Arman Financial Services Limited (NSE: ARMANFIN) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
Jayendra B. Patel — Vice Chairman and Managing Director
Vivek Modi — Chief Financial Officer
Alok J. Patel — Joint Managing Director
Analysts:
Unidentified Participant
Aman — Analyst
Girish Shetty — Analyst
Karthik Srinivas — Analyst
Ronak Chheda — Analyst
Shreepal Doshi — Analyst
Shubham Jhawar — Analyst
Ashlesh Sonje — Analyst
Amit Mantri — Analyst
Abhishek — Analyst
Umang Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q1FY26 earnings conference call of Armand Financial Services Limited hosted by Philip Capital PCG Desk. 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 conference call, please signal an operator by pressing 0 on your Touchstone phone. Please note that this conference is being recorded. Please note this call may contain some of the forward looking statements which are completely based upon our beliefs, opinions and expectations as of today.
These statements are not the guarantees of our future performance and involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward looking statement to reflect developments that occur after a statement is made. now hand the conference over to Mr. Aman from Philip Capital India Private Limited. Thank you. And over to you, sir.
Aman — Analyst
Thank you, Shruti. Good evening everyone. On behalf of Philip Capital Private Land Group, I welcome you all to the Q1FY26 earnings conference call of Armand Financial Services Limited. From the management we have Mr. Alok Patel, Joint Managing Director and Mr. Vivek Modi, Group Chief Financial Officer. I now hand over the conference to Mr. Alok for his opening remarks and we will then open the floor for the question and answer session. Over to you, Mr. Patel.
Alok J. Patel — Joint Managing Director
Yeah. Good evening and thank you everyone for. Joining us today on behalf of Armand Financial Services. I extend a warm welcome to all of you to our Q1FY26 earnings call. I’m of course joined by the group CFO Mr. Vivek Modi and the investor relations team. I trust you all have had the opportunity to review our results, investor presentation and press release, all of which are available on the stock exchanges and our company website. The microfinance sector continues to operate in a challenging environment while defaults are decreasing and rural incomes recovering. The improvement is uneven across regions and in some areas repayment behavior is still impacted by local stress.
In spite of these conditions, we have maintained a conservative stance in our MFI lending with core focus on improving portfolio quality and collections. This has meant that for the past few quarters we have slowed down on fresh disbursements intensifying our collection efforts and embedding structural changes to strengthen the book. Our other segments, which are MSME two Wheeler and Loan, against Property Micro Lab, which are housed under our standalone entity Arman, have been relatively insulated from these headwinds. They continue to post steady growth supported by healthy demand and relatively better asset quality. In comparison which in turn has helped cushion the impact of the microfinance portfolio at the group level.
The quarter reflected two contrasting trends, moderation in the MFI book and handy momentum in the non MFI businesses. Consolidated asset under management stood at 2,156 crore as of June 30, 2025 compared to 2,594 crore a year ago reflecting a slowdown in the microfinance lending. Disbursement for the quarter was 387 crore as against 459 crore in the same period last year. Gross total income was 151 crore resulting in a net total income of 99 crore. This decline from the previous year reflects the volume impact in the MFI portfolio. Pre provisioning operating profit stood at 55 crore.
The quarter closed with a consolidated loss of 15 crore largely due to the elevated credit cost in the MFI subsidiary. We view this as a short term impact as a part of our longer term recovery strategy. As far as Micro finance which is housed under NAMRA Finance, namrus AUM closed at 1554 crore compared to 2129 crore last year with a disbursement of 270 crores. GNPA stood at 3.43% and NNPA at 0.23%. While the year on year decline in the book and NII was anticipated, we are encouraged by improving operational matrices. In June Collection efficiency reached 95.3% and zero bucket flow forwards, a key early diligence indicator improved to about 98.8%.
Total impairment cost for NAMRE was the lowest in the last three quarters. Q3FY25 was about 68 crores, Q4FY25 was about 82 crore and Q1FY26 was down to 59 crore. One of the key structural reforms we have been implementing in recent months is the separation of credit underwriting and recovery functions at the branch MFI branch level. This change is already operational across about 180 branches, strengthening governance, enhancing accountability and improving the quality of both originations and collections. Early indicators for this are all very positive in terms of asset quality. We are on track to complete the rollout across all branches by the second half of FY26.
Since November 2024 all new MFI disbursements have been covered under the CGFMU Guarantee scheme, adding an extra layer of protection against potential credit losses. As of June 2025, almost 50% of our MFI AUM is covered under CGFMU, providing a meaningful cushion against potential credit losses should the conditions fail to improve. As far as the standalone business which is MSME2 Wheeler and Microlab, our non MFI businesses continue to perform in line with expectations and remain our growth engines. Aum grew at 29% year on year to 602 crore with disbursements rising 10% to 117 crore. Net interest income rose 17% year on year supported by healthy yields and a stable cost of funds.
Pre provisioning operating Profit stood at 23 crore. Profit after tax was broadly stable at 12 crore. On asset quality, GNPs stood at 3.8% for MSME, 4.7% for Two Wheeler and our LAP portfolio which was launched last year now present across branches in Gujarat and Telangana with a pilot in Madhya Pradesh continues to maintain zero NPAs. At the consolidated level, GNPA was 3.45% and NNPA at 0.5%. Collection efficiency in June stood at 95.5% for the group, 96.1 for MSME, 95.3 for Two Wheeler and 95.3 for MFI. Early bucket trends in MFI branches are encouraging indicating that our credit reforms are beginning to yield results.
Our balance sheet strength remains a key differentiator. As of June 30th capital adequacy was 38.24% for the standalone entity and almost 50% for number of finance, both well above regulatory requirements. We closed the quarter with 216 crores in cash, Liquid investments and undrawn limits in addition to 256 crore in sanctioned but undrawn facilities from the lender. Our asset liability profile remains positive across all maturity buckets, ensuring both funding stability and flexibility to capture growth opportunities when market conditions improve. In summary, FY Q1 FY26 was about consolidating our base in MFI segment. We consciously traded near near term growth for long term stability and the early results from our operational changes are encouraging.
Our standalone business continues to demonstrate strong momentum delivering growth and profitability both. We believe as the rural economy stands supported by favorable monsoons and better agriculture output, the pace of recovery in our MFI business will accelerate in the second half of this year. With strong balance sheet risk management and diversified growth drivers, we are all positioned to benefit from this anticipated upturn. Thank you very much and Shruti we can open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue May press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will plead for a moment while the question queue assembles. The first question is from the line of Girish Shati from GIR Capital. Please proceed.
Girish Shetty
Yeah, hi, thanks for the opportunity. Just one question, could you how has been the trend 0 +B3 trend in your MSI as well as overall business and August as well as connection efficiency?
Alok J. Patel
Sir, maybe Girish, maybe you can get off speakerphone. I. I’m not able to hear you clearly.
Girish Shetty
Can you hear me now?
Alok J. Patel
Yeah, go ahead.
Girish Shetty
Yeah, so just wanted to understand the trends in July and August. How similar is it in terms of collection efficiencies? And second.
Alok J. Patel
Zero DPD collection efficiency is improving month on month. So we are 28.8 just hope to we have reached the past not all steady upturn. Sometimes you take two steps forward and half a step back also. But everything is going positively August. I was a little afraid that due to lot of holidays with Rakshabandhan and Independence Day and Janmasmi and lot of national holidays and regional holidays with Ganesh and everything, it might be a tough month for collections. But right now we are as of the 14th we are kind of the same place we were last month.
So luckily that has not impacted so far so much. We’ll wait for the long weekend of course to get a better idea. Other than that, what was your question?
Girish Shetty
Also any stress that you because a lot of people have called out on stress in mfme. Are you seeing the same for your non MFI portfolio?
Alok J. Patel
I mean I like to stress that, you know that MSME is also not immune to the overall macroeconomics that are playing out in rural. So forget about ffi. But I think all small ticket retail loans anywhere in whatever shape or form that you are doing are under some level of stress. You know, some more than others. Obviously MFI is more than others, but MSME is not immune. But surprisingly it’s doing a lot better because we are operating in very similar to same areas and lending to customers. Maybe just one or two steps above MFI customers, but maybe due to our underwriting or collection efforts or you know, some bit of luck.
Also I’m not sure. MSME has been. Behaving a lot better than expected. But that said, yes, there are challenges in that book as well as it’s clearly shown also in the impairment cost. If you compare it, you know, previous quarters versus what it is this quarter, it’s slowly been edging up. But in that book we have Never really fallen on zero. DPDs less than 99% throughout. I think last month we were at 99.2. So fingers crossed, you know, we don’t lose a lot of traction there and God knows I need some luck as well to make sure that doesn’t happen.
Girish Shetty
Like you mentioned about the CBSMU and also setting up our separate credit and collection divisions in a normalized situation. How should we look at your business on an ROA basis when everything you feel is in a normal state?
Alok J. Patel
Well, I mean once we get back to normal it’s easily a three and a half ROA business. You know historically we have in the good days we have reported even four and a half five percent bad years of course zero. So on average we do typically manage pulling out about three and a half types roas. Of course there’s a lot of variations in those from year to year. Given the fact that I guess now it’s time to admit we are in a sort of a cyclical business. I think the industry was bit in denial but it is what it is.
So we are in a down cycle right now but hopefully in a couple of quarters that should turn around and you know, it will be back to normal and back to business.
Girish Shetty
And so this mix of 70, 30 that you have currently, how do we see that like two years, three years down the line.
Alok J. Patel
So here’s the thing. So I mean part of our strategy, and maybe this might be a slightly longish answer, but part of our strategy has been also to kind of figure out what’s next. So if you are saying that the only purpose of JLG right now is to ensure you are collecting from multiple people instead of one, let us presume that if JLG culture being completely diluted as in it has reached this tipping point. And so we have been doing a lot of different kinds of products in rural. So one product is of course individual loans that we are doing.
MSME products that we are doing microlap is of course there. So we are trying to diversify away from group loans. And my hope is that group loans versus non group loans, whatever you call them, individual loans or whatever it may be, hopefully that should be 50, 50 even like over the next three to four quarters. And that’s where my efforts will be. So essentially we have to journey from like a single product entity to a multi product entity. Now all of these products will be interrelated. But you know this classic JLT group loan, I, I think that company will have to evolve beyond.
Girish Shetty
Thanks. Thank you sir for your Answers.
operator
Thank you. The next question is from the line of Karthik Srinivas from Unifi Mutual Fund. Please proceed.
Karthik Srinivas
Yeah, thanks for the opportunity. Good evening all. So my question is increase in cost to income ratio. We have gone all the way from 30 to 33%, 44% and I believe it’s mainly because of the employee benefit expenses. And now that you have a credit division, credit vertical in all your branches, just for my understanding, is it and where in, in that case, where do we settle on a state basis. So that first question.
Alok J. Patel
No. So cost to income or if you look at what we look at is typically operating cost as a percent of aum. So that has been increasing significantly and it’s no big surprise, I think overall. You know, as the denominator decreases, as. The aums decline, or in your case, as the EUM declines as a result the income declines, the operating cost as a percent of a denominator obviously will show it increasing. Right. But over and above that it’s not only the percentages but absolute values have also increased. And that is again as a result of trying to tackle this crisis by hiring, you know, substantial recovery officers, around 500 of them hiring the PCMs, as I said, the separate credit structure. So that has also led to increased salary expense, increased travel cost, of course. So all around, you know, the operating cost has been increasing and.
Vivek Modi
Lower denominator. I think the investment on the employees in terms of the new verticals, the overall strengthening of the recovery team across the branches, I think we will over a period of time should start building better results once the entire sector turns to a positive cycle towards the disbursement.
Alok J. Patel
So for the last two quarters specifically employee benefit expenses has been steady. So and if you consider the third quarter that they have not increased substantially. So I don’t expect those expenses to increase substantially over the next two to three quarters.
Karthik Srinivas
Got it. So my question is on the debt to equity ratio now that we are operating at a very comfortable, profitable capital adequacy ratio. So maybe 2 to 3/4 downtime when the, when the business is back into form. So where do we expect our debt equity ratios or CAR to be at before we, you know, go for the next round of capital?
Alok J. Patel
Well, I mean my answer remains kind of same that we start looking at about 4, 4.5x debt equity ratio. 5 is something that I become, although we have gone that far in the past, but that’s something that I start getting slightly uncomfortable. But yeah, between four, four and a half x.
Karthik Srinivas
Got it, sir. So that’s it from my side and thank you. All the very best.
Alok J. Patel
Thank you.
operator
Thank you. The next question is from the line of Ronak Chada from Oregon Capital. Please proceed.
Ronak Chheda
Yeah, hi Alok. My first question is on the vacuum in the industry itself. So is there a case to be made where the supply is a shortage now because of the liquidity crunch which most of the players are pulling out and not lending, the demand remains at a certain point has that vacuum created for you kind of to be opportunistic and you know, start picking up your customers which you feel comfortable in lending?
Alok J. Patel
No. So see part of the problem why the situation has not improved as fast as we would like it is that the, frankly the rural area is choked for credit right now. I mean over a period of nine months we went from like four and a half, 12, nine to 12 months. We went from a period MFI portfolio of four and a half lakh crore to 3.5 lakh crore or 3.6 lakh crore, something along those lines. So I mean that is a drastic decline over a one year period, you know, and we are stating that geographically also.
So for example, in Gujarat, certain areas which have a higher credit demand because of guardrails and everything, those have, you know, that has been kind of a collateral damage and you could very easily kind of correlate as soon as the fund flow stopped into those areas, overall delinquency started increasing as well. Right. So you can call it evergreening, you can call it whatever you like. You can say, oh, people were just borrowing and paying somebody else. You can be like the credit was choked and they were not able to use it in their business, whatever.
The fact is the evidence is very strong that once you choke a credit from an area then the delinquency skyrocket. So that is one of the problems that we are trying to sort. Obviously if you look at increases in gold loan portfolio in the rural market, that has also substantially increased. Because obviously if people aren’t getting money through MFIs, they’ll have to find alternative methods to get money, whether it’s gold loans or money lenders or family and friends, whatever it may be. So definitely once the situation improves, we are, you know, I’m just ready to pounce.
But until I get a clear indication this is over and this is behind us, it will be very difficult to do that. And the rejection rates are also ridiculously high. So it’s not a problem of inquiries. I mean last month, in the month of July, for every 100 inquiries we made it we made 19 disbursements. So that is a rejection rate or whatever else, you know, from inquiry until disbursements, we lost 81 customers out of 100. So that, that really is. I mean, on one way, I’m kind of showing off that we are so selective.
But another way, that’s really not a sustainable business model in the sense that you cannot get away by having so much rejection. And so somewhere along the lines, I think we MFIs will have to get together. As soon as there are some green shoots, we’ll have to kind of get together, get together in a room and be like, okay, you know, it’s time to start getting back to normal.
Ronak Chheda
But your X bucket number of 98.8% doesn’t give you that confidence as yet.
Alok J. Patel
Not yet. No, not yet. Until I see like 99 plus for three months straight, I. I don’t think I’m gonna get that confidence. Because even 99 friendlies, not a low number. I mean, maybe that might be the new reality that I have to accept. But, you know, historically, on average, if you look at between 22 and, you know, April 22 and March 24, it was like around 99.35, 99.4, somewhere around that neighborhood. So even 99 isn’t like, you know, worth popping open a bottle of champagne or anything like that. But it’s something that I can live with.
It’s okay. I mean, the balance sheet and the. P and L can absorb those credit costs.
Ronak Chheda
Just the next one is on the growth in your MSME and lab. It is quite encouraging. But can you talk about the quad of customer? You did mention in an answer earlier that it is still part of the same geography. But how are you kind of now thinking of scaling these businesses? Because the ticket size and the yields kind of puts you in a similar bucket as the other MFI guys or other unsecured guys. So how are you thinking of this product and where are you finding this customer? Could you just talk about some brief traits of these customers which kind of you feel comfortable lending just positively.
If you could comment.
Alok J. Patel
I mean, I. I can’t really comment on traits really on top of my head. I mean, what do you mean by traits exactly? Like, as far as their personality or.
Ronak Chheda
No, in terms of the cash flows, because you are underwriting these customers. It’s the same, similar geographies. The ticket size is similar to like other MFI guys. So just wanted to.
Alok J. Patel
MFI was general. Historically, it was relying on kind of macro credit checks, you know, kind of one Size fits all kind of credit checks is what MFI was relying on. And then we were relying on the group dynamics and group liability and group culture. Jlg, MSME always had a separate credit where we were evaluating each customer on their, his or her own kind of cash flows and other qualities, whether it be credit score, cash flow or the type of business they were in or the type of house they lived in or you know, their history of what they had or their banking statements.
And there were other many factors. Not everything was available to everybody. But we try to get as much information as possible. I think what you will find is, and this is actually what we are trying to do is that more and more the MFI will move towards that kind of a credit. You know, and that’s what in fact what we are trying to do right now is that kind of empowered by the better success we had in msme even though they are in the same geographies. If you kind of just take my seat and see that, okay, what did we do differently in MSME than we did in jlg? And why are the losses in MSME lower than where MFI is? And there’s only one real big distinguishment is that it has its own independent credit.
Otherwise there’s not a lot of difference. And the second difference is we are lot more conscious about making sure that the money is used for some income generating activities. Right? So me, along with MFIs that was always the case somewhere along the line. I’ll take my fair share of blame for it. I think we lost our way in terms of making sure that the money was going towards real income generating activities for the MFI side. So that is where we kind of need to reach. I don’t know Vivek anything to add
Vivek Modi
ok already said one thing that has been always a differentiator between the MFI and the MSME is the independence of the credit and multiple variable checks and balances that have been created in the MSME because of the larger ticket size and the overall positioning of that product allowed for a far more superior underwriting from the very beginning. The learning in the last 18 months has been that maybe the time for evaluating the microfinance customers on similar lines becoming more and more, you know, need of the hour.
Alok J. Patel
See and to answer your other question about, I get this question a lot that oh, you know, MFI is, has its own fair share of issues right now. Why don’t we just like increase disbursements in msme? But you know, honestly like if. It. Wouldn’T be a good idea at all because what has protected me in MSME is also that I was never really pressured to grow that fast. Right in the MSME book, I kind of grew at my own pace. It would be kind of hypocritical to kind of push that book right now and kind of keeping your fingers crossed, nothing bad happens there. But that said, we are keeping a very, very close watch on Microlap and MSME both because just like you guys have been hearing, obviously, I’ve also been hearing that there is fair bit of issues going on in the MSME market at this point.
And it seems that lot of the MFI players are also moving towards these kinds of products. Right. The individual MSME type products. And so I’m very, I’m careful. We want to make sure that, you know, a year down the line we are not in the same spot as we are in MFI right now. So I’m not trying to say that in any, I have no evidence for that. But it just seems that the level of household borrowing that has gone up in the market versus real incomes being completely stagnant for the last four or five years.
As I said to an earlier caller that it’s not just going to be mfi. I feel if you are in the rural lending business or any or even semi urban lending business, you are going to face issues unless these macroeconomic issues get solved.
Ronak Chheda
Just last one on with Vivek, just on the credit cost, are we largely done in terms of the hit we were supposed to take for the stress in the MFI book? And going forward we should see this number trending significantly.
Vivek Modi
He’s asking whether, whether we’ve seen the bottom in terms of the credit cost. Am I right?
Alok J. Patel
Yes, I think.
Vivek Modi
I wish there was a, there was an answer which could be done as a yes or a no, but then that’s not the case. I think the industry is still going through a bit of pain. Things have started to improve in the last at least two quarters in terms of the early indicators being in terms of the improvement in the zero bucket or the current bucket collection efficiencies. But the entire process needs to trigger down to the lower buckets as well and also accelerate to that extent for the entire sector.
Alok J. Patel
There are, there are, you know, I was saying there were good indicators in March and then I turned out to be wrong. So like ask me next quarter, I promise I’ll give a better answer.
Ronak Chheda
Thanks for answering my question.
operator
Thank you. The next question is from the line of Sripal Doshi From Aquarius, please proceed.
Shreepal Doshi
Hi sir, thank you for giving me the opportunity. So my question was on again to what you sort of alluded in the earlier participants, to the earlier participants question when you said that in MSME what has worked well for us is the income generating being the key evaluation criteria. So do you feel that, I mean incrementally, even in nfi, that the end use monitoring will become even more important and just its implication on the roa? Because then, you know, typically we’re talking about higher OPEX to a set. So just wanted to understand, you know, the operational changes, it becomes much more, which will become much more prudent and let’s say much more end use driven and also its implication on the profitability.
Alok J. Patel
See what I kind of learned over the last 10, 15 years of doing this is once the loan goes out of your account and into the hands of the customer, doing any kind of monitoring after that is pretty useless because it doesn’t really bring a lot of value to making sure that the customer pays back. Even in the MSME portfolio. I think whatever we do to ensure that the end use is going to be correct is try your best to underwrite them properly and make sure that they have some business like, oh, I need a loan.
What do you need the loan for? I want to buy a tailoring machine. I mean, are they in the business of tailoring? Can they even stitch a button? You know, and so those kinds of things will be more helpful. But frankly, whether it’s a micro loan or a macro loan, once, once the money is out of your hands and into theirs, what are you going to do about it? Even if they don’t use it into a place where they said that they, they are going to use it. So it’s not an exact science, let me just put it that way.
You just have to make sure that the customer who’s coming to you is genuine and you know, they’re only going to use that towards their small business or whatever small venture that they are trying to do.
Shreepal Doshi
Got it. And the implication on, let’s say maybe on the ROA front because as a model we are moving towards that. While I understand the, you know what you said that it is very tricky, but as a practice we are incorporating that. Right,
Alok J. Patel
the model. Model of what?
Shreepal Doshi
Meaning that as a business model we are moving towards having, let’s say, separate credit and use monitoring.
Alok J. Patel
Absolutely, absolutely. Absolutely. So I mean this really, I think as an industry, I just, you know, MFI as a model had its time, it was amazing, you know, it was a. It was for 15 years. We had a lot of fun doing what we did, growing 30, 40% year on year and making quite a bit of money also to boot. Nothing lasts forever. You have to reevaluate the models as the market conditions shift. And that’s not just the financing business, that is any business. Even Mohammed Yunus has changed. So obviously his model needs some engine.
Shreepal Doshi
So the second question was on the indicators that gives you, that will give you comfort. You know, that the peak out of, let’s say stress is brought is broadly behind or let’s say in terms of even the credit cost, we incrementally will see moderation in that. So what indicators that said macro level or even at your level with respect to rejection rate or even the collection efficiency. So if you could just enumerate a few factors that you are closely monitoring, that gives you confidence.
Alok J. Patel
No, so, I mean, yeah, so we are monitoring 0dpd. We are monitoring at each bucket level, what is the repayment rate. We are monitoring early delinquencies, we are monitoring late delinquencies, we are monitoring, I mean, we have quite a huge business intelligence and analytics that looks at all kinds of factors on a regular basis. Certain employees which are certain branches which are having accelerated kind of defaults, in which case many times it is really the staff’s fault. Right. It’s nothing to do with the, with the customers either giving it in the wrong hands or not doing enough underwriting or whatever it may be.
So many factors are there. But let me be, let me be perfectly honest with you that I am quite okay with the trend that we are seeing in the asset quality. So whatever crap which has been created in the past, obviously that will take its own course to kind of get off your books. Whatever stuff that we have originated since, you know, Q3 of FY25, I’m quite happy with overall. I think my next challenge, my next challenge will be really to start getting the portfolio back up, right? Because you need the interest income. So if you look at my balance sheet, my P and L this time, actually the credit cost and everything has gone down, but interest income has gone down even faster than that.
And so really that will be the next challenge over the next coming quarters is that stop focusing completely on collections and quality and kind of now start doing a mixed kind of a concentration on increasing the overall AUM and also increasing, of course, as safely as possible. So people like me don’t really want to deal with collections and quality issues, if you know what I mean. So how to get that kind of balance will be really the key over the next couple of quarters.
Shreepal Doshi
Got it sir. This is very helpful. Thank you sir and good luck for the next quarter.
operator
Thank you. The next question is from the line of Shivam Jawar from Dexter Capital Advisors. Please proceed.
Shubham Jhawar
Yeah. Hi Alok. Hi Vivek. Am I audible?
Alok J. Patel
Yes, yes please.
Shubham Jhawar
Yeah. So I had two, two questions. The first was sir, what is the write off for the quarter both for Arman and Namra out of our total impairment.
Vivek Modi
Number was approximately 60 odd crores. In fact we have a provision right back to that extent within that 58 crores. And for Armand I think the red top was approximately 4 odd crores.
Shubham Jhawar
4 crores for Arman.
Vivek Modi
Yeah.
Shubham Jhawar
Got it. And so my second question is so in case borrower. Sorry,
Alok J. Patel
no, let me also add that we are doing accelerated write offs in the number of book. So anyway post 90 days I think we are almost for 90% provision or.
Vivek Modi
Yeah, I mean for anything which is more than 180 days is 100% provision.
Alok J. Patel
Provision. So we just. So I think we have written off pretty much everything over 180 days. Now when we say write off don’t mean, you know, we don’t write it off from our lms. These are accounting write offs. And the purpose of being accelerated write offs is also that to make sure that the GNP we don’t trigger any covenants from the GMP aspect. You know, so that is one of the reasons why we do accelerated write offs. From a P and L perspective. It makes no difference whether, because whether you are doing 100% provisions on 180 plus or you write off it will be the same impact on the pnl.
Shubham Jhawar
Right, right, absolutely. So the, so sir, the accelerated provision that you’re talking about, right that we are provisioning anything above 180 +DPD. So how long have we have we been doing this? Like for the past three four quarters. Or how is it
Alok J. Patel
accelerated write offs as a strategy? Three quarters or so.
Shubham Jhawar
So.
Alok J. Patel
Yeah, I mean.
Vivek Modi
That three quarters largely. Largely. I mean beginning from December 24th onwards.
Alok J. Patel
Yeah.
Shubham Jhawar
Got it. So and my second question is in case when a borrower defaults, right. So how do we know that the borrower is only defaulting to us or are they also defaulting to let’s say MFI to MFI3 lenders as well? Like is there any way we are tracking that or any like anything on that sort?
Vivek Modi
Yeah, we do obviously track that. So there are two stages. I mean your first level is trusting or having Your field people kind of track that. But let’s say if you see a sizable issue in a particular area, there are things like scrub analysis reports that are available from the bureaus wherein you can really establish if a borrower or a particular group of borrowers is just not paying to us and paying some others.
Alok J. Patel
Yeah, we have triggers available. So just last month there was a branch in Bihar where there was a lot of accelerated kind of defaults that were happening. So we have risk teams and audit teams that go in and kind of check what went wrong and what’s going on.
Shubham Jhawar
And so how, how effective do. Like how effective is that exercise? Like.
Alok J. Patel
How effective is that exercise?
Vivek Modi
So again look, monitoring and efforts will have different results in different geographies and different. I mean there could be multiple variables. So. So you might have, you might have floods in a particular area and there is a increase in the delinquencies that may be addressed much faster.
Alok J. Patel
Yeah, so I mean operation teams has a lot of experience to deal with lot of kinds of situations by the side. You are sending teams of risk and audit units. Usually that is postmortem. So after that you just try to salvage. But before that the operation teams usually does dealing with 8 out of 10 kind of issues that come up, they manage dealing with. Anyway, move on.
Shubham Jhawar
Color. Yeah, these were my questions. Thank you so much.
Alok J. Patel
Yeah, next question please.
operator
Thank you. The next question is from the line of Ashleesh Sonjay from Kotak Securities. Please proceed.
Ashlesh Sonje
Hi team, good afternoon. A couple of questions. Firstly,
operator
Mr. Ashleesh, can you be a bit closer to your device or else can you use a handset?
Ashlesh Sonje
Can you hear me better now? Okay, firstly, can you. You spoke about the increase in rejection ratio. Can you tell me what the rejection ratio was last quarter and what was the reason for the increase? QQ Was it primarily the 3 lender cap which impacted it?
Alok J. Patel
Yeah, yeah. So it was primarily the guardrails and increased defaults. So Obviously, you know, 10, 15, 20% of the customers might be showing, depending on areas might be showing as defaulters now or having overdue. I mean default is a strong word but if they have anything like that, we are rejecting them over and above that, the guardrails have also pushed up the rejections quite a bit.
Ashlesh Sonje
And this 81% number, what, what would it be last quarter?
Alok J. Patel
Roughly, Roughly it would be about 75%. So not a big dip. But still 6% is from our perspective. 6% is quite a. I mean it’s significant enough. It doesn’t sound a lot, but it is, yeah.
Ashlesh Sonje
Understood. Then you, you spoke about borrowers trying to get access to liquidity through other products in your, in your borrowers. Also you have which are the main products where you have seen the borrowers borrowing from and how, how prevalent has this become now?
Alok J. Patel
Which are the main borrowers that I have seen doing what in terms of products?
Vivek Modi
So I mean typically a microfinance borrower largely tries to approach or multiple lenders. Yeah, right.
Alok J. Patel
There are MBSPs which are there. I mean, I’m sorry, I wouldn’t have data on that. Anecdotal data perhaps, but I, I don’t have any hard data on that.
Ashlesh Sonje
Understood. Perfect. Those were all the questions. Thank you.
Alok J. Patel
Thank you.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two participants. The next question is from the line of Amit Mantri from 2.2 Capital. Please proceed.
Amit Mantri
Yeah, hi Aloka, how much was the interest reversals this quarter?
Vivek Modi
Interest reversals we make. What was the interest reversal typically on the NP assets? Probably not too, too large, but about a couple of crores if that’s what we’re trying to ask.
Amit Mantri
Yeah. And on, on the, the par 3290. Has shown a good decline both on a percentage and absolute number basis in NAMRA. How is par 1 to 30 trending? Q1Q
Alok J. Patel
it’s lowering. Q1Q it’s obviously coming down. But you know, flow forward rates are also increase, getting better slightly at all bucket levels except 180 plus. So as I said, there is enough. You know, if I was a more optimistic man, I would be like, oh, things are looking up. But unfortunately we’ve been here before where things go well for a month or two. And then so like that happened in the fourth quarter where January was slightly better and then, or I’m sorry, January. So February was slightly better and then back to March was better and everybody was like okay, we are done and dusted and then April again took a, you know, hit.
So, so I’m being a little cautious. But right now things, if you look at let’s say June, July, things are only on an improving trend. August, it’s a little early to say. As I said, there’s a lot of holidays and other things going on this month. So let’s see how we wind up with August. But yes, I mean I should be able to answer better about how well things are probably by next quarter.
Amit Mantri
Okay. And in terms of, for the consolidated. Book loan book growing, when do you start to expect that growth to come back.
Alok J. Patel
So I’m hoping by at least by September, at least the decline will stop. As far as growth, I don’t really expect it at least until Q4
Vivek Modi
Just to add to it. No, slightly adding to it. Only the MSME and two Wheeler book are likely to grow because two Wheeler we are getting into the festive season. So I think in terms of September, October, November, that book is likely to. I mean though again just a 4% of the entire. But that’s. That grows in this three months only. MSME again historically has given better kind of disbursement levels in these festive months. So to that extent I think the Arman standalone has been going consistently for the last, I mean multiple quarters and we don’t see too much of a challenge there.
And that’s where in the Arman book anyway a 20% growth in Arman book which was 20% only of the entire EUM will have a reasonable, I mean not a very significant impact on the overall but still things are moving forward there micro. We’ve had a good monsoon overall as a country. Things probably look slightly better for a microfinance as well. And with a hope and a prayer I think we feel that quarter two and onwards should start looking but from the reimbursement funds.
Amit Mantri
Sure, sure. Thank you.
operator
Thank you. The next question is from the line of Abhishek from AB Capital. Please proceed.
Abhishek
Hello, Am I audible?
Vivek Modi
Yeah, yep.
Abhishek
Yeah. Some of our larger competitors, they have. Given some growth guidance for this year. How much we can grow. Do you. Do you want to give any such. Number for this year?
Alok J. Patel
No, no, absolutely not. I wish I knew myself. Okay.
Abhishek
Okay. And do you think we will need. To do more provisions going forward?
Alok J. Patel
I mean your question is whether we are adequately provisioned. That answer I can quite confidently tell you that yes, absolutely we are adequately provisioned without getting into any kind of crazy tactics or anything like that. So yes, we are adequately provisioned at this point. And I mean, I don’t know, I think if your question was do we expect more provisions? I mean. Yeah, I mean in the business of lending money there’s always going to be provisions. At what level is the question.
Abhishek
No, I meant to ask, do you.
Alok J. Patel
Think again we will have another loss. Making quarter we might have or we are done.
Alok J. Patel
That’s the. No, that’s a tricky question. I hope not. I mean to be honest, in our 32 years or 31 years of existence we’ve only had losses in two quarters. So I don’t really Want to make it a third quarter but might be close. Let’s see.
Abhishek
Okay, thank you.
operator
Thank you. The next question is from the line of Oman Shah from Banyan Tree Advisors. Please proceed.
Umang Shah
Hi sir. Am I audible?
Alok J. Patel
Yep.
Umang Shah
Yeah. Hi. Thank you for the opportunity. Sir. Our disbursement ticket size has moved to almost 50,000 rupees per borrower in MFI. For the longest we were at a much lower level to the overall MFI industry. And now when we are seeing that we are at the cusp of the GLG model ending, how is it that our ticket size are increasing?
Alok J. Patel
Because we have changed our model. Right. So we are basically assess. So again we are kind of getting away from this one size fits all model. What was the model earlier in jlg? What we were saying is oh, if you are a first cycle customer you are good for 40 grand. And for second cycle you might be good for 60 and for third you might be at 75. And then after that I’ll move you into some individual loan. And you know, if you have an EMI of 12,000 you are a good customer. If it’s 13,000 you are bad.
If you borrowed 1 lakh 90,000 you are a good customer. If you borrowed 2 10,000 you are bad. You know if you borrowed from 3 MFIs you are bad. If you borrowed from 2 you are good. So we are trying to move away from that and assess each customer based on his or her cash flow and FYR and other factors and whatever loan that he or she will be eligible for. Hopefully it’s more than 50,000 at this point. Right. Like I mean if I’m doing a proper underwriting then it’s no longer about first cycle 50 and second cycle 60.
It’s what each customer is good for.
Umang Shah
Right? Sir. Sir, there are three major players, banks, SFPs and NBFC MFIs in this sector who’ve been, who’ve been lending vigorously since COVID Right. Among these three, do you think any one group has, has had underwriting which is worse or better than the other two?
Vivek Modi
Certain extent. Let’s understand that the processes in all three tend to be very different. The banks, banks have a problem of reach and they’re probably the intent of going to the grassroots level.
Alok J. Patel
Well, I mean let’s. Vivek. Sorry to interrupt. There’ll be two kinds of banks here. Ones that are operating through co lending and BC modeling or DAs. And then the second will be the ones like Indusins, Bharat Sin or, or Kotak subsidiaries or you know, different kinds of somewhat separate entities but controlled by a bank. So it depends. Yeah, yeah, sure, but, but yeah, if you are say dealing B.C. or co lending bank, then your processes will be very different versus let’s say. I don’t know. I mean that’s a difficult question to answer. I would say rather than saying banks and others, there are some people who have good credit underwriting, some bad.
But the problem is if over leveraging is a issue, then you might assess a customer at let’s say a loan of 50,000. Nothing is preventing a bank or an NBFC or SFB or whichever entity of coming and over levering that customer. And so about 85% of defaults happen everywhere at once. Right. So people don’t pick and choose their defaults. I know that’s a common myth that people say KO they’ll pay a bank but they won’t pay an MFI because they’re more scared of a bank. I mean it’s really. That is an urban legend, to be honest with you.
I mean it does happen. There are isolated incidences, but it’s not, I have not observed it in my years of doing this business. So I don’t know, I’m not sure how to answer that question.
Umang Shah
No worries.
Vivek Modi
So it’s very difficult to kind of come to. And within banks, different banks have had completely different experience.
Umang Shah
Last question, if I could squeeze in two parts, one was how has been the attrition this quarter among the employees and with the separating the credit and the sales, are you getting any pushback from the field force because their incentives to an extent get capped somehow?
Alok J. Patel
Yes, yes. I mean, yes to all of these. So obviously attrition has also been very, very challenging throughout this entire crisis or whatever you call it. Attrition last quarter I believe was about 45.
Vivek Modi
So it’s slightly improved. Things have started to kind of improve to that extent. And in terms of basically, you know, the pushback because of our credit department initially, like all changes, is something it met with some bit of resistance, but it’s fine. It takes its own time. Training and you know, normalization between departments is a regular process. And things are going into a pretty much a synchronized manner of functioning now right now.
Alok J. Patel
You know, if your question is that are your ground level teams on average making less money per person than they were in let’s say March of 2024? And the answer is yes, absolutely they are. We’ve been trying to offset that the best we can by running RR exercises and awards and contests and those other things. The good performers have that opportunity to earn or earn equivalent or more money. But unfortunately that cannot be helped, you know, especially at a time like this even. And it’s really same across the industry with every, with all the interviews and stuff that we do.
It’s really the same in banks, SFBs, NBFCs and really everybody. So until things. And you know, that’s one of the reasons why the attrition is high as well, because there are alternatives now which were not there 10 years ago, but now there are alternatives where people can earn more money or equivalent money with perhaps less work or less stress or. And you know, we as MFIs need to be mindful of that. Nobody likes collecting overdues. I mean, may sound hard to believe since I’m in the business of that, but including myself, nobody really likes collecting money or recovering money.
And so when that becomes a big portion of FO’s job, obviously that’s going to lead to high attrition. So no matter how hard you try, until we solve the problem of this credit issues, the attrition is, we can lower it, but it’s certainly not going to go away or return back to where it was.
Umang Shah
Thank you so much and all the best.
Alok J. Patel
Thank you.
operator
Thank you. Due to time constraints, that was the last question. I now hand the content over to Mr. Aman for the closing comments.
Alok J. Patel
It’s okay, I make the closing comment.
operator
Yes sir, sure.
Alok J. Patel
So anyway, sorry we couldn’t answer more questions. I’m sure there’s a lot more questions. Anybody has any, you know, pressing concerns or questions, feel free to email us. Or email the investor relations and we’ll. Try our best to answer them. Otherwise, thanks to everybody for being part of this call and have a great evening. Bye.
operator
Thank you members of the management, on behalf of Philip Capital India Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines. It.