ESAF Small Finance Bank Limited (NSE: ESAFSFB) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Kadambelil Paul Thomas — Managing Director & CEO
C.P. Gireesh — Chief Financial Officer
George Kalaparambil John — Executive Vice President, IT and Operations
Hari Velloor — Executive Vice President
Unidentified Speaker
Analysts:
Mamta Nehra — Analyst
Unidentified Participant
Rishikesh Oza — Analyst
Chinmay Nema — Analyst
Abhishek Murarka — Analyst
Deepak Poddar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 FY ’25 Earnings Conference Call of ESAF Small Finance Bank Limited. 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 decision during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Nehra from Orient Capital. Thank you, and over to you.
Mamta Nehra — Analyst
Thank you. Good evening, ladies and gentlemen. I welcome you for the Q3 FY ’25 Conference Call of ESAF Small Finance Bank Limited. To discuss this quarter’s performance, we have from the management, Mr. K. Paul Thomas, Managing Director and Chief Executive Officer; Mr. Gireesh C. P., Chief Financial Officer; Mr. George K. John, Executive Director; and Mr. Hari Velloor, Executive Vice President, Credit. Before we proceed with this call, I would like to mention that some of the statements made in this today’s call may be forward-looking in nature and may involve risks and uncertainties. For more details kindly refer to the investor presentation and other filings that can be found on the company’s website. Without further ado, I would like to hand over the call to the management for their opening remarks and then we will open the floor for Q&A. Thank you, and over to you, sir.
Kadambelil Paul Thomas — Managing Director & CEO
Thank you. Good afternoon, everyone. On behalf of ESAF Small Finance Bank, I’m glad to welcome you all to our earnings call where we will discuss our business performance for Q3 FY 2025. I appreciate all of you taking the time to join us and show your support. Here with me today, my senior colleagues; Mr. George K. John, Executive Director; Mr. Gireesh C.P., our Executive Vice President and Chief Financial Officer; and Mr. Hari Velloor, Executive Vice President. I hope you all had a chance to review our quarterly results and investor presentations, which are already available on the stock exchange and on our bank website. At ESAF Small Finance Bank, we remain dedicated to serving the underserved while extending our commitment to all. Our journey is built on the foundation of inclusivity, ensuring that financial services are accessible to everyone. We take pride in our comprehensive and uniquely designed product portfolio crafted to evolve as social banking solutions that make a meaningful impact. As our vision statement goes, we have here to be India’s leading social bank, one that fosters equal opportunities for all by ensuring universal access to financial services. Talking about the macroeconomic environment, the India’s GDP growth moderated slightly in the December 2024, forecast to 6.6% for current fiscal year from 7.2% earlier. While this reflects a slower pace of growth, key economic indicators suggest a mixed outlook. On the inflation front, consumer inflation eased to 5.22% in December, down from 5.48% in November. However, the wholesale price index surged to 2.3% in December compared to 1.89% in November, indicating potential long-term pressure on wholesale prices. The Reserve Bank of India has maintained its monetary policy stance unchanged for the 11th consecutive time. However, in a move to enhance liquidity in the system, the RBI reduced the cash reserve ratio or CRR by 50 basis points to 4%. Meanwhile, favorable monsoon conditions and a strong Kharif and Rabi harvest have provided a positive outlook for rural markets. This has contributed to an increase in credit demand from rural areas, signaling improving economic activity in these regions. RBI has also started rate cuts beginning with 25 bps, reduction in repo rates indicating a reducing interest rate scenario going forward. In terms of tax collections, GST revenues grew at 7.3% year-on-year, reaching INR1.77 lakh crore in December. The steady rise in collection highlights India’s economic strength, driven by robust consumer spending and stable trade activity. Now I want to take this opportunity to reflect on our progress and outline our key strategic priorities, moving priorities moving forward. In the previous quarter, we identified several critical areas that required our focused attention to strengthen our business foundation. These priorities remain at the core of our strategy as we navigate an evolving financial landscape. Our key focus areas are expanding secured lending, enhancing asset quality, strengthening recovery mechanisms and optimizing our liability mix. I am pleased to share that this quarter, we have made progress in putting our key priorities into action. Our overall performance reflects to work across many areas while we continue to take a careful approach in microfinance. Our total loan book has grown from INR18,149 crores in Q3 FY ’24 to INR19,161 crores in Q3 FY ’25, marking a 5.6% year-on-year increase. While Kerala remains our biggest largest contributor with approximately 35% of gross advances coming from the region, we have been steadily decreasing share from 56% in FY ’21 in the Q3 FY ’25. We disbursed INR4,226 crores in secured loans, a 172% increase from INR1,554 crores in the same period last year. As per the strategic direction of the Board of Directors, to increase the secured portfolio to 45% by March 31, 2025, and 50% by March 31, 2027, we have made significant progress. As of December 31, 2024, our secured portfolio stands at 43.35%. Our total loan book, a substantial increase from 27.91% as of December 31, 2023. Within this, gold loans have increased by 22.3% over the trailing quarter and 82.1% on Y-o-Y basis. By expanding our exposure to secured lending, we aim to reduce overall risk while enhancing the quality and stability of our asset base. Now talking about the mortgage loans and MSME lending, which witnessed a 30.83% growth from the trailing quarter and 83.30% on Y-o-Y basis, contributing to the overall secured portfolio increase and the overall secured book contribution to our total loan book grew from 38.09% in Q2 FY ’25 to 43.35% in Q3 FY ’25, exceeding our initial projections. The significant rise in secured disbursement from 40% in Q3 FY ’24 to 76% in Q3 FY ’25 reflects our strategic shift towards a more risk-mitigated portfolio. This growth underscores our focus on enhancing asset quality, strengthening collateral backed lending and improving portfolio resilience. By prioritizing secured lending, we have reduced the risk exposure, enhanced capital efficiency and ensured sustainable growth, aligning with our long-term financial objectives. This shift also demonstrates our commitment to prudential lending practices, reinforcing confidence among stakeholders and investors. In fact, our secured lending book has performed beyond expectations, surpassing our FY ’27 target ahead of schedule, which shows strong demand and careful lending strategies. We will continue to build on this momentum, ensuring sustained portfolio diversification and risk-adjusted growth. The liability book has grown as per projections with overall deposit growth at 3.71% quarter-to-quarter. The increase in deposits strengthens our liquidity position and supports our lending activities, particularly in the secured segment. CASA ratio stood at 24.9% in Q3 FY ’25. And retail deposits constitute 92% of total deposits, highlighting our commitment to a stable and diversified funding base. Overall, our focus on secured lending, retail deposit growth and improving our funding mix is helping us build a strong and stable foundation for the future. The bank has strengthened its reach and accessibility by partnering with 35 institutional business correspondents. These partners operate 1,106 customer service centers, ensuring better financial services for communities across the country. In addition, we have 186 business facilitators and 669 ATMs spread across 24 states and 2 union territories, marking making banking more convenient and accessible. Our efforts to expand our customer base have also shown strong results. In the first 6 months of FY ’25 alone, we added 8.2 lakh new customers, bringing our total customer base to 91.2 lakh. Through these initiatives, we continue to build a stronger, more inclusive banking network for the future. At the end of Q3 FY ’25, gross NPA stood at 6.9% which is at the same level as of Q2 FY ’25, driven by stress in the microfinance segment, especially in certain geographies. However, net NPA remained at 2.9%, supported by higher provisioning, improved collections and a shift towards secured lending. While legacy microfinance exposures continue to impact asset quality, fresh slippages are slowing due to stricter credit loans and focused recovery efforts, reinforcing our commitment to portfolio stability. The stress test on the microfinance industry indicates that the current challenging cycle is expected to persist throughout FY ’25, highlighting the ongoing pressure on the sector. Customer indebtedness and lower disbursements have contributed to rising credit costs, creating a complex operating environment. However, despite these challenges, we remain optimistic about the industry’s future. We anticipate a gradual recovery in the coming years. With improved financial discipline, tighter underwriting standards and regulatory support, the industry is poised for growth. We have taken decisive measures to enhance portfolio quality, reduce risk and ensure sustainable growth. To mitigate risks, we have regulated our microfinance portfolio while prioritizing quality over expansion, capped the maximum ticket size for microfinance loans at INR75,000 limited the number of loans per client to 2, ensuring responsible lending. Lowered the overall borrower exposure limit to INR1 lakh from the previous INR2 lakh. Restricted new loans for clients with a DPD days past due, exceeding 60 days. Another notable improvement this quarter has been the significant increase in digital loan repayment collection. Digital repayment adoption increased by 66% quarter-to-quarter, reducing dependency on manual collection efforts. Digital repayment has also enhanced operational efficiency and improving turnaround time. Additionally, we have introduced stricter recovery regulations by following responsible lending principles to maintain financial discipline and reduce delinquencies. Stronger credit rules now ensured through borrower assessment and prevent over-leveraging. While enhanced risk controls minimize slippages and strengthen portfolio stability. Our disbursement strategy remains highly selective, focusing on regions and borrower profiles with a proven history of timely repayments. At the same time, we are enhancing credit assessment processes and implementing proactive risk management strategies to safeguard our financial position. We have established a dedicated war room under the leadership of our Executive Vice President Credit to closely monitor SMAs, NPAs, track collection trends and take swift corrective actions. This initiative has significantly improved decision-making on stressed accounts, allowing us to intervene early and prevent further slippages. Second, we are increasing field level engagement for business correspondents, given that a large portion of thrust has emerged from BC originated microfinance loans. We have deployed additional field officers in high-risk regions. These teams are actively engaging with borrowers, reinforcing repayment discipline and ensuring that BCs adhere to stricter credit and collection protocols. Additionally, we have introduced a stronger recovery framework for BCs. Ensuring greater accountability in managing stressed portfolio, our focus remains on strengthening collections, minimizing delinquencies and restoring financial stability. One of our key steps in reinforcing repayment discipline is the revival of group meetings for micro loan borrowers. This initiative is designed to rebuild borrower engagement through structured group discussions and restore the traditional joint liability group model, which are weakened post pandemic. Through these measures, we are ensuring a disciplined, structured and responsive approach to recovery. These efforts will not only safeguard our asset quality, but also reinforce trust, stability and long-term resilience in our lending practices. Our priorities for the coming quarters are clear. As we move forward, our focus will be on maintaining stability and reducing volatility in the microfinance sector. While microfinance has been a key driver of financial inclusion, we recognize the importance of a well-balanced and sustainable portfolio. To achieve this, we plan to gradually regulate the share of microfinance within our total portfolio. Instead, we will concentrate our efforts on regions that demonstrate strong repayment discipline while simultaneously shifting our focus towards secured asset growth. This strategic realignment will not only enhance the portfolio quality but also ensure long-term financial resilience. We are confident with the steps we have taken will lead to portfolio stabilization in the next few quarters. By strengthening our risk management practices and optimizing our lending mix, we are laying a solid foundation for sustainable growth in the future. While the short-term impact provisions impact of provisions and book cleanup was necessary, these efforts are crucial for long-term success. We have reinforced our commitment to financial discipline and positioned the bank as a stronger, more resilient institution. One that can navigate challenges effectively while continuing to serve our customers with confidence and trust. As we move ahead, our vision remains clear, to build a stable customer centric and future-ready financial institution that drives inclusive growth and long-term value for stakeholders. Now I hand over the mic to my colleague, Gireesh C.P.
C.P. Gireesh — Chief Financial Officer
Thank you, sir, and thank you, everyone, for joining us today. I truly appreciate your time and presence on this conference call. Let me begin by sharing an overview of our financial performance for Q3 FY ’25. As a bank, our primary focus is on serving the unbanked and underbanked communities, particularly in rural and semi-urban areas. We believe that financial inclusion is the key to economic empowerment and our efforts are directed towards bridging the gap in access to banking services for those who need them the most. As of December 2024, approximately 43.3% of our gross advances are directed towards customers in these regions, ensuring that financial support takes individuals and businesses where it can make the most impact. To further strengthen our outreach, 69% of our banking outlets are strategically located in rural and semi-urban areas, bringing essential banking services closer to underserved communities. Our gross advances reached INR18,291 crores in Q3 FY ’25 compared to INR17,153 crores in Q3 FY ’24, representing a 6.6% growth on a Y-o-Y basis. This highlights our continued efforts to extend credit to individuals and business across our key focus areas, particularly in rural and semi-urban markets. In terms of disbursements, we maintained a strong momentum with total disbursement standing at INR5,544 crores in Q3 FY ’25, up from INR3,893 crores in the same quarter last year. This translates into 42% quarter-over-quarter growth, driven by increased demand across secured lending segments. The disbursement of loans as a percentage of total disbursement increased from 40% in Q3 FY ’24 to 76% in Q3 FY ’25. On the deposit front, deposits grew by grew to INR22,415 crores in Q3 FY ’25 from INR21,613 crores in Q2 FY ’25, marking a 3.7% increase on a sequential quarter basis. This reflects our ongoing efforts to enhance customer trust, expand our retail deposit base and improve liquidity to support our lending operations effectively. A key component of our deposit growth strategy has been the expansion of current and savings accounts, CASA, which plays a crucial role in strengthening our liquidity position and optimizing our cost of funds. Our CASA deposits have shown steady growth, reaching INR5,592 crores in Q3 FY ’25 up from INR3,562 crores in Q3 FY ’24. Net interest income for Q3 FY ’25 reduced to INR487 crores as compared to INR597 crores in Q3 FY ’24 on account of higher slippages and the change in loan mix. Net interest margin for Q3 FY ’25 stood at 8.6% as compared to 11% in Q3 FY ’24. The return on assets for Q3 FY ’25 was negative on account of loss for the 9 months ended 31 December 2024. Pre-provisioning operating profit reduced to INR127 crores from INR288 crores in Q3 FY ’24. As we continue to navigate the evolving financial landscape, maintaining a healthy balance sheet remains our top priority. In Q3 FY ’25, we saw an increase in gross NPA, which now stands at 6.9%, which is stable with 6.9% decline in Q2 FY ’25. This rise is primarily due to stress in the microfinance segment. Our net NPA remains at 2.9% supported by higher provisioning, improved collection efficiency in new loan originations and continued portfolio diversification towards secured lending. However, we have proactively taken steps to strengthen our risk management framework and mitigate potential future risks. To further safeguard our balance sheet, we have significantly increased our provisioning coverage this quarter also. Provision coverage ratio, PCR has risen to 78.6% up from 73.7% in Q2 FY ’25, reinforcing our ability to absorb potential credit losses, write-offs. As part of our ongoing efforts to clean up the balance sheet and focus on higher quality assets, we have written off INR450 crores in bad debt this quarter, additional provisions to ensure that we remain well prepared for any contingencies in stress segments, we have set aside additional provisions beyond regulatory requirements. This proactive approach strengthens our financial position and enhances the resilience against future uncertainties. Despite the current challenges, we remain committed to maintaining a healthy net interest margin and we will focus on recovering NPAs and growing high-margin products, especially in secured lending segments. Our increased CASA ratio provides a low-cost funding base that will help sustain NIM level. We are also implementing productivity and cost control measures to enhance the efficiency within the company. We will continue to maintain a healthy portfolio and minimize risk exposure. These efforts will enable us to navigate current challenges while positioning the bank for long-term success. Thank you.
Operator
Would you like to begin the Q&A session, sir?
Kadambelil Paul Thomas — Managing Director & CEO
Yes.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Participants will wish to ask a question may press R&1 on your touchstone telephone. If you wish to remove yourself from the question queue, you may press. Participants are request you to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Sunidhi Joshi from NM Financial. Please go-ahead.
Unidentified Participant
Hello, am I audible?
Operator
Yes sir.
Unidentified Participant
Yeah. Thank you for the opportunity. PCR grew to 78.6% from 59.5% in the corresponding quarter last year. How do you assess the adequacy of provisions? And do you anticipate further provisioning requirements in the near term? Given the increasing stress in unsecured loans across the industry, what challenges have you made in underwriting practices and risk management to mitigate further asset quality risk?
C.P. Gireesh
As far as provision coverage is concerned, we are consistently increasing the provision coverage despite the fact that the bottom line turning into red, bank is always providing higher than the minimum requirement as well as the policy, which is over and above the RBI minimum requirement. So we proactively provide more to strengthen this balance sheet and profitability. For the time being, we are not giving too much concern for that.
George Kalaparambil John
Yes. I’ll speak something on the underwriting part of it. Can you hear me?
Unidentified Participant
Yes.
George Kalaparambil John
Okay. So I’m sure you’re aware that our SROs, the self-regulating organizations of the microfinance industry have come out with the guardrails. All of those guardrails have been implemented by us in letter and spirit. That is the first part of it in terms of microfinance. And in terms of seeing that underwriting standard maintained at a very high level. The other major thing we would like to say is a very conscious deliberate planned shift from unsecured to secured. I mean, Mr. Paul Thomas has already spoken about this when he was describing our business in the last 3 months. When he said that the gold loan portfolio has gone up and our disbursements, which was about INR1,400 crores, INR1,500 crores was INR4,000-odd crores. And the large part of that is from gold loans. Today, the secured portfolio is at about 47%. And so from the other side, when you look at it and primarily gold loans, so the credit quality has improved dramatically.
Unidentified Participant
Okay, sir. And if you can just help us understand, legal actions and asset sales have not yet contributed significantly to reducing NPAs. So are there any plans to sell stressed assets to asset reconstruction companies? And if so, what quantum can we expect?
C.P. Gireesh
See, as of now, almost whatever assets were slipped into NPA till last March, it stands fully provided for. So we have a saleable portfolio in the fully provided loan itself is around INR1,000 crores.
Unidentified Participant
Okay. And if you can throw some light on how technology can play out in improving collections and how digital interventions like automated reminders and analytics-based tracking yielded better recovery rate?
Kadambelil Paul Thomas
Definitely. What we’d like to say is I’ll take it to start with in terms of digital collections. About last June, when we started pushing digital collections in a big way, the collections coming in was about INR53 crores or so. When you look at the December end figures, our collections was INR142 crores. As you know, the portfolio per se, we have been maintaining at almost a similar level or actually rather shrunk from a microfinance point of view. But the digital collections have almost tripled, and this trend is continuing as we speak. From another point of view, the MD has spoken about having a war room and various ways in which we are supplementing the collection efforts in the field. What we are actually doing is forecasting what we would call a pre-NPA or a pre-SMA, that is SMA 0, first level of delinquency, etc. We are doing a lot of predictions based on trends. We are studying geographical trends even up to districts, et cetera. And this is being constantly supplied to the field areas and guiding them on specific actions to be taken. The traditional methods are also continuing in terms of 4 or 5 things which we do apart from the physical collections in terms of sending notices, in terms of calling them, in terms of SMS blast, in terms of phone messages that are being sent, following a logical sequence. And this we are doing at specific geographies, seeing what is working and then applying it across the other geography. So these are some of the 3 or 4 big things which we’ve done from a collection point of view.
Unidentified Participant
That was helpful. Thank you so much.
Operator
Thank you. We have the next question from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh Oza
Yeah, hi. Thank you for the opportunity. Sir, can you share past due numbers for last 3 quarters, Q1, Q2 and Q3 of FY ’25 and also the collection efficiency numbers?
C.P. Gireesh
You mean past due data?
Rishikesh Oza
Yes, past three quarters data.
George Kalaparambil John
Would somebody else like to ask another question while we collect the MIS and give it to you.
Rishikesh Oza
I have only these two questions.
George Kalaparambil John
Yes. If somebody else. We’ll definitely come back to you.
Rishikesh Oza
Okay, got it. Thank you.
Operator
Rishikesh, do you have any further questions?
Rishikesh Oza
No, no, no.
Operator
All right. We move on to the next question from the line of Chinmay Nema from Prescient Capital. Please go ahead.
Chinmay Nema
Sir, just a data keeping question from my side as well along with PaR 0, you could share the PaR 30 numbers for Q1, Q2 and Q3. And secondly, could you share the yield on disbursement for the different segments that we operate in for agri, MSME and personal loans, what are the numbers?
George Kalaparambil John
You were asking about the disbursement figures?
Chinmay Nema
Yes, the yield on disbursement.
Hari Velloor
Yield on disbursement, Okay. On personal loan, on agri and.
Chinmay Nema
On MSME.
Hari Velloor
MSME?
Chinmay Nema
Yes.
Hari Velloor
We hardly have any personal loans. So because largely, we’ve been in the unsecured field for the last few years. And so we are really not doing any other personal loans other than the microfinance loans. In terms of yield on MSME? just put that figure at 10.83%. In terms of agriculture, it is 13.24%. Mortgages are at 11.38%.
C.P. Gireesh
Gold loan is 13%.
Hari Velloor
Yes. Gold loan is 13%.
Chinmay Nema
Understood, sir. And going ahead for the next few quarters, could we see a similar level of provisions as Q2 or Q3? Or do you expect a reduction going forward?
Hari Velloor
He is asking if we see a similar level of provisions for the coming quarters? Or what is the…
C.P. Gireesh
Definitely, the expectation is that the slippages will come down and also some efforts on recovery measures also will yield results. So the provisioning impact is expected to come down going forward.
Chinmay Nema
Got it, sir. And yes, if you could share the PaR 0 and PaR 30 numbers, that’s…
Kadambelil Paul Thomas
Yes. I think the same question was there from Rishikesh.
C.P. Gireesh
Yes. PaR 0 is INR501 crores. SMA 0.
Kadambelil Paul Thomas
Q1, Q2, Q3.
C.P. Gireesh
Q1 was INR448 crores and Q2 was INR506 crores and Q3 is INR501 crores.
Chinmay Nema
Got sir. And PaR 30 number?
Hari Velloor
PAR yes, Gireesh has already given you the figures for SMA 0, that is PAR 0. Then if you go to 30 days, it was INR270 crores, INR307 crores and INR331 crores.
Chinmay Nema
Got it, sir. And if you could share the collection efficiency number.
Hari Velloor
We are classifying it into various ways. The collection efficiency without NPA is 91.47% as of 31/12/24.
Kadambelil Paul Thomas
I think we have answered for Rishikesh also.
Hari Velloor
I think so. I hope you we handled answered the question on the 0, 30 and 60 days. There was an earlier question also on that.
Kadambelil Paul Thomas
Rishikesh, can you please confirm whether your question is being answered.
Hari Velloor
Please go ahead.
Operator
Sure. Chinmay, do you have any further questions?
Chinmay Nema
No, that’s all from my side.
Operator
We have the next question from the line of Ashish Sanjay. Please go ahead.
Unidentified Participant
Sir, first question is on the slippages in microfinance portfolio. Out of your total slippages of INR505 crores, how much of it came from microfinance and how much was from gold?
George Kalaparambil John
Well, to give you a ballpark figure, the exact figures we can give you, gold is almost nothing. In fact, microfinance would be the bulk of it.
Kadambelil Paul Thomas
Yes.
Unidentified Participant
Almost entirely it would be MFI, fair to assume?
Kadambelil Paul Thomas
99%.
George Kalaparambil John
Yes, let me put that gold would be around INR20 crores or so. Even that, it is because of some loans would have a microfinance exposure, then it has gone into NPA, not gold loan per se having become an NPA.
Unidentified Participant
Okay. You mean some of the borrowers who have the gold loan, if they were.
George Kalaparambil John
Also have.
Kadambelil Paul Thomas
Yes, that’s correct.
George Kalaparambil John
That is why the gold loan has gone into NPA.
Unidentified Participant
Okay. Understood. And roughly, out of the gold loan book, how many how much of the portfolio would be to borrowed from microfinance?
George Kalaparambil John
As of now, roughly, it would be around 20% or so.
Unidentified Participant
Okay. Understood. Sir, you mentioned the PaR number. Can you just repeat those numbers? I missed out.
Kadambelil Paul Thomas
Sure. SMA 0, and I’m reading from June quarter onwards, SMA-0 is INR448 crores. And September, it is INR506 crores and December, it is INR501 crores.
Unidentified Participant
And this is SMA 0 only for the microfinance book?
George Kalaparambil John
No, it is the entire book, entire book.
Unidentified Participant
Okay. Sir, last time you had given a number, about 24% of your microfinance book was in PaR 0 plus.
George Kalaparambil John
Yes.
Unidentified Participant
Do you have a comparable number for this side? And along with that, if you can share the NPA number in MFI?
George Kalaparambil John
Okay. Total NPA in MFI would be in the region of INR1,131 crores. And for the bank, it is INR1,273 crores. So the total NPA is INR1,273 crores. And within that, the MF segment is INR1,131 crores. And in fact, gold, I’ll give you the exact figure, it is INR31 crores.
Unidentified Participant
And the PaR number for microfinance would be?
George Kalaparambil John
I’ll tell you.
Operator
Ashish, could you kindly be a little more louder or closer on the microphone. Your audio is not very audible.
Unidentified Participant
Sure.
George Kalaparambil John
It is roughly excluding NPA, it will be about INR650-odd crores. Did you get that?
Operator
Mr. Ashish, did you get the answer for your question?
Unidentified Participant
Yes. So you said SMA 1 to 90 in microfinance is INR650 crores roughly.
C.P. Gireesh
Yes, INR646 crores. SMA 0 to 90 and 90 and above is INR1,131 crores.
Unidentified Participant
Understood. Sir, just qualitatively, out of all the slippages which you have seen across states, how is the performance across the top few states, let’s say, Kerala, Tamil Nadu, MP?
George Kalaparambil John
Well, one of the good things we are able to say is that Kerala has been a good story for us in the last quarter. We have been able to bring down the slippages by a very good factor. So Kerala has been a good story. Madhya Pradesh, Tamil Nadu. Tamil Nadu is showing some improvement, but Tamil Nadu is still a bit of a concern. Madhya Pradesh remains more or less at the same levels. The fresh problem that has presented, and that’s not just for us is Karnataka, especially in the last 60 days or so. But the Karnataka government has also come out with some clarifications. So we hope that going forward, the regulated entities should be able to operate without a problem.
Operator
Thank you. We have the next question from the line of Priyesh Jain from HSBC. Please go ahead.
Abhishek Murarka
This is Abhishek Murarka from HSBC. Sir, can you give some sense of this quarter so far? So if I look at in MFI, if I look at your disbursement numbers, Q3 was slightly better. Do you see disbursements trending up? Also the disbursement in gold, is it mostly going to MFI customers? Or is it going to non-MFI customers? If you can give some sense? And collection efficiency so far in January, early February, how is that versus December? If you can give some idea of recent trends, that will be very helpful.
Unidentified Speaker
I think there were 4 or 5 questions. Two questions were clear. One is how much is the gold loans going to MFI segment? I think I had handled that earlier, that is about 20%. The second is the collection.
Abhishek Murarka
Sorry to interrupt, but of the disbursements also?
Unidentified Speaker
No, no, no. I will okay. Disbursement, I will come back to you. In terms of disbursements to microfinance gold loan disbursements to microfinance customers. Is that what you’re asking?
Kadambelil Paul Thomas
No, no, he’s asking total disbursement.
Unidentified Speaker
Total disbursements.
Abhishek Murarka
No, no. I that is what I was asking. So out of INR3,450 crores gold loan disbursement, how much of that has gone to MFI customers?
Unidentified Speaker
It is about 1,000…
Kadambelil Paul Thomas
20%.
Unidentified Speaker
No, no. You can say 20%. So that’s about INR600-odd crores. INR640 crores.
Kadambelil Paul Thomas
Yes, close to INR700 crores.
Abhishek Murarka
Okay. So incrementally also, it is about 20% to MFI?
Unidentified Speaker
Yes, it is a rough guess. I’m not giving it as an exact figure, but 20% of the book is to MFI. And so I’m extrapolating from that. We’ll get you the exact figures. I don’t have it immediately.
Abhishek Murarka
Sure, sir. And how in MFI per se, how have been the disbursement and collection trends more recently, say, in January?
Unidentified Speaker
Yes. As you know, we’ve been very, very strict in MFI disbursements and all the guardrails, all the quality controls, the underwriting strictness we have put has all come to reducing the disbursements that we are making to microfinance segment. If you ask me on a rough basis, it’s about INR400 crores a month or so disbursements that we are doing in the last quarter.
Kadambelil Paul Thomas
Yes, that’s right. INR420 crores, INR430 crores or so. And what was the other part of the question?
Abhishek Murarka
So sir, January would have been similar to the last quarter.
Unidentified Speaker
You are asking me about collection trends. I’m not able to give you a January as of now. But I’ll give you some other figures. In the loans which we have disbursed since April of ’24, the collection we are seeing is 99.7%, 99.8% or so.
Abhishek Murarka
Yes, that’s okay, sir. But it would be helpful to know the overall January collection efficiency without NPAs because that will just give us a sense of how things are trending in the MFI space where you’re operating. So that is why I was asking the question.
C.P. Gireesh
Yes. January collection was encouraging, and it is better than the previous month because I can’t give any exact numbers because it’s an unpublished.
Abhishek Murarka
No, sure, sure. Not an issue. Finally, sir, just a couple of data keeping questions. So what was your exposure to the more than four lender in MFI and the fourth lender. So if you can break that up, that will be useful.
Unidentified Speaker
Fourth lender, I think we will give you the exact figure. If I remember correctly, it was 12% or something like that. I’ll give you another figure, which I hope helps you. If you see from a total number of loans that a customer of ours has, it was roughly 1.22% or so.
Abhishek Murarka
So sir, highly negative.
Unidentified Speaker
The number of loans that a customer of ours has in the microfinance segment is roughly 1.22%. But I will come back to you on the fourth lender thing, the exact figure.
Abhishek Murarka
Yes, yes. Yes. I mean just compare so the rest of your peers have given that. So that’s why just from a comparison perspective, it would help to know what is your exposure to basically whatever under Guardrail 1 and what will come under Guardrail 2. So that is…
Unidentified Speaker
Sure.
Abhishek Murarka
Sure, if you can share that during the call, that will be great. Thanks. Those are my questions. Thanks for taking that.
Operator
We have the next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Deepak Poddar
Am I audible?
Kadambelil Paul Thomas
Yes.
Deepak Poddar
Sir, just first up, I just wanted to understand, I mean, this quarter, we had about INR410 crores kind of a provisioning, out of which I think you have mentioned around INR250 crores was because of additional provision, which we have done to increase our PCR ratio, right?
C.P. Gireesh
Yes.
Deepak Poddar
Yes. So are we satisfied with this 79%, 80% kind of PCR or we expect this additional provisioning to continue in coming quarters as well?
C.P. Gireesh
When the slippage comes down, definitely, this kind of provisioning is not required. Only the aging provision, which is normal as per our policy only will be required once the slippage numbers moderate.
Deepak Poddar
Okay. Okay. So this additional provision is not likely to come going forward, right? So going forward, our base would be more towards provision of INR150 crores INR150 crores, INR160 crores per quarter. Would that be a fair understanding?
C.P. Gireesh
Yes. Once the NPA slippage normalizes, the provisioning requirement also will moderate.
Deepak Poddar
Okay. And we do expect slippages to come down in coming quarters, right?
C.P. Gireesh
Yes, it will it is expected to come down in coming quarters.
Deepak Poddar
And the trend would be visible from fourth quarter itself, I mean, in terms of reducing provisions and decrease in slippages?
C.P. Gireesh
Yes. The January numbers gives us some comfort.
Deepak Poddar
Come again, sir, you are not audible.
C.P. Gireesh
The January numbers gives us some comfort.
Deepak Poddar
Okay. Okay. January gives some comfort that the trend would be, I mean, on a better way in going forward.
C.P. Gireesh
It is trending positive now.
Deepak Poddar
Sure, sure. And then what sort of I mean, growth we are looking at right now? I mean, this 6% growth is what we would like to end this year with? I mean, would that be a right way?
C.P. Gireesh
The quality of growth.
Kadambelil Paul Thomas
Sorry.
C.P. Gireesh
Advance growth.
Deepak Poddar
Advance growth, yes.
Hari Velloor
5% year-on-year basis. I’ll just give me…
C.P. Gireesh
One second please.
Deepak Poddar
Yes.
Hari Velloor
I was just on the listening on your question on the fourth lender. So as I had said, about 12% of the book for us, we are the fourth lender. There was a question on…
Kadambelil Paul Thomas
Previous question.
C.P. Gireesh
Current year and growth…
Hari Velloor
Expectation is it?
Deepak Poddar
Yes. What is the growth we are looking at for this year and next year, FY ’25 and ’26 in terms of loan book growth?
C.P. Gireesh
Micro or total?
Deepak Poddar
Overall.
C.P. Gireesh
Overall loan book asking. Isn’t it?
Deepak Poddar
Yes, at the entire company level, yes.
C.P. Gireesh
Next year, we are yet to project that number precisely because current year, I mean, there is a there is a medium-term plan, but that has to be reworked, which will be reworked in March based on almost we will be having a clear picture as to where we will end up in March. And accordingly, we will make a projection for FY ’26. For FY ’25, we expect that it will be somewhere around 10%.
Deepak Poddar
10% fair enough. Okay.
Operator
In the initial round, that was the last question. I would now like to hand the conference over to Ms. Mamta Nehra from Orient Capital for closing comments.
Mamta Nehra
Thank you for taking this time out for the conference call today. And also thanks to all the participants. If you have any queries, please feel free to contact us. We are Orient Capital Investor Relations Advisors to ESAF Small Finance Bank Limited. Thank you so much.
Kadambelil Paul Thomas
Thank you so much. Thank you.
Operator
On behalf of ESAF Small Finance Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.