Home First Finance Company India Ltd (NSE: HOMEFIRST) Q1 2026 Earnings Call dated Jul. 28, 2025
Corporate Participants:
Unidentified Speaker
Deepak Khetan — Head Investor Relations
Manoj Viswanathan — Managing Director and Chief Executive Officer
Nutan Gaba Patwari — Chief Financial Officer
Analysts:
Unidentified Participant
Suraj Das — Analyst
Renish Bhuva — Analyst
Abhijit Tibrewal — Analyst
Chandrasekar — Analyst
Amit Ganatra — Analyst
Anand Bhavnani — Analyst
Nidhesh Jain — Analyst
Boon Han Ong — Analyst
Rajiv Mehta — Analyst
Pranav Gundlapalle — Analyst
Kunal Shah — Analyst
Nischint Chawathe — Analyst
Shubhranshu Mishra — Analyst
Raghav Garg — Analyst
Dixit Shah — Analyst
Prithviraj Patil — Analyst
Presentation:
operator
Ladies and gentlemen, Good day and welcome to Home First Finance Co. India Ltd. Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Ketan, head investor relations of Home First Finance Co. India Ltd. Thank you. And over to you, sir.
Deepak Khetan — Head Investor Relations
Thank you. Rayo. Good afternoon ladies and gentlemen. Welcome to Home First Finance Company’s earnings conference call to discuss the financial results for the quarter ended June 30, 2025. We hope you have had the chance to review our investor presentation and press release. Both of which are available on our website and the stock exchanges. As per our practice, we have also uploaded an Excel sheet containing historical data on our website. For your easy reference from the management we have with us today. Mr. Manoj Vishwanathan, Managing Director and Chief Executive Officer and Ms. Nutan Gaba Patwari, Chief Financial Officer.
With that, I now invite Manoj to share his insight on overall performance. Over to you, sir.
Manoj Viswanathan — Managing Director and Chief Executive Officer
Thank you, Deepak. Good afternoon everyone and thank you for joining us today. Quarter one FY26 was marked by two important events in our history. First, we raised 1,250 crores through our first QIP which has significantly increased our net worth and further strengthened our capital base. Also, our long term credit rating was upgraded to AA Stable by ICRA India Ratings and Care. Both these events further enhance our ability to build a strong and large housing finance franchise. Now let me walk you through quarter one FY26 highlights.
AUM growth remains strong growing at 28.6% year on year and 6% quarter on quarter to reach rupees 13,479 crores. Disbursements for the quarter stood at 1,243 crores which was the second highest in our history. The previous highest was in Quarter 4 FY25 which is seasonally a strong quarter. Disbursements in April were slower than expected. However, May onwards we are moving on expected lines. The shortfall of about 50 crores will be covered in H2 of the year. Our disbursal guidance for FY26 remains in the range of 5600 to 5800 crores. We have grown strongly in Madhya Pradesh Maharashtra and Gujarat.
Growth in Tamil Nadu and Telangana, which are two other large markets, was muted in quarter one. However, we are confident of a rebound in these regions in the rest of the year. Home first branch expansion strategy is based on a continuous expansion into large and high density affordable housing finance markets. During the quarter we added three new physical branches taking the total to 158 branches as of 30 June 2025. We added 75 employees during the quarter, taking the total employee strength to 1709 as of June 25th. We intend to add six new branches in quarter two.
Our origination market share in the 5 to 25 lakh ticket site in the locations we are present in based on bureau data has gone up from 1.5% in FY22 to 2.3% in FY25. We continue to retain a strong origination yield of 13.4% despite an 84% share of individual housing loans. This is a significant growth lever at our disposal in a falling interest rate environment. Asset quality saw a seasonal uptick in 1 GPT and 30 plus GPT. However, we expect the numbers to normalize over the next two quarters. OnePlus GPD is at 5.4% up by 90 basis points on a quarter on quarter basis.
30 +GPD is at 3.5% up by 50 basis points on a quarter on quarter Basis. Gross Stage 3 is at 1.8% up by 10 basis points on a quarter on quarter basis. The above seasonal uptick was more pronounced in two regions, Surat and Coimbatore. Tirupur we have already seen a turnaround in Surat in July. We are expecting Coimbatore also to be resolved in the next few months. Our credit cost is at 40 basis points. We continue to maintain a credit cost guidance of 30 to 40 basis points, ensuring disciplined risk management even as we scale technology remains central to our execution and continues to give us competitive edge.
Home first embarked on the journey of exploring AI ML technologies more than five years ago. In quarter one we launched Pulse, which is an omnichannel conversational AI platform which enables integrated customer conversations across various channels like voice, WhatsApp, SMS, email, etc. It is functional in seven Indian languages and uses AI to facilitate business process flows and provides actionable insights to advanced transcription and analytics. Pulse use cases span across lead generation, customer verification, underwriting collections and customer service. During the quarter we also went live with our internally developed enterprise grade document management system and Treasury Management system.
The core benefit of developing these applications in house is that these are tailor made to suit our business flows and more importantly, we remain agile to adapt to changing business requirements. Digital adoption continues to be strong and a key area of our focus as we grow. 78% of our approvals in quarter one were facilitated via the Account Aggregator framework, more than 80% of our loans are digitally fulfilled through E Agreements and E Nash mandates and 96% of our customers are registered on our mobile app with 88% of service requests now raised digitally. During quarter one we got 70 additional green homes certified taking the total to 190.
Our efforts and dedication towards responsible and sustainable financing are evident from our ESG scores during the quarter. Morningstar Sustainalytics has reaffirmed our low risk ESG rating. SES ESG Research has assigned a score of 80.8 in 2025 versus 78.9 in 2024 and CRISIL has assigned a score of 64 up from 63 implying strong rating I would like to share a quick Update on the PMAY2 scheme. I’m happy to share that seven customers have already received the first tranche of subsidy with another seven approved and evading funds. We expect the scheme to pick up traction with increasing customer awareness and streamlining of the process.
With recent cuts in policy rates and the government’s continued focus on capex growth, increasing disposable income and housing for all, we remain confident of a strong demand for housing and housing finance. Given our strong and unique business model, we are well positioned to harness this multi decade growth opportunity. With that, I now hand it over to Notan to take you through the financials in more detail. Over to you Notan.
Nutan Gaba Patwari — Chief Financial Officer
Thank you Manoj. Good afternoon everyone. Let us start with the key financial metrics. Total income for the quarter stood at 455 crores up by 33.4% YoY and 9.4% QoQ. For Q1 our spread excluding CO lending was 5.1%. Cost of borrowing excluding CO lending maintained at 8.4%. Disbursement yields were at 30% 13.4 in line with 13.3 in Q4FY25. Net interest margin for Q1 was 5.2% up from 5.1% the previous quarter. Cost to income at 32 apologies, 34.2% in Q1 decreased 150 basis points on a QOQ basis. Operating expenses to assets was at 2.7% for the quarter in line with our expectations.
We expect this ratio to remain range bound within 2.6 to 2.7% as we focus on growth and expansion, our profit after tax increased to 119 crores up by 35.5% YoY and 13.6% QoQ with return on assets of 3.7% and return of equity of 14.9% pro forma pre money ROE adjusted for QIP for Q1 was at 16.6%. Moving to provisions and asset quality, credit cost for Q1 stood at 40 basis points. We continue to maintain our annual credit cost guidance of 30 to 40 basis points. We continue to adopt a conservative approach to provisioning maintaining a provision overlay over and above ECL requirements.
As of June 25th our total provision coverage is 43.1%. Moving to balance sheet and capital positions, our borrowing profile continues to be well diversified and cost effective. Reflecting our prudent financial management, 60% of borrowings come from private and public banks, 16% from NHB, 19% from assignment and co lending and balance from NCGs, ECB and MBSC. During Q1 we executed direct assignment transaction worth 184 crores. Our disbursement on the co lending increased by 87.5% YoYo and 43.3% QoQ to 78 crores for Q1 taking the co lending book to 434 crores or 3.2% of the total AUs.
Co lending will continue to be an important part of our strategy to strengthen our ability to cater to higher ticket price segments. We aim to take CO lending contribution to 10% of disbursements as we scale our Q1 reported cost of borrowing is competitive at 8.4% excluding co lending enabling us to maintain healthy spreads. With the recent rate cuts and an improved long term rating, we expect the cost of borrowing to improve in Q2. Our June and July marginal cost of borrowing is sub 8% giving us significant confidence that we can deliver benefit in COG in the next two quarters.
Coming to Capital adequacy and liquidity, our capital adequacy ratio as of June 25th stands at 49.6% with 20 year 1 at 49.2%. Our net worth stands at 3855 crores up by 76.2% y o wide and 52.9% QoQ book value per share as of June 25th is 373 rupees. Our strong balance sheet with high capital base undermines our readiness to take on the growth ambitions of the company. With that we conclude our opening remarks and are now happy to take your questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Suraj Das from Sundaram Mutual Fund. Please go ahead.
Nutan Gaba Patwari
Yeah, hi.
Suraj Das
Am I audible?
Manoj Viswanathan
Yes. Yeah.
Suraj Das
Hi sir. Thanks for the opportunity. Sir, the question is on disbursement this quarter disbursement has been weak. I think you called out couple of places where probably there was seasonal impact. But sir, if I look at your guidance and what effectively you are saying is that over the next nine months the disbursement growth will be something like you know, 24, 25 on a YUI basis. But if I look at your disbursement this year, this quarter it has been only 7% and even if I let us say adjust for the co lending business it is hardly 4, 4, 5%.
So sir, I mean the question is in terms of disbursement what are the challenges? I mean in your couple of geography also not only the ones that you have called out for but also let us say in UP and Uttarakhand. I think the AVM growth is slowing down and all that thing. So if you can give us more color in terms of disbursement and then what has been the pain point for this quarter and how you are planning it if you can give us a bit more color on that.
Manoj Viswanathan
So you know as I mentioned disbursement only in April was lower than expected number. So I think just the year opened on a slower Note. See generally Q1 has much lower number than the industry compared to Q4. You know till now we have always been slightly above except for last year where we were about 5% higher than Q1. Q4 if you see previous years that is 24 over 23, 23 over 22 etc. You will see that we are just 1 or 2% higher than Q4 in Q1. So generally it is a seasonally low quarter. Other than that, frankly speaking yes, April was slightly slower than expected.
That’s why I said there’s a 40, 50 crore kind of a difference than what we expected. But otherwise the May onwards we are moving on expected lines only in line with what we have planned for the year which is about 56 to 5800 crores of disbursal. If you see our history Also in the past there have been, if you see FY23 for example, quarter one was low. But then you know, quarter two, quarter three, there was a jump or rather quarter three, quarter four, there was a jump. So you’ll have to look at it through the year.
Other than that, actually there is, you know, there is nothing additional to add. As I mentioned, in Tamil Nadu and Telangana there were two large markets. Again, you know, the Q1 was a little muted which is why, you know, we kind of came a lower than expected. But this trend is likely to get corrected and we should be on moving on expected lines in future. There is nothing structurally which is, you know, difficulty in disbursements or anything which we are seeing on the ground.
Suraj Das
Okay, sure. And so if I may ask, what was the year April disbursement this year versus historical run rate? I mean if the April was slower, is it meaningfully slower?
Manoj Viswanathan
Yeah, I mean it was lower than what we expected. So we first quarter we had to, we were looking at maintaining about a close to 430. Between 430 to 450 kind of a run rate. But April alone came a bit lower. So I think it was around 380 crores. So that about 40 to 50 crores of difference came in April itself. We caught up in May. May and June we caught up. But then and even July, you know, the trends are good. So I think it was just a blip in April.
Suraj Das
Okay, sure. And one last question from myself. In terms of asset quality, again, I mean partly seasonal I can understand. But again this quarter, if I see the gross increase in stage two, stage three plus write off that number has been quite elevated. Is it the new branches that you have opened over the last one or two year that is getting matured and hence you are seeing the pain now or what it is, or do you think there is only.
Manoj Viswanathan
Seasonally there is a 30, 40 basis points impact in general. So that’s why I’ve also called out that, you know, other than the seasonal, we had a couple of markets where we had a more than the seasonal impact generally that we see in quarter one, which was Surat and Tiruppur. I mean these are markets which employ large number of people. And I think a little bit of this sluggishness in the economy and you know, the credit squeeze in the economy has led to a little higher than normal uptick in delinquencies. But you know, by the same token, I mean these are basically people who get employed in factories etc.
So they end up, you know, Catching up in a couple of months. So you know they were not able to pay in June for example but in July now and for example being so that we are seeing a turnaround. So a lot of the many of the people who did not pay in June are now paying to do installments in July for example. So it is something that we feel is under control.
Suraj Das
Okay, sure. And on a full year credit cost. Basis, what kind of credit cost you are expecting this year for the full year?
Manoj Viswanathan
30 to 40 basis points is what we have always mentioned because there are always ups and downs, you know, in this business. So 30 to 40 basis points, we should be in that range, not expecting higher than that.
Suraj Das
Sure, thanks. Yeah, that’s all from my side.
Nutan Gaba Patwari
Thank you.
operator
Thank you. Next question is from Renesh from icici. Please go ahead.
Renish Bhuva
Yeah, hi sir. Just two, three things from my side obviously sorry to coming back to the businessman front. So you know when we look at in absolute terms, you know obviously it is hovering around you know 1,150 crore to 1,250 crore despite we adding 25 new branches, adding more than 400 people in past one year. So obviously the scale up is sort of below the expectation. And you know what, what gives you that confidence that you know we’ll catch up this, you know, lower investment in April, in let’s say May, June, July because two things.
So obviously you said we take some time for a full recovery. And also I don’t know what’s your view on Tain and Telangana but what are the feedbacks you are getting from the ground which gives you that confidence that you know we’ll be able to. Sort of recover these losses this month in April.
Manoj Viswanathan
So two things. One is that as I mentioned May and June were normal in terms of what we expected since we bounced back in May and June and even in July till date whatever numbers we have. So that gives us the confidence that this was April was a temporary blip. So April, if we had for example in April, let’s say we had to clock the same number as May then I think this, we would not be having this conversation probably. But it was much shorter. I mean it’s like I said it was only 380 crores.
So that was the only. So that is what gives us the confidence that three months in a row we have been able to move to more in a different, I mean more as expected. So there is no structural issue or anything like that. That is one. And secondly if we look at the overall industry we saw, I mean we Also compared ourselves our quarter one with the rest of the industry. So in fact in full year FY25 as well as quarter one versus quarter four, if we compare ourselves with some of our peers or other larger industry, the drop has been much more substantial.
So in our case it was a 2% drop compared to quarter four, which we accept is not something that we expected. We were expecting a 2, 3% increase on quarter four. But if you look at overall industry, the industry drop is in even more. It’s much more substantial than us. So that’s what gave us the confidence that we are much better off. And we are. Anyway, we already corrected that trend in May, June and July. So that is what gives us the confidence that we should be able to meet our overall year numbers.
Renish Bhuva
Got it. And sir, would you like to share your July disbursement number?
Manoj Viswanathan
July disbursement number is. I mean we are still five days away from month end so it will be difficult to share that.
Renish Bhuva
Okay. Okay. So secondly, on this small ticket lap piece, you know, so obviously we are hearing multiple players highlighting strength in this portfolio. And off late we have been sort of scaling up this book aggressively in recent past. So what’s your sense on this Lab book and would you want to continue this growth path in this product given the current scenario.
Manoj Viswanathan
In Lab? See, we have not, we have always been very picky about what we are picking up in lab, what we are onboarding in Lab because we never had a pressure to grow that book and it is anyway not a large contributor to our overall growth. So we are, you know, we are not feeling worried about the Lab portfolio as such because. And it is actually not giving us any, you know, additional stress in spite of all the, you know, noise in the market.
Renish Bhuva
Okay.
Manoj Viswanathan
So actually the contribution to disbursement is only about 16 or 17%. 80% plus is still coming from digital housing loans. So which is why we are not, we are not worried about the Lab portfolio.
Renish Bhuva
Okay. And have you sort of analyzed your stock in Lab? I mean in terms of, let’s say number of customers having more than three loans or any, any data would you like to share which can sort of give us some comfort on the health of this portfolio currently.
Manoj Viswanathan
Yeah, we have done that. We did this few months ago and I think at the time the discussion was more around MFI business and you know, how it impacts, etc. So we did a mapping of whether our customers are MFI customers. So we only found about 1% ought to overlap of our customers with the MFI segment as far as you know, other loans are concerned, there has always been an overlap. I mean if you see the bureau penetration of Our portfolio is 85%. Which. Means 85% of the customers are already coming to us with some kind of a bureau score which they must obtain because they already have some kind of small ticket loan which they borrowed. So that is always being there and that number is only increasing every day. So that 85%, I mean that’s almost the entire portfolio. So difficult to say what is impacting, not impacting maybe you know, like I said in some of these markets like Surat, Tirupur etc, where the, where we are dealing with, you know, lower, lower income category, people like, people like factory workers, etc.
There is probably some impact of that but it is very so little that, you know, difficult for us to attribute everything to that.
Renish Bhuva
Got it, got it. And this is just a last deducting question maybe for so what’s the realized yield under co lending and also yields for loan in more than 25 like rupees ticket size which is 14% of. A year realized these on co lending will be just around 10%. That is what basically price to the borrowers. What we end up earning is much more if you go through the unit economics principle. But essentially what we charge to the borrower is about 10%. And what was your second question?
Nutan Gaba Patwari
Yields for loans in more than 25 ticket size which is 14% of the. UN about 50 to 75 basis points lower so around let’s say 12%.
Renish Bhuva
Okay, thank you and best of luck.
operator
Thank you. Next question is from Abhijit Tibrawal from Motilal Oswal. Please go ahead.
Abhijit Tibrewal
Yeah. Good evening everyone. Thank you for taking my question. First thing, I just want to understand. This increase in one plus TPD that we saw about 90 basis points QQ. For us as well. Was the slippage much more pronounced in the month of April and then in. The months of May and June things kept getting better. Was that the case for us as well?
Manoj Viswanathan
The slippage was high in April. Yes. In May we kind of pulled back then there was some slippage in June as well.
Abhijit Tibrewal
Got it. And July again the same thing. I mean trending along similar lines as. June or is there a recovery?
Manoj Viswanathan
July is much better than June. I mean it’s much better than maybe.
Abhijit Tibrewal
Got it, got it. And you’ve already spelled that out. But what I’m trying to understand is what the industry saw in the month of April was a little unusual of sorts and to be honest is not Too much of an explanation of why. That happened in April and talking at the industry level. So as for us, in your view. Is it just a macro weakness, tightness in customer cash flows which is resulting into this or is it something else?
Manoj Viswanathan
So there would have been some collection, I mean, some weakness at a customer level, but at least internally I think it was the collection efficiency reduction as well. Just our inability to collect from these customers in April for various reasons. You know, so customers being on leave, employees being on leave, a bit of collection. I mean, it’s basically a collection efficiency issue. I don’t think there was any, I mean, there would have been marginal difficulty that customers faced because if the entire industry has faced something that probably there was some marginal difficulty that customers faced, but it was, I think more of unavailability of customers, you know, fewer employees on the job and so on.
Abhijit Tibrewal
Got it, got it. And then the second question I had was around Karnataka, just trying to understand, we all know because of Ikata issues. Things have been weak, the momentum has been weak in Karnataka. So just trying to understand, I mean, Karnataka is not among our top five markets. And despite that, I mean, I see the growth that we are seeing in. Karnataka for the last three, four quarters. That has been weaker than our top five markets. So if you could just help us understand what’s happening in Karnataka on the ground and when are we expecting things. To recover in Karnataka?
Manoj Viswanathan
Karnataka is, you know, there are multiple issues in Karnataka. One is of course that we are concentrated more in Bangalore. I mean, almost our entire business comes from Bangalore. Right. Bangalore and surrounding areas. I mean, we don’t have an extensive distribution across Karnataka. And secondly, there’s the Icata issues there which has impacted our volumes over the last, I think three quarters now. Not getting, I mean, it’s still not resolved. That process is slow. And of course the whole, you know, the employee dynamics in Bangalore are also very, very difficult compared to rest of India. So I think all of these factors are there, which, so which is why it is not one of our key markets.
I mean, we will, you know, we will probably get better bang for the buck in many of the other markets. So we have to solve these things, you know, one by one. It will take some time for these things to get resolved. I mean, of course if the Ikata issue gets resolved, numbers will come back because we have a strong presence in Bangalore. But you know, in terms of distribution across the state, etc. Those are things that we need to, it’s more long term and we need to solve for that.
Abhijit Tibrewal
Last question for. You while you said long term. So that reminds me, I mean if just speak a little bit about what’s our market share like today over the. Next maybe three to four years, what’s our aspiration like in terms of market share? And if you could just also briefly speak about geographies that you will be. Focusing on, I understand for the last two years. Right. We’ve been talking about some newer geographies. That we’ve been focusing on in the last couple of years. So if you could just briefly speak about some of our market share acquisitions and within that, I mean large part of it, where will they come from?
Manoj Viswanathan
Yes. So market share as I mentioned, I mentioned on the call market share, if you see over the last three year period it was in market share origination, market share, it’s gone up from 1.5% in FY22 to 2.3% now in FY25. So there is a market share gain and our ambition is to take this number to closer to 5% say in the next four to five years. And in terms of markets, so last year if you remember we spoke about, you know, kind of focusing on newer markets like our mp, Rajasthan, up, Uttarakhand. So out of those four markets we have had a reasonable success in Uttarakhand, Rajasthan and MP or has a very good success in these three markets.
As far as UP is concerned, we have the enemy did not go as aggressively as the other three because UP is a large market, still a little more rural than the other markets. So we have been cautiously expanding distribution in up. So we will continue to do that. So probably we will see more action in UP over the next year, maybe two to three years rather than immediately. But in NP and Rajasthan you can see that, you know, our share share of those AUM share of those states have gone UP and they have become fairly significant markets for us.
Now as far as other markets are concerned, we again did a good turnaround in Maharashtra. Maharashtra, if you see couple of years ago the AUM share of Maharashtra was reducing but now it’s again started turning around and the AM share is increasing. It is a very large market and it is becoming significant for us now. And Tamil Nadu and Telangana we had some issues over the last two quarters in terms of leadership, etc. In terms of people, leadership team and so on which we have now rectified. So this year we should definitely see uptick in those markets.
So these are going to, these are the largest markets. So Gujarat, Maharashtra, Tamil Nadu, Andhra and Telangana put together and NP and these are our largest markets followed by Rajasthan. And then of course we will we have a Chhattisgarh, we have UP Uttarakhand which are smaller for us. And Karnata.
Abhijit Tibrewal
Thank you so much. And one last question for Nitin. I mean just looking at your borrowing mix, right, we are increasing our borrowings. From public banks now versus the private banks. So if you could just help us understand a little bit about are we getting lower cost borrowings from public banks and which is where that inclination to borrow from public banks or how should. We think about this?
Manoj Viswanathan
Yeah. So essentially it’s a function of where the drawdown is happening on that particular quarter. We did the large drawdown from SBI in quarter one. That is why you see that public banks have gone up from 34 to 36. As a strategy we are kind of not very choosy between a public sector bank or a private sector bank. If I were to lay down top 1, 2, 3. The first thing that we focus on is tenor and second is diversification. Third is pricing. And second thought probably depending on the market situation can be either way but tenor is sacrificed for us.
We don’t do short term borrowing below five years. We don’t do that. So when you consider that depending on where we are getting all these three right, we will borrow and drawdown essentially depends on what time period we get to draw down depending on the capital charge. And so on this particular quarter we have drawn down from SBI and last quarter also with sbi and now we’ve completed that large line. So now you will see some expansion in the private bank line. So it will keep interchanging really speaking.
Abhijit Tibrewal
Got it. But the pricing is broadly the same.
Manoj Viswanathan
Yes, the benchmark could be different but the language cost is broadly the same.
Abhijit Tibrewal
Great, thank you so much and I. Wish you and your team the very best.
Manoj Viswanathan
Thank you.
operator
Thank you. Next question is from Chandrasekhar from Fidelity. Please go ahead.
Chandrasekar
Yeah. Hi, good afternoon. I have three questions. I think over the period of time. The productivity metrics on a per employee basis have actually come down a little bit. I mean maybe once some time on. Where you deploying people, are you beefing up some of more of the back end or is there a reason why the productivity is coming on or just because you’ve added a lot of branches. That’s question one. Second is on spread. Given that we’ve had the rating upgrade. What is. I mean in the previous cycle when rates went down, we did see a brief period of spread expansion. Because you said the customers weren’t particularly sensitive but I noticed you’ve done I think a 35 bits cut from August starting August. So how should we just think of spread more near term in that context and you know, more of the longer term And Maharashtra just take us through, I mean what’s happening because it’s pretty much a sharp jump which has happened in any markets there and then, and.
Then lastly just on earlier delicate obviously. It has been inching up you from the commentary you said you sense that that stopped out and then coming off over the course of this year. Thanks.
Manoj Viswanathan
Yeah, thanks. So on the productivity side, see it has been. Productivity has been fairly constant. So if you’re just referring to probably quarter one dip in quarter one it is because again because of the different numbers.
Nutan Gaba Patwari
So again more over a period of time. Not specifically just I understand quarter one is a little seasonal but I mean we used to have disbursal per employee for the quarter of you know, 75, 80 lakhs. It’s down to 70 to 73 lakhs. I mean that, that’s not moved up despite sort of ticket sizes over a period of time coming sort of cases. 75 down to 72. So it’s just some.
Manoj Viswanathan
You’re talking about the AUM per employee I think if I’m not mistaken.
Chandrasekar
Yeah, the cases, the outstanding cases for. Employee are a little lower now versus employer is lower now that’s been a sort of trend over a period of time, not specifically one quarter related.
Manoj Viswanathan
So yeah, so disbursement per employee see largely we benchmark to about three to three and a half crores a year which is broadly we are in the same ballpark except that one or two quarters, you know when the employees join like quarter four and quarter one is when large number of employees join and the employee count goes up. So at that time the, and the volume is also correspondingly lower. So at that time there is a slight reduction but I think it should broadly be in that range of about 3, 3.5 crores per employee per year.
So we are not seeing that going down. We will continue to maintain it at those levels. And as far as spread is concerned, again as I mentioned on the call, we have actually tried to maintain the, tried to maintain the Yield at about 13.4% in spite of the overall reduction reducing trend in interest rates. So that is one lever that we have with us and we can kind of use that to build up disbursements as we go forward. As we start seeing the transmission and as we start seeing the cost of borrowing coming down we can actually use that to build up volumes.
So we have not actually reduced the, you know, done any repricing as of, as of now. I think I heard you mention 35 basis points.
Chandrasekar
Yeah, this is August last year. Sorry, that’s my mistake. Sorry.
Manoj Viswanathan
Yeah, so we have not done that. So we still have those levers with us we can use especially on the origination side. If you see last quarter also we maintained a origination yield of about 13.4%. So that is a lever, a strong lever that we have with us which we can use to build up, build up volumes going forward on Maharashtra. Yes, there has been definitely a turnaround. So last year, last two years we were working on, you know, building a team, rebuilding the team, getting our positioning in the market, etc. So those things have worked well.
And we are now again, you know, at a 20 to 30% kind of, I think a 30% AUM growth in Maharashtra. I mean this used to be much lower over earlier a couple of years ago. So I think last year, I mean, so we managed to get into that 30 plus percentage of AUM growth in Maharashtra. So similarly this is where we are coming and Maharashtra is one of the tough markets, you know, where Bombay and Pune are really very formal markets with large players etc. And here if we had managed to turn this around and get to a 30% plus kind of an AU on growth, that gives us a lot of confidence that you know, we can kind of do the same kind of business and same kind of turnaround in some of the other markets where you know, there is some slowdown on the delinquency side, I think.
Which was your fourth point. Yes, quarter one, quarter one always is the delinquency goes a little higher. But except in one or two markets where we saw more than the seasonal uptick. But then the good news is that in July, for example in Surat you had, we are seeing a good pullback. Like I said, a lot of customers are making good the payment which they missed in June also. So we don’t feel worried at all about that uptick. We should be able to pull back on that.
Chandrasekar
Thank you.
Manoj Viswanathan
Thanks Chandra.
operator
Thank you. Next question is from Amit Ganatra from Invesco. Please go ahead.
Amit Ganatra
Yeah. Question is for Nutan. Your cost of borrowings quarter on quarter is almost same from when should you start getting some benefit of your rating upgrade as well as you know, the general interest rate cuts.
Nutan Gaba Patwari
Right. So Amit, if you see it’s flat quarter on quarter June and July our Marginal cost of borrowing is below 8% and I’m expecting quarter two reported cost of borrowing to be 20 basis points lower. So we should start seeing the benefit and hopefully by Q4 this 8.4 should be more like 8%.
Amit Ganatra
Okay, but this is largely on account of general interest rate cut or is there any extra benefit that you are now getting on account of rating upgrade?
Nutan Gaba Patwari
See the spreads have reduced when we are negotiating with the banks the spread that used to get added has started to come down by 15 to 20 basis points. But of course the overall rate cycle has also come down. So it does get mixed up to some extent. So having a proper bifurcation which is, let’s say auditable will be very difficult.
Amit Ganatra
The only thing is that shouldn’t your cost of borrowing improve more than your general, you know, interest rate cuts or is it that your hunger is so high in the sense that you are still growing fast? So that. And anyways you mentioned that it’s a tenure and then you mentioned one more thing and then pricing is the last thing that you guys look at.
Nutan Gaba Patwari
Right? Right. So Amit, the thing is that I don’t. The issue is not the size of borrowing that we are looking to do either this year or next year. We are small in the relative scheme of things. But what happens is that the benchmark for each of the lines that you draw down, for example ranges between repo T bill to a 3 month NCLR all the way to a 12 month NCLR. And let’s say if you’re working with a large public sector bank they will stick to an NCLR based pricing only and then the lower central is a one month versus a private sector bank.
Depending on which banks you may be referring to. You can focus on a repo based pricing also. And ultimately what boils down to is today’s landed cost. But what gets reported is if I have done a transaction, let’s say six months out and the NCL has not moved down though the overall policy rate has moved down and G SEC has moved down. So it takes time. So the only bank that has taken down NCL are mainly meaningfully today there’s the I. Nobody else has done that. So transition takes time. What we are trying ensuring is that our marginal cost of borrowing is below it.
Amit Ganatra
Okay, and have you done any corresponding actions on the yield side?
Nutan Gaba Patwari
Not yet. So what we had discussed to date is that we will first want to see the cost of borrowing line go down and then take the call. So we have passed that decision for either middle of Q3 or early Q4. So Q2 we are not looking to make any changes. Okay.
Amit Ganatra
And lastly your generally, you know, disbursement to some extent slowing down was there. It’s not only this quarter. It has been there for, you know, more than one quarter now. So just one question there that is it on account of, you know, rising competitive intensity or is it on account of. So you mentioned, you know, couple of markets. So. So. Or is it only very, very geography based or. Or is it on account of, you know, high rejections at your end? Because asset quality basically, you know, is. Is also important. So. And what would be the reasons that one can attribute.
Manoj Viswanathan
So Amit, I think other than April, frankly we don’t see it as a disbursement slowdown because last year I think this discussion came. This discussion again came up because in Q1 we had grown quite aggressively and then you know, Q2 and Q3 we kind of just consolidated. So there were questions around, you know, why the dispersal is kind of flattish across. But that was more intentional in some ways. And then Q4 again, we saw a decent jump, almost 10% on Q3. So followed by I think April was the only disappointing month if you ask us internally.
Otherwise May, June, July, we are going as we have planned. So we don’t see it as a stress on disbursement or difficulty in disbursement.
Amit Ganatra
Okay, thank you.
operator
Thank you. Next question is from Anand Bhavnani from wo. Please go ahead.
Anand Bhavnani
Thank you for the opportunity. Two questions. One is if you can tell us approximately what percentage of our disbursement in. Last one year would be to under construction apartments under the CLP Construction Link Plan framework. So under construction on the AUM is generally around 12 to 14% is under, generally under construction. As you can see from the chart which shows the fee among versus EMI. Just tell you the chart number. Yes, page number 14. So we show this under construction risk in this page 14. So 13% is under construction. It is instant premium mode. The customers are still not fully, I mean the loan is fully, not fully dispersed and 87% of the AUM is fully disbursed.
And second, when I look at the. Payment rates, it seems our payment rates have come down in a sense that. Maybe the BT out has come down in this particular quarter. Anything that you can share with us. Which explains this Trend?
Manoj Viswanathan
It’s a Q1 phenomenon. Q1 to some extent. You know, the overall industry is not as aggressive as Q4. So the BTO trade comes down a little bit.
Anand Bhavnani
Got it thank you. All the best.
Manoj Viswanathan
Thank you Anand.
operator
Thank you. Next question is from Nadesh Jain from Investec. Please go ahead.
Nidhesh Jain
Thanks for the opportunity. So first question again is on growth. So if I do numbers to deliver 20% disbursement growth for the full year, we have to do 500 crores disbursement per month from here onwards. And my sense is that we did around 4:34, 40 crores disbursement in May and June. So how do you plan to increase the disbursement run rate to 500 crores per month?
Manoj Viswanathan
Yeah, so basically that requires us to have two quarters where we have maybe a 7 to 10% kind of a growth rate on previous quarter which we have done in the past. And now the organization is much larger with much wider distribution. So getting that additional 40, 50 crores, we don’t see it as a big challenge especially in a falling interest rate environment. So I think broadly what we are, what we are saying is that this quarter we do about 1350 kind of a number, then next quarter we do about like a 1450 and then a 1550 kind of a number.
We should get there ballpark.
Nidhesh Jain
Okay. And secondly, so since our RM looks after collection as well as disbursement sourcing, so when one DPD increases the load on the RM for follow up etc. Will also increase. So in that context how do you plan when bandwidth of the RM and how many cases does the RM handle on collections? And so to make sure that our sourcing engine remains intact, how do we plan the bandwidth for the RM?
Manoj Viswanathan
The bandwidth for the RM so RM is expected to deliver about 5 loans in a month which translates into about 50, 60 lakhs of disbursal. So that’s on the disbursal side. And then on the collection side they generally handle about 15 to 20 overdue customers. So that number has been kind of static over time. So we don’t see, I mean we don’t see, we don’t actually see a bandwidth problem for, you know, for the employees. Plus a lot of tools have been made available over a period of time. Like you know there is e signature process, the electronic, I mean payment through upi.
So actual effort has actually diminished which is why the bandwidth is available for them to do the activity. So when I say 20 customers who are overdue is allocated to a relationship manager. Typically if I call those customers on phone out of 20, about 10 would make a payment without any physical visit. So I just need to send them a link and they will make the payment through UPI, et cetera. Effectively, I’m left with only 10k10 customers whom I have to visit. Convince them to pay bandwidth has never been an issue.
Nidhesh Jain
Sure. And third question is on OnePlus DPD. So is it a regional problem? You mentioned Surat couple of times. So is it more confined to Surat where we have seen this one DPD rise or it’s. We are seeing it across geographies.
Manoj Viswanathan
So I mentioned the two regions where there was a more significant increase. So out of the total, let’s say 16 or 17 regions that we have carved carved the country, there were about five to six regions where there was a more than normal uptick. You know, in, in April and June, out of these five to six regions, there were two regions which were more pronounced which was Surat and this. Coimbatore, Tirupur. The remaining 10 regions. Frankly the numbers were very benign. I mean there was no uptake at all.
Nidhesh Jain
Okay, okay. And there also we are now seeing improvement in the month of July as well.
Manoj Viswanathan
That’s right.
Nutan Gaba Patwari
That’s right.
Manoj Viswanathan
In July there’s a substantial improvement in Surat.
Nidhesh Jain
And in other geographies as well. Right. Coimbatore and Tirupur.
Manoj Viswanathan
Tirpur. Not as much as Surat, but it should improve over the next two, three months.
Nidhesh Jain
Sure. And last question is what is the count of active connectors for the quarter?
Manoj Viswanathan
3,600.
Nidhesh Jain
That number is also tapered off. I think this number was 3600 more than is a 3700 in Q3 of last year.
Manoj Viswanathan
This number is also number was a little higher. Yeah, so which is also kind of. I mean it’s, it’s, it’s again flows from the flag that the disposal was lower than last quarter because the. This is a number. I mean this is directly correlated to the disposal. So the way we calculate this number is basically connectors who have contributed to a disposal in that quarter. So since the disbursal was 2% lower, this number is also slightly lower than last quarter.
Nidhesh Jain
Are these connectors linked to the company or they are linked to the RMs? Basically is our business model still dependent on employees and RMs or even irrespective of the RM? These connectors will keep, keep, keep giving us business.
Manoj Viswanathan
Connectors. We keep doing, giving business because they are linked to us. I mean there’s a contract signed with the company and if an RM exits then we know that, that a particular connector is, you know, he’s, he needs very low area allocated to a new rm. So that that that information is available to us. So we end up reallocating the connector and then some other RM will look after that relationship.
Nidhesh Jain
Sure. Thank you. That’s it. From my side.
operator
Thank you very much. Before we take the next question, a request to participants to please limit your questions to two per participant. The next question is from Boon Han on from Lion Global Investors. Please go ahead.
Boon Han Ong
Hi. I’m new to the company but I have two questions. The first question is regarding the fee income. The fee income has been going very strong. I just want to know if this growth is sustainable. This is the first question. The second one would be in terms. Of your cost income ratio. We have seen good improvement in the recent quarter. Do we have a target in terms of our cost income ratio in the near term? Yes. Thanks.
Manoj Viswanathan
So thank you for your question. So the fee income has gone up because we have seen some mixed improvement in our insurance commissions partners. Yes, it is sustainable. We had guided a few quarters back that the insurance commission will range between 15 to 20 crores a quarter. So we are holding to that number. 15 to 20 crores is one what should expect. Every quarter on that particular line, cost income has gone down. What we are anchoring the conversation to is operating cost to total assets which is a 2.7%. What we are guiding is 2.6 to 2.7% for the full year.
Considering that, you know, we are still investing for growth. We are also adding branches and people. So 2.6 to 2.7 is there. We are broadly focusing for the rest the of of the year.
Boon Han Ong
Right. What about in near term? I mean the medium term, what do you expect in terms of cost income ratio?
Manoj Viswanathan
If you take a three year view, a medium term view, we should definitely go more towards 2.5.
Boon Han Ong
Okay, okay. I see. I see. And this fee income itself, the growth itself, how is it linked to the loan growth or how should I look? How should I do an estimation in terms of this?
Manoj Viswanathan
It is linked to the dispersal growth. So it is linked to the disbursal growth. So about 90% of our customers take an insurance policy and we earn commission on that. So broadly speaking, 90% of our disbursals and a similar percentage of insurance commission we can do. What I will do is I will do a separate call with you and just take you through the model detail. Deepak will reach out to you and we will set up a call with you.
operator
Thank you. Next question is from Rajiv Mehta from yes, securities. Please go ahead.
Rajiv Mehta
Yeah. Hi, good evening. Can you comment on the trends in Employee accretion at the branches and how is your share in your connectors business volume moving? Are we, you know, gaining share with an existing active connector? How are the dynamics there?
Manoj Viswanathan
Sorry, I missed the first part.
Rajiv Mehta
Just two things. Employee accretion at branches and your share in the connective business volume, how is that moving?
Manoj Viswanathan
Employee accretion has been steady around 30ish, 30% across the last, I think several, several quarters, seven, eight quarters. It’s been in that range, only 30% range. So which we think is kind of a healthy range for us as far as the contribution or sorry the share of the connector is concerned. See by design we are trying to keep it very granular. So we don’t want any connector want to get a large proportion of business from one connector. And our sales teams are incentivized to kind of diversify their OEM origination across connectors. So because connectors, I mean if you see there are different segments the connectors are dealing with.
So you know, so we want to make sure that you know, the connector is obviously getting up, you know, higher segment loan or a prime loan, then they go to a different company and if it is a loan that is suitable for us, it’s in the affordable segment, they send it to us. So to that extent the share will be, share will be bifurcated across various companies depending on the segment that they are operating in. And by design we are trying to keep it very low.
Rajiv Mehta
Okay, angel, one thing this observation is on the UP and Uttarakhand market, I mean in the past two quarters the EU growth has significantly slowed down. I mean anything to read here or if you can comment wider, slowed down in the last two quarters.
Manoj Viswanathan
Yeah, so UP, if you see last two years we were saying that yes, we want to expand in up, so we put in four branches, you know, so in key markets in eastern part of up, which is, you know, Allahabad, Varanasi and Gorakhpur. So that is eastern UP and part of the UP business also comes from world is getting booked in Ghaziabad. So because technically that falls in UP and I think two quarters ago we articulated that in some markets we had tightened some of the credit screens, especially on the property side. So yes, this holds true for the gazebad business as well.
So Gazebag and Eastern Yupi, we have those screens were tightened and as a result of which there has been slight reduction in the business in those markets. It’s a very large market. But we know we want to, we want to approach it very cautiously. So which is why you are seeing that little bit of a slowdown there in anywhere else. We have done some tightening of underwriting or selection. We did do that last Q2 over Q3, Q2 and Q3, especially of last year. We did, you know, put in certain screens in place which are continuing. So higher ticket cases pass through more screens. And as you can see there, the rate of the pace of increase of the higher ticket cases has slowed down from Q2 of last year. I mean the 22.5 million or 25 lakh ticket size segment was rising sharply if you see the previous year. But from Q2 of last year that increase has slowed down a little bit. So we have. Because we wanted to kind of focus on the affordable segments, smaller tickets, etc.
So we did some tweaks to control the increase in the 2.5 like ticket size plus so that those screens are. Screens are in place and they continue.
operator
Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. The next question is from Pranav Gundapale from Bernstein. Please go ahead.
Pranav Gundlapalle
Thanks for taking my questions. Two questions. One is on the ticket size. I think you have talked a lot about this natural increase in ticket size over time. Some of the peers have seen their. Ticket size stay stable, I guess by going down a segment or 2 lower. The question is, is it more a risk filter that’s preventing us from going down on the ticket size or is this a limitation of the model either because of geographic presence, sourcing model or whatever else? The second question is on attrition. You did mention the overall rate is stable around 30%. Could you give some color around either tenure wise or seniority wise or the position wise attrition? Just trying to get a sense of if someone sticks around for a year, year and a half or two years, how does that number change? And third, if I can just squeeze in one last one, what percent of customers during a quarter would get a lower rate offered either because they express willingness to or intention to move out or any other reason? What would that rough number be? Thanks. Those are the questions.
Manoj Viswanathan
All right. So on the ticket size, you know it’s multiple factors. So obviously there is risk filters there, but there is also reliability angle. So very small ticket sizes if you actually wanted to make it viable. And we need to offer very high rates which we are uncomfortable with. So for example, to make a, if you have to actually offer a 2 or 3 lakh ticket size loan, we will have to do it at very high rates. I mean maybe 15, 17% to make it viable and to make it equivalent to a loan at a 10 lakh loan at a 30.
So we are uncomfortable doing those small ticket loans at very high rates. So which is why when we talk about our segment we start at 5 lakhs. So we don’t even talk about less than 5 lakhs. So 5 to 25 is how we define our segment. So which is why to some extent we are not as low as some of the other peers as far as ticket price is concerned. So there is risk as well as viability. Both filters are there in ticket size. On the second question on attrition, the RM level attrition in the first one year is generally higher than 30%.
So 30 to 35% it tends to be. It slows down in the second year. So between 12 to 24 months it’s a little lesser. Then again it picks up a little bit in the 24 month period, 24 to 36 months it comes back to around 30, 30% in head office and post three years that is much lower. So it generally tends to be in the 10 to 20% range post three years and in head office. So this is the breakup of the attrition across various segments. And as far as deep thought question.
Pranav Gundlapalle
Was concerned, percentage of customers who.
Manoj Viswanathan
Yeah. Number of customers who are getting a repricing offer. So it would be around 50 odd customers per month. So maybe about 600 to 1000 customers month the entire year.
Pranav Gundlapalle
That’s very helpful, thanks.
operator
Thank you. Next question is from Nishin Chavate from Kotak. Please go ahead. We seem to have lost the line for Nishan. We move to the next question. Next question is from Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, hi, thanks for taking the question. So first we just wanted to gauge. In terms of what led to this problem in Surat and Coimbatore because I think you said like you’ll be able to roll back. So was it more of internal issue or these were like the external circumstances in terms of slowdown in the economic activity because it doesn’t seem like maybe the economic activity levels would have changed. Okay. Which is making us confident with respect to the rollback and particularly that question is in context of provisioning coverage because that’s also down to 22 odd percentage. I think that confidence that we’ll be able to roll it back and get back to 25% but if it doesn’t come through then seasonality might impact the credit cost as we will need to get towards like 25% kind of a coverage.
Yeah.
Manoj Viswanathan
So yeah, I think in April Generally, you know, Q1, April, May, June is little more difficult in terms of collection which is where you see the numbers going up every year in this quarter. It’s because you know, customers are, you know, part of the time they are on vacation, plus they have some stress of school fees and things like that. So there is additional load on the customer’s wallet during that quarter which also requires, you know, higher collection intensity during that quarter. So I think in April of this year, I think on both fronts we, you know, we had a problem.
So one is obviously the collection, sorry, the customer was under stress and plus the collection intensity could not be matched the level of intensity that is required to collect because again, you know, our employees are also on leave, you know, during that quarter and so on. So I think it’s a combination of both factors. Bit of collection intensity, efficiency issue, plus some stress that are connected customer level.
Kunal Shah
And in sur, the only question was. On Quantum, you see generally it rises. But maybe if you look at last three, four years, the increase which has been there, that could be say even one plus DPD, it would have been closer to like say 30 odd basis points or so. And this time it seems to be relatively on the higher side at 90 odd basis points on one.
Manoj Viswanathan
So yeah, I think, you know, it’s been Surat. In any case there are fluctuations, you know, in the incomes of the customers because they are all dependent on this whole diamond and textile industry. So depending upon demand in the market, global markets, etc. They get over time. They may not get over time. So there is some fluctuation in incomes. So normally what happens is in April there is an uptake and then we kind of claw back at in May and June. This time we had a regular May. I mean we had a clawback in May.
But then surprisingly in June for some reason the, you know, there was again some slippage. So that was the only I think difference if you see past years. So normally whatever is the slippage in April is be pulled back in May and June. This time in June also there was some slippage. So which is why there was a more than normal slippage. We don’t see any fundamental issue as such in these markets except that I think these are more lower income customers. They’re all factory workers and people of that profile. Other than that we don’t see anything which is, which indicates a pattern.
And as I said, the good news is in July it’s getting clogged back. So we are not reading too much into it.
Kunal Shah
Okay. So July itself, we are seeing a significant drawback from this. So seem to be more like an economic activity issue.
Nutan Gaba Patwari
Yeah, yeah. So some fluctuation maybe in economic activity. Possibly other than that, we are not seeing anything more significant than that.
Kunal Shah
Okay. And on the coverage side, maybe getting down to 22% now we are at a relatively lower level compared to our recent past as well. So maybe. Obviously it depends in terms of the CL model, but would we need a higher provisioning out there?
Manoj Viswanathan
Kunal will be watchful on the overall number. If the number rolls back, then the coverage comes back to 25 because we will unlikely reverse the provisions that we have taken and in that extreme scenario does not then we will build the provisions.
operator
Thank you. Next question is from Nishin Chavate from Kota. Please go ahead.
Nischint Chawathe
Sorry I got dropped off. My question was essentially on competition in affordable and prime segments. And I think as the BT out trends for you and your peers seems to suggest that competitive intensity seems to have actually gone down while in the prime segment has gone up. So how long do you think what could be the reason for it and how long do you think it could be sustainable?
Manoj Viswanathan
So first quarter one anyways, the competitive intensity is a little. There is a lull in the competitive intensity, especially in btouts because in quarter four, you know, many companies use btouts as a channel to push up the overall yearly numbers and in Q1 there is a slight drop in that. Otherwise, you know, overall, I think. You. Know, cooperative intensity, you know, as we have already seen spoken about it, there is ups and downs across the years. We don’t see anything which is fundamentally different. But I mean probably 1/4 it was a little lesser. I mean especially on the BT side.
Nischint Chawathe
Putting it differently, you know, there are some of the high rated NBFCs who are now entering into the affordable space. Do you see them? And their cost of funding comes down I think much faster than you and some of the other peers. So do you see them getting more aggressive on rates?
Manoj Viswanathan
Yeah, I mean, see, I think most of the companies, what they have realized is that they need to maintain at least a 4.5 to 5% spread in this business to be able to make a decent ROE or at least, I mean if you’re talking about the highly rated, higher rated companies and you know, companies which have a higher proportion of prime lending and you know, the affordable is more as an add on, so the affordable business needs to be ROE accretive, then they need to also maintain a similar spread. You know, 5% spread because the expense is not going anywhere.
The expenses will be similar. Whether it is a large company or a small company, the expense be will are going to be similar. So the operating expenses and plus the credit losses, etc. So I think broadly the industry has come to the conclusion that, you know, this is a business that runs at a 5% spread. So we don’t see, you know, you know, rational companies dropping rates too much. Of course there are different strategies in the market. I mean some companies are cutting rates to certain segment of customers and then, you know, subsidizing it by offering a much higher rate to certain other categories, etc.
Those are all, you know, more temporary in nature. I don’t think it will work, you know, on a long term basis. On a long term basis in the core affordable individual housing segment, you have to maintain a 5% spread otherwise your ROE will be much, much lower than what we have delivered.
Nutan Gaba Patwari
I want to add one point there, Menachem. If you look at the larger nbsp the cost of borrowing difference for us in them is less than 60 to 80 basis points. So essentially if you’re doing a 13% product, they will have to do it at 12 12, 20 on a blended average, which is not very different, which is not the reason why the customer will move. And if they do substantially lower than to not point, they don’t deliver the product level roe and it will get called out at some stage. So it is unsustainable to that extent.
So they’ll have to end up coming close to the similar number where we are. The 6080 basis points is the only difference that can be there, not more than that.
Nischint Chawathe
Perfect. Thank you very much and all the best.
Manoj Viswanathan
Thank you.
operator
Thank you. Next question is from Subranshu Mishra from Philip Capital. Please go ahead.
Shubhranshu Mishra
I’m Anoj, I’m open to questions. The first one is to maintain the dispersant runtime. What is the number of loans that we do on a quarterly basis? I understand there are variations in each quarter.
Nutan Gaba Patwari
We would have a budget in our mind for the number of loans. Given the fact that the at similar. Again when we have to look at the one plus what is the curing of this one plus till 15 bpd from 16 to 30 bpd. What is the curing and what was this year ago? Third is if we can have the concentration of dispersants give us the concentration of AM concentration of dispersants of the top 10 11th to the 25th branch and 25th till the 50th thanks.
Manoj Viswanathan
Sorry, last question. I did not.
Shubhranshu Mishra
Concentration of disbursement for top 10 branches, 11th to 20, fifth branch, 26th to 50th branch.
Manoj Viswanathan
Yeah. No, so broadly, if you’re looking at the top, I mean, let me go reverse and reverse. Necessary questions are concerned. So if your question is that what is the, you know, size of disbursal or quantum of disposal across the top 10 versus the top 20 and top 30 branches, broadly, that is your question. So top 10 branches would be delivering on an average about 5 crores a month in terms of dispersal per branch. So the number which you said, you know, 10 versus 20 versus 30 will broadly be in the range of 4 to 6 crores.
So 4 crores per month to about 6 crores per month would be the variation between the top 10 versus the top 30 branches. And I think you were talking about oneplus, you know, how that gets cured in the next two buckets. So basically about 70 to 80% of the customers, you know, eventually get cured and about 20% then flows forward. So that is in each of these buckets, I mean bucket, the 0 to 29 bucket, about 80, we get an 80, 85% resolution. So about 15% moves forward and then the next bucket, that is 30 to 59, the resolution is about 60 to 70%.
About 30% moves forward. Is that. I get that. And we focusing on the 30, 0 to 30 here. The idea was to understand what flows from 15 to the 16 to 30 DVD because till 16 we can call them or we can send SMS’s or WhatsApps, the cost would be much lower versus 16 to 30 to cure. That is the idea. 0 to 15 days. Okay, 15 days.
Shubhranshu Mishra
Okay, yeah.
Manoj Viswanathan
So yeah. So out of C there are. The bounce rate is around 15%. Right. And by 15 we collect about 50% of that. So if you see the number by 15, that is about 7% would be 6 to 7% would be left as of 15th.
Shubhranshu Mishra
Right. So we’re left with around 20 to 25% which needs to be. No, no, no, no.
Manoj Viswanathan
Let me clarify this, Let me clarify this. 4th of the month is the bounce Nash mandate, which is when we collect 15% of all customers bounce. On the 15th of that month we’ve collected another 7%. So on 15 days past due we have 7% 1 DPD plus which is 30 day end of the month is 5%. Are you with me?
Shubhranshu Mishra
Right, right.
Nutan Gaba Patwari
Those are the numbers. Okay.
Manoj Viswanathan
Entirely in zero, you know, bucket zero or you know, clear month, you know, and let’s say 100 of them bounce the payment typically by. We collect 50% of that. So 50 customers we would collect by the 15th of the month. And then about 50 customers will be left between 15 to 30th. Again, if you look at that number BY let’s say 20th, you will be left about 20 customers. So only 20% of the customers who bounce in the beginning of the month will be left by 20th. 20th of the month.
Nutan Gaba Patwari
Right.
Shubhranshu Mishra
So the 16 to 39 BPT, what is the cost per file? Do we have that number or a.
Manoj Viswanathan
Budget collection you’re talking about?
Shubhranshu Mishra
Yeah, per side on a profile basis, just 15 to 29.
Manoj Viswanathan
So the cost of collection is all. Because we don’t have a separate collection team which is only focusing on this particular bucket. We have the same relationship manager who’s also doing various other activities who’s collecting, you know, from these customers. So it will be part of the relationship manager’s overall compensation. So like I mentioned at the beginning of the call, the relationship manager’s broad responsibilities are to disperse certain number of cases, say about five to six transactions a month and plus collect about 20 overdue payments. So that is how the RM’s cost is bifurcated.
operator
Thank you. Next question is from Raghav from Ambit Capital. Please go ahead.
Raghav Garg
Hey, I greeting and thanks for the opportunity. I have two, three questions. One is you partly answered that. But what is the length of period or years of experience you consider when you build your ECL model from the. Origination of the company. From the origination of the 15 years. Yeah, okay, understood. Also my second question is when I look at the total stock outstanding of stage two and three assets, right, on an aggregate basis, the growth in that number is somewhere around 50, 54% y. And that growth rate has been increasing for last. That suggests some deposition underlying asset quality. I know, coming back to asset quality. But you know, what is the reason for that? What are your thoughts? Because it’s not just in this quarter that we see that, but even in some of the previous quarters, you know, the growth rate in stage two and three has been higher than the underlying AUM Group.
Any comments that you would have on this?
Manoj Viswanathan
No, Raghu, there’s no structural, you can say problem with the portfolio as such. So these are, I mean, because the number itself is, if you see our stage two, it is one of the lowest in the industry. So on that small number, you know, just some slight movement, we don’t see it as a. I mean at least we are not internally not alarmed about that number. And I Mean if you compare our. Stage to the lowest in lowest across all our peers, so that number might have gone up by, you know, a few basis points. So we are not alarmed. I will do stage two and three cumulatively. But I think that explanation holds there at best.
Nutan Gaba Patwari
So Rakat, I was just looking at the numbers Q4, for example, Q4, our growth in stage two was only 3% vis A vis our AUM growth of 6%. So I think when we look at stress, you will have to look at it differently because A they are in different buckets, provided differently and the impact on financials is also different.
Raghav Garg
Understood. Nathan. I was referring to say the YOY number because just to adjust for the seasonality that a particular quarter has. So and hence there was. That’s where I was coming from. So the other question that I have is in 1H FY25 you added a substantial number of employees. That number versus FY24 was up 30%. But since then I think the addition has not been a lot. 1650 going to some 1700 employees. You also said that attrition has been fairly stable, yet your value productivity per employee has not improved despite rising ticket sizes. And given that a typical employee becomes more productive with every passing month, why is it that the UN per employee, disposal per employee is not increasing?
Manoj Viswanathan
Disposal per employee is that there is a certain range in which it moves. Like I said, 30 to 35 million or 3 to 3.5 crores is the disability per employee per year. So unless there’s something very structurally we change, that number will not go up go up substantially. So like, you know, few years ago we introduced, you know, a lot of some level of automation. So we were able to kind of, you know, move up that number. So unless we do something which is structural like that doesn’t that number is going to be range formed.
operator
Thank you. Next question is from Dikshit Shah from Ascendancy Capital. Please go ahead.
Dixit Shah
Hello. Am I audible? Yes, a few statistical questions. Of the 864 crores for Uttar Pradesh and Uttarakhand, what is the A for Uttar PR.
Manoj Viswanathan
Uttar Pradesh total is about 450 crores.
Dixit Shah
450 crores and. Sorry, what? 400.
Manoj Viswanathan
450 crores is the total Uttar Pradesh which is. Which has, which includes the Ghaziabad, which falls technically in Uttar Pradesh, but actually it’s part of NCR plus Eastern UP which is about 100 crores.
Dixit Shah
Okay, okay, got it. And during the quarter I think we might have not drawn any from any sanctions from Energy I think because it’s flattish. Qoq, did you draw down any?
Manoj Viswanathan
Not from nhv.
Dixit Shah
And one more statistic. Can you question of the total aum, what is the pure individual housing loan? Housing loans in the AUM, 34%. Is the housing loan individuals?
Manoj Viswanathan
Yeah, yeah. We only do individual.
Dixit Shah
Now coming back to a few questions on a statewide growth. So Madhya Pradesh we are seeing massive amounts of growth. It has gained y more than 200 basis in our composition. So are we seeing a higher ticket size growth there or. The Madhya Pradesh market in itself has seen a very massive growth spurt and we are capitalizing on it. One question on that. All of it actually Madhya Pradesh is going well. Ticket size is growing and number of units is also growing. And we don’t see any any respects to asset quality issues. Because some of the players were having a little bit of an issue specifically in southern part. And I was going to come on that one of the players was which way which we compete in the southern areas was saying in the less than 20 lakhs they are not seeing as much as demand. A few other players are saying that there is good demand. So in the state of Madhya Pradesh and also in south where we are present, how are you looking at the demand scenario and are we seeing a lot of competition and with respect to the affordable segment and a sense on the overall view on the housing credit market.
Manoj Viswanathan
So Madhya Pradesh has been developing well. I mean because industrialization and organization is picking up there and it’s been developing well. So it is a growth market in an overall sense. Plus we have also capitalized on it. We have a great team there and we have very good asset quality there. So we have capitalized on that growth. Other markets, south etc are also growing. So AP Telangana, Tamil Nadu are also growing well we had some issues in Telangana and Tamil Nadu in terms of team etc. Which we have sorted it out. So growth should come back there.
operator
Thank you. Next question is from Prithviraj, Battle from Investec. Please go ahead. Yes, so my question was largely answered.
Prithviraj Patil
I just wanted the guidance for the. ROA ROE given that right now the. CRA is quite high and there’s a. Lot of liquidity on the balance sheet.
Manoj Viswanathan
Right. So we had mentioned this in the last call. Currently our Roe for Q2 will be lower as we take on both the full leverage benefit. We aim to deliver 15% ROE in the next five to six quarters and then build from there. As far as ROA is concerned, we look to go closer to 4% again coming purely from the leverage benefit.
Prithviraj Patil
Okay, thank you. That’s it for my slide.
operator
Thank you. Next question is from Subranshi Mishra from Philip Capital. Please go ahead.
Shubhranshu Mishra
Hi. One question remained unanswered. What is the number of loans that we disburse on a monthly run rate basis and there will be quarterly variations but monthly number that we don’t have.
Nutan Gaba Patwari
In terms of our budget about 4,000. Loans a month is what we originated.
Shubhranshu Mishra
Right. Thank you.
operator
Thank you. The next question is from Dixit Shah from SNMC Capital. Please go ahead.
Dixit Shah
Yeah, thank you for the follow up. The second question that I had was on cost of borrowing. So overall we have seen 100bps deployment in the report and we have a credit rating upgrade. So overall for the whole year what would be the impact in the cost of borrowing that we could see in. The by end of FY26?
Manoj Viswanathan
Right. So I think first very important to understand what is the composition of a cost of borrowing. Borrowing therefore link cost of borrowing is about 20%. About 60% comes from MCLR. Link borrowing and MCLR of banks have not come down. So while we may see 100% 100 basis points decline in repo, the MCLR reflection has not yet happened. The deposit rates have started to come down and it is expected that MCLR will come down. So this transition takes time. So currently we are at 8.4 by December. I’m expecting this to go down towards 8.88.1 by March we should definitely be at around 8 or maybe slightly lower than 8.
So that is the expectation. Unless of course the bank in CLR goes down much faster Then that full transition will also play out in our cost of borrowing. But broadly we would expect 50 to 60 basis points transition by end of March.
Dixit Shah
And what will be the impact on our yield them correspondingly how much would we pass on?
Manoj Viswanathan
So we have to discuss it in the algo. We have not done that yet because we first have to reflect the benefit in the cost of borrowing. So only Q3 or Q4 will be start passing it on. We expect the spread to be maintained in that 5 to 525 broad range. Okay, 5 to 525 is the spread that we want to maintain.
Dixit Shah
Okay. Thank you.
operator
Thank you very much. That was the last question in queue. I would now like to hand the conference over to Mr. Manoj Vishwanathan for closing comments.
Manoj Viswanathan
Thank you everyone for participating and engaging in the call. We hope we have been able to answer the questions to your satisfaction. In case you want to reach out for further questions, you can always reach out out to Deepak Ketan or write to us on investment.relationshomefirstindia.com thank you so much.
operator
Thank you very much. On behalf of Home First Finance Co. India Ltd. That concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.