Satin Creditcare Network Limited (SATIN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Satin Creditcare Network Limited Q3 and 9M FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. HP Singh, Chairman and Managing Director of Satin Creditcare Network Limited. Thank you, and over to you, sir.

Thank you. Thank you for taking the time to learn about our Q3 and 9 months FY '22 results. I'm hoping you've already gotten our quarterly results and investor presentation for individuals who haven't seen them, they are available on our website and our stock exchanges. The microfinance sector in India has traversed a very turbulent journey until H1 FY '22. However, we are pleased to report that collection efficiency and business has improved dramatically in Q3 FY '22 with overall collection efficiency of 97%, excluding Assam, as compared to 90% in Q2 FY '22, and 84% in Q1 FY '22. The collection efficiency in top 4 states, which comprises of UP, Bihar, Madhya Pradesh and Punjab, which account for 51.5% of the company's AUM stood at 99%. This growth in our collection reflects the strength of our underwriting and collection systems as well as the tenacity of our customers' base. There is also a very promising time in form of reduction of nonpaying clients to 3%, which was 4% in the preceding quarter. During the quarter, the company employed a cautious and calibrated approach in disbursing loans to new customers throughout emphasizing more on disbursing loans to existing customers with regular repayment cycle and healthy credit history. Our average ticket size of MFI lending for the quarter stood at INR 43,000 since we focus only on repeat customers. Our disbursal for the quarter were at INR 1,348 crores on a consolidated basis, up 2.5% sequentially from INR 1,315 crores in Q2 FY '22. The consolidated assets under management amounted to INR 7,218 crores. However, the Omicron strain is supposed to be milder than previous infections. And since most of the employees and borrowers have been vaccinated this time around. We expect stable credit demand and approved ecosystem recovery in the coming quarters, allowing us to focus more on fresh disbursement and get back on the path of growth. The company believes that the worst is behind it and that robust industry demand and rising economic activity will lead to long-term success. In this regard, the company has successfully raised INR 225 crores by way of allotment of equity shares and fully convertible warrants in the promoter and nonpromoter entities in January 2022. We at Satin are really grateful for the opportunity as this investment will not only help us reach our medium-term objectives, but will also accelerate our long-term strategic aspiration such as strengthening our footprint and driving the company's planned growth across key metrics. These investments also underline the market's belief in Satin even in these difficult circumstances that is -- it is well positioned to achieve profitable long-term growth without compromising on portfolio quality. This fundraise of INR 225 crores will boost our strong position in the lending ecosystem and help us retain our form hooting and recuperate in these uncertain times while keeping an eye on opportunities ahead. As of December 2021, the company's balance sheet liquidity remained strong with INR 1,069 crores in surplus funds and INR 320 crores in undrawn sanctions. Till date, the company has raised INR 2,329 crores from various vendors. The CRAR as on December 2021 stood at a strong 24%. We consistently developed over the years are putting a significant emphasis on customer service. Our technology integrated process, solid domain knowledge, motivated team and visionary leadership are the foundation of Satin. Our primary goal is to make a positive distance on the lives of underserved communities while also empowering and transforming the lives of over 28-plus lakh clients and going ahead using a calculated approach. The organization aims at building a solid portfolio with few delinquencies and expanding its reach in existing and new locations. Now let me give you the financial operational highlights of the company. Our disbursements for the quarter stood at INR 1,348 crores as compared to INR 1,822 crores in Q3 FY '21, and INR 1,315 crores in Q2 FY '22, registering a sequential growth of 2.5%. Microfinance disbursement for the quarter stood at INR 1,224 crores as compared to INR 1,742 crores in Q3 FY '21 and INR 1,221 cores in Q2 FY '22. Continuing our cautious and calibrated approach in disbursement activity. We are gradually inching towards a pre-COVID disbursement level and have ideally disbursed loans to clients with regular repayment cycles and healthy credit history. The company's collection efficiency trends without Assam for the first 3 quarters of FY '22 was as follows: Q1, 84%; Q2, 90%; and Q3 was 97%. Assigned portfolio stood at INR 771 crores as on 31st December 2021. As on December 31, 2021, 100% of our disbursements are made through cash less mode, while cash collections stood at 4%. We at Satin aim to adopt and use more of digital channels as it largely mitigates cashless and increasing operational efficiency. In this regard, we have also adopted website payment options and UPI auto-debit. Net interest income for Q3 FY '22 stood at INR 194 crores as against INR 164 crores in Q3 FY '21. Our Q3 FY '22 pre-provisioning operating profit stood at INR 59 crores as compared to INR 52 crores in Q3 FY '21. Our quarter ended 31st December 21, we have made adequate on-book provision of INR 427 crores on account of COVID-19 pandemic and other external factors. PAT for the quarter stood at INR 34 crores as against a loss of INR 80 crores in Q3 FY '21. Our cost-to-income ratio for the quarter stood at 69.6%, while our OpEx-to-GLP ratio stood at 7.4%, which is expected to come down gradually. Broadly on our collection efficiency cumulative pan-India collection efficiency for Q3 FY '22 stood at 97% without Assam, whereas collection efficiency in top 4 states stood at 99%. 97% of our MFI customers were paid at least 1 installment at December 2021 as against 96% in September 2021. We are also witnessing consistent improvement in customers that have made full payments. 91% of our customers have paid in full as of December 2021 versus 76% in September 2021. We have a well-diversified customer base, well-penetrated branch network across states and 76% rural exposure. We've taken a number of proactive steps to improve portfolio quality and reduce portfolio stress. As of December 31, 2021, our GNPA stood at 8.6% of our AUM, and we had made more than adequate provisioning of 8.1%. Our overall branch network counted 1,214 branches as of December 31, 2021, making it one of the largest in the business. We use our physical branch network across India to reach more clients and help to the country's financial inclusion goals. Our branch network stretches approximately in 387 districts and 23 states and union territories. As of December 31, 2021, 97.2% of our districts have less than 1% portfolio exposure. We have seen a significant reduction in our portfolio risk in terms of average exposure for district, 0.26% in Q3 FY '22 versus 0.45% in FY '17. Exposure of top 10 districts, 14% in Q3 FY '22 versus 21% in FY '17. Exposure of top 4 states contributed 51.5% in Q3 FY '22 from 77.3% in FY '17. Women account for a large portion of SCNL customers with 75% hailing from the country's rural areas. Supporting business, our financing support helps underserved women in rural and semi-urban areas. We've been able to disburse close to INR 29 crores under the product finance category, which includes loans for bicycles, solar lamps, home appliances, consumer durables and water and sanitation over the years by leveraging our idea of cross-selling products to these women. An update on our subsidiaries, business correspondent service under Taraashna Financial Services has reached an AUM of INR 676 crores. As of 31 December 2021, the company operates to 152 branches has more than 3.4 lakh active loan clients. That since, our MSME lending out has reached an AUM of INR 144 crores. Satin Housing Finance Limited has now reached an AUM of INR 275 crores, including DA of INR 22 crores, having presence across 4 states with 3,888 customers. The Satin Housing has 100% retail book comprising of 71% affordable housing loans and 49% of LAP. The company has 12 active lenders, including NHPD Finance, CRAR of 74.9% and gearing of 1.8%, the total equity stands at INR 100 crores. The Board of Directors of company's 2 wholly-owned subsidies, Taraashna Financial Services Limited and Satin Finserv Limited at their restrictive meeting considered and approved our draft scheme of arrangement for amalgamation of Taraashna Financial Services, transfer company with Satin Finserv Limited, transfer company and their respective shareholders, a greater the scheme under Section 230 to 232 of the Companies Act 2013. The company has filed the first joint motion application before the honorable NCLT Bench Chandigarh in January '22. Now before we open the floor to questions and answers, I would want to emphasize that as a responsible firm, we are constantly working to improving the lives of our stakeholders are promoting financial inclusion. We are guided by our long-standing commitment to reaching out to societies under privilege. We are well positioned to achieve development at reclaim loss run in the next quarter, pushing by our utmost sincerity, compassion and long-term goal of providing support where it is most needed. I would now like to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Rishikesh Oza from RoboCapital.

So my first question is, if you could indicate about our loan book growth for FY '23 and FY '24. And by then can we hit a pre-COVID quarterly disbursement numbers of around INR 1,900 crores.

See, the pickup has started during January. In fact, December, January, we were a little cautious in terms of the Omicron variant. But giving our growth numbers technically for '23 -- FY '23, we are looking at a 15% to 20% growth for FY '23. And the disbursements have started picking up now. And hopefully, I think there is no more wave coming in further now, but we are now well capitalized as well as looking forward towards a growth of about 15% to 20% for FY '23.

Okay. That's great. And also, sir, if you could give a credit cost outlook for FY '23?

So on an overall level, we hopefully think that the way we have actually put in our teams, and we are looking at the complete system, it will be close to about 1.5% -- 1% to 1.5%, as a credit cost on a yearly basis.

Okay. That's great. And also, sir, if you could give a reason for the increase in OpEx for this quarter? And what will be your outlook -- like that if you could quantify in cost-to-income basis.

On OpEx, our expenses are broadly under control but because of the reduced volume, the percentages look high. If you see the number for 9 months are close to about 6.3% the slightly increase in AUM, these will come to in the range of some 5.5% to 5.75% very soon, and then we'll work on for bringing it down. So we are working on it. And that's the reason why I mentioned in my opening remarks that we're looking at bringing it down gradually. Hopefully, everything is settled down in terms of our infrastructure, in terms of our human resources, in terms of the complete system, as well as the way we are looking at growth now since the third variant -- the third wave practically also looks now completely diminished. So it is very, very positively said that, yes, the cost income ratios will definitely come down now.

Okay. And sir, the INR 427 crores on-book provision that you have specified it for stand-alone basis, right?

Yes, that stand-alone basis.

Yes. So what would be the consol basis number?

So consolidated numbers are also there in the results. The other businesses, the MSME and housing, they make their own provision because as on today major business is microfinance. So that number has been mentioned in the presentation. But if you...

3.9%.

Total of, I think it will be close to about -- I don't remember the exact, it is close to about INR 490-odd crores.

Okay. Okay. That would be great. And sir, my last question is if you could provide any slippages data for this quarter compared to whatever it was last quarter and what we used to do in pre-COVID?

Sorry, can you repeat?

We have given this data, comparative quarter...

I think you can look at that, we've already shared that.

I think Stage 3 data, where we need like slippages, right. Just broadly comment on as the slippages were higher this quarter compared to your pre-COVID or was it stable?

It is stable, that's the reason why the GNPA is practically at the same level, it was 8.7%, it's down to about 8.6%. So it's practically on the same level.

The next question is from the line of Tejas Mehta from Omkara Capital.

Congrats for a fantastic set of numbers. Just a couple of just a couple of questions. One is there is a new investor, Flowering Tree Investment, who have subscribed to your warrants last month, that is in the month of December. Could you just elaborate, is there any role that they are playing in running the ship from here?

Well, I -- probably I am not the right person to give you a comment on to that. But yes, they are active good investors with a good pedigree in our sense is that any investor who comes on board definitely has some value addition to be made to the company, and this is what we are looking forward towards Flowering Tree also because the pedigree and the legacy is pretty good, and we look forward to their constructive approach towards the well-being and the value addition to the company definitely, yes.

Great. The other question is your -- for the book that you have about INR 7,200 crores, I think your presence is very wide across the country. Probably, that is one of the reasons why your OpEx are also so high. Is there any thought process to consolidate the operations, rationalize the branch infrastructure or any of those things?

See I think when we actually diversified, this was post-demonetization. So at that point of time -- and I can just give you a broad base that our UP was about 50% of our total portfolio. Now for us to do a diversification was like an impending thing to really avoid any further crisis, which could probably -- this is probably has allowed us also very well in terms of -- are looking at this crisis across in the last few years as such. So we have actually no plans, but we are looking at growth, which will now happen because since our geography is so diversified then for us to take a deep dive into all these existing geographies will give us maybe a far more easier reasons to actually grow now from here on.

Got it. And what would be your growth ambitions over the next couple of years? And how do you see the MFI cycle from this point onwards?

See the MFI cycle still has a lot to deliver in terms of its reach. It is still not peaked up as what a lot of people would really say, and this is what my forward-looking statement is that it is still not peaked up, still has another 10 to 15 years before it finally peaks up. So in terms of our growth, we are looking at a 15% to 20% year, next year. But I think my own sense is if I can give a forward-looking statement to this, it could probably be in the same range for the next at least 4 to 5 years and this is what we are looking at.

15% to 20% kind of a run rate in AUM growth, right? This is what you are thinking?

Right. [Foreign Language].

[Operator Instructions] The next question is from the line of Priyanka Singh from Atidhan Securities.

So first of all, have you faced any impact of COVID third wave with any specific states that had been impacted? So your presentation indicated a collection efficiency in Punjab, which has been relatively subpar. So what are the reasons for the same?

So I think -- if you look at the third wave, technically for us, we took a preventive measure in terms of looking at it, the collection efficiency did hold up pretty well in -- and in fact, this is holding up even till now. Now it's on a decline. The third wave is practically on a decline. But the reason why we had maybe a slight dip in the disbursement was because of -- we wanted to be very, very cautious in terms of how we really look at the disbursements for the December particular month as such. So December and January were -- which was the effect of the third wave. Thankfully, the collection efficiency was, in fact, better during these times. And looking at -- Punjab has an overhang technically from the farmers hesitation. And there's been technically what you call it, overhang in terms of overdues, which are still there. And however, looking at it, the collection efficiencies have increased from about 86% to now about -- in December, to about 91% in January. So it's a slight uptick, which is happening now across and we feel that in the next couple of months, 2, 3 months, we'll be able to recoup back whatever we've lost during the entire session of about 1, 1.5 years of the pandemic as well as the farmers hesitation.

Okay. And are there any other states that are showing signs of deliquency due to third wave or any other reason?

No. There aren't any.

Okay. Sir, going forward, what is the plan for the Assam portfolio, like are we looking to maintain the portfolio share or reduce it further like going forward?

It's already been reduced. I mean we're just waiting for the State Government to -- they have already distributed checks for the first category of borrowers. We are now waiting for the second category of borrowers to be paid the amount from the Assam Government, and they're on course to probably do that. However, there has been a dip since the last 1.5, 2 years since all this cycle started in Assam. Our portfolio has already dipped from there. We started our disbursement on a very low key in Assam also just to maintain and see how the ground covers. And in fact, we are very hopeful that the first signs of disbursements, which have happened in Assam have hold up pretty well, and this will now hold up. So we'll do it once this whole thing by the State Government actually finishes off, then we will start our full fledged disbursement from there. But right now, yes, there's been a slight dip in terms of the AUM.

Okay. And lastly, what are your views on disbursement of new loans, how much is post-COVID?

Post-COVID, it's been -- significantly been let earlier what we used to have close to about 40% to 50% of our loans, which were new customers. Right now, I think it's in the range of about 24%.

24%.

So I think we are just now catching up once the third wave is completely finished off and which is right now with the declining numbers being shown now on a constant basis. I think this will come up to the levels which is pre-COVID to about 40%, 50%.

The next question is from the line of Mahesh M.B. from Kotak Securities.

I just had 2 questions, one in terms of the borrowers that you have in terms of their job availability or the kind of wages that they had pre-COVID and what we are generating today. If you could just kind of give us a color as to how that has progressed as we see in the last couple of months? And secondly, now that you've been speaking to the borrowers quite consistently, have they also taken a fair amount of debt outside the MFI to sustain thereof, to sustain their livelihood in the last 2 years?

Mahesh, I think there has practically been not that a challenge in terms of the wages earned as well as the monsoons are giving us a good agri crop as well as the other related factors, which are there in the rural economy. There was that initial this thing in the first wave of COVID, which did impact the borrowers to a certain extent, and that's the reason why this whole pool has really come up. And the second wave, which were far more harsher in terms of lockdowns as well as in terms of human lives I think post that, it has been a slow and a cautious approach of having -- coming back into the economic scenarios in the rural space. And now I can probably say that in terms of the income generating capacity of our borrowers, they are all now back to the pre-COVID level as customers. So that decline is not there anymore in terms of wages as well as the output of the agri economy as such on a macro level. What was the other question?

Indebtedness, sir.

Overall borrowings.

I don't have an idea, technically, whether they are borrowing from the other sources as such because, again, I think that distribution outreach, the reach, which is being presented by banks, SFDs as well as the MFI, I think it's very hard to replicate by any other -- I will not be able to give you a comment on the unorganized sector because we don't have numbers which could justify my take on that. But besides that, I don't think so that there would be borrowing from the other lenders besides the financial inclusion.

No, it was just a very, very general question in the sense that things on the ground was fairly challenging in the last 1 year. Did they had to resort to some form of indebtedness outside of the formal financial system that is there?

I really don't know because the credit bureau reports, which we are getting up are still giving us the -- practically the same amount of indebtedness which we used to see close to about a year back, and maybe that is a kind of an indicator which is there.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

First question is, so your nonpaying customers are 3%, and I think the partially paying ones are like 6%. So that is 9% of the customers, and it has reduced over time. But on the ground, sir, any feedback that you're getting from these 2 categories as to what are the reasons behind continued nonrepayment, and when can they start paying up to MFIs like you?

See, my own sense is that this drop, whatever has happened in terms of nonpaying customers you are saying could largely be an issue of maybe the income generation as well as maybe a forward-looking or maybe a blunt statement like of the intent issue, it could also possibly be there. The reasons of bringing it down probably also attributes towards the strong deals, which we have put on the ground and the way we've really been handling this crisis as such. And we feel that going forward, also, I think we'll be able to -- let's see if we go forward by that, we'll be able to get at least our collection efficiencies back on track, which are already on track as compared to the 4 top states, which we said about 99%. My sense I think this could probably be the reason why these non-paying customers are still there and the partial paying customers are there.

Even as it is, what's happened is after crisis, the credit culture does dilute. So if you remember, 5 years before this industry used to have a credit cost of less than 50%, which gradually between 1% and also remembering the earlier question sir, commented that it will be around 1.5%. So yes, there is a dilution in the overall project discipline and culture also, and that has just because -- been because of whatever economic downturn we've been facing.

The other thing was I think spread tax, which were supposed to be removed for the MFIs. So what is the timelines for that? And do you see that as resolving some of the problems for MFI industry as such?

Positive. If you all guys can actually tell the RBI to probably give it to us as fast as possible. No, it will be probably good, but we are also waiting for that. It's been some time. But going by the initial draft, which are there for the harmonization book, we feel like there is going to be a benefit for the MFI industry, for sure, because the margin caps are not there. It definitely gives us maybe some room to give a pass on whatever we want to pass on maybe have a risk-based pricing for ourselves also rather than not having it right now. So our sense is that once it comes in, I think it will probably be far more positive to the MFI industry.

Understood, sir. Sir, any guidance on your overall gross NPA number. So now I think last 2 quarters, we have been around 8%. So what's the guidance for, let's say, the end of this year and end of next financial year?

See next, I can't give a GNPA because there are so many moving parts to it. But I think we have probably done whatever we've done in terms of our provisioning and everything. And I think we'll probably be good from here. That's the only thing which I can let you know because that's what we are also sensing and feeling our costs in terms of our numbers.

Understood. And other -- some of your other subsidiaries, we have seen much larger credit cost coming in, in this quarter. So what's happening on that front and why?

So it was basically on our BC model, where BC was as exactly what the microfinance industry was facing. So BC is a replica for the microfinance industry what we face in SCNL, the parent company. So that's the reason why it is here. The other 2 are probably -- if you look at Satin Housing business for the GNPA about 0.34%, which is far less than even the industry peers all across. And MSME is about 6%, which is again a slight overhang of this thing, they're also back to the collection efficiency of about 98% now.

And slight impact of the RBI surplus.

RBI surplus.

On the MSME book?

On the MSME book, yes.

We'll move on to the next question that is from the line of Balkrushna Vaghasia from Axanoun Investment.

Many congratulations for good performance in this quarter. I have 2 questions. First is related to, I mean, how far we are from pre-COVID levels in terms of slippages? Is there any new normal where in NPA will be substantially higher than pre-COVID levels?

So I think we were right there now knocking at the doors of pre-COVID levels. But if you look at maybe in entirety it will be FY '23 year, I think, where we can look at maybe things to probably stabilize in the fullest form as such.

Okay. So is there any -- I mean, is there any fundamental change in terms of what the average NPA levels? I mean what it is -- in comparison of what it used to be pre-COVID?

No. I think we're not giving any guidance on the NPA level. We're just watching the situation. I think as we've reiterated so many times, I think we are now probably looking at the end cycle of the impact of the crisis.

See in spite of whatever cycles we saw, there is 100% decline year-on-year in terms of the GNPA, and that to while we actually save 2 more years. So yes, sales will be better with a growing base, et cetera, but no guidance as on this.

Okay. Okay. And my second question is related to Taraashna Financial Services. So basically, in the quarter 3, it has posted a pretax loss of INR 9.5 crores. So what I understand from the business model of Taraashna is that it is being business corresponding services. So basically, we would be doing a lot of efforts on the ground to raise loans in this company. So even with -- I mean, the whole purpose of adopting this business model is to avoid losses or maybe to have very minimal losses in comparison of revenues, okay? So I mean what is happening over there in terms of the credit cost and the losses that we are continuously posting?

See, Taraashna is a VC company. And the first loss guarantee which normally we give is about close to about 5%. In terms of -- if you look at the comparison between the parent company of SCNL and Taraashna. SCNL has probably got a 100% provisioning to be done across, over the year it is based on 5% first loss, which probably is to be -- is given to the partners. So in terms of that, of such a crisis of a huge magnitude, we've been able to sort of settle ourselves with about the INR 10 crore loss. I think speaks very well for the ground efforts which is put in by Taraashna in terms of getting the money back from across that. But there has to be some loss after such a huge crisis, which was there. So our sense is that I think we've really been able to permit to this kind of a level. And going forward, I think it will be much better. And the other factor is, once it gets merged with SFL, which is going to happen in due course of time. I think the leverage of capital as well as the entire ecosystem of the -- both the companies merging to whether we reach or I think is going to go far more positive than compared to Taraashna just being stand-alone looking at just pure microfinance type of BC model.

Okay. And basically, so we have around INR 20 crores of revenue in quarter 3 in Taraashna, right? So I mean, as you say, the Taraashna would be sourcing loan for parents, right. So I just want to confirm that this company is also raising loan for other like IndusInd Bank or something like that, right?

Yes. Yes, it is for both. For us also as well as for the others.

Okay. So I mean, can you give any rough idea like how much of this INR 20 crores of revenue would be attributable to in-house sourcing and for the other people.

In house is very negligible. I think it will be just about maybe about 2% to 3% at the maximum of that INR 20 crores.

Okay. Okay. Okay. So yes, so basically considering do you think there is a -- I mean, risk reward ratio in this business is not particularly in these times are not in our favor because we are doing -- we are putting a lot of efforts in loans and still like we have to bear a lot of losses.

Yes. I told you that FD is just about 5% of the first loss as compared to what 100% we carry in SCNL. So that's a huge advantage. But the magnitude of the crisis was so huge. And the entire portfolio or whatever it was, was under a down at times, if you really look at it. So out of that, if we come out with a loss of about INR 10 crores at the maximum I think is pretty heartwarming to really look at it. That's what our segment is.

[Operator Instructions] The next question is from the line of Vibha Batra from FairConnect.

My question is on NPA movement. Can you give the gross slippages recoveries for the quarter?

We mentioned earlier, we are giving the GNPA number quarter-on-quarter, which is broadly consistent, actually has come down by roughly 1% in the last 12 months, provision has been made. So this is what we have shared. So whatever slippages are happening means there are collections improving. So there's no additional slippages happening, broadly, the NPA numbers are stable or coming down.

Okay. And have you taken effect of the changed RBI norms on NPA recognition?

On microfinance book, there is hardly any impact on that member circular. There is roughly 1% increase in MSME gross NPA number because of that. And then housing NPAs just 0.34% primarily because of that circular only.

Okay. And what would be your exposure in terms of equity and loans to Taraashna? And have you done mark-to-market on that exposure, since Taraashna has been reporting losses?

So mark-to-market, we do that. So mark-to-market, this is being done every reporting date for all the assets that we have, that is the ongoing process. So that we do on an ongoing basis.

So what is your total exposure, equity and loan?

So investment is about INR 85-odd crore, which is mentioned in our annual report also. There's some amount of debt of end, I do not have the numbers, but will check that.

The next question is from the line of Shreya Verma from Oracle Securities.

I wanted to ask what are our yields in the respective segments?

So yield in microfinance, we have a 10% margin cap. So when we price our product, we keep that 10% margin while doing that which is cost of funds plus 10% margin. We are broadly ending at 21.6% to 21.7% right now, it includes the cost of subdebt, et cetera, also that we have raised in the past and then some fixed cost funding. In housing, including that, the blended yield is close to about a little less than 15%. And MSME is broadly around 20% to 23%.

Okay. And when can we expect our margins to normalize? What kinds of operating margin numbers have we met? Also how do we see our NIMs pan out in the next quarter and the next fiscal?

So the NIM has improved...

So on one side, the NIM has improved. There's a little bit of impact of overdues as on today on the yield because generally in the sector, people don't charge interest for the delayed payments. Once that improves, the yields will automatically improve, which will have a result on NIM as well as on today, about 8.6% is gross NPA at the moment they will come down to acceptable level of -- so the yield will automatically improve. So work on 10% margin for next year.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Hi, good morning, everyone. I take this opportunity to thank everyone for joining this call. And I hope we were able to answer all of your questions. In case you have any more queries, you can contact us. My name is Aditi Singh, I Head the Strategy and IR for Satin. And alternatively, you can also get in touch with our IR advisors, Strategic Growth Advisors, SGA. And so stay safe, stay healthy. Thank you once again. Have a great day. Bye-Bye.

Thank you. Ladies and gentlemen, on behalf of Satin Creditcare Network Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.