Suryoday Small Finance Bank Limited (SURYODAY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '22 Earnings Conference Call of Suryoday Small Finance Bank hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pritesh Bumb from DAM Capital Advisors Limited. Thank you, and over to you, sir.

Thank you, Rutuja. Hi, good morning, everyone. We, on behalf of DAM Capital, would like to welcome the management of Suryoday Small Finance Bank, represented by Mr. Baskar Babu Ramachandran, MD and CEO along with the other senior management members of the team. We will have opening remarks from the management, and then move on to the Q&A. Thank you. Over to you, sir.

Thank you, Pritesh. Good morning, everybody. On behalf of Suryoday Small Finance Bank, I extend a warm welcome to everyone to this Q4 and FY '22 earnings call. I hope everybody had a chance to go through our investor presentation, which includes our strategy for making the bank stronger, resulting in higher growth going forward, along with financial performance for the quarter and year ended March 31, 2022. The fiscal '22 began against the backdrop of COVID and its relative impact on the business. Geopolitical tensions, combined with Omicron variant, create a challenging economic environment this year, particularly at the beginning of the financial year. Despite the [indiscernible] of adversities, Suryoday demonstrated a resilient performance on the ground with a solid AUM growth of 20.4% and a disbursement growth of 59.2% in FY '22 as against the previous year. We're pleased to share that our new to bank customer base has grown by a substantial 30% year-on-year, resulting in a total customer base of 19.2 lakh customers as of 31st March, 2022. Our focus remains to acquire new asset customer and maintaining the existing good customers by giving them customer offers. On the industry front, RBI has recently increased [ REPO Rate ] by 40 basis points to 4.4%. This rate hike has come after 2 years along with return of [indiscernible]. We feel it is a step in the right direction given the inflationary environment and the dynamic global economy. Talking about the new initiatives in FY '22, Suryoday remains to be [indiscernible] and start loan products to our existing microfinance customer, offering an end-to-end digital product which includes the repayment through digital means. The pilot was carried out successfully and it is now live for 50,000 Suryoday customers. Intent is to really scale it up in a very sustainable manner over the remaining months of FY '23 and target around 2 to 5 lakh customers through these products. The other product offering is a small ticket fixed deposit, a minimum of INR 1,000 to customers through customer service points, is the first in industry initiative and a turnaround time for opening a deposit for even non Suryoday Bank customers is 100 seconds flat. These products provide a seamless digital experience and save time for the customer, and increase the base of the customers. Let me throw some light on the key operational metrics of Q4 and FY '22. On the disbursement front, the disposals for FY '22 stood at INR 3,528 crore, up by around 60% year-on-year. Subsequently, the bank disbursed INR 980 crores during Q4 compared to INR 1,056 crores in Q4 of FY '21. The disposal was a little bit [ muted ] on account of a substantial focus in terms of collections. The company employed a very cautious and calibrated approach in disbursing loans to customers throughout. Emphasizing more and disposing loans to existing customers with solid track record in spite of movement to COVID 1 and 2. The focus is on retaining micro finance customers who are onboarding new customers in the micro or non-micro loan sector and expanding specifically the affordable and micro housing finance vertical. The collection efficiency is improving sequentially on the back of opening of the economy and nearly on mixing. The bank's one-EMI adjusted collection efficiency stood at 87% as of 31st March compared to 84% for the month ended 31st December 2021. In March '22, overall collection efficiency touched 116% compared to 109% in December '21. The collections vertical being the most critical, we have created a special task force of 400 collection officers on a pan-India basis, which specially would target at GNPA and write-off customers. Our gross advances grew by 20.4% to INR 5,064 crores on a year-on-year basis. At the end of March 22, inclusive finance comprises 66.9% of the fair book while affordable home loans, commercial vehicles and secured business loan comprised 8.8%, 6.7% and 4.7%, respectively. As a strategy, we have been increasing our noninclusive finance portfolio gradually over the last few quarters. The mix of non-inclusive finance has risen from 27% as of September '21 to 33% as of March '22. Suryoday plans to have a portfolio mix of 45% of inclusive finance and 55% in non-inclusive finance book by FY '25. On the deposit front, our total deposits witnessed a growth of 18.2% to INR 3,849.8 crores. Retail deposits currently compared 78.1% and bulk deposits comprised 21.9% of the total deposits. Furthermore, 100% of our bulk deposits are non-callable in nature. CASA, which is excluding the CD improved to 20.2% as of March -- 31st March '22 compared to 15.4% during the previous year, resulting in a steady improvement in line with our granular retail strategy. Our borrowings as on end of March from [ 31.2% ] of our total liabilities clearly in design with our asset liability management. On the distribution front, Suryoday is spread across 565 branches, of which 98 branches are specifically focused on deposit mobilization and 360 branches are asset focused specifically in terms of inclusive finance business and the balance, the comprises of [indiscernible] centers. Through this branch network, the bank service 19.2 lakh customers, of which total asset customers are 16.5 lakhs and total liability customers were 15.8 lakh customers. The GNPA as of 31st March stood at 11.8% compared to GNPA of 10.5% as of 31st December. The net NPA stood at 5.9% (sic) [ 6.0% ]. The provision coverage as of 31st March was at 69.8%. The delinquency in the portfolio increased due to the impact of multiple COVID, our [ 90%-plus ] of the portfolio stood at 7.4%. Total restructured -- standard restructured book is currently 10.4% of our advances as the 31st March 2022. The collection efficiency on the restructured books stood at 44% on date. We intend to increase the collection percentage to closer to 60% in the coming quarters. We continue to monitor restructured portfolio for collections. On the earnings update, on the earning side, net interest income increased by 53% year-on-year to INR 460 crores in FY '22, and net total income increased by 39.3% to INR 678 crores. NIM stood at 8.6% for FY '22 compared to 7.1% for FY '21. Other income mainly included income from sale of investments of INR 14.7 crores. Cost of funds reduced to 7% in FY '22 compared to 8% in FY '21 and 8.6% in FY '20. Cost to income during the same period moderated to 60.9% as compared to 67.5% during the previous financial year, which was primarily due to rising income compared with lower cost of borrowings. The company incurred a loss of INR 93 crores in FY '22 as of March '22, we continue to hold a [indiscernible] provision of INR 91.3 crores on the books. Our capital adequacy continues to be very strong. Our capital adequacy of the bank currently is 37.9% compared to 51.2% as of FY '21. Of this, Tier-1 comprises 34.4% and Tier-2 comprises 3.4% of in the capital adequacy calculations. There is a significant trust digital front with the technology transformation program being on track and expected to be completed by Q2 of this financial year. We have done a collaboration with Lendingkart to digital -- leverage these partnerships to provide value-added products and services to our customers. The overall digital transactions have been increasing sequentially with the raise in UPI transactions as well as on online transactions through the NetBanking. To summarize, the business had witnessed earlier and adverse impact due to COVID induced lockdowns. However, we see a return to normalized scenario to pre-COVID levels. Our endeavor is to grow the loan book by [ 24% ] every year. Not just the loan book, we intend to grow our customer base by closer to 15% to 20% in this financial year. Suryoday plans to progressively increase the share of non-inclusive finance product makes from 33% currently to 50% to 55% by FY '25. This increase will happen in terms of delivering secure loan products even to our existing inclusive finance customer. Suryoday targets to disburse INR 400 crores per month from this quarter to Q2 of FY '23. On the deposit front, we foresee a great opportunity in leveraging our JLG customer and offer them liability products. Suryoday aims to expand its presence very cautiously in new states and focuses on strengthening its foothold in the existing states. Going forward, the company will target close to INR 40 crores of [indiscernible] on a monthly basis from Q2 FY '23 onwards, along with maintaining GNPA below around 8%. This is from our end in terms of update. We look forward to our interactions. Thank you.

[Operator Instructions] The first question is from the line of Ashutosh Adsare from SBI General Insurance.

Yes, yes, sir, firstly, on the disbursement front, you said Q4 was muted. due to focus on collections. So going forward, in the earlier interaction, you had guided for in 30% to 35% loan growth in FY'23 and now you are saying loan growth of 25%. So do you mean till your focused on collection and hence, disbursement will get impacted going forward for FY '23?

Ashutosh, what we have guided earlier is around 30% to 35%. We continue to kind of hold that range, 25% to 35% for disbursement, but on the lower end, it will be likely to be not less than 25%. But at the current pickup of business, as you really see it, including our own kind of liabilities, which are substantially in surplus, we are kind of aiming towards more of a 30% growth for this financial year. And the growth will be predicated both in terms of not just the loan book. Even last year, we exhibited a very robust growth of closer to 30%, which is actually higher than the growth in the books because our growth advances in terms of customer acquisition. So the higher customer acquisition done in the previous year would reflect robustly and substantially in terms of increased disbursements during FY '23 as well.

And sir, on the collection efficiency, if you could throw some light, you said on the restructured book your efficiency stands at 45%, and you're targeting at 60%. So how you intend to increase this? And how the book and the restructured have been performing currently?

Yes, as we kind of mentioned already, it was 45%. Why we said 60% is not just an increase in a mathematical number. It is -- we have put in a collection for the 400 dedicated only in terms of collections. The team's shop -- the executive job of the collection team is to only get in touch with the customers for restructure. And with -- even within that, customers who are already NPA and the write-off customers. We have seen a very good traction in the last 2 months in terms of the focused collection effort. And the reason why it's really accelerating is that the customers -- we have many, many customers, even though they are not paid for a sequential 4 to 5 months. The moment that touch point increases, we have seen the kind of accounts getting activated with as low as an amount of around INR 500, and then slowly moving towards one-EMI. Earlier, our intent was to really activate the customer in terms of getting them into payment more. And as we kind of stabilizing it, we're looking at in terms of taking in a collection of minimun of one-EMI and we are [indiscernible] seeing a good traction on that front. And based on that, we are looking at activating at least another additional 15% and hence closer to 60% of the restructured portfolio.

And on the standard book, you have mentioned that 60% of the customers as of paying and the -- the GNPA books. So on the standard book, if you could throw some light on that?

So in so far as the standard book is concerned, we -- it reflects the full normalization. Our par in the standard book is less than 3%. And we will continue to focus on bettering that number and keeping it as slow. Our focus entirely is on the restructured book and thereof, the nonpaying part to ensure collectibility and pullback of the GNPA.

And on the cost-to-income ratio from FY '21, which significantly managed to cut down your cost 67% to 60%. So going forward, how much scope do you think that's left or it will remain at this elevated level in the cost-to-income side?

Yes. So a lot of this has been possible because of the growth in our pre-provision operating profit, which has grown by about 70%. As guided previously, for the current year, we would be targeting a 55% cost income ratio, while our steady state long-term goal will be to go back to the 50% level where we were pre-COVID.

Okay. Okay. And in terms of provisions, you maintain your guidance of INR 200 crores of provisions for FY '23?

Yes, given the kind of growth in book that we have and the overall collection efforts that we have in mind, what we had advised is that we will look to have about INR 100 crore of final cleanup in Q1 of this year and a total provisioning target of around [ INR 150 crores to INR 100 crores ], and we stick to that guidance.

Okay, okay, last question from my side in the [ PAR 90 ] segment. On a sequential basis, there is an increase from 4.6% to 7.4%. So do you think that you'll be able to set back this [ PAR 90 ] level to your first run rate of 3% and 4%.

Yes. I mean that's why the specific challenge -- the challenge that we have taken about ourselves and Baskar talked about the dedicated team of collection agents that we have put in place. This increase in par is largely due to the restructured part of the book, and that's what is the primary focus of our collection efforts.

[Operator Instructions] The next question is from the line of [ Nandan Madiwale ] from [indiscernible] One Capital.

I think in the Q3 presentation, you had mentioned that by Q1, we are looking to bring down GNPA to around 8% or so. Does that continue to hold? Or do you think it will take some more time?

Our intent in terms of putting up the collection force is [indiscernible] that what the kind of -- whatever slippages happened as kind of [indiscernible] mentioned, was in terms of restructure advances, and we have not done any restructuring with a high long moratorium. Is there were a couple of months? And then kind of a move into some of them have slipped as I said, the collection of patient is at 45%. Sub-8% is our target. And I think the way we are building up the momentum, clearly, that is where it is. So maybe not it may change by a couple of months, but clearly, that's the intent in terms of reducing it to 8%.

And just on the Q1, I think we had mentioned that elevated provisions would continue until Q1. So that still remains, right? You don't see provisions going up beyond Q1.

That's right. Yes, yes, please. What we have done is that in the last 2 years, we have not increased the ticket sizes beyond what we are kind of comfortable with including for our existing good customers. So that's where you will see a very moderated low principal outstanding per customer. So one of the ways in which, obviously, the GNPA is a higher base, including higher funding to existing customers. We have been very prudent and we will continue to be prudent. And what we are kind of clearly seeing is a portfolio built with approximately closer to INR 2,000 crores in the inclusive finance portfolio post July '21, continues to be near 99% in terms of collection. So we'll continue to be very prudent in terms of building -- increasing their loan ticket sizes even to our existing customers. And our focus will be in terms of building customer base increase as well. Last year, while the growth of the entire advances was only 20%, we had a growth in terms of customer base of 30%. So the increase in customer base of the last year will reflect in terms of very robust disbursement. And to that extent, the base impact itself will reduce the GNPA marginally, but our intent is at on an absolute level is that we want to reduce the GNPA amount.

And just one last question. I think in the last call, we had mentioned that from July 2022 onwards, we are looking at a monthly pick up of INR 40 crores. Is that correct? And does that still hold?

Yes.

[Operator Instructions] The next question is from the line of Varun Ghia from Dimensional Securities. [Technical Difficulty]

Hello, Can you hear me?

Yes Varun.

Yes, sir. Could you explain why the yields are lower? Was there any interest reversal? Or is this due to some other [indiscernible]?

Yields are [indiscernible] on account of some excess interest capitalization reverse, these related to restructurings done in September. So on a full year basis, there is no impact. But on a quarter-on-quarter basis, there will be a bit of a distortion.

How much [indiscernible] was for full year?

It was about INR 25 crores of some adjustment.

And going forward, what means do you target?

So on a gross book basis, we will continue to target around 18%, given the mix. As indicated by Baskar, our focus is to grow the secured lending book, which will have a comparatively lower yield as compared to the inclusive finance book. So 17% to 18% range is what we would be comfortable at. And that's the corridor we will work in.

[Operator Instructions] The next question is from the line of Pritesh Bumb from DAM Capital Advisors.

A couple of questions. You said that you will be limiting moving to newer geographies and focus on the geographies which you are in. Can you give some -- or you can share some areas where you didn't feel like -- or penetration in new geographies is done? Or is that the penetration in the existing geographies where you are in is very less, and you want to focus on the same? And how will you increase the customer base from those kind of areas? Yes, that's the first question.

Sure. So we don't have a deep penetration in many of the states where we entered and some of the states where we have actually been present for long. One of the states is Karnataka where we have been present for closer to around 8 years, but our penetration is very, very marginal. So our intent is to really focus deep into Karnataka. The other couple of states where we have recently entered in the last couple of years, and again, very low penetration in the state of Rajasthan and Uttar Pradesh. So the intent is to really penetrate a little more into these markets before really expanding into the other new geographies. In inclusive finance, we are kind of now watching out in terms of some of the states which are getting highly penetrated where we may not even have a presence. But consciously, in the past, we have stayed away and currently also even in the present wherever we see -- even when the markets are performing very well like the state of Bihar, where we will see a huge increase in the portfolio base. We tend to kind of defer our plans in terms of looking at those markets. So we're not looking at some of those markets, which on performances are extremely good where our presence is nil, but we will kind of not really look at entering those markets for inclusive finance for now. In terms of the rest of the other products, our penetration even in terms of our existing branches is very low, like affordable home or commercial vehicle operate at no more than 30% of our existing branch network at this point of time. For those products, the delivery would be in terms of increasing our presence. For instance, our commercial vehicle presence or an affordable home loan presence in very key states like Karnataka, Tamil Nadu is very, very low. So intent is to really out the business force there and increase in size and geographies [indiscernible] funding at this point of time for our size of business.

Second part of that question was at what cycle will you start increasing the ticket size in the [ FY MFI book ] you said that right now, you're not increasing any ticket size. So at what cycle of the customer's life cycle do we want to increase the ticket sizes?

Yes, so what's happening now is not -- we are not clearly going by only the cycles and increasing it. The customers have multiple footprints in terms of even retail asset exposures. So closer to around 28,000 of our customers in inclusive finance. At an average home loan taken of around INR 6.5 lakhs on disbursement and INR 5 lakhs in terms of principal outstanding are current in those loans. And there are around 4.5 lakh of our customers in the overall customer base where an excellent track record in retail assets. So analytics comes into play in terms of understanding the profile of the customer apart from the primary data we gather from the customers. And probably we are shifting to a more, we're not necessarily only by the number of cycles they have had with us, we are going to increase the size or probably will not increase the size just because the customer has been with us for 3 or 4 cycles with an excellent track record. So we'll use all of that. And to the extent where the customers can handle the EMI, there is a clear business requirement for taking a loan of size of around INR 1 lakh, INR 1.5 lakh. We are kind of will [indiscernible], which is our digital offerings will be all about. And for the rest of the customers, we'll moderate it out, but currently at around -- which is our fisrt cycle is around closer to around INR 35,000, we'll retain around the same range. And the max we are comfortable whether it is a cycle 2 or 3, if we don't have any other substantive data that they can handle a higher loan would be closer to INR 60,000, INR 75,000 at max.

Sure. And just wanted to check, are we in line with the RBI guidelines in terms of household debt? And are we having things in place to know what is the household debt in terms of the software or whatever the market insights are required on that?

We have invested post-COVID, counterintuitive in terms of heavy investment in analytics. So even before any of the new norms came in place, we had a full visibility in terms of the customer and guarantor in terms of their composite outstanding and their monthly EMI obligation. So given that, that perspective we had, what we are kind of doing is more in terms of getting the income data of the entire household. Earlier, it was restricted only to the borrower, which is the lady of the household and the guarantor, which 95% of the time happen to be the spouse of the borrower. So today, we'll have to also gather data in terms of unmarried children. So that's an extra piece that we have built in and which will kind of go fully automated end of this month. And as of now, we are collecting it through our own mechanism of [indiscernible].

Sure. And another question was on collection efficiency. That seems to be your compared to peers in most of the segments like MFI or even CV, even if you look at some of our peers like [indiscernible] and [indiscernible] on collection efficiency in Karnataka. What seems to be a issue for us? And why is the collection efficiencies still lower when people have almost reach about 99%, including on NPA or earlier [indiscernible]? So what is the issue with us?

You are correct, I mean I will not be able to comment in terms of the competitor's data performance. But what we kind of measure ourselves is in terms of one-EMI, that is for the EMI generated for the month. How much of EMI is paid? And it includes all the customers where the EMI is generated, whether they are a write-off customer, whether -- sorry, the whether it is a GNPA customer, whether they have customers with the moratorium with respect to all the EMIs that are generated. Against that, we kind of the measure -- so the one data which kind of gives us a qualitative outlook in terms of where we stand is that the book built after July '21 is around INR 2,000 crores of inclusive finance book is at 99% in terms of -- 98.5% in terms of collections. And the one which we are kind of working out in terms of getting back on track is a pre-COVID portfolio. So we kind of first -- one of the first of the recognition in terms of our collection or repairing it is to understand the problem. So we haven't resisted from funding any customer who are an overdue even with us even for a 60 day. We have not done any of those fundings that try to activate. The models can be very, very different. So to that extent, we recognize as it is in couple of the NPA stamping is also on account of we had given a small OD product at that point of time. And even if the customer is regular on the regular loans and OD is not -- has not serviced a small interest for a period of 3 months, we still get stacked as an NPA. So to the extent that might be not necessarily comparable. But our one-EMI was computed, has been marginally going up and currently at 86%. As the new portfolio builds up, we clearly see that inching more towards 90 plus -- 90% and above by probably end of this quarter.

The next question is from the line of Rini Singhal from Lok Capital.

A couple of questions. One, out of all the non-JLG products, which is the product where we are seeing more traction on [indiscernible] and we are bullish on? And we are looking to grow at maximum in the next financial year.

We're looking at affordable home loan and the secure business loan backed by property as a key driver. We have built up a small but a very robust used vehicle finance portfolio in the last 1 year on strong underwriting. And that portfolio is the kind of collection is very close to 100% and we would -- 30-plus it still was up 3%. So intent is can it really build a very strong used vehicle portfolio but less than around 5% in terms of 30-plus and probably around 2% in terms of 90-plus. So that will kind of keep adding, but it will not add substantially to the overall volume at this point of time. But the key driver in terms of value would commercial -- sorry, mortgages, which is both home loans, affordable home loan as well as in terms of secured business loan. Our current cost of borrowing, including the excess liquidity, which we'll carry of around INR 1,000 crores is at 7%. As the interest rate cycle is picking up, we clearly kind of see a very competitive advantage in terms of playing that mid-segment, which is currently priced anywhere between 11% to 14%, would be our growth driver for this year and for years to come.

Second question, in terms of just the within the JLG segment, given the new guidelines on the MFI, I know that this is not applicable to us, but are we seeing some sort of at least reversal of yield compression that was happening in the last 2 years? Have we taken some interest rate hikes in the JLG segment?

Yes, the yield that -- as of now yield has not come down. In fact, probably in the market post this guideline, there would have been an increase in pricing to cover up the credit losses and so on. We are continuing to maintain the same pricing which we were kind of having either before the repo rate hike or before the new unified terms came into picture. Our intent over long term is to convert the customers to repaying us also through the digital means. And these analytics that offer both -- products, both in terms of disbursement as well as in terms of collections back digitally. And that should lead to a substantial drop in operating costs, which we intend to kind of pass it back to the customer. An ideally a good inclusive finance model at the current cost structure would be beneficial both to the institution and to the customer, at least well paying with a good track record should be priced closer to probably around 18% to 19%. So that convergence is what will happen as things become more digital, and customers become more aware and start paying even without a touch point being in place for every installment. So that's where we have launched 2 of the products. One is called Vikas, Loan where you are around close to 50,000 customers. Another loan is a Star Loan, which is a preapproved product for our existing customer based on all the current data done for income capturing at the field level. If these 2 products were to really scale, we believe that the operating costs will dramatically come down, probably not immediately in the next 3 or 4 quarters.

And one very last more of a clarification question. The GNPA was 11.8% on Slide 22 versus the [ PAR90 ] of 7.4%, so what's the delta between the 2?

Yes, so as Baskar explained, that's largely on account of customers to whom we would have offered our Smile [ Only ] product, right? So they would be current on their principal loan, which is a term loan. But at a customer level, they would have been tagged as NPA because their payment would have been near regular on the OD.

It's also possible that there's another one, which is a customer such as [indiscernible] stamped as GNPA for banks. And even if the customer starts paying on an installment thereafter and stays in the bucket of 30 for a moment, it will still be considered as a GNPA till the entire amount is repaid and they become regular all over again. And in the micro finance segment, when the customer slips to any particular bucket, while they continue -- good customers continue to make 1, 1 installment or 1, 2 installment. Clearing up all 3 installments build up, generally is a challenge. It gets done only towards the end of the tenor. So that would be the difference between the divergence between 7.4% and [ 11%].

[Operator Instructions] The next question is from the line of Aman Mehta from Haitong Securities.

Can you help me with the breakup of restructured book and the total provision on it?

Yes, so our total restructured book as of today stands at INR 700 crores out of the INR 5,663 crores book that we have, right? Yes. And if you are looking at in terms of the standard part of the restructured book, so the standard part of the restructured book is around 10%.

And about -- in standard restructured book, there are various segments, JLG, CV, HL. Can you provide data for that?

In terms of the -- predominantly, it will be JLG segment, and the rest of the segments will be very, very small. Around INR 550 crores or INR 550 crores plus INR 50 crores around 600 crores happens to be from JLG. INR 100 crores of which INR 65 crores happens to be from CV and around INR 12 crores happens to be from HL segment.

[Operator Instructions] The next question is from the line of Pritesh Bumb from DAM Capital Advisors.

Sir, just wanted to check on the scenario in the market now after the RBI rate hikes, what will your stance on the deposit side in terms of rates? And will we be able to pass on some of rates on the non-MFI portfolio? You explained on the MFI side, but do you think that you can pass on some of the rates [ at ] deposit rates had to be hiked? And what is the stance on the deposit side?

So in so far as our home loan and LAP portfolio is concerned, a significant portion of that portfolio is variable linked and it's linked to the repo. So to that extent, yes, there will be some amount of transmission in the rates, especially as the new disbursements take place. And as the old disbursements come out of the first 3 years of fixed rates. Very, very marginal in terms of bottom line, Pritesh. So even around INR 1,000 crores portfolio it is 40 bps is around closer to around INR 4 crores. So on a comparable overall number, it may not be a significant overall [indiscernible].

The CV portfolio also will be linked to the repo rate?

No, no, that's a fixed rate product.

Yes, I think that is the second largest segment, I think in the loan book. So what can be -- I mean, of course, as you said, it's not a very significant thing. But as you go ahead and bring a little bit of non [indiscernible] portfolio, which is on CV as well along with affordable housing, do you see any risk to pass on yields there or type on the new loans as well?

That won't be the case at least at this particular point in time because most of our borrowings are multiyear with rates locked in. So to that extent, for the time being, we are fairly comfortable. We are also sitting on excess liquidity that will help us in terms of rate management. As I said, home loan LAP is the segment that we are focusing on, and we will grow it significantly. And in that particular portfolio, we certainly will have a variable rate product.

And the questions on rates on deposits, I mean can we conclude that you're not going to change any of the rates immediately as you have excess liquidity?

Yes. broadly, yes. And on the [indiscernible] a particular spot, which is the 3-year deposits, we are offering 7, which happens to be as competitive. So we'll kind of hold on to our deposit rates at this point of time.

Thank you. Ladies and gentlemen, as this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you. So as stated last quarter, we continue to kind of maintain that growth, would be in the range of around 30% and then upwards. While our guidance is anywhere between 25% to 35%. We intend at the current growth pace, it will be closer to 30% equally driven by the increase in customer acquisition, even when overall industry, we see a flat or marginal negative growth in terms of customer base, specifically in inclusive. As our engine in terms of the noninclusive finance products have stabilized, specifically the last 1 year, we intend to grow home loans, as mentioned by Kanishka as well as in terms of secured business loan far more robustly. And specifically in terms of our excess liquidity, which we have maintained all along, and currently our cost of funds being at around close to 7%, we will diversify the portfolio in a very meaningful manner. We don't intend to kind of increase the ticket size in terms of inclusive finance substantially without clear backing in terms of analytics data of the household economic status. And we do believe that FY '23 will be a year of enterprise profit. And Q4, as we guided, we are kind of endeavoring to deliver a INR 40 crores PPOP starting from Q2 and we'll stay focused on it. The intent is to reduce the GNPA by 8%, and we are fairly confident that we'll be closer to that number by end of Q1. Whether we intend that coming back or swinging back into sustained profitability. And with that, we built in terms of managing the portfolio in the right mix. We will not be doing that by reducing the growth in terms of the inclusive finance, but the growth in terms of -- with the other products will be much higher, considering that they are at a small base at this point of time. In terms of overall other key things in terms of our borrowings, in terms of our [ asset/liability matching ], in terms of government, we continue to be pretty strong, including capital adequacy. And we believe that, that will come into our [indiscernible] views in a very volatile year like what we are probably entering in terms of FY '23. Look forward. Thank you very much for the cooperation.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.