BANDHAN BANK LTD (NSE: BANDHANBNK) Q1 2026 Earnings Call dated Jul. 18, 2025
Corporate Participants:
Unidentified Speaker
Vikash Mundhra — Head of Investor Relations
Partha Sengupta — Managing Director and Chief Executive Officer
Rajeev Mantri — Executive President and Chief Financial Officer
Rajinder Babbar — Chief Business Officer & Executive Director
Ratan Kesh — COO & Executive Director
Analysts:
Unidentified Participant
Kunal Shah — Analyst
Vishal Wadhwa — Analyst
Anand Dama — Analyst
Mahrukh Adajania — Analyst
Piran Engineer — Analyst
Harsh Modi — Analyst
Jai Prakash Mundhra — Analyst
Ankit Bihani — Analyst
Punit Bahlani — Analyst
Manish Agarwalla — Analyst
Abhishek Murarka — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Bandhan Bank Limited Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Mundra, head IR at Bandhan Bank. Thank you. And over to Mr. Mantra.
Vikash Mundhra — Head of Investor Relations
Thank you. Nirav. Good evening everyone and a warm welcome. To all the participants. It’s a pleasure to have you with us today as we discuss Bandhan Bank’s business and financial performance for the quarter ending June 2025. We sincerely appreciate your time and participation today. We will take this opportunity to provide insights into our operational activities, significant achievements and challenges as well as offer perspectives on market conditions, strategic initiatives and any notable changes in our business environment. To walk you through these details, we are joined by Mr. Partha Patin Sengupta, Managing Director and CEO Mr. Ratan Kumar Kesh, Executive Director and Chief Operating Officer. Mr. Rajinder Kumar Babbar, Executive Director and Chief Business Officer.
Mr. Rajiv Mantri, Chief Financial Officer. Myself Vikash Mundra, Head of Investor Relations and our senior management team at Bandhan Bank. We are happy to answer any questions on or provide additional clarity on the current quarter’s performance and our outlook moving forward. Now I would like to invite our Managing Director and CEO Mr. Patapatim Singh Guptafa to brief you all on the bank’s performance. Over to you, sir.
Partha Sengupta — Managing Director and Chief Executive Officer
Thank you, Vikash. Good evening and thank you all for joining us today. On behalf of Bandhan Bank. I extend a warm welcome to all of you attending our earnings call for the first quarter of financial year 26. We are pleased to have this opportunity to share our performance and insights for the quarter. Let me begin with the macro. Despite ongoing global uncertainties, the Indian economy continues to exhibit robust resilience underpinned by strong fundamentals and supportive policy measures. For fiscal year 2526, the RBI has predicted a real GDP growth rate of 6.5% alongside a moderate average CPI inflation of 3.7% reflecting a balanced and stable economic outlook. In fact, today the inflation rate is even lower. In line with its commitment to fostering growth, the RBI has implemented significant monetary easing including a 50 basis point reduction in the repo date in June 2025.
The cumulative cut since early February 25 has been 100 basis points. Furthermore, the RBI has announced a phase reduction in the CRR by 100 basis points to be implemented between September and November 25 aimed at sustaining liquidity within the banking system. This sizable liquidity, coupled with focused efforts on the transmission of monetary policy to the real economy is further expected to stimulate the economic activity of the country. The combination of moderating inflation, a generally favorable monsoon forecast and the introduction of the new income tax regime is expected to collectively foster a positive business environment and bolster confidence in a broad based recovery across sectors.
Taken together, these factors create a strong foundation of stability in the Indian economy and is expected to stimulate economic growth by making borrowing more affordable and encouraging investment, particularly in sectors such as housing, micro small and medium enterprises. I now move to the performance of Banzhan bank for Q1FY26. Before we begin the quarterly Performance Review, I would like to highlight that Q1FY26 is not aptly comparable to Q1FY25, primarily due to the challenges we encountered in the EV segment following changes in the guardrails at the industry level. Despite these headwinds, we are performing reasonably well when benchmarked against our industry peers having microfinance in their books and other competitors with sequential improvement in our financial performance.
Further, as highlighted in our previous communication, we anticipate challenges in the EV segment to persist till second quarter of FY26, albeit on an improving trajectory. In line with this outlook, our EV portfolio has had a bearing on both our overall growth and profitability in Q1FY26. That said, we remain cautiously optimistic. Recent regulatory and monetary interventions such as reduction in RWA for lending to MFI and nbfc. MFI as well as PSL related relaxations have been constructive for the sector and we expect to witness a gradual and steady recovery in the EV segment over the coming months with the positive bias emerging in the second half of the fiscal year.
During the quarter, loan growth remained relatively subdued largely due to the muted performance of the EEB book. However, non EEV book continued to witness strong growth momentum. Profitability showed moderate improvement and we remain encouraged by the sustained strength in our key operating metrics. We further observed that increase in the proportion of secured loans in our overall portfolio alongside a healthy rise in retail term deposits have brought stability in both deposits and advances. These developments are contributing to a more diversified asset base and enhancing the stability and resilience of our balance sheet. In line with our guidance, we saw marginal improvement in slippages compared to the previous quarter, reflecting our continued emphasis on prudent asset quality management.
Furthermore, our strong capital adequacy and comfortable liquidity position provide a robust foundation for sustained growth and improved financial performance in the quarters ahead. While my colleague and CFO Mr. Rajiv Mantri will provide a comprehensive overview of the financials and I would like to take this opportunity to highlight a few key developments and performance indicators from the first quarter of FY26. As of June 30, 2025, the bank’s drop advances stood at 1.34 lakh crore registering a YoY growth of 6%. On the liability side, total deposits reached 1.55 lakh crore reflecting a robust YoY growth of 16%, significantly outpacing the growth in advances.
This reflects our strategic focus on strengthening our granular liability franchise and ensuring a healthy balance sheet composition. Retail term deposits demonstrated the strong momentum growing by 34% yoy. This performance underscores the increasing trust and engagement of individual customers and highlights the effectiveness of our distribution channels. CASA deposits now account for 27% of our total deposit base. The overall share of retail deposits remains steady at 68% indicating a marked improvement in both granularity and stability of our deposit base. We continue to execute our diversification strategy with steady progress. During the quarter our secured book recorded a YoY growth of 29% resulting in an improvement in the secured portfolio mix to 52% compared to 43% a year ago.
Maintaining asset quality remains the top priority. Freight cost saw a moderate improvement sequentially and we are committed to bring them farther down over the course of the year. During the quarter we undertook technical write offs amounting to 1047 crore. Gross NPA stood at 5% and net NPA at 1.4% while the PCR the provision coverage ratio including the technical write offs improved to 87.3% compared to 86.5% in the previous quarter. For Q1, 26, net total income stood at rupees 3483 crore with an operating profit of rupees 1668 crore. The bank reported a spat of rupees 372 crores for the quarter.
On an annualized basis, roe stood at 0.8% while Roe at 6% which witnessed a marginal improvement. On a sequential basis, Our capital position remains strong including Q1’s FY26 profit. The capital adequacy ratio stands at 19.4% and Tier 1 capital at 18.6% providing adequate headroom to support future growth. Our branch Network expanded to 1,750 branches with addition of 35 new branches during the quarter. As the microfinance environment continues to stabilize, we are confident in our ability to leverage emerging opportunities. We will remain focused on prudent risk management, identifying new avenues of growth and further enhancing operational efficiency to drive sustained performance.
In our previous communication, we highlighted the transformative initiatives undertaken by the bank, focusing on various aspects to ensure a seamless integrated customer journey and an enhanced omnichannel experience. During this quarter, we have successfully enabled all 4400 branches that banking units to offer retail term deposits. I am pleased to share that over 2,000 banking units have been activated and have begun raising retail deposits. This achievement followed a comprehensive capability building exercise which involved 8,300 employees across 3,200 locations delivered through a combination of physical and virtual outreach. This initiative has expanded our retail liability sourcing capabilities allowing us to tap into new catchments and strengthened our approach to granular deposit mobilization and liability resilience.
In the first quarter of FY26, the bank undertook strategic measures to reduce the cost of deposits by lowering interest rates on both savings and term deposits. The introduction of the One Bundan Initiative has transferred greater synergy across departments, culminating the successful execution of Grow Deposit Growth Together campaign across verticals which helped generate nearly 4,200 crore incremental retail term deposits in just 40 days. Furthermore, we launched the specialized products tailored to targeted customers in the Elite segment which are known as Elite and Elite plus Savings Account for the hni. Looking ahead, our focus will continue to be on a driving granular retail growth, advancing product innovation and broadening our geographic footprint.
On the connections front, we have pioneered the use of WhatsApp and reach communication service channel in real time to bolster our recovery efforts for missed installments. Following a successful pilot which yielded outstanding results, 88% of the messages were successfully delivered and 80% of these led to recoveries. We have now rolled out this initiative across all banking units nationwide. The bank has made significant strides in enhancing its government and financial services. The bank is now live for collecting both direct and indirect taxes through multiple channels. We have integrated with the income tax portal for refund processing and enabled central civil pension and railway pension disbursement across all branches.
Additionally, we have partnered with the Jeevan Praman portal for digital life certificates and expanded our services for different pensioners via the Spurge platform. The bank has also signed key MoUs including one with the Indian Air Force or Soldier Salary account and is implemented with the Haryana and Madhya Pradesh government for conducting government business and managing state investments during the quarter, we have further strengthened our position by integrating with the Orissa and Rajasthan government systems for account validation and reporting and executed an MoU with EPFO for centralized collection of employers contributions in the wholesale banking segment.
Beyond the strong growth in the secured loan book, the bank successfully closed its first debt syndication mandate for an existing client. This syndication fee marks a strategic step towards building a steady other income stream and positions Bandhan bank around one more sophisticated lenders in the industry. Our non fund trade book reached rupees 2100 crore as of June 2025 which is expected to boost fee income further. We have also executed import LCs enhancing forex inflows and current account balances. Cross border remittance volumes are increasing which is farther strengthening our forex income potential. Our bank is strategically diversifying its portfolio with a strong focus on retail lending, particularly in secured loan segments like housing loans, gold loans, auto loans and commercial vehicle and construction equipment loans.
Leveraging its extensive branch network and large customer base, the bank is enhancing existing customer relationships while expanding through new partnerships emphasizing risk management. The bank integrates advanced analytics at every stage of the customer life cycle to ensure asset quality. Investments in digital platform, CRM and data analytics are improving customer experience and operational efficiency. Overall, we remain committed to building long term value through disciplined growth, strong risk management and compliance culture and continued investment in our core capabilities. These strategic pillars continue to guide our actions as we navigate the current market environment. With that, I now hand over to Rajiv Mantri, our CFO to take you through the details of our financial performance. Thank you.
Rajeev Mantri — Executive President and Chief Financial Officer
Thank you and welcome everyone to the earnings call. We now move on to the business performance for the quarter. I will walk you through the key financial highlights and provide an overview of how the bank has performed. We’ll start with the advances as of March 2025. The gross as of 30th June 2026, the gross advances stood at Rupees 1.34 lakh crores reflecting a growth of 6.4% year on year and on a sequential basis the gross Advances declined by 2.5% primarily due to a 7% contraction in our EEB portfolio. The EB portfolio declined by about 15% year on year reaching Rs.
52,812 crores. This decline was mainly driven by the strategic controls we have implemented in response to the elevated sectoral risks. On the other hand, the non EEB portfolio, which now accounts for nearly 60% of total advances, up from 59% in the previous quarter and 51% a year back registered a robust growth of 27% year on year. This strong performance was driven by continued momentum across our retail assets, wholesale banking and housing segments. Specifically, retail assets grew by 78% year on year. Wholesale banking saw an increase of 32% and housing grew by 15% on a year on year basis.
The growth in retail assets was mainly supported by secure products such as commercial vehicle and equipment loans, auto loans and gold loans. Aligned with our strategic focus on product diversification and asset quality, we continue to strengthen our secured loan portfolio across housing, wholesale banking and retail assets. The secured book grew by 29% year on year and now constitutes 52% of total advances, underscoring the shift towards a more secure and diversified asset base. From a business mix standpoint, our advances remain well diversified across various segments. The EV group lending represented 25% of total advances, SBAL at 14%, wholesale banking 28%, housing 25% and the retail assets stood at 8% respectively.
In terms of regional concentration, our top five states, West Bengal, Maharashtra, Gujarat, Madhya Pradesh and Bihar collectively accounted for 58% of total gross advances compared to 59% a year back. Notably, Western Wall remains the largest contributor at 22.8%, a slight decline from 24.1% in Q1FY25. Moving to liabilities as of June 30, 2025, the total deposits stood at 1.55 macro compared to rupees 1.33 lakh crore in the previous year, reflecting a healthy growth of 16%. This healthy growth in deposits continues to outpace the growth in our advances, reflecting our strategic focus on balance sheet resilience and funding stability.
We remain committed to building a granular and stable deposit base with a continued emphasis on retail deposits. Our total retail deposits, which comprise both CASA and retail term deposits grew by 15% year on year. Within this, the retail term deposits demonstrated particularly strong momentum, growing by 34% on a year on year basis. The proportion of bulk deposits to total term deposits also reduced to approximately 43.6% compared to 46.3% a year ago and 45.3% in the previous quarter. This downward trend underscores our continued focus on building a more stable and granular funding base. CASA Deposit stood at 41,858 crore rupees marking a 12% quarter on quarter decline.
This decline was primarily driven by typical Q1 seasonality as well as industry trends. Further, the CASA deposits were also impacted due to reduction in the savings interest rate implemented in April 2025 which led to reduction of some saving deposits and migration of a few balances into retail term deposits. The bank continues to place strong emphasis on deepening customer relationships and expanding its customer base. Strategic initiatives are underway to enhance our product suite, refine our value proposition across segments and improve the engagement to drive sustained growth in deposits. Our top five states for deposits, which is West Bengal, Maharashtra, Uttar Pradesh, Orissa and the NCT of Delhi now account for 66% of total deposits.
West Bengal continues to be the largest contributor representing nearly 40% of the deposit base. I now move on to collections and the asset quality the bank’s overall Collection efficiency excluding NPAs stood at 97.7% for Q1FY26 compared to 97.9% in Q4FY25. Within the EEB portfolio, collection efficiency for the month of June was at 97.7% and for the full quarter of Q1 FY26 it was 97.6%. The marginal decline in collection efficiency is primarily attributable to a procedural change related to the raising of installment demand on holidays. We have given additional information on collection efficiency in our investor deck slide 19.
On the asset quality front, improvement with gross slippages at the overall bank level declining to Rs. 1,553 crores in Q1FY26 compared to 1,748 crores in the last quarter. This improvement was primarily driven by the EV segment whereby the slippages in the EV portfolio moderated to Rupees 1,089 crores during the quarter, down from Rs. 1349 crores in the previous quarter. Recoveries and upgrades during the quarter stood at Rs. 319 crores, slightly lower than the 355 crores recorded in Q4FY25 at the overall bank level. Additionally, the bank has undertaken technical write offs amounting to rupees 1047 crores during the quarter of which write off in the EV portfolio was rupees 952 crores.
As a result of it, the gross NPA and the net NPA ratios were at 5.0% and 1.4% respectively, slightly higher than the previous quarter mainly on account of degrowth in the overall gross advances that contributed to this increase. The PCR remains stable at 73.7% excluding the write offs. As guided in the last quarter’s call. Credit cost shows an improvement on a sequential basis. Credit cost including the standard asset provision for the quarter stood at 3.5% of advances which was lower than 3.9% in the previous quarter. As of Q1FY26, the overall DPD pool for the EV portfolio comprising of SMA0, SMA1 and SMA2 stood at Rs 2,026 crores representing 3.8% of the EV advances compared to 3.4% in Q4FY25.
The increase in percentage terms was primarily due to the sequential degrowth in the EEV portfolio. On an absolute basis the overall EEB SMA book grew by rupees 131 crore quarter on quarter driven largely by an increase of 145 crores. In the SMS0 category. SMA1 remained largely stable while SMA2 witnessed a sequential improvement. The increase in the EV SMA0 book is primarily attributable to a procedural change relating to the raising of installment demand on holidays. We continue to focus on strengthening our collection infrastructure and processes with dedicated efforts to improve the overall asset quality of the EV portfolio.
I’ll now move on to the quarterly profit and loss statement. The net interest income for the Q1FY26 stood at rupees 2757crores reflecting a year on year decline of 8%. NIM for the quarter stood at 6.4%, a decline from 6.7% in Q4FY25. This moderation was primarily driven by an increased proportion of secured loans in the overall portfolio, a reduction in the CD ratio, the impact of the recent repo rate cut and the continued stress from the elevated slippages. However, the decline in NIM was partially offset by an improvement in the cost of funds which reduced by 19 basis points on a sequential basis in this quarter.
This improvement was supported by rate reduction on savings deposit during the quarter which led to this improvement. During the first quarter of FY26 the non interest income grew by 33% year on year. This was contributed by higher treasury income of approximately 250 crore from the sale of investment and income from third party products which grew by 73% year on year compared to the same period last year reflecting our continued focus on diversifying revenue streams. As a result, our net Total income for Q1FY26 stood at rupees 3486 rows representing a year on year decline of 1%.
Operating expenses for Q1FY26 increased by 14% year on year to rupees 1815 crores. This rise primarily reflects our continued strategic investments in talent, technology and infrastructure as well as the impact of higher business volume in our non EV segments. The operating expenses to average assets ratio for the quarter student 3.9% marking a sequential decline of 23 basis points. Operating profit for the quarter was Rupees16.68 crores, nearly 6% increase. Sequentially, the bank reported a net profit of Rupees 372 crores for the quarter as compared to Rupees 10663 crores in Q1FY25 and Rupees 318 crores in Q4FY25.
The year on year decline in profitability was primarily driven by a change in advances mixed towards higher secured elevated provisioning reflecting stress in the EV portfolio along with the impact of technical write offs undertaken during this quarter. On an annual basis, the return on assets stood at 0.8% while the return on equity was at 6% with slight improvement compared to the previous quarter. Thank you for your patient hearing. On behalf of management team, I once again thank you for participating in this call. We will now open up the call for questions.
Questions and 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 N1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press Star AND one to ask a question. The first question is from nanof. Kunal Shah from Citigroup. Please go ahead. Kunal Shah, may I request to proceed with a question?
Kunal Shah
Yeah, hi, thanks for taking the question. So firstly, with respect to disbursements maybe of almost like 10,000 odd crores which is down. If you can highlight in terms of how much is on account of say the implementation of Guardrail 2.0 and how the rejection rates have moved and any particular geographical trends, if you can just indicate that. And how much was because of maybe the conservative approach towards growing the EEB portfolio. So that’s the first question.
And second question, when we look at it in terms of the vintage analysis which you provide on the disbursement which is on say slide 21. So when we look at it like even say disbursements of Q1FY25 and Q2FY25, that’s rising compared to what we have disclosed maybe over a period that’s now crossing almost like 4 odd percent. So in fact it seems like after maybe 12 months kind of a vintage we still see 4% slipping into NPA across the pools. Okay, right from 3Q to maybe almost like Q1 of 3Q FY24 to Q1 of FY25. So is that like this is like. The general nature wherein we will keep seeing like 4, 5% of NPAs even from the recently written pools? Or maybe there was anything specific to read into this this year?
Vishal Wadhwa
Yeah, hello, this is Vishal here. I’ll take your question. The first part of your question spoke about in terms of the disbursement coming down first quarter every year there’s a seasonality which gets a disbursement down. So this particular year, if I have to compare it to the previous incredible year which we had in FY25 this first quarter at 10,708 for EB and that number incomes corresponding was 13,721. Obviously the dispersals are slower comparatively because of the guardrails which got implemented. And these guardrails are very good at nature at a long term perspective. But obviously there have been on the short term there has been growth here because of the lender norms and in terms of the rejection which has gone up primarily due to three lender norms and due to also that nobody is onboarding more than 60 DPD in their books and go to unsecured exposure of 2 lakhs.
On the second point of your question on the vintage, if you see.
Kunal Shah
Sorry, sorry just on this part, if. Sorry on just this part, if you. Can highlight rejection rate trends as well, that would really help.
Vishal Wadhwa
So 16 to 18% of our rejections are also coming in where there has been an overall industry default. So nobody is able to lend and 16 to 18% of these customers are not being given loans by anyone. Now considering that Everybody of this 16% population has moved towards 60 dbd an hour. And if you spoke about the geography for us, because we are more recent in compared to some of the established players in Tamil Nadu and Karnataka. Our dispersals of Tamil Nadu, Karnataka, though it’s a small base, is also not growing up there. And some parts where we are trying to go further is also a little bit of impediment.
Specifically in the growth parts of UP and Gujarat we are geographies which are really not growing for us. And it’s also true of the industry. If you see on the part of your vintage analysis, if you see Slide 21, we peaked at 5.2 quarter for FY24. I think this trajectory because of the leverage issues in the industry everywhere. Everybody else also has worser number compared to these NPAs R was 5 and 4. And I think this will keep on coming down because a recent book which is showing is coming out to be much better off of FY24 quarter four and FY25 quarter one.
So I pursue that this will somehow will be in the range of 3% NPA and not at the range of 4 and a half 5% in times to come.
Kunal Shah
Okay, but this still seems to be because of the guardrails.
Vikash Mundhra
Yeah, exactly. And I would like to further add that you see last year Q1 was an exception. It was an exceptional performance for Bandana Bank. So almost we could not also apprehend that suddenly the EV segment would reverse and it will cause worry for us for the day. So it is this year if you look at the march it was the NPLs were at 5 point. The slippages were almost 5.2 percentage for the year. And from there we are actually coming down for the day mainly because EEB slippages as well as being double digit for the day.
So there we are actually coming down. So sequentially if you see there has been some improvement but compared to a year on year basis would not be a favorable comparison because last year it was completely unexceptional. I think the best Q1 the bank has ever had.
Unidentified Participant
Got it, Got it. Yeah, thanks. Thanks. And all the best. Yeah. Thank you.
operator
A reminder to all the participants, you may press Star and one to ask a question. Next question is from the line of Anand Dhamma from MK Global. Please go ahead.
Anand Dama
Thank you for the opportunity. So the first question is on your SMA0 where I think you said that you started bidding on the holidays and that’s the reason the SMA portfolio has gone up. Can you explain like how is that happening and what is the industry practice? Secondly, your SMA 1 and 2 portfolios actually gone up now. So what explains that bucket moment? Is it specifically stagepack, West Bengal or Assam or there is something more to it, number one. Number two question is that when do you see your 5% of the Bandhan plus reports for unwinding whether it will take another about six months for that portfolio to unwind because ultimately theoretically it has to go down to zero. Right. So when that unwinding will happen.
Vishal Wadhwa
Okay, I’ll take this question again. In terms of our SMA going higher, this number has primarily happened because like Lord Rajiv was speaking when he was speaking on the holidays on demand, which was a requirement if we were not doing earlier demand holiday was being raised from 31st of March and then we had four days in the month of April where we started raising demands for all all days. And that’s why you see there is an elevation on SMS 0 which however is pretty much recoverable.
That is not something which is so much for us to worry about. If you see SMA 1 and 2. Largely they have been stable. SMA 1 has been stable and SMA 2 is in fact improved. And in terms of the overall number percentage wise is the same simply because for the EV segment what he’s saying with the bank bank. So our percentage of SMA2 has remained flat and overall our book has of SMA2 has come down. In fact it’s been 4.8 billion compared to 510 crores and SMS like I explained for the four weekly holidays which had got billed which was for the first time and that impact was mainly in terms of in West Bengal and to some extent in Assam.
That is something which we’ll have to live with for one more quarter. And every month we have been improving on that estimate number which also had moved further up. But we are trying to control it and that number in times of previous to come will also come down from the current level.
Partha Sengupta
I think just to supplement on that that has continued to remain within the SMA0. It has not moved on to SMA1 and SMA2 and as Vishal said there are efforts in terms of how that can be recovered.
Vishal Wadhwa
The culture is now changing in the ground also. So we are also now started collecting the installments in advance. And number two is that. Yes, just want to tell all the investors who are there. So next this quarter September also. So the eastern part will be submitting the festivals and there will be a block holidays on account of the and others for that year. So you may see a little bit more in the rise in the SMA 0 but that’s not a concern because these are all recordable and as Rajiv has said it remains within the SMA-0 book quarterly.
Anand Dama
My second question was about your when do you see 5% of your bandhan plus three portfolio winding.
Vishal Wadhwa
You see that 5% bandhan plus five is hardly any number discussion 2% today and that is a very. That is 5% now over the period of I believe next two quarters these numbers will come down to sub two sub three number because now we have restricted the guardrail from April. So whatever is remaining over the next 2 to 3 quarters because we have an actualization of 18 month loan either 1 year or 2 year. So I think between the next 2. To 3 quarters it will come down. And already I just want to emphasize that today as we stand a 90% of our portfolio is 1 than plus 2 and 60% is only London and London plus 1 is another 21%. So 81% is London plus 1 and 90 is London plus 2.
Anand Dama
And even in your retail portfolio there is some increase in the NPA that we have seen on a quarter. On quarter basis obvious it is far more higher 2.7 billion going up to about 3.3 pure housing also we have seen the MPS moving up from 7.2 million in March 25 to about 8.1. So what explains the increase in the housing and the retail portfolio NPAS?
Unidentified Participant
Okay, here are this. Right on the retail portfolio there is a whole book which is like mostly in the unsecured side that is showing little stress and we have never written off anything on those unsecured. We continue to afford to get the, you know, some collection from there. So the recent upside which is seen it is only the unsecured book which we have done a lot of course selection within last one one and a half year and recent book which is a vintage analysis is showing a greater performance there. So this is only the book which is beyond 22 and beyond. That’s a card book. Right.
Rajeev Mantri
I think just to, just to supplement on that a large portion of the retail assets is really secured. There is only a small portion which is in PL which is the unsecured piece. And I think that’s where there’s you know, some bit of an increase in the scene which are the voltages in the house.
Unidentified Participant
Yeah, this was from the housing. In housing too we have witnessed certain old portfolios which, which have trickled down over there. Certain geography specifics also which are. Which did show the trend but now the trends are lowering. Okay, sure. Thanks a lot.
operator
Thank you. Next question is from land of Maru Kajania from Nuama World. Please go ahead.
Mahrukh Adajania
Yeah. Hi, good evening. I had a couple of questions. Firstly again on the SMA0. So given that, you know these are very low income groups, there is a lot of certainty that it does not roll forward. Is that the right way to put it? Because they are low income. Right. So if, I mean usually it’s a difficult guess on whether they do roll forward or not. So that’s my first question and my. Should I. Okay, you, you can answer.
Unidentified Participant
So we have got on the EV segment, our data proves that your SMA1 and 2 remain stable for us while SMA0 has got slightly elevated in the same month itself is getting recovered. So collection efficiency has inched up. You can, you can see so basically the holiday. So they don’t just say that we have started these things, the collecting also on the holidays where we cannot make any collection, but the demands are raised. So obviously in any geography, if you see there is a holiday and if my people are not there for collection, almost 1/6 of the portfolio in that particular geography will become SMA0. So this has an impact. And then because states like West Bengal and Northeast where we have a larger presence, so there are some certain festival holidays or other local festivals or something as they are, obviously it leads to the increase in SMS 0 and it looks quite large for them.
But there is nothing concerned. So that is what I say. That means there is no concern because these are recoverable and these are getting recovered. So what we are now trying is that we are trying to collect in advance. But it will require us, I would say a cultural change not only for our scrum but also for the borrowers. Because till now they have been habituated to pay only on the due dates or at the end of the period. That is the extend the 48 months to 52 months. So now this change is actually happening.
It will take some time to stabilize. But nothing as a matter of concern as far as the SMS 0 is concerned and SMA 2 has come down and SMA 1 also it is double, more or less.
Mahrukh Adajania
Okay, and my other question is that what is your general feedback on industry discipline? Of course guardrails have been implemented but some players are again complaining about aggressive behavior of some other lenders. So what is your take on industry discipline? And in that environment of course you partly answered Kuna, but in that environment, when do you see your micro finance dispersal scaling up?
Unidentified Participant
One thing I just said, while Bishan will tell about the industry perspective that we are disciplined and we will continue to be disciplined.
So the guardrails, we are following it very meticulously and we will continue industry wise. Also it has affected the performance of all because more or less the major players we are implementing the guardrails. But yes.
Rajinder Babbar
Most of the players are implementing that. Right. So only means the plus and minus. Only few, few one. But all. All the actually players are aligned with the objective and they’re making the changes.
Mahrukh Adajania
No, I mean aggression and relending is what I am getting at. Not in terms of guardrail.
Unidentified Participant
Okay, so let me take this one and I’ll just Supplement what Parthasar and Valinda spoke about for us, like what we spoke, we have been disciplined from the 2nd of April Cardrail 2.0 got implemented. We have been following very religiously and diligently. Now somebody trying to play aggressively in the long run this may not be great for that particular entity. So as a rule what mpn as the SRO association, I’m also working in terms of ensuring that have been designed are followed on the ground by all the 82 regulated entities who have signed up for this.
So there is also a report which. Has been published by them every quarter whoever is not being following the guardrails appropriately. So it will all come up into light once this report is rolled out by the srs. But having said all of this, whatever I get to hear from now, whatever have been entities who have signed up. Everybody is following through the discipline pretty Much the way gardens are designed.
Mahrukh Adajania
So then when do you see your dispersal scaling up? I know that your growth will be slower than other segments, but still.
Unidentified Participant
So I. I think it will still take a quarter more for everybody to stabilize this guardrail. Like I spoke earlier as well, 16 to 18% of the customers who are above 60 dbd, nobody will be able to lend to them as all of us have signed up to that gadget. The 16 to 18% customers obviously which. Were existing are no longer eligible for loans. However, having said this, considering the new borrowers which are coming up because everybody now is trying to make their portfolio concentration and portfolio quality better, the focus has been there from the all industry players. However the quarter two end I believe where the monsoon season gets over and the pasture season kicks in, the momentum also shift towards more disbursal and sustainable disbursement.
So my guess is maybe one this quarter more was more time frame for us to be more cautious. And then quarter three onwards the disbursement will step up. It may not step up to the way it was stepped up. At a 30 40% compound in annual growth, it will be in the region of 1015% growth from quarter three onwards. Okay, thanks a lot. Thank you.
operator
Thank you very much. Next question is from line of Pennon engineer from CLSA India. Please go ahead.
Piran Engineer
Yeah, hi, thanks for taking my question and congrats on the quarter. Just a few follow ups on mfi. Firstly, have you all or the industry hiked MFI yields and processing fees? No. No we are not right. No heal night, no property height and no cut either and we are not hiked anything. Understood. And then secondly on this holiday thing can you just once again explain it? So like let’s say there was a holiday on in April and she had to pay, but she couldn’t pay then, then what happens say on 11th, don’t you all go and collect it?
Partha Sengupta
So let me tell that earlier what was happening on a holiday the demand was not being raised. But as you know that we need to be now being a bank, we need to comply with direct norms. So the thing is that even on a holiday like in other segments also we now raise to have to raise the demand. The demand is raised but my people are not available for collection because that is the holiday for the day. So earlier this loan was getting ballooned at the end of the period. So a 48 weeks loan would have become a 52 weeks loan. But now we have to pay within a 52 weeks. We have designed and we have to pay on all on time.
So what was happening initially the borrowers or even my people also on the ground, they were also not in the habit or culture of taking the payment in advance. And so it was obviously becoming an SME 0 because it was getting collected on the next day or on the next working days, whenever it happens for that. So now we are trying to get it collected a week advance for that year. That is our effort. It will take some time to stabilize. Also we are exploring Boko because we have not yet decided that whether we can do something similar to the bond market that when I disclose a particular day, the next working day becomes the collecting day for that year.
But that is of course little bit difficult because this segment, as you know, the works on the practice, the systems, the culture built over the years for that year. So we are now majorly aiming that if we can collect a substantial portion in advance or the installment in advance, then we can save the SMS zero. So that’s why I said that whenever block holidays do appear, like in September, we are apprehending that my SEM 0 will come up because of the happening celebrations at block of holidays in almost all the eastern states already. But ultimately this does not pose to be a very much concern because election efficiency is more than 99% and these loans also get recovered.
Ratan Kesh
So I just. So. So if I may just add ratan here, I’ll just add a little bit more to what see in a normal retail loan, if it is, let’s say a housing finance loan, generally the bank will raise an SI demand and it will go and hit the savings account and recover from the account in case of EV loan, our group meetings the loan officer will carry a tab on any day and then show that you have got thousand rupees installment to be paid. Which means that if on a particular holiday the loan officer is not landing into a group meeting or group meeting is not happening.
The practice was that you don’t raise a demand and next week you go and collect it. Now that we have now ensured that we are, we are raising the demand every day. That’s number one. But we have created two more practices. One is we have now launched our QR code capability which means that the borrower can now pay online remotely as well. A B we are also creating a practice of discipline that can we collect the money in advance if it is Monday installment, Monday being a holiday, can I collect it on a Saturday and request the borrower to keep the money in their savings account so that we can pull on a Monday.
That is the second thing that we are doing. And the overall amount, if you see on the 53,000 crore book the SMS 0 increase is just about 150 crore. So, so these are all like collectible amount. So that’s, that’s the point about holiday. Have I, have I clarified
Piran Engineer
Partly. So okay, I understand that digitization will help it help collections. My question was simple. Let’s say three months in a quarter 12 weeks. Okay, let’s keep it simple. The borrower pays every Monday. Now on one Monday it was a holiday. So you all used to collect only 11 installments.
Is my understanding correct? Not 12 installments for those borrowers. Okay, okay. So I thought on the next Monday you would collect double. But what’s the name? No, no, no.
Partha Sengupta
We were not raising demand. So obviously demand rate is 11. We were collecting 11. Now we are raising 12 demand and we are collecting either in advance a week before or if on that particular day we are not able to collect, we have to go the following week to collect. And that’s why that zero to six comes into play. And that is what we see. Please understand on a 53,000 crore book, 14050 crore addition means 0.27, 0.28 added up to date.
And that like also if you see the SMA 1 and 2 has not people who have not paid us that 0.28% which is there are still paying us every time. What they have not paid is a backlog of one week or two weeks. Wherever the holidays .
Unidentified Participant
when we collect. A week in advance, it doesn’t become SMS zero. If it stayed the next week then it’s estimate zero. But gets connected it’s only the initial piece. When these holidays happen there is a backlog to clear out, right? Which is exactly why it’s continuing in the SMS 0.
Unidentified Participant
But it will take some time because borrowers in the habit of paying only on the day of their week getting two weekly payments on the following week. Week is also not easily and that’s one of the reason that takes some time to stabilize. And like what sir also spoke about in the month of September, holiday period of 45 days together a decent bar. We’ll have another strike up. But like I said just one more point to clarify.
Unidentified Participant
While QR code is there as a initial as a incremental initiative the center meetings will continue. So I think that discipline will come.
operator
Thank you very much. Can I request you to come back for a follow up question please.
Piran Engineer
One very quick question. Take 30 seconds. Just what’s your trajectory on NIMS if you can guide us.
Unidentified Participant
So Nim will get moderated as we know that we have just passed 25 basis points and now this quarter we are passing another 75 basis points. But two good things are there. My only 50% of the advances will get affected because 50%, 52% of my books are still in the fixed rate. So that’s advantage I am getting positive. Number two is that my cost of funds as I told you Rajiv has already told that sequentially because of the cut in the deposit rates we have got a benefit of 19 basis point decrease in the cost of HUDs.
And as and when the fixed deposits would be matured this will be increasing because the immediate effect is only on the savings bank not on the fixed deposit. So that a little bit will be compensated. But let me give a clear picture. NIM would be moderated and we have to cope it up with additional business so that the quantum of profit increases.
Unidentified Participant
So four factors to think about Kiran. Like sir said one is clearly the repo effect. So I mean 45% of our book is repo link and there there could be some bit of a impact. However we have reduced our savings rate and we’ve seen the benefit of that comes from this quarter already 19 basis points improvement in the cost of deposits. And as the term deposits come for renewal we will see benefit of that coming through in quarter three, quarter four. The third is on slippages. As slippages continue to come down we should see a benefit or an offset happening on that particular front.
And fourth is as we are growing secured books faster than the I think that mix change will have an impact. So I think these Four factors. We don’t have a specific guidance but I think these four factors what needs to be monitored.
operator
Thank you very much. A request for all the participants. Kindly restrict to two questions per participant and join the queue again for a follow up question. Next question is from Dwindav Harsh Modi from JP Morgan. Please go ahead.
Harsh Modi
Hi, thanks for the call. Two questions. First, on margins, as you just explained, if I look at the mix change on the asset side with more of secured and less of eeb, even in third and fourth quarter with the FD effect coming in, do we still get sequential reduction in margin? So second quarter Definitely. Margin goes down, if I understand you correctly. Does that continue in third and fourth quarter as well? Sequentially, that’s first.
Second, this increased competition of some of the players kind of naming the gentleman’s code and competing a bit aggressively. Which segments, which states do we see? This behavior is there, Is it behavior in terms of credit underwriting standards? Is it in terms of ticket size. Is it in terms of pricing? If you could give a bit more. Clarity around how the competitive landscape is e volving despite the guardrails 2.0. Thank you.
Rajeev Mantri
Maybe I’ll take the first one on the nims. I think White have already talked about the key factors which are there. Look, I think you’re right. We will be able to see I. Think some bit of a compression further in the next quarter. However, we should be able to see some level of stabilization in the second half of this year because of the offset that we expect, especially in the slippages that should try to improve. So I think that is the broad trajectory that we are looking at from a perspective. But at the same time there are other levers that we are looking at on how do we actually increase the our other income which you’ve already seen a 33% growth in this particular quarter that we’ve done and any further opportunities that we see in terms of improving our cost of funds. Right, which will help because we are doing a lot of targeted push towards increasing our CASA mix as well. So there will be a multiple factors and levers that we’ll be using in terms of how do we offset any further compression that comes through on the Second question.
Harsh Modi
That Rajiv slightly more because the gap between your secured yield and your EB is quite large and yes. We got rate cuts and all of. That has happened and hence your cost of fund will improve. But is it enough or as you said, you need a structural shift in much higher CASA balances and so on so forth for you to even Have a stabilization of min and second half half or knowing at least what we know and where the state of play is, a fair assumption is to expect further NIM compression in second half from second quarter levels.
Rajeev Mantri
Sure, maybe I can take that. So firstly I think on the EV what we had guided the market is that we will be looking at growth on a moderate basis and the second secured book will grow on a faster basis. The first quarter actually we’ve seen a decline on a year on year basis. We expect that to start reversing out marginally the next quarter and then a bit more significantly henceforth. So as the EBIT book continues to improve, we’ll definitely get some benefit of that to happen. Whilst we are clearly aligned towards improving our secured share and the secured mix over the next couple of years.
We already made good headway. We already got 52% of our book as secured already. So I think we are running a little ahead of time on that particular front. The trajectory is quite good. So we have a leeway and we have some headroom to be able to start growing our EV book as the opportunities provide.
Unidentified Participant
Rajit, what you have said is also correct that we are also focusing in the mix of deposits. So more focus will be given from this quarter to garner CASA deposits. Yes, it is right. We have tried within the last quarter for fixed deposits because we wanted some stability in our books and that we have been successful. In just 40 days we could garner 4200 crores of incremental deposits. For that this quarter the focus is on casa. We need to make a mix change in the mix of funds. So as and when this CASA would increase for that year, definitely it will further reduce our cost of funds.
Unidentified Participant
Two points on the other side just to add one clearly that 3 4th of our banking outlets which are distributing this EEB loan, we largely see they’re out of the problem in the larger sense, which means they will be going forward doing business as usual of course not grow at the pace considering that we have the guardrails to follow. Second, clearly the second half of the year is generally good for the industry and therefore we expect to see a significant uptick from here on. Now as far as the guardrail is concerned, our belief is that what we hear from the industry SRO is that most of the players and most of the significant and the large and medium players have implemented.
Given that the last cycle of overheating really impacted the entire industry in a big way, our belief is that people will follow the discipline and therefore we don’t see that at least reasonably larger medium players will derail all of that going forward soon. So to that extent, that’s our belief. That’s what we get to hear from the SRO as well.
Unidentified Participant
I ll just supplement in terms of the numbers to get some flavor and color to this whole discussion. Yeah. Industry portfolio overall has come down by 13 14% overall. If I have to compare year on year from March4,24, March24 of 4,24,000, we are down to 3,67,000 in May, June figures of the industry are not published yet.
That means 13, 14% of the industry level has come down in terms of active loans. Also it’s more than 16, 17%. So it’s not that anyone which I have been hearing is aggressively growing. The only thing what has come out recently is in terms of the qualification criteria of 16, 60, 40. Now qualifying criteria, the 60 can be micro for even nbsp MFI. And that is something which everybody has to watch out for.
Sorry,
Harsh Modi
Sorry, could you explain that a bit more? Or when you say watch out for.
Unidentified Participant
Like I said, overall the industry numbers have come down. I have not heard from any particular layer or geography where they have grown. On the question of 60% on 40% qualification criteria is mainly for NBFC MFIs who are now eligible to do non MFI loans up to 40%. So we have to now watch out for individual loans. Guardrail may be coming into play. Rather than just sticking into micro finance loans aggressively, there would be institutions who would like to grow the individual loan because there are no guardrails there. Okay. Guardrail is only for microfinance loans. That’s something. And that’s something for those entities to really figure out in terms of how do they want to build a book of individual or non microfinance or non micro. Right. Is that clear or have you got the point?
Harsh Modi
Yeah, I understood. Thank you so much. Thank you. Thank you.
operator
Thank you. Next question is from line of MB Mesh from Kuwait Securities. Please go ahead. So the line for the participant dropped. We move to the next participant. Next question is from Lanav Jamundra from ICICI Securities. Please go ahead.
Jai Prakash Mundhra
Yeah. Hi. Thanks for the opportunity. First, a small clarification, Nishan. So you said that now that the qualifying criteria has been changed so there may be further tightness on the individual loan side, right? Not the group eeb, but I mean. In your parlance the individual MFI loans. Is that the understanding?
Unidentified Participant
Yes. So there would be a maybe. I would what? Vishal was just telling that now enterprise can do 40% non micro. So There will be a little bit of aggression in the individual loans already like we have a DOT ban in our books. So similar to that schemes are there now in this particular loan there are no guardrails as of now. The industry would also like to see that it does not face the same experience as microfinance loan when due dual leveraging a large part of the lenders borrowers became nps. So that’s what he was just indicating that maybe going forward we may have certain curve lengths for this segment too.
Jai Prakash Mundhra
Correct. So I mean if I understand if I look at our EEB book while at the system level, at the aggregate level for Bandan, the EV book has been declining but still the individual portion is still reasonably healthy. Right. So I mean there is some, some, some. Some moderation. You may if there is a further tightness there. Right. That that could be one outcome there.
Unidentified Participant
So I would like to say that the individual loan book is behaving better than the overall group loan book even in our side. My only contention here was there are now qualification criteria for other entities. Being like you spoke about aggressiveness it. Could be aggressive on the other parts. Of micro non micro book. Right. Which other entities will try to go because there are no guardrails there currently.
Jai Prakash Mundhra
So other means other has a lot. Of other business subs segment including as well. Well right. That is how you, you are seeing this.
Unidentified Participant
Yes. So they can now do 40% of non micro. So there may be some sort of aggressiveness to book the individual loans.
Jai Prakash Mundhra
Correct, sure. And on the credit cost side. Right. So has anything changed in the sense. That while the slippages are no lower. And I think in the opening commentary. You had mentioned that, I mean you. Know the credit costs are slightly lower but still on improving direction. So has there anything changed in your thought process wherein we had said that. First half will have relatively higher credit costs and then it should start start towards normalization going into the second half. Is there anything changes there or is.It broadly the
Unidentified Participant
What we have our guidance, what we have told earlier remains the same. So we said that credit cost will be remaining almost at the same thing in Q1 but thankfully and we have a little bit lower credit cost compared to March quarter. So that is a good indication Q2 will be a little bit better. Q3, Q4 we are expecting so that overall trade cost of 2.5% as was the guidance we have given. We will try to maintain that till now that is our aim. We have not changed that guidance.
Unidentified Participant
Yeah, I think just to supplement we had mentioned that we will be able to see some marginal improvement in Q1 compared to Q4. That’s exactly what we’ve seen as well. And that’s the trajectory. We expect marginal improvement in Q2 and with a more significant recording at Q3, which is the second half.
operator
Please request it to come back for a follow up. Sure. Thank you. Thank you. A request to all the participants, Kindly restrict to two questions per participant and join the queue again for a follow up question. Next question is from line of Ankit Biani from Nomora. Please go ahead.
Ankit Bihani
Yeah, hi, thank you for the opportunity. I just wanted to understand that while our margins have declined 30bps QQ loan. Book has declined at around about 2. And a half percent CoQ. What explains our net interest income being. Flat on a QQ basis? That would be my first question.
Unidentified Participant
Yeah, I think as I mentioned earlier, we actually have some improvement in the cost of funds. So our actions relating to the reduction in the savings account rates have led to almost 19 basis points reduction in the cost of deposits. And I think that has been able to help us in terms of reducing the what we are seeing in the gross yield. The second thing is also sequentially we’ve seen the slippages come down marginally from roughly 1700 odd crores to about 1540 crores from 1748 crores to 1553 crores. And that lower slippage is also translates. Into some benefit,
Unidentified Participant
Basically lower and the margin is due to the cost of transfer.
Ankit Bihani
Okay. And another I might have missed it earlier. So of the 1550 crore slippages, how much would be from The MFI segment? 1089.
Unidentified Participant
It’s from the EV segment on the EV is 1089. Okay, thank you.
operator
Thank you very much. Next question is from line of Puneet from Macquarie Capital. Please go ahead.
Punit Bahlani
Yeah, hi, thanks for taking my question. Just two questions on the EV asset quality front. So when I was looking at your vintage book, you know, I was surprised that in Q4FY25 I’m just seeing where you have given a disbursement of 150 billion and it shows like an NTA of 0.1%. Now I know it’s negligible 0.1% but I just don’t understand that if something is disbursed in Q4FY25 and you know he’s not paying three installments, that just makes it like immediately empty after disbursement. How I know point one percent is negligible. Just. But just want clarity on that. Is it a collection issue? Or what is that? Because it seems, seems like just it. Like it dispersed in Q4FY25 and it’s been classified as NPA the next quarter. So any clarity on that? Secondly on. Yeah, I’ll wait for this and then I’ll move on to the second question. Yeah.
Unidentified Participant
I think, I think your point is valid. It’s largely due to some cross linkage and the NP coming due to that which, which is what is causing this. It’s a fairly marginal aspect and that’s something which they’re focusing in terms of recording as well.
Unidentified Participant
But there are JAN loans also here because JSN. So Jan, we have a 12 month tenure loan for 50% of our loans. So six months have elapsed from Jan. So point one, some portion would also be from a January month loan. Could be. And like what Ravi said, most of it is coming primarily from a cross linked loan.
Punit Bahlani
Cross linkage.
Unidentified Participant
As I didn’t get that cross linkage some other other loan would.
Unidentified Participant
Talk about.
Unidentified Participant
One loan becomes npa, the entire portfolio.
Punit Bahlani
Okay, okay. But I thought we, we had stopped. Okay. It went on MPA later.
Unidentified Participant
It could be CO as well. It could be co borrower linkage or any other loan linkage.
Punit Bahlani
I get it. I get that. Also when I look at, you know, just this is just from the past 2/4 behavior when I look at the SMA 1 and 2 and when you know, when I track the flow. So say like this quarter, the GNP has been Constant and like 47.2, 47 per book. And SMA1 and 2 last quarter was around 5.1, 5.2 billion. That makes it an aggregated 10, 10.3 billion. We have written off kind of 10.5. Our technical write offs are around 10.5 billion this quarter, which is assuming all EEB right from the EEV book. So is it true that the SMA1. SMA2, the entire flow is into the NPN? Then we are writing it off and. This has been for the past two quarters. And am I getting that thing right? Or if you could correct me if. Something is wrong with that?
Unidentified Participant
I can explain that. So of the 10.5, almost 9.5 is EV. So a large portion is that so typically for anything that we look at in terms of a technical write off, it is for a significant level of vintage which has been there. So we first have a lot of recovery efforts that we do and only after a considerable period has elapsed there we look at what exactly needs to be written off. Right. So it’s not it’s not something from. Here would have got written. Exactly. So it would be, you know, at least a longer vintage of portfolio that you look at.
operator
Thank you very much. Puneet, I’ll request you to come back for a follow up question. The next question is from the line of Manish Agarwala from Philip Capital, please.
Manish Agarwalla
Your investment has increased on a sequential basis. What explains that?
Unidentified Participant
Sorry Manish, could you repeat that question?
Manish Agarwalla
Your ego investment has increased on a sequential basis. So despite your investment declining on a. Sequential basis, there’s a quite bit of jump on investment in terms of. So the calculus yield looks quite steep in a potential declining, you know, interested environments. So can you please explain that?
Unidentified Participant
So you see the surplus in deposits because advanced growth has been rooted. So obviously the funds have been deployed in investment. But investments also. We are building up the trading book mostly. So if you look this quarter also we have made substantial income from the investment portfolio, from the treasury portfolio. So that has come because…
Manish Agarwalla
Sorry to interrupt sir. If I look here in outstanding investment book that have declined on a sequential. Basis, my question was presenting to your yield on investment. So the calculated yield on investment has increased by almost 70 basis points on a sequential basis. So what explains that? I understand.
Unidentified Participant
Yeah, yeah, I can explain that. I think on a sequential basis the yield actually has not increased. It has slightly reduced from about 6.6% to about 6.45% on an average basis. Our investment book has actually gone up. It’s so I think period to period, end to period end, you might be seeing a reduction but on an average basis it has actually gone up.
Manish Agarwalla
Okay. Okay.
operator
Manish, do you have any follow up questions?
Manish Agarwalla
No, thanks, I’m done. Thank you.
operator
Thank you very much. Next question is from line of Abhishek from hsbc. Please go ahead.
Abhishek Murarka
Yeah. Hi everyone. Good evening and thanks for taking my question. So the first question is on the EB disbursements that you are doing now, especially the group loan disbursements. Is it mostly to existing customers or are you looking for open market acquisition, new customer acquisition as well. So what is the strategy then?
Unidentified Participant
We are doing both. It’s not that only we are going to existing borrowers. 86, 87% is existing borrowers and 13 14% is coming from the new borrowers of whatever we have been discussing. But like I said that is implemented for both set of borrowers.
Abhishek Murarka
Sure, of course. But this 8687, is it now higher than say last couple of quarters or will it be coming lower?
Unidentified Participant
We have been doing 85% of existing borrower typically and banning 15% from the new borrowers.
Unidentified Participant
The number remains pretty much similar.
Abhishek Murarka
Okay, so and the beginning of the call, I think you called out a few geographies where you are not growing and therefore your growth is limited to just a few. Can you clarify where is it that you’re comfortable to grow and where you’re slowing down?
Unidentified Participant
It’s not like that. Our strongholds remain east and West Bengal, Bihar, Assam, up. That still remains a stronghold for us. Where we are not really able to grow is southern parts of India, specifically Tamil Nadu, Karnataka. Because like with the guard of three lender norm, most of the players already have got three lender norms going for. Themselves and like for other competitors for them to come to Bengal. So for us growth is a little challenging in Karnataka, Tamil Nadu with all those political infringement as well. So that’s place where we want to go, but we are finding it tough to go there
Unidentified Participant
Rather than geography wise. I can say more pointing out that view wise that is out of the 4400 views, 3100 are quite okay. But there we are focusing the growth so it is across JO and more or less because the two states they had issues in the recent past. Obviously the growth is little bit mutating those two states.
Abhishek Murarka
So on a full year basis this year in FY26, what kind of disbursements or let’s say um growth are you targeting? It would still be, I don’t know, 10% yoy or what are you thinking? How, how do you see the trajectory?
Unidentified Participant
I think it will be somewhere between 5 to 8% of growth for us in this year FY26. And because the first quarter has been. Muted and it is in fact has gone down, I think the second half of India would be better and we have to accommodate and compensate for the first half degrowth.
Unidentified Participant
Yeah, what Vishal mentioned of 5 to 8% is for the EEB portfolio.
Abhishek Murarka
Yes, yes, EB portfolio. And overall then we should be able to target a 10 kind of growth. Right. For everything put together.
Unidentified Participant
More than that because our non EV is growing at much faster pace of almost 26 27% as we said.
Unidentified Participant
Overall 15% to 17% target is the growth target.
Abhishek Murarka
Okay. Okay. Second question would be on cost of borrowings because cost of deposits actually just on the term deposit repricing. Can you give some sense of the duration of TD and how fast you expect the deposit rate cuts to start showing up in terms of your overall deposit cost drops?
Unidentified Participant
So I can say yes, we first cut down the cost in the month of April. The effect of savings is being seen. But some deposits as and when they get mature. But in our case the maximum resides in the one year bucket. So you can say so within next March. I think we will get the full benefit of this red card on this term deposit because the maximum almost 60 to 70% decides in the one year.
Unidentified Participant
Just to supplement. So savings rate was reduced by almost 30 to 80 basis points. And we saw the impact significantly in the first quarter itself. 19 basis point reduction overall on term deposits. Overall on the cost of deposits. On the term deposits. I think 20 to 30 basis point reduction has happened in multiple buckets. Some we did in May, some we did in June. And I think we should see the impact from Q3 onwards.
Abhishek Murarka
Yeah. Okay, got it. Thank you. Thank you for those answers.
operator
Thank you very much, ladies and gentlemen. We will take that as a last question. I’ll now hand the conference over to the management for closing comments.
Unidentified Speaker
Thank you. We would like to thank all of you to join for this call and would hope that you continue to place the trust with the bank. Thank you.
operator
Thank you very much on behalf of Bandhan Bank. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.