IIFL Finance Limited (NSE: IIFL) Q3 2025 Earnings Call dated Feb. 13, 2025
Corporate Participants:
R. Venkataraman — Joint Managing Director
Nirmal Jain — Managing Director
N. Venkatesh — Managing Director, IIFL Samasta Finance Limited
Monu Ratra — Executive Director & Chief Executive Officer, IIFL Home Finance
Analysts:
Abhijit Tibrewal — Analyst
Yash Darak — Analyst
Aagam Shah — Analyst
Anusha Raheja — Analyst
Murthy Nagarajan — Analyst
Varinder Bansal — Analyst
Desmond Lee — Analyst
Gokul Raj — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of IIFL Finance 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 assistance during the conference call, please signal an operator by pressing the star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to the management for their opening comments.
R. Venkataraman — Joint Managing Director
Good afternoon, and thank you for joining the analyst call of IFL Finance. I am R., Joint Managing Director. Along with me in this call are Jain, Managing Director; Ms Ratra, MD of IFL Housing Finance; and Venkatesh, who is the Managing Director of IFL Microfinance. Unfortunately, Kapish Jain could not join us. Our CFO could not join us on the call because he is recovering from some health issues. Now I’ll ask Nirmal to share the big-picture and the broad macro macroeconomic outlook.
Nirmal Jain — Managing Director
Thank you,. In terms of big macroeconomic picture, I think the long-term structural growth outlook remains in tech, but there is a cyclical slowdown and that has impacted earnings and market sentiment. Coming to NBFC sector, I think the stress is evident in unsecured and microfinance segment and primarily due to a rising consumer leverage, whereas the income growth has not been there, so the real income has been stagnant and a significant portion of the borrowings in the recent past of the unsecured credit has been directed towards consumption rather than productive or income-generating activity and that has further the repayment capacity of the borrowers.
The slowdown in industry IIP to 3.2% further signals the weaker economic momentum. SME growth has also moderated, reflecting broader economic sluggishness. And additionally, the liquidity remains tight for most NBFCs as banks have restricted the funding access and most of the NBFCs are encouraged to diversify the sources of funding and that reduced availability of credit and rollover options for the borrowers has the financial stress in the sector. The Karnataka government’s regulation on MFI and for although targeted and under entities is affecting the borrower sentiment and the repayment culture. However, the good news is that the regulator and the government are focusing their monetary policy and fiscal policy stance and narrative towards a more supportive and accommodative approach and therefore, cyclical slowdown is likely to be halted and reverse very soon. Our I think maybe Venkat can take you through the — as-is not there today through the financial numbers and we can take Q&A after that.
R. Venkataraman — Joint Managing Director
Yeah. So thank you,. Coming to the numbers. For the quarter, IFL Finance profit-after-tax before non-controlling interest was INR82 crores, down 85% year-on-year and up 188% on a quarter-on-quarter basis. Our pre-provision operating profit was INR534 crores, which was down 29% quarter-on-quarter and down 45% on a year-on-year basis. For the quarter, our consolidated loan AUM fell by 8% year-on-year and was up 7% quarter-on-quarter. It is now INR71,410 crores. Further dissecting this AUM, our core products loan AUM, which comprises home loan, gold loan and MSME loan and microfinance, this fell by 6% year-on-year and was up 7% quarter-on-quarter on. This segment now constitutes 98% of our overall AUM mix showing the retail granular nature of our portfolio. Our gross NPA stood at 2.4% and net NPA was at 1%, which is up 70 basis-points and 14 basis-points, respectively when compared to the same-period last year and last quarter. Our — this reflects asset — this is due to asset quality stress in microfinance, unsecured loans, small-ticket lap and which effective — which reflects the overall sluggishness in the Indian economy.
The assigned loan book stands at INR12,472 crores, which is down 33% year-on-year and 11% quarter-on-quarter. We also have co-lending assets of INR9,236 crores, which is down 20% year-on-year and up 9% quarter-on-quarter. While co-lending asset grew and has met expectations, the assigned assets the declined due to reduced availability of eligible and seasoned book. This is an outcome of RBI’s embargo, which constrains new loan origination and hence the pipeline of assignable and available assets. We expect assignment volumes to recover as fresh disbursement pick-up over-time. Our quarterly average cost of borrowing increased nine basis-points year-on-year and 1 basis-point quarter-on-quarter to hit 9.16%. During the quarter, we raised INR9,964 crores through term loans, bonds and commercial paper and INR1,477 crores was raised from assignment. Our cash-and-cash equivalent and committed credit lines from banks and institutions stood at INR5,656 crores. This is adequate to meet near-term liabilities, but also fund growth. We have a positive ALM in all buckets and our net gearing is at about 3.1 times. Our annualized ROE for the quarter was 1.4% and ROA was 0.6%. Earnings per share for the quarter was INR1 per share. Our capital adequacy for these NBFC is at 22%, HFC at about 46.2% and for Samasta microfinance is 32.2%, which is well-above the minimum threshold of 15%, reflecting our off-book strategy and growth model.
With this, I come to the end and we are open to questions that you may have. And thank you once again for joining us. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhijit Tebriwal from Motilal Oswal. Please go-ahead.
Abhijit Tibrewal
Yeah. Good afternoon, everyone, and thank you for taking my question. Sir, I mean, two questions really. First one on your gold loan business, I think we saw some good momentum during this quarter, almost 39% 50% up Q-o-Q. So just trying to understand somewhere, I think we had also guided that by the end of this year, we will want to get closer to where we were prior to the bank. So I mean, what progress are you making in that direction? And is the demand strong enough for us to get us there? And then in your press release, you’ve also spoken about some pressure on gold loan yields since you’ve been trying to regain customers. So just trying to understand again what is it that we are doing there and what impact it could have on your loan yields going-forward? And the second question I had again was on the MFI business. And undoubtedly the sector is going through its share of pain. We’re seeing that in other NFIs as well. For us, in our assessment, what is the extent of the pin and is there any ballpark credit cost guidance you can give out and for us by when do we expect things to start improving maybe one, two, 3/4 from here? Those are the two questions. Thank you so much.
Nirmal Jain
Yeah. So thanks, sir. Taking your first question, gold loan volume growth is there, but the portfolio yield is down by almost 2%. The way this industry works is that normally basically to get the customers onboarded and in a very competitive environment, one has to offer lower rate. Over a period of time, the rate improves. Most of the times the customers basically opt for a product and the conditions will basically allow them to take lower rate like monthly interest or a lesser LCV. But over a period of time, this gets stabilized. So for the time-being, it looks like that our volume growth will be stronger. So we — at the time of bank, we are 10,000, then we went up to 11,000 in the 10 days after the bank, the September that 15,000. And more likely, our target was to go back to 24,000 25,000 where we were. We may fall little short of it, but still will be closer. But it will come at some compromise — some small sacrifice on the yield, which we hope to make it up in the next financial year fully. Then coming back to MFI, I think the industry has been passing-through a significant pain and also not only MFI, but adjacent loans of the cross-selling products of MFI also because the entire sentiment of borrower has been impacted. Maybe to some extent, this has been unprecedented. So I think under learning and understanding. So most of the MFI customers, if their track-record has been good, they are given the small macro or the individual loans. And even unsecured or the lap loans performance has deteriorated significantly. You know that what we gather from the market and from the field is maybe is there can talk about it in terms of how does the next quarter look. Although in the last quarter also in the beginning, we thought that things would improve, but again they deteriorated. You know, the borrowers and they know that they’re going to get new loans because of the restrictions on the number of loans or the amount of loans or also many microfinance companies pulling back. Then they stop repaying the earlier loan and-or whatever they have, because they say okay wherever you get new loans. So I just like I don’t repay, I will keep the money for my business or whatever it is. So you know, to that extent interest you are extent? Yeah. Hello.
N. Venkatesh
Yeah, I’m there,,
R. Venkataraman
Can you hear me?
Nirmal Jain
Yeah, yeah. So maybe I think you can talk about the raising stand now and how the industry should look at the you know, the microfinance asset quality going-forward?
N. Venkatesh
Sure, sure. Thanks. I mean in terms of the asset quality, if you look at what in the last six, seven months, what the industry has gone is a little unprecedented given that the industry implemented the guardrails and how the things have spanned out. Most of the states have shown improvement in collections. As in the initial remarks, what Nidmal had pointed out, the Karnataka’s ordinance is where slightly the — where Karnataka historically even during this phase was doing well, but a slight thing. So the ordinance clearly talks about it is — it is not for regulated entities. We expect slight disturbances for a couple of months or so till people — I mean, even now if you look at it on-the-ground, most of the stakeholders have understood that it is not for the regulated entities and things, but slight disturbances will affect the Karnataka for slightly little things. On an average, we will be looking at a credit cost of around — for this around 8% to 8.5% kind of a thing,
Abhijit Tibrewal
Got it, sir. Got it. And sir, I mean, there are other MFIs also who have started now reporting their current bucket collection efficiencies just to kind of impress upon us that maybe December, January things have gotten better versus October and November. Is this something that we have also seen in or for us, I mean, things are still where we were in October and November.
N. Venkatesh
Yeah. As I pointed out earlier, if you look at most of the states have started improvement in collections, especially on the zero-day bucket. I think the forward flow-in the zero-day bucket is slowly coming down. So that was the initial thing. So yeah, things — I mean, the things have improved in the last three, four months. I mean, post October, I can say November 15th onwards is where we saw the improvement happen.
Abhijit Tibrewal
And so it has sustained in Jan as well.
N. Venkatesh
Yeah, Jan also it sustained, yeah.
Abhijit Tibrewal
Okay. This is all from my side and thank you for patiently answering all our questions. Thank you so much. Thank you.
Operator
The next question is from the line of Yash from RSPN Ventures. Please go-ahead
Yash Darak
Hello, am I audible?
Operator
Yes, sir, you are.
Yash Darak
Thank you for the opportunity. So first question is with regards to the home loan segment. I think the — IFL housing finance has recorded a 20% decline in profits. So if you could just provide some color on the same.
Monu Ratra
Yeah., may I?
Nirmal Jain
Yeah, go-ahead.
Monu Ratra
Yeah. Hi, Yash. So what you are looking at — I believe you’re talking about quarter-on-quarter, right?
Yash Darak
Even a Y-on-year basis.
Monu Ratra
Sorry? Yeah. Yeah. So if you look on the quarter-on-quarter basis, Yash, in the last quarter, we had a very significant interest strip income, which was there. And if you see our numbers, which are net of the interest strip income, which in this quarter was actually negative which was there. And one, the YTD adjustment of SPC, which RBI had implemented regarding the Fair practice code, we put together, so there is actually quarter-on-quarter increase of 2% in our profit. So on the actual cash basis, we are still positive by 2%, yes.
Yash Darak
Actually, sir, I meant it on the year-on-year basis.
Monu Ratra
Yes, okay. So if we talking about the year-on-year basis, the decline, which we are seeing is primarily for two reasons. One is, again, slightly increased our cost of funds, which was there margin and the other is the credit cost. So we’ve ever since we have had a pretty, I would say, a very conservative write-off policy, which we have, these are majorly technical write-offs, which are there, which actually not write-offs, which are there as we see some stress in the micro lab portfolio. So if we see that, so the slight increase in the credit cost is the major reason for it, but we’re pretty confident of these technical write-offs to give us decent recovery in the coming quarters. But as it is ever since COVID times, we have been pretty conservative on the — our write-off policy and the SICR policy. So it’s more from that standpoint, yash, but we are very confident of all these loans being coming good in the next two quarters.
Yash Darak
Thank you. Okay, sir. Thank you. Got it. Secondly, with regards to the construction and real-estate finance, I think the AUM has gone down by 58%. Are we supposed to — are we planning to regrow the AUM or are we going to cut it down more?
Monu Ratra
So if you — I think you would be seeing this at two-levels. If you see it as a housing finance level, actually there has been a slight — it’s flattish. But overall at a group level, I’m sure Nirmal can answer better on this. We’ve been averse to the real-estate business. But as far as HFC is concerned, standalone, it’s pretty flat and we do see some headroom for growth in the HFC on the construction finance business, which is a pure construction finance for affordable units
Nirmal Jain
The construction finance that we are doing now is primarily — so the earlier one used to do it on a of land also and unapproved projects, but now it’s done for projects which have got all the approvals and the funding part is only for the construction and not for the land or so in or any other cost of sort of bringing the land to the upload state. So to that extent, there are two advantages. One is the risk is much lesser because the borrower equity is much more and two, this also dovetails into our home loan product because most of the cases that we fund, we can be one of the priority lenders for the customers. But obviously the ticket size are smaller and the portfolio performance significantly different.
Yash Darak
Got it, sir. And just a couple of more questions. With regards to gold book, when do we see the gold book normal — getting to the normalized levels this year is a —
Nirmal Jain
So next financial year, maybe from first-quarter itself, we’ll see that the yield coming back to the normal levels. The whole year will be normal. The first-quarter — so supposing we are lower on a — by say 2 percentage point, I mean, I expect at least 1% to be recovered in the first-quarter of the new fiscal year itself. But it’s very difficult to be precise of the forecast, but at least whatever sentiment we pick-up, I think this is what I would expect.
Yash Darak
And also AUM size, like we are at 15,000 odd right now. When do we expect it to reach to around 24,000 levels?
Nirmal Jain
25,000. I think year we should end at around ’22 ’23 and it will take maybe some more time to get to ’25.
Yash Darak
Okay. And last question would be with regards to the NFI loans. So are we bottoming out on the provisions or do we expect the provisions to increase furthermore the GNPA ratio that I’m talking about? So are we expecting to bottoming it out or how is it?
Nirmal Jain
See, at this point in time, we expect — again, because the industry has been so fluid and passing-through all kind of problems and new problems. But I think that we should be bottoming out now.
Yash Darak
Okay, sir. Thank you. Got it. Yeah.
Operator
The next question is from the line of Shah from Flute Aura Enterprise. Please go-ahead.
Aagam Shah
Hi, am I audible?
Nirmal Jain
Yes.
Aagam Shah
Sorry, I just had one question and I think Yash, I had already asked it, but I just want to clarify, the gold loan AUM will be back by next financial year, right?
Nirmal Jain
Yeah. So gold loan AUM will back by mostly maybe in a very close vicinity of wherever we were by this financial year end, which we have talked about March ’25. The yield will be back to normal in the next financial year.
Aagam Shah
Okay, that was it. Thank you.
Operator
Does that answer your question, Mr Agam?
Aagam Shah
Yeah, that was it. That was it. Thank you.
Operator
Thank you. The next question is from the line of from Dalal and Brocha. Please go-ahead.
Anusha Raheja
Yeah, thanks for taking my question. Good evening. So I just wanted to understand why there is a reduction in the assigned assets on Q-on-Q basis.
Nirmal Jain
So as per RBI regulations, you can assign the assets and they require minimum seasoning or minimum period on your book of three months if the asset duration is less than two years and six months the asset duration is more than two years. So you can assign book only of the assets which have been on your books for minimum three to six months, but practically because after that three months, you give it to the rating agencies and you give it to the potential buyer of the assets. So it takes another one to two months. So normally the four to five months lead-time for say gold loan and seven to eight months for the other products before the — is ready to assign. So this signal requirement is RBI regulation that you can assign assets only after they stayed on your book for certain minimum time period.
Anusha Raheja
Okay. And sir, incrementally co-lend — assigned assets and on the co-lending side, which of the assets you know that other assets have been assigned.
Nirmal Jain
We assigned all the assets, the gold loan, the home loan and even the SME for that matter. So all the products that we do are all assignable assets.
Anusha Raheja
Okay. And
Nirmal Jain
But as I said that when there is a disruption in the first-half then it will take us four, five months, six months for the assignment book to be ready in a significant manner for our size.
Anusha Raheja
Okay. And sir, on the asset quality side, there was increase in the secured business loan as well in this quarter. So how do you assess overall or MSME loan secured plus unsecured asset quality — from asset quality standpoint going-forward. So how do you see that shaping up? And what could be the consol credit cost number that we can expect for Q4 or say for that matter in FY ’26.
Nirmal Jain
So the entire segment of high-risk credit which is unsecured as well as micro small-ticket secured, they have been very badly impacted. Many of times, these borrowers are also MSME and they need it for working capital or business. When overall system credit reduces, they are not able to roll-over. And also the whole sentiment, everything also gets impacted. So the business has slow-down, the income slows down, the repayment defaults happen and so when we say if you on Slide 12, we have now given a breakup of MSME secured, which is lapped and unsecured, which are sourced by three different entities. And what has happened is the, which is a microfinance entity, their sourced assets have suffered the most because are the same set of borrowers who are also microfinance customers. Typically in the microfinance industry, 25% of the book can be non non-microfinance.
And it was actually supposed to be a diversification and a better — so the individual — so what happens, the microfinance is given to a group of women, typically five, when they have a good track-record, say, for two years, three years, then individually microfinance companies will lend them, sometimes unsecured and sometimes against some property. Now the properties also in the rural or areas where they live and the property can be, but their repayment will happen with the cash-flow. When the income and cash-flow is impacted, then you see that unsecured as well as the small-ticket are secured both get impacted similarly. But NPA might be saw similar trend. But in case of property, our experience is that ultimate defaults will be lower because you have ability to take the property or that trend basically make the borrower you know get financial somewhere, but not lose the property. So the ultimate losses might be lower in the lab segment, but GMTA is impacted by cash-flow, which is similar impact on and that actually depends on the profile of the borrower.
Anusha Raheja
Okay. But I just missed on to your credit cost guidance for the MFI segment. What did you — what percent?
Nirmal Jain
Vector spoke about it 8.5% was his guidance., that’s the number.
N. Venkatesh
Yeah, that’s 8% to 8.5 percentage will be around.
Anusha Raheja
He first-quarter. Thanks. Okay. And sir, on the construction finance, I think sequential growth has been quite on a higher side. So if you could just give some color as to how do we see this segment growth shaping up over the next three to six months’ time because this forms one of your non-core segment, right? And what is the — so what explains such a sharp rise and what is the strategy of growth in this segment and incremental why you’re saying perspective whether this is sharp rise, where-is number? Actually the decline there, significant decline. Construction finance book has gone down. And you see look at Slide 11 actually. Okay.
Nirmal Jain
So probably you’ll see a rise in capital market, but this is a small base. So — but otherwise the construction finance book has fallen 39% quarter-over-quarter and 69% Y-o-Y. Okay. Okay, sir. Okay
Operator
Thank you. The next question is from the line of Mursi Nagarajan from Tata Mutual Funds. Please go-ahead.
Murthy Nagarajan
So this question is directed to. So can you give us some idea about what is happening recently in this company right now? So this is
Nirmal Jain
The bank.
Murthy Nagarajan
Yeah, so which you are reading in the news. So if you can give us throw some light on that.
Nirmal Jain
No, I’m sorry, Banglade Bank, how would I be expected to throw some light? Bank you are saying right?
Murthy Nagarajan
Yeah, so what has been happening recently in the company like if you can give us some light or can you give us some idea about what is happening.
Nirmal Jain
So you are saying in our IFL or where IFL you are saying right Murti, I can’t get your question. Can you repeat it? Hello,
Murthy Nagarajan
Actually I am
Operator
Hello, Mr Murti, can you hear us? Hello. As there is no response, we’ll move on to the next participant. It’s from the line of Rendra Mansal from Omkar Capital. Please go-ahead.
Varinder Bansal
Hello, everyone. Thanks for this opportunity. I hope I’m audible. I think maybe Mr Muthi also wanted to have some light on the news which was going around the income tax, okay, said the IFL. You know any, any light on that?
Operator
Hello mister Vankatesh,
N. Venkatesh
Who yeah, I’m there. I’m there Nidbal is there online.
Operator
Ohh, yes, sir, sir is there on the line okay, sir, I’ll just disconnect and reconnect, sir okay,
N. Venkatesh
Okay, how wait
Nirmal Jain
Hello, can you hear me?
Varinder Bansal
Yes, sir, we can hear you.
Nirmal Jain
Yeah, so I was responding to the question about income tax by earlier, I think. So you know, income tax had a search and office provisors of all our group companies as well as the residential provisors of some of the key employees, including mine and the search are under — they have right under Section 132, where basically they take — I mean they check documents, take data, take statements of various people. Obviously, they have some suspicions and there could be some undisclosed income or under-reported profit. But as a company, we follow the highest standards of governance and compliance of tax as well. So we gave all the statements, documents state as required. And as a search concluded, it started on 28th of Jan and it’s concluded on 2nd of Feb or maybe 3rd February morning. So five, six days, it was there in various devices.
Varinder Bansal
So. So any results, sir of the income tax-rate
Nirmal Jain
Will be higher. Okay. The way the process is that there is nothing which was there for us to declare or do anything or for them to do anything at this point in time but once they collect all the data and documents then the process that I’m told is that they will make something called report which can take about three months, which goes to assessing officer which then if he believes or he believes that the income was not reported fully, then they give a notice to the company, the assess of — that you file a revised vision within 30 days. And if we do not file revise or revised visit similar to what it was and then the assessing officer feels that still there is a cause for doing an assessment differently so they can do it and for which you can go in a field against it, engaged they are not satisfied. But at it at this point in time, we don’t have anything to this.
Varinder Bansal
Okay. Thank you, sir. Thank you so much. My second question, sir, in the press release, you have mentioned that we believe the worst is behind us. So just hypothetically thinking that we have taken all the pain of the technical provisions in the last two, 3/4. So next quarter we will not be having more technical provisions coming in and hopefully the quarter-four will be better than quarter three and progressively.
Nirmal Jain
Yeah. So if you look at the average loan book of gold, profit is not the lowest in last quarter because it has been declining till September and has — we started to resume, but still the yield and low gold loan has been impacted very badly. In terms of provisions, yes, I believe that we have taken and in case of MSME, our insurance cover start from the loans, I think from September, to October. In microfinance, I think sub-pay is still there, but it may not be as bad as the 3rd-quarter, which was the worst ever quarter. So all put together, I think that worst is behind us and things should improve. Also, if you notice that even the RBI narrative and the government has also been pro-growth and pro supportives rather than the sort of a tightening or more the regulatory actions, which have been very stringent in the last few months. So all these put together, they are very good and things should start improving from here and this will improve significantly as we go-forward.
Varinder Bansal
Okay. Sir, my last question, if permitted. We also hear that RDI has been pushing for demerger of the home finance business. Any idea on that?
Nirmal Jain
No, I think RBI have no view on this. I don’t think RBI or RBI for this.
Varinder Bansal
I mean, RDI said,
Nirmal Jain
You know, RDI, oh, no, IDI is a long-term investor. So I think there is some understanding and they are invested for at least seven years in terms of their own investment. So it will be done strategically whenever it’s appropriate time. So I don’t think there’s any push or pull from either anywhere for demerger or otherwise.
Varinder Bansal
Yeah. Okay, sir. Thank you so much. Thank you so much for taking the questions. Thank you.
Operator
Thank you. The next question is from the line of Desmond Lee from Wellington Management. Please go-ahead.
Desmond Lee
Oh, hi, management team. Thanks for the call. Just maybe two items here. Can I ask you about the capital levels for the standalone entity? I noticed it’s declined Q-on-Q by quite a bit. I think about 2% to 22% now from 26%. Just wondering, can you provide some forward guidance as you regrow your loan book will your earnings be able to follow that at low book growth and maintain a capital level? Just want to get some sense whether this number
Nirmal Jain
Capital has fallen from
Desmond Lee
26.3 to 22% Q-on-Q. So I was wondering for guidance on where you want to bring capital?
Nirmal Jain
Okay. Yeah. So the is the margin is down because the loan book has grown obviously. And as I said, the assignments have been much lower because they require seasoning. So the way our long-term strategy on the capital efficiency has the loan book grows, then that consumes your capital. But if you are able to sell those loans along with the risk, then that reduces the capital. So last quarter, our assignments have been much lower because the book has not seasonal, but loan book has grown pretty smartly in case of gold. And therefore, what is the decline that you have to double to ’26 to. And also the subordicate debt of the Tier two capital. Can you just give you a yes, the Tier-2 capital fall is then the bonds maturity reduces to less than five years, then we can’t consider them as Tier-2. But we can always — in this quarter will raise more subordinate bond. And when we assign the assets, the capital will be restooked to the earlier levels. So we are watching it very carefully, but it’s just sort of a phase that just it. And we are enough cushion actually because we are far above the regulated level.
Desmond Lee
Okay. So just to clarify, so as you start to pick-up on the assignment, again, you expect cap levels should get better from here or
Nirmal Jain
Yeah. So when we do assignment, the — okay, capital a function of the risk assets on your balance sheet and what your own capital is, your own funds are. So your own fund basically will in increase by profit, which also has been much lower in the last quarter for regions that we discussed. And your risk assets have gone up because we have not assigned. So when you assign those assets to bank along with the risk, your risk assets go down, which is the denominator and the capital goes up. So to summarize, you’re right that as assignment picks up and as we raise somebody has bond, both these things will contribute to higher capability. At the same time, when the loan growth happens, then the capability goes down.
Desmond Lee
Got it. So maybe just one final question from my side here. Maybe just on the liquidity side, it seems like the liquidity buffer has weakened compared to pre-pandemic levels. Just wondering, are you taking steps to improve that free-cash plus undrawn lines buffer going-forward. I noticed you’ve issued a dollar bond since then since the quarter-end. So maybe just some thoughts on your liquidity position, where you want to maintain that going-forward.
Nirmal Jain
So these numbers as of December 31st that time the liquidity buffer is close to little less than INR6,000 crores. The dollar bond issue money came out 14 — sorry, 24th of January this quarter. So the liquidity as we speak is back to the normal level, but you don’t see them in these regions, you see them in the next quarter. The door amount issue happen in January, these numbers are in December.
Desmond Lee
Got it. So can you give us an updated level like just taking coverage of your next three months debt and interest payments, would it be higher than the next few months payments?
Nirmal Jain
No, we are very well-covered for next six months of interest in and principal payment
Desmond Lee
Six months. Okay.
Nirmal Jain
Actually, actually. For the contract, we are covered yes, our six months total maturity is — I mean, I’m talking in Indian INR5,297 crores and our liquidity as of 31st December was INR5,656 and now in the month of January, we have further added. So we are well-above requirement for the next six months.
Desmond Lee
Thank you very much. Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and 1 at this time the next question is from the line of Gokul Raj from Industries Group. Please go-ahead.
Gokul Raj
Hi, could you speak a little bit about the availability of funds for growth? And also is co-lending and asset man partners with the — is it similar to what you’ll see predone in terms of pricing and availability of funds or has there been any structural decrease — decrease in the — or additional interest premium that we are still looking for. Thanks,.
Nirmal Jain
So availability of the fund is not an issue, but the cost is an issue and the dollar bond that we have raised in the month of January full hedging, the cost is significantly higher. It’s almost kind of double-digit and that will impact the weighted-average cost of fund going-forward. But you know the availability of fund is not an issue. We are able to raise from banks, mutual funds and the external commercial lenders or investors as well.
Gokul Raj
So when do you expect — you said roughly you will catch-up on the yield side, let’s say, in a year or so. So let’s say from a spread point-of-view, if you get.
Nirmal Jain
Sorry. You ask your voice properly. Can you please repeat?
Operator
Mr, can you please use your handset?
Gokul Raj
Is it better now?
Operator
Yeah, please go-ahead.
Gokul Raj
No, I was just say asking on the yield side, you had mentioned that within a year, you expect the yields to normalize on the gold loan side. So from a spreads point-of-view, when should we expect the economics to return to the pre-band level?
Nirmal Jain
I think next financial year as a whole, and of course, the trend will be evident from the first-quarter itself.
Gokul Raj
Okay. And then from a growth point of vie, I know growth probably may not be the first concern at this point, but from a growth point-of-view, any broad view on how you are thinking about growth next year?
Nirmal Jain
I think whatever we are seeing now in terms of — as I said, even the cyclical slowdown seems to be reversing. And I think we should look-forward to strong growth next year. We don’t give any forward-looking guidance, but I think this year has been a year of consolidation challenges as well as the certain unexpected thing that happened. Next year should be a very strong growth on a base from a tender point-of-view, this year is like more or less stagnant compared to last year in terms of size. So next year should be a very — I’m very optimistic on the next year’s growth.
Gokul Raj
Okay. Sorry, just on the — on assignment and co-lending, you said the yields have increased. So the costs have increased, but as all the all the partners onboard and the quantum of lines that they give to you for these co-lending or our payment, we think that’s pretty much similar to the pre-band stuff.
Nirmal Jain
So the cost across the industry for in particular, had gone up. Now this is the story till December. What we are seeing now is that the unanimous consent of NPC to reduce the rate and also it looks like that NBI seems to be committed to make sure that the liquidity issues do not arise. So I think that the cost of funds also seem to have peaked out but the impact of okay, what will happen is that as I said, if we raise high-cost money in the month of January. So your March quarter impact will be there of the cost of fund. But beyond that, I think the — incrementally we’ll see cost of fund moderating.
Gokul Raj
Okay. And last question would be on gold loans. Has there been any change in the type of product? Is it getting more EMA-based or is there any change from how we were doing the business since then to now? And so once you get back to the old peak, should we expect normal growth or is there something different that we should think about?
Nirmal Jain
So as of now, we’ll have a faster growth as we are recouping our customers and business. But next financial year, we should see normal growth.
Gokul Raj
On the product and mix change, is there any higher product EMI-based gold loan that’s happening or is it just the normal mix similar to —
Nirmal Jain
So our focus more on retail, smaller ticket loan, but I think mix will be more or less similar to what it was. We have down on the — so the larger ticket loans, strategically we are focused on the smaller ticket customers more as compared to the larger customers.
Gokul Raj
Thank you. Best.
Operator
The next question is from the line of Mustin Agarajand from Tata Mutual Funds. Please go-ahead.
Murthy Nagarajan
Yeah. Am I audible now? Yes, go-ahead. Yeah. So I want to know on one thing like how is the next two years, three years, how do you see the composition of your balance sheet changing? How much will be a gold loan, how much will be unsecured? If you give us some breakup on this?
Nirmal Jain
Yeah.
Murthy Nagarajan
Or you got some idea about how you would like to go?
Nirmal Jain
Yeah, I’ll tell you thing. So one is that the microfinance industry has undergone a fundamental change in terms of because the new guard which restrict the amount to broadly to lag INR3 lakh number of lenders from unlimited to four or maybe three going-forward. So microfinance growth, which was a significant driver of growth in last three years will not be — will not see much growth and as of now, they’ve seen decline, right? So what will we see is the microfinance, which I say around 15% of mix or 14% right now will roll-down to 10% or even maybe slightly lower than 10% over the next two, three years. So gold loans will continue to be strong in-home loan as well. Yeah. But within MSME, we’ll see that the secured piece will grow faster. The other thing like personal loan, we have discontinued, which we had earlier with Jest and partnership we had done primarily in ’22, ’23. The structural real-estate has already declined, it’s not declined now, but will be a relatively slower-growth. So in terms of mix, you’ll see that our — if you see the current mix, then home growth is 42%, gold loan is 21%, but this is because gold loan was impacted in the first first-half. So both these will be around, say, one-third, one-third of our total portfolio. And microfinance may be around 8% to 10% and then another — the 20% 25% will be MSME road 25% or so, which will have two-thirds or 70% will be secured and the revenue will be unsecured. Okay. Broadly speaking, our unsecured, our target is to bring it to 15% or lower of the total portfolio.
Murthy Nagarajan
Okay. Thank you. But this will also affect your margins, right, going-forward.
Nirmal Jain
You know, that’s a good question. But gold loan margins are good. And secondly, you know, in the other — the home loan also, because we are able to sell-down the asset the margins are I mean I mean pretty okay. So there will be some advantage of cost-income ratio also because when the book for whatever reasons, cost-income goes up. So yes, this will be a little lower, but cost-income will also come down. So on a — on a ROA level, there will not be much
Murthy Nagarajan
Okay. Thank you.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
R. Venkataraman
Thank you so much for joining us on this call. And if you have any other further questions, please feel free-to reach-out to our Investor Relations department, and more than glad to answer your question. Thank you so much.
Operator
Thank you. Thank you. On behalf of IIFL Finance Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.