Suryoday Small Finance Bank Ltd (NSE: SURYODAY) Q1 2026 Earnings Call dated Jul. 25, 2025
Corporate Participants:
Unidentified Speaker
Shailesh Kanani — Moderator
Kanishka Chaudhary — Chief Financial Officer
Gaurav Pawra — Head, Mortgages Business
Baskar Babu Ramachandran — Managing Director, Chief Executive Officer
Analysts:
Unidentified Participant
Harshit Jain — Analyst
Jai Chauhan — Analyst
Deepak Poddar — Analyst
Saumil Shah — Analyst
Shashi Kapoor — Analyst
Ashlesh Sonje — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Suryadha Small Finance Bank Limited Q1FY26 earnings call hosted by Arihant Capital Markets Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Jain from Arihant Capital Markets Limited. Thank you. And over to you Mr. Harshit Jain.
Harshit Jain — Analyst
Thank you. Hello. Good afternoon everyone. Welcome to Suedai Small Finance Lines Q1 FY26 earnings conference call. On behalf of Aryan Capital Markets Limited I would like to thank the management of Zeroday for giving us this opportunity to host this call. Today we have with us the entire top management team of Suruday Small Finance bank represented by Mr. Bhaskar Babu Ramachandran, MD and CEO Mr. Heman Shah, Executive Director Mr. Kanishka Chaudhary, CFO and Mr. Hemadri Das, IR Head. I will now hand over the call to Mr. Bhaskar Babu for his opening remarks and then we will open the floor for Q and a session. Over to you sir.
Baskar Babu Ramachandran — Managing Director, Chief Executive Officer
1F526 earnings call. We appreciate your time and interest. I hope you had a chance to review our financial results.
operator
We couldn’t hear you. Please.
Baskar Babu Ramachandran — Managing Director, Chief Executive Officer
Can you hear us now?
operator
I can hear you loud and clear.
Baskar Babu Ramachandran — Managing Director, Chief Executive Officer
Yeah, sorry. So I hope you had a chance to review our financial results and investor presentation. Both of which are available on our website and on the stock exchanges. The bank has started Quarter Q1 FY26 on a positive note in terms of the growth in advances and deposit. The growth was driven by inclusive finance disbursement, returning back to near normalcy and the significant momentum in the mortgages and the wheels business on the asset side. On the deposit side, the growth was driven by the retail franchisee as well as the digital channel. The growth in the retail franchise on the deposit side is a further step towards achieving the bank’s overall mission of serving 1% of the Indian households in a meaningful manner.
The NBFC MFI sector had experienced increased asset quality pressures in FY25 primarily due to borrower over leveraging, socio political dynamics and operational challenges. Factors that have prompted the industry to strengthen its risk frameworks and operational resilience. Our bank also experienced these challenges, part of which was mitigated through the CGFMU credit guarantee cover. We are also confident that there is a huge opportunity lies in inclusive finance backed by individual loans Vikas Loan and will continue to serve these customers in a holistic way. Also, the bank has been proactive in implementation of the Mfin Guardrails 2.0 in November 2024 itself well ahead of the mandatory implementation timeline and portfolio source post November 2024 have been showing better behavior either on 3 mob, 6 mob, etc.
Also, it was a year of opportunity, particularly in the focus to growth of our secured assets portfolio and the continued strengthening of our deposit franchise. Strategic initiatives undertaken in recent years such as investing in credit guarantee mechanisms, enhancing our digital offerings across both product deposits and lending, and sharpening our focus on the MSME segment have laid a strong foundation for the coming financial year. The RBA’s revised PSL norms for small finance banks have also enabled institutions like ours to build a more diversified and balanced portfolio. This progressive move opens up greater opportunities for us to focus on segments like msme, Micro Housing and other sectors, broadening our impact and reach in respect to Suryadeep’s performance for Q1FY26.
I’m sharing only the key highlights and not elaborate numbers in detail which have been included in the investor presentation uploaded on the stock exchanges. Our gross Advances stood at 10,846 crores with a 20% year on year increase. Our deposit base stood at 11,312 crores which is 39% increase year on year. The share of the retail deposits now stands at 82% as of June 20 compared to 79% the year earlier driven by the deposits garnered through the digital channel. CASA is reasonably stable at 17.7% and we aim to reach back the 20% range in the coming quarters.
The inclusive finance current bucket collection efficiency increased from 97.5% in April 25 to 98.4% in June 25 and the current bucket collection efficiency of the last six months of its portfolio is at 99.5%. Our current GNPA is at 8.5% as of June 2025 and NNPA is at 5.6%. GNPA stood at rupees nine hundred and eighteen crores and NNPA at rupees 593 crores against which rupees 584 crore is receivable under the CGMFU scheme. In effect, the CGFMU receivable and the existing Provisioning covers almost 100% of the GNPA. Some of the strategic initiatives which were initiated a couple of years back are now beginning to yield results such as shifting from group lending to individual lending which strengthen underwriting processes, prudent risk management practices for wider coverage of cyclical events by initiating and continuing with the credit guarantee coverage for eligible loans focused on secured in retail assets business.
Currently the deposit source to the digital channel stored at rupees 1000 crores with a daily run rate of rupees 3 crores per day on an accretion basis, the digital sourcing channel works effectively as a customer acquisition engine and also opens up opportunities and enables us to cater to the other requirements of our customer source channel. We remain committed to delivering consistent improvement across all key business parameters in spite of the challenges and a strong focus on sustainable growth, asset quality and customer centric innovation as we move forward, we are confident in our ability to create long term value for all stakeholders while staying true to our mission of financial inclusion.
Thank you for your continued trust and support and over to Harsher for question answers. Thank you.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets 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 Jay Chauhan from three Netra Asset managers. Please go ahead.
Jai Chauhan
Hello, good afternoon. Thank you for the opportunity. So I just have one question sir, you mentioned digital deposits have crossed thousand crore with run rate of 3 crore a day. So can you just break down the customer cohorts driving this inflow and some important metrics like CAC and renewable data points that you know would convince you to scale marketing beyond the current partnership model.
Baskar Babu Ramachandran
Yeah, thanks Jake. Currently our digital sourcing on liabilities is on account of our partnerships with the payment banks Fino jio Atel and these are our and on the digital fixed deposits which are completely granular, we source to various platforms and the largest platform for us currently is stable money and we are currently accruing around 3 crores per day predominantly on the retail FD side and the CAC is substantially lower than the physical mode approximately around 35 to 50 basis points.
Jai Chauhan
Understood sir. And do you also calculate the renewable data points? Renewable data points and like customer lifetime value or something like that?
Baskar Babu Ramachandran
We just started in the last six months as you know that kind of move almost doubling every quarter for the last three quarters. Currently while we have thousand crores it was less than 500 crores. Even a quarterback which was last quarter, the renewals and all of that. We’ll get to know the data only probably after another six months. But many customers when they first test the platform start with a very small deposit as low as around thousand two thousand rupees and try pre closing it to see the efficacy of the digital platform. Once they are convinced usually then it jumps up to 50,000 to 1 lakh and up to around 2 lakhs.
The customer profile of the digital fixed deposits are substantially different from the regular channel in that they are digitally savvy, probably have a credit score which is well above 750 and people kind of who have diversified savings not all their fixed deposits. In our assumption there’s a hypothesis we have to test it later really flows through a single bank. That’s why usually the deposit size varies anywhere between 50,000 to 2 lakh rupees and the average I think currently we run it around closer to a lakh.
Jai Chauhan
Got it sir, that’s it from my side. Thank you.
Baskar Babu Ramachandran
Thank you.
operator
Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.
Shailesh Kanani
Good afternoon everyone and thank you for the opportunity. Sir, had a couple of questions with regard to our secured portfolio. Now it accounts for more than 50% of our book. So how is this segment shaping up Especially given that the Q and Q improvement is there in par 30 book over there which has come down to 4.3%.
Unidentified Speaker
Right. So as you may have noted, you know, I mean the torch bearers for us is clearly CV and mortgage in that order. CV on a year on year basis has grown more than, you know, 50%. Mortgage has grown more than 30%. I think given the base that we have in both these businesses our growth will continue to be quite high relative to what we plan to do in if and for both TV as well as on a market on mortgage or on a 12 mov basis. Our bars are well under control. So I think we will continue to focus on these two lines of businesses for our retail asset secured business growth.
Shailesh Kanani
So I wanted to understand if there. Are any early indicator, indications or signs because various partners are talking about stress in those assets. So are we seeing any signs given our exposure is on similar market like Tamil Nadu. So just wanted to have some color any anything on that front.
Unidentified Speaker
So overall indeed we are significantly outperforming. We are significantly outperforming the market right now for one year cohort or a two year cohort on Both CV and mortgages and it’s too early because this static pool stabilizes in 36 months and anywhere between 24 months to 36 months. So last three years anything source post Covid the portfolio is intact second span and we had some incident in the past in MP in mortgage. Otherwise we are the portfolio post that is completely intact.
Shailesh Kanani
Okay, that’s helpful. Coming to unsecured portfolio year two in stage two we have seen a decline. Is it safe to read that slippages may have peaked during this quarter? And additionally when can we anticipate 90/. Bucket to stabilize or potentially start declining?
Baskar Babu Ramachandran
What we’re really seeing which is really kind of heartening is that the rate of accretion to the NPA is coming down quarter on quarter. So we are kind of seeing almost the trend going closer back to what it would have been around six quarters back. Hopefully if this trend continues then it’s near back to normalcy in Q3 and probably in Q4. The reason probably from some of the early SMA’s would have come down is that the current bucket collection efficiency has inched up closer to around 98.5 98.6 and fairly confident that the current run rate will cross 99 in the month of July.
Given that scenario some of the buckets would have been early SMEs would have flown on into GNPA and our accretion in the current bucket is lower and hence it’s showing a percentage reduction.
Shailesh Kanani
So just to just to summarize, Q3. Is very we and we are expecting. Slippages to come down meaningfully, right?
Baskar Babu Ramachandran
Yes, but Q2 will be lower than Q1 Q3 if the trend were to be extrapolated. I think it’s a kind of on a big assumption that we make at based on. But at least what are we seeing the ease with which probably the lesser the difficulty in terms of inching it from 98.5 to 99 gives us the reasonable confidence that if the trend were to continue Q3 is where you would see a substantial reduction in the NPA equation compared to Q1.
Shailesh Kanani
Okay, so my last question is with respect to our non interest income I believe a portion of could have a portion of it would have come from the claims during the quarter. So can you just highlight how it works? And additionally the remaining the remaining part of the CGS you know we are expected to receive this year around 250 odd crores. How would that flow into PNL balance sheet?
Kanishka Chaudhary
Yeah, so there are two parts to your question. So on the Other income. This year we made a little over 30 crores on PSLC and we had a one time gain from sell off our investment portfolio in OMO amounting to 13 odd crores. Right. So both of them look to be one off for the time being. We do not expect significant money to be made in PSLC for sure in the next two quarters. To your question on how the claim will impact our P and L. So what we see that all claims that we are likely to make in Q3 will be P and L neutral. It will help us reduce our headline GNPI numbers.
Shailesh Kanani
So basically it would not be representating. Any editor of Food, right?
Kanishka Chaudhary
Correct? Absolutely, yes. All in respect of NPF and what,
Kanishka Chaudhary
what would be that amount? If there is any change in that number?
Kanishka Chaudhary
We are expecting about 300 odd crores as the claim amount for from our side in Q3.
Shailesh Kanani
Okay. Can I squeeze in last one more question?
Kanishka Chaudhary
Yeah, yeah, sure.
Shailesh Kanani
In terms of dense, we have seen quite a bit of pressure and because of high slippages and also because of book mix changing, where do we see this settling and what is the kind of guidance for future and normal, normalized business?
Kanishka Chaudhary
So you know, for this particular year we will look to have a credit cost of around 1.21 quarter. On a steady state basis we will be having, you know, credit costs in just about near about 1%. Given the kind of mix that we have in the businesses today. We will continue to have the 55:45 mix between secured, unsecured.
Baskar Babu Ramachandran
Includes claims from CGFMU. If you cannot adjust the premium for it and then add it up, it’ll add another 50 basis points or 60 basis points to the overall credit costs. The CGFMU premium paid is also treated as a credit cost.
Shailesh Kanani
I was actually referring to NIMS part because nims have kind of followed that way. Nims net interest margins.
Kanishka Chaudhary
Yeah. So you know, we expect that our NIMS will be somewhere between. Basis with. The kind of mix that we have. We will.
operator
Sorry to interrupt, sir, There is a background noise. Hello?
Harshit Jain
Yeah, I also am not able to hear them.
operator
Yes sir.
Shailesh Kanani
Is it coming from my side?
Kanishka Chaudhary
Yeah, I think so. Salish, can you check the sleeve?
Baskar Babu Ramachandran
Yeah, yeah. Please.
Shailesh Kanani
Is this better now?
Baskar Babu Ramachandran
Yeah.
Kanishka Chaudhary
Can you hear us?
Shailesh Kanani
Yeah, yeah, I’m able to hear you now please.
Kanishka Chaudhary
Okay, so like I was saying, you know, we expect the NIMS to be in the region of, you know, 7.5 to 8% with the mix that we have. We shall continue to maintain this mix of 55:45 between secured and unsecured.
Shailesh Kanani
Okay, thanks a lot Investor .
Kanishka Chaudhary
Yeah, thank you.
operator
A reminder to all participants. Anyone who wishes to ask a question may press star and one on their touchstone telephone. The next question is from the line of Deepak Podar from Sapphire Capital. Please go ahead.
Deepak Poddar
Yeah. Am I audible, sir?
Baskar Babu Ramachandran
Yes, please.
Deepak Poddar
Yeah. Thank you very much sir for this opportunity. So just first up, just wanted to know, I mean this CG FMU portfolio, I mean our 100% of if portfolio is covered under this scheme.
Kanishka Chaudhary
Yeah. More than 98% of the portfolio is now covered under the scheme.
Deepak Poddar
More than 98% of the portfolio. Portfolio.
Baskar Babu Ramachandran
Yeah.
Deepak Poddar
Okay. Okay, okay. Fair enough. And in terms of normalization of credit cost, we, we mentioned we expect normalization to happen from third quarter, right?
Kanishka Chaudhary
Yes, please.
Deepak Poddar
Okay. Okay, okay, understood. And. And in terms of Karnataka, we have any exposure?
Baskar Babu Ramachandran
Yes, we do have.
Kanishka Chaudhary
Yeah. 11% of our portfolio is Karnataka. So we have seen significant improvement in the current bucket collection efficiency right from February onward. And now it is more or less getting normal. Indeed. Earlier Karnataka used to be the best state with 99.8, 99.7. It is maybe 1/4 away to get into that earlier high current bucket. Otherwise Karnataka is back to normalcy as far as we are concerned. And we don’t focus on group loans anymore. We focus on individual loans and we have changed our strategy. Two years back we stated that the customer behavior has changed from group to individual. And we started focusing on the graduating customers from 2023 onwards.
Baskar Babu Ramachandran
Just to clarify, 11% is on the inclusive finance portfolio.
Deepak Poddar
11% of if. And we have seen significant improvement. And we see Karnataka is already back to normalcy.
Kanishka Chaudhary
That’s what near back to normalcy of the current customers.
Deepak Poddar
Correct. And any other state we are seeing any kind of issue. I mean stress.
Baskar Babu Ramachandran
Broadly. I think other than Karnataka provide whatever stress we saw. But what’s not really kind of stabilized is that it is not gone back to 99.5 as it was about a 6/4 back. So it kind of stitches anywhere between 98.2 to 98.7. 98.8. So Tamil Nadu was seeing some stress. I think it is fairly stabilized, not really showing any more deterioration. What happened happened and kind of the remaining current portfolio operates closer to say 98.6, 98.7%.
Deepak Poddar
Fair enough, I got it. And just my last query from my side, I mean given the direction we are seeing in terms of lower slippages and improvement overall across the sector. So would it be right to say, I mean quarter on quarter we should see improvement in our bottom line? I Mean whatever we have seen, that would be a base and we will build upon that in coming quarters. Because if you have to reach 1112% ROE, that is one trend that we need to might be looking at. Right.
Baskar Babu Ramachandran
Should probably play out the way you are mentioning, Deepak. But what we do currently, including in our inclusive finance portfolios, we provide the entire amount which is not claimable under CGFMU is approximately 23%. We don’t provide 25% of 23. We provide the entire 23.5% in the same quarter as 27 in the same quarter, 73 is claimable. So to the extent, whatever, in a way it’s kind of upfronting the credit cost of the portfolio. Anything which is slipping in straight away 27% and the balance 73 is what is claimable. And as you know that it is with the cooling period of one plus one year, the year of origination and then you have the crystallization year and then the third year is when we make a claim.
So to that extent, as we see more lesser and lesser slippages, 27% of that straight away will be our addition to a P and L. The current trend which you are seeing of course taken, you will have to take into consideration already 15 to 20% of the customers across board in the industry. And even the less it’s no different is that already has slipped into the gnp. So what we are really talking about from now on is the customers who have been through, including this stress cycle and have been paying reasonably well. And hopefully once it stabilizes at 99.5, things will be far, far different from what you’ve seen in the last quarters.
Deepak Poddar
Correct, correct. And what was the slippage amount in first quarter? In rupees. Crores.
Kanishka Chaudhary
Yeah, so we did around 278. We had 278 crores of slippages as against 308 crores that we had in last quarter of FY25.
Deepak Poddar
And do we expect substantial improvement in this number of slippage of 278 crores from 2Q onwards only?
Kanishka Chaudhary
Yeah, yeah, we certainly expect that. So we would want that, you know, our slippages reduces anywhere between 50 to 70 crores in the next quarter and. Then the quarter thereafter.
Deepak Poddar
50 to 70 crores. Okay, fair enough. I think that’s very helpful, sir. I mean, thank you very much. All the very best.
Kanishka Chaudhary
Okay, thank you.
operator
Thank you. The next question is from the line of Somil Shah from Paris Investments. Please go ahead.
Saumil Shah
Hi sir. Good afternoon sir. Out of the 584crores which are receivable under CGFMU claim. So how much can we expect in this year and how much the next year?
Kanishka Chaudhary
About 320 odd crores will be for. This year and the rest will spill. Over to the next financial year.
Saumil Shah
Okay, and so since the industry is facing so much challenge, is there a possibility that this claims, what we have done, some of them are rejected or maybe they are, the percentage on the claim will be reduced.
Baskar Babu Ramachandran
What we kind of see, just cover has not started what post the crisis we started when our GNPA was in this portfolio portfolio was probably less than 2%. The mathematics at that point of time pointed that the premium will be substantially higher than the claims that we would make. But nevertheless, having seen a couple of cycles every four years, known unknown factors cause it like this time. So we kind of, I would call that as an investment, knowing fully well that it was not in terms of to have a plan to have a claim more than the premium.
We would have been happier even if the premium that we paid for consecutively 4, 5 years would have been higher than the claims that we received. So our portfolio has covered near 100% in the last two years. And to the extent we don’t, the scheme is primarily focused in terms of ensuring that more and more households without formal credit gets included. And it’s a well funded scheme to our knowledge. So to the extent, as long as we are completely right, both in letter and spirit and including in terms of a recovery once claimed, we do not simply write out the portfolio and levitate that there is a collection which happens as much as in the regular GNP portfolio, including in this portfolio where the claim comes and that money is returned.
We actually look forward to having a track record that of a substantial amount of the claims that we make. We are in a position to return it back to the credit guarantee fund by focusing on the collections as if it is our own. And I think hence we do not at this point of time, having made our two claims and getting the entire 100% and we only ensure that what is eligible gets covered and that we are not cherry picking based on the risk of the customer, either in terms of stage or in terms of indebtedness across the board, we kind of COVID and do not see at this point of time anything significantly different the claim amount receivable received than what we make.
Saumil Shah
Okay, that was helpful. And so the 320crores, what you are saying, we’ll be claiming it in the third quarter or we’ll be receiving it.
Baskar Babu Ramachandran
We already got 50 crores.
Kanishka Chaudhary
So our expectation is that you know, the claim will be fulfilled in third quarter. So we do see a reduction in the headline GNPN numbers by the time. We report Q3 and the day we came. I mean in how many months we received the amount.
Baskar Babu Ramachandran
It would vary but I think the committed timeline the service is around 60 days max.
Saumil Shah
Okay, so max by fourth quarter we can expect this 320 crores.
Baskar Babu Ramachandran
I wouldn’t be able to kind of second guess for the fund but the fact is that they may make a claim till now at least the turnaround time has been probably much lesser than the 60 day period which they kind of work on.
Saumil Shah
Okay, okay. For current year we are guiding for 1.5 to 1.6% ROA and around 12% ROE. So how confident are we to achieve it? And by next year can we expect ROA to be north of 2.5%?
Baskar Babu Ramachandran
I think we’ll cross this year with whatever we have. Really committed and fairly confident. I think towards the end of the Q4 I think with the key learning is that guidance works in a far stable environment. In a very dynamic environment like what we have seen we would rather completely kind of included in terms of ensuring 11 to 12 and 1.5% as we kind of have that visibility fully clear which should be by end of Q3 we will probably be in a better position to kind of that is what we intend. But to kind of say that it’s what happened next year would rather be little be too early.
Saumil Shah
Okay. Okay. And so my final question, what would be our guidance on GNP and NNBA number by year end?
Baskar Babu Ramachandran
Overall I think we have guided for five and three. But of course the timing of the CGFMU plays a critical thing. So it may be, but what would be is that by and large we’ll try to maintain the NNPA minus the CGFM will cover very close to 0%. So the rest of it will be mathematical and hopefully towards the Q3 Q4 will also start seeing in terms of us getting even from the claims that we made and in a position to return it back to the trading activity fund.
Saumil Shah
Okay, so this 3% NNBA is after considering this 300 crore of claims before that. Okay, okay, fine. That’s it from my side. Thank you and all the best.
Baskar Babu Ramachandran
Thank you.
operator
Thank you. The next question is from the line of Shashi Kapoor from Dauladhar Capital. Please go ahead.
Shashi Kapoor
Congrats. Good numbers. Just wanted to know what kind of changes we are doing in our leadership team or what kind of hiring are we particularly in the top leadership team.
Baskar Babu Ramachandran
As we speak. I think we’re fairly kind of happy to state that the leadership team has been stable for and the leaders who are here have been in the system for more than three to four years. That is extremely important in terms of ensuring a steady growth aligned, effective leadership. So we’ll probably have addition, one addition to handle marketing and HR open marketing specifically. Other than that I think we are fairly on. I don’t think we are really focusing in terms of we have hired a senior leader for customer experience and we had hired a senior leader for retail liability products. So I think we are full up at this point of time and the focus is in terms of ensuring that all of us contribute substantially for the overall growth of the bank.
operator
Thank you. The next question is from the line of Rahul from Trellis Investment. Please go ahead.
Unidentified Participant
Hello.
Baskar Babu Ramachandran
Hello. Hi.
Unidentified Participant
Am I audible?
Baskar Babu Ramachandran
Yes please.
operator
Yes sir.
Unidentified Participant
From a slightly longer term perspective over the next two, three years, how do you see like the profitability trajectory of the secured lending business such as like housing finance or mhme? We have been active in this segment for some time. Like I just want to know what the broader vision in terms of that segment because as we are shifting from unsecured to secured mix. So I just wanted to know that.
Baskar Babu Ramachandran
You know that we’ve never called out saying that we’ll go towards 80% secure. There is a good balance that we would like to maintain but ideally would have preferred a 5050 kind of very comfortable at 45, 55 that is 45 so called unsecured and 55 will be restored will be secured Initially we have kind of taken a focus in terms of security both in commercial vehicle as well as in terms of mortgages to be at a reasonably closer to the near prime segment. And as we really have a portfolio which is seasoned and fairly confident, slowly we kind of inch up to kind of do a little lower ticket sizes where the profitability will be higher than what we have built up secured and even within the secured since most of it is business loans and not in terms of personal lap, the possibility of giving quasi secured or semi secured loan or unsecured loan has become substantially higher.
They also become liability customers. I think now we have the leadership at the top level mortgages and branch banking. We see quite a bit of benefit in terms of making customers on both sides of the balance sheet which is both on the deposits and savings side as well as in terms of the lending side gives us fairly good Confidence in terms of looking at a customer holistically and purely on a product basis. So it will stimulate and we were very clear that the transition will happen in a way that the P and L is not impacted by excessively moving prosecute in a very, very accelerated manner.
Unidentified Participant
One follow up question. When I look at the presentation, key strategies that I’ve played out slide. So looking at the strong growth trajectory in the secured retail segments like CV and ModCage where the portfolio has scaled from around like 1000 to 3800, like around 50% CAGR along with stable GNP levels, how do you see the profitability profile shaping up over the next two, three years for the secured business in terms of the CV and mortgage? Because additionally, what role will be the increasing granularity and geographical diversification play in supporting such returns?
Baskar Babu Ramachandran
Two ways in which we can really look at it. One, if you look at the portfolio already built up, cost of maintenance of the portfolio will be kind of substantially lower than probably I don’t have the exact number, say probably around 100 basis points. But if you look at the cost that we are investing or the investment that we are making in terms of securing higher businesses is what really adds up to the cost. Both the businesses are double the scale at which we are at this point of time will become ROE accretive to a point to an extent of probably very close to 1.5%.
And since you can consider this as a breakeven to the roe, we are kind of well beyond the breakeven at this point of time in both the products and specifically if you look at only the maintenance piece of that, it will be pretty high. But both combined investment as well as the maintenance put together inching up to ROE will be when the portfolio doubles which will probably be one and a half years from now.
Unidentified Participant
Okay sir, thank you so much and all the best for the coming quarters.
Baskar Babu Ramachandran
Thank you very much.
operator
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press the AND one on their touchstone telephone. The next question is from the line of Siddharth Chandrasekhar from and retail investor. Please go ahead.
Unidentified Participant
Hi sir. Am I audible?
Baskar Babu Ramachandran
Yes sir. Please.
Unidentified Participant
Sir, I have a question regarding the liability franchise. So I was going through our presentation. So we have a guidance for 40% growth in our deposit book. I was going over the, you know, the branches that we have also. Right. So from 2021 we have around 500, 550 branches around you and now we have around 700 branches. So what I could see is like you know our incremental deposit book is not coming from our branch growth or employee growth. Right. So what is our, you know where we are getting our this much amount of growth? Because industry wide phenomenon is basically 10% are you know, in good case it’s 15%. Right. So could you elaborate our, you know what is our strategy to get this you know excellent amount of growth in the first. So you alluded to the fact like outside third party sourcing is just thousand crores. Right. So. So I get the remaining 90% is from our own site. So what’s driving this factor?
Baskar Babu Ramachandran
Sir, I’ll let my leader Gaurav answer the question. But before that the fact is that we are now present only in approximately 130 of our overall branch network. In terms of focus on deposits. Slowly we are kind of enhancing all other branches also to become deposit focused in a smart balanced manner. We also started what we call a smart banking outlets which are 300 to 400 square feet surrounding our main branches to cater to the neighborhoods. Digital is incremental. And over to Gaurav is digital mentioned.
Gaurav Pawra
I think there are a couple of things apart from the digital space wherein of course in the last six to nine months you’re seeing great results coming in. I think apart from that I think what is helping us is the investment we’ve done in the last two years in terms of manpower. I think instead of spreading ourselves very thin currently we’re just about 130 while we grow. But I think the objective has been to kind of go deep into the current geographies and of course look at the enhanced productivity on the retail side. So I think that is something which I think has worked for us.
And we kind of, you know plan to continue for the next two to three quarters. Also.
Baskar Babu Ramachandran
Mr. Siddharth, base is not very high. Now we just about around 11,000 crores and not so to the extent the kind of the mathematics in terms of the figure will it will be higher.
Unidentified Participant
Okay. So whatever growth that we are capturing is basically from our account folder. So these are not just accessing customers just for deposit.
Gaurav Pawra
It’s large, it’s primarily retail granular. So 80% of our deposits are granular.
Unidentified Participant
Okay. Okay. Yeah. Thanks for reply. I have one more question regarding our inclusive finance book. So what I could say is I appreciate the fact that we got CGFME for. For our insurance coverage. So that’s a commendable job. But excluding the fact that. Right. Basically see the performance of that specific book and if I compare it against the peers What I could show you is like maybe ours is not the worst, but still I can say like, you know, ours is not, not the best among the peers, right? So where exactly we were in trunk? Because in Covid also like our GMP spiked a lot, right.
And now also our GNP is spiking a lot, right. So there is a, there is some pattern like you know, some, some of the peers, you know, got impacted in first during COVID time and now they are little stable. But our book got impacted heavily and both occurred. Right? So whatever, whatever our learning from here and what we are trying to change to make sure that this does not happen again.
Baskar Babu Ramachandran
This is something which has to be seen at a little longer basis. So I do agree that when Covid it was little higher basically because we are either because of geographical consolation, but we are also very clear that this is not a customer segment where you fund it and you kind of go and collect somehow. So sometimes even on a personal basis, when you go and meet the customers, there has been a health crisis or there has been an economic crisis, irrespective of whatever pre analysis that you do. When they kind of get into that, it’s not collected any cost.
So we are reasonably proud that in terms of any complaints, in terms of the way we handle collections in the inclusive finance segment, we have not gotten into this business and are not in this business only from the point of view of high yield, high return. So there is a balance which we kind of exhibit in terms of we collect. And given that probably always the damage may be a percentage more than 2. But I think increasingly what we are really seeing is that including from our GMP customers, we are able to see a collection coming back.
As long as you are in touch with the customer, there are certain percentage which is migrated or for circumstantial default, moving to intentional default over a period of time. I think we would probably like to work on a model where can we really treat these customers with a far more responsibility and that some of the times when you do a 90 and then write off, it’s not, probably not. The customer is not wanting to pay. We lose touch with the customer. This I think one clear learning this time we have taken and we’ll attempt to do it is that be in touch with the customer and be in touch with the customer. And I’m sure that will kind of translate into a better collection efficiency, including for customers. You have stripped me on the gmp. Thank you.
operator
Thank you. The next question is from the line of Ashle Sanjay from Kotak Securities.
Ashlesh Sonje
Hi team. Firstly can you just share the microfinance slippages number please?
Kanishka Chaudhary
So out of the 280 crores of slippages that we have at the bank level, 240 crores is on account of microfinance.
Ashlesh Sonje
Can you share some qualitative commentary on the situation on the ground today? Specifically in terms of borrower leverage and how the market is performing in terms of disbursements.
Unidentified Speaker
So overall market has slowed down in terms of disbursement. So you can clearly see muted portfolio across. So players like us who are focusing on the graduating customers and continue to play and continue to grow. So we can like we have gone back to the more or less same dispersal numbers of Q1FY25 as this quarter and our individual loans have actually become now 2/3 of our overall IF portfolio. So we can clearly see the market is having a challenge and the group behavior. So the group model like Bhaskar has called out couple of years back, group model has inherent inbuilt operational challenges.
Now at a design level because earlier in a group we used to have 12 to 15 members minimum. Most of the groups used to be more than 15. And the economies of scale productivity used to be there. And there was a good meeting point for the customers to come and gather on a given a day in a month. Now it’s no more activity. And there are 20 plus lenders in most of the PIN codes. So that’s the primary thing. Market is definitely moving. There are always, even in the worst of the times, 80% of the customers are good.
So we just need to pick and choose the customers. So from a qualitative point of view, internally we have clearly focusing on graduating customers and not only existing customer survey graduating customers but also MFA industry graduating customers. So our NTB Vikas loans started from the month of January. Now we have built a portfolio of almost 200 crores of NTB Vikas loans. It’s too early however, bounce rate is low single digits and we continue to collect all the money through standing instruction in the savings account.
Ashlesh Sonje
Got it, sir. And specifically around the household leverage situation, what is the situation of those borrowers which you would have probably stopped disbursing or would have flown to NPA because of higher leverage. Do you see those customers also getting access to any credit at this point?
Unidentified Speaker
Yeah, for some reason this is something we have been taking in the internal MFA forums. Customers continue to get lending not necessary in the same name in the household. So that’s the fundamental challenge. And there are also challenges of during significant period lending was done on Aadhaar numbers and when we put voter ID the match doesn’t happen. So customers continue to get loans.
Baskar Babu Ramachandran
Actually there are some of the operational challenges of the industry which the industry is working on. Mphone is working on in terms of unifying and clearly identifiable unique number for the customer. It is not other at this point of time so we’ll have to come up with. There has been some requests made including MPHIL requesting for whether we can use the last four digits in across some will come in but at this point of time we’d like to play prudent in terms of where there are credit bureau track record of two of the people at the household level it’s up to each institution to play the risk and with the overall however the guardrails too is getting implemented we certainly will see some benefit.
The so called slippages obviously better to have those slippages up front then the liquidity kind of flushing that out. So we’ll see some little bit of a moment there. But overall I think it has been very good for the industry and I think everybody is clearly appreciative that while it is at the cost of a little bit of a business drop in a couple of quarters it’s going to probably help us in terms of building a solid portfolio. More important than that the word spreads around saying that only good customers will get funded probably earlier if defaulting to X. But as long as they are good to me I can go and fund the new guard rates. Really kind of put a cap on that. That I think will be a good behavioral change for the institutions in the microfinance segment as well as for the customers.
Ashlesh Sonje
Got it sir. And just lastly when you do acquire a borrower or offer a repeat loan to a borrower do you think it is viable enough or viable enough to you know check the Bureau’s bureau report Bureau history of all the members of the household and do you do it?
Baskar Babu Ramachandran
There is a legal angle as well. So I can’t really kind of take a trade bureau of all the members connected to the extent they are coming into the deal structure it’s kind of not done is applicant and the co applicant because they sign up for it. But mostly these are the two main earning members of the family.
Unidentified Speaker
So yeah, from April 2023 onwards it is mandatory to collect the co applicants KYC detail so the entire industry collected. So we have collected, we have got the bureau track of the husband or the earning members of the household. So we have a significant data as far as our existing customers are concerned.
Baskar Babu Ramachandran
The viability of doing assessment. Now I think at least with all that we have seen in the last one year, it’s much, much cheaper than to really enter and then encounter a creditor across the sector.
Ashlesh Sonje
Okay, sorry, just to confirm, you do check the bureau history, you are able to check the bureau history of the applicant and co applicant.
Baskar Babu Ramachandran
All of us I think do. That’s my understanding.
Ashlesh Sonje
Okay, understood sir. Thank you.
Baskar Babu Ramachandran
Thank you.
operator
A reminder to all participants, anyone who wishes to ask a question may press star and one on their Touchstone telephone. The next question is from the line of Sawmill Shah from Paris Investments. Please go ahead.
Saumil Shah
Yeah, thanks for the follow up. Sir, I have a small confusion. You just mentioned to me that by year end we are expecting 5% GNPA and 3% NNPA. Is my understanding correct?
Baskar Babu Ramachandran
Yes, please.
Saumil Shah
And this 320 crores which we are expecting in Q4, this NNPA is without that 320 crores.
Baskar Babu Ramachandran
Yes, that’s correct.
Saumil Shah
So, so can I. Yeah.
Kanishka Chaudhary
So so basically the claim that we will get from CGFMU goes to reduce our headline GNP and numbers, right? So as an example if, let’s say if I have 100 rupee of NPA, I am already carrying 27 rupee of provision and I will, when I get the 73 rupees claim from CGFMU, I use the provision and the claim to write write off.
Saumil Shah
Okay.
Unidentified Speaker
NNPA is actually today also nearly zero. And so whatever guidance we have given is before considering that CGFMU claim otherwise today also if you consider CGFMU claim our although The GNPI is 8% 9% but NNP is nearly zero.
Kanishka Chaudhary
So. And since we are providing 100% for the uncurrent covered portion, it essentially means that my, you know, net net NPA is entirely covered under the gallery scheme.
Saumil Shah
Understood? Understood. Okay. Thank you.
operator
Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference over to the management for closing comments. Over to you, sir.
Baskar Babu Ramachandran
Yeah. Thank you very much for taking time and participating in our conference call. Thank you very much for your continued support. Thank you.
operator
On behalf of arihant Capital Markets Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.