Ladies and gentlemen, good evening and welcome to the earning calls of Equitas Small Finance Bank Limited financial performance for Q2 FY 2027. We have with us today Mr. Anil Kumar Sharma, Part-time Chairman and Independent Director, Mr. P N Vasudevan, MD & CEO, Mr. Balaji, Executive Director, Mr. Mukund Barsagade, CFO, Mr. Jagadesh, Head of Assets, Mr. Murali Vaidyanathan, Senior President and Country Head, Branch Banking, Liabilities, Product and Wealth, Mr. Gopalakrishnan, Head Treasury, Mr. Suresh, Head IR Strategy and Business Intelligence, Mr. Sundararaman, Unit Head, Investor Relations and Strategy, Mr. Abhishek, Manager, Investor Relations. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note this conference is being recorded. I would now like to hand the conference over to Mr. Anil Kumar Sharma for opening remarks. Thank you and over to you, sir. Good afternoon to you all. Thank you for taking your time out to dial into this conference call. I would like to address the issue of our MD & CEO, Mr. Vasudevan's desire to step down from the services of the bank. The background and the reasons for his decision have been spelt out by him in the letter that he has given to the board and which has been duly disclosed to the exchanges and which I am sure you all would have had time to go through. The board respects his decision and appreciates that he has acted in the larger interest of the bank, despite there being no regulatory or legal impediment to his family investments in the NBFC. The board has thanked him for the significant contribution and for guiding the bank in the first 10 years of its existence and wishes him all the best. A formal transition process has been initiated and the board has requested the Nominations and Remunerations Committee of the board to shortlist the candidates for this role. We would be evaluating both internal and external candidates. We would be working to complete the successor identification and due regulatory approvals as early as possible. Mr. Vasudevan has confirmed that he would continue to discharge his present responsibilities till his successor takes over from him, thus ensuring continuity. The board will ensure that the bank will continue to pursue its long-term vision set out earlier and does not expect this transition to have any impact on the same. We would keep the exchanges duly informed of the progress in this matter. I now hand over to Mr. Vasudevan to take you through the highlights of the performance of the bank for the second quarter. Mr. Vasudevan. Thank you, sir. Good evening and thank you for taking the time to join us today. The macroeconomic environment remains broadly constructive, supported by healthy economic growth and sustained credit demand across our Core Retail and MSME segments. While elevated funding costs and competitive deposit market conditions continue to pose industry-wide challenges, borrower cash flows and underlying business activity remains resilient. We are also closely monitoring the evolving drought conditions in parts of Maharashtra and Karnataka following adverse weather patterns. However, our microfinance exposure to the affected regions remains limited at around 2.9% of total advances of the bank, providing comfort from a portfolio risk perspective. This will be closely monitored over the coming quarters. Coming to our business performance for the quarter, the bank maintained a strong growth momentum. Gross advances grew 30% year-on-year to cross INR 50,000 crores, while deposits grew 19% and also grew surplus INR 50,000 crores during the quarter. This took the total business of the bank beyond the significant INR 1 lakh crore milestone, underscoring the strength of our diversified franchise, sustained customer acquisition and consistent execution across our core business segments. We continue to see strong tractions across our housing finance, vehicle finance, gold loan and retail businesses. Our microfinance business continues to demonstrate disciplined portfolio management with collection efficiencies remaining strong at around 99.6%. The net slippage at bank level has declined by 4 bps sequentially to 1.39%. Mr. Jagadesh, Head of Assets, will explain in detail our strategic priorities and growth drivers. On the deposit front, the bank has started picking up on the deposit growth once again after a lull in the last few quarters, with the total deposits growing by 19% year-on-year and 7% sequentially to INR 52,483 crores. Our CASA ratio stood at 26%, while retail deposits continue to account for a stable 68% of the overall deposit base. On the FCNR deposit front, the bank successfully mobilized $110 million under the RBI FCNR scheme window, and we didn't have a leveraging opportunity either. Without that, we are able to mobilize $110 million under the scheme and our total FCNR book stands at around $138 million. The CD ratio is reasonable at 90.53%. Cost of funds increased by 7 bps sequentially, which is attributable to the recent revisions in SA and TD pricing that we undertook in the beginning of last quarter. On the deposit mobilization, we are seeing good traction on retail TD and growth momentum is in line with our advances growth. We continue to focus on relationship-led approach to build deposit franchises across retail transaction and NRI segments. Murali Vaidyanathan, Head of Liability, will explain in detail the strategies that drive deposit growth. In addition to our strong deposit growth during the last quarter, we also raised funds through refinance, borrowing, securitization, and direct assignment transactions, and also through Tier-II capital. While these initiatives were undertaken to strengthen the bank funding profile and support future growth, they resulted in a temporary buildup of excess liquidity at the bank level. The resulting liquidity drag, coupled with an increase in cost of funds, impacted margins during the quarter. Accordingly, NIM on a daily averages basis stood at 6.69% in last quarter, compared to 7.24% in the previous quarter, a sequential decline of 55 basis points. We expect this impact to gradually reverse as the surplus liquidity is meaningfully deployed over the coming quarters. We have raised rates on deposits in anticipation in the last quarter, and hence, we do not expect the need to raise rates based on the recent repo rate increase. Credit cost has reduced by 43 basis points from 1.37% to 0.94% in Q1 to Q2. However, if you remove the effect of ARC sale undertaken during the quarter, the credit cost for the quarter would have come in at 1.12%, which is still very good, given the 1.5% credit cost guidance that we had given earlier for the full year. During Q2, the bank has reported the highest-ever quarterly profit of INR 218 crores, and the ROA and ROE are good at 1.3% and 13.5% respectively. I believe at this ROE of 13.5%, we compare favorably amongst many of the banks. During September 26th, the bank raised INR 500 crores through issuance of Tier-II bonds for a tenure of 10 years, with an option for the bank to put in foot at the end of five years. This has improved our Tier-II base from 3.43% to 4.57%, and the overall capital adequacy as of September stands at 20.92%. With this capital base, we have created sufficient headroom to support business expansion for the next few quarters. Because of the 10-year tenure, we would get the full capital benefit of this INR 500 crores for the first five years. The bank has continued to deliver consistent performance across all key operating and financial metrics. Given the strong business momentum witnessed during the first half of the year, we are happy to revise our FY 2027 ROA guidance upwards. We now expect to deliver a full-year ROA of around 1.35% compared to our earlier guidance of 1.2%. This improvement will be driven by gradual recovery in NIM as excess liquidity gets deployed, moderation in credit cost, and a lower cost-to-asset ratio, which has been coming down quarter on quarter. With that, I would now like to hand over the call to our CFO, Mukund, who will take you through the bank financial performance in greater detail. Mukund. Thank you, sir. Good evening, everyone. The quarter reflects continued momentum in growth and profitability. Gross advances grew by 30% year-on-year. Deposits grew by 19%. Asset quality continued to improve, and the bank delivered its highest-ever quarterly PAT of INR 218 crore. We reported net interest income of INR 1,026 crores, another income of INR 288 crores, taking total net income to INR 1,313 crores for the quarter. Total net income grew by 32% year-on-year and 3% sequentially. Gross advances grew by 30% year-on-year and 6% sequentially, supported by disbursements of INR 7,450 crores during the quarter. Growth was broad-based across products, and the non-microfinance portfolio grew by 24% year-on-year, reflecting continued diversification of the loan book. Deposits grew by 19% year-on-year and 7% sequentially, demonstrating a significant improvement in liability momentum. CASA stood at 26%, while retail deposits, including CASA, constituted 68% of the total deposits. The credit deposit ratio stands at 90.53%, vis-à-vis 92.93% in the previous quarter. NIM stood at 6.69%, declining by 55 basis points sequentially. The decline was largely driven by surplus liquidity and higher interest expense. Importantly, the underlying yield on advances remained resilient. As surplus liquidity is progressively deployed into earning assets, we expect the liquidity-related drag on margins to moderate. Total operating expenses were INR 911 crores, increasing by 20% year-on-year and 4% sequentially, in line with the scale-up of the business. Operating leverage is beginning to become visible with cost to assets improving sequentially to 5.49% from 5.61%. Asset quality continued to improve. Gross NPA declined by 13 basis points sequentially to 2.29%, and net NPA declined by one basis point to 0.70%. Net slippage is reduced to 1.39% from 1.43% in the previous quarter. Provision coverage ratio stood at 70.08%. PCR, including technical write-off, stands at 86.73%. The reported credit cost stood at 0.94 of average gross advances. During the quarter, the bank sold NPA amounting to INR 110 crores to an Asset Reconstruction Company. Excluding the impact of this transaction, credit cost improved to 1.12% from 1.37% in the previous quarter. As mentioned earlier, the bank reported its highest ever quarterly profit after tax of INR 218 crores, compared with INR 24 crores in Q2 FY 2026 and INR 184 crores in Q1 FY 2027. Return on assets improved sequentially to 1.31%, and return on equity improved to 13.5%. Importantly, despite the temporary compression of NIM, ROA improved sequentially, supported by higher other income, improvement in cost to assets, and lower credit cost. As of September 30th, 2026, the capital adequacy ratio stood at 20.92%, with Tier-1 at 16.35% and Tier-2 at 4.57%. Thank you, and I will now hand it over to Jagadesh, our Head of Assets. Good evening, everyone. Before I begin the discussion on our advances portfolio, let me briefly touch upon the operating environment. We continue to closely monitor the geopolitical, macroeconomic, and weather-related developments and have not observed any material impact on our portfolio performance or collection trends. While certain districts in Maharashtra and Karnataka have experienced rainfall deficiency, our exposure remains limited, with MFI advances accounting for only 2.9% of the overall advances. Collection efficiency remains stable and northeast monsoon in Tamil Nadu has progressed broadly in line with the expectation where we have close to 42% of the overall book. Now, let me now take you through the key trends in our advances portfolio. We closed the quarter with gross advances of INR 50,669 crores, reflecting a growth of 30% year-on-year and 6% quarter-on-quarter, driven by the robust disbursement momentum across key products. Let me now highlight some of the key developments during the quarter. We delivered our highest-ever quarterly disbursement of INR 7,450 crores with a growth of 38% year-on-year. On the non-MFI front, our disbursements at INR 6,161 crores, registering a strong 31% year-on-year growth, reflecting healthy demand across secured asset classes. Our small business loans continue to be our largest business segment, growing at 16% year-on-year, and vehicle finance grew 16%. Housing finance grew at 27% year-on-year, and MSE Finance continued to scale well, growing at 38% year-on-year. We have delivered consistent growth in both disbursement and advances, despite minimal additions to our physical distribution network with only three asset branches added compared to Q2 FY 2026. This performance reflects our focus on improving productivity and strengthening product distribution across our existing network. In gold loans, for instance, the business was traditionally sourced and serviced to liability branches. Over the past two quarters, we have started building gold loan capabilities within select asset branches, which now stands at around 60 locations. We have also expanded sourcing coverage to nearly 90 additional branches, with servicing being undertaken through the nearest liability branch. This hub-and-spoke approach has enabled us to expand our reach, improve customer access, and drive growth without materially increasing our branch network. Let me now touch upon the yields and asset quality. Our asset quality continued to demonstrate stability and improvement during the quarter. The bank's reported 1-90 DPD stood at 7.42%, while the non-MFI 1-90 DPD stood at 8.31%. But if we include the recently securitized portfolio of INR 1,235 crores transferred to DA and PTC transactions during the quarter, the corresponding 1-90 DPD ratio should have been lower at 7.24% and 8.08% respectively. The 1-90 DPD for the microfinance portfolio, including DA, stood at 1.48%, partially impacted by the denominator effect as the direct assignment portfolio continues to run down. Our credit cost stood at 0.94%, compared with 2.16% in Q2 FY 2026. Adjusting for the ARC transaction impact, our credit cost would have been approximately 1.12%, indicating broadly stable underlying credit cost on a sequential basis and continued resilience in portfolio performance. To conclude, we delivered our highest-ever quarterly disbursement, continued to grow our secured portfolio at a healthy pace, maintained stable collection efficiencies, and further improved asset quality. We remain focused on disciplined growth, portfolio diversification, and prudent risk management, and we expect the positive momentum in business growth and portfolio performance to continue over the coming quarters. Thank you, and I will now hand over to Mr. Murali. Good evening. During this quarter, we actually witnessed an improvement in retail deposit mobilization through launch of multiple initiatives, which I will cover. Most importantly, it has helped us to get into the trajectory where we want to be in terms of 7% quarter-on-quarter. Threshold-wise, we reached actually the number was 52,483. But the most important part is granularization of deposit, and during this quarter, as we discussed during the last time, we will slightly tweak the layering in terms of savings account. So savings account and TD. We launched a new product called Maxima on the domestic side, which is the first branded exclusive TD product. I think that has helped us to expand the base and helped us to reach close to 68% of the overall deposit base coming through retail. We continue to maintain the prudent mix in bulk with 92% of the bulk coming from non-callable base at this point of time. FCNR, it is not only bulk retail customer. We did close to $110 million coming across 4,000 customers from 150 countries. That shows our depth and spread in terms of NRI customer, and most importantly, AI as an investment actually started giving us return in terms of deposits in dollar as well as remittance volume and value kicking in. So that is one good aspect of AI, which we launched recently. Our cost of funds increased by 7 bps, partly because of sales focused predominantly on House of Elite, what we call, we launched, as we are aware, three segments of HNI segment. One is called an Elite program for absolute affluent. Then we had one to the emerging affluent, and then we launched something called Artha. Now, all these three propositions in this last quarter actually was coupled and backed by savings account rates and good relationship management. For the first time in last six months, we are seeing RM managed book actually growing 11% on quarter-on-quarter. So this has helped savings account as well as TD mobilization at this point of time. In terms of Artha, we crossed 2,000 customers. It is a HNI program, and we almost crossed now INR 2,000 crores of relationship value through this segment. So our proposition and strengthening is really helping us in that direction. CASA would have seen a significant uptick. That is because of our IPO skewed current accounts, and that will continue to hold and helping us to build actually in transaction and volume and value at this point of time. Till the time IPO-centric approach is there, I think that will propel CASA. To initiate CASA mass sourcing, we are actually launching digital CASA very soon, and that we will cover it up later. Most importantly, asset-led approach in liability branches is what we are focusing. Like Jaggi said, how we are using gold loans from asset into liability, we are using liability branches to cross-sell assets. That initiative is also throttled among 20 branches, and we will take it up to 50 branches this quarter. TPP and insurance is in line with budgets, what we want to do. Overall, I think retail franchise proposition focusing on HNI will help a customer-centric approach through our RM and liability branches. I think we remain well-positioned to support the bank's funding requirements as we move forward. I will ask now Gopi to give an insight on treasury. Thanks, [Mohit]. Good evening, everyone. The unusual volatility and unpredictability in markets continues. Foreign investors have continued their exit from Indian assets, exerting pressure on Indian rupee. INR depreciation continues, with the Reserve Bank announcing further measures to temper speculation volatility. While rupee ended the quarter at INR 95.83 to the dollar, the impact of the latest RBI measures in foreign exchange market will also be keenly tracked to ascertain the way forward. RBI MPC has hiked repo rate in response to the uptick in inflation, with further hikes expected in December and before the end of the financial year. RBI has also taken steps to reduce system liquidity in line with the repo rate hike. Imported inflation and continuing impact of monsoon shortfall risk pushing CPI numbers beyond current projections. Coming to Equitas, we navigated a very challenging quarter. Bank has seen a healthy inflow of RBI FCNR. We have already discussed, $110 million inflow coming to the bank. Treasury income stood at INR 27 crores in Q2FY27. We approach the coming quarter with caution, given the continued volatility and fluid regulatory environment. Thank you. With this, the opening commentary is finished. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Renish from ICICI. Please go ahead. Yeah. Hi, sir. Congrats on a good set of numbers. Sir, two things, one, of course, on the resignation. I just wanted to understand, obviously I have gone through the details later also. But still want some clarity around, ideally, this transition would have been, we might have first selected the interim CEO or maybe someone should be hired as a Deputy CEO. And then, after, I think, spending maybe three to six months post that you might have thought about resignation. I just wanted to understand why this sudden thought of leaving Equitas like this. Hello? Yes, sir, you are definitely. Yeah. Yeah. We have to follow a certain process, and this is the process that we have followed. We believe that this is the only way that we could have done this. We cannot really go to the market looking for a CEO before even making an announcement that there is going to be a change in the bank. We will not get the right candidates. If you are not able to tell potential candidates that there is a job for which you are looking for, you will not get the right candidates. You will get the next set of second rung of candidates. This, we thought, is a better way of handling it, where we announce that there is a change so that we are sure that we will get the best candidates available for us to look at before we finalize the right choice for the bank. Got it. As things stand today, what are the timelines in your and board's mind to complete this entire transition? This entire transition, as you would have seen from the letter which has been filed with the exchanges, the board has taken note of the resignation and has requested the NRC to prepare a short list of candidates, and thereafter recommend it to the board. The board will take a view and eventually, as you know, being a regulated entity, it will go to the regulator for the final approval. Correct. What are the timelines? Timeline is around three to four months, is what we expect. Three, four. For our entire process to be complete. Three, four months before board finalize the candidate and goes to within three, four months. No, three, four months for the entire process, where the candidate would be approved by the regulator and is expected to take over from Mr. Vasu. The board will take, I don't think it will take more than a month. It should be much less than that. Got it. My second question is around the asset quality trends. Obviously on overall basis, this quarter has been fantastic in terms of asset quality. But when we look at the segment-wise breakup, it seems to suggest that there has been a sequential increase in MFI and vehicle business gross NPA. Just wanted to understand this drop and everything is more of a third, fourth quarter phenomena. But why there is a sequential increase in second quarter itself? Yeah. Good evening, Renish. This is Jagadesh. Hi. Yeah. As far as the MFI has been concerned, both in terms of the gross slippage and net slippage, it was on a decreasing trend. For microfinance, for the previous quarter, the gross slippage is 3.09%, whereas currently it was 2.57%. Similarly, on the net slippage, it was 2.49%, and currently it was at 2.10%. Microfinance, if you see, even in terms of the collection efficiency, it has been very much stable at 99.6%. And we don't see any impact as far as the microfinance has been concerned. On the vehicle finance side, yes, there was a little bit of increase in terms of the GNPA. But when you compare with the, because vehicle finance is a seasonal business. Yes. Because of the certain cyclical trends. If you compare with the Q2 of the last year, it was effectively better than the Q2 what it was. Look at the data what we have shown in the presentation. Sorry. I'm not able to hear you, sir. Can you hear us now? Yes, sir. Okay. Okay. Just repeat that vehicles. Yeah. On the vehicle finance, if you look at Q2 of the last year, it was 1.98 against. Against now it is 1.82%. So vehicle finance, you cannot able to compare on a sequential basis. It should be on a year-on-year. year-on-year basis. Got it. Okay. There is nothing too much to read on sequential movement is what you are highlighting. Right, sir? Yes. Thank you. Okay. Thank you. Thank you. Next question is from the line of Rajiv Mehta from YES Securities. Please go ahead. Yeah. Hi, good evening. My first question is again to Vasu, sir, on the resignation decision. Sir, I think a couple of things you highlighted in your resignation letter being investor concerns and stock undervaluation because of those concerns. But were there any other reasons like maybe a regulatory nudge or maybe your individual realization that your guidance and services would be required by the NBFC promoted by your family? I am asking this is because it has just been two, three months since you got reappointed as the MD & CEO in July for three years and this decision has come. If you can just clarify on that. Yeah. There is no nudge or anything from the regulator. That is clear. There is nothing as far as the regulator is concerned. Okay. Sir, what will be then in such a situation, what will be your message to the senior management people and maybe the second line of Equitas who would have worked with you for quite long? How should they be looking with their roles in the future in this whole management transition? Anything you would want to, what kind of comfort while you are there in transition period that you would want to provide and by how? Yeah, we will be doing our normal communications. I don't think there should be any other issue as far as the rest of the team is concerned. Because ultimately individuals come and go, institutions have to last forever. I am not going to be the MD of the bank for eternity. There is another two years plus that I could have had as a tenure, and at some point I would have had to anyway retire or leave the bank. So it is not something that is never likely to happen. It had to happen. It happens today. That is the only issue. I don't see that there should be any issue as far as the rest of the team is concerned. We will be doing our normal regular communications with the team, so I don't think there should be any issue. And just last question is on the uptick in SMA buckets as seen in MFI as well as non-MFI in the September quarter. Has there been further increase in the SME in both MFI and non-MFI in October? Right. This is Jagadesh. We have clearly mentioned that on the 1-90 DPD, the figure shows without the securitization book. If we include the securitization, it was pretty much stable at the bank level. Okay? On the non-MFI front, it was on the decreasing trend. MFI, there was a slight bit of increase, which I also covered during my speech. It is basically the denominator effect where the DA has come down. But if you look at even in terms of the client base, 1,290 in terms of microfinance, as of June, it was 25,200 clients, whereas in September it was only 25,776. So basically it's just a 500 clients increase. It's much more stable. So there is no external factors to be going into these ratios. And October movement? October, it has to complete, but we don't see much of changes compared to the September month, even in Maharashtra and Karnataka. Got it. Thank you. Thank you, Vasu devan, for answering my question. Thank you. Thank you. Next question is from the line of Parth from 360 ONE Capital. Please go ahead. Yeah, hi. Thanks a lot for the opportunity, sir. My first question is on the deployment of the surplus liquidity. Any rough estimates on whether the entire liquidity will be used in Q3 or it will be spread over Q3 and Q4? Yeah, Parth. It will be mostly consumed in Q3, but overall what we are saying is the complete recovery will be reflected by Q4. Okay. One second. Do you want to give any idea of what will be the recovery of NIM because of deployment of this excess liquidity? Yes, sir. So, 6.69 is what we are saying in terms of NIM, what we have reported for Q2. So we are looking at roughly 18 to 20 bps improvement by 4Q. Okay, fair enough. My second question is on the ARC sale. What was your income recorded in the other income line item? This is Mukund here. The net income recorded was INR 22.5 crore. Okay. Net income. Thank you. Thank you. Next question is from the line of Prashant from SBIMF. Please go ahead. Hi, good evening. Just two data points. If you could tell us what percentage of the company would be owned by the ESOP pool on a fully diluted basis, excluding Mr. Vasu's stake, and that will be divided among how many employees? On the total term deposits above INR 10 crore, how much would be non-callable, and are FCNR deposits also covered under that? Hi. With regard to term deposits, bulk, 92% is non-callable. We have close to INR 12,500 crore of bulk. Out of that, 92%, which will come closer to INR 10,100 crore, which is non-callable. FCNR, out of that INR 1,100 crore, 50% is on five-year bucket, 30% is on four-year bucket, and 20% is on three-year bucket. As we know, no customer can withdraw anything for the first one year because that's not allowed. So these two put together gives us the total non-callable base. On this question of the outstanding ESOP options amongst employees other than me, divided by how many number of employees, we don't have that data right now. But when we publish the minutes of this con call, we'll add that response in the minutes. I request you to go through the minutes when we publish it in the exchange. Sure. Thank you. Okay. Thank you. Thank you. Next question is from the line of Vivek Kumar from Geometric Securities. Please go ahead. Sir, am I audible? Yes, please go ahead. Sir, on a medium-term risk point to 5-year basis, what would be the NIM ratio? I am not asking the perfect, but on a sustainable basis, even if there is a stress on our liabilities, we have room to increase our interest rates and maintain a 7% NIM. Can we assume that to model the bank? Yeah. Around 7% is something which we are also working from a medium-term point of view. Medium term is how many years? 1-2 years. One to two years. Two years. Okay. In a two-year time frame. Yes. Okay. How many years, because as we scale from INR 50,000 crore to INR 100,000 crore and above, when will you see sustainably our ROAs going above 1.5%? When will we see the real benefits of operating leverage? How far away in terms of scale we are or 1.5 would be the max? How should we look at this? This year, we are revising the guidance to 1.35% ROA for the full year, which I think we should be able to deliver. Next two to four years, we have given as part of our long-term plan that on an average, we should be able to deliver 1.5%. That is assuming that there are certain headwinds and tailwinds as normal economic factors which affect our operations. There will be times when things will be good and credit cost will be benign and markets will be good. Those are the times when we should be able to look at something more. There could be even times when it may be less. We are saying basically on an average, we should be able to deliver 1.5%. We will go there in next one to two year and stay there mostly or give it much sooner? The 1.5% we should hit it next year. Got it. Sir, sorry, in your letter you wrote that we have built a moat, given the risk in the segment that we are operating. Can you more elaborate what do you call that moat, and how should we understand? Okay. If you look at the small business loan segment, which is loans typically starting from 2-3 lakh going up to maybe 15-20 lakh. The unmet credit demand in the market as per various government data is something in the range of around INR 25 lakh crore unmet credit demand. If you look at affordable housing finance, again based on various published data from the government and other agencies, the unmet credit demand is in the range of around INR 45 lakh crore. If you just take these two alone, just small business loan and affordable housing alone, we are talking of nearly INR 80 lakh crore of unmet credit demand. The total banking credit in the country is around INR 250 lakh crore. If you compare the unmet credit demand, it is actually one-fourth of the entire banking credit in the country built over the last 70-75 years of independence, post-independence. Okay. The question is, when banks have been able to scale up so much in all fronts, in all parameters, in all industries, in all areas of the economy, why is it that there is INR 85 lakh crore of credit demand unmet even after 70-75 years of independence and 60 years of bank nationalization? Why is it still remaining unmet? That is a large amount of demand. It is not a small demand. The reason is because of the difficulty of both assessing the credit as well as in terms of managing the customers and the collection part of it. The difficulty. That is why it remains unmet for such a long time, and that is where a bank like Equitas, we really excel because that is our core area, and we have been able to perfect that over so many years. Our credit cost at 1.2% or 1.12% without the ARC sale for second quarter, for example, is after having given loans to this profile of customers. That is where we believe is our moat, that we are able to understand and deal with a segment of customers, which has not been possible for the other banks to do over the last 75 years. I am not passing any comment on any bank, but all I am saying is it is data. This market of INR 85 lakh crore remains unmet after 75 years of independence. So that is our moat. That is what we are referring. The whole underwriting part of- Sorry to interrupt, sir. Should you have a follow-up question, please rejoin the queue. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. Next question is from the line of Ashlesh from Kotak Securities. Please go ahead. Hi, team. Good evening. A few questions from my side. Firstly, on the drought piece. In these drought-affected areas of Maharashtra and Karnataka, what is the behavior of these microfinance borrowers right now? Have their incomes been impacted? Are they asking for more time to repay, and is there any political activism there? That is the first one. Second one, if you can share the segmental breakup of gross slippages between MFI, vehicle finance, and SBL. Last one is on the succession piece. What is it that makes you feel confident that identifying the successor should not take more than a month? Any thoughts on whether you would prefer an overlap between Vasudevan and the next CEO in case it is an external person? Those three questions. Yeah. Yeah. Hi, this is Jagadesh. On the drought-related question, what we have done is that we have identified certain districts both in Maharashtra and Karnataka. Let's say an example, Maharashtra, we have identified some 29 districts where it has been clearly identified as a drought and also some kind of political intervention. So we have been tracking on the branch-wise collection efficiency. But if you look at between September and October, it's hardly we are looking at any kind of impact in terms of the microfinance. So here and there are some political interventions, but not on a large scale. But Karnataka, even that, we don't see any kind of impact. Almost we are seeing a better efficiency compared to the month of September, as on date. So we need to wait and watch how things unfold, but as on date, we are not seeing any impact. Understood. Ashlesh, on the second question of on slippage, we have mentioned for MFI it is at 2.64 and non-MFI it is 1.21 for Q2. We may not be able to give further breakup in terms of product-wise and how. So we'll give it to. And the last one on the succession. Sir, in terms of- Hello. With regard to the timelines, Anil Kumar Sharma here. Yeah. With regard to the timelines, we have contacted the agencies, and we have asked for the list of candidates which possibly we can look at. As I said earlier, the NRC has already been asked to start the process, put the process in place. We do not expect it to take more than a month. We in fact expected it to take a bit earlier, but nevertheless, we are taking it as one month as a normal part of process. Insofar as the overlap is concerned, as of today, we do not see any need for an overlap, even if it is an external candidate. In case it comes to that, we will take a view at that point in time. But as of today, we do not see a need for an overlap. Understood, sir. Perfect. Those were all the questions. Thank you. Okay. Thank you. Thank you. Next question is from the line of Shailesh from AMSEC. Please go ahead. Good evening, everyone. Thanks for the opportunity. Just to continue on this transition, sir. Vasudevan, is there any hard stop date for you, which you have in mind or you have communicated to the board in case if the appointment of new candidate doesn't kind of justify the time frame what we are looking at? No. There is no such hard stop for you, sir? No. Okay. Fair enough. Thanks. My second question is with respect to over-leverage of customers more than three lenders. In the last call, we had highlighted that we had kind of an exposure of around INR 88 crores with an extra standard asset provisioning of around INR 44 crores. Can you provide the number as on Q2 end, how that number stacks? Right. The exposure remains very close to INR 84 crore, which is INR 82 crore, and we carry a 50% provision on that. There is a release of around INR 3 crore. INR 2 crore approximately. Okay. Thanks a lot. That is all from my side. Okay. Thank you. Thank you. Next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead. Yeah. Hi, good evening. Thanks for taking my question. I have got three questions for Vasudevan sir. So first one is, this time around, if I recall last time, about two or three years back when you rejoined or took over as the MD of the bank, there was a situation where the board was not able to find a suitable successor. This time around, do you think if at all, unfortunately, that situation has to arise, can you come back and resume the role or you do not really think that is a possibility this time around? No, I do not think that situation will arise this time. Okay. All right. Sir, the second question is as per your letter, right? Basically, your reappointment and the license of the housing finance company that your daughter runs, both are legit and RBI-approved. I believe this was also the arrangement at the time of your appointment as well as the recent reappointment. Then in that case, was there any specific trigger which caused or rather forced you to take this decision? We are just trying to wonder because if it is a RBI-approved situation, then what would have caused this? This has been an issue which has been going on for last two, three years now. Someday it had to happen, so it has happened today. That is it. There is no particular trigger. It is just that this has been going on for quite some time, and there has been a lot of pushback from some of the investors that I have been meeting over a period of time on this issue of the perception. Every time I meet investors, people have asked me, I have tried to explain my best, but at the end of it always ends up by the investors saying that while in reality, there may be no conflict, but the perception is still very strong, and how do you handle that perception? How will you be able to manage that perception, which is difficult because you do not know who is thinking what in their mind. It is something that was going on for some time, and now the bank is touch wood, doing extremely well. On all parameters, I think we are really poised for a good level of growth. Our Q2 has been, again, a very good performance at 13.5% ROE. I believe is one amongst the best from the banking industry. Our profit also is the highest for the second quarter. Credit cost is very much under control. The portfolio quality is very much under control, and we have a full range of products, be it on the liability side or on the asset side. I think we have a complete range of products, and now it is all being scaled up. Most of the products which have been launched have turned the corner, and they are all now generating profit for the bank. I think on all fronts we are doing very well. I thought that this is the best time that we do the transition, so that the incoming successor gets a bank which is performing well, and he does not have to do any firefighting while he is trying to settle in the system. We just thought this is the best timing to do it. Okay, all right. Thanks for that. Just one last data point, sir. What would be your daughter's and your shareholding in the bank today and what was it when you resumed the office three years back? Our shareholding will be very little. I do not really know. It may be 0.1% or something like that, but actually I do not know. It was 1.5% or so. In 2022, my daughter had around one and a half percent in the bank. My shareholding in the bank always was very little, but my daughter had around one and a half percent in the bank, which she had exited and put into that NBFC. Okay. All right. Thank you so much, sir. Thank you. Thanks, Umang. Thank you. Next question is from the line of Pritesh from Elara Securities. Please go ahead. Good evening. Just a question on the cost of funds and the deposit cost side as well. We have seen that there has been a sharp rise versus the industry being a slightly better off. What do you think can be the trajectory from here on? Will it be more steadier, or will we further see some pressures on the cost side? I know, of course, we have raised rates in some of the buckets in different savings account and term deposits. But anything, if you can guide on the trajectory. Right. This is Mukund here. We had an increase of 7 basis points in Q2 FY 2027. We expect 8 to 10 basis points over next two quarters. Sorry, 8 to 10 basis points more increase for the next two quarters, right? For next two quarters, yes. Okay. This is without any pressure which can come from the industry in terms of raising rates? Is it a possibility or that is an additional headwind which can come over time? No. See, actually, we had raised our deposit and our rates slightly ahead of the repo rate increase. Because of the repo rate increase, we don't plan to change our interest rates at this point in time. If there is going to be another repo rate increase at any point in time, that's something we'll have to look at that point in time. But for the present, we don't have any plans to raise the rates again. Sorry. My question was on the deposit funds itself or cost of deposit itself. The 10 basis points increase will happen without any increase or pressure from the industry, right? Yes, that is right. It will increase without any further increase in rates, basically because of repricing of old deposits as they mature. Right. Got it. Second question was in terms of asset quality. I just wanted to check on the vehicle finance. Though the headline numbers do not reveal any large stress, what we are seeing is there is agri stress cropping up in some of the states. Also there is certain micro-lending related issues still pertinent in some of the states. What do you think about our vehicle finance book? Yes. What we have done during even the West Asia crisis and the macroeconomic during Q1 itself, we have started reducing our exposure in the HCV segment. We have started focus more on the SCV and a little bit on better-profile customers. Okay. Even Q2, if you look at compared to the last financial with all these challenges, we are able to perform in a better manner, whether in terms of the GNPA or also on the credit cost. There are few states like in Rajasthan specific, like cement segments. There are few LFO customers, they have limited stress. Apart from that, whereas in south or even in Maharashtra, we do not see any kind of stress as such. It is more of based on the product-wise performance we can able to see. Sure, sir. Thank you for that. All the best. Thank you. Thank you. Next question is from the line of Prolin from Edelweiss Public Alternatives. Please go ahead. Yeah. Hi. Thank you for taking my question. A large part of the question has been already asked by some other participant. But again, Mr. Vasu, the question is to you, right? What specifically changed again since August, you had come out and said that "I want to leave this company." And these questions by investors have been asked frequently before that as well. So how did you arrive at maybe the resignation was the best solution to arrive at, remove this conflict, so to say. And this whole opportunity of even after 75 years, there is such an untapped opportunity in India on the financing side, and maybe the financing reaching to this untapped is also a social cause. Does this not excite you enough to continue with the bank? Slightly very difficult for most of the investors to understand, and given the stock reaction, ideally according to your release, the stock should have reacted positively, right? But see what the stock reaction has been. Vasu devan, what exactly changed and does this opportunity which still lies ahead of us not excite you? And was resignation the only solution, was this discussed with the board that there could be other ways to safeguard, governance safeguards could be put in, there could be other ways to resolve this conflict? This question of timing is always a very difficult question to answer as to why today, why not tomorrow. It is very difficult to answer that question. These things just happen over a period of time and then one day it just becomes clear what exactly you should do, and then you end up doing that. So I am not going to be able to very clearly pinpoint as to why it should be today and why not, say, tomorrow, or why not after six months or one year. Very difficult to answer that question. It just builds up over a period of time, and then one day it just becomes clear what you should actually do. That is what happened now. Second thing is that, generally, I am also very sensitive to any kind of a finger being pointed at me, and you don't want that. We don't want to really be in a position where we believe that we are trying to earn money irrespective of who points fingers at you. That is not the situation you want to be in. So some day something breaks and you take a call. So that is what has happened, and beyond that, I won't be able to tell you why it couldn't have been done six months from today. It is very difficult to answer that. It just happens. That is one thing. What was the second question? What is the second question? Vasudevan, the second question would be that, was this the best way to resolve this conflict and stop this? Also, the opportunity that lies ahead, is that not an exciting enough opportunity for you to get over these alleged questions of conflict? Yes. The opportunities in front of the bank is very large, and we have 28,000 members in the bank. I am sure that we will pursue as a bank, we will pursue that opportunity. We will deliver inclusion strongly going forward. I know that we will not make a serious dent on that 85 lakh. We cannot as an individual bank do that. But definitely we will pitch in and chip away as much of that unmet credit demand as we can. That is something definitely exciting and that is what we have been driving. I have been in Equitas for 20 years now, so it is not like it is a short tenure and that I am switching. 20 years is not a very short period of time, and this entire 20 years has been a period of great excitement for us in the kind of work we do here and the inclusion that we have been able to bring. Just for your information, for an additional data point, almost, I would say 80% of our borrowers are NTC, new to credit to the industry. Almost 80%. That is the kind of business we do. So we genuinely are extremely happy and satisfied with the kind of inclusion that we are spreading through the bank. That journey, I am sure will continue because that is our strength and that is our moat. Sure, Mr. Vasudevan. Thank you so much and hope in your new role you are able to contribute more to the society. All the very best. Thank you. Thank you. That was the last question for today. I now hand the conference over to Mr. P N Vasudevan for closing comments. Thank you. Thank you for joining the call and taking us through all your questions, which always helps us to review and re-look at what we do in the bank and keep improving ourselves all through the time. Thank you very much, and look forward to seeing you again next quarter. Thank you. Bye bye. Thank you. On behalf of Equitas Small Finance Bank Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.