Ladies and gentlemen, good day, and welcome to the Ujjivan Small Finance Bank Q3 FY 2024 earnings call, hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rikin Shah from IIFL Securities Limited. Thank you, and over to you, sir. Thank you, Darwin. Welcome, everyone. We have with us today the entire senior management team of Ujjivan Small Finance Bank, discuss 3Q FY 2024 earnings performance and the business outlook going ahead. The management team is represented by Mr. Ittira Davis, MD and CEO, Carol Furtado, Chief Business Officer, Ashish Goel, Chief Credit Officer, Ramesh Murthy, Chief Financial Officer, Martin P. S., Chief Operating Officer, Vibhas Chandra, Head Micro Banking, and Deepak Khetan, Head Financial Planning and IR. With this, I will pass on the call to Mr. Ittira Davis to share the opening remarks and walk through the 3Q performance. Over to you, sir. Thank you, Rikin, and good evening and welcome to our Q3 FY 2024 earnings call. FY 2024 Q3 has been yet another healthy quarter, with the bank moving in the right direction. During the quarter, our loan disbursements were at INR 5,675 crore, up 17% year-on-year, leading to a gross loan book growth of 27% year-over-year and 4% quarter-over-quarter. Microfinance business continues to witness strong ground-level trends, being an underpenetrated segment still. We believe the business in this industry has more room to grow, mainly due to increasing number of customers coming in the purview of lending, along with growing appetite for credit among existing customers. We acquired around 2.5 lakh new customers, taking the total count of newly acquired customers to 7.8 lakhs in the nine-month period as of April 2023 to December 2023. During the quarter, disbursements of our group loan and individual loan business were at INR 3,294 crore and INR 1,029 crore respectively, up by 7% or 45% year-on-year, but stagnant when compared to the last quarter. This was due to higher number of holidays during the period, resulting in some loss of business. However, we have seen momentum picking up very well during the month of December and expect this strong trend to continue in the fourth quarter, which is usually our best quarter. One of our key focus areas is increasing our secured loan book contribution to our total portfolio. Our concentrated efforts have helped improve our secured loan book percentage to 28.3%, up 83 basis points versus the last quarter. Affordable housing, including micro mortgages, which is our second largest and profitable business, continues its strong upward quarter-on-quarter. We disbursed INR 595 crore for the quarter, up 73% YOY and 10% QOQ. As I had mentioned earlier, we are focusing on a hub-and-spoke model for the housing and MSME businesses. This has been beneficial in improving our business efficiencies and reducing tax. Along with this, we have introduced state-wide collection policy for our micro mortgages as we progress to enter into new states and have also started offering new product variants for our customers in this segment. MSME business has started to pick up. Apart from offering secured products, we have onboarded two new fintech partners this quarter and started disbursing towards supply chain finance. Going ahead, we plan to expand our reach in this segment with our own supply chain finance distribution channels. The FIG business continues to expand its customer base and disbursed INR 379 crore in the quarter. New products like gold loan and vehicle finance are ready to scale up in the next fiscal onwards. We continue to expand our physical distribution network. During the quarter, we have added 29 new branches, taking the total branch count to 729, spread over 26 states and union territories. We aim to add 23 more branches in the current quarter. Also, we added five new hubs to enhance our retail secured business distribution. Coming to the liabilities, Q3 has been a very healthy quarter. Targeted initiatives like nationwide brand campaign, value-added liability products have started to yield benefits. Quality of new acquisition has improved by the fact that our average savings account balance for retail branch banking customers has started to rise, currently at 35,000, which was stagnant about around 30,000 for the last six quarters. We've garnered more than INR 500 crores of CASA this quarter, taking our CASA book up 8% quarter-over-quarter to INR 7,556 crores. Our CASA ratio also improved to 25.5 against 24.1 last quarter. This itself underlines the fact that we are focused to add granularity to the book. As we continue to moderate excess liquidity, total term deposits remain stagnant this quarter, but the ratio has inclined favorably towards retail TDs, which is up 9% sequentially. Further, I'm happy to announce that our long-term borrowing has received an upgrading rating of AA minus stable from A plus or A plus positive. This will be very beneficial to access lower cost borrowings and reducing our costs of borrowings in the future. Our recently launched application, Hello Ujjivan, is gaining acceptance among the customers, with total downloads reaching 5.9 lakh and total repayments of more than INR 100 crore since its launch. This, the loan acknowledgment of our group loans has also started to pick up. A total of 80,000 loans were acknowledged this quarter. This serves a dual benefit: firstly, saves the customer visit time to the branches, and secondly, reduces the pressure on our branches. Additionally, repeat loan facility will also be offered through the Hello Ujjivan facility in the future. Digital TDs has started its course, and we are exploring partnerships with aggregators to increase the business volumes. In line with our digital strategy, we have started offering digital savings account from this quarter. This will further aid us in onboarding customers digitally and build savings account relationships in areas not falling in branch catchments. The financials and margins. Another focus area during the quarter was to bring down excess liquidity in the system. This provided some breathing room for our margins, which was under pressure due to rising cost of funds and excess liquidity. The rising cost of fund has also started to slow down, rising only 8 basis points against 23 basis points last quarter, indicating that our cost of funds has started to peak out. Our yields also improved sequentially as repricing of the book continues. As a result of three factors, lower liquidity, lower rise in cost of funds, and improving yields, we are able to sustain our quarterly NII. We will continue to reap some more benefit from asset book repricing, as currently, around 65% of the book is in the highest bracket, while around 20% of the book sourced between September 2022 and February 2023, and 17% of the book sourced in September 2023 is yet to be fully repriced. Having said that, our PPOP remained healthy at INR 457 crore, growing by 18% year-on-year. Coming to the credit costs and provisioning, we have been receiving many queries from the street on this topic. To answer this question, the aberration in terms of credit cost you had witnessed in the last two years, largely due to an unprecedented event in one year and a very good recovery from the event in the subsequent year, has now all but settled. Going ahead, our credit costs will continue to move towards the normal levels. We continue to improve our business processes, credit, and collection policies. We can confidently assure this will be. This will draw more comfort from the quality of the book we have built over the period, supported by our strong collection team. Credit cost for the quarter is INR 63 crore, as against INR 47 crore in Q2. PAT for the quarter was INR 300 crore. Ujjivan has been displaying strength in business and financial performance over a period of the last eight consecutive quarters. This is highlighted by our ROA and ROE at 3.1% and 24.2% respectively for Q3, financial year 2024, among the best in the industry. Our asset quality remains robust, with the GNPA at 2.1% against 2.2% in the last quarter. NNPA remains negligible at 0.16%. Collections remain strong. This quarter saw some minor incidents like flash floods in Tamil Nadu and false loan waiver campaigns propagated in certain pockets of North India, but these were largely contained in limited districts and did not have any major impact at pan-India level. Slippages for Q3 were at INR 140 crore, as against INR 113 crore in Q2. For the nine-month period, slippages are at INR 347 crore, with upgrade and recoveries of INR 198 crore. Bad debt recovery remains strong at INR 105 crore for the nine months. We have written off INR 93 crore during the quarter, a substantial sum from the non-performing MSME book. Now, an update on the succession. As I mentioned in our last earnings call, the bank's board is working on identifying candidates and submitting recommendations to RBI. The process is moving ahead as per the set timetable, and I can assure you that a smooth transition will be made over the next financial year. Update on the reverse merger. Based on the order received from the Honorable NCLT, a hearing has been scheduled next week on thirtieth of January. We are confident that this will be the final hearing. Once the merger is approved by NCLT, we will proceed with the remaining procedural and regulatory aspects, expecting the merger to be completed by March 2024, by the end of this financial year. The outlook, we will maintain our short-term and medium-term guidance given earlier this year. I would like to again add that the fourth quarter historically has been our best quarter for the year and should follow this trend during this year as well. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We also request that you please restrict your questions to two per participant. For follow-up questions, you may rejoin the queue. Ladies and gentlemen, we will now 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, and congratulations on a good set of numbers. So just two questions from my side, one on the AUM growth side. So, what is our internal assessment for FY 2025 growth? You know, given we have been hearing that our regulatory is asking us if we is to sort of maintain the CD ratios 85% odd, though we are very close to that. But, do you see any downward risk to our guidance getting into FY 2025 because of the regulatory pressures? Renish, hi, first of all, thank you. We do not see any downward push to our guidance. We in fact maintained, mentioned that our guidance remains the same. Our CD Ratio, as per RBI guidelines, is more or less in line around 85 only, I think 88 for this quarter. Right. We will grow in line with what we mentioned in June. Got it. Got it. And, secondly, on the NIM side, okay, actually, I didn't hear on the, you know, let's say, the what percentage of the book is still yet to reprice at the higher rate? For the microfinance book, the GL book, 20% is yet to have a 50 basis points improvement, and 17% of the book is yet to have a 100 basis point improvement. Okay, which will be in Q4 or Q1? This will happen over the next couple of months, few months. Okay. Q4 and maybe even Q, a little bit in Q1. Got it. Got it. So safe to assume that NIM will sustain at current level, at least for next couple of quarters? We will continue to be strong, and we are working on cost of funds. If cost of funds, given they are flat, the way they are behaving now, there should be improvement in NIMs. Got it. And just last question from my side on the MFI book. You know, so, we've been hearing from a lot of the industry peers that Punjab and Haryana is facing some problem, you know, because of this Karza Mukti Abhiyan and all. And, we have some, I think, 8%-10% of our AUM in both the state put together. So are we facing any issue, or those issues has been now resolved and, you know, the collection is back to normal in those states? Hi. So, yes, you are right that in Punjab, Haryana and some other parts of the country also, the Karza Mukti Abhiyan is going on. It's completely illegal, but at the same time, the effect to us is little limited because we are mostly present in urban and, metro pockets. So effect to Ujjivan is little limited. At the same time, we are working very closely with Sa-Dhan, which is, self-regulated body, and also RBI also come up with various documents around it, which we are working, with, various also, so that customer understand that, this is something which is illegal in nature. So far, the effects of this is, very, very limited in Ujjivan. No, okay, and at industry level, I mean, let's say, the collection trend which you might have seen in September, October, the situation is better in December, January, or it is still the same? Our experience is almost on the same, and we don't have, we have not seen any substantial impact on our book. As far as industry is concerned, we have heard that there is some, some impact in some certain pockets, especially in rural pocket has happened. But it is at industry level also, it is not. At this point in time, it doesn't seem to be a very big challenge at this point in time, especially as corrective measures have been taken, and RBI are also coming, and as they are coming, the various initiative bodies also helping to reduce the effects of this Morcha. Got it. Got it. Got it. Okay, that's it from my side. Thank you. Thank you. The next question is from the line of Rajiv Mehta from Yes Securities. Please go ahead. Yeah, hi. Congratulations on good numbers, and thank you for taking my question. So firstly, a couple of clarifications. So there is a sharp jump in employee cost. Is there any one-off? And second is on the insurance and distribution income. It is yet again higher at INR 30 crore plus in this quarter. So has the run rate structurally changed after the commission changes? Rajiv, on the employee cost, three things impacted it. One, there has been hiring this quarter. Second, there were some mid-year corrections given for certain employees. And third, the cost of ESOP is included in Q3 numbers. So these three has impacted. Cost of ESOP should be more or less one time. Rest is ongoing costs. That hiring also include the new branch expansion that we did. 29 branches were opened. Your second question was on if the TPP income. There's no change in the structure. Last quarter, we had mentioned that some arrears were there, because in Q1 the ruling came in August, and the arrears of Q1 were there in Q2 numbers. Okay. So the reported run rate should hold up, right, in that case? The reported run rate should hold up. Yeah, understand. And, just broadly, on the, you know, loan disbursements. Yeah, on the loan disbursements. Okay, okay, got it. And, on the group loan disbursements, which has been modest, I think are also alluded to, you know, things will improve in Q4. Because, so that should come back very strongly in Q4, and that's the expectation we have. Yeah, that's correct. So apart from the holidays, there were a couple of other technical challenges also which impacted this quarter, early quarter in the month of October, November. And so which impacted the overall disbursement, which have been rectified, and we are seeing good. At least January, so far, we are seeing as a good month. Got it. And any reassessment of our long-term cost to income outlook? I know you are maintaining a long-term guidance of ROE, ROE, but given that you have done some media corrections, so that employees, ESOPs, can be, you know, given out slightly frequently, and hiring is going up. So would you want to kind of reassess or maybe reiterate what is the cost income outlook for the next couple of years? Rajiv, there's nothing that has changed course from our internal strategy. So when we met you around eight to nine months back in Mumbai, the analysts on the street, all these things were there on our plate. So we would not want to make any significant changes from that. I just want to add to what Deepak said. You know, when we grow our branch network and everything, there's a leading and lagging. So when we invest in the new branches, lagging effect is that we get inputs and returns a year or two, 18 months later. So that will. You know, we have invested this year in about 100 branches, and that has increased the network. The benefits of that will come in the coming year. Got it, sir. Thank you so much for answering all my questions. Thank you, Rajiv. Thank you. Ladies and gentlemen, we request that you please restrict your questions to two questions per participant. You may rejoin the queue for follow-up questions. The next question is from the line of Manish Ostwal from Nirmal Bang Securities. Please go ahead. Yes, sir, thank you for the opportunity. My question on your capital adequacy slide. This risk-weighted assets has increased almost INR 2,085 crores. There is our balance sheet increase on quarter-over-quarter basis, INR 850 crores. Can you explain what is leading to this kind of jump in the risk-weighted assets quarter-over-quarter basis, sir? Manish, we have taken adjustments based on the recent RWA guidelines that RBI has announced. So that has also impacted a little bit on the risk-weighted asset number. Okay. So can you quantify the impact? The impact on CRAR, I remember, would be somewhere around 80 basis. Okay. Which has been already incorporated. Okay. The second question on your comment in the press release, which is that we have reduced our excess liquidity during the quarter, and still, our NIM is, that is, compared to the last quarter. So, I know our full year guidance is 9.9% we are maintaining, so, and quarter four, seasonally strong quarter, but, logically, excess liquidity should have some positive impact on the NIM. So where's the disconnect here? For the nine months, the NIM is already maintained at 8.9%. We maintain that we will be around 9% NIM. So Q4, Mr. Davis mentioned that generally the best quarter for the bank, and we believe whatever, the next two and a half months will be there for us will be good, and we maintain our guidance there. Last one is for data point. Can you quantify the issue of cost, one-off, in the employee cost in the quarter? Thank you. I'll have to check that and come back. We'll take it offline. Yeah. Thank you. The next question is from the line of Pritesh Bumb, from DAM Capital Advisors. Please go ahead. Hi, good evening, sir. Just a couple of questions. First of all, the PAR book seems to be little plateauing compared to GNPA. Is there any rise in early buckets as well? Yes, Pritesh, there has been a 15 bps rise in the SMA book, as compared to the past. This is, largely due to, you know, seasonality plays an important role in the months of October and November, other than there being a little bit of extra holidays. So I think that is what the, you know, the numbers are showing. There is nothing other than the seasonality and funding factors. Okay. So nothing to worry. So this, this will of course come back basically in, in our, in our books, basically. Yeah. Second question was on this bad debt recovery, which we still are having, almost like INR 31 crore. Is this from the earlier write-off pool only, and how much from that now we have recovered, and how much is left? I think we had an INR 1,200 crore pool a year ago. So how much is left to recover and how much has been recovered? And is there any potential recovery which can come ahead as well? So, Pritesh, on the bad debt recovery, normally the trend has been a recovery of between 25%-30% over a 24-month period, and this has been consistent over the last 6-8 quarters. We currently have a book of about INR 800-odd crore, and the recovery in the first nine months has been 102, sorry, 105, 105 crores. We expect that by the end of this, we will maintain a similar runway for this Q4. Next year, again, I would say that whatever fresh write-off we have done, as you see, the fresh write-off has been coming down. Last year it was in the range- Sure. Sure. Last question was, the new customer mix in the IL, individual, lending. Answered the question. Yeah. So I had. Sorry, one last question was on the new customer mix in the IL. The IL? Sorry, can you hear me? Yeah. Yes, we can now. Now we can hear you. Yeah, sorry. So I was mentioning the new customer mix in the individual lending. It's been consistently moving up. It's now 18%. Generally, I, we thought that this generally is a step up from the GL to IL. So what will be the, you know, upper cap of that mix you want to generate from new customers, and how do you look at it as a portfolio perspective? Pritesh, we would not want to put an upper cap anywhere, anywhere right now. The industry trend is that IL is growing faster, and Ujjivan is one of the pioneers in the individual loan business. And, we have been saying that, this will pick up faster and this will be growing faster than GL Also to add to what Deepak said, you're right that, you know, sorry, for the IL or GL to IL, I mean, not the graduation of customers from GL to IL, but the IL industry is now old, and we have great deal of information for about 10, 11 years around the customer. The customers who are coming in open market also have experience in microfinance, maybe not, not with Ujjivan, but some other organization. And we see practically they have experience, and then they are graduating to IL. That way, you can acquire the best customer, the cream of microfinance customers, and that's how we are trying to grow. And we will keep, you know, deploying in the open market as we go ahead. Got it. Thank you so much for your, for your answers. Thank you. All the best. Thank you. Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Yeah, I'm audible? Yes, Deepak. Hi. Yeah. Hi. Hi. Hi. Thank you very much, sir, for this opportunity. Sir, so you mentioned employee costs are higher, two, three reasons. So one of the one-off was the cost of ESOPs. So what was the. Can you quantify that cost? I do not recall that number, but we can talk offline and I'll get the number by that time. Fair enough. I mean, this will not reoccur, right? I mean, this is one-time cost. We have a ESOP policy that we, issue ESOPs, every year to base the performance of the employee and this is the pool available. Okay. Okay. Issuance is done once a year. Okay. Okay, understood. So, I mean, in terms of your total OpEx cost, I think, this quarter, our OpEx cost is close to about INR 587 crores, right? Which was a stark jump from INR 529 crores that we have done last quarter. So quarter and quarter, we have seen a big jump in OpEx costs. So is there any rationalization in this cost that can happen in coming quarters, or this is the base that one can look forward to? One thing that I can mention is the income cost. Other than that, it's mostly this quarter only, nor nothing major that is one-off or anything of that sort. But yes, in terms of rationalization that you are mentioning, as Mr. Davis also mentioned, there's a lead in the lag. As the business picks up, again, the cost-to-income ratio, if you are looking at the ratio, they will start to fall behind. Okay. Okay. And in next two years, what sort of cost-income target we have? We have given our guidance in the month of June 2022. We maintain our guidance. Okay. Okay. Your business is good. It was sub 50%, right? That's what we had targeted, I think two years, right? If I can recall right. We mentioned around 50%. Huh? Come again. We have mentioned around 50%. Okay, mentioned around 50%. We mentioned around 50, 50 to whatever, 50 and 52, we have mentioned that only. We have been. Actually, there was a lot of query that why we are mentioning that. Uh-huh. Okay, I got it. I think, I mean, just one last thing on the deposit side. I think in terms of growth, we have seen a lower growth in this quarter, right? I mean, because of the challenge that I think most of the financial player has faced in terms of garnering the deposit side, I mean, liability side. So how do we see that going forward? Our deposit growth being lower quarter-on-quarter, is that the question you are asking? Yes. Yeah. So it's 2%. That is because we have reduced our bulk deposit. If you see the retail deposit and the CASA has shown very strong growth. The CASA is up 8% Q2, and that is the focus of the bank. It will be like that, and also we mentioned that we are moderating the excess liquidity. So that continues, and that is why we did not want to grow deposits too much. Okay, fair enough. I got it. I got it. Okay, I think that's it from my side. All the very best to you. Thank you so much. Thank you. The next question is from the line of Ashlesh Sonje from Kotak Securities. Please go ahead. Hi, team. The first question is on the asset quality. Can you just give a break-up of your slippages for the quarter across segments? Actually, we don't give, segment-wise slippages. Okay. Okay, then coming to deposits, we have seen the term deposit rate being fairly constant over almost a year now, for Ujjivan. Do you see a need to hike term deposit rates from here? It's more of a market-driven phenomena. Right now, we do not see any kind of pressure. Based on the requirement that we have, we are seeing deposits coming in. Okay. And on the outstanding term deposits, you would say that the repricing is largely completed? Largely completed. There will be some bit of a bunch of coming up next fiscal. By that time, we'll need to see how the rate cycle is there and what behavior will see in the market. We can't comment on that now. Okay. I can say that the cost of fund has been stagnant for the past couple of quarters. There's been absolutely no movement. Okay. And just lastly, on the microfinance business, how good is the demand on the ground from the borrower? And in that context, do you also see a possibility to take a further increase on the lending rate in the microfinance business? as far as the demand is concerned, and this is exactly the same as every year. Last quarter is going to be within, you know, demand is on the lower side because of festival holidays. And also, the demand because of holidays actually coming the month of July, mid-July only, because then we then require. But, require. But, last quarter is very, very good for the industry as far as IL also. And so far, this quarter has been very, very good for us, and we hope to continue in the rest of the coming quarters. As far as lending is, as far as the lending rate is concerned, we do not see a hike in anything this year. Okay, perfect. Thank you. Thank you. The next question is from the line of Tushar Sarda from Athena Investments. Please go ahead. Yeah, thank you. Thank you for the opportunity. I wanted to check, you know, in terms of net profit growth, with the credit cost coming back, how should one look at it? Would we have flat profits? I think that's what most of the brokerage reports are projecting. So, Tushar, I can say that, last year, when we gave guidance for this year, we said that we'll have a decent net profit growth for this year, and we maintain that guidance. During when we mentioned about FY 2025, 2026, we gave a ROA, ROE guidance, and we maintain this guidance. Okay. Okay, thank you. Thank you. We have the next question from the line of Saumil Shah from Paras Investments. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, as per our guidance for FY 2024, we were to grow our loan book by 25% and deposits by 30%. So which means for next quarter, we have to grow our loan book by, say, 9% and deposits by 12%. So is this doable? So deposits, depending upon how much we require, will be there. On the Q4, in terms of disbursements are good. So a basis here and there, I would not be able to comment, but overall, Q4 will be better. So we can see a higher single digit growth in our loan book? Sorry? We can see a higher single digit growth in our loan book for Q4? It will be a good, good growth in the next quarter. I would not want to say high single or low single, but Q4 is a good quarter for us. Okay. Okay. And, sir, any guidance on the NPA front, where we would like to close FY 2024? You know, in the beginning of the year, we said we will be in the range of 3%. I'm sorry, we can't hear you. At about- Sir, sorry to interrupt. But, are you able to- You are in between, sir. We are not able to hear you. Okay, so in the beginning of the year, we had said that we would be in the range of 3%. Currently, we are at 2.1%, and we expect that we will be in the same range, in the range of 3%. Okay. Okay. And sir, finally, any update on our floating provisions? I mean, we still have about INR 2 crore-INR 3 crore of floating provisions, which is still unutilized. So what would be the update on the same? We continue to have floating provisions of INR 250 crore. Now, this is about 1.9% of our overall book. This will be used in terms of, you know, whenever we have any contingency in the future. This floating provision is to cushion our balance sheet from, any future one-off incidents or events and any unforeseen one. So this we carry for, at about 1% of the book, at 2.9% of the book. Okay. Okay. That's it from my side. Thank you, and all the best. Thank you. The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Hi. I have two questions. Picking up on the earlier question on individual loans, you know, how much would be new to credit and or new to Ujjivan? And given that, you know, that is. I mean, I understand you're not placing a cap on that. In terms of credit bureau scores or any guidance you can give, that's question number one. And question number two is, you'd also mentioned some write-off of the MSME book. So can you guide in terms of how the MSME book is looking at what particular part of the portfolio you're concentrating on, and is the write-off more than in the retail portfolio? That's it from my side. Sorry? First question. The first question we could not hear. Repeat the first question. Okay, so on the individual loan, it was a pickup from the previous question. You know, are you seeing, you know, how many of the customers are new to credit and how many are new to Ujjivan? If you have some color or if they, if they're new to credit, is it like, you know, higher bureau scores, or is there any difference in customers compared to the past? That was the first question, sir. Okay. So on the individual loans, right, we have new to, new to Ujjivan is about 17%. And new to credit, new to credit would be, I would say, I don't have the exact numbers, but, in, in the range of 10%, not more than that. Okay, so, On the Individual Loans. Okay. And, the profile of the customers remains the same, pretty much, right? In the sense, there's no difference, in the sense, are you migrating to the higher quality, quality customers or something? So, as far as our, you know, acquisition strategy is concerned, we continue to have bureau scores above a particular threshold, is a very hard cutoff, so we do not take any new bureau scores as per any customer acquisition is concerned. Perfect, sir. So my second question was on the MSME book. In terms of, you had mentioned some write-offs, so how is that book behaving, and where do we expect to see a growth in that book coming? Our MSME book has, you know, the new book that we have done in the last 24 months is doing quite well. In fact, this is in complete line with the industry. We still hold a book of about 4%-5%, which is the pre-COVID book. You know, the NPA on that is 4%-5%. That is the book on which we have initiated a lot of legal initiatives, including for SARFAESI and other legal measures. That book has taken some time for us to recover. Most of that book is now in advanced legal stages. I would say 90% of this book is in the advanced legal stages. We expect that, you know, in the next two to four quarters, we should see some significant recovery coming from there. So that's the tricky thing that was in COVID, which we continue to have on the book. Otherwise, on the new acquisition, it has been very good. An d in terms of the growth of the book, we've seen that the book, MSME business has started to see pick-up. Product launches have been done, and hirings have been done. The people, technology upgrade is in process, and phase wise, they will also get, capitalized and get launched. And in terms of, FinTech partners, we have already started working with FinTech partners. One more added this quarter, and we are looking to add more. So the business will see a good pick-up in the coming quarters. Perfect, sir. I wish you all the best. Thank you. Thank you. The next question is from the line of Shailesh L. Kanani from Centrum Broking. Please go ahead. Good evening, everyone. Thanks for the opportunity, sir. All my questions have been answered. Only one question, sir. Just wanted to understand, post the NCLT verdict, assuming that the reverse merger verdict goes in our favor, so what is the next steps from January to March? If you can highlight those steps. So, we'll receive the NCLT order first, and basis that we'll move for, or we'll notify the other regulatory bodies, and we'll set up for a record date. The shares will be issued, and there will be a small fee window, where the trading will be suspended for the existing shares, and the new shares will be listed. All in all, as Mr. Davis mentioned, we should be able to finish it by March of this year. Just to clarify, there will be no further approval needed, right? After this approval, just wanted to clarify. Sorry, I couldn't hear you. So I was asking that there will be no further approvals needed, right, after this order? It will be more of administrative work or- Yeah, yeah, yeah. It's more of- It's more of procedural in nature. Okay, fair enough. Thanks a lot. And also, our book value stands to be increasing by the same percentage, around 2%-3%, post this reverse merger. Is that understanding right? Yeah. So, the book value you are asking, right, post reverse merger? Yeah, yeah. Yeah, yeah. The book value should go up by 2.4-2.5. One time increase should be there. Okay. Thanks, sir. Thanks a lot. Thanks a lot. Thank you. The next question is from the line of Himanshu Taluja from Aditya Birla Sun Life AMC. Please go ahead. Hi, sir. Thanks for the opportunity. Just one question at my end. Sir, since it's the start of the year, you have given the credit cost guidance of 1% for FY 2024, and mostly you're going to hold within that. Based on the current trends, as the credit cost is also normalizing, how do you. Any guidance that you want to give for FY 2025? How one should see the credit cost trend for the next year? Himanshu, it's a little early for us to give you a guidance for next year, but, you know, anything in the range of 1.25%-1% is what we would say. Sorry, but can you, can you be a little bit louder? Sorry, I can't hear you. Is it better now? Yeah. Okay. So, since our slippages have been very minimal in the last two years, the upgrades in the next financial year would be lower than what we have seen in the last six quarters. So to that extent, the credit cost could move up marginally. This year, let's say it was below 1%, next year it will be higher than 1%, so maybe in the range of 1.25 or something. But it's a little early for us to give you an exact number. We can talk about a range of 1.25-1.3%. Okay, sir. Thanks. Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Sir, most of the questions have been answered. Just one thing on the bad debt recovery. So, this year we have done around INR 105 crore, and you mentioned that you have a pool of INR 800-odd crore left. So what could be the sort of, recovery, that we are penciling in for the next, couple of financial years from now? So bad debt recovery, typically in the range of 25%-30% within 24 months is what we have experienced. Now, lot of the pool that we have written off is more than 24 months, so we believe that it will be lower on that pool. Our incremental bad debt write-off, you know, write-off has been very low this year. It's in the range of 0.6%. So our bad debt recovery for next year is likely to be basically lower than what we are going to do this year. That should continue for a couple of more years from there, right? It will be surely lower than what we got last year. Sorry to interrupt, but can you repeat, sir, this point? Last year, we got, bad debt, you know, write-off recovery of about INR 130 crore. This year it will be marginally lower than that, but in the same range. But next year, the bad debt recovery would be lower than this. And, you know, because our write-off have been going down, so the recovery, in terms of absolute numbers, will have to come down. Understood, sir. And, sir, one thing on the cost to income. So it has gone up in this quarter. Is there any, you know, change in the mix also, which is causing this higher sort of a cost to income, or this is more to do with, you know, the higher number of branches and personnel that you have hired, which has caused this? There are a couple of things that you need to see when you talk about cost to income ratio. One, the income on the other income this quarter was flat, given the insurance income was high last quarter. So there is no one-off in this quarter on, on the income side. Cost of funds continued to move up, so which is why there was a decent jump in finance cost. And, on the OpEx side, there was an ESOP cost which was there. So netting all these three, the movement in cost to income ratio was not as steep as it looks like. It's like 275-280 basis points, this is the reported number. But, mapping of the numbers, that, three reasons that I mentioned, it would not be as high. It is in line with what we have guided earlier, that we will be in this range for the full year. Q4 should be improvement. What could be the rough range of this ESOP cost that you are talking about? Very rough number. I have mentioned that twice on the call. I need to check that and come back. Understood, sir. Okay, sir. All the best. Thank you. Thank you. Ladies and gentlemen, we will now take three more questions, the first from the line of Amay Ashok Kulkarni, an individual investor. Please go ahead. Yeah. Hi, good evening. One of our competitors from Karnataka. Hello? Yeah. Hi, hi. See, one of our competitors from Karnataka has reduced interest rates. Are we seeing any significant increase in competitive intensity? Do we expect to reduce interest rates for the Gold Loans? Amay, yes, one of a large competitor has recently announced a rate cut in their microfinance business. We do not expect too much of a change on the ground in terms of competition in India. And, see, we have been guiding for a credit cost of approximately 1% or less than 1%. That comes to approximately INR 250 crores. So these nine months, we have done a credit cost of about INR 160 crores. So any guidance on what could be the tentative credit cost for Q4? We'll maintain the guidance that we have given rather than giving any absolute number, Amay. We continue to be below 1% is what we have said, and we will be below 1% only for Q4. Okay. Thanks. Thank you. The next question is from the line of Arvind R from Sundaram Alternates. Please go ahead. Hi, sir. Thank you so much for the opportunity. I would just like to understand, like, what are the new product launches that is coming up? Like, you know, obviously, you know, outside MFI, we are doing our affordable housing loans very fast. And, as you said, like, we will be launching, you know, gold loans and vehicle finance loans. I'd just like to understand what other products, you know, are in the pipeline. And I would also like to understand what would be the, like, yields in those cases, because there is a significant difference in, you know, yields and MFI loans and affordable housing finance loans. I'm just trying to understand if these products would be somewhere in between. That's my first question, sir. Okay. So, you know, we've been into this business, you know, catering to the needs of the aspiring middle class. So our new products are also designed for the same segment. Therefore, a logical extension to that is we do gold loans, which we have tested, and we will be scaling up in the next financial year. Two-wheeler loans is something that we are already doing well now, and we will scale up again that product in the next financial year. In the same segment, we also launched a micro mortgage product, which we have already started to scale in this year, and we have started to see very good response to the product. This is again a product which we will scale in the next financial year. Other than that, on the MSME business, we will be launching the working capital product for manufacturers and traders. That is expected to be launched in the beginning of the next financial year. Other than that, you know, we've been doing secure agri products, which is in the form of KPC. This is something that we've been testing, so we believe that we are ready for scale up on this product also. What would be the typical yields in these products, sir? I mean, like, because we have, like, two completely different levels of yield. I understand the nature of the product. I'm just trying to understand where would the yields be in this new, new, new set of products. What kind of range it would be? Sorry, voice was a little muffled. Could you please repeat the question? The market competition. Is the question on the interest rates, yields and all that? Yeah, yields on these kind of these new products that you're going to launch or which is in the stage of scaling up. I'm just trying to understand, what would be the typical yields in these products? Yield or interest rate on these products. It would be competitive. The interest rates would be industry competitive interest rates. Typically, two-wheeler and micro mortgages are on a higher yield business. Gold is a medium kind of a investment. MSME, as you are aware, would be very competitive and within our product basket, on the lower side. Okay, sir. Okay. And any guidance on, like, mix of MFI and non-MFI by FY 2024, FY 2025, FY26? We had given March 26th, secured, unsecured guidance of 40/60. Okay, sir. Okay. Just one last question, like, any long-term guidance, any change in long-term guidance on cost to income? Like, since we are grow- I mean, like, continuously investing in the franchises, do we see any upward revision to cost to income ratio in the test? Our long-term guidance for FY 2025 and 2026 were given in our annual meeting, done in June 2022, and we stick to that. We had given a ROE guidance of 22% plus, and we stick to that. Sure, sure. Thank you. Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang Securities Private Limited. Please go ahead. Yeah, thank you. My question is answered. Thank you. Thank you. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Over to you, sir. Well, thank you very much, Gavin, and I'd like to thank IIFL and Rikin Shah for organizing and, sponsoring this. And thank you to all the participants for joining, and appreciate all the questions. And we look forward to seeing you in the next quarter. Thank you. Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.