Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
FINO Payments Bank Ltd (NSE: FINOPB) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Ketan Merchant — Chief Financial Officer
Anoop Agarwal — Interim Chief Financial Officer
Analysts:
Sheetal Kanduja — Analyst
Ankit Kanodia — Analyst
Anand Dama — Analyst
Unidentified Participant
Saikaran — Analyst
Unidentified Participant
Ashish Kumar — Analyst
Nithin — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Fino Payments Bank Limited Q4FY26 earnings conference call hosted by Goindia Advisors. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance, please signal for an operator by pressing Star and zero on your touch tone telephones. Please note that this conference call is being recorded. I now hand the conference over to Ms.
Sheetal Kanduja from Go India Advisors. Thank you. And over to you ma’. Am.
Sheetal Kanduja — Analyst
Thank you. Good afternoon everyone and welcome to the Q4FY26 earnings call of Fino Payments bank hosted by Goindia Advisors. We have on the call Mr. Ketan Merchant, Interim Chief Executive Officer, Mr. Anoop Agarwal, Interim Chief Financial Officer, Mr. Salish Pandey, Chief Business Officer and Mr. Tejas Mania, Chief Digital and Liabilities Officer. We must remind you that the discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risks that the company faces.
May I now request the management to take us through the financials and the business outlook subsequent to which we will open the floor for Q and A. Thank you. Anode to you Ketan.
Ketan Merchant — Chief Financial Officer
Thank you Sheetal. A warm welcome to all of you joining us today for our bank’s quarter four FY26 and full year FY26 earnings call. Well, FY26 has been in many ways the most defining year in Fino’s journey since inception. We came into the year on the back of a landmark FY25 with a clear focus on risk calibrated growth in what we knew would be a challenging operating environment. What followed was a year that tested franchise on multiple fronts and I’m pleased to share that it has emerged stronger on every parameter that matters to long term value creation and our focus on differentiated SFB I.e.
Small Finance Bank. Let me set the Context briefly through FY26 the broader ecosystem witnessed heightened regulatory scrutiny and industry wide efforts to tackle digital fraud. The rise of MULE account in banking system and a tightening of operating environment. In addition to these industry wide factors, the bank also navigated an unprecedented event in Quarter 42026 as a part of our steadfast commitment to timely disclosure and transparency, we have provided detailed disclosure on these matters through our regulatory filings across the month of March and April and if I’m not mistaken, we put around 40 disclosures in the month of March and April.
A testimony of our transparency towards our stakeholders. I want to take a moment to thank each of you, our board, investors, analysts, customers, merchants, regulators and the entire team at CINO for the trust and patience you have extended to the institution through this period. Through all of this, our approach has remained very clear and simple. We have consciously chosen sustainable and compliant growth over short term acceleration. We’ve taken measured path and prioritized building a stronger and a more resilient institution for the long term.
And the results I believe speak for themselves. On the governance front, I want to be second but absolutely clear. Throughout the second half or the quarters 4 of FY26, the bank had acted institution first at every step. Coupled with keeping in mind mid and long term objective intact, the board swiftly convened within 24 hours to ensure continuity to interim leadership arrangements approved by the Reserve bank of India. Now, in the lifespan of an organization, specifically a bank, the most important aspect is robustness of its business continuity plan that is BCP.
For us March 26th turned out to be a testimony of our execution on bcp. And amidst all this what came out is resilient business model of ownership reflected in accounts being opened and increase in deposit balance in March 2026. In addition to these business parameters, what was successfully tested was the stability and level headedness of the leadership team in keeping mind focused amidst the chaos and thereby not deterring from mid to long term vision of the organization. Let me come to what I believe is the single most important development on FY26 on the business front.
Yes, this is the strength of our deposit franchise. Our customer base stood at 1.75 crore by the end of March 26th growing 22% on a year on year basis we’ve added approximately 6.9 lakh new CASA account in quarter four. Quarter four 26 alone eclipsed by this event in end February 26th. Focus for the month of March was on CASA and liability generation. In this context, in the month of March 26th we opened 3.2 lakh new accounts. Yes, this is 3.2 lakh new accounts highest in last three years. Our total deposit balance increased all time high of 29.57crores post event.
And the sustaining of that has been consistent across after achieving the highest possible peak. I want to emphasize this point because it speaks directly to the quality of the franchise we built and in compliance driven culture being implemented for long term value creation. Our renewal income in quarter four 26 reached 62.2 crores. The highest single quarter renewal in the bank’s history. For the full year Renewal income grew by more than 25% year on year. This is not transactional revenue but customer owned ownership revenue, the most authentic measure of the trust of our 1.75 customers have placed in this institution and also corroborate our plans for journey towards small Finance bank.
Coming to our digital and transaction business through the second half of FY26 we further heightened our deliberate risk calibrated approach. We tightened merchant onboarding and strengthened transaction monitoring. We exited certain partnership on Suomoto basis and certain merchant categories where the risk return profile was no longer aligned with where Pinot wants to be as an institution. The result in short term was moderation in our digital throughput and our transaction led business as well.
Throughput from B2B digital payments were down approximately 17% sequentially in quarter four. 26 it is exactly the kind of decision a prudent bank should make when its business associate risk framework needs an overhaul and we made it on our own accord being aware of the short term impact on our profitability. Let me come to technology as committed in earlier calls, our core banking system migration to FINACL has been completed in this quarter. This was an investment of around 200 crores for the bank and one of the most consequential technology project we’ve undertaken and it has gone live within our anticipated timeline.
Alongside Pinnacle, we’ve also developed Hollow the Core modular architecture which decouples high frequency transaction handling from the core. This significantly reduces the failure rate, enhances traceability and crucially provides us with technology backbone that is ready to cover scale and complexity of small finance banks. We expect significant improvement in ease of doing business, faster product launches and better customer experience over the coming quarters as new platform stabilizes. Now moving on to another important aspect of FY27 I.e.
Small Finance Bank. As you are aware, on December 5th the Reserve bank of India granted us in principle approval to convert from Payment bank to sfb. We are the first payment bank in India to receive such approval and we are deeply grateful to Reserve bank of India for the trust they have imposed on us in the institution. Per the RBI’s framework, we have defined window to satisfy stipulated condition for final SFP license including the thresholds of network capital, adequacy, promoter shareholding, branch rollout and overall a differentiated business plan.
I want to assure you that execution is on track on every front. On lending side we made steady progress on our referral book which is a proof of concept for our lending franchise which we will eventually own as an SFB FY26 referral business stood at approximately 1300 crores with Q4 alone contributing around 592 crores, a 97% sequential increase. The referral mix is heavily aligned to the kind of secured priority sector aligned lending that an SFB model is designed for and that is the model which we are also looking at.
Housing Loan, affordable housing, Gold loan, loan against property and MSME are the key products which we are looking at. Our intent as I stated in earlier call is to build a differentiated SFB focused on secure asset and an asset light model that can deliver superior return on equity. To reiterate, our business model for SFB revolves around three primary modes. First one is our cost of fund advantage over traditional bank wherein we are looking at around 300 basis points advantage on our cost of funds.
The asset light model which will be predominantly through our merchant network 20 lakh plus merchant beach we already have it currently and a strategic edge on our technology and digital platform which we built. To summarize, FY26 has been a year that has asked franchise to demonstrate two things. Deposit base is durable through a difficult environment and that the institution can execute on SFB transaction transition on every condition that the regulator has set on both counts. The answer in numbers Record Deposit Record, Customer base, Record renewal Income, CBS Migration delivered compliance leadership strengthened.
As I have repeated in my earlier calls as well, our priority continues to be steady, sustainable and a predictable bottom line growth rather than pursuing exponential top line expansion along with a sound base going towards a small finance bank transition. With this I would now hand over to Anoop who will take us through the financial performance for the quarter and full year in detail. Over to you Anoop.
Anoop Agarwal — Interim Chief Financial Officer
Good evening everyone. Thank you ketan. As mentioned, FY26 has been the year of challenges but let me assure you Fino has emerged stronger and more resilient with single focus on building prudent franchise with governance. First approach let me take through our Q4 and FY26 financial performance. The total revenue for the quarter dropped by 31% year on year and full year by 14%. The causes are discrete and largely external. The regulatory driven contradiction in Digital Payments From Q2 onwards, the industry wide collapse of bank led DMT remittances following the November 24 RBI circular has caused the decline and further on our B2B business.
Because of the slumber in the NBFC MFI sector, the revenues have declined for the quarter and for the year. None of these reflect customer attrition or a loss of market position. Our margins expanded by 250bps for quarter and quarter and 500bps on year full year basis. This itself demonstrates the shift from a low margin to high margin and ownership business. Our CASA base reached 1.75 crore accounts as of 31st March 26, up 22% year on year. We added nearly 7 lakh accounts during Q4 alone. Despite tightening our onboarding framework and overall difficulty in the ecosystem conditions.
The headline metric I draw your attention to is the renewal income Q4FY26 renewal income reached rupees 62.2 crores, the highest in the quarter and the history full year renewal income grew 25% to 237 crores from 190 crores in FY25. Renewal income is the cleanest measure of our customer ownership. It reflects customers actively choosing to stay with Fino. 25% increase in a year of industry disruption tells you something durable about this franchise. Our cost of funds remained structurally low below 2% on the core CASA book entering our SAP phase with approximately 2,800 crores of low cost liabilities.
It gives us a cost of funds advantage of approximately 300 basis points related to our typical small finance bank that is the foundation of our lending business case Coming to digital the revenue decline from 63 crores in Q3 to 41 crores in Q4 reflects a deliberate de risking of high margin program manager flows in response to the regulatory environment, not a loss of platform capacity. We have intentionally trimmed down on this segment as we recalibrate our approach reflecting in our active client base declining from 347 in December 25 to 229 in March 26.
Operating cost discipline has remained tight throughout the year. FY26 operating expenses including depreciation grew only by 9% year on year absorbing the finical migration investment which is a proof of concept for the lending franchise we will eventually own as an SAP. FY26 referral disbursal stood at approximately 1300 crores with Q4 alone contributing around 592 crores, a 97% sequential increase. The referral mix is heavily aligned to kind of secured priority sector lending. SFB model is designed for housing gold LAP msme.
Our intent as I have stated in earlier calls is to build a differentiated SMB focus on secured assets and an asset light model that can deliver superior return on equity. To retrace, our business model for SAP revolves around. It revolves around three modes which is the cost of funds, advantage, asset light model and cutting edge of our technology. In summary, FY26 has been year of lot of challenges. We have navigated through those challenges. Coming through the difficult times in Q4 and FY27 we look forward building out a prudent franchise of liability and preparing ourselves for the sfb.
With this I open the floor for questions.
Questions and Answers:
Operator
Thank you sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter STAR followed by one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may enter STAR and two participants are requested to please use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankit Kanodia from Zen Nivesh.
Please go ahead.
Ankit Kanodia
Thank you for the opportunity. So my first question is related to the FFB transition. If I understand the business correctly, we are currently doing a few services or products which will probably be in a conflict of interest when we start lending as an sab. So for example when we look at our cash management business or our business correspondence business, I think a lender basically takes this business basically gives this business to us. Now how do we make sure that there is no conflict of interest?
That is number one. Number two, we are also doing a lot of some of co lending with other lenders. But when we start our own lending book won’t there be a conflict of interest on that part as well? That is my first question. Sir,
Operator
Management lines been disconnected. We are just connecting them back. Please hold the line. We have the management line reconnected. You can go ahead with your question.
Ketan Merchant
Thank you. Farah. Hi. Hi Amit. Sorry there was a technical snag. Instead of unmuting we just touched some other button. But coming back to your question and I’ll take the second question first about your co lending I think we put some statistics on actually it’s not co lending, it is about lending referral. You know the amount which we’ve done for the last quarter of 597 crore of dispersal. There is no intent of co lending. SFB are also not allowed co lending before we migrate and before the launch of operation starts.
This is our way to establish a proof of concept or a pilot that how our differentiated model which we are doing through merchant what kind of demand it can raise. So it is actually showing a very good traction. It is helping us to prepare the guardrails once. This essentially it is not a revenue accretive business currently but it is a business which is being prepared for getting the railroad establishing the potential of our differentiated channel and that seems to be be going on the right direction.
So that’s where our lending referral will translate itself into our SFB loan book through our differentiated channel. Coming to your first point, you know conflict of interest in the past also we have actually said it many times. We’re not going to go into a brick and mortar small finance bank with multiple branches and traditional cost of funds and traditional business models. We intend to continue our payment business which are regulatory allowed. You had used the example of cash management services.
Yes, we do have some of the financial institutions where we act as cash management services. But in addition to financial institutions the industry is far and wide. Its logistics, its operations, its quick commerce. So there might not be an impact if your question eludes towards that, is it either and or? The answer is no from a regulatory standpoint and from our business plan perspective as well, our CMS will essentially continue. Coming to the second example which you said business correspondence.
Yes, that business approximately has a revenue number of around 140 odd crores in FY26. That is a business which we are not allowed to do in small finance bank and we’ve made our business model after factoring that. So once we transit into a small finance bank the business model has envisaged all the business which will continue barring this business correspondence which will be separately dealt with. I trust this clarifies your point.
Ankit Kanodia
That was very helpful sir. And I read a news article that you are planning to sell this business correspondence. So do we have any progress on that front? Anything which we want to share in this call regarding? Typically do not
Ketan Merchant
Answer on any media articles but we are looking at strategic options which we can look at for this business and we will keep and we provide an update on this as things progress out.
Ankit Kanodia
That would be great sir. And for one last question if I may again, I think we have mentioned in the past that as per the transition to SAB we’ll be doing a fundraise. So any timeline, any valuation or any kind of valuation numbers which we have internally chopped out and we want to share with the investing community right now.
Ketan Merchant
Okay. No, I think you mentioned it offered that as we currently speak our capital adequacy ratio is in 83%. If Anoop can validate that for me, we shall reach a 15% regulatory requirement. We have made our business plans until FY30 which will be a fee based business plan coupled by the secured lending book as well. So as things stand now from a business projections perspective, we are Technically not requiring to have capital. So our SFB launch is not dependent on any capital based on the business plan which we have drawn across.
How do we take it forward if at all? Whatever happens we will keep an update on that.
Ankit Kanodia
And RBI doesn’t mandate us to reduce our promoter holding because our promoter holding is 75% today in the company. So is there any mandate by RBI to reduce it once we transition into Sabbath?
Anoop Agarwal
So Ankit, as mentioned in the speech, whatever the conditions RBI has laid down from implementation point of view or a promoter shareholding point of view or like exiting certain business or whatever the requirements, we are in process of progressing on the same and as and when things progress it will be updated to the relevant stakeholders including the stock.
Ankit Kanodia
Right? That was very helpful. Sir, one last question. One of the payment bank license has been cancelled by. Actually it was cancelled long back. It has been just executed recently. Any particular as in. I don’t. I know you would not want to comment on any. I’m sorry to interrupt
Operator
But could you please return to the question queue?
Ankit Kanodia
Sure.
Operator
Thank you so much. Participants, if you have any questions at this time you may enter star followed by one on your touch tone telephones. We have the next question from the line of from Anand Dhamma from MK Global. Please go ahead.
Anand Dama
Hi, thank you for the opportunity. What explains the drop in the CASA opening in Q4? I understand DJ payment business but CASA was a smooth business where we had a strong funnel from the DMT and the non DMT customers. So what explains the fall in the CASA account opening in fourth quarter?
Anoop Agarwal
Hi Anand, so the answer to your question regarding the CASA slowdown in Q4 other than the digital business. So during the Q4 we had initially in the first month in January we had a core banking system migration. So for around four to five days there was a disruption in terms of the technology switchover that one of the causes that second at an overall level as mentioned in Ketan’s speech also comments that we are now focusing on a high quality customer with the higher balances and which will enable us to lay the foundation for our SAP plans.
So These are the two factors which led to the Q4 dip during. Sorry, the CASA account opening dip in Q4.
Ketan Merchant
Anand Ketanya just one thing to add if you’re looking at it from a representative way forward, I think our focus is fully on retail and CASA as we had seen across in the month of March as well. So that momentum is expected to continue in FY27 in the manner which Anoop just explained
Anand Dama
Should we expect that FY27 or particularly first quarter. FY27 should be a normal quarter where we don’t have any technical issues and so the CASA momentum should again pick up.
Ketan Merchant
Yes, yes Anand, as I said, the technology change, etc. Was already completed in Jan and Feb. March was a testimony of that. And our focus remains back to, you know, going back into the CASA and retail momentum. And that is our high focus.
Anand Dama
And in the digital payment segment, the customer cleanup that we have done in the fourth quarter, in the third and the fourth quarter, most of these customers were largely related to real money gaming business or there were other customers also that we have done a cleanup in terms of either profitability or regulatory issues. Whatever the case.
Ketan Merchant
Yeah, I lost Silesh to just take this one.
Unidentified Participant
Thank you. So if you recall, the Real money game was actually stopped in August 2025 as per the regulation issued by the government of India. So the cleanup was at that point immediately. The next day we had blocked all the merchants who were doing real money gaming as per the circular. And the current quarter four changes which we have done is belonging to merchants which are predominantly within the program manager Ambit.
Anand Dama
So in that case, and I think mentioned about that, we’re looking at better profitability and better profitable customers. Does that mean that the margins of the DMT business now that we have done the cleanup should be better incrementally?
Anoop Agarwal
So I think Anand, you are. I think Maybe there are two products which we are talking about. One is. One is a digital payment which is a UPI P2M product which is where the real money gaming was there. Whereas now in your question, I think you mentioned about dmt.
Anand Dama
My mistake, it was about digital payment.
Anoop Agarwal
Digital payments. Sorry. So digital payments. So what? Sorry then can you just repeat your question? Sorry.
Anand Dama
So saying that we have done a cleanup in the digital payment business now and somewhere I think you said that you’re looking at now more of a profitable customers. So does that mean that incrementally the margin of the digital payment business should be better?
Ketan Merchant
Hi. Hi Anand. Sorry, this confusion because of digital payment and dmt you are saying that should going forward our digital payment margin be different from what we’ve seen in the FY26? Correct? That that is your question? Yes, yes. To answer to that, I think what we’ve essentially done based on March is we’ve taken a pause. We are looking at our processes, recalibrating our risk and so on and so forth on the digital payment as and when we progress after the reviews which we are doing internally and otherwise as well.
We will just keep an updated on the entire business model in later part of the quarter or towards end of the quarter.
Anand Dama
So then how should we model FY27 in terms of our various business lines? Where should we expect improvement and where we should see deceleration in terms of the business except for you know BC business which we know that that would undergo a change but other business lines, how should we model it in terms of throughput revenue and margins.
Ketan Merchant
So I’m not going to, you know we’re not putting currently any guidance but however I can just provide a direction in what we were looking at. Perhaps in the previous question also this came up. Our focus for FY27 is driven into three parts. One is the CASA accounts which we had seen an historic high in the month of March after a relative slumber in Jan because of reasons which we explained. So that is one of the growth factors which will come across. Anoop earlier mentioned we are looking at a corresponding liability balances which is essentially there as well.
So that is an important part and our focus essentially is going out there digital payment. I have earlier mentioned it up. We are also looking at our transaction business typically has been a challenge on account of what Anoop said in his note but we are looking at an upside coming across in our Aadhaar enabled payment system and that is also we are looking at our CMS business which will bounce back from the slumber which you see. So if you are asking about the growth levers and all of these four growth levers along with I am not repeating the lending referral which is not from a modeling perspective but from a business model perspective.
All of this taken together is our priority for FY27.
Anoop Agarwal
And to add on to that since the product mix is moving towards more CASA driven focus and liability driven focus, the margins are also will be dependent and moving in that lines as well.
Ketan Merchant
So typically high product margins will lead to an improvement in the margin is what he’s saying in nutshell.
Anand Dama
And is it possible for you to tell us like you know what kind of commission that we make on this business, I mean referral business that we do for loans?
Ketan Merchant
No. So again typically the referral business as I said is not driven by not driven essentially by the P and L but we around make 100 basis points on the lending referral business which we are currently doing.
Anand Dama
Thanks, thanks. I’ll come back in the Time channel.
Operator
Thank you. The next question is from the line of Sai Kiran from Pulwarti Finserv, please go ahead.
Saikaran
Yeah, hi, just curious, extending the conversation or rather referring to your April 13th press release about Mr. Rishi Gupta being unavailable for more than 45 days. And then you explicitly mentioned that the board as well as RBI will take a call on his written proper status. Just trying to understand what is the procedure which as an organization have to apply to get what I can say this assessment to be done. If you can just help us with the timeline also that will be really helpful.
Ketan Merchant
Hi Ketan here. As you rightly highlighted to a stock exchange disclosure, in addition to the stock exchange disclosure which we said you mentioned with I think there was an earlier stock Exchange disclosure of 7 March as well if I’m not mistaken, where the Reserve bank of India had approved the interim management structure and you know helped us in terms of directional way forward, you know through a fitted proper and their review. So as we speak of the way things have progressed across as well the bank and the board is evaluating the guidance and the prescription which the Reserve bank of India has given and we will be working towards that at the current stage.
This is under work in progress and is being evaluated by the Bank Board. That’s where I should stop at
Saikaran
Conversation. If I may ask whether the bank and board had done any special audit appointing any external agency and is there any findings regarding the same? Of course subject to the subjugees and as well as the regulatory thing. But of course if you can comment anything which the bank specifically had done to address this issue.
Ketan Merchant
Yeah, it’s a fair point. I should have covered it in my listing as well. We are doing a special review of the product and process in contention. That review as we speak is currently on and as you rightly said the bank and the board are evaluating various options including the outcome of the special review and will take the step forward.
Saikaran
Got it. And one last question from my side Ketan is that this event has happened late in the quarter. Just curious if you can. And also you mentioned that in the last quarter the account openings were very large. If you can just try to break the quarter between pre this event and post this event. Have you seen any slowdown in the account openings or the business? If you can just comment on.
Ketan Merchant
I think I mentioned it in one of my notes as well. The account opening for the full year was around. A full quarter was around 6.9 lakhs. Anoop earlier explained the January and February month. In the month of March which as you can see it as post event we opened around 3.2 lakhs account which is historic high of last three years and our deposit balance has also reached a stage of I think total deposit of 2957 crores which was again one of the historic high which we’ve seen. So the customer confidence, the business model, resilience and perhaps on account of all of this business parameters, retail business parameters, the business for the month of March and thereafter has been going as business as usual on account of retail banking.
Saikaran
Thanks Rocket. I really appreciate this. Thank you very much and all the pleasure.
Ketan Merchant
Thank you very much.
Operator
Thank you. Our next question is from the line of Sidharth Gupta from Voyager Capital. Please go ahead.
Unidentified Participant
Good afternoon. Congratulations Ketan, Anup and the entire team on this result. I just have a few specific questions. Firstly over the past few months and this is directly in line with the problems that we are facing on the management end, have the lost merchants or noted a slowdown in merchants being onboarded with us? And just to Clarify on page 31 of the presentation in context of Soundbox, the merchant numbers mentioned as 2951 is that an absolute figure or a scale figure? I just wanted to understand the difference because According to slide 10 we have about 20,000 merchants and just wanted to understand the difference.
If you could answer this and then I can take up the other couple of questions that I have.
Anoop Agarwal
Hi Siddharth Anup here. So to answer your question on that soundbox thing. So the 20 lakh merchants are the physical merchants network which we have across India covering 98% pin codes. The soundbox are. We started as a strategy for our SAB foundation saying that we want to provide a soundbox and capture more data points from our existing merchant to our having a better transactions. That’s where we implemented Soundbox and these are absolute numbers and not in any scaling. So out of that universe of 20 lakhs we have deployed Soundbox in these merchants for these merchants.
Hope that answers your question.
Unidentified Participant
If you could just a couple of follow up on this. So if are we pursuing Soundbox as a revenue strategy that will it form part of our like rental income from these sound boxes? Are we charging anything or anything along those lines? And the other bit that I wanted to understand if are we response of the UPI incentive from the government Given that there’s a lot of UPI thoroughput that goes through if yes, if you could quantify the amount received in the last financial year or provision to be received for the last financial year.
Ketan Merchant
Let me just take the first one. Soundbox strategy is not a revenue accretive strategy. This is to something, you know the way I explain the lending referrals where we are building our card rail so that you know it essentially can we can leverage all of this at the time of small finance banks launch. On the second point on perhaps you’re looking at a UPI incentive. Anhoop is a better person to answer that.
Anoop Agarwal
So although you know so the incentive from the government of India only came until FY25, FY26 although they announced something in January. But till date we don’t have any line of sight unless any further communication is there from the government government of India on this I don’t think we will be able to comment on that.
Ketan Merchant
No. So Siddharth, I think if your question is towards UPI incentive I think increasingly it’s going towards the nature of the merchant, the small merchant and the mid or the large merchant as well as we are understanding most of the banks which are operating may not be coming under the amount of of the small merchant. So as Anoop explained it is not currently factored into our model or neither it is there in FY26. Neither factored in FY27.
Unidentified Participant
Great. Just last two quick questions. I’m sorry Mr. Could you return to
Operator
The question queue sir?
Unidentified Participant
Thank you.
Operator
Ladies and gentlemen, as a request please limit your questions to two questions per participant. The next question is from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.
Ashish Kumar
Hi, just quickly wanted to understand in terms of the, the. The account openings, how has been the month of April? Is it been similar to March or is it similar to Jan Feb? If you can kind of give because we are also one month additional which has passed. You can give some Ashish
Ketan Merchant
Katan here I think. I’m not commenting or giving divulging the numbers of April currently. However, earlier someone had asked the question of whether the momentum which has been picked up is that a momentum which we intend to continue for the coming quarter and coming year. The answer is yes. CASA account opening is our the fulcrum of all our strategy coming across and we expect the momentum to continue.
Ashish Kumar
Secondly, in terms of the merchant partners that we have, I see that we see that there’s a big drop from December to March in terms of total number of merchants. Is it fair to say that a lot of that is already behind that? That we have discontinued the whole merchant program and now it’s only direct merchants or are there still some more cleaning up needed?
Ketan Merchant
This are you I presumably you’re referring to.
Ashish Kumar
Yeah,
Ketan Merchant
I can get Silesh to answer that please.
Unidentified Participant
Thanks kitten. Hi Ashish. We have been following a risk a little bit growth Strategy for our UPI P2M business and you know we’ve highlighted that in earlier calls Also what we’ve been doing as we move in FY25 the management team, you know in its internal discussion has decided on a sumoto basis that you know we will do a comprehensive review of the digital payment business as we empower on this journey. I think we have decided to pause the UPI P2M business which means the existing merchants will not be able to transact as well as will not be onboarding any new partner as well as merchant.
The objective actually is to not strengthen the overall monitoring systems and develop a long term sustainable business model in alignment with our overall strategy of the bank. So currently we have, we have, we are pausing the business and we will come back to you know, as we do the entire complete entire week.
Ashish Kumar
When we say pausing does it mean that the revenues are near zero in the month of April?
Ketan Merchant
April there will be some revenue which will happen but Ashish, from now on
Unidentified Participant
It will be zero. Yeah
Ketan Merchant
Ashish. So just to give a context to everyone and we clarify it off as said and I earlier alluded to this as well, it is like a pause, look at rehaul, look at the ecosystem, get reviews done and then we will announce a separate plan as I earlier said, maybe towards the end of the quarter or thereabouts in terms of our digital plan. Until then the focus very persistently remains on the four items which I had earlier alluded towards.
Ashish Kumar
Sure. The second question was in terms of depreciation and interest we see a large jump quarter on quarter end on that. Is that because of the new IT system being capitalized? How much would that be the impact because of that?
Anoop Agarwal
So Ashish, anup here. So to answer your question first. Yeah. Depreciation is completely primarily the impact on account of the core banking system migration, completion and capitalization of the same in Q4. That is one second in terms of the interest cost increase. It’s primarily on account of the leveraging our in terms of the license which we have in terms of participating in reverse repo. I understand
Ashish Kumar
Anup on that. So how much is the increment on depreciation?
Anoop Agarwal
So depreciation the complete increase in on account of that.
Ashish Kumar
Okay, and that would be going continuing I guess.
Anoop Agarwal
No, the next year will be a larger impact because here this quarter is this year only you had around two and a half month impact whereas
Ashish Kumar
This quarter what is the depreciation for this quarter.
Anoop Agarwal
Sorry, the depreciation for this quarter, 23 crores.
Ashish Kumar
Yeah. And so that’s going to be your hundred going forward broadly?
Ketan Merchant
Probably a little bit. Yeah. This, this and Anup explain already factored in the migration of our core banking system is what we were essentially saying. So Ashish, and maybe for Roy’s rest we can just draw the attention ON slide number 12 where if you see until EBITDA level, despite a benign business implication and everything what we discussed earlier, EBITDA has largely improved, been impacted only by around 6,7 crores. And this is where, you know, when we come down to PBT and Pat, the impact gets larger is because of the investment which we’ve done and which has been something which we’ve been telling about for a while as well.
And that is the capitalization which has happened in the month of January.
Ashish Kumar
Okay, thanks a lot.
Operator
Thank you. Participants with questions may enter star and 1. Our next question is from the line of Shahzad Shroff from Demeter Advisors. Please go ahead.
Ankit Kanodia
Yeah, thank you for the opportunity. My first question is given the management disruption that we saw in the last quarter, do we expect this 2028 launch of our lending business getting impacted? That’s one. Second, what regulatory milestones do we need to get cleared over the next 12 months to get to our SFB launch? And third would be we’ve broadly given out the 20% ROE target. But if you can, if it’s possible, if you can break it up into expected yields, names, OPEX costs, that would be helpful, thank you.
Ketan Merchant
Let me just take the first question is about the challenges in SFB launch. As I had mentioned earlier and maybe we had referred it in earlier calls as well, RBI has given us in principle approval on 5 December and has given us a specific timeline. If I’m not mistaken, we have actually articulated a timeline and I’ll just give a reference of the slide as well if there is one. Yeah, so if you go to slide 22, this is exactly the same what you’ve been asking across. There is no change in our SFD plans and as we speak the work is essentially happening.
We are going towards a differentiated sfb. We’ve given our thoughts in terms of the assets and liabilities as well, liabilities being core. So in a nutshell, to answer your first point, the SFP functioning or SFP preparation, if at all, has further intensified for FY27 and the timelines currently as we see us completely intact. Second aspect which you asked about was a regulatory milestone I think this is no different for us. After RBI gives an in principle approval there is a timeline which is given across and which we’ve attempted to capture in slide number 22 as we speak.
The major part of our technology upgrade is already done and we will be adding some more technology levers and the relevant specialized staff as well and that is being progress after that. The process, RBI defines the process that we’ll apply for or we will tell them about the final launch preparation and that’s how it will go through. As regards to your third point on the yields and the kind of products, if I take up on the liability side, if I just take everyone towards slide 18 and I mentioned it, or rather Anoop mentioned it in his note as well that one of the key aspects which we are essentially looking at is the cost of funds in FY30 and around 3.9% based on current.
So that will be around 300 basis points. So we are getting skewed towards the CASA liability. That is our strength. The point to remember is we are not starting. Whilst we have put an articulation of around 13,300 we already have some 2,000 8,900 crore of deposit which is anywhere there. And with our payment bank license evolving into small finance bank there are other avenues which we can go into in terms of our low cost liabilities. As we mentioned it TOF and it is there on the slide. Around 2/3 or more business is expected to come on the liability side from our merchant model which is our current existing model.
And then of course that will be dovetailed by some of our brand setting as well as regards to yields and the nims. I think in the past either we’ve given or we’ll just come back. We have listed down products which we are looking at largely secured 90% secured portfolio which we are looking at affordable housing, MSME gold loans, LAP micro lap and a bit of personal loans. We will as we progress towards we will be providing a much more detailed impact or detailed strategy on how are we essentially building.
This is also going to happen through our asset light model or the merchant LED model as regards to broadly nim and if I just recollect it off nim we have been putting it across because of our low cost deposit base which we have is anywhere in the range of around 8 to 10% is what we are looking at.
Ankit Kanodia
Okay, thank you.
Operator
Thank you. We have a follow up from the line of Ankit Kanodia from Zenivesh. Please go ahead.
Ankit Kanodia
Yes, thank you for allowing me a Follow up. Sir, one last question which is related to our PPT where we have mentioned about our CASA revenue of 629 crore in FY26. Just a request sir. If it is possible to give a breakup of how much of float income is included in this.
Anoop Agarwal
Hi Ankit Anup here. So to answer your question. Yeah. Out of the 630 crore of the CASA revenue we have 130 crore of float revenue in this.
Ankit Kanodia
Okay. Thank you so much sir. That was my only question. And all the best.
Operator
Thank you. The next question is from the line of Siddharth Gupta from Voyager Capital. Please go ahead.
Unidentified Participant
Sir, two quick questions. One, on the reverse merger with the promoter entity which we had announced back in 23. Any updates that you can share with us? And second, I wanted to know the renewal percentage of our CASA subscribers.
Ketan Merchant
On the reverse merger. Yes, we’ve updated on that earlier call as well that eventually or rather at the time of the application, our intent was to have a reverse merger as a small finance bank application. As things stand now and consistent with what we said in the previous calls as well, currently we are on the path of small finance bank which will proceed. And reverse merger is something which if it regulatory allowed will be explored subsequently as and when the small finance bank comes through.
On your second point on the CASA percent renewal percentage.
Anoop Agarwal
Yeah. So Siddharth, on the question on the CASA renewal, we are maintaining the renewal run rate of around 60 to 65% for the CASA subscription renovation.
Unidentified Participant
Okay. Thank you so much.
Operator
Thank you. We will take the last question from the line of Nitin, an individual investor. Please go ahead.
Nithin
Hi Ketan. So I know that you said you won’t be giving any guidance but if you look at the slide number 22 and you know you have consistently said that you are looking at ROE of 20% as part of your SSB plan. Is this 20% something that you’re looking by FY30 or you’re planning to achieve that much earlier as per your business plan? Also this hundred crore of investment that you’re going to do is that also basically on your branch expansion or it includes all other expenses like staff etc.
Ketan Merchant
So let me just take the second question first. The investment which is you quoted about, or rather we quoted around 100 crores is primarily around the technology infrastructure enhancement which we are doing over and above the core banking which we’ve done across. So primarily or the larger part of that will be on the digital and the technology parts on the branch. As I have earlier said, it’s our business model or larger part of our assets and liability franchise will be on a variableized cost model which is the merchant.
We will open branches but not in comparison with a traditional brick and mortar business. So that perhaps answers the second question
Nithin
Which is fine but that will incur more whatever even if we open few branches. So that cost is not part of this 100 crores that will be on top of.
Ketan Merchant
I essentially said primarily it was the technology driven. So if we are looking at 100 crore that is the overall capex at this stage which we are looking at. But the branches from a business model perspective may not be material is what I am saying.
Nithin
Fine. Your
Ketan Merchant
First question on slide 20 was about 20% and Anoop is jumping on his chair.
Nithin
I mean the thing is we talked about TAM and we talked about so much, you know in our earlier presentations. I’ve been in investor for a very long time now but unfortunately last year’s events of you know, the remittance going out, mule account, then what happened with Rishi, a lot of other things, you know, investor confidence is certainly down which you all know what are you really doing? So you know get that confidence up and this 20% is definitely something that will, you know help towards that basically.
So let
Ketan Merchant
Me just answer your second point now in terms of definitely as I said in my note as well, it has been a redefining year for us, you know, risk calibration, suomoto moderation and the event which we are talking about. But one thing which has happened, you know, and maybe I’m retraining it all and this also resonates or maybe answers some of the earlier questions as well from a management intent and from a management or the stability of the organization. March has been an historic high for us. So there is definitely a retail business and it is institutionalized.
The processes are institutionalized and not essentially person dependent or a person heaviness as well. So and our focus is going towards the SFB which we are looking at as regards to your specific questions of roe by which time before Anoop answers that. I think we recognize people who have been standing with us in all of this and we are working towards that and we are making a differentiated SFB. Not many will have a 300 basis point advantage of cost of funds which I am essentially saying it is.
So there is an element of definitely a differentiated model which is being worked out.
Anoop Agarwal
Yes. But to answer your question on the ROE, the ROE of 20% is what we aim to achieve by FY30 and there are three main factors for aiming that ROE one is we our asset light model. So two third of our business, whether be it liability or an asset will be sourced through the merchant network, which we already have or which is already established.
Nithin
Yeah, I think I know all of that but what I’m trying to really understand is how fast are we working? Because see the thing is we should have been monetizing everything that we worked for the last three, four years. We’ve been seeing this investor presentation for a very long time now. So all I’m trying to understand is how soon are we looking at, you know, profits are down like from 100 crores to 60 crore, you know, and we know the reason but we still need to, you know, really move ahead and try to get back, you know, where we were, which I understand is asset light and we’re differentiated.
We know all of that very well by now. I’m just trying to understand how soon are we going to get some ROE which you know will bring back the confidence in the institution because that’s what investors look at at the end of the day. So
Anoop Agarwal
No. So Nitin, as Ketan mentioned, we are completely the whole entire management and the board is working towards the same. One thing we can assure you is we are working on operationalizing SFB at the earliest. What we have given the timeline based on what RBI has also given us, we are working towards the same second in terms of getting the higher profitability, we are maintaining that cost discipline. If you see overall, the variable, variable cost model has led to this profitability also for us.
So we are as a management, we have been trying to overcome those challenges around the same and we can assure you that we are completely working towards the same.
Nithin
And you’re not going to give any guidance for this year at all in terms of what we are planning to achieve in terms of revenue.
Operator
But due to time constraints we would need to close the call now.
Nithin
All right,
Operator
Thank you. I now hand the conference over to the management for closing remarks.
Ketan Merchant
Thank you. Thank you everyone. As I have said earlier, it’s been quite a task on this quarter but there have been lot of positives which have come across and I’m not repeating them but, but just to give an assurance to everyone, our focus continues to remain on our retail CASA liabilities, APS and more importantly how we are building towards sfp. There has been, you know, some amount of events which have happened or event which has happened, but the management is completely resilient and working towards this.
And when I’m saying this across the entire bank is rallying towards the commitment which we have made towards our stakeholders. So I thank every one of you, and we are doing our best to increase the momentum. And FY27 would be, again, a redefining year for us in terms of going towards an. Thank you, everyone.
Operator
Thank you on behalf of Go India Advisors. That concludes this conference call. Thank you all for joining us. And you may now disconnect your lines. Thank you.
Ketan Merchant
Thank you. Thank you, farah.