalized credit cost would be 1%, then 1.5%. What Vasu sir highlighted during opening remarks is just for FY 2023? Yes. Yes. Yes. Yes. We had said 1.5 in the beginning of the year, keeping in mind COVID and the provisions we'll have to make. It's not steady straight, basically. No, no, no, no. It's not steady state. Steady state, hopefully, we will revert back to what we were during the pandemic or non-demonetization period. Got it. Got it. Thank you. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Punit Balani from Nomura. Please go ahead. Hi, sir. Am I audible? Yes. Please go ahead. Yeah. We can hear you. Yeah. Sir, my question is on the margin bit. Firstly, you reported stable margins QOQ, but your cost of funds increased around 16 basis points, as reported, and your yields were broadly flat. What am I missing here? Yeah. So yeah. So the yields are on the loan book. NIMs are on interest-earning assets. So what you've missed is treasury assets. So the treasury assets, as a percentage of balance sheet, has roughly remained same at 20%. But like what Natarajan said, the treasury yields have actually gone up in Q3 compared to Q2 with the investments or the instruments earning higher yields. So 7+, I think, is what they've tried to earn. So that's actually what's cushioning some bit of what you would have seen. Right. Right. Got it. Got it. And on the second bit, also on the microfinance book compared to peers, our PCR is relatively low just on the microfinance bit that you mentioned. So you mentioned increasing in FY 2024 with a credit cost target of around 1%. So are we planning to increase our PCR in the microfinance book? Any color on that? Yeah. So one, credit cost for next year, hold on. Hopefully, we'll give it next quarter. As I said, 1% is generally where we revert to. PCR, like I said, we want to bring it up to 60% in about four-six quarters, so somewhere in FY 2025. And that would, like you said, the higher-risk assets would have a higher PCR. And that's also how our current provisioning norms are. So we'll have to work towards that. At a product level, you will see it move. But at a bank level today, this is the target we have. And again, microfinance is just 18% of the book. So it is not above 50%, which would cause a lot of disturbance. So that way, we are a lot more stable. Right. Right. Okay. And. Also, sorry. Let me just give you one more color. This year, there has been write-off from the microfinance book, especially the book which was impacted during COVID. So when we write off, those are assets with a higher provisioning. So there's some bit of that math playing where loans where I've got a higher or close to 100% cover getting written off. So that's why the microfinance PCR looks lower. Okay. Okay. Right. And just one last bit. From the restructured pool, what were the slippages this quarter? Give us one second. Yeah. Just give us a second. So slippages were at INR 286 crores against INR 314 crores last quarter. And this is slippages on a daily basis. That is what. Restructured. Restructured. This is the total restructured book. Yeah. INR 85.99 crore was the slippages on the restructured book. INR 85 crore, INR 86 crore. Okay. Got it. Got it. Yeah. That's it, sir. Thank you. Thank you. The next question is from the line of Jyoti Khatri from Arihant Capital. Please go ahead. Yeah. Thank you for taking my question. I'm audible? Ma'am, please use the handset. You'll be clearer. Yeah. Am I audible now? It's slightly better, but the voice is still muffled. You may go ahead. If it's muffled, I'll let you know. Yeah. So what is the guidance for credit cost for current fiscal? I've moved on to that. No. You said 1.5% is for the current financial year. Okay. So how much has been for the first nine months? Sorry. How much has been? How much is this credit cost for the first nine months of current fiscal? For the first nine months, we would be about 1.64%. Okay. Now, does 1.5% also include the provision on the standard restructured assets? Yes. Yes. The total credit cost. Okay. And you also mentioned that you have INR 60 crore of provisioning on the standard restructured book, which you're going to utilize in Q4. Yeah. Sometime in the next 4-6 months. Yes. How much it was utilized in the current fiscal? It depends on either here. How much got utilized in the current? INR 26 crore in the current quarter. Sorry. 20? 36 crore in the current quarter. Okay. But I don't understand why there is a withdrawal of the provisioning on the standard restructured book. I mean, it should be the other way around. There should be increased provisioning on that book, right? And also some color. How is the asset book, the standard restructured book, performing now? You see that here. The reversal happens when actually it moves to normal standard assets or it moves into the NPA because NPA provision gets attracted under IRAC norms. So that's the reason there's a write-back happens, actually. Yeah. This is as per the RBI COVID guidelines. So we do that, actually. We retain the standards of provision until that time the recovery is made and are no move to the NPA. Then the NPA provision is sufficient. Otherwise, you're satisfied with the current provision that you hold on the, I mean, restructured standard book? Yes. This is required to ensure the optimum audio quality on the call. Yeah. I'm using handset only. That's not very easy. Yeah. Yeah. I'm saying, are you satisfied with the current provisioning on the standard restructured book that you're having right now? Current provisioning on standard restructured book? Yeah. Yeah. See, basically, when we restructured last year under the COVID guidelines, we were required to provide certain provisions as per the RBI guidelines on the restructured book. And now, it's been almost what, 15 months or so, 12-15 months of post-restructuring. So some of them have moved into NPA. And whichever has moved into NPA, anyway, the provisioning as per NPA norms will take over. But some of those assets have remained standard after about 12-15 months of restructuring. But we continue to carry those provisions in the book of standard restructured book. And as per the guidelines of RBI, whenever those accounts have crossed that specified period and don't ask me what a specified period. It is defined by RBI in some manner, but it's typically anything beyond 12 months, 12 months and above. If an account has remained standard, then that provision is not required any longer to be kept by the bank. So that is where the write-back comes from standard restructured book. And when that so for example, in the third quarter, we had INR 36 crore of provisions which was released because those accounts had crossed that specified period and were not an NPA by that time. They are still remaining standard. So INR 36 crore got reversed. And what we did is we used INR 26 crore of that to make additional provisions on some part of the restructured book. So that's what we'll do. So we have another INR 60 crore coming up like that. So if those accounts for which that INR 60 crore provision is there continue to remain standard and then they cross the specified period also, then to create at least. Mr. Vasu, sorry to interrupt. See, your voice is breaking. Yeah. Can you hear me now? Slightly better, sir. Hello? Yes, sir. Hello? Yes, sir. We can hear you now. Please go ahead. Yeah. So when that INR 60 crore, when those assets, sorry. That INR 60 crores or whatever, a part of that might get released. And then we will take a call how much can be pushed back on further provisioning wherever we feel there's a stress. So that's how it is done. Okay. Got it. Thanks, sir. Thank you. The next question is from the line of Ashlesh Sonje from Kotak Securities. Please go ahead. Hey, sir. I hope you can hear me. First question is on the optics side. So we have seen a decent addition of about 1,000 employees over each of the last two quarters. Would we say that we are done with most of the employee addition? And secondly, on the same point, which business segments are absorbing most of these new employees? Yeah. Before I give it to Rohit to talk on which businesses are absorbing people, no, we'll continue to add people because we have next year's growth and all of that we have to start hiring for. So we don't see the manpower plateauing or flattening. So we will continue to add people. And most of the people are getting added across businesses because we are seeing strong credit demand. And as you see, that's also translating into an increase in disbursement. Yeah. Ashlesh, Rohit here. So as Vasu sir also mentioned, we are adding new products, and we are expanding the products of affordable home loans, used cars. So obviously, as we expand into new geographies, we will need to hire manpower. Even the current small business loans, as we are deepening geographies and we are moving more into non-TN geographies, we will need to add people. So I don't think we have plateaued off on the hiring of employees. We will continue to hire people. That's it. Okay. Perfect. Thanks. Secondly, on the gross slippage front, the slippage number still seems to be slightly on the higher side at around 5%. I understand that we did a change in the way we compute gross slippages. Your voice is not very clear, Ashlesh. Hi. Sorry. I hope this is better. Yes. This is better now. Yeah. Hi. On the gross slippages front, the number still seems to be slightly on the higher side, although I understand that we made a change in the way we look at slippages last quarter. But still, how would you see this number trend going forward? And at the same time, can you give a segmental breakup of slippages for this quarter? Yeah. No segmental breakup we can't give at this point in time. So you'll have to look at these numbers, I think, in isolation because these are not quarterly-ended numbers. These are on a daily basis. So it might be casting the wrong impression. Right now, slippages are in a comfortable zone, and it will trend downwards as the restructured book starts to wind off. We still have about INR 700-800 crore of it. But otherwise, it's in a comfortable zone, and there is some scope of it to improve. The breakup of the restructured book is largely, I think, sorry, of the slippages is more or less business as usual. So we'll try to see if we can incorporate from the next presentation onwards. But we don't see this as a practice across. So let us rethink that and come back. But don't look at these numbers in comparison because I don't know how many of them are actually putting it the way we are. So these are daily slippages numbers. Have you made a change in the way we look at slippages this quarter as well, or we are sticking to the last quarter? Yeah. Last quarter. Last quarter. That way, from last quarter to this quarter, it has come down. If you see gross slippages and net addition, those two numbers have actually improved. So it's likely to improve in the next quarters too. Okay. Perfect. See, basically, what we are doing is our gross slippage, if an account becomes an NPA, let's say, in the beginning of the quarter, and if that NPA is resolved within that quarter, we are not netting it off. We are showing it both as a slippage and as a recovery. So that's what we are displaying. So we are not netting off the collections or recoveries out of NPA during the quarter. So to that extent, if you want to compare it with any other industry player, you'll have to figure out what they do and how they do. And we have to see how to come get the similar data and then start comparing. Understood, sir. So but, just sorry to push on this point. Would you still see higher slip [audio distortion]? See, as Dheeraj said, we are not giving segmental data on that, and I don't know whether we will want to give going forward. You raise a point. We'll look at it internally and then see whether we should be able to give or not. But what we can tell you is that over the next three-four quarters, we should see this gross slippage also coming further down as the restructured book kind of runs off from the normal the restriction of the non-restructured book slippages are definitely lower. And so this should anyway trend down over the next few quarters. Understood. Thank you, sir. Those are all my questions. Thank you. Thank you. The next question is from the line of Abhishek from HSBC. Please go ahead. Yeah. Hello, everyone. Thanks for taking my question, and congratulations for the quarter. I just have a question on opex ratios. So just if I look at cost-to-assets broadly, nine months versus last year full year, it's more or less flat. But incrementally, as your growth recovers, asset quality improves, what kind of improvement do you think we could see in that metric? Yeah. Cost to assets is about 6.4%. So as business expands and as we get into longer-tenured projects like, for example, housing, the more housing grows, the larger ticket size of SBL, that is INR 10-15 lakh plus grows, those are longer-tenure projects compared to the others. And our average assets duration of our assets is close to about two-point-two years. So that also will start moving higher. You will see this cost down. So we have been at sub-6%. So I think that's something which slowly will start trending for this reason. So, Dheeraj, for FY 2024, how much of an improvement should we? Would it go sub-6 in FY 2024 itself, or is that a longer time? Yeah. So I think you'll have to give us a quarter. So next year's numbers, we are in the planning stage. But I wouldn't say we would hurry to sub-6 at this point in time. Okay. Okay. Right. Thanks. That was my question, actually. Thank you and all the best. Thanks. Thank you. The next question is from the line of Darpin Shah from Haitong India. Please go ahead. Yeah. Congratulations on the quarter, and thanks for taking my question. So first question is again on provisions. Our provisions are almost half on a sequential basis. So Vasu sir, wouldn't it have been more prudent to make additional provisions and shore up the PCR this quarter only when we had an opportunity? We've done that. I don't know if you heard the commentary. We've added INR 27 crore of provisions. Yeah. I heard that. I heard that. So no, Dheeraj, but just to add, if we could have created more additional provisions, say INR 30 crore, INR 40 crore more, and increase the PCR in this quarter rather than spreading it over the next six quarters. So I am saying this because we don't know about the ECL. The RBI has given a draft regulation also. So even that might have some impact. We can score that on that as well. Yeah. Before I hand it over to Sridhar to give you a sense of what that ECL impact may be, we had a couple of quarters before given our provisioning norms across products. So if you look at that, the incremental NPAs and the provisions against that is actually provided for at a healthy rate. So we've given that I don't know how many quarters back, but I think about two or three quarters back. So directionally and as per the provisioning policy, it is quite stringent. The question is, this release, can we utilize how much of this release can we utilize to hit PCR? Yes, which is what we have done this quarter. And like Vasu had explained, the further release we get, we'll have to see how do we use that. And like we mentioned earlier, the intent is to take PCR to 60. And at the same time, it needs to be calibrated. So those are our intentions. So, Sridhar on the ECL. Sridhar here. This is on the ECL. See, we have been preparing Ind AS ECL based on the Ind AS ECL provisioning for the purpose of consolidation of old accounts. And the thing is that always we noticed that our IRAC provisions are higher than the ECL provisioning under Ind AS. And we used to do a management overlay to ask for the RBI guidelines to keep it in this one on the same IRAC norms, the provision. And also, the thing is that most of our products, except the microfinance and a few products, most of the products are secured products. And we are comfortable with our LGD in these products. And we do not foresee any higher provisioning or something when the Ind AS has come into picture after the ECL, actually. Great. Okay. Yeah. Thanks a lot. Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead. Congratulations, sir, and thanks for the opportunity. I just had only one question on the deposit front. We seem to be doing excellent on that front. But given the rise in interest and the deposit rates across the spectrum, not only from small finance banks but even from the larger peers, how do we see that growth going ahead? Hi. Murali here. See, two things which is helping us is one is our new-to-bank acquisition through phygital and digital. So there are new-to-bank customers are coming in. So we operate at a retail level called pull-up liabilities as a concept, which means, like Vasu sir was mentioning, we would like to keep it as a CASA. But then when the arbitrage rate actually is benefiting, people will shift into one or other. So today, if you see on a savings account, we are having one of the best optimum rates. I can say best optimum rates. We are in the top quartile backed by a fantastic proposition and relationship management. So acquisition and growth is happening, and we are focusing now on a family banking concept. Just to explain to you, Elite, we have mentioned in our presentation too, we have 60,000 families who are contributing to INR 12,000 crore of RB. Can we go deeper into it? Yes. So which means we are focusing on family banking as a concept and going deeper into it. That is one part. On new-to-bank acquisition, we are specifically targeting senior citizens as a proposition to get the retail TD in. That is a second part. And now these two things, why we will differentiate among many peer group is, A, through the ease of opening where we can do it through digital, mobile banking, and relationship banking. Second thing is, as the tightening happens, we are expanding that base into a bulk segment also. So we will continue to focus on retail. We'll continue to maintain the family banking concept, leverage on relationship management. As you know, that pricing is a supply-demand equation at this point of time. Increasingly, as the competition goes up, we have to go depth at the family level along with spread. That is going to be our approach. NR is one key opportunity for us. Where the arbitrage for NRI is far and higher, even on a savings account itself with us, adding to a TD. Thank you, sir. Thanks a lot. That's all from my end. Thank you. Thank you. Dheeraj, let's take a break. Thank you. Thank you. Thank you all. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. P. N. Vasudevan for closing comments. Thank you, and over to you. Thank you. Thank you all of you for dialing in, and thank you for keeping us glued to our job. Thank you for keeping us highly motivated in this journey of creating a stable, sustainable, and scalable bank. That's what we mentioned in our presentation. I remember about maybe 6-8 quarters back, we said that we are on a sustainable and scalable bank. Most of what initiatives we have taken have borne fruits. Today, we have reached a level where we can clearly see that we have got a bank which is very stable and very much sustainable and definitely scalable. In this journey, we continue to look to you and to your support as we progress on this path. Thank you so much and wishing all the very best. Bye-bye. Bye. Thank you all. Thank you very much. Ladies and gentlemen, on behalf of Equitas Small Finance Bank Limited, we conclude today's call. Thank you all for joining us, and you may now disconnect your lines.