Utkarsh Small Finance Bank Limited (NSE: UTKARSHBNK) Q4 2025 Earnings Call dated May. 05, 2025
Corporate Participants:
Govind Singh — Managing Director and Chief Executive Officer
Pramod Kumar Dubey — Executive Director
Sarjukumar Pravin Simaria — Chief Financial Officer
Puneet Maheshwari — Head, Strategy and Investor Relations
Amit Acharya — Chief Risk Officer
Analysts:
Renish Bhuva — Analyst
Mohan Raj — Individual Investor
Deepak Poddar — Analyst
Anant Mundra — Analyst
Vinay Nadkarni — Analyst
Rajiv Mehta — Analyst
Ashlesh Sonje — Analyst
Gaurav Phulwani — Individual Investor
Shrikant Shivsagar — Individual Investor
Kapil — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Utkar Small Finance Bank Q4 FY ’25 Earnings Conference Call hosted by ICICI Securities 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 Ranish Vuwa from ICICI Securities Limited. Thank you and over to you, sir.
Renish Bhuva — Analyst
Thank you. Hi, good afternoon, everyone, and welcome to Small Finance Bank Q4 FY ’25 earnings call. On behalf of ICICI Securities, I would like to thank SFP management team for giving us the opportunity to host this call. Today, we have with us the entire top management team of Ukkarsh SFB, represented by Mr Govin Singh, Managing Director and CEO; Mr Pramod Kumar Dube, Executive Director; Mr Kumar, CFO; Mr Amit, Chief Risk Officer; Mr Vivek, Head, JLG Sales Micro Banking; and Mr Puneet, Strategy and Investor Relations Health. I will now hand over the call to Mr Govindi for his opening remarks and then we’ll open the floor for Q&A. Over to you, sir.
Govind Singh — Managing Director and Chief Executive Officer
Thank you. Yeah. Thank you,. Thanks a lot. So thank you everyone for taking out time to attend our Q4 FY ’25 earnings call. FY ’25 has been a challenging year-on account of difficult operating environment for microfinance sector that emanated from higher borrowing — borrower level leverage and credit supply tightening for underlying borrowers guardrail norms. Microfinance sector stress peaked out towards end-of-the year with the stabilization of ex-bucket collection efficiency and reduction in new power accretion as well as some improvement in disbursement. However, we continue to see good traction on our non-JLG and secured loan portfolio, healthy growth in deposits led by retail term deposits and CASA. We have also expanded our franchise significantly. We have more than 100 — more than 1,000 banking outlets now. In terms of business performance, our deposits grew by around 23% year-on-year to INR21,566 crore. Deposits grew as led — growth was led by growth in retail term deposits, which grew by 33% year-on-year and CASA deposits, which grew by 31% year-on-year. Our CASA deposit — deposits ratio also improved to 21.8% as on March ’25 from 19.7% as on December ’24. Share of CASA plus RTT ratio improved from 66% as on March ’24 to 71% as on March ’25. We have strong network of 331 general banking branches largely covering top 100 centers of the country, primarily in metro and urban locations. These branches are focusing on deposit mobilization and retail asset loan sourcing. We see significant potential to scale-up from these locations. Our deposit mobilization strategy revolves around customer 360 degree perspective, improving product per customer and comprehensive customer engagement, including digital enablement. We have also launched NRI banking in-quarter four FY ’25. In-line with our strategy, we have been reducing our CD ratio, which declined to 87% as on March ’25 versus 94% as on March ’24. And if we net of refinance borrowing from advances, CD ratio declines to 17% as on March ’25. Recently, we have reduced interest rates for savings deposit for certain slabs as well as higher-rate for highest rate for retail term deposits by 25 basis-points, which will lead to — which will lead to reduction in cost of funds gradually. As regards JSG book, as stress peaked out in-quarter four FY ’25, we have seen improvement in ex-bucket collection efficiency for quarter-four FY ’25, which was 99.1% for quarter-four FY ’25. We also witnessed improvement in JLG towards end of FY ’25. We expect this momentum to continue in FY ’26 as there is decline in leverage level of underwriting borrowers in microfinance segment and guardrail loans are ensuring tighter control on overall leverage level of microfinance borrowers. Guardrail 2.0 with reference to number of — with respect to number of lenders not exceeding three lenders are fully implemented in our system with effect from 1st April 2025. Furthermore, with reference to state-level ordinance and related disruption. We do not have any direct exposure towards JLG lending in Karnataka as well as Tamil Nadu. As we highlighted during last earnings call, we expect SMA book to normalize by quarter one FY ’26. SMA book in microbanking portfolio reduced from 10% as on December ’24 to 5% as on March ’25. And accordingly, we expect fresh NPA generation to reduce meaningfully in some time. We are seeing improvement in collections from OD book, expect meaningful improvement in collection from OD buckets in H1 FY ’26. While we continue to focus on collections in current environment, we expect JSG disbursement to normalize by quarter two FY ’26. As for quarter-four FY ’25, JSG disbursement was INR1340 crore, marginally higher than INR1 crore to INR96 crore in-quarter three FY ’25. As we continue to focus on collections and as a result, JSG portfolio declined by around 18% during FY ’25. We expect JLG book — JLG loan book declined to get arrested by end-of-quarter one FY ’26. We have seen significant pickup in disbursements toward microbanking individual loan. We call MBBL. MBBL portfolio grew by 36% year-on-year to INR910 crore. MBBL disbursement for quarter-four FY ’25 were higher by 49% quarter-on-quarter and 25% year-on-year. MBPL comprises 9% of our microbanking loan book. It is focused on graduating better profile GLG customers with good repayment track-record. This portfolio is behaving much better on collection efficiency and asset quality. Individual loan portfolio is expected to grow faster. We are seeing good traction in our non-JLG loan portfolio, which grew by 45% in FY ’25. MSC loan portfolio grew by 52% year-on-year to INR3,875 crore. Disbursement yield also improved by 180 basis-points over same quarter last year. Within this, we are also seeing traction in micro lab portfolio wherein disbursement yield is around 18%. We see good growth potential for this product in our geographies and given our strong franchise. Housing loan portfolio grew by 36% year-on-year to INR918 crores. Disbursement yield also improved by 80 basis-points over same-period last quarter-over same quarter last year. CE&C loan book increased by 26% year-on-year to INR188 crore. Within this, we are focusing on increasing share of used vehicles. We are strengthening our presence in BBG lending. Our entire portfolio is secured against immobile collateral. This book grew by 52% year-on-year to INR903 crore, we are seeing much better traction on cross-sell on both sides. Asset products that is MSME, Housing and Microlab through our liability focused GB branches and deposit account for our asset customer, essentially more more products per customer. Further in-line with our strategy, we have been increasing share of secured loan in our portfolio and increased further from 34% as on March ’24 to 43% as on March ’25 and is likely to increase further. On account of significant degrowth in JSG loan book, overall gross loan book growth was moderate at 7.5% year-on-year and 3.2% quarter-on-quarter. As for outlook on loan book growth, we expect JSE disbursements to normalize sometime around quarter two FY ’26, expect good growth in MBPL portfolio in digital loan. We are expecting healthy growth trend to continue for non-micro banking portfolio, which is largely secured loan portfolio in FY ’26 as well. We are expanding our franchise and opened more than 200 new branches during FY ’25. Our total branch count exceeds — exceeded 1,000 branches as on March ’25, as on March 31, 2025, which are spread across 27 states and UTs. We have significant large franchise, which is adequate for our target growth and hence we may not need much expansion of branch network in FY 2026. On account of challenging operating environment in Maximum lending, our fresh NPA slippages were high in-quarter three and quarter-four of FY ’25. And as a result, as a result, our gross NPAs increased from 6.17% as on December ’24 to 9.43% as on March ’25. As we are expecting SMEs to normalize by end-of-quarter one FY ’26, fresh NPA slippages will also decline meaningfully. As mentioned on our last earnings call, we were holding floating provision of INR190 crore, which we have utilized towards loss on-sale of stress assets and the non-performing assets during quarter-four FY ’25. We have also registered with CGF MAU for credit guarantee for unsecured JLG portfolio and are looking-forward for credit guarantee cover for all JLG disbursement post our registration rate that is January 17, 2025. We are strengthening our collection team as well as efforts and as well as efforts and expect collection trends to improve. We are reducing case load per staff as well as strengthening collection team of microbanking set — setup call-center for reach-out — for reach-out to OD clients. We are also focusing on improving critical processes like center meeting discipline and other processes. Additionally, on an ongoing basis, we continue to split our large MB branches to maintain better control. Our profitability during the quarter was impacted by stress in JLG book because of which credit cost was high as well as there was higher interest income reversal. Profitability is expected to remain under stress in H1 FY ’26, post which we expect material improvement in profitability profile. For us, FY ’26 would be a year of operational and financial optimization, whereby we would focus on improving asset quality first and grow all focused and profitable-driven businesses along with superior customer experience. As of now, we are not giving any specific guidance for FY ’26. We will share detailed guidance in mid of the year as we progress further. Our pre-provision operating profit, TPOP increased by 1% year-on-year to INR1,007 crore in FY ’25 versus INR9967 crore in FY ’24. During the current year, we changed accounting policy for recognition of loan processing fees collected from the borrowers and allied expenses for more appropriate presentation of the financial statement and alignment with the industry practice. This change in accounting policy has resulted in increase in bank’s operating profit by around INR95 crore during FY ’25. Our profit-after-tax was INR24 crore in FY ’25 vis-a-vis INR498 crore in FY ’24. As on, 31, 2025, we had surplus equity of around INR3,800 crores, which is higher than our usual liquidity requirement and an LCR ratio of 190%. We don’t have any short-term borrowing on our balance sheet. We are also undering a business transformation project to make our technology architecture and business process future-ready for our growth plans. Now we can move to question-and-answer section. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. 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 Mohan Raj, an Individual Investor. Please go-ahead.
Mohan Raj
Yeah. Hi, sir. So my first question is like I just want to understand a bit on this business because like if you look at the South side like Paris government support starting coming like started coming like first-in Karmatica there is an ordinance and now like in the recent week there is a we are not sure like whether the other states also will follow the same. So if there is a government support, so eventually it will impact the repay I mean the repayment behavior of the customers, right? So how we are going to tackle these things like if it emerges and my second question is like if you start covering the microfinance portfolio into CGFMU. So will it become a profitable business and like when there is no deception like let’s say if you’re back from normalcy. Yeah. So that’s yeah.
Govind Singh
Sorry, I couldn’t follow the second question. What was that?
Mohan Raj
Yeah. I mean like if we cover the entire portfolio into CGFMU. So like for — like let’s say like going-forward, we will do the same in all the subsequent years. And when the — and when the microbinance business it come back like let’s say, if it come back to the normalcy. So will it become a profitable business because the premium for this is high, right?
Pramod Kumar Dubey
Despite the premium whether it will remain the profit.
Govind Singh
Okay. Okay. So just to respond, first part is about what is happening in the states of Karnataka and Tamiladu. So these states, yeah, state government has come with an ordinance. Two important things? Yes, temporarily it can certainly sometime it may have an impact on the portfolio, but we have seen in past also in medium run, I mean this doesn’t have impact. Secondly, what in both the ordinances, what they have done, they have specially — specifically mentioned that the regulated entries of Reserve Bank of India are excluded from this. I do understand that sometime at the ground level, it may not go to go the same way and that’s why there may be some temporary issue in terms of collections or in the disruption of the operation. But I think in both the cases, I think RBI also was firmly that the regulatory should not be should not be impacted by these and even the industry associates and SROs like and, they have also taken active part. And as I mentioned, the REs are not a part of it. But I still take your point is sometime, temporarily there may be a — there may be disruption, which can cause some issue in the collections for sure. On the second part, if you look at the guarantee part, if the guarantee — see the cost of guarantee, maybe on an annualized basis, maybe around 1% to 1.5%, broadly speaking, I mean, it may differ for some partners, but it’s around 1% to 1.5%. So I think the profitability of the sector or overall micro plants or all the JSG will not get impacted. I think it will still remain no largely profitable and well sustainable. In fact, what also happens if the is available, which is expected that I think most of the players are going towards that, the type of delinquencies sometime we have seen abnormal delinquencies, those will be taken care. So I think it will be more on a long-term more sustainable and the — when you say the highs and lows will be less-frequent and more controlled. So it will be more a more steady type of businesses what we’ll see. So our sense is, I think this guarantee is ultimately the way it is happening. It’s good for all of us. And I think sustainability becomes more — I mean, you can say, I can use the word assured or more certain going-forward if we get this cover, and the cost is not much of this covered.
Mohan Raj
Okay. So you mean let’s say it’s if you cover the entire microfinance portfolio under the CGFME and if there were like — and if the microfinance business is back to normalcy. So the yield from this business like still be higher than the secured on portfolio. Am I right, sir?
Govind Singh
That’s true. That’s true. See, ultimately, it is unsecured portfolio from that angle. So yield will certainly be higher than secured portfolio in these cases. But if I say.
Mohan Raj
So my question is like even accounting this CGSME expenses.
Govind Singh
Oh, yes, certainly yes. I mean, even if we account for the cost of the guarantee cover, this remains a profitable and sustainable business for sure.
Mohan Raj
So the yield also will be higher than the secured one even if you include the premium amount into it, right?
Govind Singh
Yeah, generally, I mean the way pricing happens, I mean, normally unsecured whatever maybe form and format will attract higher yield or higher-rate of interest than the secured loan.
Mohan Raj
Right. So yes, why I’m asking is like because instead of paying premium and if it and the outcome yield is not better, I mean when we can eventually more like more towards the secured portfolio, right? So yeah. So I just want to understand.
Govind Singh
I can follow what is the last point. Yeah. Thank you. Sure. No, I just reiterated that the guarantee cover will certainly make it more sustainable and more steady from that angle. Maybe it’s a matter of one, one and a half years when we start getting benefit of that. Some players have already have reached a stage where they will start getting benefit of it. And this will be more sustainable and it will be more steady and the highs and lows will be more controlled. That is how it will happen. But certainly, it will be much, much — it will certainly be a profitable business for all the players.
Mohan Raj
Okay, sure, sir. Thanks so much.
Govind Singh
Okay. Thank you.
Operator
Thank you. As a reminder, I hope — please limit your questions to two per participant. Thank you. Next question is from the line of Deepak Poddar from Sapphire Capital. Please go-ahead.
Deepak Poddar
Yeah, am I audible, sir?
Govind Singh
Yes, yes. Please go-ahead.
Deepak Poddar
Yeah, MR. Just wanted to understand, I mean, first April effective guardrail 2.0 was implemented. I mean has it been implemented properly and as per as per condition and how do you see — I mean, how much time we are away from that you see the MFI segment coming back to normalcy.
Govind Singh
So as I mentioned earlier, one is that all the guard lays have been implemented and though I’m not from SR, but I think this has happened with across basically, so because this is helpful when it happens across. So all have implemented and we have also implement from 1st of April, all the guardrails, this what we call 2.0. And we do expect that this is going to help in controlling and we have seen that happening, though there is stress because of earlier portfolio, but there will certainly be improvement in overall portfolio. As I mentioned earlier also, there has been stress, but level of stress is coming down significantly that we have seen during last two, three months and especially in-quarter four of last year and now. So — and as I mentioned in my opening remarks also, I think you know, today quantifying that may be a little difficult, but we expect that this pain what pain or stress is expected to be there for another two quarters and quarter one and quarter two of FY ’26.
Deepak Poddar
Okay. So another six months you expect the pain to be there. So — but ideally since you mentioned that the stress is coming down, is it — I mean, in terms on a quarter-on-quarter basis, the credit cost that we have seen will see a declining trend in terms of your provisioning. I mean, will that be a fair assumption to make?
Sarjukumar Pravin Simaria
So as we had mentioned in the previous call, you know about Q4 and Q4, we also mentioned in our earlier interim reasons that the ex-bucket has improved significantly. We guess that the Q1, Q2 as mentioned will be there, but it should be lower than the earlier two quarters for sure. So it’s in decline trajectory and we are working hard to even improve and see that the level of decline and is there in Q1 and Q2.
Anant Mundra
Understood. That’s fair. And just one last small thing. Any specific pocket, I mean in terms of our portfolio, any specific pocket in MFI where we are seeing abnormal stress and which is where we are operating basically.
Pramod Kumar Dubey
So we are primarily present in Bihar, UP, Jar Khan, Odisha,, Rajasthan. Out of these states, we see slightly higher stress in the state of Odisha and Rajasthan. Other states are equal and they are much better than these two strips.
Deepak Poddar
And Karnataka and Tamil Nadu would be how much percentage?
Pramod Kumar Dubey
Karnataka, we have negligible presence through our BC partnerships and Tamiladu, we don’t have any presence.
Deepak Poddar
Very, very less presence across. Okay. Okay. Got it. I think that would be it from my side. All the best. Thank you so much.
Govind Singh
Thank you.
Operator
Thank you. Next question is from the line of Vinay Nard from Hatway Investments. Please go-ahead.
Vinay Nadkarni
Hello.
Govind Singh
Yeah, please go-ahead. Yes, we can hear you.
Vinay Nadkarni
Yeah. Sorry. I just wanted a couple of questions on the semi portfolio. Your, we have opened some 204 branches, some of 149 are MB branches in this year, the biggest in a year when you have the worst results. Now these MB branches have not impacted the collection efficiencies over the period. Is there anything that we are missing here?
Govind Singh
No, so what is the numbers. Anyway, there is 49%. You are right that we have opened more branches for MB. So the idea — so largely these branches when we — what we term as a spilled branches. When the branch becomes large-enough, then it becomes — because there are a lot of manual intervention still in case of JLG business. So it becomes little manually controlled — control becomes difficult. So we split the branches into two or sometime we make three branches out, two branches, sometimes we make two branch out of one branch. So that is the exercise. And we see the medium-term, we normally start getting impact of that because currently the environment is that the full focus on collection. Otherwise, collection improves for sure. That is our — even we have seen wherever we have done a split of branches, we have seen better collection or in those places. At the same time, if the growth comes back, I think even the disbursement trajectory is better for those places. But as you have seen the environment is — that is very difficult to compare right now because of the stress in overall environment. It’s difficult to pinpoint today that what is the impact of or the positive impact of all these branches. But certainly, the investment in expanding this network will benefit us in terms of collection efficiency. At the same time, once you know these sector becomes little normal in terms of disbursement also, we should also get benefit in terms of investments.
Vinay Nadkarni
Yeah, I understand that. My — the other question was when I look at the operating costs in-quarter four, it is higher than the net interest income. So now this is with not all cost of all these opening of new branches factored in. When the entire thing gets factored in, what would be the running cost for per quarter operating cost because you say that next two quarters are going to be a little tight. So would it be really impacting your overall performance looking at Q4, which was otherwise a good collection efficiency of 99%.
Sarjukumar Pravin Simaria
So you would appreciate that, you know due to the NBA stress, you have a reversal of income that has been accrued prior year that does impact the income line and for that reason, you would find that the operating income is somewhere in-line with the opex. But as we go along, as we have disbursement, you know, improving and by and large the cost is going to be static. We have done the platform, you know increase in terms of the branches that we have done over the last two years. And so now we’re going to be, as mentioned, driving on the operating efficiency as we go along. So as we go-ahead and get income, you know generated from better disbursements, both in terms of microbanking, non-micro banking, the operating profit you know the buffer will be obviously higher — much, much higher than what you are seeing today.
Pramod Kumar Dubey
Just one more thing I’d like to clarify here is in Q4, the opex, what we see INR465 crores is including the one-time impact we have taken because of change in our accounting policy to DSA payout which has been added, which is not a usual thing.
Vinay Nadkarni
Yeah, I understand. And that’s the reason why I was just comparing the NII with the uptake in cost, not the total income. My only us what is the amount of income reversal in Q4, if I can get interest reversal?
Puneet Maheshwari
Yeah, it will be used to about INR40 crores.
Vinay Nadkarni
INR40 crores.
Puneet Maheshwari
Yeah. It is on slippages about INR40 ground.
Vinay Nadkarni
Okay. Okay. That’s all. And if I can I push in one more question if you don’t mind?
Puneet Maheshwari
Yeah, please carry-on.
Govind Singh
Please go-ahead.
Vinay Nadkarni
Yes, sir. Yeah. See, you have added a good number of people, some 3,600 people in the company in the bank. How many of these are in collections and how many in credit assessment? Because I understand new branch opening will also have a sizable amount of new people.
Govind Singh
Yeah. So largely these people are for in the JSG business only, almost close to 2,500 out of these people — I mean, 100 plus-minus in the JSG business and we have credit collection team, which has more than 800 people. They are dedicated people for 61 plus, DBD is 60 plus, in fact. That is what they are focusing upon. Even the other people because in, the center meeting, the collections happened by the same people. So they are into collections — large into collection because we all have experienced disbursement are not to the extent which normally used to happen. So they are largely into collections. Besides there are around 800 people dedicated for collections only. So out of 3,500 odd people, around close to, 24 2,500 people are only for JSG and that’s why even our case store has gone down significantly during this year. The number of people have gone up, but the number of clients and the overall portfolio has gone down during this year. So that should benefit in days ahead as far as improving the collections — overall collections for the JLG portfolio. So focus has been more on improving the collections part across in fact, and that’s why this number.
Vinay Nadkarni
Okay. I’ll come back-in queue. Thanks a lot.
Govind Singh
Sure. Thank you.
Operator
Thank you. Next question is from the line of Anant Mudra from Capital. Please go-ahead.
Anant Mundra
No. Yeah, am I audible?
Govind Singh
Yes, absolutely. Please go-ahead.
Anant Mundra
Yes. Yeah, sir. Thank you for the opportunity. Sir, sir, what is our PCR in the JLG book?
Puneet Maheshwari
So for unsecured book, PCR is close to 52%.
Anant Mundra
All right, all right. So sir, we’ve seen a big spike in GNPA quarter-on-quarter while the SMA book has — SMA-0 to 90 that SMA-0 to 2 book has considerably reduced. So now how should we think about how — I mean, there’s a lot of pain from the GNPA pool that is left to be absorbed. So are we going to take this provision consistently over the next four quarters or is there some one-time impact that we could see in our financials in Q1 or Q2? How should we think about this?
Govind Singh
So we have also good seen last 3/4 where there has been stress. And as I mentioned, we expect that quarter one and quarter two are the period when we should be able to — we expect that completely bottom out. When I say there are two aspects, one is that the portfolio improves, the delinquency levels come down, but it is — and we use the word bottom-out for that period for that portfolio. But as far as overall impact of the delinquencies, I think that normally goes to three to four quarters beyond that part. Maybe we should be able to assess during this H1, you mentioned yourself quarter two and take a final call because we have improved our collection mechanism in a big way. We do expect that there should be significant improvement in collections, normally the collection efficiency, but overall the collection from the overdue buckets also. So that is what we expect to happen. So we should be able to — as you also mentioned, we should be able to analyze and assess the overall impact and we’ll take a suitable suitable provisions or whatever is required accordingly during this period of H1.
Pramod Kumar Dubey
One thing I would like to add here is that we are — we are providing higher than what is recommended or prescribed by the RBI as per norms in all the businesses. So we have accelerated probably.
Anant Mundra
Got it. And sir, could you give some color on how the non-GLG book is behaving, like what is the gross NPA in that portfolio and what has been the credit cost for this year in that portfolio.
Puneet Maheshwari
If we look at from an asset quality perspective, NBA in non-micro banking portfolio is close to 2.4% and credit cost in these businesses have been in a range of 1% to 1.5%.
Anant Mundra
Got it, sir. And sir, you mentioned that.
Pramod Kumar Dubey
Some of these NPAs also covered by the FLDG, which we do through our BC partners.
Anant Mundra
Okay. Okay. So I mean the credit cost of 1.1.5% is after factoring in the FLDG or that benefit will separately accrue.
Puneet Maheshwari
You’re factoring in on an overall basis for non-micro banking.
Anant Mundra
Okay. Got it. Got it, sir. And sir, you mentioned that you’ve implemented guardrails 2.0 from 1st April. So do you expect the SMA zero to 90 book should be stable and in a declining trend going-forward in-spite of the implementation of the guardrails? Like what has been the early trend because we’ve already seen the first month of the implementation of Guard Rail 2.0. What kind of impact do you see of that?
Govind Singh
Okay. So if you look — if you compare with quarter-four, I think we expect quarter one on the almost a similar trajectory. There may be little elevation in the — in the April because of immediate implementation. But our assessment in the quarter one, this will be in the range of what we have seen in the quarter-four of last year. The overall collection — collection efficiency and 1 to 90 bucket.
Puneet Maheshwari
Yeah. So I mean, last quarter also we had highlighted that 1 to 90 DPT bucket will start normalizing and it has come down from December to March number and I mean by end-of-quarter one, it would normalize for that.
Anant Mundra
Got it. And sir, one final question. So we had some buffers in our balance sheet in terms of there were some contingent provisions and also we had a one-time recognition due to change in policy of fee income. I just wanted to check, are there any more buffers available in the balance sheet in case there is a credit cost that has to be absorbed in future?
Sarjukumar Pravin Simaria
Well, you know, we had been mentioning this in the previous call and one of the item was floating provision and you would appreciate that floating provision was set-aside from profit in the earlier years with a very clear intent to make that floating provision in good times and use it when the stress actually is visible. By the way, this floating provision is also under, so to say, regulatory radar and we have taken liquid approvals. We have used this floating provision. And if you recollect, we had mentioned that whatever we had until September, from October onwards, we had also, you know, stopped making any further floating provision. But the reason that you can’t go for reversal and at the same time make floating provision both are in that opposite direction. So as we stand, we have utilized fully the floating provision and as you just mentioned, I just wanted to confirm to the fact that the entire floating provision with approval from the regulator has been utilized in this quarter for the year. At the same time, I think it’s important to mention that we were looking at in terms of comparability with the peer set and the banks and one of the accounting that we used to do is while we received loan processing fee upfront in cash, but we used to amortize that. And therefore, when we are receiving it in cash, it made a lot of sense to gain for LT to align with the industry and we choose to — with the — in discussion again with the auditor Board and the regulators, we thought we will align this completely. So both of this has been done. There is otherwise both were sitting out-of-the profit carve-out as we mentioned earlier. As such, there is nothing in the sense like buffer that continues frankly to answer that question. There isn’t anything that is kept aside.
Govind Singh
And the only thing I think what I would just try to add that we don’t have — we have used the entire floating provision, but our normal provision is extra — in it’s beyond the RBI required type of provisions and that certainly is there. But we’re not trying to quantify that, but that is there. But normal — whatever we have treated, we have utilized that.
Anant Mundra
Got it. Got it, sir. And sir, one second question, sir, what is our AUM of plus more than two borrowers?
Puneet Maheshwari
Utkash plus more than — I mean in total, if you take three-plus four-plus 5, I mean everything put together, it is close to 25%. Of which 20% is much plus four or higher and 13-odd percent is of cash.
Anant Mundra
Got it. Thank you, sir. That’s it from my end. I’ll get back-in the queue for any more questions. Thank you.
Operator
Thank you. Thank you. Next question is from the line of Rajeev Mehta from YES Securities. Please go-ahead.
Rajiv Mehta
Yeah, hi, good evening. Just a couple of things. Firstly on the answer you gave the previous participant about how the collection efficiency will be in this quarter. You are saying that overall number will be very similar to Q4. And if that is the case, see, Q4, I believe you had an improving month-on-month collection efficiency between January and March. So are you saying that in April, we have already seen some decline because of implementation of cap and that will get covered up in May and June.
Pramod Kumar Dubey
Yeah, absolutely. Yeah, absolutely, absolutely. So if there is a — there is a slight decline in the month of April, which will cover-up in the month of May and June. So overall, we see that Q1 should be similar to the — similar to the Q4 and Q4 was, I would say, quite satisfactory in terms of collection efficiency in the initial four buckets.
Rajiv Mehta
Okay. And could you tell us what is the profitability of the secured products, MSME, housing and CGCE, as a portfolio, we’ve been running them for a few years now. What is the current profitability and what is the roadmap for profitability in the next two, three years and what are the factors and levers through which the profitability can be turned around or further improved for that?
Pramod Kumar Dubey
So as far as our secured portfolio is concerned, it’s moving in the right direction in terms of we have improved our yield. So yield is quite satisfactory. OpEx has been coming down. OpEx to AUM ratio is coming down year-on-year because of increasing book as well as because of the operational efficiency. Credit cost has been in control. Our fee income has been as per expected lines. So year-on-year profitability ratio is improving and it is on-track. So I’d say a few of the few of the segments in those businesses are already making profits and all other businesses are fully on-track. We are quite satisfied with that.
Rajiv Mehta
And but since we’ve been doing this business with certain profitability in mind in the future, what is that profitability number, ROA number and aspirational number that you think that you’ll achieve for which you’re gaining and operating scale?
Pramod Kumar Dubey
So at this point of time, we’ll not be able to actually give any numeric to that. But we believe that in this financial year, we will have satisfactory ROA from those businesses. And next year, it will be much better than that.
Rajiv Mehta
Okay. Just one last thing. Any changes in lending rates in MFI in response to how the risk has played out or maybe because of higher credit cost, are we tweaking our lending rates in MFI — maybe up or maybe even down if you think that for growth, you need to keep it slightly down. Any changes?
Govind Singh
No, as of now, there are no plans of any change in MFI rate of interest. I mean, either way, in fact, we don’t have any plans right now.
Rajiv Mehta
Okay, sir. Thank you and best of luck of luck.
Govind Singh
Yeah. Thank you.
Operator
Thank you. Our next question is from the line of Ashlesh Sonjay from Kotak Securities. Please go-ahead.
Ashlesh Sonje
Hi, team. Good afternoon. Sir, first question is purely a data — data keeping one. If you can share the segmental slippages, that is one. The next question is, now that it’s been about 3/4 of this asset quality down-cycle, 3/4 of recollections, I assume you would now have a much better idea of the borrower situation on-the-ground. So just wanted to check with you what has exactly happened to these delinquent set of borrowers? How many of them have gone missing? How many of them were involved in some kind of identity thoughts and what are you essentially doing about them? About recovering from them?
Puneet Maheshwari
So, touched on data points. So overall fresh NPA was about INR770 crores in-quarter four, out of which about INR665 crores is microbanking and balance is non-micro banking. And one second question sir with respect to — and out of non-micro banking also, roughly about INR28 crores is PC book, which includes both GLG and the non-GLT portfolio. And as we said earlier also that slippages or any other VC related slippages are covered via FLDG, which we have from the VC.
Ashlesh Sonje
Got it. On the other question, sir?
Govind Singh
Yes. Yeah. If you look at our experience of the customers, so in — we all understood that this time the JLG, the way JLG operate could not — was nor operated, there are lot of customers who are delinquent and the design was not for a door-to-road collections. I think that is why it is taking long-time. Our broad finding, I mean, we don’t have any exact data for that, but is our finding at that. We still see that most of the customers, customers maybe were not able to contact during that period. I’m talking six, seven months back. Our current and efforts are to contact in each and every customer who is — who is overdue currently. We are seeing a little better center of discipline also. Again, not an exact data, but maybe around 65% to 70% of center meetings are happening. Some of the customers are coming, some of the customers are still not coming there. But if you look from the library of customers, I think that this time that is not a major issue, which was the case in saying COVID and those period. I think maybe 3%, 4%, 5% customers are under stress. But most of these customers because of the guard rates which were put forth and there are some stress and people are not able to get funds because of stricter — stricter following of the guardless, there are some real stress because of the — that — because of the cash-flow mismatch that we are seeing. So contacting customer and real cash-flow mismatch. I think these are the two regions in which I think we and the other players are also trying to trying to implement through collections team through the normal team which is currently focusing collections only. It’s very difficult even to currently predict what type of amount we’ll finally be able to recover. But I think recovery of the old part, I’m saying that should be much better from here, that is what is expected because I think now we are able to — or again, as mentioned, this is largely about the industry also, people are able to connect the customer, contact the customers and the ability of our ability of getting this money back-out of the area part is much, much better, much, much, much bigger now because there is not livelihood issue in most of the cases. I’m not saying it is not there at all-in most of the cases. It is the over leverage and which gradually is getting addressed.
Ashlesh Sonje
Understood, sir. Thank you. And just lastly, at a very broad level, how do you think about the loan mix going-forward?
Govind Singh
So loan mix, we have guided also again it’s — I mean, not seen as a guidance, but we have been increasing our secured portfolio by 4% to 5% on an annual basis year-on-year. And our expectation is that at least if you look at the medium-term horizon, that should — that should keep happening. Our secured book will keep growing by around 4%, 5% in terms of percentage on a year-on-year basis. So you are aware that we have — during last five, six years, we have put a lot of efforts. We have proper collection — collection credit, product and sales team for each and every vertical that we have put in-place. So our expectation is around 4% to 5% increase in our secured book if you look at a medium-term horizon.
Ashlesh Sonje
Understood, sir. Thank you. Those are all the questions.
Govind Singh
Thanks, Ashresh.
Operator
Thank you. Next question is from the line of Gaurav Falwani, an Individual Investor. Please go-ahead.
Gaurav Phulwani
Thanks for the opportunity. My first question is if you can share an update on the reverse measure.
Sarjukumar Pravin Simaria
Sure. I think so. Yeah, all right. Okay. You know, we have got the NOC from RBI. We also know that the two exchanges through which you know SEBI in ultimately gives in okay. Both of them have given the NOC. Currently we have already responded credits to SEBI. I think we are in the queue. I’ve seen some of the sequent thing I guess our application was somewhere in December and then there are some of the applications for, they even filed prior to us, which are still open. We hope that our — in the queue comes as soon as possible, hoping this month. All that is awaited is to be okay and you know, trying to see that we also approach them if you can — if there is anything that remains to be explained, hoping that we get that approval this month as early as possible.
Govind Singh
In nutshell only SEMI approval is left, I think we are still expecting that to happen soon. There has been some delay what we had discussed last-time also, it’s largely because of we are yet to receive approval. And as soon as it happens, I think we are ready for filing with the NCLT. And thereafter, you are aware the NCLT process may take from seven, eight months, nine months or so whatever is normal time process. So that is what is expected. But I think approval is one important thing where — what we are waiting for right now.
Gaurav Phulwani
Okay. And the second question is that we have seen some changes in the senior management personnel at the bank. What has been the reason for it because we have seen this happening quite frequently in last two quarters.
Govind Singh
These were — I mean, I can use the word of course, timing might be — you might have seen on 30th April, but these were some of the cases where people — sometimes people want to move on also. And we have a very strong second-line as far as it’s not only about this business, but across the businesses. You name the department, we have very strong second-line and which takes care of this and there is no there is no, you know there is no gap in-between per se from that angle. And also promote, he’s on this call also our ED, he had joined eight, nine months back and he takes care of all the businesses. So the names you just saw, in fact, they also used to report new and he is overseeing all the businesses including the deposit part, the liabilities part, the assets part, the microbanking part, the collections part. So there is no gap per se in-between. As far as the day-to-day operations or even the strategic or you know business plans for next year is concerned.
Gaurav Phulwani
Okay. Thank you.
Govind Singh
Yeah.
Operator
Thank you. Next question is from the line of Srikant Shivsagar, an Individual Investor. Please go-ahead.
Shrikant Shivsagar
MR. Hello. Am I audible?
Govind Singh
Yes, yes. Please go-ahead.
Shrikant Shivsagar
Good evening. My question is on the lending side. After the NPAs like after we seen the stress during this time. Have we made any extra checks or any other improvement in the lending practices?
Govind Singh
Thank you. Yeah, certainly, as you know, whenever such things happen, we are learnings also, some might happening because you can say guard or because the environment. But at the same time, especially if you look at JLG is the type of discipline we are talking of, the type of monitoring we are talking of, even use of technology, I think it’s not that we are not doing earlier, but we have strengthened all those things, the underwriting norms, not on JLG, but even in the non-JSG part, wherever we thought that there are — there are gaps and which became apparent during this period. I think those have been plugged. Our CRO is in this call, he can also talk a little bit on the part of wherever we have strengthened in terms of control and underwriting practices. I mean, right now sourcing till it. Just to add one more thing, you know, because we are in lending business, we have further strengthened our collections part also, be it the JSG and be it the non-JSG part. Historically in JSG people are not having collection stream. So now we are having 800 plus people collection team. And similarly, on the other side also, the — for the retail — retail assets for the — any all other lending mortgage and other things also, we have strengthened our collections team across the country. But he can talk a little bit on the other aspects of underwriting other things.
Amit Acharya
Yeah. So just to add what MD has just told you, the — even on the MB side, all the guardrails or all the rules are being the input into the system itself. So there is no manual intervention. The system takes care of all the routes and all the guardrails and automation is there. As far as non-MD products are concerned, we continuously look very granularly on the data at a granular level and we seek which civil score band we are getting early delinquency or which are the policy norms even on the LTV side or the FYR side or other parameters in retail because so many parameters goes into play on retail side and we keep on strengthening or changing those levers. So we have taken all adequate measures and this has been continued since last six months and we keep on doing this in future as well.
Shrikant Shivsagar
Thank you. One more side — one more question on the secured lending side. As sir previously mentioned that we to increase the share like of secured lending approximately 4% to 5% each annual year. So any plans on the gold loan side because I think the percentage is quite low as of now.
Pramod Kumar Dubey
Yes. So we have started gold loans and we intend to increase that, although the numbers at this point of time is a very, very small number. It’s just a beginning, but we have started doing it in quite a few branches.
Shrikant Shivsagar
And lastly, a last question, do we have any plans to collaborate with any fintech apps to lend.
Govind Singh
So we do have fintech where we have partnership and under PC model, we have a few partnerships which are — which where we are lending through fintech and certainly efficiency — the experience has been good. The efficiency of fintech we are able to get and we are also able to get the FLDG cover. So I think we have a good experience. And certainly not in a very big way, but in a small way, we intend to keep exploring that wherever we are able to get good — good partners and good product, we will certainly be exploring the additional partnership under VC model.
Shrikant Shivsagar
And the Super card which we have launched, I think any response on it? How is the response on the super cred.
Govind Singh
Oh, yes, it’s a secured credit card and our response has been very good. And we have also got I mean, I may not be able to say sizable as on-date, but we are also getting able to get good amount of fixed deposits in this. And so-far, the experience has been good and we expect that — and especially in some of the geographies, we are aware that credit cards are not available to people. So I think this product is doing good and ideas to scale this product in future. So our initial experience has been very, very good.
Shrikant Shivsagar
Thank you. Thank you very much. Best of luck.
Govind Singh
Yeah. Thank you.
Operator
Thank you. Next question is from the line of from Investments. Please go-ahead yeah.
Vinay Nadkarni
Can you hear me? I have three questions. Yeah just wanted to check-out on couple of questions. What is this coming up and we have a large exposure in India. Any impact you can see. We have to take election.
Govind Singh
So as I mentioned that Ukrash as an institution is working in that geography, especially UP and behalf for last 16 years and we have seen multiple general elections, state elections, even elections and elections have never impacted as far as the ground level JLG part is concerned. So we don’t foresee any challenge, any such of impact because of the general elections coming to behalf. In fact, some of these governments which are supportive of movement because getting lows for livelihood especially the states like Bihar is very important even form from the government side. So we don’t expect any disruption or any such thing because of elections.
Vinay Nadkarni
Okay. What is the amount of loans in the books as of.
Puneet Maheshwari
Sorry, can you come again?
Vinay Nadkarni
Written-off loans, what is the total return of loans on books.
Puneet Maheshwari
So basically, this number is a cumulative number and if we would put all technical written-off amount, it will be about INR1,000 crores. It’s over a period. This will be cumulative over a period.
Govind Singh
All 10 years. Almost years amount.
Vinay Nadkarni
Yeah, I understand. So INR1,000 crores are written-off book. Any recovery — because your recoveries are very low. So because I think because most of it will be micro-finance, but any chances of any big recovery happening in that.
Govind Singh
You know, in terms of recovery so you know the recovery part, what you might have seen slow is because there are lot of you know it’s a recent ones and there were guardrails because of that getting money from people was becoming little difficult, disbursement are also low. But historically, we have been even JLG and non-GLG both, we have been able to recover recover money. In fact, today also in some cases, we recover even during demand period amount we are able to recover in some cases. So we do expect the recovery will keep happening in these cases. And even today also we are able to get old — very, very old recoveries in JLG and in all JLG also. So I mean, it’s very difficult to put a number right now, but yes, we do expect the recovery — proportion and recovery percentage will significantly improve from here.
Puneet Maheshwari
Write-up selection in current financial year, it is more than INR80 crores.
Vinay Nadkarni
INR80 crores.
Puneet Maheshwari
Yeah, more than INR18 crores.
Vinay Nadkarni
Okay. And secondly, if I this impact of this change in accounting policy for quarter-four, both from income as well as from expense, your opex to incur ratio is nearly 74% and if you’re saying this is a one-off event and definitely it will not be recurring in the next year, but your collections will happen in the same manner 74% is pretty high. Do you see that impacting in the coming quarters.
Sarjukumar Pravin Simaria
So you are right, the one-off also is part of the that we used to do for processing fee in terms of payout to partners have been upfront. But if you take one-off out, then honestly the opex increase Y-o-Y is around 20% and Q-on-Q is around 4%. So technically what is the business-as-usual cost. So to that extent, the incremental cost will be business-as-usual volume-driven increase and that is what we see to happen.
Govind Singh
So your — what is also happening, all these ratios are getting impacted by the denominator factor. So because there is no-growth, but expenses were there. So obviously, as I mentioned, it’s a matter of few quarters before we’ll start improving — improvement in all the parameters across.
Vinay Nadkarni
Yeah, because this quarter was quite sad. So therefore, if you remove that the factors, it would have been really miserable quarter. And if I think that is going to continue for the next two quarters, there would be a pain that we should see in H1.
Govind Singh
No, no, but we didn’t mention that pain will be like what was in-quarter three and quarter-four. I mean, when we talk of pain, it is the overall pain. Whatever are the delinquency of previous quarters, there may be any additional provision on that. Suppose you have done 50%, you have to make now additional 15% 20% provision on that. So that is the type of pain. Certainly, collections are improving and the — especially the rate of delinquencies are coming down significantly. So it won’t be on those lines.
Vinay Nadkarni
So can we expect the disbursals in the next two quarters because that’s the only way you can increase your income?
Govind Singh
As you have indicated that quarter — end-of-quarter one or maybe beginning of quarter two, we should see an improvement in disbursement. That is what we expect as of now.
Vinay Nadkarni
Thank you. Thanks very much.
Govind Singh
Yeah. Thank you.
Operator
Thank you. Next question is from the line of Kapil from GC. Please go-ahead.
Kapil
Yeah, this is just a culmination of some of the things discussed. Based on the OpEx accounting changes and the income accounting changes, do you feel that the bottoming out-of-the pre-provisioning profit? I’m not referring to the final PBT number. The pre-provisioning profit of INR235 crores is virtually the bottom because you know things have stabilized, there would be some level of better recovery and the disbursements would have lesser reversals. So is there a bottling out-of-the pre-provisioning profit? That’s one. The second is, you know, given that there is a gross NPA closer to INR1,000 crores still there and there is a — do you think another INR300 crore to INR400 crores is the max provision relating to the old book which would be made? So after — if that is number-one. And based on that, what would be the medium-term credit cost which we should budget. This INR400 crores INR500 crores could be one-time, but what is the medium-term credit cost we should budget on the microfinance book and the non-micro finance book. And culmination of all of this, again, would it be fair to assume that the PPOP could be therefore well in the range between INR1,200 crores INR1,400 crores in the coming year?
Sarjukumar Pravin Simaria
As I mentioned in the beginning of the call, I guess we will come back with more you know, in the mid of the year-on exactly what you are seeking. At the moment, I guess to ball gas would be a little premature.
Govind Singh
Hello. I think we are on.
Puneet Maheshwari
Yeah. It is take the next question.
Operator
Sure. Ladies and gentlemen. Gentlemen, we take the last question from the line of Anand Mudra from My Tample Capital. Please go-ahead.
Anant Mundra
Hello. Thank you for the follow-up. Sir, when do we expect to complete the fundraising and by what mode are we planning to do this?
Govind Singh
So we had discussed last-time also in terms of fund-raise, we — I mean, one is obviously the market situation. We need to be careful about market situation. As far as the capital adequacy is concerned, we are still above 20% capital adequacy and you are aware that RBI requires 15% as a statutory requirement of capital adequacy. So we’ll not be in a hurry and you are aware that we have taken approval for INR750 — up to INR750 crore, not INR70 crore, up to INR750 crore Tier-1 capital that we can raise for market. So we’ll certainly look at-market. The movement market is receptive and good, then certainly we’ll go for this. But we’ll not be in a hurry because we are adequately capitalized as on-date.
Anant Mundra
Got it. And sir, any color on the modes of the fundraise? Like can it be through a rights issue is what I’m trying to understand.
Govind Singh
Yeah. So I think we have kept it open. And as I mentioned, based on our interaction with the investors and the overall market conditions, we’ll take a call. It is not yet closed that way. As I mentioned, because you have seen that market is not that steady right now. So we need to be little cautious about that part. So certainly, whatever moats is doable and useful for us, we’ll take that mode. Certainly, we’ll come back to all the investors before it is done.
Anant Mundra
Got it, sir. That’s it from me. Thank you.
Operator
Thank you. I would now like to hand the conference over to the management for closing comments.
Govind Singh
Yeah, thank you. Thank you all of you for joining this call. And as you have mentioned that market is through a — especially microfinance part, our other businesses are well on-track in terms of other assets in terms of liabilities. Yes, microfinance is passing-through a tough phase. We are seeing that it is in the process of bottoming out and we should see good traction, good improvement in next few quarters and we’ll keep engaging with larger certainty on this part. And again, thank you very much for attending this call and look-forward your continued support and guidance — guidance to us. Once again. Thank you. And thank you, ICIC team for call.
Operator
On behalf of ICICI Securities Limited, that concludes this call. Thank you for joining us and you may now disconnect your lines.