Jana Small Finance Bank Ltd (NSE: JSFB) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Ajay Kanwal — Managing Director and Chief Executive Officer
Abhilash Sandur — Chief Financial Officer
Analysts:
Nitesh Chan — Analyst
Manish Ostwal — Analyst
Saumil Shah — Analyst
Rahul Bagaria — Analyst
Kamal Mulchandani — Analyst
Darshil Jhaveri — Analyst
Shailesh Kanani — Analyst
Sarvesh Gupta — Analyst
Chintan Shah — Analyst
Unidentified Participant
Sagar Shah — Analyst
Anant Mundra — Analyst
Vikram Subramanian — Analyst
Presentation:
Operator
It. And gentlemen, good day and welcome to Jhana Small Finance Bank Q3 and 9 months FY25 earnings conference call hosted by Investech Capital Services India Private 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 touchstone phone. I now hand the conference over to Mr. Nitesh Chan from Investec. Thank you. And over to you sir.
Nitesh Chan — Analyst
Thank you, Steve. Good afternoon everyone. Welcome to Q3FY25 earnings conference call of Genai Small Finance bank to discuss the financial performance of Chennai Small Finance Bank. And to address your queries we have with the top management team from Jenna Small Management. The management team is presented by Mr. Ajay Kanwat, Managing Director and Chief Executive Officers. I would now like to hand over the call to Mr. Ajay Kanwal his opening comment. Over to you sir.
Ajay Kanwal — Managing Director and Chief Executive Officer
Thank you very much and welcome everyone. Like last time I would focus on the investor presentation we have uploaded and I’ll be referring to the pages of the investor presentation when I speak. So let me start by using slide number three. So we had a very strong quarter three where both gross NPA and net NP have declined. And I would really like to ask to go through these specific numbers with me which is in the box. So first, regulatory provision in Q3 has come down to 81 crores versus 149 crores of Q2. And if investors, analysts who are on this call remember what I said last time. I did say that Q2 has seen the peak of our challenges. And this drop in regulatory provision 149 to 81 is from that purpose. Second, we are providing extra provision so that our NET NP remains below 1. And that is primarily due to our need to apply for a universal bank in May this year. As we all know, to apply for a universal bank you have to meet conditions of gross NPA below 3, net NPA below 1 for two consecutive years. We met it last year and to make sure that we meet it this year we keep providing the accelerate provision. So in quarter three we have done that for 93 crores. However, if you see the net NPA has fallen to 0.91% versus 0.9% of Q2. Our PBT post the regulatory and actual provision is 105 crores which of course is higher than Q2 of 88. If you add back our deferred tax asset which is lower in Q3 from Q2, our PAT is at 111 crores and 97 crores versus 97 crores of Q2. For people who would like to calculate what would have happened to PAT or ROA or ROE if there was no accelerate provision done by the bank. I’ve also given those numbers our adjusted pat. Just adding back accelerate provision and taking away DTA would have. Been 204 crores. Our ROA would be 2.4% and ROE would be 20.7. So very important that we understand accelerated provision the need for us to do it. And of course both GROSS NPA net NPAs is dropping. I will show you credit cost in detail on the next page. But on the very high level it’s been a fabulous quarter with a drop in regulatory provision with an increase in PBT and if you go down to the balance sheet we have seen a solid growth in secured loans 36% year on year and now a secured book stands at 68% from 60 in the March ending financial year ending. Our unsecured book has declined 7% year on year given stress in the MFI business. And from last quarter we’ve initiated CGTMSE for the micro enterprises who are in business and for the rest of the MFI book CGMSU and I will share with you how much we already put into the guarantee program. Our deposits continue to grow well and our LCR is at 279%. Our book value has improved 380 per share which I thought I will share so that we are very specific about it. So very important to remember from the first page it’s been a declining gross NPA net NPA and if one were to remove the excellent provision taken by the bank that would be at 204 crores. Page number four of the presentation deck is our credit quality. The credit cost Q1 196 Q2 210 Q3 down to 174 in 174 actual provision itself is 93. So one is actual credit cost has dropped. If I take away actual provisioning and recoveries then the net credit cost is just 44 crores. So again I would like to repeat for folks who are attending our analyst calls regularly we have seen a drop in our credit cost in Q3 the peak challenges behind us. And then I’ve also given because many of us want to know what happened to the gross NPA during the period and so what to anticipate. So here we are on the opening gross entry we open at 755 crores. We added about 437 crores and we had recoveries and write up of 434. We have flat is on closing gross NPA. Now what is the portion of gross NP and net NPA which is secured and unsecured? We certainly will cover before I go into Q and A. So the main thing to remember from here is a drop in credit cost in absolute terms. And if you take away the accident provisioning, it’s even much lower. Our PCR continues to be very healthy at 66.94. And when I say very healthy because 66. Assuming or rather given a secured book of 68%. The other two points I want to cover which are Q3 developments which is now slide number five. We have taken roughly CGT MSC which covers 13.3% of our portfolio and by March 25th we will hope to reach about 25 to 30% of portfolio under both the guarantee programs. I want to emphasize that our staking guarantee program is just to make sure that anything unforeseen in the future does not shake us from a credit cost. We are conservative in how we lend, much more stringent than the MFIN criteria. We do believe our book is performing much better than the industry. But I did want to make sure that we were extra careful given the environment. The second thing that I have pointed out here is the cost to income ratio. And for all the folks I have actually done OPEX to total business which is what is my asset book and deposit book. I have divided that by total cost and there you can see the 0.9%, 0.92%, 0.91 per quarter. So really a cost is not going up. It is in line with the AEM growth. The challenge being the NIM is dropping because unsecured book is dropping and that is stretching the cost income. So moment we stabilize our unsecured MFI book which we expect to do in quarter four which is it doesn’t drop any further, just remains where it is or goes positive, our cost income will start getting better. So you should expect cost income to start getting better. There is nothing extraordinary on cost that is happening. It is just a change of mix between secured unsecured and we have seen an unexpected steep decline in unsecured. So I just want to give comfort to everyone that we have our eyes focused on cost and this is just a mathematical thing which will get aligned as the MFI book stops de growing and of course will get even better as it starts growing. Finally I want to show CASA. Now we took a step on 3rd of October of cutting our CASA pricing because we did feel that there were a lot of expensive CASA coming in which to our mind was not the best CASA to retain. Having done that, I have shared with you what was our cost of CASA as of September end it was 4.8%. It has now fallen to 4.44% in the quarter alone purely because we have taken away the upper end of casa. The result is that our CASA ratio is down to 18.43% since we dropped on 3rd of October. Lot of the expensive kacha which migrated to other banks. We could recover from retail bank, from retail casa, but not all of it. We’ll certainly make CASA positive as we go into quarter four. Our LCR continues to be very healthy. We are very liquid. So there are no challenges around that. So big take away from here is we are at 68% secured. We are on trajectory to become 80% secured at 20% in unsecured. We as a bank would like to put that under guarantee programs so that there is no event risk that we will run once we do that. Second cost income is showing an increase not because of some extraordinary cost, primarily a drop in the mfi. And third is we have aligned our CASA rates. We do think that this may be a short term but certainly the healthiest thing to do for CASA growth. I will now move on to slide number nine. Very important to see our asset book and see how the asset book is really growing in the areas we want them to grow. So affordable housing for nine months with an average ticket size of 11.9 lakhs has grown at 25%. Our microlap which is average ticket size of 6.4 lakhs has grown by 14.3%. Our MSME loans has grown 17.4% by 73.9%. Our gold loans at 104.9%. So all the core businesses are unsecured, are really going in a very healthy business in a very healthy rate. We continue to expect to see a strong growth insecured in quarter four too unsecured as you can see as in the nine months has degraded by 11%. And I do expect that quarter four we should at least at the minimum hold back any further decline. And that is not for any other reason. We do believe that our focus on our business, the criteria we have applied, gives us comfort in making sure that we hold the book at this point and start growing it. Because the new book obviously is doing very well. I want to now move on very swiftly to slide number 14 which will show you our anchor bank. I just want to make a very important point. We’ve always said that the future of us is making sure that the aspirational customer, the middle of India gets a home bank. And we want to be the anchor bank for people following our anchor bank slide which is there in every quarter you will see that hold on penetration in home loan and lab customers has increased from 1.8 last quarter to 2%. Our TD penetration which was at 19 has gone to 20. Our pre approved business loan which is at 15 has gone to 16.5. Doing this is super important for us because this is where we get operating leverage. This is where we get a competitive mode and this is where our customers really treat us as a bank. Once we get more and more of these customers, we will get better and better credit quality and that is the reason we put up this slide and we keep focus on it. And I’m glad to present to you that there is real positive change here. I will now move on to the next slide which is on the deposit side. I want to cover two, three points here. First, our CV ratio is 102 for two reasons. One really is we had FDOD growth on the last week which was unexpected, which has been paid down which is why if you see the last page on secured assets, there’s a big jump in FDOD growth which is for this quarter. Otherwise it could have been at a 98 or 99%. Second, we always keep it in the 90s because we do know, all of us know that we have refinanced line from NHB, SIGBI and Nabad. We have taken additional 730 crores of NHB and SIDB money. This is 10 year and 5 year money at very good pricing. But we do it because it does help ALM getting long term rates. So on the liquidity side, few things to remember. LCR@279 we are very liquid. We don’t have a challenge of doing. We are maintaining CD ratio at a slightly elevated level only because we do not want too much cash on the balance sheet which tends to be a drag. And the reason why this happens is purely because we do get refinance lines from nfd, Sigbi, Nabad, which we do think is very healthy from a tenor mismatch angle. Next, I would like to move down to slide number 19 and I really want to reaffirm that. If you take away exit provisioning, you take away DTA, we end up at a 2.3% ROA which is the true value of the bank and we would certainly be in the two plus range once we kind of finish the net NPA less than 1 and gross NPA less than 3. Once that is sorted out, we’ll be there. Slide number 20 gives you a net NPA breakup between secured, unsecured and total where you will see that nearly 79% of net NPA is with secured loans. The secured loans have property backing it with AN LTV of 46%. So there is not much one should expect in terms of credit cost going forward. I really want to repeat on the credit cost we had said that in Q2, it will come down in Q3. We have seen the worst and we certainly have put this behind us. I don’t want to give an illusion that it is not hard work. Still is a lot of hard work and we are very focused on making sure that we continue and persist with that and keep this credit cost at the lowest point as we go along. I have a PNL slide which is slide number 21. Our PBT of 350 crores. In this tough environment has been the highest we’ve ever done so 350 crores. 354 crores. PBT is after 208 crores of accident provisioning and of course with the help of 24 crores of deferred tax asset. And very important for all of us to know this because you know there was certain trajectory you may be expecting from us and rightly so in terms of profits. I just want to say that we are maintaining that trajectory. It’s just that we have to make sure end NET NPS to below 1, which is where we are doing accelerate provisioning. The management and the board remain consistent and everybody’s on board as they used to be. And with that I just want to give one or two highlights before I close and open it for Q and A. Number one, credit costs have dropped. If I take away accelerate provisioning which is required to maintain NET NPO below 1% we are really at the extreme low end of provisioning anticipated the worst is behind us in Q2 itself which is what we had signalled and now you can see the numbers. Our secured group is growing very strongly and so we should be in the 35% range when the full year finishes. On secured growth, we would like to grow our unsecured book in Q4 at the minimum keep it stable. We are very focused on cost though we think mathematically the better answers will appear any which way in Q4. And LCR remains strong, our deposit growth remains strong and we are very liquid with that. Thank you so much and happy to take on questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use ANSEC while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manish from Nirmal Bang. Please go ahead.
Manish Ostwal
Yes sir. Thank you for the opportunity and stable set of performance in tough microenvironment. So congratulations to the team. So my question on the microfinance business. So in your opinion where the stage of the pain in the industry number one and secondly when you say the quarter four will see some growth or stable and secured book. So I mean are you seeing collection trends in the current book is improving and can you talk about from October, November, December how the trend of collection. That is the question number one sir.
Ajay Kanwal
So Mani thank you. Let me tell you what I think first having an industry answer may not be possible anymore. I think whether it’s SFDS or it’s MFIs now you will see divergent performances and two things will decide that. Number one is who has what composition of book and that becomes a very important so you know secured book can also be of various natures. Our secured book is largely property backed so we should have a different answer again MFI we have never done lot of growth so if you take our 2018 book to our December 2024 book our CAGR would have been around 1%. So really you should not see much of a challenge because the book has grown slowly. It’s not that there is no challenge but the amount of challenge would be less. So I really don’t have a good answer for you saying what is to be accepted by industry. I think you will have to go by the books. Now where are we on MFI industry? I must tell you that reaching 99% by the 2022 of the 20th or 22nd of the month is still very hard. We kind of stay at 98.5 98.6. That’s a collection percentage of B0 I’m talking of. I’m not adding anything else except what is demand in B0 and what is collected in B0. So and we still keep fighting till the month end to reach the 98.5 98.6 I don’t think so. That is changing in a hurry. But having said that we are consistency 98.5 98.6 we can see the new book that we have disbursed through the year is performing well. Whatever we could have seen as challenging we think most of it is already passed through. So I do think that we have comfort to now at least keep the book flat if not grow it and that is a step we are going to take in Q4. I hope this helps but see very importantly I did say in Q2 that you have seen the peak but and we may be probably among X number of players who will probably say that in Q2 different players will have different depending on you know what kind of books they have.
Manish Ostwal
Understood and the second question to Abhilas I remember on the end of the quarter for earnings analyst meet you said the operating expense growth will be 8 to 10% for the year but if I look at the nine month number it is growth of 19.5%. So given the pressure on the credit cost how do you see the growth in OpEx growth versus your guidance raise of 8 to 10%.
Abhilash Sandur
So the OpEx growth, I think it’s in line with the AUM growth. So what has happened is if you see covered it also. In the slide earlier. So the OPEX is going in line with the AUM. So we had given a earlier guidance of 8 to 10%. This is that scenario not considering any additional connection cost and additional marketing spend which would have been required during the year. So that being said, probably so that is the reason there has been a slight blip during the current year. So I think you want to add.
Ajay Kanwal
Sure. Thanks Manish. Math is very simple. If you take page number five, we have people in microfinance, about 8,000 of them, but the book is negative for the year for about roughly 11%. Now if this book would have been positive 5 or 6%, which is what if there was no stress, that would have been a normal year, then our cost of income would have probably been around 55% and we would have justified this cost increase. Now the challenge is we have the people who are doing collections now and not doing any incremental business. Which is why you have elevated cost and rightly so, because you obviously have more collectors than what we anticipated and the collectors are not doing new business, you know, so cost income is getting a bit challenged. I don’t think so. We are increasing collection capacity anymore. I think we are already having enough and more that we need. So you should not see a cost increase. And like I mentioned that if you stabilize the unsecured book in Q4, which means at the same level that is today, or even slightly positive, you will see a pushback again on cost income will go down. The reason I put a very specific box is I just want you to know that we’re very conscious of it. We should always be very proud of our cost income and we would like to bring it back to the 55 levels because, you know, our longer term aim is to get to the 50 to 53%. But right now the collection focus is more important to us, which is where we added the bodies. Second, as you know, there has been a bit of attrition across the industry which does cause a bit of a jump in the people cost and probably a harder push towards collections talent being higher than it normally is in every year. If you add the two up, that will explain why our cost is higher. But then I would have anticipated this question and it does bother us, which is why we put up that box. And we certainly would like to see a better cost income as we get into Q4.
Manish Ostwal
Last question on the slightly longer term perspective. So you mentioned in Elsmith that we aim to achieve the secure book of 80%. Our margins keep on declining because of the rise in secured book and declined MFA book. So if I ask you what one should model your sustainable ROA given the cost metrics and the pricing of the credit cost and the NIM profile on a sustainable basis.
Ajay Kanwal
So Manish first is again, I would like us because here is a bit of an extra. Slide number five. Slide number five gives you earning at 7.6%. And it tells you that if the MFI book had stayed for that grow even it had stayed at the March levels, my name would be 8%. Okay. Which means my secured book name is actually holding up where it needs to hold up. 8% was a NIM in March. 8% would have been my new in December. Forget growth if I just held the microfinance book flat to match. So that is what I want to give you. Comfort that even though we are turning secured, we have micro lab, we have gold loans, we have two wheelers, we have affordable housing and means are very handy. So that’s rule number one. Another point number one. Three years our model was that our NIMS would drop 30 basis points. Sorry 50 basis points. As we turn 80% secured, I want to tell you the point to point. So we assume 60% in March 24th will get to 80. So 20% change in secured 50% drop. 50 basis point drop in min. CASA will improve from 20 to 30. So 20 basis point help from CASA, net min negative would have been 30 basis points over three years. So you are not seeing that 30 basis points today. What you are really seeing today is the CASA, the microfinance book going down from 9,800 to 8,800. That the secured impact is not in. That’s what the secured book has done very well. And in fact it’s holding NIM exactly as it was in March. There is no decline in secured NIMs. It’s just a decline in unsecured.
Manish Ostwal
Okay, thank you. Thank you very much.
Ajay Kanwal
Thanks. Manish.
Operator
The next question is from the line of Shamil Shah from Paris Investments. Please go ahead.
Saumil Shah
Yeah. Hi sir. So we have guided for a 30% pet growth for this year. Which means we have to almost do around 500 crores of profit for next quarter. So how far it is achievable. Of course we will be taking some DTA benefits in next quarter. But still it’s a very tall task. So would you like to revise our guidance?
Ajay Kanwal
Yes. Well listen, I didn’t put any more guidance because I think quarter four one can calculate. But let me just step back a bit. See if you take slide number three. Adjusted fact that is at 586. Forget DT completely. You just think that if I didn’t have to put excellent provision I was in the number that we had guided towards or probably slightly better. And the reason I put it up is exactly for that saying our business model had there been no need to be net NPA below 1, you certainly would have been at a 5. 500 plus number. It would not be exactly what it is because we may not want net MP to go much higher. But certainly I would have been better than it. And which is what I’m showing saying if you step back and think about the franchise ability to produce that it’s much higher. And I do think that now that the worst is behind us, we had a very strong quarter. We have seen our credit cost decline. I think our acceleration in TBT in quarter four will certainly be higher than what it is seen in Q3.
Saumil Shah
Okay. Okay. And sir, as per the last quarter we had 740 crores of DTA. So can we know how are we going to use it? I mean is there any calculation for next two years?
Ajay Kanwal
So as per our original calculation, you know we would have used most of our DTA except the last hundred crores when we end 27 this year. Obviously we will leave a bit of detail on the table. We do want to sit down now and we are going to do that as we started in next year that how we use most of our DTA because we have two more years to use it up. We have some ideas in our mind and we will certainly be working on it. We will share it with you all when we come for next year. So when we open up next year when we do full year March 25, we will do two things for you all and of course for us. One is to make sure that we give you guidance for next year which is very straightforward. Our guidance on asset 20% we meet. Our guidance on deposit growth of 20% we will meet. If you give us the benefit of adding back accelerate provision then we are meeting the ROAS, ROEs, etc. But we will come back with guidance for next year. When we do March 25th we will also share with you how do you plan to use up the dta? Because we do have a small gap which has come up from this year.
Saumil Shah
One just a bookkeeping question for the current year. I mean I just wanted to calculate on the PSL certificate. So see when we become a universal bank our PSL requirement will be at 40% from 75%. So how much any additional benefit can we get on the sale of PSL certificate?
Ajay Kanwal
So CSL certificate won’t give us much benefit. I’ll tell you why. The larger PSL book when you turn from a 75% to 40% will be the surplus MSME micro enterprise which doesn’t get you too much value when you sell it. Maybe 10 basis point, 20 basis points so you can use about a 30:40 crore at best. Not anything more significant because the real money in PSLC is when you sell the SMS which is small and marginal farmer which anyway we are surplus and we make use of that PSL CCL even today as an ssb. So one is there is not going to be a big jump in profit from 75% PSL to 40% PSL. I do think that. You should. And at least in our heads we are budgeting a 25 basis point minimum drop in cost of deposit when we turn into a universal bank. And we do expect the velocity of growth of both CASA and deposit to be much better. When we drop the word small finance those are the two things in our mind that we are contemplating. There are other cases like you know, your capital adequacy may drop etc. Etc. But you know 25 lakhs, 50% book has to be below 25 lakhs will change in. But those we don’t think as impactful. I don’t think. So we’re going to cut down our capital efficacy or we’re going to you know do a lot of big loans. I think everything else will be the same but I think for us the main change will give us certainly a big advantage on with velocity and cost of deposits.
Saumil Shah
Okay, okay, that’s it from my side. Thank you and all the best.
Ajay Kanwal
Thank you so much.
Operator
The next question is from the line of Rahul Bangaria from Luck Investment Managers. Please go ahead.
Rahul Bagaria
Thank you so much for taking my question. Sir, first question is on your slide number four which you have kind of covered before. Just if you could just give us a sense. You know the additions during this period have broadly been in the same range as pre previous quarter but the regulatory requirement of provisioning has come down. So just give us a sense of what is the recovery is all about. 430 odd crores because your recoveries under other income is also not a very big number. So just to give us a sense of what and where do we expect this 400 crore odd number gross NP addition to kind of go in the future.
Ajay Kanwal
Right. So two things. One is it also has technical write off and recovery both in the 434 line. So that’s the first important piece in terms of recovery out of 434 that would be about 100 and I talked around 100 909. 109 rest is all recoveries. Yeah. And the recoveries comes in two lines. One is in the credit cost and second is in the other income. So we do anticipate that both will continue as we go into Q4. We would be able to take technical write off as we do full provisions and we will continue to get good recoveries which we have seen an acceleration of in Q3. We do think Q4 will sustain that. We are hoping and working towards the addition which is 437. We should bring down that a bit more in Q4. And we should end up with a closing GNP number which is flattish to lower than where it is right now.
Rahul Bagaria
So given the nature of. Sorry, please continue, sir. Please go ahead.
Ajay Kanwal
I will add later.
Rahul Bagaria
So. So given the way in which the book is kind of evolving toward an 80 secured book, this what is your expectation of what the credit cost will look. Because from what I. From what we see in the. One of the slides where you have given the gross NP numbers even for your affordable home and the micro lab book they have gone up quarter on quarter from Q2 to Q3. What is your expectation generally on that book?
Ajay Kanwal
So let me take one by one. First is we did say that our credit cost this year will be 1.6 to 1.7% and given where we are in Q3 we will end up with a 1.6, 1.7% cost and easier. Very important is to also look at slide number 20 which gives you a sense of where the challenges if at all can appear. Where you can see 79% of net NP is in the securities which tends to be. It is more a timing issue than whether you will get your money back. And ngds are very low in our three year model which I explained earlier that we have assumed a secure of 80%. We have modeled a 1.5% credit loss.
Rahul Bagaria
Okay, okay. Right. And sir, last question before I go back to the queue. Any extraordinaries in the current quarter in terms of interest, write back or anything like that.
Ajay Kanwal
So I’m looking at Abhilash. No, nothing that should change. I think the only extraordinary. I must say that what we had not anticipated, we tried but couldn’t succeed. We were hoping to stabilize the microfinance book in Q3 but somehow the focus on collections continued to be high. We had a good October, but again November, December, hard work. So our disbursement didn’t keep up to what we thought we could do. Other than that we in our working also we didn’t find anything else which looked odd.
Rahul Bagaria
Right. Sir, thank you for taking my questions and all the best.
Ajay Kanwal
Thank you.
Operator
The next question is from the line of Kamal from Investec Capital Services. Please go.
Kamal Mulchandani
Thank you so much sir, Congrats on a good set of numbers. Like firstly, like following up on the question of the previous participant, like could you highlight the reasons why there was an increase in the GNP in the secured segments of micro lab and affordable housing?
Ajay Kanwal
Right. So it just, you know, for us very specifically two states are showing a bit of extra challenge and I don’t know whether this industry wide or Jenna specific one is in the state of Odisha. Secondly, we have seen slight pickup in West Bengal. We have taken actions to address those and we do believe that we should see this dos NPA certainly getting more better than where it is right now. But not. Nothing that you know, if the question is around are you seeing a spillover from microfinance into micro lab? The answer is no. We don’t have too much overlap and we don’t see the micro lab responding also like that. These are affordable housing. But we do think there are two geographies where we need to tighten up our shop and our act. And which is what we are focused on doing. Nothing other than that is giving us any discomfort. Which is why if you really see quarter on quarter advances group which is on page nine, we continue growing affordable housing in micro lab at a very healthy clip of quarterly growth of 7% and 5% or further 6%. So nothing that would worry us but little bit hard work in two geographies.
Kamal Mulchandani
Okay, got it. And was my understanding correct that the write offs during Q3 is 109 crore rupees?
Ajay Kanwal
That is correct. Abhilash mentioned that. And listen, see first I won’t tell everyone that this whole feeling anxious about what microfinance can do, what does the numbers look like is all behind us. Given a choice, we would certainly like to make sure NPAs does remain below 1. Because we want to become a universal. So we are doing our best to get to the right points. And Q3 has been to our mind extremely good. Because you know the numbers we kept talking about in Q2 saying this is our peak. We’ve actually shown the numbers. If you take our credit cost is actually shown including access provision. Also you know which is very large number. If you take a slide number four, you know trade cost is at 174 versus 210 of last quarter and that 174 is 93 of accelerate provision. So yes you are right. The technical writer was 109 and rest were recoveries.
Kamal Mulchandani
What was the number during last quarter
Ajay Kanwal
Taking a write off? You know, just check. Just give us a minute. We’ll just check.
Kamal Mulchandani
Okay, sure. Sir. Also if you could just help.
Ajay Kanwal
There was no technical write off. Only this quarter we are technical.
Kamal Mulchandani
Okay, got it. Sir. Also sir, if you could just help us out like what is the blended credit cost and roas for your secured book and unsecured book.
Ajay Kanwal
Okay. Blended credit cost. Okay, why don’t we take a next question while Abhilash quickly calculates that.
Kamal Mulchandani
Okay, like this is all from me. Sir, it would be great if you could just get back to us on the credit course and RN numbers. Thank you so much.
Operator
Thank you. The next question is from the line of Darshal Javeri from Crown Capital. Please go ahead.
Darshil Jhaveri
Hello. Good evening sir. Thank you so much for taking my question. Firstly congratulations on a great set of results. So. So just wanted to know with regards to like you know now a bad growth like on a reported basis will not be able to do a 30. Can we know expect next quarter like it’ll be similar on what we have reported like 110 crores. 111 crores.
Ajay Kanwal
No, certainly should be better for simple reason. You know whatever asset we’ve added this quarter, it’ll give us extra income next quarter we certainly would like to grow at least stabilize our unsecured book. So that will also add to the profits. We are not expecting any higher credit cost for sure. So I think that should also be positive. You also know that quarter four is anyway good for all bank. It’s the best quarter in every year which means a lot of disbursement goes up and certainly leads to a lot of fee income. So I mean if I just use those three parameters of bigger balance sheet going into Q4 unsecured, hopefully stabilizing and higher disbursement in Q4 I do expect my cost of deposit to go down in Q4 and that I can see happening because we’ve repriced our casa, we had also repriced our deposits. So I would anticipate much higher EBT impact and I would certainly like to keep NET NPO below 1 and gross NPA below 3 as I go into as I finish the quarter. I can say that with great comfort because we are on the 21st of January and we are really having clear view of what we are expecting.
Darshil Jhaveri
Fair enough sir, that that’s very helpful sir. So the accelerated provisions, those will maybe end in FY26 right? Like or we’ll. How long will we continue these accelerated provisions with the dampening a book quite a lot. So just wanted to like after we apply for the universal Banking License, will it continue in Q1 also or how would it go through? Sir,
Ajay Kanwal
I think the unwinding will happen over the next three or four quarters. It won’t happen in a abrupt matchup but what will happen is the addition to the actual provision will diminish as we go into next year. So certainly you know, because right now the total corpus of action.208 crores, let’s say we take another 60, 70, 80 crores in quarter four should be closer to like 275 to 300 crores of accurate provisioning we’re carrying in the next year. So obviously we use up those provisions. But certainly I don’t see a wide. We should add more to them. And remember, you know, as your unsecured book stabilizes. Right. The need for provisioning anyway comes down. Secure doesn’t take too much provision and like I said, you know, the small blips in secure will get sorted out. So I do see that, you know the carry of accelerate provision, which means my PAT is reduced this year, it won’t happen next year and make sure that what that number is, I put that clearly in slide number one so that there is clarity in everybody’s mind that what to expect with our franchise.
Darshil Jhaveri
Yeah. Any kind of, you know, guidance that you would like to give for FY26 right now.
Ajay Kanwal
So listen, asset growth 20, liability growth 120%. I mean that we said for this year we will achieve it. We will certainly put up a similar guidance in next year. I don’t think so that will vary us. I think what we want to give around PAT and ro’s roe, we just want to take time to finish this year and see the impact of how the release of asset provision happens etc. Just be very clear about it and then we’ll certainly come back to you when we declare the March results, you know.
Darshil Jhaveri
Okay. Okay.
Ajay Kanwal
Right now is asset and liability growth will continue. Secured group growth will continue. We will not like to see a decline in it. So all three are going to happen. We will try and grow CASA even harder. And like you’ve seen, we’ve grown the CASA cost down. That strategy won’t change. So I think those are the some of the givens you should assume that Jannah as a strategy and that won’t change.
Darshil Jhaveri
Correct. Fair enough, sir. That’s it. From my side. So all of us, thank you so much.
Ajay Kanwal
Thank you. Thank you.
Operator
The next question is from the line of Shailesh El Kanani from Centrum Booking. Please go ahead.
Shailesh Kanani
Good evening sir, and thanks for the opportunity. Sir, can you point out any strategy which we have deployed in three third quarter means apart from the collection efforts because our performance seems to be very well in terms of visa. Visa.
Ajay Kanwal
Very good question. Sorry. So did you finish your question? Sorry, you’re breaking it a bit.
Shailesh Kanani
So I. Sorry, is it better you want me to repeat the question?
Ajay Kanwal
No, I got it. I. Yes, I’m repeating. You’re asking why is our performance better? Did we apply any special strategy in Q3.
Shailesh Kanani
Right. And any states you would like to call out where our performance has kind of sequentially improved dramatically or anything you would like to follow. Any states which are performing well.
Ajay Kanwal
Right. I just want to take you and everybody else on this call to a slide which. This is slide number 11. So first out of 8000 888-899 crores total unsecured book 5124 is individual loans. I do not think we’ll get too many other MFIs or SFDs which are high proportion of individual loans. We have been doing individual loans because we were in urban micro finance. We moved to our individual loans way back in 2018. The one thing about individual loans is they are lot more urban in nature. And you can see we have given a pickup where our agri and non agree is. But you know we give individual loans to people who have finished one cycle of withdrawal. And number two after an underwriter visits them and this is a visit by an underwriter of credit to figure out what the cash flows are before you give them a loan because typically the uninterrupted loans are higher. So I think one of the reasons our book is better is two one, it’s individual loans. We had done underwriting two, you know individual loans collection behavior is far better now than group because in individual loans there is no you know gang up of people saying okay let’s get together and not pay or you know, let’s put up a barricade outside the village thing. No MFIs are allowed. That all doesn’t happen. Individual loans there is no ringleader here. There is a customer and there is a bank. And second this customer is going through a credit cycle, knows what credit is. And third my underwriter has visited him. We were making giving the market this clear indication even in Q2 but you know we didn’t have the numbers to back it up because Q2 did see an increase. And we kept saying that listen to our mind we have seen the worst of it and the start point of evaluating us versus you know what will happen industries. To start from this page see what is their book made up of.5124 is individual loans.1643 is BC where we have service guarantees which means if I don’t get my money collected by them and it turns NPA they are responsible in a financial sense. Right. So if you add these two you can see why my credit cost should be lower. Both because we had service guarantees from BCS which roughly is 20% of my book. Individual loans is 5124 of 8000 crores which is a few 55 to 70% of book is very different from a regular MFI or an SFB I would think and which is why you would expect differential performance. And we are very convinced we will continue this strategy. Yes, we had a few hiccups with three bcs. We know what to do differently now. But remember, out of the 17 bcs, 14 were very good. So the three we have taught us lesson we’ll fix it and then we’ll move on. So just, just to add up means. Sorry to harp on this but even so I was looking for sequential performance. See individual share was high for us even in second quarter right. Maybe a few bips here and there but even in second quarter we were had more than 50% share individual lending. So just wanted to know if we have done because individual book per se has seen a marked improvement Q on Q so I was just wondering if something has happened over there. So one is, you know some of it would be technical writer because you heard abhilash that we have not done technical write off in Q2 we have done in Q3 if some of the GNP drop is what to do with the technical write off. So you’re right it looks better than Q2 and I think one of the reasons would certainly be the tech write off. But if you step back and say listen even if you take Q2 numbers they’re on 4% odd for individual loans and I think individual loan will show across MFIs and SABs and banks better performance than group loans. And I think again unless somebody has done it in a very odd way if you have done a credit decision these are customers who are credit experienced I do think you will get a better experience in IL then you will get loans and I do think more of the industry will turn towards IL as an answer because batteries are broken. There is no ringleaders around this and you will find that customer behavior with the bank or a financial institution when it’s one on one will end up being better.
Shailesh Kanani
Fair enough sir. Any, any, any, any shout out for any state in terms of performance.
Ajay Kanwal
So where are we working very hard? I’m looking at Raman now We were working very hard in Bihar. Yep. We have certainly a challenge in pockets of UP but not all over. So I wouldn’t call out the state in general. There are a few districts there we certainly are seeing stress in Odisha and that we can see both in MFI and even our housing book. So there is a general level of challenge in Odisha. I think other than three small pockets of West Bengal, nothing significant but we’ve never had big part of our exposure there. Yeah I mean that is what I would call out.
Shailesh Kanani
Fair enough, that’s helpful. So my second question was with respect to PC book. So PC book has again seen a noticeable decline sequential basis and GNP is also sorry.
Ajay Kanwal
A big reason again is CBC book first is improving. So that is the rule number one. But some of it is maybe any tech writers taken here could be the reason. But yes, if you should take away that and when you look at the credit cost, the one assumption you should certainly make sure is there that the unsecured achievement was including the BC book.
Shailesh Kanani
Okay, so just last question from my side. So in our individual lending and gag customers what other products we would have in terms of overlap apart from the unsecured loan? Do we have an overlap with affordable housing or any other product for our customers?
Ajay Kanwal
Here is what I mean. You must know we have 3005 on street to do affordable housing micro labs. These 3000 people are reporting to a business manager who runs affordable housing microlab business and most of them or other, I would say all of them are from either banks or NBFC who do housing or life. There is no overlap of salesforce between microfinance and affordable or affordable housing or micro lab. So that’s rule number one. The credit underwriting of affordable housing and Micro Lab is done by separate set of underwriters which has a scorecard and you know, physical visits valuation legal that we would follow. I also want to clarify that our Micro Lab is not moral obligation by customer. It is surfaceable property. Even though it is six and a half lakhs. We don’t have a product which is please deposit a power of it on a this property transaction and we’ll give you a loan property which a legal lawyer has signed. Yes, and we can do surface reaction on it. So that’s my. So I don’t want to clarify this because if there is like how much is the impact of micro finance on this in our book should not be high. Are there any microfinance customers in affordable housing and Micro Lab? Yes, because there are certainly a lot of microfinance who are good. This would be about 5 or 6% at best of the affordable housing Micro lab group. We have tested their performance and the good news is that our microfinance Micro Lab customers who are from microfinance background, sorry affordable housing Micro lab customers who are from the microfinance background, their performance is very good but they are not a large chunk. And predominantly there will be only one secure only one unsecured product for this customer. Right? Be it individual or jlg. So we only have one circuit in the bank only. We have no other unsupervised business only. Our entire bank only does microfinance where you can get a GLD if you’re a GLG graduate, you’ll get individual loan. There is no other unsecured product. Only in the bank.
Shailesh Kanani
Okay, Fair enough, sir. Thanks a lot. And best of luck, sir.
Ajay Kanwal
Thank you.
Operator
Thank you. Participants, please limit your questions to two per participants. The next question is from the line of Sarvesh Gupta from Maximal Capital Private Limited. Please go ahead.
Sarvesh Gupta
Good evening. Thank you for the. For giving me the opportunity and congratulations on a good set of numbers. Most of the questions have been answered. Just one thing, if you can give some more clarity. Hello?
Ajay Kanwal
Yeah, go ahead please.
Sarvesh Gupta
Yeah, so this 2.3% adjusted ROA that we have earned for 9M now, you know, once the tax benefits go away, you know this can also come down by around 25%. So. And then you explained that there can be a 30 basis point impact due to the. Due to us reaching 80%. Sort of a secured book. So net net. Where do we, you know, see maybe in two, three years, where do we see the ROA and ROE stabilizing post tax benefits are also over.
Ajay Kanwal
Yeah, so that’s a good question. So at three years later, and you rightly funded admin will be a compression of 30bps. It will be 80% secured. What we had not put in our numbers three years from now is we will also have a thread guarantee run secured. We’re going to model that now. But in the past model that we had done where we had turned 80% secured with a drop of NIM, our ROA would be 1.8 to 2% range and ROE between 16 to 17%. That is a steady state model that we had imagined would happen. And also I must add that CASA had become 30%. So there were three variables. 80% secured, CASA at 30% drop in NIM of 30bps and then ROI would be 1.8 to 2. Cost income would be about 53% and ROE would be 16 to 17. The one variable that I would like to now add is now I have a credit guarantee program. It does have a cost, but it also has an upside to us if something does go wrong. So we’ll just put that model in and when we see you again after March results, we’ll bring that forward to all of you. I do think that it’s important for us also to do it, but I must admit that we have been too busy around trying to bring around this stability and turnaround in the credit cost. Now that we have a bit more breathing space, we will certainly complete that and share with you folks when we bring the March results.
Sarvesh Gupta
Okay. And on the CASA cost. So this time you had reduced it in October and I believe we pay a decent sort of a savings rate beyond 5 and 10 lakh. So as we grow, do we sort of expect to be a top tier, sort of a savings bank interest rate player, or do we have intention to sort of reduce it. And given that now this time you have reduced, so your casa has also dropped. So how do we look at this entire scenario? If you can throw some color on that.
Ajay Kanwal
Yeah. So, you know, what we felt was at the top end, you know, when you’re offering a 7.8 or some other, you know, extreme CASA rate, you tend to get very large tickets. And fundamentally we looked at it and said, listen, this doesn’t help us grow a casa, but is this the kind of CASA that we want to, you know, build ourselves from? Because, you know, once you start going that route, then you get more and more of that. Because that is very easy to get right. You’re really paying money and getting good casa. So we said, okay, the upper end, let’s kind of cap it to a point. It is not that we’re going to reduce our price and become uncompetitive, but that extreme end, you know, we don’t want. There are banks, which, I mean, we don’t. We know where a CASA went and which bank actually got it away and what price. But we think that is too extreme a price. And our bias is, listen, there is no hard work. We’ll open branches, RMs. You know, if you see our presentation, there is a lot of segmental offers. We have started. We have seen very good traction for mit. So at some point, you know, we think that there is a CASA pricing has to be very competitive, but there is some competition that we did not want to play and which is why we cut it off.
Sarvesh Gupta
Thank you, sir. And all the best.
Ajay Kanwal
Yeah. And listen, I put this slide again showing cost decline because, you know, there is a CASA decline in the industry. So people may think that, you know, CASA is down like the rest of the industry or in part, etc. I just want to make sure that, listen, our CASA decline is clearly on a price drop. We have recovered some of the money gone out. Recovered means the wholesale money or wholesale CASA has gone and retail CASA has come in. But we have not really reached the point of, you know, matching it up. We’re going to work hard and get past that. Yeah, sorry. Abdul Ash has an update for one of the previous questions. Kamal, you had asked the question. We said we’ll get back to you by calculating it.
Abhilash Sandur
The credit cost between segments for 2, 3 secured. If I remove the accelerated portion, the regulatory portion was 23 crore unpecured, 56 crores. That is our credit for Q thing. So that one answer was finished. So that I’ve given you.
Operator
Thank you. The next question is from the line of Chintan Shah from ICIC Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity. So just firstly on the PCR also, so for in this quarter we have ended up our secured PCR to 48 percentage from 29 percentage in the previous quarter. So probably what could be the reason for the same? So is there any change in the PD assumptions or LVD assumptions or how is it?
Ajay Kanwal
Very simple. Yeah, see listen, I have no other place whatever I provision in unsecured, I’m taking a technical write off. Right. Then I’m left with secured book. Now if I have to keep net NP below 1, I have no other way to but to increase TCL there. Okay, so probably just to keep net NPA below 1, this has been done. Yeah, of course. When we started the year we had 18% and some of us suggested that why don’t you make it like 20 to 30 because that is what the industry is. So we made it 28 last time but now we are not the room we have to make it 48. I worry that when we put the next money in this quarter to give net NPA below 1, it may become 58 or 68 also. But yeah, that’s the way it’s going to go now.
Chintan Shah
Sure. And I don’t know if I missed this but have you mentioned the microfinance slippages for the quarter which was like around 230 crores in the last quarter?
Ajay Kanwal
No, Abhilash is giving the number. Just give me a minute.
Chintan Shah
Sure. And also one more number. So I think do we. Did we mentioned the collection for the last three months, Any numbers, their work could you please provide. And also on the January, how has been the collection trend so far for the unsecured portfolio specifically and even on the secured front, are we seeing any spikes or any steep decline in the collection efficiency?
Ajay Kanwal
One is on the secure side. I mentioned a few geographies where we can see uptick and which I think is more to do with us than an industry in general where we have to tighten up both our collection effort and some of the trade parameters. So I think that is one. Nothing stops us from growing. So we continue our growth path. Nothing is alarming us but just some work to be done and we fix it. On the unsecured side, I do think January, February and March, between the 30th of the month or 31st of the month we’ll be running hard to reach the 99%. I don’t think so. Anything has got streamlined that we’ll reach 99% or 98.5% which we have been doing by the 20th or 22nd. I don’t think so that stability is there either certainly in the way customers are responding and how the industry is looking at things. So I think that hard work will continue. Only thing now I can see is people are more confident of it than they were in the previous quarter which is why I feel the disbursal will pick up even more and the book will flatten out. But we do think that we are very, very attentive on microfinance. Still, the only good news for us is given the shape of our book, we haven’t had the damage that one would have anticipated. And which is what you all can see in this Q3 results. But yes, nothing on secured, which should. I’m being very clear here, there’s nothing there that is, you know, rub off and fund that. I think just two geographies actually, which is challenging.
Chintan Shah
Yes, sure. Answer. So we have already made 208 crores of accelerated provisions so far and probably another 60, 70 as mentioned would be done in Q4. So roughly 300 crores of baggage. So what will make us reverse this accelerated provisions in Q4. So what could be that trigger for the reversal of this provisions?
Ajay Kanwal
So it’ll be happen over the next year rather than next first quarter of next year and will be driven by. Yeah, sorry. And so you know, very simply put, you know there is a need to keep net NPA below 1 and to keep the net NP below 1. When you have slippages there’s only one basically provisioning for it. So I do think as the slippages are getting more and more normalized, we will need less and less provisioning. And when some of these customers after some point will need a hundred percent provisioning, we will not need to put any more provision because already provisioned for it and certainly on the unsecured side, whatever this 208 crores goes to unsecured, that won’t be that we fully used up either we’ll collect the money or we’ll use it 100% provisioning. So obviously our need for provisioning estate will be lower. But all depends on. So the Q3 provisioning will probably unwind around Q2 Q3 next year. What we provisioned about I think around 60 crores in Q1. That is probably what will be available in Q1 next year. So it is that kind of phasing will happen. But important, you know Chintan is, you know we did give a set of numbers that one should expect from the bank. I do think that if you add the actual provision a lot of it is visible. So when you do forward numbers you should say the bank doesn’t have to put an excellent provision. It already has 300 crores corpus and surplus. What will the numbers look like? And so it makes life very easy for you and hence and be very upfront about it, I put it in slide number three saying assuming we don’t do any excess provision, what would the bank look like? It’ll give a better sense of what next year will look like. Probably it could be better if there is a reversal as well on the credit cost. Just give me till March. No, I. If I made a statement here which I wasn’t very clear about when I sit with you with March results, I’ll give you a clear sense of when the reversal will happen. We cannot continue with beyond point but you know, the speed of reversal and which quarters will it come? Let just give me an opportunity to do it right. One thing you should know for sure is when we finish this year. We’re right now Pat. Around 360 odd crores. We have one more quarter to go. You can take any reasonable addition to that which is better than Q3. So you know what Pat will finish with. Plus we’ll carry about 300 crores of accurate provision. So you can do a fair estimate for next year now. Which means that we will not have accurate provision. And plus some of this provision will get removed. Least if not all of it so you can take a fair guess of why the number yeah, sorry well I said from our side that proper guidance will give you when you meet with us sure sir. Sure sir. And such a lastly on the credit guarantee scheme so when is the recovery? Any timelines on the recovery? When can we expect that and what could be the quantum buys Any thoughts there? No so I’m hoping since then there is no recovery because this year just started guaranteeing now if they turn NPA we’ll have to request the institution to give us the money ito fresh disbursement I’m hoping I never go back to them for money but whatever we’ll see in the will probably happen next year if we some of these do turn NBA I think what you will see Chilton is next next few quarters will keep adding to our cgt, MSC and CGMSU guarantee programs so that any event risk on unsecured will not disturb us too much it will of course disturb us a bit but you’re very marginal what we have seen this year I don’t want to see it any other year so more it’s a more of a kind of an insurance taken against the portfolio right. And you know given that we have seen no external event yet we saw stress in the book right that means there is possibility of future stress without an event and you know our takeaway for all our investors has been a persistent consistent book where we are predictable we got disturbed now we have taken our medicine and we want to make sure that we don’t get disturbed in future there’s enough and more business to do Books are performing well we are in 180 cities we’ve got 24,000 people our products are all seeing Covid in their existence we are very comfortable with the growth and what we are doing so I want to take away one amount of winter I thought BC was one opportunity and to be fair BC has worked well the three haven’t But I do want to also add up to the cgt, mbc, CG and a few I also must tell you that even my BC book I am also guaranteeing that while I am doing my own book also so we are doing the entire unsecured book both BC and non BC so that there is even for my BCS there is much more safety in the future if something odd happens which none of us can
Sarvesh Gupta
Sir Sure. And just lastly on the MFI slippages number has it handy.
Ajay Kanwal
230. Yeah. 230. Yeah.
Chintan Shah
So that is flight on QOQ website, right?
Abhilash Sandur
Yeah. Yeah.
Chintan Shah
Sure, sure. Yeah. I think that’s it. From my pen. Yeah. Thank you.
Ajay Kanwal
Thank you.
Operator
Thanks. The next question is from the line of Ashlee Sonjay from Kotak Securities. Please go ahead.
Unidentified Participant
Hi sir. Good evening sir. A few data keeping questions. Firstly, how can. How do you account for the FLDG on the BC book in mfi?
Ajay Kanwal
So simple. It goes to npa, there is a deposit which is available under the service guarantee program and we take the deposit and we apply it. So what happens is my net npa my trade cost goes down. So two things. Gross NPA goes up that I can’t change net NPA because I take the money and apply it. The net NPA remains stable which means remains lower. And my credit cost also doesn’t take that into account. Roughly we would have taken about 110 odd crores out of the various deposits available with us during the year. That comes as a provision reversal. Then provision made. No. So no reversion required the moment you go to NPI applied a deposit. Okay. And secondly can you share the SMA book in MFI as on December and September. So you know if you see what’s sitting in the. So I would use this. We haven’t done the SMA breakup but we did want to give you a sense of what’s going in. Which is what we have done in slide number four where our closing gross NPI is about 756. Right. And if you take slide number. Give me a second here. Yeah. So please slide number 20. Right. So slide number 20 will tell you that you know out of the 758 crore 382 is secured, 225 is unsecured and 151 is DC. Mostly the unsecured. And the DC book is got a PCR of 86 and 98. So no trouble coming from here. The secured book has like 46% PCR. So really that is a high PCR mainly to keep net NPA below 1. But LTV is 46. So this should not worry us. So the real will be what happens to then what is the need for provisioning in T? The only flesh which come in from unsecured. Because I think secured we can do enough and more feedback on the action we have taken in Q3. So that should be the only number that you should put in your model.
Chintan Shah
Okay sir. And lastly can you share the microfinance disbursements in this quarter and the previous one?
Ajay Kanwal
Yes, I can. I have it. Abhilash has it ready.
Chintan Shah
And why also if possible if. Yeah. Thanks. Those are all the questions I had. Thank you.
Ajay Kanwal
I can tell you yoy is negative about 19 or odd percent. But I’ll just give it exact number there. And while he’s giving the numbers you listen. While we’re doing CGT, MSC and CGMSU one of the risk mitigation was also the PC approach. Which is why I said the 110 odd crore that we have reduced from our credit cost. You know it is result of us, you know giving higher income to the B.C. for all these years. And in a stress moment we did think that they would not have a challenge. But if they had a challenge they would have to account for it themselves which they have done. 1800 is our disbursement in microfinance for this quarter against the 1350 of last year. 1338 of last quarter.
Chintan Shah
Hey Abhilash, can you come again please? I could not hear you.
Abhilash Sandur
1800 is Q3. 1338 is Q2. Q2 was 1338 and 1899. 1809. 1809. But what was it in Q3 of last year? Q3 of last year? 1970. 1970 friend.
Chintan Shah
The write offs which you had this quarter of 109 crores. That would be completely from MFI. Correct?
Ajay Kanwal
Correct. Which is why you should kind of use that to figure out why didn’t. Why we not did not grow even though we did it in M crore.
Chintan Shah
Got it sir. Okay. Thank you.
Operator
Thank you. The next question is from the line of Sagar sir from Spark pwm. Please go ahead.
Sagar Shah
Good evening sir. Thank you for the opportunity and for congratulations was at least a stable set of numbers in this kind of environment. Actually I had a couple of questions. My. Now the first one was related to the data keeping question. What were. What were the interest reversals in this quarter Especially in the MFI segment.
Ajay Kanwal
So around 50 crore of interest reversal. It has happened year to date. Actually that is year today for the quarter it’s around 18 for the quarter.
Sagar Shah
For the quarter it was 18 crores. Hello.
Ajay Kanwal
Yeah, sorry. Yeah. 18 crores for the quarter.
Sagar Shah
Okay. 18 crores for the quarter. For in case of MFI segment, right? Okay, sure. Now, second was related to this. Slippage ratio. You already highlighted the number before that this in this quarter. Actually our slippage ratio still it’s relatively little high at around 6%. So the was it 230 crores you highlighted was predominantly based on for MFI business. So for another. So another the second half was totally related to the secured segment. So can you highlight that which of the secured segments are actually are. The secure slippage ratio was relatively higher.
Ajay Kanwal
So you know if you look at our gross NP net entry. This is the slide on page 9 micro lab like I mentioned 2, 3 geographies which are giving us a bit of a challenge. We have seen increase in Micro Lab and slightly in affordable housing. So there are just two points. MSME loans are very stable and in fact two wheeler has dropped back Gold loans. Anyways technical. So a bit of Micro Lab which has seen a slippage and specifically in the three geographies and not the book in general across the country. Okay so Microlab and that is completely secured business, right? The Micro Lab business. Yes, I specified it earlier. This is entirely surfaceable. Surface applicable property business with a 33% with an LTV which we have given as if you can see on page nine last column is 32.8% which is 33%. So it’s a matter. Okay, but you know we are not seeing anything which is kind of. We know a few geographies we could do a bit better which we are now just tightening. That’s about it.
Sagar Shah
Okay. So there’s no major reason to worry at least on that or there’s no major overlap with mfi. It’s not related too much to MFI business.
Ajay Kanwal
I’ll be very clear that. Listen which is why quarter on quarter with 5.8% I would have retracted back or slowed down the growth if I find that listen, I am entering an area that I’m uncomfortable with. We don’t have the discomfort and I want to be like extremely easy with this that the if you see sign of trouble we would be running away from it and I would have already announced it to you folks that. Listen, where is that I can see a problem coming. I don’t see a problem coming. It’s one or two jobs. We’ll fix it.
Sagar Shah
Okay? Sure sir. Sir. And lastly on the PCR. The PCR for the secured segments. What is the PCR for the secured segments on as on this Q3FY25
Ajay Kanwal
Slide number 2048.3% unsecured.
Sagar Shah
Okay. Okay, sure sir.
Ajay Kanwal
It gives you 758 gross NPA breakup. It tells you 79% of net NPA is all secured, so really not much damages. Only worry about. about unsecured slippage in Q4. That’s all that could be hitting a trade cost. If you minus your recovery then I think we’re in good shape anyway. And we have large amount of pcr. But like I mentioned earlier to Chintan that most of this PCR unwinding will happen next year.
Sagar Shah
And just on just a second squeeze on the last that you made a statement that you. We have seen the bottom as far as the microfinance business is concerned. So by Q4 can we expect a sequential uptick in disbursements in this particular MFI segment?
Ajay Kanwal
100%. Because anyway Q4 is always strong Q4. You know that, right? Exactly. That is not what worries us. Can I grow enough? Then my book will turn become like have no. Has no negative growth or become positive. That is my biggest ask to myself. And Sudhir runs a business sitting right in front of me. You know our work is there. But listen here is the classical fees. If you source group loans your rejection rate is 70 to 80% now batches. So we don’t want to grow and end up with problems also. So we are very hard on what we are doing. So for example my existing customer if he is not in a metro city and has more than 50,000 rupees outstanding balance with any MFI I am not giving him money. Okay, I say that. I’m only telling you that listen, I can grow much faster. But I don’t want to grow when I’m not certain that this is going to turn out right. Credit. So I’m saying this again. Non metro city, more than 50,000 offers exposure. Good customer of Jannah. He will not get a repeat loan. Because we are not ready now till the industry is pretty much sorted out which I don’t think so we are sorted out right now. So we have put stringent conditions. We will continue with those. If you are slightly more challenged on growth. I would rather live with that. But I don’t want to add up till we are very clear of what we are seeing in the front. And this is in spite of having a credit guarantee. Because my idea of credit guarantees to be used in a event risk not in taking more risk and saying okay, the you know whatever comes on top will be covered. That is not our bias.
Sagar Shah
Okay. Thank you. Thank you so much and all the best for the next quarter.
Operator
Thank you. The next question is from the line of Anand Kundra from my temple capital. Please go ahead.
Anant Mundra
Hello, good evening. Thank you for the opportunity. So we are at a slightly higher lcr. So just wanted to understand why are we carrying higher liquidity and when do we expect this to normalize? And I’m guessing this will have some impact on our NIMS as well. Like there could be some uptick in NIMs. So is that understanding correct?
Ajay Kanwal
So you’re 100% correct. Our LCR is very, very high. We did try to bring it down. We made some progress in Q2, were back in Q3. See what we tend to do is when we do bulk deposit now, we tend to ask all the bulk depositors say like 5, 10 bits more extra but make it, you know, non volleyball. Yeah, somehow our sales force is very comfortable with that and it gives us strength in, you know, whatever bulk we take here. We have launched a few products which would include our retail deposit and reduce bulk in general. Once that happens, LCR will also come down. So you know, the way we think is, you know, bulk has a reason why it is called bulk. So the best thing is when you take bulk, make it non callable. Once you make it non callable then you can sleep easy. And we’ve also given the breakup of how much is one year plus roughly about 70% of all bulk deposits more than one year also. But we are conscious of that. We do know that we’ll save some money if we get it right and we’ll attempt to do that in waterfall.
Anant Mundra
Got it? Got it sir. What is the. So we’ve done fairly well as compared to our peers when it comes to managing this MFI cycle. But what really is the next challenge that you’re seeing in terms of meeting your long term guidance of you know, having a steady state ROA of 1.8 to 2%? Is it, you know, the mobilization of CASA where you have to get to 30% or is it, you know, there’s been some increase in the NP on the secured side. So is that also bothering you? So what, what is, what is really bothering you now given that this cycle is behind and you’re past the peak.
Ajay Kanwal
So look at affordable housing, micro lab, msme. I think we are doing fine in msme we are incrementally seeing sales invoice on purchase invoice discounting. So our focus is building credit structure early warning around that. So I think that’s rule number one I think on micro lab and affordable housing, you know we just, we’re in 180 cities just making the operations run well. Yeah, I just mentioned we had 3,000 people. So always, you know, it is like you have to keep your hand on the machine all the time. You can’t assume everything is fine. So I think just making sure we are executing well is all that is required. It doesn’t bother me. And you know you should. You know, we are among the players who have a microfinance business. We have a micro lab. We have access to credit bureau. We know what the overlaps are, who’s doing what, not just with us. I know my microfinance customer have taken microlab from somebody else. How they’re behaving. You have taken from me how they’re behaving. That is not our real worry. What I would really like to do is first get the cost syndrome back because that’s been our strength. And we’ve got a bit of a hiccup now, so I. Cost income. Right. And that will come from unsecured, going back to its 10,000 levels. And if that is slower, then I think you have to work harder on the secure side so that the cost income becomes better. So I think that is my, one of my focus areas. Doing product diversion, product diversification in MSME is our second area. I don’t think so. We’ll take the eye off the ball on collections, whether MFI or non mfi because I think that is core in this environment. I think that won’t change. On casa we have segmental offers and we’ve even shown the segmental offers in one of the slides. We just making sure that we really focus on retail growth here. I think there is a bit of hard work but we’ll continue doing that and we expect that to continue. So those would be our real top areas. CASA growth, MSME into sales, invoice, purchase invoice, making sure that we keep our hand on execution and secure MFI collection doesn’t get easy ever. And finally is making sure that we get the cost income back on track because that is something which we think cost is a certainty. Revenue is the hope. So cost has to come. Right.
Anant Mundra
Got it, got it. Thank you for the detailed answer. Just one final question. Could you briefly just explain the economics of CGT MSC and CGFMU?
Ajay Kanwal
Yeah. So CGMFU cost is 1% of the disbursed amount for one year. Next it will pay on whatever is the balance outstanding. Then the first 3% of the gross NPA. So let’s say 100 rupees, you guarantee 5 rupees goes into NPA. 3% of 5 rupees which will be over 15 paisa is your cost. After that 75% of the balance amount will be paid by the CGMFU. They could change your cost of guarantee if your delinquencies, whatever it is. So that is the economics I think beyond a certain point very early, about 1 1.5%, you’re fine, you start getting some money back. On CGT MSC, it is 0.3% of the cost. It is only for micro enterprise. So you need to give registration. It has to be a small business and you get money back once it goes into. Only thing is, I think the current condition they have applied is you get money back equal to 2x of the premium you pay for that year. So unless you don’t have a real bad year, then most of your money of NTH on the CBD MSC book will come back. And that would be our bias. And this is not on a poll. This is on each specific loan that you developed. Yeah, yeah. So there is a proper format where you get in all the details, you put the Aadhaar number, you put the number, you write all the details, everything has to match and once that is done, you upload to the system, the system accepts it, then you pay the guarantee fee and then it becomes guaranteed. So it’s a very formalized and very automated process and there’s enough checks and balances to make sure that, you know, these are done rightly. And you know, I think it’s very well organized by the National Gynet Corporation.
Anant Mundra
Thank you. So that’s it from my end.
Operator
Thank you. Thank you. Due to interest of time, this will be our last question. It’s from the line of Vikram Subramaniam from Marshall Vase. Please go ahead.
Vikram Subramanian
Hi, thanks for taking my question and glad to see the current ongoing stress environment being managed very well. And also glad to note that credit quality peak stresses behind. But just a couple of questions is more a follow up on a couple of other participants before. Can you give a sense of how the SMA has moved between September and December and how the collection efficiencies have moved in the past four months? This is majorly to get a gauge of how the on ground realities are because even though you are calling out peak stress behind slippages still seem to be flat. Qoq and also you also call out that the overall environment still remains challenging. So just to get a sense of more like forward flows. So if we can get an idea of the SMAs or the correction efficiency that will give a better picture for us.
Ajay Kanwal
So one is collection efficiency unsecured at 99, sorry 98.6, 98.5 consistent across October, November, December. Our push to get to 99 was not very successful and some reason or other always get pushed back. Which is why I keep saying that it’s still going to be focus on from our side on microfinance because we would like to see a 99 plus. So that’s rule number one. Also I said that micro finance Vikram has normally we’ll reach a 99 around 22nd. 20. Now we are fighting to the 30, 31st. I don’t see that changing much. So I suspect will be a bit more relaxed in Q1 next year rather than Q4 this year. So hard yards will continue. We are geared up for that. We have put the collectors in place. We should be there. Our SMA has reduced in Q3 over Q2. You want to add something. So I don’t see a challenge. Also recoveries are much better than in Q3 versus Q2 and Q1. So which means we are getting better traction than we got earlier. It also means that the collection source is much more settled now because once you start hiring people, by the time they understand the system and they start, you know, reaching out to customers, finding out where they live, we have to have blacklog for everybody. So we know exactly how to find our customers. It takes a time to do the settlement. I think that settling period is over. So why I said the work is behind us and I said that in the last quarter quarterly meeting. See through the shape of the book here and like I keep, you know, if you take secured book. Also if my book was not property backed, I had a different version. I would have said, you know, let’s say my book was, you know, vehicle finance. It would have another future. How it would look similarly in mfi if I had more group loans, I would have probably taken another quarter. I feel, I think that group loan is not so settled. I feel from whatever I gathered from our MFI business, that’s what I think. Fortunately, Q3 turned out right. Like I said, the only thing that I was hoping but I couldn’t achieve in Q3 was to really stabilize my unsecured group where it was at the end of September. I thought we’d make it happen but somehow our field force hadn’t got the confidence to do more disbursements. So we continue working on that and once I get. Once we get that right, I think then most of the issues are well settled. I know it’s a bit of a longish thing, but I do with Vikram. It gives you a good sense of what to expect in Q4 and next year.
Vikram Subramanian
This is very helpful. Thanks. Thanks for that detailed explanation. Just to follow up on that, just so I’m clear. So our book mix and our recovery efforts and potential give us confidence to give out this comment that credit quality peak is behind us. It’s more to do with how we have been dealing with and how our book has progressed. Am I right in assuming that?
Ajay Kanwal
Yeah, absolutely. And so that peak is not a hope but a reality. If you take actual credit cost, which is what we are given in slide number four, it is lower in Q3 if you take the slide number four, even assuming a higher accelerated provision, my total credit was 174 crores. It is lower than 210 crores of last quarter and it’s a perfect 196 goes up to 210, come down to 174. 174 is 93 of excellent provision, which is higher than the 61 of last quarter. You should see in the slide number four. So I just want to give not just how I feel, but these are actual numbers which tell you that. Listen, behind us now, if my net NP is 0.91, suppose I admitted 0.95, you know, that was our chosen path, then yes, PBT would be higher or pat would have been higher than other 1520 crores. 1520 crores. You can always, you know, as things are more exuberant, we can show them right now. Let’s be more conservative.
Vikram Subramanian
Got it? Got it. This very clear. Thanks a lot for the detailed explanation. Thank you.
Operator
Thank you, ladies and gentlemen. That was the last question for today’s conference call. I now hand the conference over to the management for their closing comments.
Ajay Kanwal
Thank you. Listen, in closing, I just want all of us to know that our bias and focus towards secured has really helped us a lot. And it only increases our conviction that we should get to 80% secured. Secondly, our focus on making sure that MFI is not just operational risk business, but has credit risk and should be treated as such, which is where the whole genesis of individual loans really began. I think we are also in our mind very clear it was the right answer and we will sustain on that path. So I think that will not change. I think thirdly, we are very committed on making sure that we deliver a strong cost income and we are working very hard for that because we do believe that that certainty which was our strength, remains our strength. Finally, I must say that we took a hard yard on pricing on casa because I did feel that as we continued growing, at some point we would have to make this call. So better earlier than later. I know that our branch team led by Shrini is committed to making sure that CASA does reach its great path and we are investing behind it. And we are very confident that Q4 will see a much better CASA number than what we saw in Q3. I think other than that, we would certainly like to apply for a universal bank in May. I think the advantage it will give us with our employees, with our customers, with our deposit rates, with our deposit velocity will be tremendous. So we certainly would like to keep the Net NPA below 1%, gross NPA below 3, and put up a good case to the regulators to find us suitable to get the license. More for you folks when we come to the March results and thank you for your. support and belief in this tough environment
Operator
On behalf of Investec Capital Services India Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.