Suryoday Small Finance Bank Ltd (NSE: SURYODAY) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
Baskar Babu Ramachandran — Managing Director & Chief Executive Officer
Kanishka Chaudhary — Chief Financial Officer
Analysts:
Sucrit Patil — Analyst
Shailesh Kanani — Analyst
Saumil Shah — Analyst
Shubhranshu Mishra — Analyst
Ankur Kumar — Analyst
Darshil Jhaveri — Analyst
Rahul Kumar — Analyst
Harshit Khadka — Analyst
Amey Kulkarni — Analyst
Unidentified Participant
Jagdeep Singh — Individual Investor
Juhi Manwani — Analyst
Presentation:
Baskar Babu Ramachandran — Managing Director & Chief Executive Officer
[Starts Abruptly] finance industry. The year was characterized by tighter underwriting, elevated credit costs at the beginning of the year and a sharper focus on portfolio quality across the sector. While the challenges continued during the year, we have started seeing gradual improvement in collections, borrower behavior and overall business momentum over the past few months. The fourth quarter in particular has been encouraging for the bank. On the inclusive finance side, disbursements have largely returned to earlier run rates of rupees 500 crores per month of disbursements while slippages reduced meaningfully to approximately 74 crores from 116 crores in the previous quarter. Collection efficiency also continued to improve with the current book for inclusive finance portfolio inching towards 99.7%.
As highlighted earlier, a strategic shift from the JLZ model towards individual ending continues to gain traction. Importantly, close to 99% of the inclusive finance portfolio remains covered under the CGFMU scheme, providing strong capital protection during periods of unforeseen industry stress. The CGFMU initiative has played a significant role during the stress cycle and has provided mitigation of approximately rupees 650 crores in terms of PLL impact. The CAST loan disbursements during FY26 remain healthy supported by continued traction in new to bank customers. On the retail assets front, momentum across commercial vehicle and mortgages continue during the quarter. The commercial vehicles finance Portfolio grew from Rs. 1336 crores in March 2025 to Rs. 1819 crores in March 2026 registering healthy year on year growth of 36%. Collection efficiency and asset quality in the portfolio remains stable during the year. Our focus continues to remain on calibrated expansion across secured retail asset segments while selectively scaling construction equipment financing.
Our mortgage book including micro home loan Portfolio expanded from Rupees 2,187 crores in March 2025 to Rupees 3,013 crores as of March 26, growing by 38% year on year. The strategy of focusing cash flow based underwriting continues to deliver steady and sustainable growth. Asset quality trends are gradually stabilizing. As of March 2026 our GNPA ratio stood at 6.5%. The CGFM recover continues to play a critical role in safeguarding the bank’s balance sheet with a 100% claim success rate on eligible portfolio since inception. As of March 26, GNPA was rupees 864 crores. NNPA was rupees 542 crores against which rupees 508 crore is receivable from CGFMA. On the liability side, our deposits expanded to Rs. 13,994 crores as of March 2026, reflecting a year on year growth of 32.3% from rupees 10,580 crores. While deposit growth remained below our earlier guidance, it remained aligned with the pace of non NPA advancement. Retail deposits continue to strengthen with their share improving to 86%. Our CASA ratio stood at 22.6% underscoring improving deposit granularity and franchise depth. Digital continues to be a key growth driver for our bank. Digitally sourced deposit continue to contribute meaningfully to incremental deposit accretion and are gaining momentum enabling us to acquire customers at significantly lower acquisition costs and with high stability. On the digital asset side, we believe credit on UPA has the potential to become an important customer acquiring engine for our bank. We are seeing strong traction in this segment with more than 90% of the customers onboarded through this platform having civil scores above 725 reflecting the quality of the customer franchise being built.
Along with the secured credit cards, digital MSME loans and digital deposits, these offerings are helping us build a fully integrated digital banking ecosystem. We now have a prequalified base of customer across these digital products creating a very strong opportunity for future cross sell and deeper customer engagement. Moving to our financial performance, net total income for FY26 increased by 10.2% year on year from rupees 1323 crores to rupees 1458 crores. Profit after tax for the year stood at Rs 152 crores versus rupees 115 crores last year. Our bank continues to maintain strong capital adequacy ratio of 20.5% well above the regulated requirement of 15% providing adequate headroom for future growth. Overall with a largely CGFM covered unsecured book, a growing base of granular retail assets across CVs, mortgages and MHL, a strengthening deposit franchise and a robust digital infrastructure, we believe Suryadha is only on the right path building a resilient long term institution.
Many of the strategic initiatives undertaken over the past few quarters including the transition from JLG to Vikas Loans and the build out of a digital asset ecosystem anchored around products such as credit on upi, secured cards and digital deposits are now beginning to show results. With the growth momentum coupled with disciplined credit process, improvement in cost efficiency and digital uptick, we believe FY27 will be a year of building momentum and consistency, setting the stage for healthier and consistent growth and profitability. Thank you for your time. We’ll now be happy to take your questions over to Jeev.
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 then one on the Touchstone table phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants, you are requested to use hand tips while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all. You may press star and then one to ask a question.We will take the first question from the line of Sukriti Patil from Eyesight Fintrade Private Limited. Please go ahead.
Sucrit Patil
Good morning to the team. I have two questions. The first question to Mr. Ramachandran is in your point of view, how is the bank preparing to capture evolving demand in financial, financial inclusions and retail lending while thoughtfully addressing challenges such as regulatory changes, credit risk and competitive pressures. And what strategic levers will you be putting into place that would be differentiating the bank in the coming quarters? That’s my first question. I’ll announce second question after this. Thank you.
Baskar Babu Ramachandran
Thank you Supreet. So we have built our inclusive finance portfolio around JLG earlier and as we saw that the customers are graduating and have taken two or three cycles which is around 60, 70% of the overall customer base of micro finance industry, we introduced Vikas Loan is an individual loan. What the individual loan does is in terms of an underwriting at the individual level. Broadly and most importantly in terms of having a customer relationship which is dependent on the customer behavior, repayment and their economic growth. So we currently have 70% of our overall portfolio in inclusive finance and individual loan and that’s growing at a healthy rate of around 40 45% year on year. With this foundation which we built we have started kind of buying products I would say rather than selling products to the customer in terms of pmjjy pmsby, apart from the usual credit life which cover comes with the loan on an optional basis, these customers are not only microfinance customers which would have been the case about 10 years back, they are graduating themselves to micro home loans, micro lab, two wheelers, used cars. And we have introduced all these products over a period of time. And what they are really expecting this is not to really do a full fledged scale immediately but keep introducing and which we are fairly confident that will cover the customer with multi products not only on the asset side but also on the liability side. So this is broadly in terms of our inclusive finance. On the rest of the portfolio which are also retail, which is mortgages and cv. As you would see both are.
Sucrit Patil
Thank you. My second question to Mr. Kanishka is as the bank continues to benefit from growth in deposits and lending, how are you prioritizing capital allocation between branch expansion, technology investments and shareholder returns? And what long term cost efficiencies are being put in place to safeguard margins amid rising funding and compliance costs. Thank you.
Kanishka Chaudhary
Yeah. As you may be aware at this particular point in time our capital adequacy is about 20%. So we have a bit of a headroom and cushion, and that certainly. Helps us in terms of capital allocation. I think first obviously to the banking book, second to the expansion and to ensure that we are able to scale from here on the operating leverage becomes extremely important for us. And in the last two years especially we have consciously ensured that our corporate headcount and corporate costs are muted and we are not growing the headcount there. Most of our headcount additions are on the frontline line of business functions. And our branch expansions are also, you know, extremely rationalized and economical. We focus on having branches of, you know, realistic costing and not, you know, very fashionable costing. And that ensures that we are able to operate, you know, go live with our branches at the earliest and get working.
Sucrit Patil
Thank you. And with Vishesh. Thank you.
Operator
Thank you. We will take the next question from the line of Silesh Kinani from Asian Market Securities. Please go ahead.
Shailesh Kanani
Good morning everyone and congratulations on good performance. Sir. The slippages numbers were quite heartening in line with what we have been guiding a couple of quarters back. So my question is slippages on the RA book. That decline in RA books pages seems to be little minimal right from 39 crores in the third quarter to 32 crores. So my question is even in the strongest of quarter in the year that is fourth quarter it is nearing 1.8% of our book. So how should we think about this number on a steady state basis or this is the, this is the number we should go with the yields what we are getting from this book.
Kanishka Chaudhary
I think at this point in time there are two focus areas for us. So if you look at the commercial vehicle portfolio there is one localized issue in the state of Orissa which we are trying to address even as we speak and large part of it is contained. Apart from that if you look at the CV portfolio exordisa, it’s possibly one of the best in the industry. Far better than the industry standards when it comes to mortgage. Again we now have a mix of deal sizes above 2 crores and deal sizes in the range of 50 lakh to up to 2 crores. There are a couple of slippages on the high ticket cases which we are currently in the process of resolving and getting resolutions through surface etc. So over the next two quarters we see that our PAR numbers for these two headline secured asset businesses will come down.
Shailesh Kanani
How should we think about. The steady state number over in this RA book because if I am incrementally getting from you and from other peer set as well that if is broadly slippages are down. So how should we think about RA in terms of second half when the things normalize at CV and mortgage level?
Kanishka Chaudhary
I would look at anywhere between you know, one and a quarter percent for the portfolio overall put together.
Shailesh Kanani
I the whole book?
Kanishka Chaudhary
Yes. The retail asset entirely.
Shailesh Kanani
Yeah. RA book. Total RA book you said?
Kanishka Chaudhary
Yeah.
Shailesh Kanani
Okay. Sir, my second question was with respect to digital liability franchise. So that seems to be significant momentum incremental deposit share has been increasing. So how should we anticipate this shift towards digital sourcing to impact our OPEX and give some quantitative benefits coming out of this channel?
Operator
Sorry to interrupt in between sir I would request you to kindly self mute your line as there is a background noise.
Baskar Babu Ramachandran
Sure, thank you. We focused on digital deposit much much ahead in terms of others coming on board. So we currently see a traction which is around closer to 50% of our incremental deposits which is completely granular. Average ticket size of around 1.25 lakhs constituting at least two deposits or navigation per customer. So it will be the customer test the platform and see the convenience in terms of both booking as well as in terms of withdrawing in a behavioral pattern. What we see is that they come in with a smaller deposit by even pre closing it and once that experience is comfortable or customer experience is good, then they start increasing the deposit and what we have seen is an average is around 1.25 lakhs. The cost of acquiring is substantially lower than in physical channels. We will still continue to have lots of physical branches in presence from a tuft point of view but the sourcing even organically through our own platform and through other partners platform will constitute a reasonable portion and as long as it is granular and as long as the profile of the customers are good quality, which is what we see even from their behavior and pattern, we would like to focus on it but however what we will take care is not have a dependency on one or two platforms alone. That is why we are present in quite a few platforms and looks like this will be the way to grow in terms of granular deposits and the next big thing that we need to build on that in terms of what other products can be cross sell the customer buy for the customers. That’s a phase that we’ll be entering into this year and onwards.
Shailesh Kanani
Anything savings plant with respect to OPEX over here because I’m assuming that this. This channel should be cheaper in terms of garnering deposits.
Kanishka Chaudhary
Yeah. At this particular point in time, the way the arrangements are in place, this works out to be relatively economical. So we will continue to double down on this. I think the digital deposit channel has been one of our success stories and it will continue to be a significant contributor to the deposit inflows. If you look at things as things stand today, about 50% of our net incremental flows are coming from the digital channel. And that will continue for this year as well.
Shailesh Kanani
Fair enough. Just one last question from my side. In terms of CCI new claim, what can we expect in FY27 in first half and second half?
Kanishka Chaudhary
I think for this year we will have three cohorts which will qualify for claims in this current financial year. At this particular point in time, we are looking at the first cohort that is to be claimed somewhere in Q1. All things going well and overall I think we will be claiming in the region of 450 to 550 crores.
Shailesh Kanani
Thanks a lot. Best of luck to the team and congratulations.
Kanishka Chaudhary
Thanks, Dilesh.
Operator
Thank you. We will take the next question from the line of Somil Shah from Paris Investment. Please go ahead.
Saumil Shah
Hi Dean. Good morning and congrats on a very good set of number. So we are guiding for 1.2% ROA for this June quarter and then gradually increasing to 1.6% by Q4 of this year. So how confident are we to achieve these targets? Because Q4 being the strongest quarter, we have done ROI of 1.1% and now for June we are guiding for 1.2%.
Kanishka Chaudhary
Right. So I think a couple of things come into play in Q1. So, you know, the first is that the paying book base increases for Q1 vis a vis what we had in Q4. Plus also the fact that with our hopefully all things going well and our CGF claim going through our paying book as a percentage of the total book will increase because the impaired book will go off. So at this particular point in time, I think 1.2 is quite achievable. You would also need to keep in mind that in Q1 is typically the time when you have most of the PSLC sales. So to that extent, you know, a 1.2 ROA in Q1 vis a vis 1.1 in Q4 this year shouldn’t be a challenge.
Saumil Shah
Okay. Okay. And on the slippage. Is also our slippages have reduced from 1.155 crores in Q3 to 106 crores in Q4. So how do we see this number going forward? Can we see further downside in coming quarters?
Kanishka Chaudhary
Yes. We would be targeting somewhere, anywhere between, you know, 75 to 90 crores as a whole for the bank on a quarter. On quarter basis. Right. So that will be the kind of target that we’ll be working on for the entire banking book as a whole.
Saumil Shah
Okay. So from 106 crores we are expecting 75 to 90 crores.
Kanishka Chaudhary
Yeah.
Saumil Shah
Okay. Okay. And on the CGFMU, I mean I, I think you answered to the previous participant. But for Q1, how much amount are we going to came claim for CGFM?
Baskar Babu Ramachandran
We will program that as of now around 510 crores is claimable of which around 28 is claimable only in the next year as we speak. So around 450 quotes. We will time it out. Likely that quite a bit of that will be in Q1. We are able to really decide in terms of whether we will claim in Q1 or we choose to claim in Q2. But as Casey mentioned, there are three cohorts. So we have the flexibility in terms of choosing which cohort we want to kind of claim during the first quarters.
Saumil Shah
Okay. But the major portion would be in Q1 or
Baskar Babu Ramachandran
Q2. One of this.
Saumil Shah
Okay. Okay. And if. May I ask one more question?
Baskar Babu Ramachandran
Sure.
Saumil Shah
Yeah. So basically our cost to income, what would be our guidance? Because at 73% we are still very high.
Baskar Babu Ramachandran
73% includes the premium which we pay on CGFMU. So that’s also computed in the past. We don’t take it separately as a credit cost. The accounting wise you do that or to Casey.
Kanishka Chaudhary
Yeah, I think on a full year basis in the coming year we will be targeting somewhere around 67 to 68%. So the goal is to come below 70 for sure.
Saumil Shah
Okay. And towards the CGFM you cover how much are we going to spend for this year? Because I think quarters every quarter we are spending around 23 crores. As of now
Kanishka Chaudhary
It will be in the range of around 110 crores.
Saumil Shah
Okay. Okay, that’s it from my side. Thank you and all the best.
Operator
Thank you. We will take the next participant. We will take the next question from the line of Shubranshu Mishra from Philip Capital, please. Correct.
Shubhranshu Mishra
Hi, good morning. Thank you for the opportunity. The question is around the credit on upi. What is the monthly disbursement that we are seeing on this particular product. And what is the FEMI rate here also? So how do we look at this in terms of asset quality recognition? Because the product is a short term product of maybe 3045 days. So and the asset quality recognition is at 90 days. So if someone defaults on the 31st day but somehow gets regular on the 35th day is it recognized in the IRAC norms of 30 day, 90 days or how do we look at this asset quality? And if you can speak about The Femi rates 0 plus 30 plus in this particular product. Thanks.
Baskar Babu Ramachandran
This is a new product. So currently what we are seeing is that closer to 97, 98% of that gets paid not necessarily on the exact due date. It’s a very small ticket. Currently the average ticket size dispersed by the limit is approximately around less than 10 grand. There’s a large scaling up product in terms of customer the risk that we take is very limited and the customer behavior is known on the 30th day as you say 30 to 45th day. Currently the way we are running is that it is the delinquency generated out of every month. The non paying beyond 30 days is less than the overall fee income that we generate. We keep watching for it. While it is a scalable product this is one of the industry first we will be very very careful in terms of monitoring on a month on month basis. That is a possibility that we will be introducing. Certainly we’ll be introducing the EMI product for seasoned customers. So in which case probably part of the portfolio which is EMI as of now it is like a charge card. Entire thing is paid at the end of the due date along with the grace period. Currently we see no around further to around one and a half percent in the 90 plus. And it’s a not a product which builds upon AVM on a month on month because it gets repaid and restarts. Currently it’s an approximately 200 crores is what we have as an outstanding at the end of the billing cycle and every month it is moving up in terms of Iraq recognition over to kc.
Kanishka Chaudhary
Yeah I Recognition is just like a term loan right. So you will have the 90 day non paying criteria for determination of NPI.
Shubhranshu Mishra
Right. And what is the utilization of this particular credit line? How many percentage what percentage of customers are utilizing it and what and the of the total limit how much is getting utilized and who owns this customer? Do we own it or does 197 communication owns this? Can we do any kind of cross sell of our own asset liability products to this particular customer?
Baskar Babu Ramachandran
As you know the regulations insist that the customers be owned by the bank. The entire VKYC is done through our platform. The customer is technically owned by us. So obviously we will not cross sell clou again to this customer or any of those products. But on a broad basis we are complete. The ownership is with us. The customer relations experiences won’t be obviously 197 because this is one of the products that they cater to the customer that is across all the platforms, whether it’s the digital.While the customer is owned, there are no restrictions in terms of cross sell. We would not cross sell on the similar product that you have sourced from the customer. 30% of the customers. For instance like as of say sometime back we had 10 lakh customers who are pre qualified around 5 lakh who have taken the sanction. Which means that they have done. They have accepted the terms and conditions of which approximately 3 lakh customers have utilized the average utilization while keeps moving up on terms of the new product. Currently it’s around 30% of the sanction of the people who have replaced the limit at least once
Shubhranshu Mishra
. Right, right. However there was something contrary which was said on the PAYTM call. They said that they own the customer. However right now what you said is that they you own the customer. So I think I’ll have to take this particular part offline. Thank you so much for answering my question.
Baskar Babu Ramachandran
Thank you. Sure. In a partnership or both owners on the consumers.
Operator
Right. Thank you. We will take the next question from the line of Ankur Kumar from Alpha Capital. Please go ahead.
Ankur Kumar
Hello sir. Thank you for taking my question. So my question is a repeat of a previous participant. You said Q4 as in Q4 is generally the best quarter and still you are expecting 1Q ROA to be better than this number. So I couldn’t understand that part. Sir, can you please explain that?
Kanishka Chaudhary
No. As we exit Q4 and move to Q1 my paying book in Q1 will be much higher than Q4. And the second thing is that Q1 is also typically when most of the PSL sales occur and that will provide an uptick to the income and which is the reason why we expect that we will have a higher ROA in Q1 vis a vis Q4.
Ankur Kumar
Got it sir. And sir, in terms of economy there are some headwinds in terms of as in monsoon also and this war related crude hike. So how are we seeing our book behaving in April and March?
Baskar Babu Ramachandran
As of now we don’t see a for two reasons. One, most of the customers we cater to or low income households who are in the service of our day to day products. The impact of that happens obviously with a lag on both sides. Even if the good times turn and then the growth is high that there is always a lag impact in terms of the low income households. The only segment which can get impacted which will be the commercial vehicle. If there is an increase in diesel prices substantially beyond 10 or 15% likely that there could be an impact which we have not seen. What are experience we had around 5% to 10% is taken. And beyond that, it does really impact specifically in terms of large fleet operators, in terms of mortgages. There are quite a few customers who are msme, though not into real large manufacturing that could be impact on them on an indirect basis as we speak today. Well, we do not see much of an impact. We will be cautious about it in terms of watching out for the impact of the war, if any.
Ankur Kumar
Sure, sir. And on this year’s we have good enough growth expectations. So when can we expect a fundraiser? It’s like not going to come in coming one to two years.
Kanishka Chaudhary
Fundraise, I think, yes, is something that we are constantly evaluating and given that at this particular point in time we continue to see ourselves growing at 30% plus and our CRA at around 20% which is our internal, you know, comfort zone, we would look to raise funds at a particular point in time in course of the year. As things stand now, yes,
Ankur Kumar
Even our price may speak given our price to book also is less than 1. So I think that will be not good enough for current shareholders. So given if we want to raise right now,
Baskar Babu Ramachandran
Obviously we are fully conscious in terms of the shareholders dilution and the impact here. But however, as you know, in any financial institution, one of the core for it to grow on a sustainable business is to really have adequate capital than required, which we have demonstrated right from the time we were EMA 5 capital efficiency higher than required, liquidity higher than required. All of this really shows up when there are testing times. We always fortify ourselves, that’s the first priority. And we are not going to be obviously raising money which is dilutive for the existing shareholders. But this will all be enabling. But we have space for tier 2. Our intent would be to kind of do both of that parallelly and the markets are markets which we will not be able to guess what it is. But if you are sustaining the performance as is, I’m sure we’ll be able to raise money at a decent price which will be only beneficial for the existing shareholders and also for the new incoming shareholders. It’s a little question for ahead, but I think what we are really focused in terms of delivering what we are fairly confident in terms of Q1 entering into Q2. We did not burn all the candles in Q4. We kind of made sure that we are able, in a position that we are able to sustain the performance of Q4 quite a bit of that into Q1 and start building up for the subsequent remaining quarters of the year.
Ankur Kumar
Thank you. Sure, sir. Thank you for the good years. Thank you.
Operator
Thank you. We will take the next question from the line of Darshan Javeri from Crown Capital. Please go ahead.
Darshil Jhaveri
Hello, good morning sir. Thank you so much for taking my question. Firstly, congratulations on a great set of results, sir. Hopefully I’m audible. Thank you.
Baskar Babu Ramachandran
Yes, you are.
Darshil Jhaveri
Yeah. Hi, sir. So, just wanted to harp upon a bit about our asset quality. So we’re guiding for around 3% GNPA, right? That would be a. Significant reduction from our Q4 GNPA. Right. So would that be that our exit run rate in terms of Q4 GNPA FY27 would be significantly lower than 3%? Would it be around 2%? 1%? How would the movement be, sir, if you could help us explain that, sir.
Kanishka Chaudhary
Yeah. So one element of that will obviously the claims that we will be making in course of the year and those claims once realized will help us write off our NPAs. Right. And the second is obviously, you know, the incremental NPS that we have in mind for the year where we are as we said earlier, we are targeting to be in the range of 75 to 90 crores in a quarter.
Darshil Jhaveri
Okay, fair enough. I just wanted to know in terms of the claims, so how quick is the government in giving us the claim? Right. If just example, just make it in end of quarter one, then what is the timeline that government does? Because getting money from government sometimes becomes a very tedious process. I just wanted to know in your experience how fast have been claims been processed and the money hits us, sir?
Baskar Babu Ramachandran
The Great Guarantee Trust. So we are not claiming directly from the government. It’s a fully funded trust. So our experience fairly has been good. Will not. They will have obviously their own internal turnaround times for making the claim, which I presume will be around 60 days. So our experience has been well within the turnaround time and we do not really expect anything to be substantially different than what it was in the past.
Darshil Jhaveri
Okay, fair enough sir. And so just we have mentioned 2x Pat in our presentation. So does that mean that you’re Targeting more than 3, around 300 crores of pad in FY27? Just wanted to confirm that.
Kanishka Chaudhary
Yeah, I mean that’s the kind of a target that we have in mind. So with the credit cycle in the MFI industry behind our back, I think that’s the kind of number that we are targeting as a bank.
Darshil Jhaveri
That’s great to hear sir. And just attending another call. So just want to know they were speaking about like pressure in terms of, you know, cost of deposits increasing and yields also been decreasing. So what do you see the competitive environment right now in both of these aspects? Do we feel there could be any pressure in either cost of funds or in terms of our yields getting lower? Sir,
Kanishka Chaudhary
Cost of funds have definitely hardened. It’s becoming increasingly difficult to raise money. We have noticed that the elevated rates of Q4 haven’t quite come down the way they typically come down in the earlier previous years. So there is a rush for deposits, especially among the small finance bank and the midsized bank. So that’s I think a part of our deposit raising life in a bank these days that’s likely to continue. So for us as a bank, what accordingly we have done is that from a funding point of view, we use a mix of deposits and refinancing. We are possibly one of the few small finance banks that actively utilize our refinancing lines and we shall continue to do so.
Darshil Jhaveri
Okay. Okay. So basically we can continue our NIMs, right? What we’ve done in FY26, sir.
Kanishka Chaudhary
Yeah. So I think given the kind of mix that we have at this particular point in time, it’s unlikely to change in a big way. So. So I think the NIMS will be maintained at this level.
Darshil Jhaveri
Okay, fair. Fair enough. That’s it from my side. Thank you so much, sir.
Operator
Yeah, thank you. We will take the next question from the line of Rahul Kumar from Vicario Fund. Please go ahead.
Rahul Kumar
Yeah, hi, just one question. Based on your learnings from the past, what has been the impact of the farm loan waivers, you know, on the asset quality for a business?
Baskar Babu Ramachandran
Oh, that’s a part of the cycle that we all grown up with and customers also have really seen the promises versus what gets achieved. So overall I think there has been a fair amount of maturity where even pre elections, if there are any waivers which are announced at least the industry has not seen any impact in Karnataka, has not seen any of the states where it has even gone to elections, including br. So we’ll have to this part of the cycle sometimes it gets aggravated in specific pockets in terms of loan waivers and so on. Even Karnataka, as you would see across the board, it has come back in six months time as people realize that the waiver discussions are good for a couple of weeks but doesn’t really help them in terms of sustaining the access to credit. So while it is a challenge and we can’t really wish it away, but the fact is that at least all of us are mature enough to handle those cycles as and then they come.
Rahul Kumar
Okay, but let’s say during the past Palm Bloom river in Maharashtra, what was your experience on the asset quality pockets?
Baskar Babu Ramachandran
In some pockets, the Kola Poor, Nagpur, we would have seen the impact. But is it really widespread? It will broadly put, probably you see the impact on around 10% of it. Wherever there are local heavy campaigns which go on or kind of missed campaigns, I would say like this so that you will see an impact. But usually they all come back okay. Industry has not seen any huge impact in the last two cycles of the last six years. Whether it was a demon, whether it was a Covid, or whether even today’s microfinance crisis, while it happened because of various reasons, which the industry is still figuring it out, but it is specifically, I don’t think there is any pointer to it in terms of any political intervention.
Rahul Kumar
Okay. The second question which I had was I think if I see the retail 30 to 90 bucket that has increased pretty sharply versus quarter three. So which are the segments where you are seeing the stress?
Kanishka Chaudhary
So retail effects. The way we need to look at this, we did a large write off of ARC in the last year Q4 so the numbers were abysmally low. So that where it looks slightly inflated point 1. And overall the market is highly elevated on CV though our metrics are significantly lower 2x lower than the market CV stress. But that is one pocket. And mortgages for the world portfolio of mortgages and MHL Karnataka definitely there was a hit for us. About 4% of the portfolio got elevated stress in Karnataka. But again it’s now back. Now even 90 plus customers, nearly 40% of them are paying regularly. So these are the pockets of stress.
Rahul Kumar
Yeah. Actually asking about the stage 2 assets versus Q3, not necessarily last year.
Kanishka Chaudhary
So you have to see like Shashi was mentioning one was. So there are three, three things. One is cv, the little bit of stress that we have seen in last quarter, the MHL part which we have seen in Karnataka. But what you have to see is a credit loss. So credit loss nowhere in all the portfolio it doesn’t. It won’t exceed in CV not more than 0.75 and not in mortgage or MHL. Also it won’t in mortgage at least it won’t be more than 0.5% and in MHL it can be maximum 1 to 1.5%. So there’s a elevation. But I think rate loss will be under control.
Rahul Kumar
Okay. Okay. So you do expect this stage two to gradually improve from quarter onwards.
Kanishka Chaudhary
Yeah, we will be able to. Yeah. Yes. Yeah. Our 61 to 90 bucket collection efficiency is actually significantly improved last two months. So that is also one of the reason why stage two is little elevated. We need to now do rollback. Instead of collecting one ema we need to start collecting two and three mls.
Rahul Kumar
Okay. Third question I think what would be the quantum of this CGFMU claim in the quarter one?
Baskar Babu Ramachandran
As you mentioned that we have to decide in terms of timing whether it is a Q1 or Q2. But likely that majority of the eligible claims will be claimed within these two quarters.
Rahul Kumar
Okay. And total.Quantum would be somewhere around
Baskar Babu Ramachandran
555 would be eligible. So depending on when we make a claim, suppose you make one cohort eligible claim is next number and we choose to do it in Q1. The remaining which we are not eligible, we are not claiming can be claimed only in the subsequent year. Time it out. I think on a very prudent basis you can say four rupee as a number can vote to clients 475.
Rahul Kumar
Okay. And the last question, I think our yields are also increased pretty sharply versus quarter three by 50bps. So is there any one off in the interest income?
Kanishka Chaudhary
No. So you will notice that there has been a significant increase in our paying book and that reflects in the yield that you see Q4 versus Q3.
Rahul Kumar
But when I see the GNPA ratio for quarter three and quarter four it’s pretty flat mix up higher for me.
Kanishka Chaudhary
So the mix of inclusive finance Vikas loan mix have also shot up. That’s primary reason if you see the contributing money paying book has grown and within the paying book the, the higher yield paying book has gone.
Baskar Babu Ramachandran
Also the fact is that there has been an uptick in terms of the NPA collections. It has now moved to around what was around 5,6 crores, has moved to around 15 crores during the last quarter will broadly sustain at around 12 crores. Part of that what we collect is also interest component. So that would have added a little bit in terms of the increase in yields which is now as you know the last book we keep collecting at least for through the year we see at least collecting closer to 150 to 180crores out of that. And a reasonable portion of that would be the interest income.
Rahul Kumar
Understood. Can I take the last, can I do a last question also?
Baskar Babu Ramachandran
Sure, please.
Rahul Kumar
So just with credit costs 2 parts A, I think our slippages have declined pretty sharply. 40% versus quarter three. Right. But the credit cost continues to be flat on a quarter on quarter basis. So yeah, apart from this floating provision, what else actually led to this? And two.
Kanishka Chaudhary
Yes, please carry on.
Rahul Kumar
Yeah, and two, I think for let’s say FY27 versus 1.4 credit cost in the quarter four, what is the level of credit cost which we are targeting?
Kanishka Chaudhary
So primarily for Q4 it’s floating provisions and nothing else which is the reason why you see floating credit cost to be flat quarter on quarter. And I think for whole of next year I am looking at somewhere around 1%. Of credit cost.
Rahul Kumar
Okay. Okay. So then in that context, do you think target of 1.2% ROA is a bit more conservative in your view?
Baskar Babu Ramachandran
See, we’re just coming out of the cycle where one of the key assumptions is that broadly the asset quality carries through. And as one of the previous speakers asked, is that to the impact of the war, is it to be really be seen including in our segment. So I would say that it is a little more realistic. If there’s any upside, it will be good. But I think we wanted to be clear that what we are reasonably certain within confidence level of 95% is what you are really projected.
Rahul Kumar
Okay. Okay, Understood. Thank you.
Operator
Thank you. We will take the next question from the line of Harshit Khadka from Robo Capital. Please go ahead.
Harshit Khadka
Hello. Yes, please. Am I audible, sir? Yes. Thank you for the opportunity. I just wanted to understand that the 3 crores of pad that we are guiding and the 450 crores of CGFMU claim that we are. So how much of the 3 crores of PAT is affected by that claim? 300 crores of PAT. Sorry,
Kanishka Chaudhary
No. So this is a more a balance sheet impact, right? Because the claim that is realized essentially helps us write off our NPAs. So every claim that you make results in the reduction of your headline GNPA number, but it is unlikely to impact your pnl.
Harshit Khadka
Okay, so thank you.
Operator
Thank you. We will take the next question from the line of Ame Kulkarni from Cantor Asset Management llp. Please go ahead.
Amey Kulkarni
Am I. Please proceed with a question. Yeah, sorry. Can you hear me? Good morning. Yes, your honor. Yeah. Congratulations to the entire team for making steady progress over the last four to six quarters. I had two questions. One is have we already submitted our claim for CGFMU in April for one of the cohorts? And if not, what is preventing us from claiming at least one of the cohorts immediately in April itself? And the second question is why have we postponed raising of funds? We could have at least raised Tire 2 immediately, right?
Baskar Babu Ramachandran
Yeah. From you, I think it’s a pretty detailed kind of the workings of procedure from you that an account we can claim only after the base one plus base year, first year is called the base year, second year is called the personalization year and third year is, becomes in the end the six months that account should have been an NPA for us to make a claim. So given all of that, we kind of do that exercise in terms of what is very optimal and also the timing. So currently we are in a reasonably kind of comfortable situation that we will figure it out whether it has to be Q1 or Q2, where we can get a reasonably higher claim because the claim is only once in a year for a particular cohort and as likely that the max, the highest claim for us will be the cohort of FY25. So which FY24 will be lower and FY23 will be significantly lower. So if you have to choose to claim FY25, we would like to at least time it that whatever has become GNP till February or March, we will have to claim it. We can make the claim only in the month of September. So we will figure it out as of now, whether it’s April, we have not made a claim. You can say that in May, not likely, whether it will make in June or whether we make in the subsequent quarter and which month we are really yet to decide. Yeah. On the funding question.
Kanishka Chaudhary
Yeah. Like you said. Yes. Having regard and being cognizant to the price to book, our preference will be for Tier two to begin with. And that’s something that is most likely to happen first. But insofar as equity raise is concerned, it will be a, you know, more detailed discussion and deliberation because we need to take care of our incumbent shareholders at the same time.
Baskar Babu Ramachandran
It has not been differed. Just to clarify, the board said that. Can we have a far more detail in terms of how much can we tier 2, how much?
Amey Kulkarni
Just to confirm right now, we haven’t submitted any CGFMO claim right now. We will decide in due course, maybe in one, two, three months we’ll decide.
Kanishka Chaudhary
Yes, please.
Amey Kulkarni
Okay. Yeah, thank you.
Operator
Thank you. We will take the next question from the line of Arvind Shah from Capital. Please go ahead.
Unidentified Participant
Yeah, my question is on the name that we expect to achieve over the course of this financial year. So given that the paying book is going to increase significantly as we go through the various cohorts through the year, remaining flat is a very conservative estimate because whatever income we make on that will be an additional addition to the net interest income. Right. So from that perspective, what is it that this has? Are we expecting some increase in the cost of funds to offset all that?
Kanishka Chaudhary
No, I don’t think that is likely. I think our NIMS will be range bound between 8 to 9% because one the paying book will now continue. To increase since the credit cycle in MFI is behind us and we will be able to protect that amount of that kind of a nim. Because if you look at our mix as well we are more or less there. We don’t see further significant changes in our mix between MFI and non MFI.
Unidentified Participant
My simple question is mathematically if your if 5% of your book is NPA, right and that’s not non paying, if over the course of this year that 5% gets added to your paying book against which you don’t have any incremental cost of funding, then your NIMPs should disproportionately increase, right? I mean mathematically speaking,
Kanishka Chaudhary
Yes, you are right there will be an uptick in nims because if you look at nims as they are today, they are around suppressed by around 50 passe or thereabouts. Yes please,
Unidentified Participant
Because we have seen an uptick
Operator
Sorry to interrupt in between and with your voice is not audible.
Unidentified Participant
Hello.
Kanishka Chaudhary
Oh yes,
Unidentified Participant
Yeah. My second question is what is your typical the secured book? Because you’ve seen as some of the other callers have pointed out there’s been an uptick in the 31 to 260 and the 90 plus markets. So just wanted to understand the loss given default
Baskar Babu Ramachandran
On these mortgages. You know the credit cost ultimately will come out much lower than the gmpa. So it may not necessarily be in commercial vehicle if the customer slips into even a repossession or the lack of tracing of the vehicle. I would say that while there has been uptick we would love to come and Max we would like to maintain this and focus in terms of resolving some of the mortgage cases which are in PNPA using FSE in terms of the reserve we have strengthened over the last year because it was a new portfolio in the last couple of years the legal thing has been strengthened and if we’re able to do OD1 recovery within the six to nine months time given that we fund the micro home loans is around 600 crore portfolio. We do not take Surface E and repossess and sale as the first option at all. So we are the very fact that we have funded and likely to be the first home of a low income household the nudge is in terms of making them come back to the regular thing rather than in terms of using surface as a one click button. So for the other mortgages which is lap where as Casey mentioned there are a couple of high ticket, not really high ticket, 3 crore plus couple of cases which are fairly confident in terms of resolving and the net slip pages may be much, much lower. And overall what we are looking at as a bank is in terms of not to exceed around 90 crores in terms of on a month, quarter, on quarter basis in terms of wages.
Unidentified Participant
Okay, thank you.
Operator
Thank you. We will take the next question from the line of Swaraj Deep, an individual investor. Please go ahead. Please proceed with the question. They did not respond so we’ll take the next participant. We have the next follow up question from the line of Rahul Kumar from Vikarya Fat. Please go ahead.
Rahul Kumar
Hello. Am I audible? Yes sir. Yes, you are audible. The previous comment you made was was that regarding on the loan farm loan waiver. Was that regarding farm loan waivers, impact on your MFI book or it was regarding MFI loan waivers which gets promised but don’t necessarily impact your overall business. Maybe in pocket they do. Was it around farm loan waivers or NFI loan waivers?
Baskar Babu Ramachandran
Both. Sometimes the spillover happens. The farm loan waiver, anything announced gets kind of treated as an MFA loan waiver which has happened at least in one state. So other than that I think in the state which has seen the microfinance presence for longer had not had a significant, we’re not saying not any impact, not any significant impact to derail the listeners in a particular state in pockets they sometimes become aggravated. We saw in Amaravati, we saw in Colapore during the DMON and subsequently in some of these markets. So otherwise the industry has become reasonably mature not to really kind of including the customers.
Rahul Kumar
Have they made any impact so far in any pocket?
Baskar Babu Ramachandran
Not in the industry. I can talk about broadly even the industry because it is available and hence obviously not on us as well when I say across the industry. So we haven’t seen an impact and hopefully will not.
Rahul Kumar
Great. So so far no impact on you or industry you know of
Baskar Babu Ramachandran
As you understand. Absolutely.
Rahul Kumar
Thank you. Thank you.
Operator
Thank you. We will take the next question from the line of Jagteep Singh, an individual investor. Please go ahead.
Jagdeep Singh
Good morning sir. Good morning sir. Very good set of numbers and thank you for sharing the guidance in a brand new spree. Sir, I wanted to ask you, do we have leverage to increase the ticket size for the IL customers?
Baskar Babu Ramachandran
We do sir. We do. Let us be done on a reasonably calibrated manner. So we have certainly increased the intent is since we are dealing with individual. Customers as you really referred to, there is always this possibility but it can’t really operate on the same mold as earlier which is one year loan, two year loan, customers are really confident at the time of taking a loan and then even one year EMI slip it becomes a stress. So we are really focusing in terms of moving towards three year for high ticket loans. We will selectively introduce and as we gain experience in the next two quarters we look at at least a portion of our portfolio which is above 1 lakh rupees loan. Okay. We have not used that lever as a simple one. Cost remaining the same, higher the interest ticket size, higher the profit. We haven’t really played that need lever at all. We will do it very, very cautiously.
Jagdeep Singh
Okay? Okay. And sir, in one of the calls we were listening to another industry company and they had indicated that there is lot of unmet demand. It seems that some few players have exited or they are not growing aggressively because of funds or God knows what. So do we have lever to go further in our disbursements
Baskar Babu Ramachandran
Which all of this together is what we have done, our guidance. So I think consistent growth is our focus. So we will grow. We’re targeting the growth around closer to 30% on asset size which obviously means that we’ll grow on the inclusive finance side as well. So other than that we are not as you know that all the large, as we know the large MFIs and have access to all the liquidity that they can fund as per their risk appetite it is a smaller MFIS which would have got impacted which is the top 10 or 15 have around 90% market share. So given that the demand, unmet demand being huge is not something we have not seen at this point of time.
Jagdeep Singh
Okay, great. Thank you sir. Thank you sir.
Operator
Thank you. We will take the next follow up question from the line of Harshit Khadka from Robo Capital. Please go ahead.
Harshit Khadka
Hi there. Thank you again for the opportunity. I just wanted to understand that what kind of credit cost are we looking at for FY27 and 28?
Kanishka Chaudhary
I think for the next coming year our credit cost will be somewhere in the region of 70 to 80 bits. And. And that’s what we have in mind at this particular point in time.
Harshit Khadka
Okay sir. And we were also looking at some point raise, right? So like are we going to do it? Are we planning it in FY27? Like what exactly are we looking at it?
Kanishka Chaudhary
So there are a couple of factors. One is obviously our internal threshold and we start looking. And that’s about 20% of CRAR we are somewhere there. The second is. Obviously taking care of our incumbent shareholders. And we are cognizant of the fact that currently we are trading at a discount to the book. The third is all options available to us. And like I said a While before, Tier 2 will be the most likely option that we trigger when we go for a fundraise as a first step.
Harshit Khadka
Okay, sir. Thank you. Thank you very much.
Operator
Thank you very much. Ladies and gentlemen. That was the last question for today and with that concludes the question and answer session. I now hand the conference over to Mr. Johi Manwani for closing comments. Thank you. And over to you, ma’. Am.
Juhi Manwani
Thank you. On behalf of Arihans Capital, I thank you all for joining this call. I now hand over the call to the management for their closing remarks. Thank you all for taking time out and participating in our call. Look forward to continuous engagement. Thank you very much.
Operator
Thank you. Members of the management. On behalf of Arihan Capital Markets Limited, we conclude this conference. Thank you all for joining us. And you may now disconnect your lights. Thank you.