Paisalo Digital Ltd (NSE: PAISALO) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
Harish Singh — Chief Financial Officer
Santanu Agarwal — Deputy Managing Director
Analysts:
Sandy Mehta — Analyst
Divyansh Thakur — Analyst
Anurag Patil — Analyst
Rahul Gupta — Analyst
Harkirat Singh — Analyst
Abhishek Jaiswal — Analyst
Deepak Rao — Analyst
Anurag Patil — Analyst
Presentation:
operator
Foreign. Ladies and Gentlemen, good day and welcome to Paysalo Digital Limited Q3 and 9M5 FY26 earnings conference call hosted by Arihant Capital Markets Limited let me draw your attention to the fact that this call discussion will include certain forward looking statements which are predictions, projections or other estimates about the future events. This estimate reflects management’s current expectations about the future performance of the company. 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. From the esteemed management we have with us today, Mr.
Shantanu Agarwal, Deputy Managing Director Mr. Harish Singh, Executive Director and Chief Financial Officer Mr. Gaurav Chaube, Chief Risk Officer I now hand over the call to Mr. Shantanu Agarwal, Deputy Managing Director for his opening remarks post which we can open the floor for question and answers. Thank you and over to you Sir.
Santanu Agarwal — Deputy Managing Director
Good afternoon and a very warm welcome to Pasalo Digital’s earnings conference call for the third quarter and nine months ended December 31, 2025. Joining me today are Mr. Harish Singh, Executive Director and CFO and Mr. Gaurav Chaube, Chief Risk Officer. Our earnings presentation has been uploaded to the Stock Exchange and is also available on our website. We hope you have had the chance to review it. We are pleased to engage with our investors, analysts and stakeholders as we Progress through Quarter 3 FY26 as we build on strong momentum, we While remaining firmly committed to inclusive financial growth, the opening environment during the quarter remained constructive for India’s small ticket and MSME lending ecosystem.
Over recent quarters, regulatory guidance from the RBI has reinforced the importance of disciplined underwriting, granular risk management and responsible credit expansion for institutions like Pesolo. With decades of experience in high frequency small value lending, these regulatory directions are entirely aligned with our long standing operating philosophy now further strengthened by data driven and technology led decision framework. During quarter three, demand across small ticket loans remained resilient driven by steady rural consumption, MSME working capital needs and improved cash flow visibility at the borrower level. The ongoing formalization of the economy aided by the digital public infrastructure and greater data availability continues to favor lenders with scalable tech enabled operating models.
Our focus during the quarter remained on calibrated growth, maintaining prudent ticket sizes, tight portfolio monitoring and risk adjusted returns increasingly driven by analytics and early warning systems. From a policy standpoint, The Union Budget 2026 introduced several measures aimed at strengthening the MSME ecosystem. Enhanced credit guarantee coverage under CGT msc, higher allocation for interest subvention schemes, improved access to growth and risk capital and the strengthened receivables based financing framework expected to deepen formal credit penetration over the medium term. While the benefits will accrue progressively, these initiatives reinforce confidence in sustained and high quality credit demand from micro and small enterprises, segments that form the core of Pesolo’s customer franchise.
Finally, the broader macro backdrop including progress on the US India Trade Agreement is constructive for export linked MSMEs and ancillary businesses. Improved trade flows and supply chain diversification are expected to translate into incremental credit opportunities for small entrepreneurs and vendors over time. While the direct impact is gradual, we view these developments as supportive of long term portfolio quality and growth visibility for Pasano, Let me now turn to our strategy. Over the next three years our objective is clear to double our AUM Income and PACT while preserving best in class asset quality. Importantly, this is not an aspirational target.
It is anchored in a deep operating track record with asset quality consistently maintained below 1% even through varied cycles. To deliver this next phase of growth sustainably, we have embarked on a transformation journey with artificial intelligence at the core of of our operating model. We believe for Pesolo’s next phase, AI will not be an incremental efficiency level, it will be a central engine powering growth, risk management, compliance and operating leverage. Our strategy is to embed AI across the entire lending life cycle allowing us to scale volumes while strengthening control, improving unit economics and preserving portfolio quality.
Starting with customer acquisition, we are transitioning from a predominantly physical sourcing to AI LED acquisition engine. Advanced analytics and machine learning models are being deployed to identify high intent borrowers across partner and ecosystem channels. This will allow sharper targeting, improved cross sell, higher customer lifetime value and structurally lower acquisition cost over time. This becomes a self learning system where every disbursement cohort improves future sourcing quality. While our traditional sourcing channels, branches, business correspondent and partners remain a core strength, they are now being meaningfully augmented by an upcoming customer APP and AI based lead generation platform.
The AI enabled public customer app is under development stage and the first phase of the app is expected to go live by the end of next quarter three of the upcoming fiscal year. This initial rollout will enable seamless digital engagement, repeat borrowing and self service access to scale through an AI assisted yes self driven customer journey for both existing to PESO ETP and new to Pasalo NTP customers. On the onboarding side, we are revamping our existing intranet based branch and BC application to enable a fully AI assisted digital journey. This will allow automated data capture, real time validations and a compliance first decisioning resulting in a materially faster and more consistent onboarding experience.
We expect this to significantly reduce turnaround time from days to minutes while lowering errors and improving auditability as the scale volumes. This AI backed infrastructure will reduce operating costs, enhance consistency across geographies and sustain our profitable franchise growth. Underwriting Our underwriting framework is going to be further strengthened through the deployment of our proprietary AI models that integrate account aggregated data, alternate data sources, geospatial inputs and field intelligence. This will enable near real time credit decisioning, faster disbursements and sharper borrower segmentation while retaining policy based controls and human oversight in parallel. RCCC underwriting model and risk frameworks are being enhanced by AI generated signals and early warning indicators to enable proactive risk management.
The objective is simple grow faster without compromising credit discipline. Further, under this strategic AI led acquisition engineering, we plan to roll out a proprietary dynamic AI enabled business rule engine that materially upgrades our credit decisioning and underwriting capabilities. Traditional BREs rely on static hard coded rules that remain largely unchanged across customers and market conditions. In contrast, our upcoming proprietary dynamic BRE will be an AI aware decision engine that adapts in real time using bureau data, account aggregator insights and deep customer behavior signals. The platform will continuously recalibrate credit rules using proprietary data and customer profiles to dynamically determine loan eligibility, ticket size and tenure at the point of decisioning.
By embedding advanced metrics such as behavioral risk scores, early delinquency probability and a credit hunter index, the system applies differentiated rules for different customer cohorts rather than a one size fits all approach. This will improve risk calibration, increase approval efficiency, deliver more accurate pricing and accelerate decision making while maintaining strong portfolio quality as the business continues to scale. It will also provide a scalable technology moat as paselo expands across products and geographies. Portfolio Management under portfolio management, we are also in the process of embedding AI models capable of detecting pre EMI stress and early delinquency.
Supported by a unified real time data layer, these models continuously re rate borrowers risk using transaction behavior, bureau data and geospatial trends, providing instant visibility and automated alerts. On the collection front, we have already implemented some of our AI optimized workflows including Gen AI led multilingual engagement. Today we run approximately 350,000 automated EMI reminders and collection calls daily, improving contact rates, recoveries and cost efficiency while enhancing the borrower experience. The takeaway is simple. By embedding our proprietary AI models across the lending portfolio, we are lowering risk, improving operating leverage, strengthening compliance and enhancing unit economics end to end.
This technology led transformation gives us the confidence in our ability to scale sustainably, maintaining superior asset quality and enhanced profitability. In parallel, we are actively evaluating inorganic growth opportunities aligned with our core strengths which can accelerate market entry, add complementary capabilities or deepen our presence in priority geographies without compromising on balance sheet discipline. Any such opportunities will be approached with a clear focus on strategic fit scalability and long term value creation. Coming to the quarter’s performance Q3 FY26 was a quarter where Pesolo delivered consistent growth alongside visible balance sheet strengthening while continuing to scale distribution and expand product reach in a disciplined and capital efficient manner.
Our asset center management increased to $55,082 million registering 16% year on year growth reflecting steady portfolio expansion across income generation and MSME lending segments. Disbursements for the quarter stood at 10,574 million reflecting sustained borrower demand and healthy sourcing momentum. We delivered our highest ever quarterly profit after tax of 663 million marking a 29% sequential growth. This performance was achieved alongside continued investment in distribution expansion and technology. As our distribution footprint continues to expand and our technology led backbone matures, we expect operating leverage to progressively strengthen supporting higher profitability and consistent long term value creation. A key driver of Q3 performance was the continued expansion of our distribution network without meaningful balance sheet stress.
During the quarter we added 492 new touchpoints taking the total network to 4872 touchpoints across 22 states. This includes 402 branches, 3041 distribution points and 1429 business correspondence enabling last mile sourcing at scale. Our customer franchise expanded to 14 million customers with 1.6 million customers added during quarter three alone, reflecting strong on ground penetration and improving sourcing productivity. We expanded lending across alternative fuel mobility, medical equipment, agriculture equipment, industrial machinery, solar equipment and loan against property, enabling higher average tricket sizes while maintaining credit discipline. These OEMs and institutional partnerships support zero CAPEX distribution expansion allowing presalo to rapidly scale physical reach by leveraging partner locations as origination and service hubs without incremental branch investments.
This model improves asset traceability, strengthens risk control, enhances sourcing quality and delivers a sustainable scalable platform that that preserves balance sheet flexibility and supports strong roe. As our footprint expands, AI led automation and data driven decisioning are delivering operating leverage, sharper risk calibration and superior portfolio diversification, collectively enabling sustainable growth and reinforcing our competitive edge in the underserved markets. Over the years, Pesolo has made meaningful and sustained progress in structurally reducing its cost of borrowing. Reflecting disciplined liability management, our cost of borrowing has declined from 13% in FY21 to 10.5% in FY25, reflecting a reduction of 250 basis points.
This improvement is the outcome of diversified funding sources, deeper banking relationships and consistent operating performance during Q3 FY26. This strategy was further reinforced with the successful raising of 1,885 million at a cost of 8.5%, one of the most competitive funding cost achieved by the company in the current environment. As a result, overall cost of borrowing for Q3FY26 declined to 10.3%, representing a 92 basis point reduction year on year. This steady downward trajectory in funding cost enhances margin stability, strengthens profitability and provides greater flexibility to scale the loan book responsibilities, particularly in small ticket and MSME lending where pricing discipline and cost efficiency are critical.
In conclusion, Q3FY26 underscores our ability to scale responsibility while strengthening the foundation of long term growth. Our disciplined approach to small ticket lending, supported by a resilient operating environment, expanding distribution footprint and consistently strong asset quality continues to deliver profitable growth. As we accelerate our transition to an AI first operating model, we are further sharpening risk calibration, speeding up decision making and enabling scalable execution across geographies and products, positioning Pesolo for a sustainable compounding in the years ahead. We thank our investors and stakeholders for their continued trust and support as we build a more resilient, technology led and financially inclusive company.
With this I’ll now hand over to Harish Singh, our Executive Director and CFO to take you through financial performance in further details. Thank you.
Harish Singh — Chief Financial Officer
Good afternoon and thank you. I am pleased to present Pasaro Distal’s financial performance for the third quarter and nine months of Financial 26. We closed quarter three Financial 26 with a record asset under management of 55,082 million rupees delivering 16% year on year growth and reflecting steady expansion across our. Core income generation and MSME lending segments. Disbursements during the quarter stood at Rs 10,574 million, underscoring sustained underlying credit demand and consistent sourcing momentum. Total income for the quarter increased to 2,401 million rupees registering 18% year on year growth while net interest income rose to 1453 million rupees up 19% year on year. This performance reflects a combination of portfolio scale up stable yields and improving funding efficiency. On the profitability front, we delivered our highest ever quarterly profit after tax of Rs.663 million, representing 6% year on year growth and a 29% sequential growth. Profit before tax stood at 888 billion rupees reflecting the benefits of disciplined cost management.
Even as the business continued to invest in distribution technology, returns remained healthy with return on Equity at 12.6% and Return on Assets at 3.8%, highlighting the strength of the business model and the ability to deliver profitable growth alongside ongoing investments. For the nine months ended financial year 26, Paso has delivered strong and consistent financial performance reflecting disciplined execution across sourcing, underwriting and balance sheet management. Cumulative disbursement for nine months financial 26 stood at 29,180 million rupees which grew by 21% year on year supported by steady demand across income generation and MSME lending segments and improving productivity across channels.
For nine months financial year 26, total income increased to 6,828 million rupees reflecting strong year on year growth of 18% driven by steady AUM expansion and improving funding efficiency. Net interest income for the nine month period rose to 3,960 million rupees and 18% growth year on year which has translated into a cumulative profit after tax of 1650 million rupees for nine months. Financial 26 underscoring Pesalo’s ability to scale profitability. Asset quality continued to be price time and best in class supported the robust credit assessment and a well embedded collection architecture. Gross NPA and net NPA improved year on year by 27bps and 18bps respectively to well content levels of 0.83% and 0.66%.
Further collection efficiency of 98.8% highlights strong repayment discipline and effective portfolio oversight. Across the portfolio, our balance sheet remains strong liquid and well capitalized providing a resilient reform to fund future growth. As of quarter three financial 26 total borrowings stood at 38579 million rupees supported by a diversified and steadily improving liability profile. The cost of borrowing moderated at 10.3% reflecting enhanced credit strength and disciplined liability management. Leverage remains prudent with debt to equity ratio of 2.22x offering ample headroom to scale the balance sheet while maintaining financial stability. Further, our capital adequacy ratio stored at a robust 38.3% underscoring strong loss absorption capacity and reinforcing our ability to pursue growth opportunities while remaining resilient to potential market volatility we have scaled our balance sheet meaningfully, expanded earnings and delivered record profitability, all while maintaining best in class asset quality, prudent leverage and a strong capital position.
While sustained demand across our core segments, improving funding efficiency and a robust risk and operating framework. We remain well position to accelerate growth in calibrated manner. Thank you. And with that, let me hand over. The call to the moderator.
operator
Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participant tab on your screen. We’ll take our first question from Sandy Mehta of Evaluate Research. Please go ahead with your question.
Sandy Mehta — Analyst
Good morning. Can you Hear me?
operator
Yes, Mr. Mehta.
Sandy Mehta — Analyst
Hello?
operator
Mr. Mehta, please go ahead. We can hear you. Hello, Mr. Mehta, can you hear us? It seems there is a connection issue. We don’t have a response from Mr. Mehta. We’ll move to our next question from Divyansh Thakur of Pinterest Capital. Please go ahead. Mr. Thakur, please go ahead with your question.
Divyansh Thakur — Analyst
Okay. Am I audible?
operator
Yes, please.
Divyansh Thakur — Analyst
Yeah, sir, congratulations on a great set of numbers. So my first question was that you have guided for almost doubling AUM over the next three years, sir, given that quarter three disbursements grew only 7% year on year and AUM grew to over 16% year on year, sir. So I wanted to ask, what are the concrete levers beyond AI integration that will accelerate disbursement growth meaningfully? And so what gives you the confidence that the business can sustain our 25% CAGR without compromising on the asset quality?
Santanu Agarwal — Deputy Managing Director
Yeah, thank you for your question. Divyansh, can you repeat the second question? You were inaudible on the second question.
Divyansh Thakur — Analyst
Am I audible, sir?
Santanu Agarwal — Deputy Managing Director
Yeah, yeah, yeah, you’re audible. Can you repeat the question?
Divyansh Thakur — Analyst
The second part was that, sir. What? So, so first part was that, you know, disbursement grew only 7% and AUM grew. Only grew about 16 year on year. So. So like, what are the concrete levers beyond AI integration that will accelerate the disbursement growth meaningfully in the coming future? And what gives you the confidence that the business can sustain at 25 CAGR growth without compromising on the asset quality?
Santanu Agarwal — Deputy Managing Director
Okay, thank you. Thank you. Thank you for your question, Divyan. So if you look at the scaling of our AUM, we have scaled at a CAGR of about 20% on a year on year basis between FY20 and FY25, while the PAT has scaled up at about a CAGR of 36% over the same time frame. And if you take a three year Aum kegr, we are at a 25% highly profitable franchise of 36% CAGR. In addition to that, when you look at the product and geographical expansion, we have doubled our geographical expansion over the last three years on a year on year basis and we have also doubled our product offering for the last three years on a year on year basis.
And we are going to be closing this year again by doubling our product suite by adding about five new products on top of the existing five products for which we already have some key institutional partnerships and three big pipeline partnerships with HR Krilosker and Sterling and Wilson. So a combination of all these factors which is geographical expansion, product expansion and distribution will allow us to maintain our 25% CAGR of AUM expansion over the next three years and also remain a profitable franchise by giving a similar KEGR to all our stakeholders and investors.
Divyansh Thakur — Analyst
Sir, so will we not be compromising on the asset quality?
Santanu Agarwal — Deputy Managing Director
Right? Absolutely not. So if you look at we are one of the few NBFCs which has for the last almost since inception been focused extremely high on the credit discipline and credit distribution. So we remain confident on maintaining those same portfolio levels.
Divyansh Thakur — Analyst
Okay, thank you so much sir. The second question of mine was that you know in the if you’ll see that our operating expenses have grown around 49 year on year significantly outpacing the 19 year on year growth in net interest income.
Santanu Agarwal — Deputy Managing Director
Sir.
Divyansh Thakur — Analyst
So given the ongoing investments in technology, business and a wider distribution network. So could you please outline when the business expects the operating leverage to start kicking in and showing.
Santanu Agarwal — Deputy Managing Director
Yeah, so see, I mean we have like I was telling in the previous question also we have doubled our geography product distribution platform as well as our technological stack. So all of that obviously requires that the operational leverage go up a little bit. So in the medium term we have guided that we’ll be maintaining almost similar operational leverages and by the time we achieve our three year strategic roadmap outlook, we should see stabilization in these levels.
Divyansh Thakur — Analyst
Okay sir, that’s it from my end and all the best.
Santanu Agarwal — Deputy Managing Director
Thank you.
operator
Thank you so much. We’ll take our next question from Sandy Mehta of Evaluate Research. We are trying his connection one more time. Mr. Mehta, please unmute your connection.
Sandy Mehta — Analyst
Can you hear me? Good morning.
operator
Yes, we can hear you.
Sandy Mehta — Analyst
Okay, great, great. Sorry about the confusion earlier.
operator
Please comment.
Sandy Mehta — Analyst
Congratulations on a solid set of results and and more importantly a strong outlook. First question is the, you know, SBI reported strong results last week and they raised their loan guidance. So can you comment on your co lending partnership with sbi? And you had earlier indicated that expansion into MSME loans would take place I think on the fourth quarter currently or Q1. How is that going and what impact will that have going forward on your loans and profitability?
Santanu Agarwal — Deputy Managing Director
Thank you. Thank you for joining in, Sandy. So yeah, SBI did report a great set of numbers coming to the question. We are still bullish on our co lending outlook. However, looking at the recent guideline which the RBA has released on co lending, we are awaiting the outlook of the bank in terms of expanding the same. So although we had guided that the new SBI MSME co lending partnership shall start from quarter four, we are still in the process of integrating our systems with their systems and hopefully we should be able to start it in quarter one as of now.
Sandy Mehta — Analyst
Okay. And if that does start that should that what kind of jump in loans do you expect or what kind of activity do you expect with that?
Santanu Agarwal — Deputy Managing Director
Our target is irrespective of how and where we are sourcing. So we should be able to achieve the same irrespective of the agreement getting live in quarter four or quarter one. That tie up should aid in additional incremental growth over the existing targets.
Sandy Mehta — Analyst
Okay. And my second question is can you comment on the outlook for your net interest margins given lower interest rates in the overall economy? Obviously the reprice. And talk about repricing of loans. We have seen that the cost of borrowing has come down. But what are you seeing on the repricing of loans please?
Santanu Agarwal — Deputy Managing Director
So see we have been able to raise about 188crores last quarter in a mix of NCDS and CPS at 8.5% which has been a fairly good achievement for the company. In terms of our NIM outlook, we had projected and guided for about a 6% NIM achievement on the full year basis. So we have already achieved the same. So we are going to maintain the same for this year.
Sandy Mehta — Analyst
All right. Okay, great. Thank you. All the best. Thanks.
operator
Thank you so much. We’ll take our next question from Mr. Anurag Patil who is an individual investor. Mr. Patil, please go ahead with your question. Yes, Mr. Patil, please go ahead.
Anurag Patil — Analyst
Yeah, so thank you for this opportunity and congratulations for a good set of numbers. So my first question is see according to your investor presentation on this slide 26, you have mentioned that you are also now offering a new launch against new products, right? About four new products. I want to understand if the yields on these products are similar to the previous or existing offering that you were doing.
Santanu Agarwal — Deputy Managing Director
Thank you. Anraji, thank you for coming. Taking on the call. Yes, the yields will remain largely the same.
Anurag Patil — Analyst
Okay, thank you. And my second question would be, you have guided that you want to reduce the, you know, cost of borrowing further. So I would like to understand what is your strategy for, you know, getting this done.
Santanu Agarwal — Deputy Managing Director
So see, as you know, as you saw in the last quarter we raised about 188 crore at 8.5% which were between a combination of NCDs and CPs. So the company is going to be actively targeting the same segment. And we are very proud to also say the fact that other than more than one and a half lakh shareholders that the company has now, the company has also more than 2,000 debenture holders. So leveraging on that existing distribution platform that the company has been able to successfully build over the last one year, we feel that a combination of NCDs and CPs will help us further reduce the cost of funds.
Anurag Patil — Analyst
Thank you so much.
Anurag Patil — Analyst
So. So the cost of borrowing will further go down right from around 10 odd percent right now. And you are, you know, taking up now about 8 and a half percent on your borrowing funds on 8 and a half percent. So it would further come down as I understand.
Santanu Agarwal — Deputy Managing Director
See, I mean I can’t give an exact future outlook but I can tell you this much that our full year target for this year cost of borrowing which was given in quarter one of this year was 10.5%. So we have already achieved it and we are at 10.3%.
Anurag Patil — Analyst
Okay, that’s it from my side. Thank you.
operator
Thank you so much. Requesting everyone who wishes to ask a question. They may click on the raise and icon from the participant tab on your screen. We’ll take our next question from Rahul Gupta of Alpha Capital. Mr. Gupta, please unmute your microphone. Please go ahead.
Rahul Gupta — Analyst
Am I audible?
operator
Yes, please.
Rahul Gupta — Analyst
Yeah, so my first question is on R R. So it dropped from 4.4% to 3.8%. YoY. What is causing this decline? And can the business sustainably return to 4% RoA while still investing heavily in AI and distribution?
Santanu Agarwal — Deputy Managing Director
Hello. Yeah, Rahuji, you are not audible. Can you repeat the question?
Rahul Gupta — Analyst
Yeah, so my question is on ROA. ROA dropped from 4.4% to 3.8% YoY. What is causing this decline? And can the business sustainably return to 4% plus roughly ROS.
Santanu Agarwal — Deputy Managing Director
Yeah, actually our total balance sheet sizes increase but around 30% in comparison to the previous financial figures. So you will find A little bit. Drop in that particular figure but we hope to get back the same within the next coming years. You can say actually we can’t use. The forward looking any further statement in this regard.
Rahul Gupta — Analyst
Thank you. Thank you. Okay, it was my like first question, so my second question is on the states. So the state, the five geographies like Delhi, Maharashtra, Haryana, Rajasthan and up their they account for our 90 of our portfolio. So what risk mitigation exists for this geographical concentration?
Santanu Agarwal — Deputy Managing Director
Sir? So see Rahul ji, if you look at about, if we look at, at a three year, four year scale over the last four fiscal years you’ll see that on an overall basis the concentration of Delhi up Maharashtra, Haryana and Rajasthan has been pretty much coming down on a year on year basis wherein we have actually gone from having a strong portfolio concentration in Delhi and up to being able to reduce almost all these states below 20% except Delhi which we should be also able to reduce and have added about 8.2% in the other states where we are expanding our geographical presence.
So from looking, you know, if you look at it from a long term standpoint it’s very difficult to compare Uttar Pradesh with let’s say a state like Goa because the population density and the people progression is totally different. So while we do expect to have geographical expansion and portfolio concentration further getting reduced wherein each day is contributing less than 20% on the overall level, we do still expect some of these large states with high portfolio with high population density to be a big contributor to our growth.
Rahul Gupta — Analyst
Okay, okay, okay sir, but my this question came because our like touch points are going up but the diversification is not increasing.
Santanu Agarwal — Deputy Managing Director
So. Absolutely. So see the touch point structure is based on three parameters which is the branch distribution point and business correspondent point. So branch for us is a OPEX and capex board driven business. Distribution point for us is only OPEX driven business while business correspondent for us is no opex, no CAPEX business. Typically when we enter a geography we will enter it through a business correspondent, try and see what is the banking literacy offer banking as a service there, figure out what kind of expansion we can do and then tie up at a OEM level on the distribution point.
So let’s say if you are entering a state in Kerala, while we may have two or three branches in Kerala, it may not be a big enough state for us to have a concentrated geography platform there. So that portfolio of Kerala will be parked to the nearest branch in Karnataka which is a large contributor of the state and being merged there as the state expands in terms of branches, distribution point and business correspondent point. It starts to give a concentrated outlook on the geographical platform. So over the next three years you will see that this strategy will play out well and each state contributing less than 20% on the overall book.
So that should be able to answer your question.
Divyansh Thakur — Analyst
Okay. Okay, sir. Thank you.
operator
Thank you so much. We’ll take our next question from Harkirath Singh who is an individual investor. Mr. Singh, please go ahead with your question now.
Harkirat Singh — Analyst
Hello.
operator
Yes please.
Harkirat Singh — Analyst
Yeah, my first question is like what percentage of our loan is below one lakh rupees?
Santanu Agarwal — Deputy Managing Director
What do you mean what percentage? Yeah, what do you mean what percentage?
Harkirat Singh — Analyst
Like. Like the loan amount. Like you have. You are disposing the loan. You have aim of more than 5000. So what percent of your loan amount is below 1 lakh.
Santanu Agarwal — Deputy Managing Director
In terms of numbers or are you asking on a portfolio level?
Harkirat Singh — Analyst
Portfolio level.
Santanu Agarwal — Deputy Managing Director
25%.
Harkirat Singh — Analyst
25%. Okay. And like you have raised around 188 crore rupees. So what percentage of the raise amount is used for loan portfolio expansion or for refinancing?
Santanu Agarwal — Deputy Managing Director
The entire money raised will go into portfolio expansion.
Harkirat Singh — Analyst
Portfolio expansion.
Santanu Agarwal — Deputy Managing Director
Okay.
Harkirat Singh — Analyst
And third. Third question.
Santanu Agarwal — Deputy Managing Director
And the liquidity levels remain strong. If you look at our ALM position on all three ALM buckets we have surplus liquidity available. So whatever the company is raising is all gearing the company towards an expansion. Okay.
Harkirat Singh — Analyst
And third question is regarding FCCB like foreign currency bonds that we have issued. So last presentation we have said like 4 millions have been converted into the shares. Right? So what’s the company’s approach regarding the remaining amount? Would you prefer to convert into the shares or held till maturity?
Santanu Agarwal — Deputy Managing Director
So see the FCCB conversion option lies with the investor. Right. So if you ask what is the company point of view. Yes, we would absolutely like the investor to. Not only that has participated in this debt race to also participate in the equity rally in the company. But the decision to convert lies with the share with the investor not with us.
Harkirat Singh — Analyst
So like you are. You must be in touch with the investor. So what are their views? Can you share?
Santanu Agarwal — Deputy Managing Director
The investors are extremely bullish on the company.
Harkirat Singh — Analyst
Some light on that also.
Santanu Agarwal — Deputy Managing Director
So. Hello.
Harkirat Singh — Analyst
Hello. Hello. Yeah, I am just asking like you must be in touch with them.
Santanu Agarwal — Deputy Managing Director
Yes, the investors are bullish and will look forward to converting their shares with the passage of time.
Harkirat Singh — Analyst
Okay, that’s all my format.
Santanu Agarwal — Deputy Managing Director
Thank you very much. Thank you.
operator
Thank you so much. Mr. Singh, we’ll take our next question from Mr. Abhishek Jaiswal who is also an independent investor. Mr. Jaiswal, please unmute your microphone. Yes, please go ahead. Please go ahead. Mr. Jaiswal. Mr. Jaiswal, can you please go ahead with your question?
Harkirat Singh — Analyst
Can you hear me?
operator
Yes, please go ahead.
Abhishek Jaiswal — Analyst
So my question is like you know I can see some very good sort of increase year over year in assets under you know management in. And then there is a lot of increase in like lot of good work done to sort of improve the touch points. But I see that like sequentially look, you know our dispersant disbursements are coming down right? And our like total income has only gone up by 7% like quarter over quarter which is okay but like I see disbursements kind of taking a hit. And the other point, my other question is related to the other income, the commission, the non interest income.
And I see that that non interest income from the, from the like from the first release, it’s not present in the investor presentation. I see light has completely vanished. Right. So can you give color on like what is going on on these two questions?
Santanu Agarwal — Deputy Managing Director
So see so to address the first point, if you look at the disbursement cycle on a nine month cumulative basis they’re up about 25, 25%. Sequential degrowth that you see is slightly there because of some we couldn’t disburse the entire lot before the end of the quarter which have been rolled over to the next quarter. In terms of your other income outlook, the other income has primarily gone down due to the changes in the co lending agreement as per the new RBI policy. Once that is up and running we should see that growth starting again.
I see.
Divyansh Thakur — Analyst
And like what is the communication from sbi? I think there was a question but I could not understand like what is the communication from SBI or a lack of it with respect to this arrangement.
Santanu Agarwal — Deputy Managing Director
SBI is extremely bullish on the arrangement and so are we. It’s just that the new policy requires some additional compliance from the regulatory point of view. Once that regulatory achievement is regulatory compliance is achieved for we should be able to expedite the same and that compliance.
Divyansh Thakur — Analyst
Or if that compliance is tech related integration or it is both tech related.
Santanu Agarwal — Deputy Managing Director
At integration level it is at a borrower level also. Like for example I can give you a couple of compliances that instead of opening a single loan account now it is required that both bank and NBFC open their own 8020 accounts or 90, 10 or 60, 40 accounts as well as run a mirror account of the entire account on a single level. Second is the arrangement of credit bureau reporting. Third is that the bank’s KYC norms being complying and being integrated into the NBFC’s compliance norms on a back to base, back to back disbursement level, that has to be achieved.
So because of all of these, both NBFC and the banks are, you know, in a process to comply with the regulatory guidelines before aggressively expanding the same. Understood.
Divyansh Thakur — Analyst
So I think I. I understood. I think this, this does require more tech integration for sure. And that, that might be, you know, some work.
Anurag Patil — Analyst
So.
Divyansh Thakur — Analyst
So I understand. Thank you. I think I understood.
Santanu Agarwal — Deputy Managing Director
Thank you. Abhishekti. Bye bye.
operator
Thank you so much. We have a next question coming in from the line of Deepak Rao of KNR securities. Please go ahead, Mr. Rao. Mr. Rao, please go ahead with your question.
Deepak Rao — Analyst
Hello.
Divyansh Thakur — Analyst
Am I audible?
operator
Yes, please.
Deepak Rao — Analyst
Thank you for the opportunity, sir. So the question I had was in respect to inorganic opportunities. So you had mentioned that you will be actively evaluating inorganic opportunities to accelerate market entry and add complementary capabilities. Can you just clarify what specific adjacencies or asset types you’re targeting, what valuation discipline you intend to follow and what kind of synergy you’re looking to with these acquisitions?
Santanu Agarwal — Deputy Managing Director
Yeah, thank you, Deepak, for logging on the call. So, you know, I can’t make a comment on the same, but I can tell you this much. That from a point of view of geographical expansion, product fit and a strategic outlook, we are, we are looking at expanding inorganically as well.
Deepak Rao — Analyst
Sure, sir. Any further detail you can provide on what kind of further acquisition we’re looking at? Any sort of color.
Santanu Agarwal — Deputy Managing Director
Deepak ji. We’ll share the details as and when something materializes.
Deepak Rao — Analyst
Sure, sir. Thank you so much. Thank you.
operator
Thank you. We request all participants that if they wish to ask any question, they may click on the raise and icon from the participant app. We’ll take our next question from Mr. Anurag Patil, who is an individual investor. Mr. Patil, please go ahead with your question now.
Anurag Patil — Analyst
Yeah, I’m available.
operator
Yes, please.
Anurag Patil — Analyst
Yeah, I have a couple more questions. First one is.
operator
Mr. Patil, just a request. Can you speak closer to your microphone, please? Your voice is not clear enough.
Anurag Patil — Analyst
Is it clear enough?
operator
A bit more louder please.
Anurag Patil — Analyst
Yeah, so. So my first question is. I see the promoter has been increasing their stakes for a bit time. So I would like to understand, is there further plan to do that? Secondly, are there any plans for, you know, bonus issues or buyback schemes to, you know, raise the sentiment of the stock in the market?
Santanu Agarwal — Deputy Managing Director
See an Raji. So the promoters have this year added about 4.7% on a fiscal year basis and 0.5% of that is in Q3 alone. If SEBI SEBI allows the promoter to purchase 5% increase their stake by 5% in a fiscal year basis. So we are very close to that. So that is number one. We have gone from about 26% in FY 2019 to now holding about 41.7% as of nine months FY 26. So yes, we are showing we believe a lot in the company, we believe in the franchise model, we believe in the sustainable growth that we have and we believe that what we are doing is right.
So yes, the promoters have increased due to their strong belief in the company from a buyback and other point of view. There is no such plan under consideration right now.
Anurag Patil — Analyst
Okay, thank you for that answer. So my second question is on the collection efficiency point of view. So I see from Q3, FY25 we were about 99 and we have been doing pretty well and we are at about 98.8%.
Santanu Agarwal — Deputy Managing Director
So.
Anurag Patil — Analyst
So I would like to understand, and this, you know, from an industry perspective, we are doing really well compared to our peers as well. So I would like to understand what are the key drivers in our collection efficiency being better than our competitors.
Santanu Agarwal — Deputy Managing Director
See, there is a large in house debt management infrastructure which plays a key role in the high efficiency collection efficiency of pesali. Right. So we to give you a couple of things over there, we have a predefined collection path for field staff. We have backend collection support, we have branch manager and legal support. We have AI and ML analysis for collection performance. And we have automated collection triggers based on geospatial mapping. But on top of that we have three stages of loan stages which is normal initial stages of delinquency and NPA level wherein we have three or four different kind of parties involved which range from all the way from tech driven to legal recovery team.
Also the third important point is a large part of the sales incentive which is accrued by the sales team is only paid for once. There is a collection performance on the branch state level as a whole, which ensures that the sales team is as focused on collection as it is on recovery as it is on disbursements. So a combination of all these factors ensures that we are maintaining a robust collection efficiency.
Anurag Patil — Analyst
Okay, thank you for that answer. And if I could squeeze in another question, this is on a NPA perspective. So I see in FY23 24 our GNPA was about 0.25 and 0.21 and NNPA was about 0.02 and 0.02 in 2020, FY24. So it has come up substantially up now. But I understand because we were facing, you know, on industry level there was stress in microfinance and msme. So can you help me understand if this would go down to somewhere close to that or would it remain stable somewhere here?
Santanu Agarwal — Deputy Managing Director
If you look at FY23 and 24, they were special, they were extraordinary years for the company because what the company wrote off versus what was recovered far exceeded the provisioning levels. So that’s an extraordinary one off year. If you look at the 26 year, 25 year track record of the company, wherein you look at the cumulative gross NPA net NPA levels, you will see that as a standalone performance and a cumulative performance, we have been able to far outperform our peer group by having a gross NPA level maintained at extremely good levels of below 1%.
Also if you look at the industry as a whole, we have been able to maintain our asset quality really well. And on top of that, if you look on a sequential quarter, on quarter basis, we were able to reduce our loan loss and provisions by 54%. So which goes to show that we are actively looking to work on the same and we will continue to maintain good levels. We have always guided for less than 2% NPA levels and you know, we are far, far below our guided range.
Anurag Patil — Analyst
Yeah, thank you for that answer. That’s it from my side.
Santanu Agarwal — Deputy Managing Director
Thank you.
operator
Thank you so much. This is just a reminder for all the participants. Anyone who wishes to ask a question may click on the raise and icon. Thank you so much. As there are no further questions, I would now like to hand the conference over to Mr. Shantanu Agarwal for his closing comments. Over to you, sir.
Santanu Agarwal — Deputy Managing Director
So we thank the. We thank all our shareholders, investors, analysts and Arant Capital for taking part in the Q3FY26 call as we build on the strong momentum while remaining firmly committed to our target of increasing financial growth. Our presentation again has been uploaded on the Stock Exchange and is available on the website. We hope you have had the chance to review it and thank you again for Arant. Thank you again to Arian Capital, our investors, analyst and shareholders for participating in this call.
operator
Thank you members of the management, ladies and gentlemen, on behalf of Paisalo Digital Ltd. That concludes today’s conference call. Thank you for joining us. You may now click on the leave icon to exit the meeting. Thank you everyone for your participation.