Utkarsh Small Finance Bank Limited ($UTKARSHBNK)

Ladies and gentlemen, good day, and welcome to the Utkarsh Small Finance Bank Limited Q4 FY '26 Earnings Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Chintan Shah from ICICI Securities. Thank you, and over to you, sir.

Yes. Yes. Thank you. Good evening, everyone, and welcome to the Q4 FY '26 Results Conference Call of Utkarsh Small Finance Bank. We would like to thank the management for giving us the opportunity to host this call. From the management, we have Mr. Govind Singh, Managing Director and CEO; Mr. Sarjukumar Pravin Simaria, Chief Financial Officer; Mr. Amit Acharya, Chief Risk Officer; Mr. Virender Sharma, Head, Micro Banking; Mr. Sourabh Ghosh, Head, Consumer Banking; and Mr. [ Abhi Kataria ], Head of Assets. Yes. So now without further ado, I would like to hand over the floor to the management. Thank you. And over to you, sir.

Yes. Thank you, Chintan. Thanks a lot. Thanks for hosting this call Yes. Thank you, everyone, for joining our quarter 4 FY '26 earnings call. The fourth quarter of FY '26 has been a period of renewed growth too for resilience and purchase optimism. And as a part of industry, we also went through adverse impact of MFIN segment, as you are aware, [indiscernible] for a longest period of 1.5 years. However, for us, FY '26 has been a year of deliberate choices prioritizing stability over speed, quality over quantity and resilience over short-term expansion growing so that we emerge with a stronger -- fundamentally stronger, less cyclical franchise that can deliver sustainable returns over the medium and long term. FY '26 began under the shadow of legacy stress and a cautious environment. Over the course of the year, we focus on stabilizing collection, tightening underwriting and rebalancing the portfolio mix. These actions were designed to arrest deterioration, reduce fresh slippages and created the conditions for a durable recovery. By quarter 4 of FY '26, we began to see tangible green shoots, disbursement improves meaningfully SMA pools contracted first NPA slippages declined sharply, recoveries and upgradation increase and collection at is strengthened. All of these point to the strategic measures taking hold. Concretely, disbursement improved across both JLG and non-JLG segment in quarter 4 FY '26. JLG disbursement grew 58% quarter-on-quarter and 2% year-on-year while non-JLG dispersion grew 41% quarter-on-quarter and 51% year-on-year. These improvements will expand the portfolio base going forward and reflect a calibrated return to lending activity. At the same time, our ex bucket collection efficiency in the JLG segment improved to [ 19.7% ] March 2026 up from [ 19.5% ] April 2025, the highest level in the last 4 quarters, our direct outco strengthened field execution and targeted collection initiatives. [indiscernible] slippages, net of recoveries and upgradation reduced to INR 170 crores quarter 4 of FY '26 against INR 710 crores in the quarter 4 of FY '25. And our GNPA ratio improved by 330 basis points quarter-on-quarter to [ 77.7% ] as of March '26. These are the early measurable signs that our corrective actions are beginning to deliver. Our central theme of FY '26 has been structured derisking of our unsecured exposure and a strategic pivot towards secured and higher yield, lower risk portfolios. This is deliberate long-term ship to reduce cyclicality in the credit cost and create multiple avenues for growth beyond JLG lending. We have consciously moderated our JLG exposure to around 28% of the gross loan book. and around 30%, including BC JLG as on March 2026, down from nearly 88% and 90 [indiscernible] in March [ 2020 ]. This is a reflection -- this reduction reflects both selective contraction of the JLG book, which declined by around 10% during the quarter, and a purpose will shift from new flows into attractive products, alternative products. As a result, secured lending now comprises 21% of our gross loan book, up from 43% a year ago. This structural ship is already changing the risk profile of the bank and will, over time, enhance stability of margins. Within Micro Banking, our Micro Banking business loan targeted had graduated JLG customers with proven repayment discipline have shown exceptional traction, MBBL portfolio grew 122% year-on-year and 40% quarter-on-quarter and now represent 27% of our Micro Banking loan book. Penetration remains below 15%, which gives us significant headroom to scale this product among other share of our customer base while preserving asset quality. To further derisk incremental flows, we have registered with for credit guarantee coverage on eligible JLG and MBBL disbursement with effect from 17 March 2025, 45% of our Micro Bank finance book for disbursement in quarter 3 FY '26 already covered under the guarantee scheme and counting quarter 4 FY '26 disbursement, 70% in [indiscernible] book is covered. This covers reduces incremental portfolio risk on new disbursements and supports portfolio stability as we scale higher-quality secured products. Diversion beyond JLG has been a key stated priority, and FY '26 has seen healthy momentum across our non-GLT lending businesses. These segments not only broaden our revenue base but also deliver attractive yields and more resident collateral profiles. Loan book expanded by 15% year-on-year to [ INR 456 ] crores supported by the newly started microlap segment, which is delivering disbursement yield. Housing loans grew by 8% year-on-year to INR 990 crores, and our BBG portfolio, Business Banking Group portfolio, fully secured a [indiscernible] grew by 19% year-on-year. D&C segment also was indicating the need to look at the mix of new versus used vehicles as the forward are significant risk at behavior. And therefore, the loan book contracted by 1% quarter-on-quarter to INR 1,090 crores, and the share of used vehicle grew to almost 30% in FY '26 from less than 15% a year ago, reflecting our strategic tilt towards more resilient asset classes. Collectively, these moves are increasing the share of secured assets in the book and improving overall portfolio resilience. On the liability side, our focus has been on building a granular low-cost deposit base and aligning deposit growth with disbursement. Total deposits were broadly stable with 0.4% year-on-year growth and around 3% quarter-on-quarter growth while retail term deposits grew by 20% year-on-year. Our CASA deposits increased by 11% year-on-year and 13% quarter-on-quarter, lifting the CASA plus RTD ratio to 83% as of March '26 from 17% on March '25. And the CASA ratio improved to 24% as of March 2026. These improvements reflect better quality of account sourcing and a conscious reduction in reliance on high bulk deposits. In response to the RBI reported cuts, we have faced reduction in interest rate on savings and tangibles remain competitive while optimizing cost of fund. These calibrated repricing have driven a reduction in our overall cost of funds by more than 45 basis points year-on-year and more than 25 -- 20 basis points quarter-on-quarter. Moving from 8.3% quarter 4 FY '25 to 8.1% in quarter 3 FY '26 and 7.9% in quarter 4 FY '26. We expect cost of funds to reduce further as pricing continues to take effect -- repricing continues to take effect. We also maintained prudent liquidity buffer. Our CD rate declined to 83% as of March 2026 from 87% as of March 2024 and we ended the quarter with surplus equity of almost INR 300 crores -- INR 3,800 crores and an LCR of [ 17% ]. These metrics provide us the flexibility to support calibrated disbursement while principal balance sheet residence. Income compression led to elevated cost/income ratio for the financial year, which impacted the is adjusted for interest reversal due to first NPA slippages then PPA would be INR 140 crore despite pressures from legacy book leading to elevated credit costs and hence the loss, our capital position remains healthy. We reported a net loss of INR 188 crores for the quarter, driven by providing the legacy stress, driven by providing for [indiscernible] stress. Our capital negotiation stood at 17.7% as of March 31, 2026, comfortably above the regulatory threshold. To strengthen the Tier 1 base and support future growth, we successfully completed a rights issue of INR 950 crores of March 2025, which has been helping to -- for our capital cushion. In parallel, we proactively address legacy stress through the ARC sale of stress JLG portfolio. This was a deliberate value-enhancing decision that improves balance sheet strength and positions the company on a much cleaner footing for sustainable growth. Following traders and shareholders on the reverse merger part, following treaters and shareholder approval obtained in accordance with the process of [indiscernible]. The second motion petition was filed with the NCLT on April 5, 2026 for the scheme of omission or holding company with and into the bank. The reverse merger is expected to be completed in the next few months, subject to NCLT proceedings. [indiscernible] discipline has been a central para of our FY '26 response. We expanded our collections workforce for JLG and MBBL to more than 1,200 as of March 2026. Operationalized and specialized call center for overdue accounts and split other branches, Lagan micro banking branches to improve oversight and control. Training programs for new frontline staff emphasized our core processes such as center metrics and customer onboarding ensuring consistent execution across the field. These structural investments have contributed directly to the improved collection mattresses and reduction in SMA and the [indiscernible] slippages we reported in quarter 4 FY '26. Technology and process transfer have also been critical. Our Utkarsh 2.0 technology transfer is delivering tangible benefits in automation, productivity and risk control, digital underwriting capabilities are canceling us about lending to overleverage borrowers. With 360-degree controlled parameter mapping tenants monitoring across the trade cycle. Bank is also in the process of launching new CBS in quarter 2 of FY '27. These investments are not only improving the efficiency, but also enhancing our ability to underwrite and monitor risk at scale. We also recognized the important of our people. During FY '26, we incurred a onetime impact related to new labor costs LTIP and ESOP grants and other employee benefit obligations in quarter 3 FY '26 and its incremental impact in quarter 4 of FY '26. While this based on the near-term profitability, it reflects our commitment to compliance, employee welfare and building a motivated capable workforce to execute our strategy. Training, productivity initiatives and our national agility will remain central to our transformation journey. Throughout FY '26, we took a range of decisions decisive actions to address legacy stress and position the bank for sustainable growth. These included tightened underwriting standards, calibrate disbursement targeted recoveries and upgradation, active portfolio resolution and measures to improve overall discipline under the new [indiscernible]. We have also been attractive to receive incremental flow-through, as we have mentioned earlier, through CGM coverage for eligible JLG and MBBL disbursement by shifting new origination towards secured and high-quality products. We also have taken steps to improve the quality of new account sourcing and to cross-sell asset products through our liability focus and general banking branches. Thereby increasing product penetration per customer and including wallet share. These actions taken together are designed to reduce the probability of future steps and to create a more diversified, resilient earnings base. We view FY '27 as a consolidation year as we appear to convert the green shoots seen in quarter 4 FY '26 to sustainable momentum while continuing to strengthen the franchise, our near-term priorities will be to sustain improved collection performance, continued calibrated disbursement into higher-quality segments, people secured lending and accelerate liability mobilization to support growth in the prudent manner. In the coming years, we are aiming to for loan book growth of 25% to 30% with secured lending comprising around 55% of the portfolio, maintaining the above 8% and delivering an ROE of around 15%. Achieving these targets will require steady execution across underwriting collections product diversification, liability mobilization and technology-enabled risk management, while sectoral headwinds and regulatory transitions may continue to influence near-term performance. We remain confident that the strategic direction we have charted will deliver a stronger, more sustainable franchise over the medium term. In essence, FY '26 has been a year of challenge and successful transformation. We have moderated risk, strength and collection, diverse with our portfolio, deepened our live day franchise and reinforce our capital base. The quarter has shown that the bank is on the path of recovery and with increase in quality disbursement, better portfolio and deposit mix, improve asset quality with lesser such slippages and higher recoveries upgradation, decline in SMA pool. We will continue to prioritize operational efficiency, disciplined execution and our automation agility. Our study is not about changing rapid growth and expense of stability. It is about building a fundamentally stronger institution that can withstand cycles, deliver sustainable returns and create enduring value for all the stakeholders. We thank you for your continued support and confidence. With this, I conclude, and now we are -- we'll move to question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Sagar Shah from Spark Capital.

Just on comp additions to the management for posting or at least better set of earnings as compared to a few quarters. Sir, I have some few questions. My first question was related to our asset quality. On the asset quality, you have mentioned the PCR on the bank level of around 59%, I wanted to understand what is the PCR that we are holding for secured as well as unsecured more of them individually?

Sure. I'm Amit [indiscernible]. Yes, Amit, this side. So if you see on the overall book, PCR is 59.3%, as you mentioned. On the entire secured book, it stood at 38.7% and on entire unsecured stood around 65.4%.

Okay. So 64.5% that you are seeing, is for -- is it safe to assume that includes MSME unsecured as well as MFI, right?

Yes. Right. Sorry, when I mentioned unsecured 65.4%, it includes all [indiscernible].

So only for MFI, what is the PCR that we're holding, sir, now?

Only for JLG, it would be 66.3%.

Only for JLG. And for MBBL as well as JLG mix spend?

More or less on the same side 66.3% because for MBBL and on JLG, we do the same kind of tradition.

Okay. So is it safe to assume that still some sort of provisioning is still left in the next 2 quarters, especially for MBBL and JLG is concerned because even if we want to recognize the 18% provisioning aging provision, so still some sort of provision is left in the next quarter, right, for MBBL as well as JLG? [indiscernible] 5% provisioning and some portion of 70% is still in.

Okay. So now the next year from FY '28 onwards, we are more migrating to ECL-based provisioning, so what I wanted to understand that how well are we prepared for actually model our asset quality towards that? Because in the ECL model, our provisioning has to be more aggressive, especially on the SME versus. So how ready are we -- have we figured out a model how ready are we for the ACL transition, sir?

Well, this [indiscernible] beginning is -- from first April is actually SSDs are exempted. So no, we still don't have to follow that. I guess it will be some time before RBI brings us into the [indiscernible]. Having said that, while we have proforma ideas that we do and even honestly, the provisioning for the last year in terms of slippage that has happened. I guess our ECL provisioning perhaps of accounting I provisioning would be equal to or maybe higher. But your question to be preparedness for India next year, it doesn't apply to us in terms of statute requirement.

Okay. Fine, sir. My second question, sir, was related to the MSME portfolio. Our JLG in the last quarter, you mentioned was upwards of 12.5% GLP on the MS front, so now it considers 23% of your total lending portfolio, so what is the GLP right now? And how is the something like still now the real impact of the West is the West Asia actually conflict is going to reflect in the coming quarters. So how -- what is the GNPA right now? And how well are we prepared to actually face that? Are we facing stress in some of our existing portfolios?

So see, if you talk about retail and SME portfolio, the gross NPA stood as of March '26 at 3.4%. And if you see, we do fund to a very normal ticket size. So we do not fund like INR 20 crore or INR 30 crore kind of borrowers who have some export or larger export limits or the foreign currency exposure. So as far as geopolitical situation is concerned, there has been no abnormal behavior in our portfolio so far, which we have been monitoring for last 2.5 months when Iran U.S. situation got [indiscernible]. So we have a close monitoring on it. As far as it is concerned, there has been no issue or portfolio behavior or change in our portfolio as far as MSME is concerned.

Okay. So MSME, the [indiscernible] has come down to 3.5%, sir?

3.4%.

3.4%. It was at 12.2% you mentioned in the last quarter?

Yes. And just when we talk, I just wanted to add one more point. When we talk about the derm portfolio, largely, it is secured by hard collateral like residential or commercial properties. So there is a security available to the bank in case of [indiscernible].

Okay. So just one suggestion, sir, from my point from mind. Within the MSME, you have around 3 segments. Within the MSME, you have the secured business on. So you have 1 secured business loan. We have [indiscernible] also. So if you can just give the breakup attain INR 4,456 crores worth of portfolio that would be very helpful, sir, to understand that what -- at what direction the bank is going actually. That would be very helpful. Now my third question, sir, was related to the disbursements and disbursements in sales you have actually are going up for the first time in almost I think in last many quarters, actually, -- so what is the reason the area behind the same because the disbursements have 3 consecutive quarters of decline. Now it has moved up to INR 1,310 crores. So where are we exactly finding the value? Have we actually for something like still have you gone up to the underwriting? What is the new portfolio? How is the new portfolio you're doing, actually? And what changes have you made in [indiscernible]?

Thanks. This is Virender Just to answer your question, there has been -- as you know, that in April '26, [indiscernible] were implemented [indiscernible] are were implemented, and there was a sudden what you call, increase in power, which led to our focus of more on to the collection side and focusing on making up the collections. By third quarter of October, November, had nearly stabilized on our collections. We always had the what you call distribution and the people to do that part. Once the collection in early bucket started stabilizing, we started putting the thrust on sales back. And we are adhering to all the guidelines as specified [indiscernible] industry has seen an upward trend towards the disbursal. And our FY '25 26 portfolio after this is behaving very well with respect to the collections also. So it is -- I will say, still, we are only at a 70% optimum capacity of disbursal and we should be stabilizing in the same ranges right now.

Okay, sir. And lastly, what is the steady state credit cost that we are in for FY '27 and FY '28 -- FY '27, sir? The target.

Yes. In the previous call, we had mentioned about 2.5% steady state, 3.5 [indiscernible] in Q2 to 2.5 in FY '28. With this trajectory of stage is being arrested significantly in terms of [ MSME ] going down significantly. With the backrun the new disbursements are happening under the new guardrail with the breakround that we have [indiscernible]. I guess this is a very conservative number, but we will still stick to the fact that it will be around 3% for FY '27 to 2.5% in FY '28. We will do better than that, assume the trajectory the way we are looking at in the industry as well is endorsing coming back of the disbursement and the correction being [ 99%-plus ], I guess, this is a conservative number that I'm giving you.

[Operator Instructions] The next question is from the line of Shivam Singh, an Individual Investor.

I wanted to ask what is the amount that you are going to get back in CGM cover in the last 1 year that insurance that we have taken for [indiscernible]?

So the way it happens that, I would say, the majority of NPA as we speak, I think still not an NPA at the disbursement that we have started while our portfolio of 70% is covered under CGM, but the maturity of claims was not arrived. I guess, I would hope it doesn't arise, frankly. But maybe 1.5 years, it takes the claim and the settlement, but we are also not even wanting to account [indiscernible]. And therefore, the entire number that we have said is without even considering the granite at this point because that's kind of an experience, and we don't own setting to a windfall gain. At the moment, the cost of premium is embedded in my P&L. And since we don't have the NPAs from the new book, while it appears to be a cost of premium, but we're just protecting our future in terms of any adverse development for future. So for your question, you say that is anything nature at CGFMU, the answer is probably too early to be number on that. Just to summarize that we have taken the cost of [indiscernible] for last more than a year now since last quarter 4 of last year. But we have either taken accounting benefit and now we have got any claims so far. So only expense have gone part. But in case something goes to that extent in the future, we'll get the benefit. But the current work, we have not taken any benefit on the expense have been taken into account.

And sir, how much of our capital was feet because of that? As I know that the risk weightage is adjusted that we take the cover?

No, even that has not been done by us. So as I mentioned, we have not taken any benefit of any guarantee scheme. The accounting -- we have kind of very plan accounting where we have not taken any benefit of this. So as I mentioned, whatever is there, the expense partner is taken. No benefit either in terms of getting any claim or any adjustment in the NPA or capital equity has not been done by us.

Okay, sir. And sir, regarding our Prime Minister's comment in the previous few days, what is our stance. We are trying to grow at 30% and given the nature of the geopolitical situations, are we like what is the segment that we are targeting? And how do we ensure that our credit cost at increase?

So you see, I mean you are aware that last year has been a year where we could not grow. So we are at the almost same level. So we have a real low base right of from that perspective. And we have got a full infrastructure in terms of manpower, in terms of number of branches and the lines of products and our channels. So I think around 30% growth would not be a problem in the normal one. And our focus remains on the one, obviously, we understand Makena as well. So that remains our focus area. And besides the value mentioned, there are various types of lab products, which we have been focusing upon, including the small ticket lab and normal lab as well as the JLG products. I think LAP and JLG will still remain our key products for going forward also. We have obviously -- we've done something like gold loans, which we think that we'll be able to grow bigger this year. There's some of the new area also, which we started around 1 to 2 years' time, we think that there should be further growth in that part. As far as the credit cost is concerned, we do understand the statement from the paninister, but I don't foresee any challenge but I think most of our portfolio is for income generation and smaller ticket size, we don't foresee much challenge. And anyway, I think we are in a recovery path, and we have got a good machinery as far as collection is concerned. So we don't foresee any major impact because of that.

Okay. Sir, that was really helpful. And sir, in the secured segment, like [indiscernible] is a default, what is the time line in which we can get physical control of the asset and auction to, what is the LTV value of the secured assets that we are lending to it?

So normally, when we assess the NPA case and the bank decides that we'll have to go on the [indiscernible] route. From there, various processes are in one, and it takes around 6 to 8 months in a period or somewhere 6 months, somewhere 8 months, depending on the situation. But that's the normal scenario. 6 to 8 months, you are able to disclose of the property completely by inviting the bid under the SPC. So that is one. Second is the normal LTV, if you will see on the portfolio side, it would be less than around it should be there because mostly, we do residential property, all our loan value at 70%. So on an outstanding portfolio basis, and including our own portfolio, like [indiscernible], we offer only 50%. We do not go beyond that out. So overall, it should be below 65 to 60.

Sir, what is the average tenure of these loans? Average tenure used because the lab may smaller borders of for a longer tenure, the average tenure would be around 12 to 13 years would be the average tenure given. But if you see the entire portfolio largely in secured in housing and understanding customer takes this loan on an average of 8 to 9 years and dispose of or close a loan within this particular period. And sir, what would be the risk weightage for this year?

So this is -- when we talk about LAP, it is 75% is the risk weight last year.

Next question is from the line of Rahul Kumar from Vaikarya Fund.

Just one question. What are our capital raise plans?

So immediately, we are not doing any plans for capital raise. I know it is [ 1.7% ] for this year. This year, we should be able to sell through on this capital base. Our idea is to first focus more on at least when I'm talking -- when I say capital raise means I'm not on the equity capital. Obviously, we have other means of taking capital like Tier 2 capital and sometimes operating some of the balance sheet items also. So idea is not to go to capital markets on an immediate basis and raise through clear to some other means this time even case there are any shortfall or immediate requirement is there, but not to capital markets.

The next question is from the line of [indiscernible] from an Individual Investor.

Yes. Actually, my question only is that in the last con call, the management has mentioned we are targeting for 15% ROE in FY '28. I want to know only. Are you in line on that part? And also now, see, what I hope what is behind? That is the only question from my side.

Yes. I'll confirm that 15%, if you're looking at FY '28 and, certainly, we are there. We'll exit [ FY '28 ], but above 15% capital -- sorry, the ROE. And as far as reverse behind, yes, what is behind us. And you must have seen the type of poising but is even if you have to take for quarter 4 also, the largely of the legacy portfolio. So I mean we are getting in -- we are creating a new good portfolio because of guardrails also. And also, we have got a guarantee over issue. So we don't foresee much challenge going forward. And whatever provisioning you have seen of late or this quarter also is largely on account of the legacy portfolio. Thank you.

The next question is from Bhumin Shah from Equirus AMC.

So by then, you are planning to reach net NPA ratio of 1.1%. And how are you planning to grow provisions for the same?

Can we repeat the question [indiscernible] properly. Can this repeat a little louder, please?

My when you paint each net NPA ratio of less than 1% because before the crisis, a decay have the operating in the range of 0.3% to 0.5%. And how are we planning to provide provisions to reach that ratio?

Yes, sure, sure. I think FY '28 is what we expect that we should be reaching this range. And one obviously through reduction in the overall [indiscernible] whatever are the NPL pass, whatever this person is possible. And certainly, as you can see that we have been providing also for the NPA in the past also. And now we have gone to almost below 3.5% also. So I guess to recovery as well as provide or during next -- whatever the balance NPAs are there in the next few quarters. So our estimate is that at FY '28 should be net NP [indiscernible] raise you just mentioned.

No, less than 1%. Within 100%, yes. [indiscernible] or FY '28 net NPA, FY '26 is 3.3% and IDMs to reach around below 1% by FY '28.

The next question is from the line of [ Kiran Roy ] and Individual Investor. Kiran sir, please go ahead sir, can you hear me? [Technical Difficulty] [Operator Instructions] The next question is from the line of [ Andy Mahesh ] from Kotak Securities.

Sir, one question on the non-unitized slippages. It has been running still higher 4-odd percent. If you could just kind of tell us what is driving this number?

Yes. Manish -- Mahesh, Amit Acharya, our CRO just about to respond to you.

Yes. If you see the non-MFI space or retail space wheels has been one of the problem area for us in the past, which we are trying to address. And if you see the collection efficiency or the revolution percentages across the buckets in the last 3, 4 months, since November onwards, we have control the NPA percentages, but yes, we need to bring it down drastically. But the resolution in the earlier bucket, so flowing into NPA bucket at the SMA-1 and 2, we have tried to arrest and which we have done successfully. Second is that the portfolio mix movement. So the past more than 12 months, we are trying to move away from new and doing more of the use. So if you see the disbursement percentage contribution of the use on the overall portfolio, you will see it whereas from last 7 to 8 months disbursement, if you'll see, the minimal has moved to close to 30%. So 30% around the used business is being done. And also, we did a lot of portfolio analysis last year, and we did a lot of norms and other parameter intervention, which is the portfolio analysis. And if you see the last 18 months disbursement, including new or used, whatever the bank has done the disbursement post October '24, the last 18 months, the new portfolio is performing pretty well as compared to the earlier portfolio. The NPL levels over below 2% post '24 portfolio creative. So we have been consistent overall. Otherwise, if you see the other portfolios like your housing or lab or even micro Life portfolio or our BCG, which is a working capital portfolio. Again, all these back-to-hard correterals like residential or commercial properties. So they are under tolerance level. Deal has been a contributor in the overall retail lending, which you will see in at least another 2 quarters, this would also be in a very, very under control it.

Perfect. Sir, going to in your opening remarks, you had mentioned a PPOP number, which is adjusted for, I think, the slippages in terms of the interest income reversal. That number was INR 140 crores is. Did I hear that correctly?

That's right. That's right. We had INR 59 crores of repo, and we had a reversal during the whole year, all 4 quarters combined of 81, that ends up to 140, which is pure we have reversals on the securities that happened during the quarter. On industrial, all interest reversal due to slippages that go into the quarter that reversed the last 3 years [indiscernible]. That's right, Mahesh.

So that number is INR 140 crores for the quarter, if you adjust for slippage interest reversion?

No, no, it is INR 140 crores for the full year.

Okay. And in your assessment, this number for next year, how are you looking at it if you have some sense of it?

No. If the trajectory of collection efficiency, and we are seeing remains and the disbursement going around in the new guard rail, I guess, this reversal should be arrested. It's a combination of your standard book going to [indiscernible], which you lose the interest which -- so by and large, I guess your steady sale interest income, though not digital now, but that should find a revival in the coming quarters, next 4 quarters. So the reversal by the measure will be less, we will see that as actual -- the move that the interest accrual actually has to happen, we'll be returning back.

Okay. Perfect. Perfect. And what is the outstanding stock? If you look at your corrections that you're seeing today, if you could just kind of give some color on how much of recovery that you're currently seeing of the stock of bad book? Which has been [indiscernible].

Region of collection, if I really have done this back of the envelope try to say because in my P&L, whatever is the credit for write-off versus the right of number on inventory it was 12% to 14% recovery.

But that has not case as yet. It continues to remain in the same range?

That is right. But I just want to add, Mahesh, we have this head count for collections that we ramped up primarily to SMA. Now that normalization has already happened or maybe a quarter more to watch on that. If that actually goes the way we are looking at, then the allocation of that head count, at least some decent kind of head count will then be shifted for collecting the right of our NDA. And therefore, I presume in the sense that the exhibition plan the right-off collection should be better off in the coming years because that extra collection for should now get allocated to connect the legacy the NPO the write-up.

Okay. And just one last question. Assuming that you are able to grow next year at 25% to 30%, adjusting for the collection machine that is sitting there. Any sense on how much of OpEx will be required against it?

How much of?

OpEx, OpEx. Operating expenses.

Only for the collection team you are saying?

No, no, no. I'm just saying in dose given that you have built some machinery around all the other assets, is it safe to assume that the OpEx is going to be meaningfully lower than the loan -- just trying to understand some direction between the past investment made versus the growth that you're likely to see in the book next year?

So whatever the -- I mean, as I said, that one way to look at it is this collection force when normalization happens to yes. But I guess the idea is to go on the write-off collections. So even if it were to continue the cost, I guess, the delta will be in multiples in terms of retaining them, taking their cost and getting credit on the P&L line for the NPA collections that I just mentioned to you side of [indiscernible]. So Mahesh, I may not have exact numbers, but it will happen in 2 parts. First part is that I've got a cost. And I expect that I should be able to raise 20% to 30% growth in the portfolio with the selling cost. So that is one thing will happen. Second, supply have around 1,200 to 1,300 people who are hard for collection people only. Our expectation, and that is what is happening right now. The cost may be around 25% to 30%, whatever the amount they bring. So we suppose we bring in on like [indiscernible]. That may be a ballpark number. So -- and because we have a large pool which needs to be recovered. And we have seen in first 2 to 3 years' time, and we are able to recover the churn. Their uprate is 1%, 2% only. So idea is that at least for the next 1, 1.5 years, let us keep this team there. And whatever is the cost at least 3 times that I'll be able to recover from this correction team. So these are 2 numbers. I don't have the exact number the way you expect, but this is a thing how to happen. Amit, do you want to add something?

Yes. So in the last quarter, we collected close to INR 50 crores of this NPL and write-off pool with this 900-odd people at that time in the field, which is close to some 20% of the collected value from this pool. So this vertical of this collection will continue to be stable for at least next couple of quarters, which will give us an upside on that side. And because the case or has actually gone down significantly in the range of [indiscernible], our expectation is that I will be able to build, as I mentioned, additional 25% to 30% portfolio with the same cost. My cost may not go down, but my income and my top line will go up by around 20% to 30% with the same cost. I think that is what happens.

In the interest of time, I will take that. That was the last question for the day. I now hand the conference over to the management closing comments.

Yes. Thank you. Thank you, ICICI team for this, and thank all the investors for your continued support. As you have seen, I think things have changed significantly during the last few quarters, and we expect that next few quarters would be a significant improvement in the trajectory. And as we have mentioned that for FY '28, at least in the next 2 years' time, we should back to 15% ROE and good written overall good all KPIs. So thank you for your support and keep exploring and keep talking to you. Thank you. Thanks a lot. Thank you.

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