Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
AU Small Finance Bank Ltd (NSE: AUBANK) Q3 2026 Earnings Call dated Jan. 20, 2026
Corporate Participants:
Prince Tiwari — Head of Investor Relations
Gaurav Jain — President Finance and Strategy
Vivek Tripathi — Chief Credit Officer
Sanjay Agarwal — Managing Director and Chief Executive Officer
Analysts:
Akshay Jain — Analyst
Nitin Aggarwal — Analyst
Jayant Kharote — Analyst
Kunal Shah — Analyst
Pritesh Bumb — Analyst
Ankit Bihani — Analyst
Unidentified Participant
Param Subramanian — Analyst
Bhavik Shah — Analyst
Piran Engineer — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to AU Small Finance Bank Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing STAR and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prince Tiwari, head of Investor Relations.
Thank you. And over to you, sir.
Prince Tiwari — Head of Investor Relations
Thank you, Sagar. And good evening everyone and welcome to AU Small Finance Bank’s earnings call for the third quarter of financial year 2025 26. We thank you all for joining the call this evening. On today’s call from the management, we have our founder MD and CEO Mr. Sanjay Agrawal. Our executive director and deputy CEO Mr. Uttam Tivriwal, our interim CFO, Mr. Gaurav Jain, our Chief Credit Officer Vivek tripathi and the IR team. We’ll start today’s call with a 15 to 20 minutes opening remarks by Gaurav Jain highlighting the bank’s performance, positioning and outlook.
And we’ll follow the opening remarks with the 40 to 45 minutes question and answers from the participating analysts and investors. For the benefit of all participants and so that we can take everyone’s questions, we would humbly request everyone to keep the number of questions restricted to two per participant and join back in the queue in case you have further questions. For any data keeping questions, you may kindly reach out to the IR team anytime post conclusion of this call. So with this I now request Gaurav Jain, our CFO to share his opening remarks.
Gaurav, over to you.
Gaurav Jain — President Finance and Strategy
Thanks Prince. Good evening everyone and thank you for joining the call. It’s a pleasure to welcome you all to our earnings call for the third quarter of FY26. Q3 marks completion of 35 quarters of our banking journey. As we near the completion of our first decade as a bank, the foundation we have built gives us strong conviction about the road ahead. With our core growth engines firmly in place and the once in a lifetime opportunity of transitioning to a universal banking platform, we enter the next phase with confidence backed by an execution led culture, stable leadership team, tech driven approach and with robust governance, we are fully prepared to scale responsibly and sustainably.
India enters 2026 on a stronger footing than a year ago. Supported by a normal monsoon, accommodative regulatory environment, prudent fiscal discipline and policies streamless. Through GST cuts, labor reforms and monetary easing. This favorable macro setup combined with low inflation augurs well for credit demand. Despite global uncertainties, system level growth has strengthened to 14.4% year on year driven by robust auto sales, healthy MSME demand and a pickup in commercial and corporate activity.
The deposit environment however, remains intensely competitive with tight liquidity conditions and systems. Deposits growing at 12.7% year on year. Amidst this environment, AU continues to deliver strong and resilient performance. Deposits growth remains strong at 23% year on year, amongst the highest in the sector and 1.8x of the system growth. Loan portfolio grew by 19.3% year on year, 1.3 times of the system growth and nearly 2.5x of the nominal GDP growth. Secured assets grew by 23% year on year and unsecured businesses have also started to turn around with a 1% positive growth this quarter led by MFI.
Margins expanded by 25 basis points quarter on quarter to 5.7% from 5.5% in Q2 led by a sharp decline of 22 basis points in cost of funds and benefit from CRR. Cut asset quality saw continued improvement led by ongoing recovery in unsecured and seasonal strengthening in secured assets. Slippages declined by 13% quarter on quarter. GNPA ratio declined by 11bps to 2.3% and annualized credit cost for Q3 declined by 41bps to reach 78 basis points of average assets with 9 month credit cost at 1.1% of average assets.
Profitability expanded on quarter on quarter basis with pat growing by 26% and ROE expanding to 1.6% for Q3. On our strategic initiatives, we continue to make strong progress across products, distribution, marketing and technology. On the product side, we launched two new innovative offerings. The first is an exclusive banking program for chartered accountants in partnership with the Institute of Chartered Accountants of India to offer customized solutions for CAs focusing on their business needs, personal banking and lifestyle.
The second is mCircle, a tailored proposition for women customers offering curated financial solutions and lifestyle experiences. On the marketing side, we onboarded Ranbir Kapoor and Rashmika Mandana as our new brand ambassadors and unveiled our campaign Soch Batlo or Bankp. During the quarter we expanded our distribution by 100 physical touchpoints including 27 new deposit branches to take our total touchpoints to 2,726. We have further strengthened our governance framework by including three new independent directors Mr.
N.S. Venkatesh, Mr. Satyajit Devedi and Mr. Fanny Shankar. During the quarter, the bank received approval from Ministry of Finance Government of India for increase in the foreign investment limit in the bank from 49% to maximum permissible limit of 74%. On the technology front, we are building a bank engineered for scale, intelligence and long term sustainability. Over the past eight years we have consistently and strategically invested 8 to 10% of our opex in our technology backbone. Our tech stack today delivers 99.9% uptime, automated disaster recovery, multi cloud resilience while seamlessly processing 3.5 million plus UPI transactions and 10 million plus API calls daily.
We have modernized AU0101 and AU0101 business into auto scalable future ready platforms while customer 360 is evolving into a powerful AI driven engine. Now we are accelerating AI implementation to embed it across the bank, reshaping acquisition, underwriting, risk operations and customer engagement as we transition into a multilingual non sequential AI native architecture. Our enterprise wide agentic AI roadmap is progressing well. We are reshaping our go to market strategy with digital STP journeys across assets and deposits vehicle partners.
Onboarding for wheels loans is live and additional integrations that deepen STP journeys and partner led distribution are underway. Our AI powered gold loan LOS will go live in Q1 FY27 and native AI functionalities across wheels, PL and credit card segments are being built to enable faster decisions with higher accuracy and scalable execution. A cloud native real time data lake forms the base layer of our AI led decision making architecture enabling real time insights generation directly by business teams.
Accelerated decision making AI based fraud systems now auto decision over 60% of alerts and transaction monitoring and voice bots handle nearly 25% of inbound calls. Bank is also adopting functional and HR training through AI led platform where employees learn continuously and dynamically improving productivity and capability. We will update more on these initiatives in the coming quarters as part of long term succession planning and roadmap for increasing leadership depth in the bank, we also announced two critical changes to our Executive leadership.
Our Executive Director and Deputy CEO Mr. Uttam Tibriwal, on completion of his current tenure as whole time director on April 18, 2026, will continue in his capacity as deputy CEO and remain responsible for leading our key business verticals including retail assets and liabilities. Alongside these responsibilities, he will devote increased time to on ground engagement to drive growth, strengthen customer relationships and expand the Bank’s presence across newer geographies. Mr. Vivek Tripathi, Chief Credit Officer of the bank, will be appointed as Executive Director subject to required regulatory approvals.
Vivek has been with us since 2014, contributing across business, credit and risk in various leadership roles as Executive Director and Chief Credit Officer, he will continue to provide enterprise stewardship of AU Credit architecture, unifying credit policy and underwriting, portfolio management, collections, legal recovery and vigilance and fraud control under single governance framework. Now let me give some color on each of our businesses. First on the deposit business. Our deposit base cross 1 38,000 crore growing by 23% year on year and 4.5% quarter on quarter reflecting the growing strength of our branch banking franchise.
CASA deposits grew by 16% year on year and CASA ratio remained broadly stable at 29%. We have added 66 new fully fledged liability branches this year and are on track to take new branch addition tally to 80 branches for the year mostly in urban areas. With robust acquisition model, distribution expansion segment led approach and a keen focus on productivity and efficiency, we’re now seeing sustainable increase in our low cost granular deposit franchise which has in turn help us to reduce our cost of funds.
New CASA account acquisition grew by 30% year on year for nine month period and crossed milestone of 1 lakh monthly account acquisition in December. Cost of Funds declined by 22 basis points quarter on quarter to 6.61% versus 6.83% in Q2 led by repricing of term deposits and benefit from savings account rate cut taken in October. Cumulatively we have seen 53bps reduction in our cost of funds in FY26 so far with effects on 12th January. We have further optimized our savings deposit rates in certain buckets and will continue to monitor the competitive landscape for further transmission of rate cuts on cross sell.
The bank continues to drive holistic integration across our full product suite covering cards, payments, insurance, wealth management, trade and forex. Through a specialized vertical focused on deepening customer engagement. We are seeing encouraging progress including 90,000 new CASA accounts opened from our retail asset base in Q3 with balances of 160 crores and a 2,500 crore liability to asset cross sell portfolio by end of the quarter. Wealth and Forex services are also gaining traction with our wealth franchise now serving 2.5 lakh customers and managing 1,900 crore of AUM.
Our AD1 business continues to scale well with steady growth in volumes and transactions and cross border trade and forex revenues growing nearly 50% year on year. Now moving on to our asset franchise, overall loan Portfolio stands at Rs 1,30,000 crores and grew by 19% year on year. Our secured businesses grew by 23% year on year and 6% quarter on quarter. Unsecured businesses registered a degrowth of 17% year on year but have started to turn around and grew by 1% in the quarter led by MFI. Retail secured assets which includes Veal’s Mortgages and gold loan formed 68% of our portfolio and grew robustly at 21% year on year.
Wheels business saw a strong growth momentum aided by GST cuts and buy and see new car sales leading to growth of 27% year on year to reach 43,700 crores. Gold loan business grew strongly by 52% year on year from a low base to reach 3,000 crore. Our mortgages business comprising micro business loan and affordable housing grew by 13% year on year to 41,000 crore in a highly competitive market warranting disciplined underwriting. We are working to increase the growth rate in this segment through distribution, expansion and improvement in productivity in the southern market.
Overall, the retail secured segment will be the main beneficiary of our expanded distribution in the southern market. Moving on to Commercial banking which forms 21% of our lending business. It has strong segmental understanding across business banking, renewable energy, emerging enterprises, NBFCs, real estate and transaction banking. This segment saw a broad based growth with overall book growing by 25% year on year to reach 27,700 crore and non fund based book of approximately 10,000 crore. A significant part of the commercial banking business is self funded as this book contributes 8% of overall deposit book and 7% of overall CASA book.
Now moving on to the unsecured business, our two unsecured businesses of inclusive finance and digital lending are nearing the end of the credit cycle. Our inclusive banking franchise comprising MFI and lending to small and marginal farmers has started to turn around with the portfolio growing 2% quarter on quarter to reach 6,600 crore. Non overdue collection efficiency in MFI improved to near normal levels at 99.3% for the quarter and 99.5% for the month of December, the highest in six quarters.
The SMA pool reduced to 1.9% from 2.9% in Q2.83% of the MFI book is now covered under the CGFMU Guarantee scheme providing protection against any potential credit losses in the future. Our digital unsecured portfolio comprising credit cards and personal loans declined 27% year on year and 4% quarter on quarter. However, we remain optimistic as credit costs continue to normalize. New card issuance strengthened to 48,000 cards in Q3 versus 27,000 in Q2 and we expect the book to return to growth in the next financial year.
In terms of profitability, we delivered profit after tax of rupees 668 crores for the quarter with ROA of 1.6%. This included a one time provision of rupees 20 crore due to impact of the new labor code. Excluding this impact pat for the quarter was 682 crores up 29% year on year. Net interest income increased by 9% sequentially on the back of strong growth in loan portfolio and expansion in margin. NIM expanded by 25 basis points quarter on quarter to 5.7% from 5.5% in Q2 benefiting from 22bps decline in cost of funds, reduction in CRR and lower surplus liquidity during the quarter.
Core other income saw a healthy growth of 10% sequentially driven by higher business volume and increased traction in distribution of third party products. Operating expenses excluding impact of labor code increased by 14% quarter on quarter driven by higher disbursement and ongoing investment in manpower and touch points. As we expand our distribution, we continue to target disciplined control over operating expenses. With opex by average assets falling to 4.1% year to date as compared to 4.4% in comparable period last year.
Cost income ratio was 57% year to date. Credit costs reduced from 481 crores in Q2 to 331 crores driven by ongoing normalization in unsecured businesses, seasonal strengthening and secured asset and enhanced CGFMU coverage in MFI. To sum up, Q3 marks another quarter of disciplined execution and progress towards our Forever bank vision. As we head into the closing months of FY26, our priorities are clear and we continue to focus on growing our deposits franchise, optimizing cost of funds, pushing growth in secured assets and driving cost efficiency and fee momentum.
I take this opportunity to thank our teams for their commitment and to our stakeholders for their trust. With that, I’ll now hand over to Prince for Q and A.
Questions and Answers:
Prince Tiwari
Thank you, Gaurav. Thank you, Sagar. We can now open the call for Q and A question answers.
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Akshay Jain from Autonomous Please go ahead.
Akshay Jain
Hello sir. So my first question is on margins. So can you explain the different moving parts on your margins? Like you explained that you know your cost of funds improved by 22 basis points while yields were down 10 basis points. So this gives us broadly 10 basis points margin improvement. So what’s driving the balance 10 basis points? Is it the LD ratio increase? And your LD ratio is already 89% odds, how should it move incrementally and medium term guidance and margins? My second question is on funding mix.
So this time on a large part of your deposit growth has come from non callable bulk deposits. So how should we look at this? Like are we facing some intense competition from peers or hence? And hence you are relying on other sources like how should we look at it incrementally? And lastly on credit costs, the credit costs came in surprisingly well this quarter. MFI and credit card both saw an improvement. So any further color on what has improved? Like should we expect normalization from next quarter onwards and credit cards guidance for the next year?
So these are my three questions. Thank you.
Gaurav Jain
So actually I’ll start off with the first question on margins. Right. So there are three broad parts. The first is the the improvement in cost of funds which we have mentioned in our presentation. The second is the benefit from CRR cut and the third is your lower surplus liquidity during the quarter due to strong loan growth. Right now within this your yields, asset yields have come down. Right. So the balance is what is reflecting in the margin growth and in terms of your margin outlook for the future.
We don’t want to give specific guidelines but guidance. But I’ll talk about the key moving parts. Right. So the first one is the continued ongoing repricing of our deposits book. So we think there are, you know, still two more quarters to go for repricing of our term deposit book. Because the tenor we were maintaining prior to rate cuts was in the 12 to 18 month bucket where the peak FD rate was. So we should continue to see repricing going well into Q1 of next year. Second is not all of the recent repo rate cut transmission has reflected in this.
So as we see improvement in liquidity and the competitive landscape around both TD and savings account pricing, we will take actions accordingly. And then the third moving part is your asset yield. So you’ll have the latest repo cut impacting the variable book which is around slightly less than 30%. That impact will come in Q4. Thereafter your asset yield which largely reflect the mix. And if you are able to improve the MFI and credit card mix then that should help on the margin side. So I think that’s the one on the margin side.
On the bulk side. On the funding mix side, look one of the ratios that we track is our stable deposit ratio which is a sum of your CASA and your retail TD and your bulk non callable. And if you look at this as a ratio of our total deposits that has largely remained stable around 80%. So I don’t think there is any increased reliance on bulk callable deposit. Having said that, liquidity remains tight in the market and we look at various funding sources and optimize across multiple metrics including deposit growth, including cost of funds, including liquidity, etc.
And see what is the best way to optimize across these matrices. The third question Vivek, do you want to take the.
Vivek Tripathi
Yeah, this is Vivek on the the credit cost for secured retail assets. Seasonally we always have this improvement in H2. Q3 is the festive season. So always there is an improvement in collection efficiencies and reversal of NPAs. So that’s factored in there and we continue to see that improvement to continue in Q4 as well on unsecured piece which is credit card and MFI. So MFI. So credit card we called out in Q2 as well that it had peaked and it started declining. So it is now near normalization level.
If you see it’s standalone basis, my slippages as well as credit cost is near normalization level and which we would continue to expect to remain in that stable zone for coming quarters as well. For microfinance there are two components to it. One, the collection efficiencies continue to improve. Exit collection efficiency for the month of December was 99.5 upward and because of that my SMA pool has reduced significantly from 2.9 to 1.9% plus since we started taking a coverage of CGFU which is trade guarantee scheme, that coverage is improving month on month.
On a quarter end basis it is now covering almost 83% of assets. So naturally that gives us the COVID So we remain confident that we are on track of what we, you know, guided that for FY26 our credit cost should be in the range of 1%. We continue to, you know, continue to basically, you know, look forward to achieve those numbers.
Akshay Jain
The credit cost of F26 will be 1%. Is it?
Gaurav Jain
Yeah, yeah. So the full year credit cost guidance that we had given out earlier was 100 basis points on average assets on. Balance sheet assets
Akshay Jain
On average. Okay. On Average assets. And just one point I guess we missed on the CD issues. You are using up your liquidity so which has increased your CD ratio to around 89%. So how should we see it in a moving.
Sanjay Agarwal
Yeah, but you know, if you see the CD ratio excluding the refinance, then we are 80%. Right. Which is the way the regulators and the entire system is looking into it. Right. So I don’t think we are somehow seeing this data very seriously in the sense that it won’t be against any growth aspiration of us. So quite comfortable in that sense.
Akshay Jain
Understood, sir. Thank you. And just any comments on. Sorry
Operator
To interrupt. Akshay. Sir, maybe request to return to the queue for any follow up questions as there are several other participants waiting for their turn.
Akshay Jain
Okay. Thank you. Thank you for the opportunity.
Operator
Thank you. Participants, in order to ensure that the management is able to address questions from everyone in the conference, please limit yourselves to two questions each per participant. You may rejoin the queue for follow up questions. Our next question comes from the line of Nitin Agarwal from Motilal Oswal. Please go ahead.
Nitin Aggarwal
Yeah. Hi. Good evening everyone. Congrats on a good quarter. A couple of questions. One is on the mix of unsecured loans. Now how should we look at that? Now that the portfolios are seeing some stability on both cards Also we have started to grow MFI as well. So how should we look at the mix of unsecured loans from here while the overall loan growth continues to remain pretty healthy. Will unsecured lead that or how will it move from there?
Sanjay Agarwal
Hi, thanks Nitin. Again we are working in all direction in sense for MFI or credit card or of course the
Akshay Jain
Personal
Sanjay Agarwal
Loan. Right. But we are seeing green shoots in MFI business. So this was the first month when book has not degrown. So rather it gets stabilized and has grown marginally. And the data says that an entire ecosystem saying that this is becoming normalized. So you will see some sort of growth in MI5 business for next year. But difficult to quantify. In this call we would be would be ready to do this kind of decision making by April that how much really want to grow. But the entire system has been stitched well in terms of guarantee in terms of branches.
The recovery, the energy on the ground is back. So I hope MFI should do better than this year. In coming year credit card. I think we want to take one more year to really stabilize it to the core. Because we don’t want to make mistake again. So credit card business will go for another one year. For the readjustment and settling down and personal loan. Of course we are banking big on the whole STP journey, NTB journey, existing customer cross sell and all those things. But the base is so low so it won’t affect us in some sense of our growth.
But of course in the long run I strongly believe our PL book will become substantial in terms of overall asset mix.
Nitin Aggarwal
Okay, sure Sanerji and the other question is around cost. While you mentioned that bank has been undertaking all the expenses to ensure sustainable growth and building a robust bank. But how should we look at the cost income ratio now? Because we have seen a fairly strong pickup and in cost growth this quarter. So how should we look at the. Ratio over the coming years?
Sanjay Agarwal
I think we want to be original guidance that it should be below 60%. Nitin. And if you see our nine month data is around 57% and we should not only read our quarter three data we are building the retail franchise so somehow in southern markets or new product range require additional people. But we are relying big on the tech ability to to reduce the cost of operations. And I think AI led the entire environment in coming years eventually will allow us to operate on a lower cost to income. But I would say that we should read out the original where we say that it won’t be crossing 60% and ideally we should be in the range of 56 57% next year too.
Nitin Aggarwal
Okay. And Sandeep lastly on the RWA growth which looks a little sharper this quarter. So anything to read into this what has driven this kind of RWA growth.
Prince Tiwari
Hi friends here. So you know there was if you see there’s an. On the capital adequacy side there were certain changes in regulations this time where regulator has now allowed interim profits to be added to the capital adequacy. But in on the other side there were certain capital deductions which have now been risk weighted and because of that while we have got the capital benefit the risk weights have gone up on some of the securitization transactions that we used to do. So it’s purely. Most of it actually is only a technical adjustment.
Nothing to read into it.
Gaurav Jain
So specifically Nitin just it’s on the DTA’s and the great enhancement on securitization. Yes.
Nitin Aggarwal
Okay. Okay, got it. Thank you so much and wish you all the best.
Prince Tiwari
Thanks Nathan. Thank you.
Operator
Thank you. Your next question comes from the line of Jain Karote from Access Capital. Please go ahead.
Jayant Kharote
Thanks for the opportunity and congratulations on a great set of numbers. First question is on the growth outlook for the next one or two years. Understand what to use your approach given now. Sorry to interrupt
Operator
You so your line was breaking. Could you please repeat your question once again?
Jayant Kharote
Yeah.
Akshay Jain
Hello?
Prince Tiwari
Yeah, hello. Is this better? This is better. Please repeat. We have not. Yes, you weren’t audible.
Jayant Kharote
Okay, so my first question is on the loan growth outlook for next one.
Akshay Jain
Loan growth outlook for Jen, next one or two years. Okay. And the
Sanjay Agarwal
Second one
Jayant Kharote
And within that. Specifically micro business loans. That piece is still not catching up to the overall book. So how do we read that
Sanjay Agarwal
Again? Two things. You know, we want to be around 2.25 to 2.5 times to the nominal GDP this year. We are expecting around maybe 8% or 8.5% nominal GDP. Right. So I think anything around 20%, 22% growth overall we are targeting. Right. And that should continue for next year too because scale will be there, all those things. So. And if anything happens about that will be the outcome of the at that time the whole ecosystem. Right. And in the sense, as I already commented that MFI business is now turning around, you know, we are seeing some green shoots, you know, the entire system is being now coming in one direction that you know, growth will come back.
So I think it’s so difficult to predict a next two years story for mfi, you know. But overall we have already said that it won’t be about 10% of our overall asset and we want to be in that direction. We have bought that book because we need to complete our obligation around smf. So the reason of MFI was not only to build an unsecured asset, it was also around to certain obligations. So you have to read in this only that how much you will grow. But specific guidance is difficult to give as of now.
Mbl, okay, so I think MBL is a mortgage business. So we are doing micro business loans, affordable housing, space. You know, we really want to focus more and more, but somehow it’s not easy to build at this scale. You know, the same pace, you know, we will be growing maybe this year around 15, 16%. You know, idea is to be really in the range of 17, 18% next year, you know, and it will be supported by our southern branches, southern markets, the present markets, you know, and building up some new product lines.
So overall in my opinion next year if you perform around 17, 18% in the longer run it may be around 20% but difficult for next year.
Jayant Kharote
And sir, if on the fincare branches dispersal run rates, you have been telling us it can ramp up meaningfully. Is there any Progress on that front.
Sanjay Agarwal
So we are building up there. So the southern markets are overcrowded, the competition is next level. So it’s not easy to ramp up in a quarter or two quarters. It will take some time. We being a bank, we have an advantageous position. We know how those markets operate now, how those customers want. So we have those ingredients. But it will take some time and maybe in next 12 to 18 month period you will fully will use that space in terms of growth aspirations.
Jayant Kharote
If I could squeeze one last question on the opex, we did see a sharp move in this quarter. We are back to that 4.3% of assets kind of run rate. How do we see again from here? Do we try to. In the last two quarters we were able to do much better. We already
Sanjay Agarwal
Commented that if you want to build a retail franchise, there would be some quarters where you will have additional manpower or you want to push for the growth. Right. I think 1/4, 2/4 should not be read in sense of permanent cost to income going up. We already said you that our cost to income ratio should be less than 60% and this nine month is also around 57%. So ideally we should be here only for next 12 to 18 month period. But we are putting lot much effort to reduce the cost through tech adoption.
AI is enabling us lot and we want to give you more color on this by April or maybe by July in our next quarter calls how we really want to use these tools to have an impact on the cost.
Jayant Kharote
Great. Thank you sir and all the best. Thanks Jen.
Operator
Thank you. Your next question comes from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah. Hi. So the first question is on MFI credit cost in particular. So a sharp drop coming in and obviously the overall GNP and SMA book is further down. So was there any benefit of recoveries and it should be managed at this level of 1.3 odd percent or the steady state MFI credit cost should be relatively higher.
Vivek Tripathi
Kunal Vivek here. As I said that there are three components to it. Obviously our collection efficiencies improve sharply. The overall book coverage of CGFU has gone up to almost 83% which incrementally if you look at in the last two quarters, almost 100% of the disbursement is 100% covered. So incrementally it’s going up. Including SMA book coverage is going up. The large reduction of credit costs happened on account of lower slippages and higher coverage of guarantee. Third, there was. Marginal amount of the previous provisioning which was there on this portfolio that has been utilized because things are normalizing there.
Kunal Shah
Okay, got it. And secondly, with respect to ROA, so we are again at almost like 1.6 odd percent now. And there are levers available, maybe OPEX, so we could see it coming down. Plus maybe some cost of deposits advantage can continue. So how are we looking at the overall ROA trajectory? What are the further levers available in the near term? And on cost of deposits, maybe on the bulk side, how much has actually got repriced? And was that the major benefit in the cost of deposits or it was to do with savings cart?
Prince Tiwari
So Kunal, I think on the deposit Gaurav already answered that. So basically it’s a function of both. Definitely savings account cut did play a large role because we had taken some cuts on the 3rd of October and TD continues to reprice. I think in the beginning also when the interest rate cut, kind of interest rate cycle started reversing, we had said that it takes about 14 to 15 months or 12 to 18 months for the entire deposit book to reprice. And I think that’s what Gaurav articulated that we probably expect two more quarters of term deposit repricing to continue.
I get that. The only
Kunal Shah
Thing was maybe since the bulk proportion is high. So was that the element of bulk repricing in the quarter or it was pure, like even supported by retail?
Prince Tiwari
I think it was. Yeah. I mean it will be in line with the composition of the book. I don’t think there is anything specific to read there. Right,
Kunal Shah
Okay.
Prince Tiwari
Yeah. On the overall roa, I think we have been pretty clear quite some time that, you know, as a bank we do believe that we have the potential to deliver a 1.8% kind of ROA on a very sustainable basis. But obviously we had also said that it takes about a decade for a bank to come up and we are already 35 quarters down. So give us, I think four, five more quarters for us to just get our initial investments done, just get the franchise up and running and then from there on operating leverage will play a role.
As you rightly said, margins. There is some more room to go. So I think for FY27 we had earlier guided that our endeavor will be to try and reach 1.8. We continue to maintain that.
Kunal Shah
Yeah, okay, thanks. Yeah, that’s helpful. Yeah,
Operator
Thank you. Your next question comes from the line of Gaurav Toshnival from ICICI Securities. Please go ahead.
Akshay Jain
Yeah, hi, this is Vinish here from icici. Just one thing Again on the main side, you know so obviously the post merger immediately we were at 6% now we are at 5.7. So in a normalized scenario should settle the fix for time. But with Universal bank conversion naturally you know we’ll be tapping more credit tested quality customers especially in MSME business banking and the other SMA related products. So net net, where do you see me settling over next couple of years? And also the reason for asking this question is that to understand how our we place on the asset yield side, right.
I mean we might continue to benefit from the falling deposit rates for next two to three quarters but if upside yield drop is not arrested let’s see some quarter it will start getting names. So we just wanted to understand from a medium to long term perspective on the intraday.
Prince Tiwari
Yeah thanks Ranish. Maybe I’ll try and answer and God of Conservancy on the interest rates as well as on the margins. I think we have commented earlier as well that it’s basically an outcome. I think we look at business by business and most of our businesses continue to hold on because of the 70% being a fixed rate book. We continue to hold on to the ease of course that you can’t really compare post merger Fincare margins because at that time MFI was almost 8% of the overall mix and the unsecured was much higher.
I think since then the mix have changed. Right. So taking cognizance of that I think we are now at about 13.8 as Gaurav said some bit of 25 bids December rate cut repo rate cut repricing is still to come into the next quarter. So but apart from that we don’t really see yields going down very significantly barring some mixed change. Right. I think we are holding on to yields on the vehicle side. We are holding on to yields on the gold loans which we are holding on to yields on some of the other businesses.
MFI will start to grow. Commercial banking is okay. So I think it’s more a function of mix from here on. I mean post Q4 than anything else in the longer run. Yes, you are right that probably if the bank decides to move into. I don’t think we are fundamentally anything changing on our business model for next three to five years. I think we have been vocal enough on our calls despite Universal will continue to build same segments I think we have the idea is to scale up in each of the segments. There’s a lot of opportunity from a half a country.
We want to go into a pan India to expand in Vehicle financing expand around the entire mortgage business. The gold loans could grow multifold. The commercial banking can continue to grow. So I don’t really see any concerted effort on the bank’s part. But yes, if we are going up to a better credit quality customer and there is some amount of yield sacrifice like in the commercial banking that will also be reflected in the credit cost in the opex. Right. So you will see a commensurate benefit. So I’m not really sure if there will be a compromise on ROA per se
Akshay Jain
Because
Prince Tiwari
Of the margins if anything at all.
Akshay Jain
Got it. Got it. Oh, this is very helpful. There’s the last thing. I mean earlier we used to give segment wise ROA breakup. Now obviously we have stopped that. But at least in terms of let’s say the product level profitability, is there any product which is still loss making? I don’t know, credit card might be one. But any other product which is still, you know, having a drag on the overall productivity level and hence, you know, cost income maybe cost of is still elevated. I’m sure it is still lower than the guidance rate.
But as compared to let’s say other banks, it is still elevated. Hence I am asking this.
Prince Tiwari
No. So I think we haven’t discontinued anything. We used to give a product level profitability or ROA tree every annually. Right. There’s no point because there are so many moving parts. We give it every with the annual results. I think you will again see that with the March financials coming up.
Akshay Jain
So
Prince Tiwari
I’m sure you’ll have a chance to go through the quarter based profitability.
Akshay Jain
Okay. But would you like to highlight any.
Operator
Gaurav sir, maybe request you return to the queue for any follow up questions. Yeah,
Prince Tiwari
I mean obviously digital banking is still, you know, continues to be, you know, loss making or haven’t really broken even. And that’s what Sanjay indicated that we’ll take about one more year to stabilize that business. The
Sanjay Agarwal
Credit card. Yeah.
Operator
Thank you. Our next question comes from the line of Pritesh Bhum from Dam Capital. Please go ahead.
Pritesh Bumb
Hi, good evening. Just two questions. One is data keeping. Are we 100% provision on MFI today? The provision coverage.
Vivek Tripathi
Yeah. Pratish Vivek here. Since we, you know as I said that my guaranteed portion is increasing. So we provide for only on a you know, uncovered portion. Right. So let’s say on 100 rupees loan if the guarantee cover is about 72 and a half percent. So 27, let’s say about 27.5% is uncovered. So you provide on that. It works that way. It doesn’t. The provision policy. Right. Governed by the provisioning policy.
Pritesh Bumb
Okay, okay, sure. Got that. So basically before the CGFMU portfolio that will be 100% and the CGFMA portfolio, whatever goes into NPA will be according to the formula which is applicable.
Prince Tiwari
So as Vivek said, it’s primarily driven by the provisioning policy. Always. Right. So for MFI at 90 DPD we provide 50% and then every month we provide another 15% so that by 180 day we are 100% provided. So anything which is 100% on the open exposure. So it will be a function. So PCR will be a function of where exactly the book is or what the vintage of the NPA book. And the second part, as Vivek said, is what percentage is already covered by cgfmu. I’ll not be making any provision on that. On the open exposure we’ll provide as per the provisioning policy.
Pritesh Bumb
Got it. The second question is on this slide 30. So basically you’ve given growing distribution footprint and given color on how things can move in FY26. Given that there is some penetration left in wheels and mbl, is it safe to say that growth will be driven by these two segments in next year given that the ticket size also is higher?
Prince Tiwari
Yep. So I think that’s what we have been saying like wheels even today has grown about 27% year on year. So we do believe that 25% growth in wheels is something that we should be able to do and I think in mortgages as well, as Sanjay said, while we are the largest player in that segment at that ticket size. But we do hope that we are taking a lot of effort with the Southern franchise coming in that current growth rate of 13, 15% we can scale it up to at least 17, 18%, you know, over the next two to three years.
So yes, they will be the drivers,
Pritesh Bumb
But apart from that there’ll be gold loan
Prince Tiwari
And. Yeah,
Pritesh Bumb
Yeah, yeah. So what. What I was trying to make sense is that if growth is driven by these and mbl, the relatively ease will be lower in the segments compared to what we’ve done in some parts. Of course you’re growing gold and MFI next year, but the ticket sizes are smaller. So just wanted to check your combination of how things can be yield versus perspective.
Gaurav Jain
I think the asset mix will largely remain the same. Right. So if you look at the composition of it today, about 67% is retail secured and then you have which is about 34% of that which is we disclose is growing at 27%. Right. So wheels will continue to grow at that clip over the next 12, 18 months. And gold obviously from a very low base there the opportunities to multiply that book multifold and that’s what we are driving for. Right. And there the yields are in the, you know, around the 16% range.
And then the rest of the book, you know, if MFI picks up then that will sort of, you know, the degrowth of MFI mix will stop. Right. And whether or not it can contribute positively on the mix, we will see. But the degrowth that is coming from adverse mix of MFI will become lower going forward. But overall I think the way to think is your asset mix will continue to be the same. And as Prince articulated in one of the earlier questions, over the next two, three years, our business model remains the same, right?
The same segment, same customers, similar geographies, etc.
Pritesh Bumb
Sure. Thanks so much. Thanks.
Operator
Our next question comes from the line of Ankit Bihani from Nomura. Please go ahead.
Ankit Bihani
Yeah, hi, good evening and congratulations on a good quarter. So my question is on MFI asset quality. So we have seen sharp rise in gold prices. Is the recent improvement in repayment behavior broad based across the MFI book or is it largely driven by borrowers with access to, you know, products, secure products such as gold loans? The reason I ask is a gold loan book has grown by around about 700 crores on a QQ basis. While the book accounts for just two and a half percent of our overall loan book, it has contributed 12% of the incremental growth in this quarter.
So is there any overlap between gold loan and MFI book customers?
Vivek Tripathi
Ankit, the MFI recovery is a very, very broad based recovery and it is not in the one lender’s book. If you look at the MPIN data it would reveal that it is across the industry gold loan. The overlap between the gold loan and MFI book would be very, very minimal. And it is an independent asset class. So the correlation of that somebody borrowing from gold loan and repaying an unsecured loan, very low chances of doing that. And the credit environment because of the MFIN guardrails have changed. So the borrower at a village level have understood that until there is a discipline in repayment, the further getting a further loan and getting the bigger loan would be challenging.
Hence there is an improvement in the credit culture itself so far. And as you know that industry is driven by lot of events. So we hope that no event take place in the future. Which derails this great cycle.
Prince Tiwari
Yeah, it’s across states. I mean the recovery is across states, across districts and as we have given month on month data as well in terms of collection efficiency. So I don’t think there is anything one off there.
Ankit Bihani
Okay, so there is minimal overlap between both the segments, right?
Prince Tiwari
Yes, yes, yes.
Ankit Bihani
Okay.
Prince Tiwari
Because gold loan, see our base was very, very minimal. Right. AU historically never used to do the gold loan business or we used to do very limited just as a cross sell in the branch banking. It was primarily a asset class that we acquired from, from Finn Care. And once the acquisition happened and we saw the opportunity and the process and the systems that they had, I think we just are trying to ensure that we start doing or start implementing those from a larger set of branches and build that business from a very, very low base.
Right. So if you’re seeing a sharp growth, Sharp growth is from a just 2,000 crore book in a 1 lakh 30,000 crore loan book.
Ankit Bihani
Yeah, but if you look at the incremental growth, just 2, 2.5% of your over book is contributing north of 12% of the incremental growth. I was just asking on that.
Prince Tiwari
Yeah, maybe. I mean so
Gaurav Jain
That’s clear, right. Because the book has grown by 50% year on year. So it will contribute oversized, you know, in terms of incremental growth.
Prince Tiwari
And that’s what we are saying that. It and
Gaurav Jain
We are actually serious about our gold loan book. We
Vivek Tripathi
Want to grow that book. You gold loan industry has grown by north of 100% on buy on one basis. Right. And banks are the most beneficial. Yeah,
Ankit Bihani
Agreed, agreed. And the second question is on the CDFME part, could you shed more color on like the kind of premium that we pay and recovery is it slightly delayed? As far as I know it takes a year or so for the, you know, the money to get recovered. Can you shed some more light on the operational part of the cgfmu.
Vivek Tripathi
Ankit? I think we can, we can, you know, take it offline because that’s a very operational procedure. But as far as the guarantee fees is concerned and the repayment is concerned, that’s very, very, you know, well defined. If you are well, you know, your processes are well defined and if, if you file properly it comes automatically. So we, we have a very different experience as far as our. The guarantee. Guaranteed portion as far as guarantee book is concerned from not only from CJF. Across in terms
Sanjay Agarwal
Of claim. In terms of claim. Right. Okay, thank you.
Operator
Thank you. The next question comes from the line of jigneshial from Ambit. Please go ahead.
Unidentified Participant
Yeah,
Akshay Jain
Hi sir. Am I audible?
Prince Tiwari
Yeah, yeah.
Unidentified Participant
Hi. Hi. Hi sir. Thank you. Thank you for the opportunity. Just one thing wanted to clarify on margin side. So previous 25 bips has been passed on and the impact will be visible in 4Q or that’s already been sorted. I just got a little confused out there.
Prince Tiwari
The December rate cut.
Unidentified Participant
Yeah,
Prince Tiwari
The December rate cut will get passed on over a period of four months. So I think December was the first month and when we said Q4 the impact will be there because the three of the months are falling in next quarter.
Unidentified Participant
Understood. But that’s, that’s only 30% of rough cut. Your book gets impacted at rest is. All fixed
Prince Tiwari
About 30%. About 30%.
Unidentified Participant
Understood. And second, just. Just wanted to understand more more on the growth part. So as I just correct me if I’m wrong, if I’ MFI is seeing a stability and we are seeing a growth coming back in next year and on credit card front we still want to wait for one more year before getting more aggressive into into that particular segment. Is my understanding correct. So the growth has to be coming up from the secured segments, rolling out of the secured segment. Yes. That strategy remains the same, correct?
Sanjay Agarwal
Yeah. Yeah. So if you ask me in overall perspective we believe we are more stronger in our retail asset strategy where REITs, mortgages, gold loan will take the front seat. We want to push our system engine there as much as possible. Commercial banking is more or less settled. It depends on how the Indian economy behaves. But the way we have performed this year, we strongly believe that will continue. MFI has come back but we don’t want to give you any guidance because. Because still only 1/4 has passed away with seeing that whole green shoot.
So we want to take more time. But my overall belief is that that industry can grow 10 to 15% next year. How much we will grow, we will decide on the course and credit card it will take some more time because we are seeing some, I would say encouraging results of our action taken over the period. But we want to be really patient enough, you know so that we don’t make mistake again. And pl, yes again a lot much has happened through analytics, tpl, credit engines and all those things. We want to focus more on etb.
The NTB journeys are also has been unveiled. So I believe PL will see at different numbers next year.
Unidentified Participant
Understood. So just so is adding up to this one. So PL is for us is a separate product. It’s not that credit card linked pl. Right. It’s a Completely separate. No, no,
Sanjay Agarwal
No, no. PL is. PL and BL comes under the same team but it’s a different product line.
Unidentified Participant
And we are confident to grow PL book incrementally next year.
Sanjay Agarwal
Yes, yes. Yeah.
Unidentified Participant
There was
Sanjay Agarwal
Not an any issue around plbl. It’s such a small book.
Unidentified Participant
So we have
Sanjay Agarwal
Re engineered entire team processes approach and quarter four also should see some better numbers around that book, you know. So. So plbl, we are focusing as a normal business in course. Yeah,
Unidentified Participant
That was my understanding. So thank you. Thank you so much and always. Thank you. Thank you.
Operator
Thank you. Your next question comes from the line of Param Subramanian from Investec. Please go ahead.
Param Subramanian
Yeah, hi, thanks for taking my question and congrats on the quarter. First question is on the OPEX movement, quarter on quarter, could you give some broad color on the various segments that are driving this so that we can understand this a little better? Because I can see both employee OPEX and non employee, both are up significantly, quote, unquote. Some broad. Yeah,
Gaurav Jain
Yes. So you know, so I’ll give you the drivers. Right. So there are two drivers. One is the 20% quarter on quarter increase in disbursement, business volumes, credit card issuances, et cetera. Right. And that also comes at certain variable cost. Right. So one of the components is that business volumes related component. The second component is your headcount and touch points wherein we have been very clear over the past few quarters that we are growing our expense, we are growing our distribution for you know, especially leveraging the footprint that we got through fincare.
So for example, we are doubling our wheels penetration. So we are, we have hired sales credit collection people there. We are opening 80 new branches this year. So we have hired people for that. We have also increased, increased the intensity of salespeople in existing branches. So we’ve hired people. Right. So that’s the second component. The third and maybe not so significant for the quarter was some typical promotion expenses which come with your Diwali and all of that in your debit cards, credit cards.
And finally we started the marketing campaign, you know, soj padlo or bank fee. Right. So that’s also contributed to some uptick in expenses. So those were the main, main part.
Param Subramanian
Thanks. Thanks. Very clear. So maybe apart from the promotional one, the others are more or less bau. Right. Because we are talking about more growth from here on.
Gaurav Jain
Yeah, yeah. So look, growth comes with, you know, you know, as we say, you know, some of the. It is directly related and the headcount cost, you look, you should look at that as a down payment on future growth. Right. So we will not need as many people going forward because we are building capacity for next year, this year.
Param Subramanian
Fair enough. And if I heard you correctly, 56, 57% cost to income broadly for next year is where we. So
Gaurav Jain
Look, you know, we’re not giving you specific guidance beyond calling out two things. We’ll be lower than 60% and we’ll be lower than 4.3% cost to OPEX which we were last year. Right. So this year we expect to do better. And every year incrementally, the operational leverage from scale and all the tech initiatives and other overhead control measures that we are taking will continue to improve our both cost income ratio and, and the cost by opex. Right. So I’ll leave it at that.
Param Subramanian
Okay, fair enough. And just one last question a little maybe for Sanjay sir, I mean a lot of your peers, NBFCs and you know, mid sized banks have raised a lot of capital recently and everyone is pretty positive on growth picking up next year. So from a competitive landscape, how are you looking at things? Do you see any pressure that can develop say because you know we are talking about largely talking about, you know, increasing our margins, our growth etc. So is there any risk from that? Yeah,
Sanjay Agarwal
No, no, you have a right question in my sense. But we are 30 year old now franchise, right. And we have seen you know, all the competitive landscape over the period, you know, so of course if fresh capital is coming in and in banks or in BFCs, they will also push for the growth. But I think it’s not about their capabilities and their positioning, it is more about our capabilities in terms of building up the product distribution people, understanding the risk around it. So I think what we are expecting that for next maybe 4 to 5 years EU growth rate in terms of 2.5, 2.25 to nominal GDP should be there because of the product range.
We have, we have retail assets, we have commercial banking, we have digital assets, we have cross sell ability. So if you ask me, the overall packaging of a franchise so strong that there would be a competition, but we should lead in that competition space. And I believe that team has the capacity, potential, purpose, energy to do this and we are doing honestly. It’s not that there is no competition as such as of now also, but still we are growing in the north of 20%. So I think we have already built a strong foundation and we have a very, I would say very tight, very sharp kind of execution mindset, you know.
So it’s not only about growth it’s also how you grow, you know. So the quality of apex, the quality of asset, the quality of team, you know if you have to judge a. You have to judge in a holistic way.
Param Subramanian
Thank you sir. Fantastic. All the best. Thank you so much.
Sanjay Agarwal
Thanks.
Bhavik Shah
Thanks.
Operator
Thank you. The next question comes from the line of Bhavik Shah from Incred Capital. Please go ahead.
Bhavik Shah
Hi sir. Thanks for the opportunity and congrats on good quarter. Sir, two questions. 1. So what will your proportion of book below rupees one lakh? I understand we have cut like 25 point of star there. And related to that do we plan to further take SA cuts because our close competitor has gone down to 6% for more than 1 million.
Sanjay Agarwal
No. So again below 1 lakh is very small amount because it does not affect only below 1 lakh depositor. This is a full stack, right? And you know that we have taken one position that we want to build our deposit franchise on the product and the whole service levels rather than marketing or higher rate. And it’s just what now six to nine period. I’m very happy that the competition is following us because that’s the right way to build our deposit franchise and we have other means to really manage this transitional requirement.
So further it doesn’t, I can’t comment as of now because it depends on entire liquidity position how the repo rate works in times to come overall our requirement. But I’m very happy the way we have really managed our entire matrices of deposit franchise where we have a very solid quality book then we have a CD ratio of around 80%. We have a cost of money around 6.84 and the 24% growth. So if you ask me the overall growth matrices I would say I really want to say thank you to my team that in spite of such a large, such an intense competition and a tight liquidity they are able to perform with these numbers.
Bhavik Shah
Okay. And sir, I just wanted to check on your cards portfolios. We had Zenith plus. I understand you have massively cut rewards on Zenith. Do you plan to do so for Zenith plus? Also given that we are not my.
Sanjay Agarwal
Friend, I think the team is not there and it’s two operational questions. But overall we want to build this. Overall we want to build a credit card book. You know it will take some time. Team is taking lot many decisions so that we get a right matrix or right product in right way, you know. So give us some more time to really comment more in detail about our credit card business.
Bhavik Shah
So thank you. Thank you.
Operator
Thank you. The next Question comes from the line of Peran engineer from clsa. Please go ahead.
Piran Engineer
Yeah. Hi team, congrats on the quarter. So firstly just getting back to the MFI thing. If collection efficiency stable from here on, credit cost will be at this 30bps or so level or below because incrementally everything is moving to cgfmu. Is my understanding correct?
Vivek Tripathi
See I think we can’t benchmark again in one quarter. There are in fact I explained that, you know, it is through the cycle it would be. Sorry, my apologies. Yeah, so it’s a game of improvement in collection efficiency, how much coverage you have from credit guarantee and also from the recovery point of view from your existing written of book. So that if it continue to improve, my recovery has improved let’s say in Q3 and continue to improve in Q4. It should remain in a zone but plus as I said that there is a marginal utilization of some previous provision which was done on this specific book because the environment now looks very very different.
And so in the more benign way it should hold through the cycle. It should hold what we guided earlier.
Prince Tiwari
83% book is covered under guarantee. I think Piran, the way you should look at it, I think we have been saying that all along that 83% book is now covered under guarantee and we have paid a guarantee fee for that. And by the end of March hopefully we’ll have almost 90, 95% of the book covered under guarantee. So with the improving asset quality or even stable asset quality, I think one of the lines that we have said in that slide, slide number 18 is that if you look at the portfolio which has been originated from this last calendar year which is January 25onwards, that forms 75% of the book and the collection efficiency there is 98, 99.7% right in the zero DPD.
So if it’s 99.7% kind of collection efficiency and 90% plus book covered under CGFMU then it’s logical to assume that the credit cost should be, you know, in range bound unless something dramatically goes wrong.
Piran Engineer
Correct. So yeah, current level is kind of motor moti year to stay as long. As plus or minus here or there.
Prince Tiwari
Right. So broad range you can say right above exact number it will be difficult for us to say but as Vivek said. Yeah,
Piran Engineer
Got it. And just the next question for Sanjay Sir Apnam Ola, you mentioned that the regulator looks at CD ratio X refinance. So just wanted to understand is the CD ratio now even a focal point anymore for RBI or not really. Not really.
Sanjay Agarwal
But okay, fine. So I think it’s about how prudent we want to run our bank. Let’s not bring regulator in every discussion, right? CD ratio is an important one, right? To really run a very sustainable and product banking franchise. What I want to say that because I get a refinance and refinance is a very structured loans which are a definitive time period and which we create some assets. So in those assets we don’t have a risk of deposit. Right. So the risk of deposits is 80% of the book which is the CD ratio of 80%.
So I think the idea is to tell you that how solid we are in terms of our approach. It’s not about regulator pushing us or they are talking about us. It’s about how we want to really build ourselves on a self governance basis.
Piran Engineer
No sir, I mean I get that. I’m just asking has the regulator also taken a more benign approach to the cda? I don’t want to comment on that.
Sanjay Agarwal
Again I’m saying you. I don’t want to comment on that. I want to say that it’s a self governance than a regulator led governance. You know, because we believe at a bank that it is about us to really build a bank rather than you know looking towards a regulator to say us good or bad about our ratios because we run a bank, right. And we know about what ratios are good for us and we should maybe around those ratios.
Piran Engineer
And this borrowing book has also increased by 2000 crores quarter on quarter. That is mostly refinance.
Sanjay Agarwal
Yes. Yes.
Piran Engineer
Okay. Yeah, that’s it from my end. Thank you. And all the best.
Sanjay Agarwal
Yes, thanks.
Prince Tiwari
Thank you.
Operator
Thank you ladies and gentlemen. We will take that as a last question for today. I now hand the conference to Mr. Prince Tiwari for closing comments.
Prince Tiwari
Yeah. Thank you. Thank you Sagar. And thank you all the participants, investors, analysts for taking time out on this call. And in case you have residual questions you can always reach out to the investor team, investor relations team. Thank you so much. Good night.
Operator
Thank you members of the management on behalf of AU Small Finance Bank. That concludes the conference call. Thank you for joining us. And you may now disconnect your lines.