Ladies and gentlemen, good day and welcome to the Shriram Finance Limited Q2 FY 2026 earnings conference call. 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, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Umesh G. Revankar, Executive Vice Chairman, Shriram Finance Limited. Thank you, and over to you, sir.
Thank you. Good evening, friends from India and Asia, and a warm welcome to all of you. Greetings also to those who joined the call from the western part of the world. To present our Q2 FY 2026 earnings call today, I have with me our Managing Director and CEO, Mr. Chakravarti, Managing Director and CFO, Mr. Parag Sharma, S. Sunder, Joint Managing Director, and Sanjay Kumar Mundra, our IR Head. It has been a good second quarter of the year for Shriram Finance under current circumstances. Let us look at the broad economic indicators that had a direct impact on our business. GDP: Indian economy recorded a strong start in the first quarter, with the real GDP rising to 7.8 against the 6.5% growth in the same period last year. The performance is largely driven by the services sector, while agri and manufacturing also have contributed positively.
On inflation, inflation has been all-time low for a reasonably long time, and it has fell below the RBI's 2% lower tolerance limit. Food prices, which account for nearly half of the CPI basket, dropped to 2.28% against 2.65% in the earlier lowest December 2018. The RBI policy, the key takeaways are the RBI has kept the repo rate unchanged at 5.5%. Policy stance has remained neutral. The GDP forecast is revised upwards to 6.8% from earlier 6.5%, and CPI inflation forecast has lowered to 2.6%, down from 3.1%. All are very positive. The rural economy, the monsoon has been very good spread across the country, even though there has been some excess rains. Overall, there is an estimation of an increase in the Kharif production, food grain production, by 2.4%.
It has come down from earlier prediction of 4% because of some damage to the crop, but it is still positive for the rural economy. GST collection has risen by 9.1% year on year. It has been growing steadily, and we expect with the increased GST collection, the government infrastructure will go up further, and that will help the Automobile and the Construction Equipment industry. Now coming to the auto industry. This quarter has been quite good for automobiles, especially the commercial vehicle sales. They have gone up by 8.27% in Q2. It stands at 240,000 units against 221,000 units in the previous year's same quarter. Within CV, M&H CV have recorded a growth of 6.16%, and LCV have grown well with 9.54%, which stands at 152,000 units versus 130,000 units. Passenger have degrown by 1.51%, which stands at 10.39.
The demand in October has been very good for passenger vehicles across, especially for the base model. We expect this quarter, that is the third quarter, passenger vehicle demand will be significant. Credit growth will be significantly higher. The two-wheeler has recorded a growth of 7.39% with sales of 5,562,000 units against 5,179,000 units in the previous year's same quarter. This October, the demand for two-wheelers has been extremely good, and we expect that momentum to continue, and we do expect good growth for Q3. Three-wheelers have been growing steadily at 9.83% in this quarter, with the sale of 220,000 units against 209,000 units in the same quarter previous year. Tractors have been again growing very well. I recorded a growth of 14.72%, with 239,000 units being sold against 208,000 units.
It again speaks volumes about the demand coming from the rural segment, and we expect the growth in the rural, backed by the government support for the MSP price, is likely to be very good. Construction Equipment has declined as the infrastructure activity by the government has been on a slow pace. Here, I would like to say that the central government spend has been reasonably steady, but the local government, especially state government and local, the panchayat and the corporation level spend, has been minimal in many of the states across the country. That has reduced the demand for construction equipment. Overall, the real estate market seems to be doing quite well, but it also is concentrated in a few geographies, not across. The board has declared an interim dividend of INR 4.8 per share, which is 240%.
The record date for the entitlement thereof has been fixed as November 7, 2025. Now I shall ask my colleague, Mr. V arti, to take us through the operational performance of this quarter.
Thank you, Umesh. Good evening and good morning to people who have woken up now. I welcome all of you to our Q2 FY 2026 earnings call, and I trust you have had the opportunity to peruse them and related investor presentation, which has been posted on the website of the stock exchanges. We registered disbursement growth of 10.24% year on year. Our disbursements in Q2 FY 2026 this year aggregated to INR 49,019.17 crore versus INR 39,021.63 crore in Q2 FY 2025. Our Assets Under Management as on 30th September 2025 registered a growth of 15.74% over Q2 FY 2025 and of 3.3% sequentially. Our AUM stood at INR 2,810,309.46 crore as against INR 2,430,425.5 crore a year ago and INR 2,72,249.01 crore in Q1 FY 2026. Our net interest income in Q2 FY 2026 registered a growth of 11.77% year on year.
We earned a net interest income of INR 6,266.84 crore in Q2 FY 2026 this year as compared to INR 5,606.74 crore in Q2 FY 2025. Our net interest margin was 8.19% as against 8.74% in Q2 FY 2025 and 8.11% in Q1 FY 2026. Our profit after tax grew by 11.39% in Q2 FY 2026 over Q2 FY 2025 and by 7.03% over Q1 FY 2026. We registered a PAT of INR 2,307.18 crore for Q2 FY 2026 as compared to INR 2,071.26 crore in Q2 FY 2025 and INR 2,155.73 crore in Q1 FY 2026. Our earnings per share for the quarter stood at INR 12.27 as against INR 11.02 in Q2 FY 2025 and INR 11.46 in Q1 FY 2026. On our asset quality, Gross Stage 3 in Q2 FY 2026 stood at 4.57% and Net Stage 3 at 2.49%.
These numbers do show an improvement over the corresponding period of 5.32% gross and 2.64% net in Q2 FY 2025 and was 4.53% Gross Stage 3 and 2.57% Net Stage 3 in Q1 FY 2026. Our credit cost and total assets for Q2 FY 2026 stood at 1.68% as against 1.84% for Q2 FY 2025 and 1.64% for Q1 FY 2026. Our cost-to-income ratio was 27.76% in Q2 FY 2026 as against 27.95% recorded in Q2 FY 2025. Our cost-to-income ratio in Q1 FY 2026, as you know, was 29.29%. I shall now request our Managing Director and CFO, Mr. Parag Sharma, to inform you about our resource raising activities, after which our Joint Managing Director, Mr. Sunder, will brief you about accounting and regulatory aspects. Thank you. Over to you, Parag.
Thank you. Hello everyone. First and foremost, we were carrying excess liquidity in the previous quarters, and we have worked hard to bring down that liquidity. Thereby, the overall debt has come down from INR 242,911 crore in the June quarter to INR 234,000 crore in the September quarter. The overall liquidity is now adequate for three months of liability repayment, and that is what was the norm which we used to have prior to the December quarter. The incremental cost of funds is also coming down. It is close to around 8.07% for the current quarter, and that should give us benefit in the coming quarters. The cost of liabilities has come down from March 2025 from 8.95% to 8.83% as of September. June, the number was 8.88%. The leverage ratio, because of the overall liabilities being down, has come down from 4.15 to 3.88.
We didn't raise large resources in the current quarter, and we will look at cheaper borrowing in the coming quarters. The liquidity coverage ratio was at 297%, and the previous quarter was 268%. Moving over to Sunder.
Thank you, Parag. Hello everyone. The employee count as of September 30th, 2025 was 78,833, as against 79,186 in the June quarter. There has been a net decrease of 353 employees. The ECL numbers, the Stage 1 PD was 8.85% as of September 30th, as against 8.82% on June quarter end. Stage 2 PD was 21.15%, as against 21.35% in June quarter. LGD was 39.04%, as against 39.05%. Coming to the disbursement numbers, product-wise, the commercial vehicle segment, we disbursed INR 17,325 crore. Passenger vehicles was INR 8,673 crore. Construction Equipment was INR 603 crore. Farm equipment was INR 957 crore. MSME INR 9,708 crore. Two-wheeler INR 2,605 crore. Gold INR 3,521 crore, and Personal Loan INR 2,425 crore, totaling to INR 43,019 crore. This was against June disbursement number of INR 41,816 crore. With this, we hand it over to the moderator. We can open the floor for questions.
Thank you.
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 the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Chintan from Autonomous. Please go ahead.
Hi, good evening, gentlemen. Can I ask on two aspects, your net interest margin and your growth outlook? On net interest margin, could you give us some guidance on where you think the exit run rate on NIMs would be by the time you reach focus? I see that you have used up your excess liquidity, but it is not showing up in your NIMs currently. Was that reduction coming in late in September? That would be my first question, and then I'll ask you on growth as well.
Yeah, you are right. The reduction has come in in the later part of September. As we guided in the last quarter, the exit of fourth quarter, the net interest margin will reach out, reach to 8.5%. On average, it will be anywhere between 8.25%- 8.3% for the full year.
Okay, and how should we think about the next year? If you are growing new vehicles a little bit more than your backbook, should NIMs see some pressure next year, or do you have more than enough cushion on cost of funds to offset that?
That will not have any impact on the net interest margin. We will protect our net interest margin to present level. I'll try to improve on the same. We are looking at various opportunities and scope to reduce the borrowing cost and thereby do more newer vehicles. That is the strategy we have, but not at the cost of net interest margin.
Thank you for that. If you do get a ratings upgrade, does that help you change your business mix down the line? Irrespective of the rating upgrades, your margin, you want to keep it stable. How do you think about it?
Basically, our idea of the business is to retain the customer because many of our customers remain with us for 10, 15, 20 years. They move out when they upgrade to new vehicles. We would like to have the customer retained, and that is the strategy we are following. The rating upgrade will only help us to do it much faster. Otherwise, we would like to retain the customer by having an ideal mix of liability that will bring down the cost.
Understood. Okay. Could you give us some idea of what you are thinking about the second half of the year and FY 2027? If you could also comment about October activity levels, that would be helpful.
See, we do see very good demand in the month of October. If I look into the October demand, if I extrapolate, then the overall third quarter looks quite good. I do expect a little higher growth compared to the present growth. Our AUM growth was 15.74%. It may be another 2% additional growth we can get for the next half of the year, the second half of the year.
Thank you.
Thank you. Our next question comes from the line of Rajiv Mehta from YE S SECURITIES. Please go ahead.
Yeah, hi, good evening. Thank you and congratulations on a strong performance. Sir, firstly, on asset quality, what drove a strong collection performance in early buckets across your main products? When I calculate the flow rates into S tage 2, they seem to be much better in Q2 versus Q1. Can you give us some color about how the income, liquidity, and leverage of your customer moved in this quarter, which may have helped you in collecting better?
See, our customers are retail customers, and they have individual businesses. We will not have a full view of their cash flow, but we do understand there is a cash flow mismatch for each of our customers. By having access to them, reach to them, understanding their business, we do help them in better management of their financial situation. Therefore, our recovery is based on the reach to the customer. I will not have a total view of their, what you call, cash flows or their business models.
Okay. Sir, in the light of reduction in the value of vehicles, how do we see the growth traction in used, EV, and PV likely getting impacted in the next couple of quarters? To respond to it, do we plan to tweak our valuation or LTV practices?
See, basically, let us understand how much is the reduction in value of the vehicle. This is first we need to understand. Now, let me give an example of a commercial vehicle. A commercial vehicle costing around INR 5,000,000, a larger M& HCV. If the price is INR 5,000,000, the OEMs, the manufacturers, were giving discount up to INR 500,000. That is around 10% discount on the value of the vehicle in the past. After post-GST reduction, all the OEMs have reduced their discounting. The GST rates have come down from 28% to 18%. That means 10% relief they got. The discounts which are offered by the manufacturers have come down from 10% to around 2% or 1%. The OEMs have significantly reduced the discount. Therefore, net cost to the customers has not really changed much, hardly a big change for the customers, especially in the commercial vehicle.
Maybe in the car, you are right, to some extent, the prices have come down. For the vehicles which are less than four meters, that resale value may have some impact at the hand of the customer. On a commercial vehicle, we have not seen a reduction in value, even for the second-hand vehicle. In fact, that was the speculation when the GST price reduction was announced. The speculation was very high, saying that the resale value of the second-hand vehicle will come down. After more than one month of the GST rate cut, we did inquire because we do have various sources of inquiry or various sources of information that we collect. We have not seen any reduction in the value of the vehicles, especially commercial vehicles.
Even in the car, it is only for a few segments there has been some reduction in the value of the second-hand vehicles. Overall, the business robustness has remained strong.
Got it. Thank you, sir, and best of luck.
Thank you. Our next question is from the line of Raghav from Ambit Capital. Please go ahead.
Sir, hi, good evening, and thank you for the opportunity. Sir, I have two or three questions. One, I remember you saying that the transactions in the U.S. CV market have been low. When I look at your growth rate in the CV portfolio, that has increased from 11% in the fourth quarter to about 14% now in this quarter. I just want to understand. Despite you mentioning low market volume, how is it that the growth rate has increased? If you can give some color, maybe some bifurcation of value growth and volume growth. That's my first question.
See, basically, what has happened is the number of transaction assets has come down because naturally, what happens is if a person is owning a 10-year-old vehicle, he will upgrade and buy a 7-year-old vehicle after three to four years. That's the general practice. Currently, since the prices have gone up significantly in the last two years, people who are having a 10-year-old vehicle, he's using it for another two or three years. Thereby, the number of transactions has come down. Since the value of each of the transactions is higher, for us, we are able to grow the business. We are having an advantage of gaining the market share from the small players at the local level. Since we have the ability to reach and we are gaining the market share, we continuously add more number of customers.
As the used vehicle prices rationalize over the next three to four years, I believe the number of transactions can go up significantly. We are quite comfortable with the growth we are getting out of volume and the market share gain.
Sir, what would have been the average price growth for a used truck that you would have financed? Just a number you would find.
Year on year, it will be around 5%. Last year, if you ask me, it would have been much higher because the used vehicle prices went up sharply. Between 2021 to 2024, it went up sharply. Between 2024, 2025, and 2026, you will see the prices increase marginally by 4%- 5%.
Understood. Sir, my second question is on the asset quality. During this quarter, multiple financiers have said that there is some stress in the CV portfolio. When I look at your number also, slippage has gone up, but not materially, it seems. What are some of your observations from branches and from the ground about your customers' ability to earn and service their loans? I think you've partly answered in the previous question about your overall asset quality outlook. I think just some of your thoughts on what's happening on the ground with respect to truck utilization and all will be very helpful. Thanks.
See, truck utilization has remained quite good. It has never come down. Even if you take the urban and rural, all segments, it has not come down. It is quite good. Certain geographies where there was excessive rain and some challenges due to stoppage of transportation because of damage, because of excessive rain, there were certain challenges. That was temporary, maybe for 10, 15 days. That would have impacted certain geography, not all over India. We also had a certain request from some geographies that they should get some kind of a relief on making the payment and all. One advantage we have over others is we have executives, field executives who are earmarked for each of the customers. They were able to reach to them, talk to them, and able to get the recovery done.
What happens is a temporary stoppage of one week or 15 days will not alter the business model significantly because he would get a much bigger business post 15 days. He's able to recover it over the month or maybe sometimes 45 days. He may miss one installment, but he will not miss two consecutive installments. We do give some time and opportunity for the customer to manage himself and give back. Since we have our person to guide him, we are able to recover it much better for the peers.
Understood. Sir, can I ask one more question, please?
Yeah, please.
Yeah. Sir, Shriram Finance revenues, they've been growing at 20%, 30% since last two quarters. Does it in any way mean that your repossession activity has gone up, or that's not the case?
Repositions have not really gone up. What I have seen is they have created a separate retail segment where they are encouraging more buy and sale activity. They also have introduced more, what you call, segments. They are not just dependent on commercial vehicles. Their Car segment or Construction Equipment segment also is doing well. Overall, I think they are doing well. Even these gold auctions also have increased. Since they are having multiple revenue streams, they are improving. We have not seen a significant increase in reposition. The market is quite large for them, and I think they will have a good opportunity to grow in the next two quarters.
Perfect, sir. Thank you, sir. Thank you a lot for those answers.
Thank you. Our next question is from the line of Renish from ICICI. Please go ahead.
Yeah, hi, sir. Congrats on a good set of numbers. Just two things, sir. First, on this MSME piece, again, in this book, Gross Stage 3 has gone up and it has been actually increasing from past two quarters. Surprisingly, when we look at the historical trend, generally, Gross Stage 3 tends to improve in the second quarter. That is not the case in this quarter. I just wanted to know what are the emerging trends in this segment. Given this segment has been one of the fastest-growing portfolios for us, it has been driving credit growth also. Do you think to calibrate business plan in this portfolio given some sort of stress buildup from last two quarters?
See, we have been cautious with the MSME segment, especially post U.S. tariff, because some of the segments are dependent on the U.S. market. Some of the segments have as high as 60% of their output going into the U.S. market, especially manufacturers and some of the service providers to them. By and large, we are financing service providers. We are not lending to manufacturers, so we do not really see a big challenge there for us. Our growth was mainly because of the wide reach we have created. Earlier, our exposure was mostly in the southern market. Today, post-merger, we have a large number of branches and larger geographies available for growth. Since we activated many of the branches, we are able to grow across the country.
Got it. This uptick in Q2 can be attributable to U.S. tariffs, maybe. In context of seasonality or how is it?
I think U.S. tariff impact is still not. Other than some of the fisheries, farm culture, and all, there where the impact was immediate. Other segments where they were able to divert the production or the output to the domestic, they are able to manage. October has been quite good for most of them. We need to really watch and see what happens in November. We also hope and wish that some kind of arrangement will be there between India and the U.S., some truce, so that the impact will be minimized. The reduction of GST has definitely helped MSME to divert the production or manufacturing to the domestic market and keep going.
Got it. Very helpful, sir. My second question is on the overall credit cost front, right? We have been guiding at full credit cost at 2%. You did mention the prices for CVs will not come down materially, but definitely, there will be some impact on the prices for PV. In that case, how do you see the reposition losses in the second half, especially in the PV segment? Now the net realization for you would be lower than the first half, assuming price reduction in used PV. How should one look at that segment, credit cost, and then the overall credit cost?
I think in the previous question, I did explain that the prices have not corrected. I don't want to repeat it again. I can tell you very confidently that the used vehicle prices have not corrected sharply as you are trying to express. This is the feedback I have across the country.
Is this true for passenger vehicle as well? I mean.
No, it is not true for passenger. It is a commercial vehicle that has not come down. Maybe passenger vehicle, we need to really wait and see the impact. Mostly in the base model cars, there has been the price impact. Other cars, the price impact is not there.
Got it. Okay. Okay, sir. That's it from my side, and that's all.
Yeah, thank you.
Thank you. Our next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Hi, sir. Speaking. A two or three questions. The first one is on the small commercial vehicle, light commercial vehicle. How do we look at the asset quality there? Are the SRTs under cash flow pressure? Second is on the passenger vehicles. We've had various OEMs like Maruti and Hyundai talking about 6% volume growth in FY 2027. However, have the OEMs come back to you speaking about price increases from January 2026 onwards because the GST rate cut would have put a price shift later? I'm talking about the new vehicles here. In terms of new vehicles, how do we look at 50-tonners and more? Thanks. These are my three questions. Thank you.
The 50-tonner and more is a little more dependent on government infrastructure spend because most of this vehicle goes for infrastructure-related activity, either for mining or it will go for the large transportation. Right now, the government spend has been a little muted, therefore, the demand is not really big on the large trucks. I did not get the first.
Okay. Passenger vehicle, you were saying that at 2025, January 26 onwards, there will be a price increase.
Okay. And c ommercial vehicle asset quality, the cash flows of SRTs.
Yeah, yeah. The cash flow of SRTs are not impacted at all, I believe. See, whatever the reading I have is that the SRTs, their earnings have been steady, and therefore, there's no impact on them directly. The price increase by OEMs, we cannot speculate because, see, there's only one reason for price increase: improvement in the technology or the government insistence on what you call the technology upgradation for various purposes, either for the fuel emission or some other reason. If the government is putting more conditions, then the vehicle prices can go up. Otherwise, it may not go up. If the prices go up, then it is good for us because the asset quality of a second-hand vehicle or our LTV coverage will be higher.
Just one clarification on the passenger vehicle pricing. Essentially, there would be a price deflator because of the GST rate cut. You guys would definitely be having TIV discussions with the OEMs. What you're saying is that they haven't communicated anything about price increases from January 26 because they might want to cover up this price deflation.
I can't really talk about what OEM is planning to do at this juncture. As of now, I can say that the portfolio is holding good, and as far as the economy is doing well, the customer will definitely repay the money. It is all the cash flow for the customer and the economy doing well; that is more important. Price increase or decrease will not have much bearing as far as the cars are concerned. Maybe for commercial vehicles, yes, but not for the cars.
Understood. Thank you so much. I'll come back and meet you.
Thank you. Our next question is from the line of Shreepal Doshi from Equirus. Please go ahead.
Hi, sir. Congrats on a good set of numbers. My question was pertaining to the pricing side. We've already started seeing cost benefit and also liquidity coming, moderating on a Q1Q basis. On the lending rate side, are we expecting or are we building in any rate cut or passing of rate cut benefit to the end customer, let's say, in Q3, Q4, Q time period?
We are yet to get the advantage for lower cost in a big way. If you look at my liability side, 87% is fixed and 13% is floating. The scope to get a lower rate of borrowing comes from only 13%, and the banks are yet to pass on that advantage to us. We have nothing much to pass on to the customer, but we would definitely love to pass on some cost benefit to the customer depending upon how much we'll be able to get out of it. Immediately, there's no change. Whatever we can do best to make the customer life and journey better, we'll do it.
In that case, sir, by when would we see maximum benefit on the cost coming to us, let's say with respect to some timeline?
See, as I was telling you, the reduction in the borrowing cost comes to us as and when we reprice the existing loans, borrowings. When it happens, we'll pass on some benefit to the happen over the 18 months, not immediately.
Got it. Got it, sir. The other question was pertaining to the rollout of all the City Union products at Shriram branches. Could you please give us some update on how many branches will see MSME, Gold, PV, and PL being rolled out, or what is the status there?
I can say it has been done progressively across all the regions, but it will be done steadily. Especially for Gold, we need to build infrastructure. For MSME, we need to build expertise. It happens across. The real number of branches that progress, what progress we have made, that maybe Sanjay will be able to give you the exact numbers. Right now, I don't have it.
Got it, sir. Just one last question was pertaining to the number of customers. There has been a decline on a sequential basis. What explains that? I mean, it's 9.66 last quarter. It was 9.72. What explains this?
No, I think the two-wheeler maturity, whenever is high, numbers come down drastically. Since now in the festive period, since our lending goes up, next quarter, you'll see numbers going up.
Got it, sir. Got it. Okay, thank you, sir.
Thank you. The next question is from the line of Kamal from Jefferies. Please go ahead.
Hello. Hi, sir. If you could just, I will just start with the asset quality part only. During the quarter, if you could just guide us, what was the write-offs and what was the same during the last quarter as well?
Yeah, I will take this. The write-off in the current quarter was INR 456 crore as against INR 447 crore in the previous quarter. The provisions was INR 877 crore as against INR 838 crore in the previous quarter.
Okay, sir. During the quarter, we have seen quite a bit of improvement in the Stage 2 slippages majorly, while Stage 3 slippages, if I calculate, have been increased quarter on quarter. If you could just guide what exactly has happened in the Stage 2 bucket versus the Stage 3 bucket and how the overall environment was.
If you take Stage 2 and Stage 3 put together, over a period of time, it has been more or less stable. There may be some intermittent movements across quarters between Stage 2 and Stage 3, but nothing alarming, I would say. It is stable.
Okay. Got it. Those were my questions. Thank you.
Thank you. We have our next question from the line of Shweta from Elara. Please go ahead.
Thank you, sir, for the opportunity and congratulations on a good set of numbers. I have a couple of questions. As far as GST rate simplifications are concerned, would that lead to higher reposition losses for us, at least in the interim periods? That's my first question. You have partially dealt with operator economics of SRTOs. Given that there have been regional challenges, has it impacted load availability for these operators? There have been articles surfacing on freight rates going up pan India by 2%- 3%. Can you just dwell on these factors as far as operator economics is concerned? You did mention that Stage 2 has not been alarming. If we look at two-wheeler, construction equipment, and even personal loans and MSME, MSME you did give some sense because of the export sector exposures.
Two-wheeler, Stage 3 has been fine, but Stage 2 has been slightly higher, even construction equipment. Those were my questions.
See, Construction Equipment, it is quite obvious that we have reduced our exposure to Construction Equipment in the last two quarters. We have been cautious because there has been some delay in bill payment in certain geographies. Therefore, there has been some delay in payment. We do understand that because the bills have been held at various levels. That, I think, situation will improve. Immediately, we expect. We are hoping because certain states where the bills are a little slow, bill movement is slow, things have challenges. You said that the freight rates have increased, and that is definitely good. That's definitely good for the economics of transportation. I feel that the operator economics, if you ask me, the idle time is one of the lowest in the last two years. I have not seen last two years, all the operators have been running at full operations.
There is no slowdown to any of the operators, any geography. There is temporarily some challenges there, but that has been addressed over the period. In a quarter or in six months, normally get averaged, and they are able to repay. SRTO economics has been quite good. One of the advantages SRTO has is they have their own drivers or they themselves drive. That brings their operational cost, and they have an advantage as an edge over the large fleet operators. Therefore, SRTO's payment has been quite good for us. The other one you talked about, the GST coming down and the sale, I think I already.
Reposition losses.
I already explained that.
Reposition losses going up because of GST rate cuts.
No, no, no. How are you linking GST rate cut and the reposition going up? See, resale values of the vehicles have not dropped. People are not defaulting. When people are not defaulting, why should I reposition? The reposition rates have not increased at all in the last two quarters, if you see. There is no linkage between GST rate cut and the vehicle price coming down and reposition going up. It's all hypothetical questions.
Okay, sir. What I meant was if there are GST rate cuts and if we repurpose the vehicles, if we sell in the market, we'll fetch a lower value today. The net credit losses would be higher than what we used to put up earlier.
See, madam, I already.
On the challenge.
I already explained in the previous questions. I don't know whether you heard or not. The vehicle prices have not come down post-GST. Anyway, whatever is the GST prices come down, the OEMs have reduced their discounts. The cost to the customer has remained the same. Second-hand values also have not come down. There is nothing to say that there is a reposition loss. GST rate cut has happened just one month back. You expect people to reposition book loss immediately. It will take time to understand what impact it is. Right now, the resale values have not come down. Reposition losses also are not there.
Sure, sir. That explains. Thank you.
Thank you. Our next question is from the line of Prithviraj Patil from Investec. Please go ahead.
Hi. Thanks for the opportunity. I just wanted to know if we have the segmental disbursement numbers and the total disbursement number for this quarter.
Okay. It was already announced, but still I'll repeat it. The commercial vehicles were INR 17,325 crore. Passenger Vehicles INR 8,673 crore. Construction Equipment INR 603 crore. Farm Equipment INR 957 crore. MSME INR 6,907 crore. Two-wheelers INR 2,605 crore. Personal Loans INR 2,425 crore, totaling to INR 43,019 crore.
Okay. Thank you. Thank you.
Thank you. Our next question is from the line of Sonal Gandhi from Asian Markets Securities. Please go ahead.
Yeah, thanks for the opportunity. I have two questions. Am I audible?
Yeah, yeah.
Yeah. On the subsidiaries, what has been the thought process behind investing in Shriram Overseas Investment Limited? If you could just give us some plan, what do you plan to do through the subsidiaries? The second one is on public deposits. That is already making up 28% of your borrowings next today. How much further scope do you have to increase this? Maybe after six, nine months, or maybe after a year when you exhaust the limit, which are the instruments through which you plan to finance the electricity side of the borrowing?
Okay. On the subsidiary, we took some Board permission to start the primary dealership business. That is why this subsidiary was created. As of now, we have to get RBI approvals for starting this business. However, the subsidiary is continuing to do government sector trading. To become a full-fledged PD, the license is something which we will await from the regulator. The second question was?
On the deposit, now we are at 28%. What is the future?
Deposit, in fact, we were actually planning to make it to around 30% of our liabilities. We are closer to around 28%, and we will try to maintain it at that particular level. Whatever additional money is required, we'll go through the domestic capital market route or the foreign borrowing.
Sir, if you could just help us, what is the landed rate for the foreign borrowings currently? Also, in cities we can look up, but if you could help us with that number.
I will not have the exact. The landed cost as of now for the additional borrowing I mentioned in the beginning, the cost of borrowing for the quarter was around 8.07%. NCDs, I think.
Yeah.
The NCDs, we will look at the overall need. What we do normally is around INR 1,000 crore- 1,500 crore of NCD borrowing every quarter. That is what we will look at in this quarter. Other than that, we will look at bank borrowings, or if there is an opportunity to get offshore funding, we'll look at that.
Sure, thank you.
Thank you. Ladies and gentlemen, that was our last question. I would now like to hand the conference over to Mr. Umesh G. Revankar for closing comments. Over to you, sir.
Thank you for joining the call. As I was telling you in the beginning, the second quarter is normally a tricky quarter, which we have done quite well. Q3 and Q4, we should be doing much better because the October has been, credit demand has been good. The rural economy seems to be doing very well. The demand across the country for credit has been good. The asset quality has been holding good. With some improvement in net interest margin, we should expect better numbers coming Q3 and Q4. Thank you very much for joining the call.
Thank you. On behalf of Shriram Finance Limited, that concludes this conference. Thank you for joining us. You may now connect your lines.