Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
RBL Bank Ltd (NSE: RBLBANK) Q3 2026 Earnings Call dated Jan. 17, 2026
Corporate Participants:
R. Subramaniakumar — Managing Director & Chief Executive Officer
Jaideep Iyer — Head of Strategy
Vikram
Analysts:
Rikin Shah — Analyst
Param Subramanian — Analyst
Jayant Kharote — Analyst
Kunal Shah — Analyst
Jai Mundhra — Analyst
Piran Engineer — Analyst
Shailesh Kanani — Analyst
Rakesh Kumar — Analyst
Unidentified Participant
Unidentified Participant
Vansh Solanki — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to RBL Bank Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. R. Subramanya Kumar, Managing Director and CEO of RBL Bank.
Thank you. And over to you, Mr. Kumar.
R. Subramaniakumar — Managing Director & Chief Executive Officer
Thank you, ma’. Am. Good evening ladies and gentlemen and thank you for joining us for a discussion on our bank’s financial results for the third quarter of financial year 2026. We have uploaded the results along with the presentation on our website and I hope you have heard a chance to go through it in detail ahead of this call. As always, I’m joined by Mr. Rajiv Ahuja, Mr. Aji Pahar and other members of our management team to address any questions you may have. Before we get into the details on Q3 operational performance, I would like to briefly touch upon the business trends of the quarter.
Our advances grew 14% YoY and deposits grew 12% YoY. This was after we reduced our IBBC outstanding from 4500 crores to 1500 crore. The CD ratio stands comfortable at 86.1%. The granular deposits which remain our focus area grew 15% and constitutes 51.5% of total deposits. On asset side, secured retail assets grew 25% OI while unsecured advances have now stopped de growing and it grew 1% sequentially. In the wholesale segment, our commercial banking business grew 30% OI driven by calibrated investments in relationship and credit teams across existing markets along with a selective expansion into the new geographies.
The disbursal in JLD segment has reached monthly run rate of 700 plus crore. With improvement in yearly bucket collection efficiency and reduction in slippages and SMA bucket balances in credit cards. We achieved over 1 lakh card acquisition in a single month for the first time post cessation of our new sourcing through our Bajaj partnership. The cards in force grew sequentially after six to seven quarters of production. The spends per month are comfortable at the run rate of 7,000 crore. The credit card slippages continue to be slightly elevated and we expect this trend to continue for 2/4 2/2.
On the interest rate front, the bank has absorbed 100bps of repo rate cut done till June 2025. The rate action taken in savings and repricing in term deposit rates has resulted in nim increasing by 12 days sequentially this quarter. The bank expects term deposits to reprice further in the in Q4 FY26 and together with the improved disbursals in better yielding assets, we expect the margins to be marginally better in next quarter even after 25 bips repo cat in December 2025, we have adapted a calibrated approach to deposit repricing including savings account rates and remain confident of continuing this gradual normalization in a measured manner.
During the quarter we accelerated branch expansion by adding 18 branches and will sustain this momentum. To strengthen our physical footprint and support growth in retail deposits, we have made meaningful progress in leveraging branches as a fulcrum for asset growth with increased branch led sourcing across gold loans, working capital, secured business loans, home loans and credit cards. While this remains a work in progress, we are encouraged by the direction of travel and expect the pace of traction to further improve.
The disbursal from branches is at a monthly run rate of rupees 400 crore. The gold loans disbursal has now reached a monthly run rate of 225 to 250 crore and has the potential to go significantly higher. Our only owned subsidiary Arafal as a sourcing channel for affordable housing and small business loans is now gaining traction and has the potential to become a meaningful contributor to secured loan sourcing alongside jg. Importantly, our retail secured businesses as a cohort have now turned profitable at the operating level and our scale builds.
We expect operating leverage to progressively translate into improved performance on the progress of announced capital infusion by Emirates NBD Bank. We received shareholder approval in November 2025 for the overall transaction including the proposed capital infusion and amalgamation of Emirates NBD’s India branches with the bank. Applications have been made for approval with other regulatory authorities including Reserve bank of India, Government of India, Competition Commission of India, SEBI, etc.
And they are in various stages of progress. In summary, our priorities remain focused on building granular liabilities with a narrower cost of deposits gap versus larger peers achieving a more balanced retail asset mix with a faster growth in sector products strengthening branch led customer acquisition and deposit mobilization deepening customer relationship through higher product penetration across our large existing customer base and improving operational efficiency in our chosen segments to deliver more predictable outcomes across our pnl.
Overall, we believe we are firmly on the right trajectory with the multiple growth opportunities ahead and right engines well oiled to capture these in a disciplined and sustainable manner. Now I will invite Mr. J.D. Payar to take you through the financials in greater details.
Jaideep Iyer — Head of Strategy
Thank you Mr. Kumar and good afternoon everyone. Let me briefly touch upon some of the specific aspects of our financial performance. We grew our net advances 14% year on year and 3% sequentially to 1,3086 crores. Retail advances grew by 10% year on year and 1% sequentially to 60,611 crores. Consequently, the retail wholesale mix is now at 5,941. As Mr. Kumar mentioned, this is net of the reduction of 3,000 crores in IBPC in the business loan and housing loan segments. Secured retail advances after the above reduction in IBPC grew 24% year on year and 1% sequentially adjusted for IBBC.
Obviously this has grown faster within secured retail business loans plus housing loans grew 34% year on year and 8% sequentially. Tractor Finance grew at about 23% year on year and 7% sequentially. The disbursal rate run rate for secured retail is well above 5000 crores on a quarterly basis. For context this number was approximately 3000 crores in Q1 of this year. Wholesale banking grew at 21. Advances grew at about 21% year on year and 5% sequentially and within wholesale commercial banking grew at a faster pace at about 30% year on year and 7% sequentially.
The dispersion in the JLT segment is at a run rate of 700 crore per month versus 550 crores in the previous quarter. The good news is that the early bucket collection efficiency is is 99.5. This is as good as one has got in this segment for a long time. The benefits of this has already been seen in lower sequential slippages and we expect that trend to continue. Reiterating what Mr. Kumar said on cards, We’ve now crossed 1 lakh card acquisition in a month for the first time post the Bajaj sourcing Bijaj financing stopped in November 2024 as a result of which our cards in force also grew sequentially.
Hopefully this should now result in the receivables as well growing on this sequentially from the next quarter onwards. On deposits, our total deposits grew at about 12% year on year and 3% sequentially to 1:19,721 crores CASA ratio now stands at 30.9. Our primary focus area being granular deposits. As we’ve mentioned several times in the past, the focus is on deposits less than 3 crores which grew faster at 15% year on year and 4% sequentially to 61,632 crores and now constitutes 51.5% of the total deposits vis a vis 51%.
In the last quarter branch banking led deposits grew 18% year on year and 3% sequentially accounting for 66% of the total deposits of the bank. Average LCR continues to be healthy at 125%. CD ratio as Mr. Kumar mentioned is about 86.1. We are quite comfortable with the range of 83 to 87% on the CD ratio. Our cost of deposits for the quarter was down to 6.2% versus 6.26% in Q2. Our savings account cost for the quarter was 11 basis points down sequentially to 5.15. Similarly our cost of TDs is down 23 basis points to 7.29 versus 7.52 vis the last quarter.
We’ve also taken a rate action in savings where we’ve reduced the peak bucket down to 6% from 6.5%. We do expect cost of deposits to further decline in Q4 and therefore should help to marginally improve the margins even though the full impact of the December repo rate cut will come in Q4 of this financial year. A little bit on our operating performance. Our NII was up 5% year on year and more importantly 7% sequentially to 1657 crores. NIM as a consequence sequentially was up at 4.63% vis a vis 4.51 other income in this quarter was up 13% year on year and to 101000 and 50 crore and I’m excluding the one off investment benefit that we had on a listing of a strategic investment we had in Q3 of FY26 so excluding that it was up 13% year on year.
Core fee income grew 10% year on year and 3% sequentially to 959 crores. Our total net income was up 2% year on year and 9% sequentially to to 2,708 crores. Opex grew less than revenues at 8% year on year and 2% sequentially to 1795 crores. Our cost to income ratio as a consequence of 66.3 versus 70.7 Last quarter our PPOP pre operating profit was 912 crore up 25% sequentially as a result, our net profit for the quarter was 214 crores. We’ve also taken the gratuity provision due to change in the methodology of about 30 crores which is a part of the reason for net profit to be at 214 crores.
On asset quality in terms of net NPA ratios and GNPA ratios they are down. GNPA was down 45 basis points quarter on quarter to 1.88 and net NPA was down 2 basis points to 0.55%. Provisioning coverage ratio is healthy at about 71.1%. Our total net slippages in the quarter was 711 crores down from 918 crore in Q1, FY26 and 727 crores last quarter. Net slippages in wholesale were negative which has been the trend for a while aided by recoveries. Negative of 9 crores. Credit card slippage was 539 crores, JLG was 130 crores and the rest of the retail was 51 crores.
So essentially our major slippages are pretty much from cards and JLG with a reduction reducing materially reducing trend in the JLG business. JLG is also further reduced at 124 crore in line with improving collection efficiencies. We’ve also seen improvement in resolution rates in bucket one and bucket two. Also we now have 80 plus percent of our standard GSG portfolio is now covered by CJFMU. Hopefully that helps us in good stead if and when there is another cycle. Over the years Our net restructured advances is very very small now at 0.16% on provisionings.
Net provision on advances was about 634 crores, largely dominated by cards with 491 crores JLG of about 60 crores and all other retail put together at about 70 crores and wholesale was about 13 crores. Credit cost as a result for the quarter was 64 basis points on capital. We continue to be fairly healthy with the 14.94% total capital adequacy and CET1 of 13.45. Including the profits for nine months we burned about sequentially about 7, 8 basis points largely due to growth. With this we will now open the session for Q and A.
Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchton telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use answers 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 Raken Shah from IFL Capital. Please go ahead.
Rikin Shah
Hi, good afternoon sir and thanks for the opportunity. I had four questions. First one was, you know I just noticed that the balance with other banks on the balance sheet has jumped to 12,000 crore sharp increase both QoQ IOI partly it’s a function of I guess you know reduction in the CRR but instead of deploying it elsewhere it has again gone to other banks. So just wanted to get a sense will this build up continue or do you intend to deploy that in either G Sec or loans in the coming quarters?
That’s number one. The second one is on your provision coverage it has now come down to 71% so perhaps it means that the additional SMA loan provisions on MFI book are no longer being carried and it has normalized. So how do you expect PCR to kind of settle in the next one year? Is this the level where it will continue or would you want to further increase it? So that’s number two. Third one is on asset quality so the slippages in credit card are elevated. And Kumar sir, you mentioned it may remain elevated for next couple of quarters.
Was this curious to understand why has it not normalized yet? What is it keeping at elevated levels and probably longer than what we initially thought. And lastly you know pertaining to the fund infusion. So any initial thoughts how you would be looking to deploy once the Capital potentially comes in one QFY27 so those are my four questions. Thank you.
R. Subramaniakumar
Okay, I’ll take couple of them and I will ask Jaydeep to get into that the mathematical part of it. Okay the first one with regards to deployment of the fines I say so goals in the last time also we said that we have drawn a broad strategic points for deployment of that and it is being discussed at the board level and we will be able to give the precise way of doing it because we have identified the growth within all the areas which we have been growing for the last one or two years. Second will be some new year forays and new areas will be entering which will be in terms of investment part of managements in expanding our branch footprint and expanding our distributions and some of the new products and services in retail.
We’ll be able to introduce it and we have a gift city we wanted to leverage it. These are the various things which I said earlier. We stand by that and we are working on the deeper numbers on that. With regard to the pcr, if you look at it, we are normally comfortable between around 75 to 78% is what we have been maintaining it earlier. Maybe in a quarter to come we will be building up to the that extent. And with regard to the bank balance, I will ask Jaydeep to give you the details. Yeah,
Jaideep Iyer
Yeah. And just to add on ccr, you know, we have, you know, board approved policies. So obviously there is not much discretion or changes that happen. So depending on the portfolio which is going bad, there is certain level of provisioning which is taken. So it’s a little bit of a mathematical outcome than a target. But we’ve said in the past that we should definitely be 65 plus most of the times on credit cards. Yes, we kind of, if I want to kind of divide the problem, I think we are kind of happy with the book that has been created over the last 18, 24 months and we’ve seen progressively better outcomes on that.
If you look at leading indicators like 6 months on book or 12 months on book, there are certain pockets of the portfolio which are exhibiting weakness. And we think that it will take us, as Mr. Kumar mentioned, a couple of more quarters for that to resolve itself. And therefore conservatively we are guiding like this. And it’s a combination of what underwriting. We had a reasonable jump in growth of cards post Covid. So part of that could be related to that. Part of that is also related to some macroeconomic weakness.
Some of that is also related to the fact that we are withdrawing from many pockets because we were fairly distributed on cards when we had a partnership with Bajaj. And we are now wanting to kind of focus more in the top, let’s say 80, 100, 150 locations rather than being far more spread out. So as we withdraw from fringe geographies, there are some impact on collections that happen. So I think it’s a combination of that. The good part is that we are quite confident of where we see this resolutions improving and what is the kind of risk underwriting that has happened over the last two years.
So there is reasonable predictability on what we are seeing and hopefully we’ll be able to demonstrate that over the next, let’s say two to three quarters
Param Subramanian
On the balance sheet.
Jaideep Iyer
Yeah, on the first question it’s actually a single day phenomena. So if I look at daily averages I don’t think it will be so stark but you know, some deployment of excess liquidity in a manner which was more tactical at that point. In time is more a consequence of that rather than anything from a structural to trend to read into that.
Rikin Shah
Got it. And just one clarification on the PCR comment. Kumar sir mentioned 75 to 78% being the comfort level and you did mention mentioned 65% plus. So how should we kind of build this? So it’s
Jaideep Iyer
A consequence of which goes bad. Right. So for example, theoretically, let’s say at some point, let’s say there is a secured retail asset shows some increase. Theoretically that will continue at 15%. Right. Because the recoverability that is very high. So as we expect see, one of the other things that is happening is on the microfinance front there is a catch up of provisioning that is happening. We have got back to a 25% run rate. So we will see a little bit of net NPA increase in microfinance.
From a legacy portfolio standpoint, whatever went bad in Q2, Q3 etc. And Q4 will have a catch up provision based on a 25% per quarter catch up. So it has nuances around which portfolio, at what point in time. I think basis the recoverability. We are quite comfortable with the provisioning guidelines that we have. So we are very aggressive as you know on cards we are reasonably comfortable with the microfinance portfolio to be taken 100% provisioning over a year. We are despite portfolios like tractor, we take 100% provisioning in two quarters.
So despite it being secured. So I think depending on what portfolio exhibits stress there can be some ups and downs. But broadly speaking, As I said, plus minus 70 is where we should be comfortable.
Rikin Shah
Got it. Very helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Jayan Karote from Access Capital. Please go ahead.
Jayant Kharote
Thanks for the opportunity. There are two questions. One is on the cards business itself. While we do understand that you’ve taken corrective actions but the quantum of slippages are or at least everything seems to be continuing for much longer than the industry and few more quarters. Meaning a good 1/5 of the book is not growing. So even with the capital coming in, if a large part of the book doesn’t accelerate, how do we see this business not from next two, three quarters but next two year perspective.
And when do we really start the issuance rate to go back to the earlier levels? That is number one and specifically want to understand why RBL card portfolio lagging the industry over here. I’ll come back to the second question.
Jaideep Iyer
I think, I mean I think the way I have described it, I Don’t think I have much more substance to add here Jen. Basically we are saying that when we look at incremental portfolio that has been underwritten over the last couple of years and the early trends that we are seeing on that, those are coming quite under control. And there is, there are, as I mentioned, there are certain pockets of portfolios which are exhibiting stress and we expect that to resolve itself over the next two quarters in terms of coming back to a run rate of issuance of 2, 2.5 lakh.
I don’t think we are next necessarily chasing a specific number here. I think the bigger excitement that we have is how do we underwrite cards that have multiple products looked at cost, sold to the same customer base. So we are hopeful to have a significantly higher overlap between our savings account and card customers over time. We are more hopeful of underwriting other secure products with the same customer base through more advanced analytical underwriting methods. So I think that is where even the methodology of which, how we approach customers, how the customers can do DIY journeys for consuming multiple products, I think that is where the focus is.
I don’t think we are looking at cards as a standalone product to grow materially beyond. I mean we will be very comfortable with a 10 to 15% growth in the book and 1 to 1.5 lakh. We should get to 1.5 lakh new card acquisition in, in a few months. And I think that’s a good run rate as long as we are able to bank the customer for more products. Because one of the, ironically one of the risk mitigants in this business is actually to have a more transactional relationship beyond cards with the customer.
And that’s obvious when you look at performance of card businesses across banks and non banks, you see that difference. And I think we want to progressively move towards multi product customer consumption on this rather than a single product business.
Jayant Kharote
This is very clear actually 10 to 15% of the book is very clear and like you said, you’re not targeting the two and a half lakh. So just to add on the asset quality, how many more quarters do you think you’ll need for the cast book to stabilize on asset quality?
R. Subramaniakumar
See, I just want this to be addressed in two parts of it. I mean the acquisition which we are doing it in last maybe around six months time is behaving normally in a sense that we are in a position to go back to the quality of the acquiring to that good state. The existing book which is just showing this test after we took over as Jaydeep made It clear earlier it was operating in all the PIN codes. We have shrunk the PIN codes. So naturally the PIN codes where we don’t have the muscle to do this activity, they’re showing a lot of stress there because this is one business where you have to be in the business for retaining the people at the end and you have to keep on doing the business with all the PIN codes do that that stress.
We made a very the sharp assessment of it and it will pick out in the June and thereafter it start trending down. So we will be by September if you call it it may be normalized number what we have been seeing it earlier. So the June is what it will pick out. And Vikram, anything more to add?
Vikram
Yeah, sir. No sir. I think you summarized it well in terms of our customer selection criteria and our distribution strength. We are almost, you know, at a well defined level. And from here onwards we’ll continue to grow at about 10, 15%. What we have identified in collection performance is that except you know, the early trends and the new sourcing is behaving as per the plan except for a particular cohort, most of it is looking predictably coming within our risk appetite zone. And I think in another two quarters we should see it getting back to the desired levels.
Jayant Kharote
Great. Just to again confirm, by September if it stabilizes, it means second half of FY27. We should be looking at a normalized behavior of this book. Yes. And the second question was on the growth after the capital and branch strategy. If you could just help us with the timelines on both branch expansion. Assuming hypothetically the capital is already in the next one or two months, how do you lay out the branch expansion strategy over the next one or two years and then again similarly timeline on the growth.
When do you see growth acceleration?
R. Subramaniakumar
See, our branch expansion strategy is very clearly laid out and it has been well consumed with a team across. We will exit March with around 600 branches and by next March as in hereafter it will be around 800 and by third year we’ll be exiting from thousand branches. It is our own RBL branch bank. We have already identified 200 high growth locations across the country. Taking into consideration consideration the opportunity for us to make a higher growth rate there in respect of a granularization of our focus.
This is apart from the touch points of around 1300 where we have an RFL which we have started leveraging it from for the last couple of quarters where apart from doing a JLG business, they will be doing all that retail security businesses Also So if you for the simplistic understanding you will say that thousand branches will do all your retail asset. Retailability is a retail consumer business bank, branch bank and R will be doing your retail asset also. So for the business growth opportunity, you’ll be having around 2,400 touch points by end of third year.
Jayant Kharote
And on the timelines for growth and the capital.
R. Subramaniakumar
See the capital is depending on the approval which is going to come. We don’t have a precedence to say precisely that when it is coming because it’s a person of its kind. So we made our own assessment based on what was the conversation which is going on with various regulatory authorities who we are apply applications have been made. We feel that maybe in Q1 will be the right time for us to say that approvals will come thereafter the process will follow for getting that infusion to take place.
Jayant Kharote
And post the capital. Would you take time to start growing or you think you already have the right plan in place?
R. Subramaniakumar
Right now we are already growing in 25% to 30% range. If you see it, my wholesale is growing at 21% and commercial is growing at 30% and retail secured is growing somewhere around 30% which all, all of them put together is somewhere around what, 70 to 74% because they were unsecured. And the put together is 26 remaining days. This is, this cohort is growing at the end of around 25% given. So with the capital with an expense of putting footprint naturally it has to be much above the 25% what you’re talking about can be another 10%.
So the growth is something which is given and assured. With our current growth rate, our run rate will go faster instead of getting forced maybe that we will continuously reaching the boundaries much easier.
Jayant Kharote
This is very clear. Thanks for the transparency.
Operator
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, thanks for taking the question. So two questions, particularly now getting on to the credit cost. So given that the pain on the credit card is continuing now, how should we see the credit cost settling? And I heard that maybe the credit card slippages would pick out in maybe June. So do we see a much elevated level even compared to that of 2Q going forward? 3Q going forward? Or maybe this is the level which can be sustained. And what would be the overall guidance on the credit cost side?
Jaideep Iyer
Kunal? I think on slippages we are not suggesting that this is going up. I mean we are broadly talking about current range which are obviously elevated from that idea. Should Be there is no suggestion that we will see anything more than the range that we have been in. I think on credit costs maybe it’s going to be two different halves next year because cards will play a role. So I guess the first half has been somewhat in the current range, maybe little lower because micro finance is coming under control.
But second half should start seeing significant improvement on grid costs.
Kunal Shah
Okay, so maybe this kind of a run rate of 2.5, 2.3 to 2.5 should continue for few more quarters.
Jaideep Iyer
No, I’m saying not few more quarters. I think see within this, I think micro finance is coming down. We are not seeing any material challenge in any other part of the business, whether it’s wholesale or secured retail. And so if microfinance comes down, we should see some moderation on credit costs. But you know, I’m not getting into precise number guidance here of 10 basis points or 20 basis points. But we should not go beyond this range clearly. And as, and when the card situation improves, which as I’m saying, as you’re saying should start looking better from September, so second half of next year should start moderating in terms of credit cost quite materially.
Kunal Shah
Sure, got it. And second question is with respect to the cost of deposits benefit, maybe in fact when we look at it it’s not coming through much even like this quarter it’s been down just 6 odd basis points. So when do we see this eventually cost of deposits benefit to flowing? When we look at it maybe from 6.53 it’s still down to 6.2. So, so maybe when you, when we look at it, maybe when should a larger part of this benefit flowing and again like maybe savings is seeing the benefit TD we saw it like 23 odd basis points this quarter.
So TD benefit should continue for another two quarters given the average maturity.
Jaideep Iyer
Yes. Yeah. So Kunal, I think the TD trend is quite clear. The savings account reduction is calibrated consciously. I think where there is a little bit of a challenge is that the CASA ratio on a daily average basis is a little bit of a challenge given the situation in the industry and the fact that we are also reducing rates. So if I look at TD rates, I think yes, that trend will continue because repricing benefits will come over time and therefore effective cost of funds reduction will be a little moderated as compared to to the TD cost reduction.
Kunal Shah
Okay, okay, good. And one last question on ecl, maybe if you have again recalibrated the impact and maybe gone into much detail about it, what could be the overall ECL transitioning impact now.
Jaideep Iyer
So that’s a little bit work in progress. I think we are in that 10% zone of net worth. But we are, you know, RBI guidelines have recently come out and we are in the process of, you know, we will also have to potentially start reporting IFRS accounts for consolidation purposes post the consummation of the transaction. So we are working on that with a lot more detail orientation and as and when we have visibility, we’ll come back. But we should be plus minus broadly in the 10% zone of network.
Kunal Shah
Okay, got it. Thanks. Thanks. And all the best. Yeah.
Operator
Thank you. Next question is from the line of Jayam Hundra from ICIC Securities. Please go ahead.
Jai Mundhra
Yeah. Hi, good afternoon and thanks for the opportunity. First question on RBA approval. So you mentioned that you also sought approval for amalgamation of Ms. India branch. And of course there is an approval pending for the transaction. Are these two separate approval or they are like one approval only?
R. Subramaniakumar
There are two different approval. It has to be a. First one is in respect of consummating the transaction. The second will be the amalgamation of the branches into it. And we also made a statement not during the intervening period. We also sought the permission for running the two entities which is. This is also the third approval which is also gone. All the three approvals are independent of each other and they will be considered concurrently. Because everything has a linkage to every other approval.
It is not nothing can be given standalone basis and it starts in sequence. Maybe. Yeah,
Jai Mundhra
Okay, sure. That. That is very clear. And. And second question, sir. On a credit card business. So you. You mentioned about the likely asset quality behavior. But I also wanted to check on the growth side. Right. So if you believe that it will take over 2/4 for portfolio quality to more stabilize in the interim period, would you see the big book outcome to be similar wherein the QOQ yoy growth has been negative or you think that maybe the recent behavior makes you positive to at least start growing this book.
How should one look at the credit card book growth over the next two to four quarters?
R. Subramaniakumar
So only one important point I’ll tell. Then I’ll ask our Vikram to talk about in detail. The first thing will be that first. It will become QOQ positive. Then it will start working on positive. Next quarter it is going to become Q positive. And the other positive because with the 10 to 15% range it will take some time for you to become O positive. You can give further details,
Vikram
Right. So see any mature credit card portfolio you see erosion of about 20%, you know, annually either Voluntarily or involuntarily. Which means that to sustain a growth of say about 10, 15% we have to do new cards equivalent to about 25 to 30% of our current base. Now immediately after exit of Bajaj, we did a diversification of distribution which has scaled up to 100,000 cards in December. We’ll continue to now scale it up to drive, you know, about 10 to 15% growth on a sustainable basis in month of November and December after I think about, you know, 12, 15 months we have seen growth in the portfolio.
Now after the start of the. So this is a point of inflection from where we will sustainably grow 10 to 15% annual which means that about 5, 7 to 10% quarter on quarter. That is the answer on growth. For driving this growth, we have already developed well defined distribution within the bank with no dependency on third party which is giving us sustainable new acquisition on month, on month basis. Did I answer your question?
Jai Mundhra
Yes, that helps very much. Then another question was on IBTC sell down. I was under the impression that, you know, the bank would need more growth even if it comes from ibpc. So why sell down IBPC when you know, one or two quarters down the line you may have to again do IBPC only.
R. Subramaniakumar
So I think it is not the sale of our asset. This is something IBBC which has been taken by us over a period of time and it got accumulated to vote. Then we said that our own muscles should contribute. So we have started saying that instead of working doing a lazy banking, we wanted a small, I mean hard work banking which is one of the major reason for us to shirt this. At one point at the time you have to. You can’t depend on the third party. If you wanted, you can accumulate and show the growth minus this.
Our people are able to show the growth up from 24% organic. So that now they know that strength which will go up to let us say 30, 30 to 35. That is an idea. It is not our assets holder to ibbc. It’s other way around. We shirt or removed our IBPC book which we bought over a period of time.
Jai Mundhra
Okay, last question sir. On lcr. If you can quantify from April beginning, you know you may have to provide more runoff rates on MIB and there could be some lower runoff rates on wholesale deposit. What could be the net impact because of these changes on your lcr? Could there be release or you may. Have to provide more liquidity.
R. Subramaniakumar
If I remember right, the task is going to give you benefit of LCR release because it is Going to move away from 100% output to the 40% output and it is providing an opportunity for growth. Plus it is going to give you relief of lcr. I don’t think there is going to be a problem of health. Yeah,
Jaideep Iyer
Yeah. Marginal benefit only on the net
R. Subramaniakumar
Release situation.
Jai Mundhra
The only thing is that you have to provide more on the mobile and Internet banking. But that will be offset right. By the lower runoff rate.
R. Subramaniakumar
Correct.
Jai Mundhra
Thank you and all the very best and congratulations for your delegation. Thank you.
R. Subramaniakumar
Thank you so much.
Operator
Thank you. The next question is from the line of Viran engineer from clsa. Please go ahead.
Piran Engineer
Yeah, hi team Congress on the quarter. Just few questions. Some might be repetitive but on this credit card slippages. So I understand that the new cohorts are doing better. Do you think it’s also an issue with our collections infrastructure? Like maybe when it was with Bajaj, they have a vast collections infrastructure across multiple products, multiple districts. Obviously it’ll be much bigger than ours and now when we move to ours, that is one of the reasons. So it’s not just the quality of the customer but the ability to recover which has impacted slippages.
What do you think of that?
R. Subramaniakumar
Yeah, Vikram, you can answer.
Vikram
Yeah, yeah. Hi. So see when we have done a very rapid transition in January, in somewhere in last financial year, there definitely was a transition impact which was there. But when we look at our collection outcome today, they are operating, you know, almost 5% better than what they used to operate in Bajaj’s collection management days. Our problem is not neither of. So our problem is not, you know, generally at a portfolio quality level we have identified not there’s a particular cohort which is giving us a little bit of a grief.
If we were to see the collection performance outside that, we are doing little better than what we used to do even when Bajaj was there. So our collection muscle right now is fully developed and fully ready to manage a portfolio of this size with a reasonable growth. But the slippage is coming because of that cohort which is giving a little bit of grief. Otherwise we are reasonably in control over the portfolio.
R. Subramaniakumar
Just to summarize the point, what you asked about whether the collection infra is weak when compared to the BFL is a broader point which you brought about. The collection infra at the end of the day is always the collection agency which is working on the feet, right? The collection agency is going to be with the X or it is going to be the Y. The same set of people, the supervisory team is what it has been taken over this infra setup might have taken a little time, but the setup is as strong as that it used to be earlier.
This is a broader sense. I wanted to give you and give you a comfort that it is not the collection. If the collection infra is weak, it is going to be very weak. So it isn’t. It isn’t. So. So the initial setup and absorption period, the moratorium got extended little because of that. The locations on which we have to work on is much beyond the PIN codes. Where we have been set up our PIN code, that creation has taken a. Little longer time
Vikram
And we have, you know, accelerated the issuance only after fixing the collection infra issue. So I mean we have passed our growth until the collection infra was 100 in control and was delivering at the original level. So. So that is the thing that we want to submit.
Piran Engineer
Okay, got it, got it. The secondly, when a secured retail slippages, are we happy with current levels? Is this built into our, you know, profitability matrix etc, like 167 crores a quarter from a 35000 crore book. I mean if I look apple to apples with other banks, obviously it’s high. But we do understand that you all have to take higher risk bets because of your cost of funds. Is this in line with your estimates or not is my question.
Jaideep Iyer
So a couple of things. We’ve had a. We have a very small agri portfolio which is. Which had some couple of accounts of about 1520 crores this quarter. If I divide the book into let’s say two, three parts. If you look at mortgages which will include small lab, micro lab, housing, prime housing, prime lab, all of that put together, I think we are in a relatively negligible slippage situation. And you should look at net slippage on this because there are certain businesses where because of the guidelines you do have slippages but then they get upgraded.
So other than a couple of quarters back we had an issue with our working capital business and this time we had a couple of loans on agri. But these are not anywhere symptomatic of the portfolio. This is anecdotal and I think we are other than tractors which by definition goes at about 2, 2 and a half percent of the portfolio as liquidity or credit cost. We are quite comfortable with where we stand on this.
Piran Engineer
Okay, got it, got it. And just your 15,000 crore secured business loan book, that’s fixed rate, floating rate. What’s the average tenure like.
Jaideep Iyer
On the. On the business notes on LAP portfolio. The 15,000 crore
Piran Engineer
Secured business loan. So I presume that is LAP, but I don’t know if it works. Yeah,
Jaideep Iyer
Yeah, that’s correct. That’s correct. So behaviorally it should be about four to five years.
Piran Engineer
Okay. And it’ll obviously be floating rates then.
Jaideep Iyer
Yes, yes. All of all entire retailers is pretty much linked to repo and floating other than cars and microfinance. And tracks are structured basically.
Piran Engineer
And gold also.
Jaideep Iyer
Basically mortgages and working capital.
Piran Engineer
Got it. Just lastly on casta now you mentioned industry wide pressures. But is it just simply that your customers are moving from SA to TD after the rate cuts?
R. Subramaniakumar
See we saw that assessment. Some of them have moved from one bucket. The people who are there in the higher bucket has moved from partly to that td. But one thing I want to tell you that ntb which my team is able to mobilize even after the cart, it just outweighs even that outflow which we have seen it here. If you look at it last, in the last two, three cuts, the total net outflow somewhere around 200, 300 crores. Only for the book of around 18,000 crores which is a sign of holding the customers together.
So this also not the one which left the bank. Majority of that gone to td.
Piran Engineer
Okay. Yeah, left the bank. Of course not. Because all the other banks have also cut their rates. So you can’t go anywhere else. But moving to TD was my question. But yeah, that answers my question. Thank you and wish you all the best.
Operator
Thank you. The next question is from the line of Param Subramanian from Investec. Please go ahead.
Param Subramanian
Yeah. Hi. Thanks for taking my question firstly on. So I heard Mr. Kumar call out. 200 branches per year, if I’m not wrong for the next two years. What does that mean for OPEX? Run rate for FY27 and 20.
R. Subramaniakumar
See, I’ll tell you now on an average around what half a million INR is what we do. Opex. Yeah. Yeah. So
Jaideep Iyer
Let’s say simplistically if you look at 200 branches for fiscal 27 we will look at an average rollout impact from a P and l standpoint of 101 should assume a 60 to 70 lakh operating cost run rate per branch. And therefore that will translate to 60 to 70 crore in FY27. Naturally the next 60 to 70 crore of that full impact will come in fiscal 28. And then the fiscal 28 will add another 100 branches for the year. Average basis of 200 full year. And so that’s how the cost will pan out. But I think the reason we have confidence of visibility.
One is obviously there will be capital coming in. Second, we will continue to improve profitability on our secured retail. Third, we expect a material change in cards and microfinance profitability by the time we exit second half of fiscal 27. So I think when you put all of that together, I think we are quite comfortable in taking these expansion costs because ultimately we have to balance at some level, some level of growth and it’s easy to grow loans. We’ll have to obviously if you have to grow deposits and that to deposits at a cost which we are comfortable with because we do have a stated intention to reduce the gap.
And along with that, if we impose a 25 30% growth in deposits, naturally we will have to arm the businesses with distribution. And that’s the intent.
R. Subramaniakumar
Distribution for retail. Retail assert we have a very calibrated plan of making the branches to become profitable on the 18th month. That means a branch which is opened in this quarter will become before FY28 will become profit. And once that cycle sets in and with your ability to reduce the cost, with your ability to borrow at a cheaper rate that will get compensated. But while of course when, when you wanted to expand on the liability side, the print has to expand. I think
Param Subramanian
So. So 7,200 crore is your annual OPEX run rate. So you’re saying only a 60, 70 crore extra impact. Did I get that correctly
Jaideep Iyer
For branches?
Shailesh Kanani
Yes.
Param Subramanian
And this is fully loaded as in here, this is fully loaded branch expansion. So that should be the incremental learning. Okay. Okay.
Jaideep Iyer
Correct.
Param Subramanian
Okay. Okay, fair enough. Second question again on your margin in this quarter. So on slide 5, you saw these movement right between your cost of funds and yield. I can see the LCR is also broadly stable. Quarter on quarter, Your yield is down 13 basis points. Your cost of fund is down by less than that. So how exactly is this limb expansion? How is it played out over 12. Basis point in this quarter?
Jaideep Iyer
Part of that PARAM is CRR cut benefit of about maybe 4 basis points or so. Part of that is on a daily average basis the investment book to advances book was lower than historical trends. Some balance sheet efficiency, some improvement in short term investments that we had. So it’s a mix of factors. Okay. No, I, I, I
Param Subramanian
Thought it should have reflected in your lcr. Right. I mean that is flat.
Jaideep Iyer
You can take that off course is lower than the previous quarter. So we’ve used liquidity more efficiently this quarter.
Param Subramanian
Okay, fair enough. Yeah, yeah, that’s it for me. Yeah. Thank you,
Jaideep Iyer
Thank you,
Operator
Thank you. The Next question is from the line of Rakesh Kumar from Valentus Advisors. Please go ahead.
Rakesh Kumar
Hello.
Operator
Yes, Mr. Kumar, please go ahead with your question.
Rakesh Kumar
Yeah, hi. Hi sir. So this is a question, sir, on extension of BCC also how much, how much of the provision that we are holding on loads outstanding.
Jaideep Iyer
Can you, can you repeat the question? Can you repeat.
Rakesh Kumar
Yeah, so with, with respect to accounts. So. I’m sorry to interrupt you
Operator
Mr. Rakesh. Your voice is breaking sir. We are unable to hear you.
Rakesh Kumar
Is it fine now?
Operator
Yes, please go ahead.
Rakesh Kumar
Yes, so I was asking the amount of a standard asset provision that we have on the loan that we have, you know, where the DCCU has been extended. So, so what is the provision that we have on those loans?
Jaideep Iyer
So total project loans that we have in our books, basically new guidelines are kicked in. Is about 4 crores.
Rakesh Kumar
Okay.
Jaideep Iyer
On Saturday. Yeah.
Rakesh Kumar
Okay. So what would be the incremental number? So like because of this increase in the. This is your extension.
Jaideep Iyer
4 crore is largely incremental because we would have had only whatever 40 basis point before that. So roughly 4 crore is delta.
Rakesh Kumar
Okay. Okay. And if you look at you know the constitution of your retail liability like you know it has marginally deteriorated from you know, from the June numbers. So, so if you have any color to add here,
Unidentified Participant
In what context? Sorry,
Rakesh Kumar
Yeah, so if I look at your retail liability constitution wise breakup which is there in the slide number 16 and if I look the number from June, June to December number. So there is like you know, individual and HF number percentage has come down.
Jaideep Iyer
Yeah, I guess that necessarily is not good or bad in itself. I think small business, if you look at granular deposits, we are sequentially better. So it could be from small businesses, it could be, you know, so we would typically not necessarily look at just individual as a constitution but look at the granularity and on an individual basis I think that we kind of savings account anyway being a challenge for the industry. So part of the reason would be that otherwise.
Unidentified Participant
Oh, sorry, Narendra.
Jaideep Iyer
Yeah,
Unidentified Participant
Our retail deposit is better which is CASA. And FD less than 3 crore is growing faster at 16% as compared to the total deposit. And our granular deposit is growing at 15% which is better than 3. Total deposit individual is showing lesser because of this because we cut the rates from six and a half to five, seven and a half to six percent. But on the retail deposit growth and granular deposit growth we are growing at a faster rate.
Rakesh Kumar
Got it. So just third question. Lastly TD has like, you know, from the March number it has fallen by approximately 40 bips to now. Considering that what is the, you know, first deposit, you know, fall that has happened in the system as per the RBI number, what would be the, you know, acceleration in the, you know, additional fall in the TD cost? So would it be around 70 babes or 80 waves? Assuming that there is a, you know, complete pass through happening in the outstanding TD number, also in line with TD number.
So like how do you think that, you know, would it complete in next 6 months, 9 months or 1 year time?
Jaideep Iyer
I think it should complete in maybe a nine month kind of a time frame. Typical average maturity of TDs would be in the nine to 12 month zone on a blended average basis. And the latest cut. See, I think the issue is that, I don’t know, maybe we have another 20 basis points to go in terms of incremental TD cuts at least in this cycle. And therefore I would, I would not go to the extent of 70, 80bps. I would say 30, 35bps is what we would have broadly as some more room to go in terms of overall TD cuts.
Cost of TDs coming down
Rakesh Kumar
In the next three quarters.
Jaideep Iyer
In the next three quarters,
Rakesh Kumar
Yeah. So from the liability side at least we are safely, we are very safe on the margin front. On the liability side.
Jaideep Iyer
Yeah, I mean, I think, I guess, you know, in our case there are multiple plays on margins. Right. So I mean we went through a period where there were rapid repo cuts and there was a material reduction in our microfinance and card book contribution to total rights. So now both seem to have bottomed out and therefore we are, you know, it’s difficult to predict long term, but clearly over the next three months, maybe even six months, we should see margins improve a bit.
Rakesh Kumar
Thank you. Thank you sir. Thank you.
Operator
Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.
Shailesh Kanani
Yeah, good afternoon everyone. Thanks for the opportunity. I have two questions. The first question.
Operator
I’m sorry to interrupt, Mr. Kalani, we are unable to hear you so your voice is breaking.
Shailesh Kanani
Is this better?
Operator
Yes, please go ahead.
Shailesh Kanani
Yeah, so my question is to. Mr. Kumar indicated that the retail secured portfolio has begun contributing to the profitability at the cohort level. So can you please provide a product wise breakup in terms of profitable, break even and yet to break even products?
Jaideep Iyer
I think the prime housing followed by prime lap, you know, tractors is already profitable. Gold loan is getting to be profitable. I think LAP is profitable. Prime housing is yet to catch up. And small affordable housing and small lab, given that it’s a growth area, you know, acquisition costs are still a little higher. Maybe that is just about breaking even. So two things will drive profitability. One is obviously there is a back book which keeps growing and therefore giving you interest income without cost of acquisition.
Second, we are consciously keeping the mix in favor of small business loans and affordable housing as you will see in the slides that we have presented, which has a faster breakeven time. And third, you know, we continue to expect productivity gains on origination as well going forward. So I guess it’s a combination of all of this in terms of improving profitability.
Shailesh Kanani
So. So if my understanding right, in terms of yet to break even, it is only prime housing is one segment which is yet to contribute to the break even. That is understanding, right?
Jai Mundhra
Pretty much. Yes.
Jaideep Iyer
Yes.
Shailesh Kanani
Okay, fair enough. Sir. My second point is to wholesale lending. Obviously macro has helped and this quarter the numbers were good. But if you could throw some light, say once the capital comes in two years, three years down the line, in terms of mix we have been stable in terms of 60, 40, how would that number be in terms of retail and wholesale?
R. Subramaniakumar
Let me tell you, this is a precise number. We’ll be able to say one once we finalize our strategy along with the board and naturally it is not going to be 60, 40. It will be definitely trending towards. I. Mean moderating in respect of. Moderating in respect to the, in favor of wholesale,
Shailesh Kanani
We are opposite. Okay, fair enough. Sir, just one question. Sorry to harp again on credit card business because we have had some misses on that in terms, especially, especially post our, post our time with Bajaj. Can you shed some more light in the sense what gives us the confidence that in next two quarters set quality would improve? Because in the past also we had, had, had given similar guidance but somehow because of the macro and other factors beyond our control, we were not able to kind of deliver on the asset quality of credit cards.
So if you can throw some more light.
Jaideep Iyer
Yeah, so Shailesh, as we said, I think if we look at portfolio originated over the last couple of years, leading indicators on that portfolio underwriting changes that we have done and being demonstrated in terms of exflow bucket, we are seeing other than some patches of cohorts as we mentioned, we are looking at significant improvement in line with our expectations. So there is a clear visibility on improvement which we see from September quarter onwards, I think. Yeah. Sorry, go ahead. No,
Shailesh Kanani
I was, I was just listening. Yeah,
Jaideep Iyer
Okay.
Shailesh Kanani
Okay. So we are, we are pretty confident this time around to deliver a Couple of quarters time. The betterment in asset quality for credit card. Right.
Jaideep Iyer
And I think, you know, in terms of profitability, it’s not only, it’s not only credit costs. We are also significantly working on cost of collections and cost of business in general which also got bloated because of higher slippages and higher collection cost. So in terms of overall business outcome, if I dial back three years, it was significantly higher on revenue. We have now the industry settling down to a structurally lower revenue business. And that has to be countered with both reduction in cost to assets as well as collection and slippages and trade costs.
Sorry, Vikram. You want to add.
R. Subramaniakumar
Vikram is looking for a confidence from yourself.
Vikram
Yeah. Hi. So Shalish, you know, after the transition of collection from Bajaj to us, we have done significant investment in collection infrastructure and we have paused the group pause growth from third party, you know, till the time we have full handle on collection. So as Jaydeep has said, now our distribution muscle is ready, our refresh rate is ready. Our collection infrastructure is also in place and has been tested on scale. Our incident of defaults are significantly lesser. I mean they are right now at I think all time lowest since we started the business.
Our resolution rates are back in, you know, back in the required range. Now what is, what we are dealing with is there’s a particular cohort which we will I think sort over next, you know, two quarters of sorts and then, then we should be back on in absolute full desired levels.
Shailesh Kanani
That’s, that’s very helpful become. Thanks a lot and best of luck everyone.
Vikram
Thank you.
Operator
Thank you. The next question is from the line of Van Solanki from RSPN Ventures. Please go ahead.
Vansh Solanki
Hello. Am I audible?
Kunal Shah
Yeah.
Operator
Yes you are. Please go ahead.
Vansh Solanki
Other than jlg, I just want to know the strategies about the wholesale and other secured retail banking. Like how we see the other two segments of the bank going forward, not in the next two, three quarters. But I’m talking about the after one, two years.
R. Subramaniakumar
You are talking about, if I understand right, you are asking about the growth of wholesale banking and the growth of retail securities, is that correct?
Vansh Solanki
Yeah, yeah, yeah.
R. Subramaniakumar
Okay. We have been growing wholesale at around 21. So that is a minimum pace and it can’t go below that and it is going to go up. So the near term it will continue to be in the range of 2025. Long term it will be much higher. In respect of retail, we have been growing around 30%. 25 to 30%. In near term it will continue to be the same range in long term it will also go up by around another 5 to 10% or more.
Vansh Solanki
Okay. And on the GLG front, will the. Growth will be as higher as we have in last one year, about four quarters back? Will it be possible for us to go back then kind of growth in unsecure sector?
R. Subramaniakumar
No, unsecured. We have already come on record to say that we will not be growing disproportionately. I We reduced it from 36% to 24%. 26% which will come down somewhere in the range of around 22 to 25. In that range, if that is the what we are looking at it, we will be growing in the range of around 10 to 15%. Right.
Vansh Solanki
Yeah. Okay. Thank you. Thank you from my side.
Operator
Thank you. Ladies and gentlemen, we now conclude the question and answer session. If you have any further questions, please contact RBL Bank Limited via email@irblbank.com on behalf of RBL Bank Limited, we thank you for joining us and you may now disconnect your lines.
Param Subramanian
Thank you. Thank you.