Ladies and gentlemen, good day, and welcome to the Kotak Mahindra Bank Q2 FY '25 earnings conference call. 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 this conference call, please signal the operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashok Vaswani, Managing Director and CEO of Kotak Mahindra Bank. Thank you, and over to you, sir. Thank you so much. Welcome, everybody, for our quarterly call for the second quarter. Let me, let me cover kind of four points. The first point I'll kind of cover is financials, but at a very high level, and then we're about to do it in detail. Two, talk a little bit about the progress we are making on the technology front. Three, a little bit about the personal loan portfolio that we've acquired, going to acquire from Standard Chartered. And fourth, I know for a fact that you will have the recent draft RBI circular on your mind, so let's try and address that as well. So starting with the financials, we ended Q2 with a group profit after tax of INR 5,044 crores. That's up 13% year on year. I've always talked about Kotak being a financial conglomerate, and a conglomerate compared to a plane flying with multiple engines. And this quarter, if you see, three of the four engines grew at over 50% year on year. Capital markets at 52%, asset management at 58%, and insurance at 50%. The bank grew at a less higher number, and the reason for that is that, number one, this was the first quarter where we saw the full impact of the embargo. Now, despite that, we grew deposits by 16% year on year and assets by 18% year on year. In our deposit growth of 16% year on year, our CASA ratio stabilized at 43.6%, which I think continues to be industry leading. Now, even though CASA ratio was 43.6% and customer deposits grew by 16, our cost of funds went up by about five basis points quarter on quarter. On the asset side, like I said, we grew up in customer assets by 18%. This was largely in the wholesale bank and on the secured advances in the consumer bank. We had one little growth in the commercial bank on the back of slow growth in the CV and tractor industry. That is more of an industry kind of trend, and what we are hoping is that this industry trend and changes moves to the better in Q3, Q4. On the MFI side of the business, we restricted growth because as we called out about two quarters ago, we were seeing some strain, and we are being cautious of growing in the MFI space. We expect the strain to continue for the next quarter, maybe two quarters, and then it should get okay. It's obviously confined to certain states, and some states are getting back, coming back quite nicely, while in some cases the strain kind of continues. On the unsecured retail business, obviously the tech embargo has had an effect, particularly on the credit card business, and as you can see, our total share of retail unsecured asset businesses has dipped a little bit to a shade over 11%. In the credit card business, we've also seen some level of credit stress due to the over-leveraging of certain kind of customers. Our loss rates are pretty much in line with industry, though the percentages may look a little elevated. The reason the percentage looks a little elevated is because our denominator is not growing as we are not issuing fresh credit cards. Overall, our CD ratio continues to be in our acceptable range between 83 and 87 at 86.4. That's where I'll leave for the financials. I think a strong quarter, INR 5,000 crore in the quarter, with three of the engines clocking at over 50% year on year kind of growth. Let me move to technology. This quarter, again, incredible amount of progress, a lot of hard work, a lot of significant progress on the risk and resilience, risk and resilience front. We continue to work under the advice and guidance of the RBI and make strong progress on the matters highlighted in the April order. We are also working very closely with GT Bharat, our external auditor, so that they can validate the work that we have done. But more importantly, while we've greatly improved our risk and resilience, we've also used this period to begin to improve the experience for our customers and our colleagues. This, through the beta launch of a new customer-facing mobile app, and if you haven't tried it, I would urge you to try it. It's available on the App Store as well as on the Android Store, and on the automation of processes. This is quite a significant rewiring, and of course, there's more to come on both these fronts, but I'm very excited to share with you the progress that we will be making on these two fronts. Finally, this quarter, we saw the RBI issue a draft circular on fourth of October, and, obviously, we are looking at that circular, in great detail and trying to understand the implications of that circular for our businesses. We have time until November the twentieth to go back to the RBI with our comments, which is, of course, something that we will do. Once we get the final circular, obviously, we'll implement the final circular as required. Needless to say, that it's a matter of where we do business as opposed to whether we do any kind of business, so it can get kind of sorted out, and we are working through, those kind of provisions. Needless to say also, that we will continue to keep you posted on the progress, that we've made, but at INR 740 book value per share, that is a clear, clear indication of a strong, strong fortress company and a strong, and a strong fortress balance sheet. With that, let me hand over to Devang to take you through the details of the financials. Thank you, Ashok, and good evening, friends. Let me just take you through the Quarter Two numbers, which we disclosed earlier today. We'll start with the consolidated numbers first. We ended this quarter with a consolidated profit of INR 5,044 crores, which is about 13% YOY up and 14% higher on a QOQ basis, and calculating QOQ, obviously, we excluded the profit from the Kotak General Insurance transaction, which we booked in the last quarter. Also, it is important to note that this profit does not include MTM gain post-tax of INR 1,363 crores, which according to the investment circular and our classification, has been accounted directly in the net worth, and it has not gone through the P&L. This is INR 1,363 crore for the quarter, MTM gain, which has not gone to the P&L and into net worth. With this profit, the consolidated net worth of the group now is INR 1,47,000 crore, with a book value per share of INR 740, as mentioned by Ashok, which grew 22% YOY. Our consolidated customer assets is about INR 5,10,000 crore, which is 19% higher than the last year. Our capital adequacy at the group level is at 22.6%, of which CET1 itself is 21.7%. ROE at the consolidated level is 13.88, and ROA is at 2.53%. We'd like to clarify, if we remove the impact of the increase in the reserves, as I explained, the consolidated ROE will improve to 14.28%. The share of subsidiaries in the group profit at the Q2 stood at 33% on back of capital market growth. Let me start with individual entity, with the bank first, which this quarter contributed 67% of the group profit. The bank ended the quarter with a PAT of 3,344 crores, with YOY growth of 5%. Q1 profit of the bank included dividend income of 380 crores, as explained on page 8 of the investors' presentation. At the bank standard on level 2, we have a capital adequacy of 22.6%, of which CET1 itself is 21.5%. And for the quarter, the bank clocked an ROA of 2.17%. It is worthwhile to note, this is the first quarter with full impact of embargo, which was applicable towards end of April last quarter. Bank's customer assets grew by 18% to INR 450,000 crore YOY and 3% QOQ basis, with secured customer and consumer banking SME segment contributing significantly to asset growth during the quarter two. Unsecured retail mix reduced to 11.3% due to the embargo on the credit card and lower disbursement in the microcredit business. The mix change in the asset growth towards secure assets resulted in reduction in the yield on advances and consequently, reduction in NIM for the quarter by about 11 basis points to 4.91%. Our CASA ratio, now at 43.6%, in fact, improved marginally on a QOQ, contributed by SA growth of 5%. Our average total deposit for the year grew by 16%, with average TD sweep growing over 50%. Bank continues to maintain LCR ratio of 86.6%. Our fees and services at the bank grew 14% YOY in the current year. That was also impact of slowdown due to the credit card business income not being accounted due to the embargo in the current current quarter. Operating costs are stable at 2.2 with QOQ growth, with reduction in acquisition costs for 811 products, but higher IT spend to meet the remedial measures relating to embargo. Overall P&L impact estimated due to IT embargo is in line with the initial estimate, as we have given as per the earlier guidance. The gross NPA of the bank at thirtieth September is 1.49%, net NPA at 0.43%, with a credit cost 65 basis points annualized, increased largely due to losses in unsecured retail book. Let me now just shift to the subsidiaries' performance. Kotak Securities and Kotak AMC continues to perform well with growth in capital market, increasing contribution to our group profits. Kotak Securities recorded YOY 37% growth in profit to 444 crore, with increase in market volume. Kotak AMC made a profit of 197 crore, up 60% compared to last year, with increase in average AUM in equity to over three lakhs crores, YOY growth of 63%. My colleague, Mr. Nilesh Shah, will delve into AMC performance during the call later. International subsidiaries also benefited from the growth in capital market and increased inflow, contributing 76 crore profit as compared to 41 crore previous year, showing a growth of 84% YOY. Kotak Mahindra Capital profit 90 crore for the quarter, as against 27 crore last year on back of large IPO mandates. Kotak Prime customer assets grew to INR 37,000 crore, with a YOY growth of 19% and PAT for the Q2 at INR 269 crore, clocking a growth of 29% YOY, with some one-offs in quarter two performance. BSS microfinance business correspondent entity ended the quarter with a lower post-tax profit of INR 16 crore, due to lower disbursements and increasing delinquencies in select states. BSS network is INR 1,076 crore at 30th September 2024. Kotak Life ended the quarter with a PAT of INR 360 crore, as against INR 247 crore same quarter last year. YOY growth at 46%, primarily due to higher investment income and realized equity gains. Kotak Life continues to maintain higher solvency ratio of 2.57x, as against regulatory requirement of 1.5x. With this, wishing you all the best wishes for the festivities ahead and look forward to interact with you. I hand over to Shanti for the business updates. Thank you, Devang. As has been stated, the bank's customer assets grew to four lakh fifty thousand crores, which is up 18% YOY and 3% QOQ. I'd like to get into the highlights of each of these segments of assets, and I will start with the consumer segment. The consumer bank advances was primarily led by secured businesses, which grew 6% QOQ. This includes the mortgage business, both home loan and LAP, as well as the business banking segment, which grew 21% YOY. Portfolio of the secured book continues to be robust, reflecting strong quality. The unsecured retail business showed a muted QOQ growth of 1%, largely because of the embargo on credit cards and some amounts on the personal loan. In the credit card business, we do see some buildup of stress, particularly in the vintage segment. We had calibrated our risk framework last year to align to the macro, and the recent vintages continue to perform well. Personal loan showing a slightly better stable, stable trend. Let's move to commercial assets. The CV industry saw a 10% degrowth in Q2, largely due to the goods segment, although the passenger segment continued to grow. At Kotak, we managed to gain market share marginally, but growth was relatively muted. This segment of commercial vehicles has seen disruptions in the last two quarters, largely due to heat, rain, and climatic risks. This impacted overall economics for the truck operators to some effect, including a lower load factor. So due to this, we have seen some delinquencies, particularly in the retail segment. We tightened our credit underwriting and strengthened our collections to ensure that we continue to underwrite well. With the ongoing festival season and the anticipation of increased government spend, we expect H2 for the sector to be much better on demand. The construction equipment showed a modest growth. Our disbursements grew along in line with the industry, and the portfolio is reasonably robust, and we plan to retain our growth momentum in this segment in line with the industry. The tractor finance business was largely flat in the first half of the year. This is on the back of 8% degrowth in the last financial year. There is a seasonal impact on the tractor business in Q2, including due to certain erratic climate events and a slower rural economy. Our disbursements have grown largely in line with industry, and we continue to be a key player in the industry. We continue to focus on our used tractor financing business.... With the above normal monsoon and expectation of the government's push on rural infra, we expect a revival of the tractor demand in H2. We also expect the cash flow in the rural and semi-urban areas to improve, and hope to see better collection efficiencies in tractor in H2. The agri business utilization was very flat, but the portfolio continues to do stable. Microcredit, after a consistent 20-25% growth in the last two years, the micro sector de-grew by 4% and expected to de-grow in this quarter as well. Mm-hmm. The segment saw certain stress because of over-leveraging of certain borrower segments. This, along with the slowdown in the rural household incomes, saw some increase in delinquency. This is likely to play out over the next two to three quarters. Our microcredit business actually de-grew. We pulled back a bit, and we'll be watchful of the trends as we look at this important business. We are optimistic of the medium and long-term prospects of the business, and are building a quality franchise with the right reward metrics. With the acquisition of Sonata, our footprint has increased, and we are currently in 16 states with 27 lakh customers. I'll now take you through the highlights of the wholesale business. The last quarter, I've spoken about the medium to long-term strategy laid out by the wholesale bank of increasing market share holistically with sensible and profitable growth. A key component was to grow the granular book at a much faster rate, and in line with this, the corporate SME and the mid-market businesses saw a healthy growth. The corporate SME grew at about 31% YOY, and the mid-market saw a number of new acquisitions. New acquisition has been a main focus, and we have been able to achieve a 56% YOY growth in the SME businesses, corporate SME businesses of new, customers. Amongst the larger corporates, the growth was a little more muted. Growth came more in the form of credit substitutes. This space continues to face challenges of irrational pricing, and our strategy in this continues to be initiatives such as increasing product holdings, capturing a higher share of transaction banking businesses. The credit substitute group book actually grew 80% YOY this quarter. Trade assets continued to be a focus and showed a growth. There has been a 2.2% increase in new customers on our flagship digital offering, Kotak 811, and the number of trade transactions on our digital platform has grown significantly. We will continue to invest in enriching our digital propositions for trade. GIFT City has been another important initiative on the wholesale side, and our GIFT City business actually grew 80% YOY in both trade and non-trade advances this quarter. Our asset quality across the customer segments on the wholesale side continues to be robust, and we continue to bolster our efforts through higher cross-sell and deeper penetration of income. One of the highlights of this quarter has also been our debt syndication business, and we were able to close a number of mandates in a diverse set of sectors like infrastructure, data centers, real estate, auto, retail. We will continue to focus on this business. Overall, the franchise and business remained healthy. Let me now turn to liabilities. The average deposits for the bank grew by 16%, and our CASA ratio this quarter actually improved marginally. Savings deposits, particularly the fixed rate savings, grew sequentially, and we saw growth across segments of affluent, core, non-residents, and we're beginning to see some green shoots in the savings deposits in this quarter. We are focusing on the premium end of the customer as far as new acquisitions are concerned and have moved to co-originate bundled offerings across all our products. On the current account side, we again have focused more on the proposition for customers, payments, current accounts, and other products. We relaunched Activ Money this quarter and saw a strong growth this quarter of 9% QOQ and 41% YOY. Deposits, it continues to be a focus, particularly granular deposits across savings, active money, and term deposits. Distribution. We made deep-rooted changes in the distribution strategy within the consumer bank, with a focus on customer centricity, and have structured ourselves across product proposition and distribution. Our distribution is across physical, digital, as well as voice and video, with a focus at a micro market level and provide best solutions to customers based on their persona. On the digital platform, focus has been in best-in-class experience across banking, investments, payments, and also through our mobile banking app, which is the banking app, Eight one one and Cherry. On the wholesale liability side, average custody flows were strong, driven by market buoyancy in both primary and secondary markets, and market acquisition in offshore and domestic markets. We continue to strengthen our offering in this space and have launched global custody services at GIFT City this quarter. Cash payments continued to show a strong growth, so also our collection payments on the cash management side. We've launched Kotak's API developer portal, which enhances the visibility of our API offerings, facilitating new business acquisitions. I will now request Nilesh to take you through the asset management business. ... Thank you, Shanti. Let me talk about our asset management business. Kotak AMC's North Star is to be the most trustworthy Indian asset management company. By focusing on the four Cs of customer, company, colleague, and community, we are building a bond of trust with our customers and have emerged as the fifth largest mutual fund in India. At the end of second quarter at FY 2025, our folio base grew 20% YOY to 1.2 crore, a growth of 2.4 times in the last five years. Our unique customer base grew 31% year-on-year to 65 lakhs, a growth of 3.8 times in the last five years. Our average assets under management grew 41% YOY to INR 4.7 trillion, a growth of 2.8 times in the last five years. Our total AUM market share grew to 7.1%. Over the last five years, it has increased by 60 basis points from 6.5% to 7.1%. Our total equity AUM, comprising of active, passive, and arbitrage funds, grew 61% YOY to INR 3.1 trillion, a growth of 4.6 times in the last five years. Our pure equity AUM grew 58% YoY to INR 2.4 trillion, a growth of 5.3 times in the last five years. Our pure equity AUM market share grew to 6.5%. Over the last five years, it has increased by two percentage points from 4.5 to 6.5%. Our SIP inflows as of September 2024 grew 23% YOY to INR 17.6 billion, a growth of 3.2 times in the last five years. We continued to serve investor requirements across active and passive funds, focusing on local and global markets across debt, equities, and commodities for retail as well as institutional investors. We maintained our focus on ESG investing as India's first signatory to the United Nations Principle of Responsible Investing. Since our adoption of UNPRI six years ago, our rating has consistently been above the median across emerging market peers. Digital transactions contributed 91% of our total transactions in second quarter FY 2025. This restricted investor queries to just 312, which represents 0.0035% of our folios. Our digital properties had an uptime of 99.95% in second quarter FY 2025, demonstrating robustness of our technology platform. Our investor base remains well diversified. The top 10 investors contribute 7.3% of total AUM, and the top 10 distributors contribute 22% of total AUM. Our disciplined investment management process continues to add value to our investors. 11 out of 16 equity and hybrid schemes are outperforming respective benchmark indices over the last three years. We have embedded quantitatives in our investment process with the launch of Kotak Quant Fund last year. The alpha of this fund for the last 12 months is 20%. Our non-institutional AUM is 59% of the total AUM. Over the last five years, it has moved 14% in favor of non-institutional investors as we have expanded our branch and digital network. All this is reflected in our profit after tax, which grew 58.87% YOY to INR 197 crore in second quarter FY 2025, a growth of 2.3 times in the last five years. Coming to our international asset management business, we manage $6.1 billion across debt and equity, across funds and advisory for global investors. Kotak Asset Management Singapore manages the largest India-dedicated midcap offshore fund, viz. Kotak Funds - India Midcap Fund, which has an AUM of over $4.4 billion. With offices in Singapore, Dubai, London and New York, among other places, they are emerging as the preferred choice for inward investment in India for global investors. Coming to our alternate investment management business, Kotak Alternate Assets has secured commitments of $352 million in second quarter FY 2025, a growth of 88%, taking its total commitments to $10 billion since its inception. Kotak Life Science Fund, which is part of the private equity strategy, was launched in second quarter FY 2025. Kotak Private Credit Fund raised $33 million in second quarter FY 2025, a growth of 153% YOY, taking total commitments to $211 million as of 30th September 2024. Discretionary portfolio solutions under Kotak Optimus and Kotak Iconic added $80 million in second quarter FY 2025, a growth of 40% YOY, taking its total AUM to $809 million. ...Our total assets under management across mutual funds, portfolio management services, offshore insurance and alternate assets grew 37% YOY to INR 6.8 trillion, led by domestic equity mutual funds and offshore funds. It has grown by about 2.8 times in the last five years. I wish all of you a happy festive season. I will hand it over to the operator for initiating question and answer session. 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 please use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question is from the line of Chintan Joshi from Autonomous. Please go ahead. Hi, good afternoon. Can I start with your recent interview, where you had kind of expressed a desire to be the number three private bank in India? If I look at kind of where consensus estimates are and extrapolate, it feels like you need to grow 8%-9% faster than your peers. And the question I have is, you know, I'm talking about the... Operator? Hello? Yes, go ahead, sir. No, operator, I think we lost Chetan. We can't hear him. Chintan Joshi is connected, sir. No, we can't hear him. Chetan is here. Chetan? Can you hear me? Yes, we can hear you. So your question was? So, my question was related to your objective of being the number three private sector bank in India. If I extrapolate kind of where consensus estimates are, it seems like you need to outgrow your peer by 8-9% per annum for the next five years. What I was interested in understanding was the products, the geographies and the subsidiaries in which you could grow, outgrow your peers, to get to that, to achieve your objective. And then the second question was on the margins. If you could highlight what kind of sensitivity we would be facing from the RBI rate cuts, and how much offset will there be from the StanChart deal, and the savings account rate cuts that you've announced. So to give... If you could kind of give us a picture on margins, how they might evolve over the next year? Okay. So, Chetan, I'll start, and then I'll ask Devang to also chip in. Look, I think, on, on the vision, this is something that we've set as a team, as a goal over the next, kind of five years. So this is not like, you know, in kind of one quarter. And the way we thought about it is that we've said that, look, this will happen both from an organic perspective and an inorganic perspective. Obviously, we will see a step up. Inorganic is not enough controlled, depends when opportunities come up. We'll step up, the pace of organic growth, and we're gonna do a whole bunch of stuff to kind of get that going. But you're not gonna see the impact of that immediately in one quarter. Right now, our first priority, like I've been mentioning, over the last, since April at least, is that our first priority is to fix our technology estate and get out of jail. But as you would have heard Shanti talk, at the same time, we're also investing heavily, in technology, not only from a risk and resilience purpose, but from a customer and a scale perspective, right? And that's the way, to kind of get about. So you'll see more of those kind of things happening. As far as NIM is concerned and margins are concerned, Chetan, as you know, we manage this very, very tightly, and we manage it on an ongoing basis. One of the things that we've been talking about is how do we at least align some of the rates that we charge, rates that we pay in the marketplace on, let's say, our savings book? And the rate change that we made on seventeenth of October was really to bring our savings rate in line with that of the competition. Going forward, Chintan, it's obviously, say, how do we monitor what pricing we can get on our loan book? Once we get out of, you know, under the embargo, obviously we'll grow our unsecured retail book, and that will give you a higher-yielding asset. Obviously, we are looking to grow our rural kind of book, which is both CBC, and then hopefully come back strongly on microfinance. Again, those are high-yielding books. So over a period of time, we will manage the rate, the yield on our assets, and then manage our deposit rates such that, about the proposition such that we maintain our CASA ratios and maintain our kind of cost of funds. So this is something that we kind of do, I mean, we audit every week, Chintan. That's fair enough, yeah. But, just I'm trying to think about the near term in terms of the main impact from three factors: RBI rate cut, the StanChart deal, and the savings account reduction. ... So, so Chintan, RBI rate cut, you know, it is anyone's guess when it will be and how much it will be. What is definitive today, which we have already declared, is the savings account rate cut, which will add roughly about four basis points improve the NIM margin. What we already also announced is the Standard Chartered portfolio and unsecured book, which will also add about a couple of basis points to the average yield on the assets, right? Plus, what I think Ashok said, we will continue to take measures to improve the margin through change in the asset mix and maintaining the deposit ratio. These are the things which we can clearly see now, and we'll see how the RBI rate cut, as in when and how much it comes. As you know, you know, when the rates were higher, we took the benefit. Clearly, when the rate cuts will happen, it will have initial reaction, but it will stabilize the way it stabilized when the rates went up. Thank you, and apologies for the voice going at the start. Thank you. Thanks, Chintan. Thank you. We have Sumeet from Morgan with the next question. Please go ahead. Hi, team. Thanks for the opportunity. I had a question with respect to margins over the last two quarters. So, margins have come down from 5.27% to 4.9%, and I was looking for some waterfall on what has happened. So I see three or four factors. One is basically change in loan mix, second is higher liquidity, as reflected in LCR, third is IPO flows, okay, and fourth is Sonata, the way in which it was accounted in the fourth quarter and then first quarter. So if you can give me some breakup, that will be very helpful because your margins have come down by 35 or 36 points. I think you're currently answering the question itself. But I can only conclude by saying despite that fall in the margin at 4.91%, we are still the leader in the sector with the highest margin. You are right about your analysis. I think I can only add, saying that in the current quarter, you saw the fall of about eleven basis points. That is purely because of the mix change, more towards the secured book. We have continued to grow our book at 18%, but the proportion of group growth is more towards secured book, housing loan, LAP, working capital, which are generally at a lower rate than a normal unsecured loan book, and as you know, we have a constraint. We cannot grow credit card book, and this being the first quarter where the full impact of the Embargo in credit card is felt. So these are the reasons which contributed. So clearly the reason is on the yield on the asset and not much on the cost of fund or the deposits fund, which seems to have stabilized. That's the reason for this quarter fall in the margin. Okay, I was looking for some quantification, but that's fine, Devang, and second is on asset quality, when do things stabilize? This quarter was slightly higher on slippages, and I also see coverage moving lower QQ, so I guess coverage moving lower QQ is because of fresh slippages, but I just wanted to get some idea as to how do you look at coverage and where are we on the slippage cycle? Yeah. So let me have Paul step in and answer that question. Okay. So you know, as was mentioned earlier, the main areas of there was some amount of you know delinquency pickup was two. One is significantly unsecured, and within that credit cards. We've not onboarded any fresh credit cards, as you know, since April, so. And we had already taken a lot of action, so probably for a year before that. And some of the impacts are also because of you know the older vintage clients who normally behave better in the industry seeing some amount of delinquencies. The actions which we've taken, all this will take a few quarters, maybe a few two or three quarters to sort of play out. Our recent sourcing, which we had done before the embargo kicked in, those are behaving much better. So hopefully that will hold up, and some of the slippages in the older book will play themselves out. And similarly, in the microfinance, we had acted much earlier, and there again, as you're seeing, degrowth. So the fresh onboarding will be better, and some of the pain in the older book will play out over the next two or three quarters. So that's how one sort of sees it. Thanks a lot. Those were my questions. Thank you. The next question is from the line of Kunal Shah from Citi. Please go ahead. Thanks for taking the question, so firstly, with respect to the entire unsecured portfolio, if you can indicate in terms of the profile, in terms of the average ticket size, how it's panning out, and earlier also, we have seen Kotak doing not so sizable acquisition, be it in the MFI or the vehicle financing, and that's continued even on PL side, so should we assume that those inorganic opportunities would be relatively in few of the sub-segments of a smaller size, or maybe even a slightly larger inorganic as well? Yeah, so that's the first question. So let me take that question. This is an opportunity that came up, and when we looked at the portfolio, we saw that it was in keeping with our strategy of the affluent segment. We've done our due diligence, as you may know, before we signed up for the portfolio. And I think that what we saw in the portfolio is in keeping with our affluent segment strategy, which is our trade strategy in the personal loan segment. So very much what Ashok has called the tuck-in acquisition strategy, which we will be looking for. And there is an opportunity, we get roughly ninety-five thousand customers, it will help us, you know, onboard, upsell, and see what other opportunities we have with these customers. Okay. And when maybe RBI is slightly cautious with respect to growth in the unsecured side, maybe does it maybe how would it be looked upon from the regulator side? Because that growth still continues from our end in this segment, yeah. No, look, I think the two are completely different. RBI basically is saying, right, that you've got to get your technology stack under control, and we are working very, very hard on that. I think they've said as part of that, that you can't do digital onboarding, and the portfolio acquisition is something, you know, these opportunities come along, and when they come along, we will look at these opportunities. These tuck-in portfolio acquisitions is what we really, really like, you know, because you just bring in the portfolio, you don't have to pay for cost of acquisition. It's an easy kind of switch across. It's a business we know, it's a risk we understand, and it's very accretive right from word go. So, you know, I just wish more of them came along. We did Sonata. We did Standard Chartered. If others come along, we'll love to do these kind of things. The technology infrastructure build-out, that continues, and, you know, those two events are completely independent of each other. I just want to highlight, even today, 89% of our business is secured, which you were seeing has grown pretty well this quarter, and our earlier stated objective is continuous, is that we will look at unsecured up to the 15 level, so as and when we see opportunities that show growth, which fits within our risk and a strategy framework, we will look at it. Sure, sure. And, secondly, on this, RBI's supervisory action, given that we are very much like almost a quarter into it. And generally, the way we have seen the restrictions getting lifted for most of the other names, in terms of the period that it generally takes, what is your assessment in terms of where we are? Would RBI look at some kind of partial lifting of the restrictions? What could be the timeline that you would want to assign, given the progress which you are very confident about in terms of it's going very well on track? If you can just give some comments on that. Yeah. Yeah. So, Kunal, look, it's impossible for me to know, you know, how the RBI is thinking or on what date they're going to say, you know, the embargo is lifted, right? That is a question for the RBI, and, obviously, the sooner the better from, our perspective. What I do know is that we are working exceedingly hard on kind of systematically knocking out, any kind of, points of failure, any kinds of things that have been brought up in the RBI, exam points, anything that, you know, we think can improve risk and resiliency. At some stage and of course, the work that we are doing is also being validated by our external auditor. That should give the RBI greater comfort, that, you know, what we are saying is validated by an independent kind of person. Having said that, that's all I can do. After that, frankly, it is in the hands of the RBI, and at some stage, they will determine that we've made enough progress to lift the embargo off us. Sure. And one last question on incremental slippage. Would it be fair to assume that a larger part of incremental slippage would be from the credit card, or are there other segments as well, including MFI and the others, yeah? So Kunal, as you know, the credit card business, generally speaking, has the most of the credit losses. So if you look at our total credit cost, credit cards is always going to constitute a very significant portion of that total, and that will kind of continue. No, on slippage, slippage. Yeah. So you are right. From the slippage, credit card does constitute about 30%-25% of the, you know, share of that, the net slippage. But I think, we are very, very hopeful that in quarter three and four, we will have recoveries from the rural and secured businesses, which will sort of help us to, you know, reduce the slippage going forward, further in the Q3, Q4. Sure, sure. Thanks. Thanks, and all the best. Yeah. Thank you. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah, hi. Thanks for taking my question, and congrats on the quarter. Piran, you are not audible. Hello, we can't hear you. Can you please repeat if you asked a question? Yeah. Am I audible now? Yes, you are audible. Yes. Yeah, go. Yeah. Hi, hi, thanks for taking my question. Firstly, just wanted to understand the rationale for the SAR deposit rate cut in an environment where our SAR deposit growth is weak and the benefit is merely four basis points. ... So look, the SAR deposits card, first of all, it's restricted only to balances below five lakhs, and we were paying a rate of 3.5%, which is more than what competition was paying. And really, the rate, the rate cut is to bring our deposit rates in line with competition. Based on every, everything that we've looked at and based on the analysis we've done, the impact from a volume perspective is going to be, at best, muted. Okay, fair enough. And, just to clarify, if I back calculate, it means that only about one-third of your SAR book is less than five lakh ticket size? Devang? No, so I think, it's not that simple, because this is up to five lakhs, means across the buckets, up to five lakhs. Correct. Where, so that is not the way perhaps you will calculate. So that may not be the right way to calculate it. No, I mean, why, Devang? Because you've cut by 50 basis points, and if it's only a four basis points impact, it means it's one-tenth of your deposits, less than one-tenth, and if size 30% and this is 9% or 10%, it means one-third, right? Where am I wrong? So I think we should separately take this. I will explain to you. As I said, across the buckets, up to INR 500,000. It is the first lag of INR 5 lakhs- First, first- Across the entire book. Yeah, across the book. Okay, we'll get to know. I'll explain to you separately, offline. Fair enough, fair. And then secondly, just wanted to confirm this, in terms of our outlook on slippages in, credit cards and microfinance. It remains elevated in the second half, but we also have some offsets from the secured loan book. Did I understand that correctly? So yes, you are right about the offset about the recovery, but I think the slippage itself we expect with the measures what Paul has described to reduce going forward, especially in the micro credit book. Yeah, but, you know, this can continue for a couple of quarters, but the measures have been taken such that, you know, each of these are... So if you look at micro credit, it's a loan. So as the old legacy loans run down, what is left will be fresher underwriting, and that therefore automatically means that slippage, you know, the slippages come under control. So that's really how it will play out. And we've done this a few quarters back. It's not that we saw it this quarter. Yes. But, it's something we saw a couple of quarters back, but this has to just play out. Got it. Got it. Okay, that's it from my end. Thank you and wish you all the best. Thank you. Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead. Yeah, good evening, and thank you for the opportunity. What proportion of your loan book will you be able to- Sorry to interrupt, Manish, but your line is not very clear. Am I audible now? Yes, sir. Yes, better. Yeah, yeah. Thank you. I wanted to check what proportion of your loan book is linked to repo and external benchmark? About 60% of our book is linked to the external benchmark. So the question here really is that, we are at a margin level where we were in June 2022, and May 2022 is when we had the first rate hike. While I appreciate that timing and quantum of RBI rate hike is not known, but if we take a six to twelve-month view, rate hike, rate cut, sorry, is inevitable. So what contingencies would you have in that scenario? Because if 60% is linked to repo and we get a fifty basis points cut, that's a pretty decent hit on your yield on loans. So, I think, see, it's not just on the rate cut on the advances side. As you have seen, when the rates went up, there was a repricing of the deposits as well, with a lag. So similarly, as when the rate cut comes down, we also would expect the cost of deposits also to fall with a lag. And the 60% is something which is, if I look at the peers, it is something across the board. Kotak is no, you know, no different from the others. So I think, as we got the benefit when the rates grew up, as the deposit reprice with a lag, similarly, when the rates go down, the deposits also will reprice downward, and you will start seeing the inflow coming. Sure. Lastly, in terms of credit cost, should one expect credit cost should remain in this 65-70 basis points handle, or do you expect it to go up before it comes down? My sense is that credit cost will more or less stabilize, and then over the next two or three quarters, actually come down. But of course, you know, these things. You've got to be, you know, this is like looking into the crystal ball. We've got to be careful. Yeah. Depends on how things kind of play out. Right now, the macroeconomic indicators look strong. Bit of stress on micro, but let's see how it plays out. But given everything that I'm seeing, I feel pretty, pretty comfortable that at least two quarters out, we'll see loss rates come down. I think, as I said, the secured book recovery from Q3, Q4 will ensure that the slippage comes down, as we go forward. Understood. Thank you. Those are my questions. Thank you. The next question is- Mm-hmm. On the line of Param Subramanian from Nomura. Please go ahead. Yeah, hi, good evening. Thanks for taking my question. Firstly, on again on the credit cost, so, in the fourth quarter, a couple of quarters ago, we had taken a big write-off, and we had explained that it was largely in the unsecured and credit card businesses. So, so that pertained to the longer vintage unsecured NPLs, right? So what we are seeing now in this quarter is more fresh and delinquencies of more recent vintage. Is that the way to look at it? No, no, no, no, no, no. No, no, no. Stop! One second. What we did, what we did in April- March. March, for the end, for the quarter ended March, was we changed the way we do the accounting, right? Throughout the period, what we've been doing, on, on secured, we've been providing 100% at 180 days, right? But the actual write-off, which we take, we were taking two years hence. To make, so what was happening is our GNPA was showing elevated kind of numbers. To try and make it in line with the industry, we brought it, we brought down the write-off from two years out to 270 days DPD, right? That was the big change that we did for the last quarter of last year, right? That is just an accounting change, it has nothing to do with, you know... frankly, it made no difference to the P&L or anything like that. That is just so that the numbers you could benchmark. It made your life easier because you could compare numbers across banks. What we are saying separately is that, and we called, frankly, this out about two, maybe three quarters ago. Two or three quarters ago, we said that there is a certain amount of over-leverage in the system, and that over-leverage in the system is starting to show up. The initial place where it showed up was in the microfinance business, and then it showed up to some extent in the credit card business. You see the loss costs and the credit costs kind of following through. What we are also saying now is that we expect post-Diwali that we will see a certain amount of recoveries, particularly in the businesses that are linked to the rural parts of India, and improvement in credit costs in the next three to six, nine months in portfolios like credit cards. That is the entirety of what has happened, how we think things will happen, and what you are referring to for the last quarter of last year was really just a big accounting change. Fair enough. Very clear, Ashok. Can you hear? Yeah, please go ahead. Thank you. Hello. Yeah. Yes. Yeah, if I heard you correctly, Ashok, you said two seventy days is when you write off unsecured retail, right? That is correct? Yes. Two hundred and seventy DPD. So other banks, look, there are banks who do it at hundred and eighty DPD. We've chosen to do it at two hundred and seventy, because providing at 100% at one eighty and writing off at one eighty, we felt was not appropriate from an accounting point of view. Because from an accounting point of view, when you provide at a 100%, you expect to get some kind of recovery. Earlier on, we just had that, keep that recovery period open up for two years, now we said we'll keep the recovery open up for ninety days. It makes zero difference from all perspectives. Yeah. Zero difference, because we continue to do recovery irrespective of whether we write off at two seventy or at seven twenty for that matter. Fair enough. Very clear, Ashok. So, my second question, again, this is just data, so, how much of the slippage in this quarter was from the microfinance segment? Or is this something that, where we expect slippages to come through in subsequent quarters? No, so this quarter also has slippages from microfinance business. So as I said, while the majority of that is from the credit card business, micro credit also had a share of it. It had the slippage issue. Fair enough, Devang. I was looking for a number, but that's okay. And lastly, just on this quarter, there would have been some impact of the float from the capital markets on the margin, right? If you could call out that number for this quarter, that would be great. Yeah. I think you're right. We had a short-term, you know, surge in the deposits, which obviously you could deploy only in a lower yield asset that we'd expected them in. The impact is about more than two basis points, basically, on account of these IPOs as fixed. Yeah? But I mean, I guess the bigger point is that the strength in one part of the business flowing through. You can see how it flows through so many other parts of the business, right? The fact that we get IPO mandates flows through on the deposit side, it flows through on the treasury side, it flows through in, you know, on the corporate banking side. And therefore, you know, the power of the financial conglomerate really, really comes through, with these kind of deals. Yeah, but we've got to impact them. Yes. Okay. Thanks a lot. Thank you, team. Thank you. All the best. Thank you. Thank you. We get the next question from the line of Saurabh from JP Morgan. Please go ahead. Hi, sir, just two questions. So one is, you know, on this RBI norms on investments, what are your thoughts, if you had to consolidate both Kotak Prime and all the lending subsidiaries within the bank? And the second is just in terms of Kotak Prime specifically, and also in the bank, I mean, how many of these customers will have, like, Kotak Prime customers will have a account from the bank as well? ... Yeah, so look, so obviously, the draft circular, we got it on October the fourth. We are looking at it in great amount of detail, and trying to analyze it, trying to understand what, the spirit is and, you know, what kind of makes sense. Now, clearly, one aspect of the circular is that the business that you can do in the subs has to be businesses which you can do, which can be done in the bank, right? And there's nothing that we are doing in the subs that frankly we are not doing in the bank, and therefore, it's not a question of whether we have to shut down, businesses, it's more a question of where we're going to do, certain, businesses. We have time till November the twentieth to kind of go back and actually talk to the RBI about the implications and what our suggestions would be in light of the spirit of the intended kind of regulation. Now, at the end of the day, the RBI will obviously take the collective view of the industry, evaluate it, some of it will make sense, some will not make sense for them, and they'll come out with a final circular. When they come with a final circular, we will have to abide by the final circular. There will be some elements of business which we will do only in the bank. We've got couple of options that we are kind of looking through, working through, trying to understand what the implications of that are and get ahead. There are advantages... There are both pros and cons, in terms of, you know, going there. We are evaluating that very, very carefully, and we should be able to provide a greater degree of clarity once we get a sense of what the final circular is. Also, finally, there's a sense of timing. Let's see, they've indicated on some elements, a certain level of timing. Let's see what the timings actually land up to be, and we will work through it. Okay. And just in terms of your slippages, what percentage will be coming from these linked accounts, basically, and, would you expect the stress in credit cards to also go up in your personal loan portfolio? I mean, is that how to say? Sorry. Sorry, Saurabh, could you just... I missed the first part. What did you say? How much of your slippages will be coming from the linked accounts? Basically, you have to delink account because of the default in the credit card business. Yeah. So when you say linked accounts with a card customer who's got a personal loan. Personal loan. Ah, common customer. Yeah. So look, I think, you know, the way to look at it, the real way to look at it is that these are usually customers who have also got a bank account, and typically and usually have their salary coming through us, and those are actually our best customers. And obviously, we monitor total unsecured exposure across products, right? And particularly a salary kind of customer usually gives you the best credit. So that area, I'm a little less worried about. So, you know, Saurabh, well, I don't have the exact percentages, but the percentages are low, okay? And we clearly identified this as a potential area of risk probably a few quarters back, and clearly, therefore, cross-sell to customers, weaker segments of one asset to the other, we've actually clamped down quite a bit, some quarters back, yeah. So that's how we're looking at it. But the percentages are low. That's not a major contributor. Got it, sir. And you, at this current point, you would not expect the credit losses in your card business to eventually go up to the PL portfolio. Will that be a fair statement? No, no, no. No, no, no, no. Definitely not, no. Okay. All right. Thank you. Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to one question per participant. The next question is from the line of Rikin Shah from IIFL. Please go ahead with your question. Thank you for the opportunity. Just one basic question. The stage three, I mean, the provision coverage on NPAs, has come off sharply in this quarter. Just wanted to understand what would be the comfort level that we would like to operate, given that we are not carrying any buffer provisions? No, so I think what happens is, when there is a slippage increase in a quarter, you'll appreciate that the coverage ratio will come down because the provision on the fresh NPA will not be providing 100%, right? So the incremental slippage will always result in coverage reducing, which will get corrected if it's unsecured loan, as we provide anyway, 100% over 180 days over next quarters, right? So I think it will depend upon the nature of business where the slippage is occurring and the quantum of it. But with the increase in slippage, you will see coverage sort of reducing. But to give to answer the second question, we are comfortable maintaining coverage ratio is about 70% on an average. Perfect. Thank you, Devang. And just one housekeeping question, if I may? Sorry to interrupt, sir. We request you to please rejoin the queue. Thank you. Ladies and gentlemen, in the interest of time, we request you to please restrict yourselves to one question per participant. The next question is from the line of Jai Mundra from ICICI Securities. Please go ahead. Hi, sir. Good evening, thanks for the opportunity. So on the StanC transaction, what is the price that we are paying? I mean, because there is a bit of a risk of the rising stress in the personal loan portfolio, are we paying at par or is this subpar? And are there any risk mitigants in case, you know, the delinquency turns out to be higher than expected? That may be the current level, that the public disclosure says that their retail GNPA is 2.6%, which is at the retail level itself, twenty thousand crores, not their personal loan portfolio. So, we would like to get your comments there. Thank you. Yeah. So, like Shanti mentioned, obviously, you know, we've done very detailed due diligence on this portfolio. We've obviously compared it to our portfolio. We are obviously aware of the situation and the over-leverage in the market. We are obviously aware of the trends of risk in personal loan portfolios, and all of those factors have been taken into account in us determining whether we want to do this transaction, and if we want to do this transaction, do it at what pricing. We obviously had those discussions with Standard Chartered and have agreed upon a deal, but we are not in a position to disclose the exact price that we paid for the portfolio. But, obviously, we've taken factors like this into consideration. Yeah. Thank you. I have one- if I, if you permit, I have one more question. We would need to end the Q&A session at this point, sir. Thank you. Ladies and gentlemen, I would now like to hand the conference over to Mr. Ashok Vaswani for closing comments. Over to you, sir. Yeah. So thank you very much. First of all, thank you so much for being with us on a Saturday evening, as usual. It's highly, highly, highly appreciated. As you can see, this has been a very, very busy quarter for us, and I think the power of being a financial conglomerate shone through very, very strongly, and some of our subsidiaries that you saw Nilesh Bhai take you through the AMC have seen some kind of stellar kind of growth, and that's really the power of Kotak. That's the difference of owning Kotak, of really bringing it all together to meet the needs of our customers. And I'm very confident that as we kind of grow, we'll see more such success stories, where we bring all the power of Kotak together to meet the needs of our customers, to deliver for our shareholders. So with that, thank you very much, and let me take this opportunity to wish you a very, very happy Diwali, and I look forward to meeting you, if not before, at the end of the third quarter. Thank you. With that, bye. Thank you. On behalf of Kotak Mahindra Bank, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.