CreditAccess Grameen Ltd

NSE:CREDITACC

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, welcome to the CreditAccess Grameen Limited Q3 FY '23 Earnings Conference Call hosted by Elara Securities (India) Private Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Ms. Shweta Daptardar from Elara Securities. Thank you, and over to you, ma'am.

[Shweta Daptardar, analyst]

Hello, and good evening, welcome. Welcome to the CreditAccess Grameen Q3 FY '23 Earnings Conference Call. From the management team, we have with us today, Mr. Udaya Kumar Hebbar, Managing Director and CEO; Mr. Ganesh Narayanan, Deputy CEO and Chief Business Officer; Mr. Balakrishna Kamath, CFO; and Mr. Nilesh Dali, Senior Vice President and Head of Investor Relations. We will start the call with brief opening remarks and thereafter open for Q&A. At this juncture on behalf of Elara Capital, I would like to thank the management team from giving us the opportunity to do the Q3 FY '23 Earnings Call. I will now hand over the call to Mr. Udaya for opening remarks. Over to you, sir.

[Udaya Hebbar, executive]

Thank you, Shweta. Good evening to everyone, and our sincere thanks for joining this conference call to discuss our Third Quarter and 9-Months FY '23 Financial Performance.The third quarter witnessed other sequential improvement in business momentum, operating efficiency, asset quality, and return ratio continuum. We conducted yet another milestone of surpassing INR 200 crores in quarterly net profit. We are confident of sustaining this profitability and further improving it over the coming quarters. Our consolidated gross loan portfolio grew by 21.9% Y-o-Y and 1.5% Q-o-Q to INR 17,486 crores. On a period of basis, the growth stood at 20.8% Y-o-Y and 23% Q-o-Q. The quarter grew by 22.9% Y-o-Y and 10.8% Q-o-Q to INR [indiscernible]. The Y-o-Y appears to be a bit lower, but because on a higher base on Q3 FY '22 where we had already resumed growth and cash in capacity of conduct demand for growth.While we see good ongoing business momentum. Our focus remains on driving calibration portfolio growth led by new borrower reduction along with entering superior asset quality. We restated our FY '22 guidance of up growth. Our consolidated active borrower base grew by 5.3% Y-o-Y and 2.7% Q-o-Q to INR 39.4 lakhs. We added 5,000 borrowers in the third quarter. Achieving our base grew by 1.2% Y-o-Y to INR 31.3 lakhs on a period of basis, the labor growth of 1.2%.At MMF, borrower degrowth was 13.3% in the we do estimate. However, on a period of basis, we had 14% volume also. Borrower gain at 9.8% in the last 12 months to the around 4% gating from wholesale at top 2storther announcing the diversion diversification. We added ventures, mainly in the new assets, taking a total bank net of INR 2,727 in 344 districts. We shall open 2 more branches in the fourth quarter, whereas higher focus will be more on leveraging on the headwind available over 500 banks over the last 3 years.For collection efficiency and asset quality are amongst the best-in-class supported by our robust operating process and controls. Consolidated correction efficiency during Q3 FY '23 stood at 98% extras. GLP at [indiscernible] reduced from 2.1% in September to 1.7% in December '22. [indiscernible] reduced from 1.5 to 7.2% in September '22 to 1.34% in December '22, while net NPA accepted to be reduced from 0.7 in September '22 to 0.5% in December '22. Overall, we can stand at 2.04 at end of Q3 FY '23, higher than of GNPA, which is [indiscernible].Our hub remained resilient on a rating interest rate scenario during a competitive adding to our customers. For the third quarter, our consolidation line stood at 1.9%, we are relatively higher liquidity during the quarter on account of finding back guidance and public NCD SCM, which accounted for INR 1,600 crores or 49% of the total debt branding. Adjusted NIM, excluding the impact of extra equity was 12.1%. I draw compared from the fact that for 9 months FY '23 or a NIM of 1.5% is 60 bps higher compared to FY '23 NIM as guided at the start of the financial year.For the marginal cost of borrowing is a little higher with one-off pipe of 10.2% during Q3 FY '23, primarily due to higher proportion of long-term debt, which is foreign ECB, MCD and public [indiscernible] in incremental boost came at a higher cost. Our cost of borrowing from banks, NBFC was stable on Q-o-Q basis. Despite the higher margin cost of borrowing in Q2, increasing share of fund borrowings to 70% was or 9% in Q2, raising public 225 bps reported ice in the past 9 months, we have been able to maintain our rate at average cost of borrowing, which in one month to 9.6%. So, this is very minimal increase. Our dedicated efforts to increase the proportion of long-term borrowings are coming from coinfection as the average maturity of liabilities on controlled basis has increased over 24 months compared to 23 months of quarter ago.We keep significantly strengthened our ALM to. We expect the contract borrowing to normally be the predominant share of bank borrowings in incremental drawdowns in Q4 FY '23. For 9 months FY '22 weighted average cost of borrowing expenses expect a gain of between 9% to 9.4% for FY '23 as guided at the chart of the financial year. For consolidated basis, May grew by 31.5% Y-o-Y to INR 567 crores and cost-to-income ratio stood healthy at 36.3%. It is 30 bps lower Y-o-Y. PPOP grew at 38.7% Y-o-Y to INR 379 crores, demonstrating a strong operational probability.Credit cost stood at INR 889 crores, which also endured the impact of write-off of INR 131 crores as per up 70 to -- this was partially offset by 1.5% -- INR 6.5 crores of bad deeper during the quarter. The credit cost at CAM is within the budget, while NLF slightly higher due to the relatively line collection trends in the last leg of the legacy book. However, we also note that we are retesting the better banded recovery from ranked retail portfolio. Further, the new book at can based on CGM model, accounting for 92% of shares has been displaying excellent force quality. As exenatide business from [indiscernible], which is currently 8% of financial book and 1.3% of the consolidated growth, we estimate FY gross rate cost may be between 2.3% to 2.4%.On the net basis, including verities the cap cost should be in the range of 32%. The impact of higher trade cost has been adequately built into the revised spacing to the customer helps our ROI guidance is intact. On consolidated PAT significantly grew by 85.3% Y-o-Y and 23.1% Q-on-Q to INR 213 crores during Q3 FY '23, resulting in ROA of 24.6% and ROE of 18.8%. In 9 months of '23, we have delivered a consolidated PAT of INR 530 crores with the ROE of 3.8% and ROE of 15.2%. We reiterate our FY '23 guidance of ROA to 4.2% and EBITDAR. The year budget FY '23-'24 focusing on common improvement into two developments by reaching the last line of the key towards India's 100 vision clearly highlight the importance of multi-participating role in the capital creation story at the bottom of social pyramid. The most of measures that INR 2 lakh performance seem to supply the food gain to [indiscernible] public infrastructure or agriculture and a retailer accelerator fund for increase in productivity and profitability. INR 300 crores credit target, 66% increase in PaaS to INR 792 crores. [indiscernible] We will benefit the real financing opportunity over the coming years and our big positive for the microfinance segment.I would like to touch upon the few awards and recognition in which was won by CA Grameen. We have been certified as we expect to work particularly for the fourth time being adjustment of our inclusive work culture. We have won the "Certificate of Merit" at the 26th SAFA award ceremony for our 2021 edition of our integrated annual report and corporate governance disclosures. We won the ‘Impactful Contribution in Financial Inclusion' segment by Elets at the 12th NBFC100 Tech Summit. Lastly, I would like to hand over the call to our Deputy CEO and CBO, Mr. Ganesh Narayanan, to share a few pick updates with you all.

[Ganesh Narayanan, executive]

Good evening, everyone. Thank you for those opening remarks. Along with the strong Q3 performance, I would like to take this opportunity to share two positive developments with all of you. Firstly, the Board of Directors have approved the extension of the term of appointment of the [indiscernible] of the company for a further period of 2 years in June 2025 after the expiries current term in June 2023, subject to approval shareholders. Backlogs experience in lighting, the company is all set move ahead towards this vision. The company also has a stable who is capable and relative to manage the business scalability over minimal years to come. Secondly, we're also happy inform that the NCLT engines has today announced other approval, the scheme of avolition between 3 MMFL. The NCLT copy of the said order is awaited. We had earlier received approval order from NCLT China bans on October 22. With this order, we can now proceed towards the inauguration of NFL with Corning and present our FY '23 annual financials. With this, we would like to now open the forum for question and question. Thank you all for your valuable time.

[Operator]

Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Shreepal Doshi from Equirus.

[Shreepal Doshi, analyst]

So just wanted to check with you, like are we still following the lender cap in our and the prudent practice in acquiring new customer of our existing customers?

[Udaya Hebbar, executive]

No, we are not capturing in lender norm, but we kept capping our unsettlement $125,000 loans.

[Shreepal Doshi, analyst]

Okay. Got it, sir. And sir, I wanted to I understand like we have revised our credit cost for this year now, which is with respect to guidance. So what are the processes behind not upfronting it during this quarter itself, I mean, because we would anyway have got clarity on the stress book, which would need to get written off. So, I just wanted to understand the process there.

[Udaya Hebbar, executive]

The very, very small proportion of to call [indiscernible], which is what you are finding is because of lagged recovery in the old legacy book. But we are trying to be towers provide. But we believe right now that reality be 1.9% on a basis, we believe the next rate of when we do, we be crossed up 0.1% to 0.3% But we can go after the [indiscernible] -- so I think be completing the same financial year but we are not taking a separation. And then also, we told that the slight increase in costs, our ROE is still intact, where appraising anyways covered that factor...

[Shreepal Doshi, analyst]

So just 2 follow-ups to what you said. So what is the write-off that we are anticipating in 4Q? And what -- and as you said, like you are not -- you're not revising the ROA, ROE guidance because NIM is likely to improve. So what is the NIM guidance for FY '23 and '24, if you can provide it?

[Udaya Hebbar, executive]

Guidance for FY 2024, we have to come back, will definitely declare in the last fourth quarter. As of now, we'll not be able to give 2024 numbers. But we estimate that the credit cost will get into a stable position. It's already we started earlier that the normal sales stock would go up, which will be between 1.5% to 1.6%, well within that one...

[Shreepal Doshi, analyst]

Okay. So just wanted an overlap of our customers with players like [indiscernible] that's elastic...

[Udaya Hebbar, executive]

There's not too many variations between each the major player, our maxim overlap is only with Bain, about 14%, 15%. Other than that, all the others are less than 5% over last...

[Shreepal Doshi, analyst]

Thank you so much, sir. Thank you

[Operator]

The next question is from the line of Nidhesh Jain from Investec.

[Nidhesh Jain, analyst]

If you can talk about borrower leverage, including all the financial institution, since now we are capturing that data for last three quarters, how are the trends in that -- on the borrower leverage trend for your customer base, including all the other institution, -- how are the trends that you are like?

[Udaya Hebbar, executive]

So we have not observed too much variation at this point of time, probably the change in regulation impact take at least two or three more quarters because majority of the players would have adopted only the Q3. Therefore, we would be canicular to get the full detail. But we are not seeing too much variation, but we've seen median varies in the urban because of the family, some of the elsewhere borrowed. So otherwise, I mean, the primary level right now, we are not able to get a full picture at utmost. At most, selling it for approves of still at the same loan get rate of 23% compared to pre-COVID level.

[Nidhesh Jain, analyst]

Sure. Actually, is there any update on the promoters selling, which has been in the news in the past. Is there any update on that?

[Udaya Hebbar, executive]

So there is no other major update as we leader. So maybe we may would have this question probably will give a detailed answer for that would have a common understanding. So our promoter holds adequate cash position and we have a very good global lines. As it can be changed as the fact that we have -- it has already fully capitalized license subsidiary and confections future capital requirements. Further, a leading Italian bank, Intesa Sanpaolo have required about 2% in the promoter company. We can see what they give a disposer. Confirming the merit correct to gradually improve our throughput and liquidity in the same start. So, some of them may can share transaction with selected high-quality, long-term emits expressing interest in the proposal. But we would like to clarify that [indiscernible] does not intend to offer any share in the market through an offer or any other offer made by advisers.Elicit transaction to CAGL may aggregate combined together up to around 10% towards the medium term at a price level, definitely reflecting the business fundamentals and grow profits, we will be stable market condition, which is our view is not the case at the current market level. which also will allow us to onboard the long-term investors who are not able to pay meaningful quantity at this point of time because of the low produced up. I would like to retain that the strategic view of our promote remains to keep holding a clear majority stake in the company above 55% to 60% over long term, even after considering any minor dilution at [indiscernible] and potential future capital sites planned for [indiscernible]. So I think there may be many thing in the mine, so I thought they were a bit long answer to cover entirely. So there won't be supply coming to our market. So, it was no policy up.

[Nidhesh Jain, analyst]

Sure. And sir, lastly, the customers that we have acquired in Kamataka, [indiscernible] which are supposed to be pretty well penetrated geography, if you can share what percentage of these customers pulling [indiscernible] applied on 1.8 lakh customer coming that 5 by customers. What percent of these customers are new to credit, new to micro finance or new to credit.

[Udaya Hebbar, executive]

Yes, out of 9.04 lakh customers a quarter in the last 2 months. So that 75% customers are acquired from the core geography of Karnataka [indiscernible]. And the net credit is between 25% to 30% in a maybe making 5% more in the Madura. So at about 33%, sending out of the 25%, Marathon produce.

[Nidhesh Jain, analyst]

35% in Karnataka, 25% in Damian around 25% in Maharashtra.

[Udaya Hebbar, executive]

–27% in Samina, 33% in Karnataka, about 35% in Maharashtra.

[Operator]

The next question is from the line of Renish from ICICI.

[Renish Bhuva, analyst]

Congrats on the numbers. Just 2 questions. So one on the incremental branch opening on the PPP, when we can see that we are implemently opening branches in Maharashtra, -- so what is the rest? I mean since we have acquired Madura. So that was the prime rational of the Matadi give us access to master therapy. So why you are incrementally opening branches in Maharashtra.

[Udaya Hebbar, executive]

Maharashtra, we are not open the branch for expansion, maybe some places where the [indiscernible] over June, and we have to split and do one more brand. It's only for a local group, not on an expansion basis. So when the brand is all going beyond 8 customers in a single location, they normally create one more brand so that we can transfer and service better. Only on bodes open bank in Maharashtra.

[Renish Bhuva, analyst]

Got it. And sir, secondly, again, in Bihar, we have opened to 19 branches in Q3 when we opened the time -- so what is our experience with geography, I mean, let's say, collection—

[Udaya Hebbar, executive]

Our experience is very good in all the order states, very, very -- I mean it early hotel quality, process quality, new customer, new to grade customers. All these are very, very good. In fact, in the arena, we are getting 40% to 50% new to credit because we operate in the very entity-type kind of tone. Therefore, we're able to build, acquire new to trade and new customers and able to build a very good requirement culture also.

[Renish Bhuva, analyst]

Okay. And sir, just last question on the growth side. You are not giving guidance for '24 but just from a qualitative perspective, size now I mean, like at what rate you guys will be comfortable growing the MFI book. And along with that, if you can just highlight what we are doing on the new product side. And is this like to assume that maybe a couple of them down the line the new products that might hit outpace the NFI growth

[Udaya Hebbar, executive]

While we are not giving the all the line-by-line been guidance, the growth we always maintain that we should be able to grow at a CAGR of 20% to 25% over the next 4, 5 years. I think which is definitely possible. Mixed be including the microfinance and nonmicrofinance. So nonmicrofinance that we are doing a lot of pilots, these are really doing a very good sign of future prospects. We should see a good traction in FY 2024. But including the all products, definitely, our aim to grow is between 20%, 22% is indefinitely possible and then actually, as a HDR, we are actually expecting to kind of growth.

[Renish Bhuva, analyst]

And would you like to give any numbers or let's say, any comments around what all new products we are piloting and like what sales—

[Udaya Hebbar, executive]

Definitely. We are working on the key 5 products. One is individual loan for the true customer with the solid pilot that we are looking to the three branches. We're already starting almost nearly close every day, to one. And we are looking at a lot of pilots on a few brands that we started and then adults again promising. And we are already running the loan again property book almost INR 5 crores per month we are disputing right now, but this is competing trend, which is, again, quite promising. And then we are also piloting gold loan in about five branches. We have to see little more pilot there because there's a difference in the type of growth between this headquarter brand to [indiscernible], but we will get more as we are working on an affordable housing, which had to be initiated. These are the five parts we are working. As I said earlier, the more in the private and the real traction, we're seeing in the '24.

[Renish Bhuva, analyst]

Got it, sir. This is very, very helpful, sir. Thank you and best of luck.

[Operator]

We have the next question from the line of Punit Bahlani from Nomura.

[Punit Bahlani, analyst]

Firstly, on the cost of borrowing debt. Like you have said that this quarter, you have mentioned that the because of the higher proportion of long-term debt, the borrowings came at a higher cost. So for Q4, because you have taken on excess liquidity, this quarter 4 perspective, the cost of fund will be a little bit lower, right?

[Udaya Hebbar, executive]

Cost borrowing, is it marginal cost, that means borrowed for Q3 was a little higher, whereas our quarter borrowing is stable at 9.5%. So, in that quarter, the weighted -- the marginal costs are little higher because of the long-term fund and the NCDs that we raised. So therefore, the impact on the total borrowing is quite marginal.And also, Q4, we are planning to borrow majority from the banks, local banks, and some borrowings. So therefore, our marginal cost and average borrowing tail remain in the same level of Q4. And the margin cost would come down because we would borrow more from the domestic banks. That's a big pop only for Q3 but on the or on borrowing.

[Punit Bahlani, analyst]

And the second bit from the loan proportion from other than the top three states or I may say the top four states and around 17% of the AUM is what you have mentioned. Any color on the page there -- like how are they over the current portfolio that the top three states portfolio? Are there in line here any color on that?

[Udaya Hebbar, executive]

See, the core market is very strong also in terms of the quality of portfolio and then the end of the growth. But there may moderate growth in the core market because already we are base is quite high. So normally, it may be low. There is other its newer when we'll actually grow much faster as were 25%. If you see as we open more and more branches, but the normal rate being higher purpose at growth. To give an example, what we acquired Custom in the last several months, 33% petite acquired from the business. then be only from the top three steps. So, since the brand we opened almost 95 a sore opened an onset. So automatically, all the growth that the new duty is coming from the nonstate, but the core will give a stable portfolio and the reasonable small the majority on metal customer and very micro new customers. Right.

[Punit Bahlani, analyst]

And sir, on the asset quality that or we just saying what you're witnessing slippages or anything? Any color on that qualitative would do?

[Udaya Hebbar, executive]

So what we believe is the current year, our overall asset quality at in credit card will be able to 2x to 3x 4%. Whereas next quarter, we believe that over next year, we believe that we been 1.6%. We are depressing similar huge rate of pace is talking that way. So that's why no current year is based on the legacy book. But with the negative book starts getting cleaned up in this year, we should be getting into the 6% kind of wage cost going forward.

[Punit Bahlani, analyst]

Okay.

[Operator]

The next question is from the line of Nikhil from Nippon.

[Nikhil Rungta, analyst]

Congratulations on a great set of numbers. Just a couple of questions from my side. First is to clarify you indicated that the promoters won't be selling any share in the open market? That would be primarily the bilateral transaction. Am I right?

[Udaya Hebbar, executive]

There are no block deal or no book building that kind of thing will be even if we do [indiscernible] we can to ADI enhanced broad base the long-term reinstates to enhance the float answer. So basically, we meet the both rate of a requirement.

[Nikhil Rungta, analyst]

Yes. Sir, my second question is, if I look at our cost of borrowing, I agree that it has been increasing since last couple of quarters, and so has been our yield in line with our expectations. But if I look at the margin profile, margin actually on a Q-o-Q basis has declined. I mean, from 12% to 11.9%. Of course, I agree the fact that we have excess liquidity. But that excess liquidity was also available in Q2. So, if I have to note of this thing, what would be a stable margin we can look at from year one.

[Udaya Hebbar, executive]

So, I too I agree it was around 20% at Q2 and 1.9% 11 bps lower from Q2 to Q3 because of the weighted average liquidity was quite high during the quarter. So in the Q2, we have accessed the only at the end of the quarter, not the average actual. So it's actually the cost to go up a carrying cost is average book almost more than 8% was our liquidity during Q4 because we raised money in November and we could not deploy immediately on this month. So therefore, the change defense difference between Q2 and Q3. whether as our continuous [indiscernible] should be between 1.5% to 2%.

[Nikhil Rungta, analyst]

Okay. So that should be sustainable NIMs from here on, right?

[Udaya Hebbar, executive]

One. Number two is what you said at the chart of here that we would get eventually about more than 1% to 1.2% higher NIM. -- at to time, whereas 60s you would achieve in the current feathers we already achieved the 60 bps, which we guided at the start of the year. Right.

[Nikhil Rungta, analyst]

So for next, say, FY '24, the margins would be 50 to 70 bps higher from this 112%, right...

[Udaya Hebbar, executive]

So because there are 2 other factors make in. But also the leverage will pay a bit because today, it would be about 24% because 22% to that extent, your name change, right? -- slightly expected NIM. Okay. Okay. Perfect.

[Nikhil Rungta, analyst]

Sir, last question from my side. Incrementally, we have been opening a majority of our branches outside our core states. Specifically, if I look at this is primarily in the northern states like PDH and all. So, going forward to 3 years down the line, what could be the share of these other states? Or how do we see the share of Karnataka, Maharashtra and Tamil Nadu and others in [indiscernible]

[Udaya Hebbar, executive]

If you look at currently also our 55% of the brands are a coat already. we will start adding customers adding portfolio. So, we should be looking at Karnataka, for example, which as it is currently at about 34% should actually go towards 25%, 26% in the next 3 years' time. Similarly, yes, similarly other set also will come down.

[Nikhil Rungta, analyst]

Okay. Perfect. So Karnataka Maharashtra Tamil Nadu also will start trending down and the other states will trend...

[Udaya Hebbar, executive]

It should be payment should be less than 60% by next years' time to a stable environment.

[Operator]

The next question is from the line of Nilesh Jethani from BOI Mutual Fund...

[Nilesh Jethani, analyst]

Thanks for the opportunity and congrats for the growth set of numbers. My first question was on your presentation, I see the lower office growth in the range of 11% to 12% but when the borrower count it is in a range of 5% to 6%. -- can you help me understand the disparity of the loan of shares at a higher number that is not being reflected in the borrowing account.

[Udaya Hebbar, executive]

So it's a loan officer to borrower in the con variation when we open new branches. What happened, we opened Sabine band. That means we added about 5200 new employees also so which it makes the variation. And then, number two, we need to -- the rotor built for the [indiscernible] that of large number of set also. These two are impacted a small variation in the overall what we call a borrower per loans.

[Nilesh Jethani, analyst]

So going forward on a sectoral basis, when you go out for a 20% or 25% growth, what could be a lot like a volume and what could be attributed the value on a borrower growth...

[Operator]

Ladies and gentlemen, the line for the management seems to have disconnected. Please stay on the line while we reconnect with the management.[Technical Difficulty]Ladies and gentlemen, we have the line for the management reconnected.

[Nilesh Jethani, analyst]

Sir, could I repeat the question?

[Udaya Hebbar, executive]

I think, Nilesh, I think I remember what you are talking is about the market share versus the number of borrowers. What I said that when we opened the new branches and then coming to the new branches, we will hire more employees, which will make it changes in terms of the averages. And then number two, we also had a rate during the quarter, which also had an impact on the average is. So it's not very large. It's very small actually, but it will depend on in the quarter when you do these two activities.

[Nilesh Jethani, analyst]

Okay. So going forward on a sustainable basis, so you are guiding for a 20% to 25% kind of a growth. So, what portion could be attributed to borrower count growth? And what portion would be attributed to AUM per borrower count growth?

[Udaya Hebbar, executive]

So it is a mix of three factors, actually. One is borrower growth there is what we call GLP per borrower. That is because of the growth coming from the existing customers. What we normally observe in our business are basically, 50% to 60% of growth comes from existing borrowers. About 20% comes from new borrowers in the existing branches in the balance, 10% to 15% growth comes from what we call the new customer and from the new branches. While so the overall basis above that about we were planning at about 10% to 15% will be the borrower growth and then the 20%, 25% EBITDA -- we've got the combination...

[Nilesh Jethani, analyst]

Got it. That was really helpful. And one last question on the NIM. So one last question on the NIM. I believe the last time we were talking about adding -- making about 10% to 15% of the portfolio mix via asset-backed loan. So I wanted to understand where are we in that process today? And if the share has to increase to 15%, how sustainable do you think NIMs are at current level?

[Udaya Hebbar, executive]

Currently, we are at a very, very small portion because the current investment in Madura sites nonmetro we have not grown their book earlier, we had saving a model. We are more on a roll right now, INR 100 crores right now. And then the more traction will be in the in next year. But if you look at the long-term perspective, anybody will start the asset back book and then the MSM at least for the 5 years to reach INR 563 crores. So our idea is that we should reach 5%, 6.4% in 4 to 5 years' time. So therefore, by that time, probably 10% to 20% of the overall portfolio. So we are not in a hurry. We want to make the model right before getting up. And we have new business products, we also planning very steadily and stable pilot on a sector profile that we'll get in the scalable mode which you would see in 2024.

[Nilesh Jethani, analyst]

Got it, sir. Got it. That was really helpful, and thank you so much for replying to my questions, good.

[Operator]

The next question is from the line of Nidhesh Jain from Investec.

[Nidhesh Jain, analyst]

On the disbursement, why the growth in this quarter was more if I look at the growth on last year base last year also, so Y-o-Y growth in Q3 is not that high, 3%, 4% Y-o-Y in last year. And on that base, also the growth is just 3% Y-o-Y this quarter. So what is the reason for disbursement growth being slow in this quarter.

[Udaya Hebbar, executive]

So to indicate I explained during my initial remarks. It looks because our base was high. And last year, we already started a business quite ahead of the industry, and we actually use the entire pent-up demand in the Q3. Therefore, the risk are quite high in the last year -- so therefore, it looks like it's a bit too low compared to ante. I think the next quarter also, will have a higher possibility and we will do more. And currently, it will it get a comparative to Q3, which are the early getting into using the pent-up demand more after COVID impact. If you remember, in the [indiscernible] started expanding branches, acquiring customers and acute really scaled up a bit structure. So we are comparing with the very high department to the no department.

[Nidhesh Jain, analyst]

And then what is the run rate that we achieved in the month of January's debt?

[Udaya Hebbar, executive]

We were about INR 18 crores to INR 19 crores.

[Nidhesh Jain, analyst]

Yes. Thank you.

[Operator]

We have the next question from the line of Prolin Nandu from Goldfish Capital.

[Prolin Nandu, analyst]

First question from my side would be when this NBFC MFI regulation has come, we had certain expectations as to how this will change the scenario in terms of how we will increase the size of the opportunity for a player like us. Now since ten quarters have passed and one of the earlier participant's question that we are still not getting enough data in terms of the overall borrowing of the household. So -- and obviously, it also depends on how each and every MFI or NFI player is interpreting and executing this regards regulation. So as we stand today, do you still feel that the -- I mean, this is metaphor and the quantum of benefit that clearliest get is same as what we had thought of when the regulation has come.

[Udaya Hebbar, executive]

Yes. Definitely, yes. Absolute. So sir, why delay in getting the data? Are your regulator allowed 6 months more for compliant by everybody. If you see October 1 was the effective that is the first quarter of the new regulation for every. Therefore, we believe that difficult to get some data fully to understand. Probably after a quarter, we'll be able to get a little more, what not better on a committed level of the borrowing level onto. So if you ask our own borrower is we have to go in to take us on December, we get that we not get a full mining will not up for the entire set of customers. Therefore, probably it's better to wait to a more quarter we get a meaningful data. That's why I said it's difficult to get data fully right now because implement is only chartered in coping many of the players. But from overruns, which will definitely help a lot in terms of the segment in microfinance in terms of growth, in terms of the expanded what teal microfinance question a itself and then some of the easy note of the regulation, leverage in terms of [indiscernible] of pricing for everybody. And then really, the market driven approach will start going forward in kind of microfinance. And then last one is more of a utility or you can say, a mature business model it is clear acceptance of mature business model from a regulatory point of view to showcase saying that this is a common business for everybody. So, all these things are definitely cost. Top of that, is it good support from government and a core at the guarantee scheme, from the TLTRO funds earlier. So I think on this a huge focus towards this not attribute. [indiscernible] to go -- and on the other side, if you look at the overall potential market, if you take any threat of calculation, there is about almost 1 million of customers are supposed to be within this sold for micro finance lending, INR 6 crores or INR 620 million are excess, which is about 90 million to 100 million borrowers who yet to get a formal finance. So -- and major to them in rural. So with the all things in place to originate and the improved business can you unmet. We believe that this will be a good opportunity for the sector to grow and we strongly believe we have a very long highway to grow here.

[Prolin Nandu, analyst]

Sure, sir. And the second question would be that we have -- we continue to invest in our tech platform, right, both on the front end and back end. So where are we now? -- way we probably compare it with our peers across different entities, right? I mean it would be baked be a small finance banks as well. Will that transition or the -- where are we now in terms of our tech versus the rest of the competition at both rent as well as packing...

[Udaya Hebbar, executive]

We always look at initiatives for the core for this kind of much volume, the large volume transactions. Therefore, we need to banking way back in 2015, probably even now or pay in microfinance within our core banking commission, which I understand correctly, okay? So, whereas we are actually on a reading, we kept on enhancing the platform and then today, every employee has mobile, as I said, front-end platform, all information, the dirty of our operations are paperless. This one of the reasons that we are one of the low-cost operators since the beginning have probably 6, 7 years, they are one of the lowest operating cost company because of the efficiencies that we've built meeting with a strong tech internal as well as between branches therapies, the back-end processor underwriting data analysis, data warehouse. So for we missed heavily in it. And we believe we are in the right architecture, which is sufficient for us to take us to next level.

[Prolin Nandu, analyst]

Very clear, sir, last question from my side would be, do you any the capital range in time next year? And if that is the case, what is management thought process of probably to wait together with the promoters offloading some part of it as well. So some clarity on this front...

[Udaya Hebbar, executive]

Yes. You currently at a confirmed level, we have capability to about 24%. And then sufficient for us to next 4 or 5 quarters. Maybe after the end of FY '23, '24, we may start working towards the next set of capital raise as we always believe that we should hold capital -- so at that time, you look at it is more of a Q1 sale of two, but we have to decide when and what amount and how will go. Bank on an earlier comment. Promoter doesn't need any funding action. They have a the capital requirement, we want for the influence in expense. So the only more effect where one of the great rating more than

[Operator]

The next question is from the line of Shreepal Doshi from Equirus...

[Shreepal Doshi, analyst]

Once again Sir, just 2 questions. Firstly, what is the approach we are deploying for customers that has been written off by any other lender or by us? Like is there an approach of cooling prior for the customer or things like that. So what is the approach for a return of customer?

[Udaya Hebbar, executive]

See a customer if the data is available in the bureau for other customers, we are not taking. We are not dining to customers. In our sector, if you know the customer as well as the rate of but it paid back the value, I mean, get back to us. So if the Busan center approve them to take, then we will do. So it's the other we don't take then —

[Shreepal Doshi, analyst]

Okay. Got it, sir. And sir, the last question was with respect to liquidity. So what is the liquidity that we want to maintain as a business as usual approach…

[Udaya Hebbar, executive]

Our intent on policy is to maintain the overall liquidity between 5% to 8% on an average at about 5% of the AUM will be ideally sufficient for a stable period.

[Shreepal Doshi, analyst]

Good. Thank you. We look forward for the next quarter.

[Operator]

We have the next participant in the queue the question from Nishit Vora from Elara Capital.

[Nishit Vora, analyst]

Hello, Thanks for letting me ask a question. I have a few questions. One would be, when would do we see that NIM and ROA normalize after incorporating the positive benefits that accrue from the new RBOs. And second question would be, what would be the ROE guidance in long term that we see?

[Udaya Hebbar, executive]

Okay. So if from RBI regulation change and then the related price change should give us a stable ROE, it's a stable NIM if you take about 24 months to get full delegate because majority of our lending are at 24 months or 36 months. So currently, probably this and that we got about 50% benefit to have a 50%- and 1-months' time. That is 1 month. So, the second one is about the long-term guidance on the stable but on a salable that we believe our is between 4% to 4.5% to 5%. And naturally, since we have actually wanted to maintain a 20% adequacy. So ROE should be around between 18%, 19% to 22%, 20%, is what we expect in the stable to growth.

[Nishit Vora, analyst]

Also one more question, sir, if you don't mind. What would the borrowing mix ahead that you expect?

[Udaya Hebbar, executive]

Yes. anatomic view we have been working it to center our ALM as I want to have a very stable [indiscernible]. So IDs in a long term to get at least 30%, 35% international borrowing, which is long term and stable. And then other borrowings such as the prices in India or public NCD kind of, again, a long-term borrowing ease 15% kind of thing. And the balance will be a normal domestic [indiscernible] bank borrowings, which is to be maybe try to then at some to with the securitization on a model basis. The balance, 30%, 40% out of 50% will be a stable domestic bank borrowings. This will be the borrowing mix, which will give us advantage of very good positive Line, very stable cash flow as well as a long-term advantage.

[Nishit Vora, analyst]

Great... That helps a lot.

[Udaya Hebbar, executive]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Ms. Shweta Daptardar for closing comments. Over to you, ma'am.

[Shweta Daptardar, analyst]

On behalf of Elara Capital and management to provide us the opportunity to host the earnings call. Thank you all.

[Operator]

Thank you very much. On behalf of Elara Securities (India) Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.