August 19, 2025

BSE Limited National Stock Exchange of India Limited

Corporate Relationship Department, Exchange Plaza, 5th Floor,
2nd Floor, New Trading Wing, Plot No. C/1, G Block,
Rotunda Building, Bandra Kurla Complex, Bandra (E),
P.J. Towers, Dalal Street, Mumbai 400 001 Mumbai 400 051

Scrip Code: 544055 Scrip Code: MUTHOOTMF

Dear Madam/Sir,

Sub: Transcript of Investor Conference Call of Muthoot Microfin Limited –Unaudited Financial Results
for the quarter ended June 30, 2025

This is with reference to the intimation dated August 01, 2025, filed with stock exchanges, pursuant to
Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, regarding the
investor conference call to discuss the unaudited financial results for the quarter ended June 30, 2025, which
was scheduled on August 12, 2025.

We are enclosing the transcript of the earning call and the same is available on the website of the Company on
the link: https://muthootmicrofin.com/financials-and-investor-presentations/?tab=6

We request you to kindly take the above information on record.

Thanking you,

Yours faithfully,
For Muthoot Microfin Limited

NEETHU Digitally signed by

NEETHU AJAY

AJAY Date: 2025.08.19

11:30:17 +05'30'

Neethu Ajay
Chief Compliance Officer & Company Secretary
 “Muthoot Microfin Limited
Q1 FY26 Earnings Conference Call”
August 12, 2025

E&OE - This transcript is edited for factual errors. In case of discrepancy, the audio recordings
uploaded on the stock exchanges on 12th August 2025 will prevail.

MANAGEMENT: MR. THOMAS MUTHOOT JOHN – EXECUTIVE DIRECTOR –

MUTHOOT MICROFIN LIMITED
MR. SADAF SAYEED – CHIEF EXECUTIVE OFFICER –
MUTHOOT MICROFIN LIMITED
MR. PRAVEEN – CHIEF FINANCIAL OFFICER – MUTHOOT
MICROFIN LIMITED
MR. UDEESH ULLAS – CHIEF OPERATING OFFICER –
MUTHOOT MICROFIN LIMITED
MR. RAJAT GUPTA – AVP, INVESTOR RELATIONS –
MUTHOOT MICROFIN LIMITED

MODERATOR: MR. MAYANK MISTRY – JM FINANCIAL

 Muthoot Microfin Limited
August 12, 2025

Moderator: Ladies and gentlemen, good day, and welcome to Q1 FY '26 Analyst Conference Call from Muthoot
Microfin hosted by JM Financial Institutional 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 the conference call, please signal an
operator by pressing star then zero on your touchtone phone. Please note that this conference is being
recorded.

I now hand the conference over to Mr. Mayank Mistry from JM Financial. Thank you, and over to
you.

Mayank Mistry: Thank you, Avirath. Good morning, everyone, and welcome to the Q1 FY '26 Earnings Conference
Call of Muthoot Microfin. First of all, I would like to thank the management of Muthoot Microfin
for giving us the opportunity to host this call. From the management team, we have with us Mr.
Thomas Muthoot John, Executive Director; Mr. Sadaf Sayeed, Chief Executive Officer; Mr. Praveen,
CFO; Mr. Udeesh Ullas, COO; Mr. Rajat Gupta, AVP, Investor Relation.

I would now like to hand over the call to Mr. Sadaf Sayeed: for his opening remarks, post which we
can open the floor for Q&A. Thank you, and over to you, sir.

Sadaf Sayeed: Thank you, Mayank. Good morning, everyone. Thank you for joining the Q1 earnings call from
Muthoot Microfin for financial year 2026. The quarter gone by brings much needed change in
microfinance operating environment. This was after a difficult year of financial year '25. This
environment change is on the back of improved macroeconomic trends and robust disbursements,
which happened in Q4 of financial year '25.

As you all know, the rabi crop was good. And because of the good harvest, we have adequate supply
of vegetable and food items, which brought inflation under control. And with good crop also with
good disbursement, there was a good amount of cash flow, which was available in the rural indolence
and there was money in the hands of the customers. That's why there is an improved trend in overall
microfinance macroeconomic operating environment.

Usually, quarter 1 is a slow quarter. However, despite the Guardrail 2 that has been introduced by
MFIN, which was implemented from 1st April, the disbursements have been decent. In the quarter
gone by, we have disbursed 3,11,026 loans under 6 different products, valuing INR1,775 crores
during the quarter 1. This is a lower disbursement as compared to year-on-year, around 19.4% lower
and around 9.4% lower to the last quarter, which was quarter 4.

Usually, quarter 4 is a most business-generating quarter, but considering Q1 is slightly slower quarter,
we have been able to manage within the 10% of the disbursement, which is a good indication. And
this despite that the regulation has tightened and there are guardrails of 3 lenders which have been
implemented.

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August 12, 2025

If you look at overall portfolio, our disbursements or our portfolio, the 3-lender count is consistently
reducing. If you look at as a percentage of overleveraged customers in terms of more than 2 lakh
exposure, it has come down to just 1%.

With the disbursement that we did in the last quarter, our asset under management has reached to
around INR12,252 crores and our borrower count has reached to 34.1 lakh borrower. This is an
increase of just a nominal 0.3% year-on-year. But important point is that we added 1.1 lakh new to
Muthoot customers in the quarter, and we added around 34,000 new to credit customers in our
customer base.

During the quarter, we opened 27 new branches, and we closed 1 branch. Our overall branch count
reached to around 1,726, and our expansion was more in newer territory that we have entered is
Assam. And we have deepened our presence in Telangana and Andhra Pradesh during the quarter.
Even though liberalization of qualifying asset, which was earlier requirement of 75% has been
reduced to around 60% was announced later.

But from the day 1 in this financial year, the focus of Muthoot Microfin has been on a calibrated
approach towards product diversification. And during the quarter, we have introduced 3 product
lines, which is loan against property, which is Micro LAP. It's a loan which is between INR1 lakh to
around INR10 lakh for our customers. We have introduced a product which is gold loan.

We are in the process of post the newer guidelines on co-lending has been introduced just recently.
We have taken an approval from the Board to have a co-lending tie-up with our parent company,
where we would be extending gold loans to our customers. We have also introduced another product,
which is individual loans. It is micro MSME financing.

If you look at the approach has been to look at the data in the presentation, we have given the breakup
last time about the penetration of these customers from retail lending point of view. Out of the 34
lakh customers, around 12,37,000 customers were having retail loan exposure. Out of that, around
INR11,000 crores of business was done through business loan and PL. Around INR8,000 crores of
business was done in gold loan business and around INR6,000 crores of business, which was done
in individual loans in loan against property and mortgage business.

So if we look at cumulatively, this is an opportunity of around INR25,000 crores which if we are able
to carefully select these customers, we should be able to have at least a 20%, 25% penetration because
these are all customers who are already having an engagement with us.

We have had an approach of deep diving into the data and bringing in the best or the cream of these
customers. We have done that analysis with a data-driven approach. We have identified 440,000
customers, which have a credit score of more than 730 plus with us, so which means the credit bureau
score of 730 plus.

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August 12, 2025

We are targeting these customers. 35% of these customers are absolutely unique to us. Around 29%
of these customers are having us plus one more relationship, which is in retail lending. So
cumulatively, this is around 64%, 65% of our customer base. This will become our base for our
calibrated and careful product diversification going forward.

I'm also happy to inform you that recently, our credit rating agency, CRISIL has reaffirmed our long-
term debt rating to CRISIL A+/Stable. Our MFI Grading has been M1, and our code of conduct
assessment rating has also been C1. M1 and C1, both being the top-notch rating for the organization.

With efficient utilization of fund, we had adopted a strategy of focusing on using PTC as a source of
capital. We have been able to raise INR1,450 crores during the quarter. The most important feature
of this fundraise is that we have been able to bring the cost of fund down by 23 bps. Our cost of fund
for Q1 stands at around 10.79% as against 11.02% in the previous financial year.

And mind you, this is without the reduction in rate that has yet to be percolate to all the borrowers
from the banks. The rate cut benefit will translate further over and above this. For the first time in
history of Muthoot Microfin we have been able to bring the incremental cost of borrowing overall to
below 10%. Our incremental cost of borrowing has reached around 9.97%.

And this has been possible because of our calibrated approach of focusing on sources of capital,
which was cheaper. We have done PTC transactions at fine rates of 8.8%, 8.5%. We have raised
almost INR890 crores during the quarter through the PTC source.

During the quarter, our net interest margins have also improved to 11.5%, which were around 10.9%
in Q4. We have revised our lending rates. Our loans are now available from 18% to 24.85% with a
weighted average rate of around 23.5%. This impact of this will be seen in coming quarters coming
from Q3 and Q4 as largely book is right now at a lower rate. But going forward, the average rate will
continue to increase, which will also help us improve on our margins. Apart from that, definitely, the
cost of fund rationalization as it continues to come down will definitely help us bring the margin
better.

During the quarter, we have also implemented a comprehensive and robust ECL policy. The new
ECL policy takes into consideration macroeconomic indicators such as inflation, per capita income
at a state level and unemployment rate at the state level and GDP growth, which we were already
considering. This comprehensive approach definitely helps us to build a provision cover, which is
more robust as compared to the previous ECL policy.

During the quarter, as you know, last quarter, we have created certain management overlay
amounting to close to INR230 crores. We have utilized that management overlay to write off some
of the flows from Karnataka, which we anticipated last year. So INR132 crores of that has been
utilized to write-off loans. Another INR97 crores of overlay, which remains with us has been utilized
to build cover on the portfolio.

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August 12, 2025

As of today, we stand at a very robust provision coverage ratio of 68.5% for Stage 3, 8.17% for Stage
2 and 1.16% for Stage 1. This is a significant improvement year-on-year, where our Stage 2 covers
were much lower as compared to Q4 or for that matter, if you go by financial year '24, Q4, it was
around 1.06% in Stage 2.

We are now at 8% at Stage 2, which is a decent cover considering the environment. We have almost
between the IRAAC and the ECL cover a gap of around INR297 crores. So the coverage is adequate.
Overall coverage on our provision is around 97% if you calculate all the provision against the Stage
3 asset, which is a decent cover.

But most importantly, despite all of this robust cover, our credit cost remained at around 4.3%, which
is within the range of our guidance, much lower to credit cost as compared to 9.4% for the last
financial year. And we feel that as we build more and more newer portfolio, this credit cost will
further rationalize.

Our GNPA remains stable at 4.5% and that was our effort to ensure that we utilize the cover that we
have created in the previous quarter to not let the GNPA further balloon. And our net NPA increased
marginally by 24 bps to 1.58%, but they remain in a very comfortable position.

I'm also happy to inform you that we have understanding from the banks on the covenants, which are
based on GNPA and net NPA and others. Those covenants were in breach for INR2,500 crores
facility, but now they are at INR750 crores facility. It has reduced considerably, and we are in talks
with other lenders who will be giving us the waiver for these covenants. And these lenders have
continued to support us in funding.

We continue to maintain a robust capital adequacy ratio. Our CAR for the quarter 1 stand at 27.85%.
We concluded the quarter by reporting a modest profit of INR6.2 crores prior to the OCI. But if you
include the total comprehensive income, it's around INR8 crores. Though it's a very modest profit.
But more importantly, it indicates a firm ushering of a turnaround within the operation and the
financial performance of the company.

We are now better placed and more confident of building a robust, sustainable, and well-diversified
business, a business which is built on strong foundation of data analytics, use of technology, focusing
on customer centricity and robust underwriting practice. I'm sure the coming quarters would show
the results of the portfolio that we have built, and we are trying to build. I think with the ability to
diversify and leverage within the organization, within the group with multiple group companies who
are already offering such products, we will be able to build a robust business.

So I think I'll conclude my opening remarks here, and I'm happy to answer any questions that our
participants will have.

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 Muthoot Microfin Limited
August 12, 2025

Moderator: Thank you very much. First question is from the line of Shubhranshu Mishra from PhillipCapital.
Please go ahead.

Shubhranshu Mishra: So a few things really don't add up here. We still have our customer count at around 34 lakhs, and
we are going aggressive on new to credit customer acquisition, whereas at an industry level and other
microfinance players have reported purging of customers, hence, the customer count has reduced.
And when I add this up to, say, the 3-plus customers or 4-plus customers, that number is much higher.
So are we not purging customers? Why are we going aggressive on new to credit customers? That is
first.

Second is we have a big concentration in UP. What are we doing to derisk from UP, where we would
most likely have nascent to credit customers with nascent banking habits. What are our plans to derisk
from that particular state?

Third is that with the qualifying assets getting reduced, what are the new products going to launch,
whether they'll be secured, unsecured, what kind of IRRs we are looking at? What is the opex increase
we should build in?

Sadaf Sayeed: Thanks Shubhranshu. Thank you very much for asking that question. A number of questions there. I
will answer one by one. Firstly, on the customer base. In terms of our 34-lakh customer, this actually
captures the entire customer base, the accounts which are live when we are even writing off or when
the accounts are delinquent, these are also counted on in this customer base. If you look at customers
who are not in NPA, the account base is around 29 lakh customers.

The new acquisition of customers is essentially from areas where we have entered into more recently,
so Andhra, Telangana, and Assam. That is the new customer base that is coming from. While we
continue to focus, we have strictly implemented the guardrails, which MFIN and Sa-Dhan has
recommended. We continue to focus on retaining our existing good customers. But at the same time,
we need to look at customers who are less leveraged and they don't have multiple exposure.

So both strategies go hand in hand. The disbursement, if you look at in terms of distribution, earlier,
we used to have 50% new to Muthoot customer, 50% existing customer. But now we have around
38% new to Muthoot customer and 62% to existing Muthoot customer.

So already, our focus is on existing customers. But more importantly, our effort is to increase the
wallet share in the base of our good customers. And that is where I said we have done a deep analysis
and we have identified among those customers, 440,000 customers who are having a credit score of
730 plus from the credit bureau.

So these are actually cream of the cream customers, and they are able to service higher installment,
and we feel that they are in a higher income bracket. These customers will become basically our pillar
for expanding into the other product category. So we are offering Micro LAP, we are offering gold.

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August 12, 2025

We are offering individual loans. And we are basing our product thesis on the base of the data that
we have seen where our customers are already having an exposure with the other retail lenders. So
that's basically on the new products and on the customer base.

I think you had another question, sorry, I missed that.

Shubhranshu Mishra: How do we derisk from UP?

Sadaf Sayeed: Yes, UP -- yes, correct. So currently, if you look at our largest customer base is in Tamil Nadu and
Kerala, which constitute almost around 42% - 43% of our overall portfolio and around 45% of our
customer base. Our effort is to have around 50% in South and 50% in the rest of the country. While
as we expand to Assam, a good amount of share would be given there. We are also doing
rationalization of certain branches where we don't see that profitability or the operating cost is being
justified.

So we are also consolidating those branches, especially in UP and Bihar. Overall, if you look at
portfolio has remained stagnant or come down in UP and Bihar, and it will continue to be so. As we
leverage on more customers out of these 440,000 customers, almost 75% of these customers are in
South only. So when we build more portfolio with these customers, our portfolio share of southern
states will increase. And of course, North, especially UP and Bihar will reduce because we are not
offering more of gold loans and individual loans in those areas.

LAP is being offered there. Our markets like Haryana, Punjab, Himachal will also be more of an
individual loan market. So I think from that perspective, we will be able to balance our portfolio mix.
Our long-term strategy has always been to have 50% portfolio in South, which has really served us
well in terms of repayment and as well as the customer satisfaction, and we will remain on that
strategy.

Shubhranshu Mishra: So just wanted to know what is our opex increase that we'll be building in to bring out the new
products?

Sadaf Sayeed: Yes. So I think that's a very important question, and you asked about the opex. In the short run, the
opex has gone up to around 6.9%, which is largely because of calibrated disbursement and reduction
in disbursement. But in the coming months, as we increase our disbursement, this opex will
rationalize. And our strategy for building this portfolio is to utilize our existing branch network. We
are not kind of planning to have separate branches for this. But we have a specialized credit
underwriting facility.

For LAP, we already have a team, which were doing our MSGB business. They will be utilized for
underwriting these loans. Individual loan, we are adopting a very well thought technological process.
We have done a lot of innovation. We are tying up with an organization which is GenAI artificial
intelligence-based technology where based on the personal discussion of the field officer with the

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August 12, 2025

client, we will be able to record that and the voice will be converted into text and that text from
vernacular would be converted into English automatically, and that will give us a CAM, credit
appraisal memo.

Basically, we have to make sure that during the PD, the field officer ask those 10 questions, for
example, like what is your income, what is your expenditure is your house owned? And if it's not,
what is the rent you are paying, things like that. And based on that, a credit appraisal memo would
be created.

Then there is a centralized credit underwriting team, which will analyze that credit appraisal memo
and also look at the credit score of that customer. And based on that, a decision would be made on
those customers. So we have seen this. We have already disbursed certain loans under this. Last
month, we disbursed around INR18 crores of these loans.

And so far, the repayment has been absolutely on time. All the repayment of these loans is 100%
digital through eNACH. And so far, all the eNACH have gone successfully through. There is not
even a single bounce. So that itself will bring a lot of operating efficiency. We will be able to leverage
our branches better.

Apart from that, the good part about being in Muthoot Group is that we have a leverage of other
group companies who are there. We are already in talks of having a co-lending business with Muthoot
FinCorp, where we have identified that a lot of our customers are having gold finance business with
other companies. So we will focus on those customers and give them customized gold finance facility
within the group, where we will have a co-lending share where 60-40 partnership is there, 60% would
be on Muthoot Microfin book and 40% would be on Fincorp book.

Similarly, on housing finance, we have identified customers who are having loans there are 1,14,000
customers who are having loans outside. We have identified that around 50% of those customers are
having loans which are higher than our LAP rates.

So we will be focusing on those customers to build that in our book and the customers which are
having lower rate of interest, we will be facilitating a BT for those customers with our housing finance
company, where we will earn some fee income on those products. So from that income and utilization
of our existing branches and tie-up within the group company, we will be able to significantly
rationalize our operating cost.

Shubhranshu Mishra: If I can just ask one last question, which is a data point. How many customers we bank on a monthly
basis, which is like how many customers are presented NACH mandate for EMI?

Sadaf Sayeed: So the IGL product, which is more of a cash collection product, there is no -- we have a NACH
mandate signed by the customer, but we don't bank that NACH mandate. That is only utilized if there
is an overdue. But if you look at individual loan customers and LAP customers and certain our

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August 12, 2025

PRAYAAS loan customers, we do a NACH mandate for them, banking of NACH mandate. I don't
have the ready number, Udeesh, what is the number for that?

Udeesh Ullas: So we do around 1,000-odd cases eNACH processing month-on-month and plus there is a digital
collection of around 23% to 25% every month. So that cumulatively comes around INR200-odd
crores of collection.

Shubhranshu Mishra: this EMI collection, digital is basically UPI, right?

Udeesh Ullas: No, it's eNACH. and this digital collection is for the microfinance customer, basically the UPI
collection, BCCS.

Shubhranshu Mishra: Balance of cash collection, 70% in this...

Udeesh Ullas: Balance of cash collection.

Moderator: The next question is from the line of Ankit Sonkhiya from Oculus Capital Growth Fund.

Ankit Sonkhiya: Sir, our loan per branch and employee has continuously gone down and still we are opening more
branches. So aren't we looking for sweating the existing branches so that our opex ratio comes down?
And the second question is when we are going for this co-lending model, as our opex ratio is 6% to
7% right now, on the 40% that will go to the parent book, are we getting compensated for the 6% to
7% of operating expenditure that we incur on sourcing of the clients, the branch expenses, the
collection, et cetera? So that was the second question.

And the last question is, as our NIM has been below the guidance level and the opex ratio is also
higher, and the entire management overlay we have already utilized. So any changes in the guidance
for this year in terms of credit cost, NIM and the opex ratio? These are the 3 questions.

Sadaf Sayeed: Thanks, Ankit. I think firstly, on the branch productivity, the AUM has been pretty much consistent
for us. We closed this year at INR12,200-odd crores of assets under management, INR100 crores
down than previous quarter. But already, the growth trend is already being noticed in July, and this
will continue to grow. As I said, we will be rationalizing our branches and also looking at leveraging
our existing branches. So of course, the AUM per branch will definitely increase going forward. You
will see that in Q2 and Q3 and significantly in Q4 that will automatically result in rationalization of
our opex.

Currently, our opex is around 6.9%. This is largely because of lesser disbursement that we have done
during the quarter 1. Already, the trend is that disbursement per month is improving. In the last
quarter, we were doing around INR630 crores, INR640 crores of disbursement. July itself, we have
seen around INR727 crores of disbursement. And in coming months, it will touch around INR800
crores, INR850 crores and reaching to around INR1,000 crores disbursement by September and going
forward quarter. So that will automatically rationalize some of our expenses.

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Apart from that, we are not looking at opening many branches. The branch count pretty much will
remain the same. As we expect –that by the end of the financial year, it will marginally go up.

On the co-lending piece, we are having a 60-40 relationship where only a lead from our side would
be passed on where we have identified that our customers, existing IGL customers is having a gold
loan exposure outside. The rest entire customer underwriting assessment of gold, storage of gold and
servicing of the customer would be done by MFL, the gold loan branch, which is our parent company.

In this, our operating expense is next to negligible. Our yield on the portfolio would be sufficient for
us. We are looking at incremental benefit from this, considering our cost of fund is coming down.
We will continue to have a decent spread on this loan without incurring any amount of operating cost
or a very marginal operating cost.

We have also seen in gold loan products, the credit cost is very, very minimal, below 1% or even
below 50 bps most of the time. So that is where we think that it will benefit us in overall cost-to-
income ratio will rationalize because of that.

On the NIM. The NIM has already started expanding. The guidance that we have given is for the full
financial year. We are quite confident that by the end of the financial year, we will, definitely, be
within the guidance or overachieve the guidance. The expansion of NIM is happening on both the
sides. One on the rationalization of the cost of fund. As I explained, we have already reduced around
23 bps in cost of fund in quarter 1 itself.

And this is even before the passing of the rate cut happens. As that benefit of the rate cut is passed to
us, we will be able to further reduce our cost of fund. And at the same time, we have revised certain
lending rates, and we will have a well-diversified portfolio where we will be earning some fee income
as well. So overall, our NIM will also expand, and our profitability will also improve.

The third question that you have was on the management overlay. Out of the total INR230 crores,
INR132 crores of the management overlay has been used for writing off, which was the intended
purpose we knew that certain portfolio from Karnataka will flow into NPA and that would be slightly
difficult to redeem, so which has been utilized to write off those loans. But INR97 crores of that
provision still remains.

However, that has been absorbed in the overall provision requirement because we have changed the
ECL model. If you go back to the old ECL model, the provision requirement would have been lesser.
So we would continue to have INR97 crores as management overlay. But because the ECL model,
we have changed, we have made it more robust. We have looked at more aspects on the
macroeconomics to be considered for calculating so that there is no volatility in the income. So that
management overlay has been utilized to make provision.

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On the credit cost side, we are quite confident that going forward, the credit cost will reduce. We are
seeing a tremendous turnaround in collections, where we used to recover around INR6 crores to INR7
crores from overdue loans. In the quarter gone by, we have recovered around INR38 crores from
overdue loans and -- which is around INR13 crores per month kind of a run rate. And if I give you
an example of July month, we were able to recover around INR18 crores.

So this number is consistently increasing. But if we even if we take an average of around INR16
crores to INR17 crores also for the balance period, good amount of INR150 crores from the overdue
loans would be recovered. And we are seeing good traction everywhere the collection efficiency is
improving. And more and more new loans that we do, there would be better recovery on those loans.

We have seen that in the vintage curves, the loans that we have originated in October, November
onwards, their data quality is much better repayment quality as compared to the loans prior to that.
So post guardrail, the recovery quality has been much better. So which will automatically translate
into a lower credit cost -- and we are quite confident that we will be on the lower spectrum of the
guidance that we have given.

Ankit Sonkhiya: Awesome. Very nice to hear that, sir. One doubt that I had is this co-lending part. You mentioned
that you will be mainly doing the lead generation, but then the collection and all the servicing will be
done by the parent. So -- but let's say, the branch network, they will not have in the same areas that
we have. So how the collections will be done? Won't it be cost -- it will increase cost for them if they
come and collect the money from these guys where they don't have branches?

Sadaf Sayeed: Yes. Ankit, usually, the gold finance repayments are bullet repayments. And the tie-up is based in
such a manner that we have pincode basis identified branches that these branches would be able to
service these customers. So whichever customers are there within the 5-to-6-kilometer radius, we
will be servicing and focusing on that branch.

The good part is that Fincorp, which is our parent company has around 3,900 branches spread across
the country. And we have around 1,726 branches. So there's a decent amount of overlap. A larger
part of these leads, almost 75% are from South where we have a tremendous density. So we should
be able to service this customer and Fincorp would be able to service these customers.

Ankit Sonkhiya: Okay. And one last thing. So let's say, once the customer has taken the gold loan and the bullet
payment has been done, won't that customer directly go to Muthoot Fincorp now because they will
have the data of the customer, and we will not get the repeat customers in the gold book?

Sadaf Sayeed: So we have a clear understanding the customers which are sourced from Muthoot Microfin will
remain Muthoot Microfin customers. We have a concept of UCIC, unique customer identification
code. So for each customer, there is a UCIC, which will be there for whatever comes through Muthoot
Microfin and that will remain throughout the journey of the customer within the system.

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Moderator: The next question is from the line of Mayank Mistry from JM Financial.

Mayank Mistry: Sir, just one question. I think it was partly answered in the previous question. But I wanted to know,
I mean, see, in this quarter, we were already at the lower end of our guidance, right, at around 4.1%
(Errata: actual number to be read as 4.3%) of credit costs. And like the collection efficiencies are also
improving given that we had the extra provisions in previous quarter, mainly expecting that the Tamil
Nadu book might start showing some dip in collection efficiencies. But it seems like the situation has
actually turned out pretty positive.

So is it possible that -- I mean, most of the MFIs, even others are largely seeing the declining trend
in credit cost. So I'm assuming that even at 4.1% in this quarter (Errata: actual number to be read as
4.3%), this trend should be declining from here on. So what is your take on the remaining quarters
on credit cost? I mean you already said that we will try to maintain at a lower end of the guidance.
But is it possible that it might even turn out even lower considering that we are already in the lower
end?

Sadaf Sayeed: Yes, Mayank, very apt question. Actually, we would definitely be at the lower spectrum and could
be below our guidance as well. We didn't want it to revise the guidance because we just issued the
guidance in Q1 at the beginning of the financial year. We will monitor this. I'm quite confident that
coming quarters, the credit cost would be comparatively lesser.

And as you have correctly interpreted, for the whole financial year, definitely, since we are already
at the lower spectrum, it could be below what we have guided also. But at the moment, we would
want to see how it pans out. We are quite positive, and the trends are quite positive. The collections
are improving, disbursements are improving. The new products that we are doing, there is a good
offtake of those products.

And also, we are seeing that the repayment trend among the customers that we have identified with
a higher credit score, the repayment is holding good. So all of this translates into better quality of
portfolio and lower credit cost. Definitely, we are confident that we would be at the lower spectrum,
but this can also turn out to be significantly lower than what we have guided. And our AUM growth
would also be above what we have guided. But we would want to watch this trend to continue for at
least 1 or 2 quarters before we change any of our guidance.

Moderator: The next question is from the line of Jaspreet Singh from VA Capital.

Jaspreet Singh: Any restriction on fund flow from the banks which NBFC MFIs are facing?

Sadaf Sayeed: So that's a very good question. Actually, we are not seeing any restrictions from banks. Banks are
focusing on, I think, the larger set of NBFCs first. And the most important aspect that I wanted to
highlight is that there is a marked change in the way NBFCs are looked at now since the new
Governor has taken over.

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In fact, very recently in Delhi, Department of Financial Services had organized a symposium of
NBFCs, which is for the first time, such kind of an interaction with the Honorable Finance Minister
was organized and in which the Finance Minister very candidly said to the banks that NBFCs play
an important role and they should support it.

And we are seeing that translation into action and most of the banks, most of the public sector banks,
which were away from action for some times are coming back in lending. We have active
conversation. We have just done a largest PTC transaction for us in a single go with State Bank of
India, around INR500 crores of PTC transaction that we have done.

Apart from that, there is a good amount of funding that is available. We are quite choosy about the
funding. Now that there is growth momentum with us, we should be able to draw these loans as well
and would be able to utilize INR1,450 crores is what we have borrowed. We definitely have more in
hand. Praveen, you want to elaborate on that.

Praveen: Yes. So I think from the company side, liquidity is not a concern as of now. So we have more than
INR2,000 crores of liquidity available in the form of prefund, some investment in G-Sec through
HQLA as well as sanctions, which is undrawn. So on the liquidity side, it's been perfect. And like the
public sector banks have started coming back.

They have been slightly slow, especially in the last couple of quarters. which they are coming like
CEO has confirmed, we have very recently done a large deal with SBI. Similarly, we see momentum
picking up in terms of fresh sanctions as well as disbursement.

So overall, we don't see any challenge in liquidity. We we have enough liquidity to manage the
growth that we are talking about. Plus, I think the NCD market, and the CP market also started
becoming more active, especially from last couple of months. So that flow also will start coming to
the sector.

Sadaf Sayeed: Yes. As you know, the transmission of rate in the CP market happens faster and so as in the PTC
market. So the rate cut that has come in has been transmitted through PTC to us. So we are doing
deals in PTC space at 8.5%, 8.8% kind of a rate, and we are able to get that benefit from our overall
cost of fund.

We have done some marquee deals like for private sector bank, the first PTC transaction for HSBC,
first PTC transaction for DBS, we are trying to do. So all of these transactions are happening. There
are DFIs who are looking at PTC transactions. And there is also active interest from foreign banks to
lend to us through the ECB route. So we are utilizing all sources. And in terms of availability of the
capital and in terms of our liquidity, there is no concern.

Jaspreet Singh: Okay. Sounds good. And what is the bottleneck in increasing the disbursements immediately that
you're facing right now?

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Sadaf Sayeed: So the current bottleneck, if you ask me, was because the Guardrails 2, which was introduced in
April. So in the field, it takes a little bit of a time for people to understand and kind of ensure that
their sourcing pattern changes according to the guidelines. We have implemented these guardrails
from the day 1. So initially, it resulted in higher rejection ratio, which, of course, results in higher
operating cost and lower productivity.

But now that system is set, now people have understood what kind of customers they should source
to ensure that it goes through. So the productivity has automatically improved. We were disbursing
around INR630-odd crores previously. We are now disbursing around INR727 crores in July. And
we are most likely to improve that to INR800 crores to INR850 crores and by the end of this quarter
around close to INR1,000 crores.

And going forward for the balance 6-month period in northward of INR1,000 crores per month. So
that is the trajectory we are seeing. With the diversification of other products also, I think the new
product line will ensure that we continue to kind of cater to those customers better.

Jaspreet Singh: Okay. All right. My last question is that in this kind of environment where there has been some
problem in the recovery and the implementation of the guardrails has taken some time to get adopted
in the system; do you think banks or small finance banks have advantage against MFI-NBFCs?

Sadaf Sayeed: So if I see in the current environment, the share of NBFC MFI is consistent and improving. But at
the same time, small finance banks are looking elsewhere mostly in the secured space. So definitely,
I think we have more space to operate. I think more importantly, because of these guardrails, people
who have well-established customer base, they would be able to retain those customers, there is less
scope of new entrants coming in.

And also at the bottom, there would be a little bit of a consolidation and winding down. So that will
also help. If you look at the overall industry, the leverage customers were around 20%. They have
come down to around 8%, which is more than 4 loans. And this is happening from conscious
implementation of guardrail and some of the loans which were available from smaller MFIs, those
are winding up.

So I think there is enough and more for both SFBs and NBFC MFI to operate. But I think NBFC MFI
with the 60-40 guideline, which has come up, it has put us on an even keel with the small finance
bank, and we would be able to utilize this customer base to offer more products to our customers just
like SFBs have been able to do.

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

Nidhesh Jain: First question is, what is the quantum of interest income reversal in this quarter or interest income
write-off that we have taken from the interest income line item?

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Sadaf Sayeed: Yes. The interest income is around INR36 crores of write-off.

Nidhesh Jain: Sure. And secondly, how is the ex-bucket collection efficiency trends for the month of July?

Sadaf Sayeed: July is improving. Every month, the collection efficiency is improving. It's 99.2% -99.3% in terms
of overall ex-bucket collection. The important aspect is that collection efficiency in states like
Karnataka, where it has dipped significantly is improving. And we have given a specific slide for
Karnataka.

If you look at the 0 plus PAR, which reached to a peak of around 15% has now reduced to around
8%, and there is a sharp decline there. And collection efficiency which has dipped down to around
83%, reached to 87%. It's now touching closer to 90%. And X-bucket in Karnataka remains at 99%
if you look at that way. And overall collection efficiency is also improving.

Nidhesh Jain: Sure. And sir, what is the X-bucket collection efficiency which used to be -- which we used to see in
normal times? I'm just trying to understand how far we are from normalcy in terms of X-bucket
collection...

Sadaf Sayeed: Yes, it around 99.7%, 99.5%.

Nidhesh Jain: Okay. So we are at 99.3%, quite close to that?

Sadaf Sayeed: Yes, we should be very close to normal. And I think the important part is that the recovery from the
overdue book needs to continue to come. And this is what we are seeing that overall, our collection
efficiency in terms of recovery from overdue is improving significantly. If you look at one of the
charts we have given, quarterly, we have been able to recover INR38 crores which was usually around
INR6 crores to INR7 crores per month, around INR18 crores per quarter.

So it has already more than doubled. And in the month of July, we were able to recover INR18 crores
on stand-alone July month. So this should definitely continue to improve the productivity from a field
officer, which is the collection office stand-alone dedicated for overdue loans, which was around
INR65,000 to INR70,000 earlier. It has now reached to around INR1,50,000 per month. So that
improvement will definitely help us improve the overall collection efficiency.

Nidhesh Jain: Sure. And overdue collection efficiency, how do we measure it? Is it 1 to 90 DPD collections or it is
written off collections that you're talking about?

Sadaf Sayeed: All due, whatever -- whether it's 90 plus if it's a due installment versus whatever the recovery is there.
And one installment, we don't club the installment if there are 3 installments overdue.

Moderator: The next question is from the line of Prithviraj Patil from Investec.

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Prithviraj Patil: Yes. So my question was on the attrition ratio. So what is the attrition rate right now for Muthoot and
compared to the industry also, if you can give a sense of what is happening at the employee level?

Sadaf Sayeed: Yes. So I think usually, Q1 is a quarter you see a slightly uptick in the attrition rate because post the
appraisal or post the performance appraisal, people look at opportunity and also certain people that
we don't want us to continue with us. There's a grading that we do. There is a meet expectation,
exceed expectation and needs improvement category.

So needs improvement category is automatically put on a performance improvement plan kind of a

guidance that they should look out. So considering that, the attrition rate has been quite reasonable
in terms of around -- it has been around 26% annualized for the year.

The important part is that what we had done a few initiatives to reduce our attrition rate, that has
really shaped up well. So one initiative that we had taken was to focus on more female field officer,
the relationship officer. We now have around 1,300 female employees, out of which around 1,100
are female field officers. And we are proactively comparing the performance of both female and male
officers.

We have seen that the collection efficiency in the centers which are managed by female officer is 2%
higher than the collection efficiency of the male officer in the same territories. And productivity is
almost same. Both are disbursing around INR11.8 lakhs of business, around INR12 lakhs of business
per month.

And in terms of attrition, the attrition rate is significantly lower as compared to the male field officer.
Apart from that, we had created some residential facilities wherever there was higher attrition. That
has also helped us to reduce attrition. I think first quarter, as I said, is slightly difficult quarter to
measure attrition. But I think going forward, it should significantly reduce further.

Moderator: The next question is from the line of Rishikesh Pise, an individual investor.

Rishikesh Pise: I joined late to the call, so maybe I missed a few details. I had a question that in the previous
conference call, management had mentioned that they were expecting that this year could be
exceptional going forward and we're expecting like 5% credit cost for FY '26 and generate 2% ROA
and 10% ROE. So is that guidance intact? Or has it changed looking at the current scenario?

Sadaf Sayeed: So in terms of credit cost, we have an improved number. So we have given a guidance of 4% to 6%.
We are within the guidance, but we are at the lower spectrum of around 4.2%. And definitely, what
we are looking for the remaining part of the financial year with the improved collection and
diversification of the products, we anticipate that the credit cost would be within the guidance or
likely to be below the guidance as well, which automatically would mean that the return on asset and
return on equity will definitely improve. That is there. On the operating cost also, definitely, the
operating cost will rationalize and it will be within the guidance that we have given of around 6.2%.

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On the growth side, we are anticipating a positive revision. But before revising the guidance, we
would like to wait for 1 or 2 more quarters. We are seeing that trend in Q2 already in the first month.
And what we have devised as a strategy, we are quite confident that in terms of growth and in terms
of credit cost, both we will be able to outdo the guidance. But before revising, we will watch out 1
or 2 more quarters.

Rishikesh Pise: But what exactly went wrong in this particular quarter because we see that the loan growth is quite
subpar. It's almost flat. So is it really like -- is the scenario that break in the economy that you are not
seeing gaining the confidence to lend faster at a good pace?

Sadaf Sayeed: If you compare to our peers, definitely, we are among the ones who are lending more. And if you
look at from like disbursement for quarter 4, we are just down by 9.4% as compared to quarter 4
disbursement in the Q1. Q1 usually is a slower quarter for lending entities usually. Considering that,
plus the guardrails, which were implemented, the Guardrails 2.0 of MFI came into effect from 1st of
April. That also had an impact on certain rejection ratio.

But despite that, we were able to disburse around 3,11,000 loans. And we are quite confident that we
would be able to do more business already in the month of July, we have seen increase in business
by around 15% to 18%, this will further improve in the month in August. And going forward also, it
will continue to improve. So we are quite confident of building a robust portfolio and meeting our
growth guidance of -- overachieving our growth guidance.

Moderator: Ladies and gentlemen, as there are no further questions, I would now like to hand the conference
over to Mr. Sadaf Sayeed for closing comments.

Sadaf Sayeed: Once again, thank you very much for participating in the call with us. As I said, our focus is on
diversification. Our focus is on building a robust underwriting model and use of technology. We will
be utilizing our existing branch infrastructure and our customer base to offer more diversified
products to our customers, and also looking at acquiring newer set of customers, which are falling
within that liberalization of qualifying asset criteria.

And with that, we would be moving to build a diversified balance and sustainable book, which will
help us to ensure that we have consistency in our earning and consistency in our growth. We have
put in all the necessary pillars that are needed for this from a robust ECL model to a well-established
technology in place to underwrite and source business.

At the same time, a robust collection practices, which is helping us to recover more from the overdue
loans. I hope in the long run, this will definitely help us improve on our performance, and we are
looking to outdo our guidance in the coming quarters. And we wish to have this continued support
from all our large investors. Thank you on behalf of entire management and Muthoot Microfin.

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Moderator: Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this
conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

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