Hi, good afternoon. Thank you everyone for joining us, and thank you to the management for giving us this opportunity to host the second quarter earnings call. We have with us Mr. T. Karunakaran, MD and CEO, Mr. B. Kannan, Whole-time Director and Chief Development Officer, Mr. M. Raja, Chief Business Officer, Mr. A. Palpandi, Chief Operating Officer, Mr. Ankush Tiwari, Company Secretary and Compliance Officer, and Ms. Shanthi Srikanth, Chief Financial Officer. Mr. Karunakaran sir will start with his opening remarks, post which we will open the floor for questions. So open to you, Mr. Karunakaran.
Yeah. Thank you, Mr. Rajiv. Good afternoon to everyone, and I am extending warm welcome to this call to discuss our September 2026 performance and way forward. Thank you for joining. The detailed results are in the investor presentation on our website, so I am not going to read every number. Before discussing the current quarter, I mean, September 2026 performance, I would like to go back, I would like to recollect the efforts taken by the company to improve the business in terms of increase the disbursement, to increase the AUM, to reduce the NPA and other stage assets. Technology side, we have revamped our technology side. Digitalizations we have carried out. We have also implemented entire digitalization program. Actually, we have carried out the digitalization program in two phases. Phase one consists of implementation of core application, and phase two consists of supporting applications.
Core applications we have implemented, and mobile applications we have implemented. We have also integrated our software with other software like SSI and CIBIL, et cetera, to improve the turnaround time. Second thing, we have done a verticalization in our company. Earlier branch head is responsible for all the activities, which is having its own limitations. We want to take this company to next level verticalization or specialization is required. We have done verticalization in our company. We have introduced separate vertical for sales, recovery, collections, operations, credit, and even SARFAESI management. Third, last two to three years, we have opened almost approximately 50 branches across the country to reach out the people. This year, we want to open another 12- 13 branches across the country. Majority of our branches will be in non-TN. These are the few initiatives we have taken in last two to three years.
The results are now, I mean, almost building a strong base of Repco is completed. Now our focus is growth and aggressive growth, which is seen from the disbursement number. If you look at our disbursement number since September 2025, we crossed INR 1,000 crore disbursement per quarter, barring June 2026 last quarter. Last quarter, we had a lot of transfers and promotion exercise we carried out, which has slightly affected our June 2026 disbursements. Now all the transfers, what are the transfers we have put in first quarter, all the people are settled down their places. They started to building the business. Disbursements are increasing. We have seen substantial improvement in asset quality in terms of reduction in NPA and Stage two assets. As end of September 2026, our AUM stood at INR 16,425 crore, which is almost up by 9.2% year-on-year basis.
Our sanctions as end of September for the half year ended, I mean, for the quarter ended stood at INR 1,359 crore as against INR 1,205 crore, the corresponding year of previous year. Our disbursements, we have crossed INR 1,000 crore mark. We have done a disbursement of INR 1,205 crore in September 2027, as against disbursement of INR 1,069 crore in last financial year. This is on business side. We have seen substantial improvement in the asset quality. Our gross NPA as end of September 2026 stood at INR 396 crore, as against INR 475 crore in last September. Our gross NPA stood at 2.4%. We have seen substantial improvement in Stage two assets also. As end of September, our Stage two assets stood at INR 1,154 crore, as against INR 1,324 crore in the corresponding period of the previous year. Our provision coverage ratio stood at 66%.
These are our performance in NPA side as on asset quality side on September 2026. Our book remained well diversified. We have not seen any significant change in the salary and HL versus non-HL. Our book is well diversified. As end of September, out of total book, salary class accounted for almost 53.6%, and non-salaried account for 53.6%, and salaried accounted for 46.4%. The mix of home loan versus home equity remain constant. So, out of total AUM, 71% of our book AUM is housing loans. Remaining is a non-HL. Of course, 29% is a non-HL. The entire AUM is retained. Right now, we don't have any exposure to builder loan. The average ticket size is incrementally, it's about INR 23 lakh-INR 25 lakh. And about overall book, it is about INR 14 lakh. Almost 57% of the book is coming from TN, remaining is from non-TN.
We have taken steps to initiatives to improve the non-TN book. Going forward, I'm expecting books from other states will increase. Coming to the borrowing side, last year we started diversification in liability sides. We have done NCDs, CPs, and PTCs. Our borrowing cost as end of September stood at, overall borrowing cost stood at 8.35%. Out of total borrowings, almost 86% of the funding is coming from banking system. It's of course not depends on one or two banks. It's spread across almost 19 to 20 banks. 7.2% of the funding is coming from National Housing Bank by way of refinance. For current financial year, National Housing Bank has sanctioned INR 600 crore refinance facility to us. Out of INR 600 crore, Q1 we have taken INR 106 crore, and Q2 we have taken INR 125 crore. Remaining amount will be utilized based on our need.
NCDs and PTCs accounted for almost 0.7% of total borrowings, and Repco Bank funding is about 1%. During Q2, we have raised INR 75 crore funds through way of issuing commercial papers at the rate of 7.6%. We done pass-through certificate also in September. It's a pass-through certificate, it's worth about INR 74 crore. The cost of funding of pass-through certificate is about 7.9%. These are from borrowing side. Coming to the profitability, our cost of fund, I already told you, stood at 8.35%. Return on advances, it's about 11.83%. So, we are maintaining a spread of 3.4%. Our benchmark rate, or otherwise we used to call the minimum lending rate, our minimum lending rate is about 9.9%, depending upon the borrower's risk profile and the interest rate vary.
The average yield what we are getting from salary class customer is about 11.25%, and from non-salary class customer is about 12.07%.
The return what we are getting from housing loan portfolio is about, average this is about 11.07. We are getting a yield of about 13.32% from non-housing loans. These are the our performance in spreads and NIM. Our NIM stood at about 5.44% as end of the September. Coming to the profit, our net profit for the quarter is about INR 116 crore as against INR 114 crore in the previous quarter. Last September, our profit stood at about close to INR 106 crore. ROA as end of the September was about 2.9%. It's almost stable. Even June quarter also it's about 2.9%. ROE is about 12.5%. We are having a strong capital adequacy ratio. Our capital adequacy ratio is close to about 37%. We are having adequate capital to grow. Also, we have accelerated the disbursement. We have taken a lot of initiative steps to improve the disbursement.
We have increased our sourcing channel. We have recruited substantial amount of DST, and we have introduced a connector model. DSA channel also we have increased. Going forward, our disbursement will go up. We are also some controlled our BT out. Last con call I said we are going to sacrifice some portion on spread to retain the good customer. We controlled the BT out. This is from profitability and other side. Our credit cost stood at 0.1% as compared to negative in the previous year. Coming to the branch network, right now we are having 242 branches across the country, including satellite center. This year we want to open another 13-1 4 branches. Majority of the branches will be in non-TN. These are the about our performance in short.
I'm very happy to say that our board has approved a interim dividend of INR 5 per share, the face value of INR 10. Going forward, last May con call, I had given a guidance of about disbursement of INR 1,200 crore for September, and I said we want to bring down our NPA to below, I mean, March level. Yes, we have done. September, we have crossed a disbursement of INR 1,200 crore mark, and we also brought it down our NPA to INR 398 crore from INR 426 crore as end of the June 2026. Going forward, our priorities will be acceleration in disbursement. At the same time, we want to maintain quality in the asset. For the growth, we will not dilute the quality. We want to diversify our liability side more.
We want to avail more refinance from National Housing Bank to reduce the cost of fund.
Our another top priority will be improve the operating efficiency. These are the our priorities. I thank each one of you for joining this call. Now I am opening session for Q&A. I'm happy to answer the questions. Over to Mr. Rajiv.
Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participants tab on your screen. We request participants to restrict to two questions each and then return to the queue for more questions. To rejoin the queue, you may click on the raise hand icon again. We will wait for a few minutes until the question queue assembles. Requesting participants, if you wish to ask a question, you can click on the raise hand icon from the participants tab on your screen. We will wait until the question queue assembles. Yes, we will take our first question now. We have Darshan Deora. Darshan, please go ahead with your question.
Yeah, thank you for the opportunity. Just wanted to know what is the guidance for disbursement for Q3 and Q4?
Our guidance for current, I mean, Q3 disbursements is about INR 1,300 crore-INR 1,350 crore. For Q4, it is about INR 1,650 crore-INR 1,700 crore. For this current half-year, we want to achieve a disbursement number of approximately INR 3,000 crore-INR 3,050 crore. This is on disbursement side. Coming to NPA side, our guidance is, stick on my guidance of what I have given post March 2025, six results. Guidance for NPA is to bring it down below 2% by year-end.
Got it. And how is the October quarter? What was the disbursement that we did in October?
Yeah, the disbursements are in line with our expectations. I said for this current quarter, we want to do a disbursement of INR 1,300 crore-INR 1,350 crore. October disbursement as well as disbursement till date, we are confident that we are in a position to achieve the number what right now I am just now committed.
Got it. Great. I mean, I appreciate that. One last question on the credit cost. Last year I think we had negative credit cost, right? For large part of the year. This year, what are we expecting in terms of credit cost and what do you think, like in terms of PAT growth, what sort of PAT growth can we end up with this year?
See, coming to this credit cost, actually we have, see our June NPA was about INR 427 crore, which we brought it down to INR 397 crore. We got a, of course, reversal in the provision. As a matter of prudent, we have not done any reversal. We have appropriated to other NPA accounts. Going forward, current quarter as well as next quarter, I am expecting charging to the provision to the extent of INR 5 crore-INR 6 crore in P&L. This is on our provision side. Profitability side, for the half-year, our profit, for the current half-year, our profits were at almost INR 230 crore. I am expecting a profit for current financial year in and around, close to about INR 492 crore, INR 480 crore-INR 490 crore.
Okay. Got it. Thanks. That is very helpful. Good luck for the remaining quarters. Very heartening to see that you have achieved your guidance which you had given out of INR 1,200 crore of disbursement. So congratulations to the entire Repco team and wish you happy Diwali, happy Dhanteras, and good luck for the balance quarters of the year. Thank you.
Thank you.
Thank you so much. We will take our next question. We have Mr. Abhijit Tibrewal of Motilal Oswal. Abhijit, you can go ahead with your question.
Am I audible?
Yes, Abhijit.
Yeah.
Okay. Yeah, thanks. Good afternoon, sir. Just two things. One is, you just gave out, you just spelled out the guidance on disbursements for 3Q and 4Q. I think that is a very heartening thing to hear the numbers that we are targeting in terms of newer business in the coming quarters. But I just want to pick your brains on one thing. I remember asking this to you same time last year as well, that in the past, we typically used to have 3Q disbursements which were lower than 2Q. Then last year, I remember, we marginally inched up from where we were in 2Q. 3Q disbursements were marginally higher than 2Q last financial year. This year, I think we are talking about a very good increase from 2Q levels.
So, that is the first point, that what used to be there in the past, which did not allow us to do a lot of business in 3Q, and what has changed now, which is giving us that confidence. Then again, on the fourth quarter disbursement guidance that you have given out, I think, again, very heartening to hear very strong business aspirations and targets that you put out. So in addition to what you spelled out in your opening remarks, which is this additional DST hiring, connector channel, what exactly is giving you confidence that we will be able to deliver the numbers that you just spelled out? And sir, lastly, if I look at the OpEx this quarter, it was, I think, slightly elevated.
Unless you have covered something in your opening remarks, which I missed because I joined a little late, for the benefit of all of us, if you could let us know what led to OpEx being slightly higher than what was expected.
Yeah, I will answer second question first. First question, my colleague Mr. Raja will answer. Yes, slightly. Our OpEx is slightly elevated compared with June. You know with that, our June, our disbursement number was We have not achieved our target. We set a target of, internal target of close to about INR 1,000 crore disbursement for June quarter, but we have done about INR 843 crore. So, we have not paid incentive for the first quarter. So, I told my people that, You increase the disbursement, you increase the business, you recover more, so we will pay for the incentive for the June quarter along with September. Yeah, our people have done good job in terms of both, in terms of disbursement, new bookings, as well as reduction in NPA, reduction in Stage two.
So, I paid the incentive. That is one of the reason for increase in the salary cost.
Number two is, last quarter we have done ad hoc provision for retirement benefits funds like gratuity, leave encashment. We have done ad hoc basis, based on our experience. This quarter, we collected actual valuation for both gratuity as well as leave encashment. We have provided more. Of course, we have invested in staff, recruited branch sales manager, branch, I mean, recovery people to improve the performance, which resulted in increase in salary cost. Number three, we have given annual increment. We have given to all the staff, which is based on purely performance, which will vary from 5%-10%. These are the reasons for increase in salary cost. Coming to the administrative cost, marketing expenses like DSA payout, because disbursement number is gone from INR 800 crore to INR 843 crore to INR 1,205 crore disbursement. We have done our disbursement numbers is increased. So, sourcing cost also slightly increased.
This cost-to-income ratio will stable at this level. Coming to the-
Yeah, I will answer.
Huh.
I will take the first part of the question on what is the difference that we have done between Q3 and Q3, why the trend is broken now or breached now? It was through organic development wherein we had invested quite amount of efforts on building the channels. Now, we have an independent sales channel, independent credit channel. Now, there is no overlap of responsibilities, and hence the concentration and focus on business is good. That is the change that has happened, and that is the confidence that we have in saying that, yes, I will be doing more than my Q2.
Got it, sir. Got it.
Hope we answered your questions.
Yes, sir, that answers my question. Just one more thing I wanted to understand is, now that we are in a rising rate environment, already seen a 25 basis points repo rate hike, and there are potentially more, which might come in the subsequent months, what is the sensitivity of our cost of borrowings to, let's say, a 25 or 50 basis points rise in the repo rates? Basically, what I'm trying to understand, what is the mix like between fixed and floating in our liabilities? Likewise, on the asset side, have you taken any PLR actions, or are you contemplating anything? Subsequently, what impact we could see in the margins in the coming quarters?
Yeah. Coming to the mix, liability side, our entire liability is floating, except some few amount what we have taken from National Housing Bank, which is a special scheme. It's a special rate. Barring that, our entire liability is on floating side, floating rate. Coming to the asset side, our entire asset is fixed, sorry, floating. We don't have any fixed kind of loans in our asset side. The entire asset is subject to repricing of once in a three months. With the time lag of three months, I can pass on to any decrease or increase to my borrower. As end of the September, cost of fund stood at, overall, I'm talking about overall cost of fund, it stood about 8.35%. Yes, post RBI rate hike, we have seen increase in our borrowing cost.
Going forward, I am expecting cost of fund may go up by at least 10- 15 basis points. I will pass on this increase in cost of funds to my borrowers with a time lag of about, say, one quarter. On the other side, the refinance, they sanctioned a INR 600 crore refinance to us. I already taken about INR 106 in first quarter and INR 25 in second quarter. Remaining amount, based on our funding requirement, I am going to avail. Whatever increase I am going to experience in cost of funds will be passed on to our borrower with time lag of about one quarter. Second thing, control the BT out to attract the good customer. Both, I mean, return and quality will not come together. To retain the good customer, we have to pass some concession to them.
Those who are with us for at least two years, having good track record, good CIBIL score, and having a threat of moving out of our company, we need to pass on some rate benefit to them. Keeping all those things in mind, in near term, right now I am maintaining a spread of close to about 3.4%, keeping this borrowing cost increase and giving the benefit to the existing customer to arrest the BT out. I may have my spread will stable at in and around 3.25%-3.3%.
Got it, sir. That answers all my questions. Thank you so much, and I wish you and team Repco the very best.
Thank you.
Thank you. Moving to our next participant, we have Vinod Vyas of Share India. Vinod, you can go ahead now.
Good evening, sir. Just one question from my side. Because major of our exposure is in South, so are we facing any stress in the housing loan in South, specifically in Karnataka or Nadu region?
In the demand?
No. No, we have not. No, we have not experienced any stress. Of course, we have seen improvement in disbursement in Karnataka. Q1, our disbursement in Karnataka is slightly below the normal disbursement. For Q2, we have seen improvement disbursement in Karnataka, but we are not seeing any stress in South.
In current month and going forward also, you are saying no stress, right? No stress.
No, we have not seen any kind of stress in South.
Okay. Okay, thank you, sir.
Thank you, Vinod. We will take our next question. We have Harshit Toshniwal of Premji Invest. Harshit, you can go ahead now.
Hi, sir. Sir, thanks for a decent quarter. I had a few questions, sir. One, obviously, if I look at the last four, five years for Repco, the challenge has been more on the growth piece itself. That I think, and probably how to exactly, if you can help us articulate that, where the change is that the growth is now seeming a bit more, that you guys are sounding a bit more confident on that number, that 1,300, 1,600 kind of a number. If you can double-click that, say, have we upgraded some of our technology, the incentivization of sales team, DST as a channel, if you can also help that, how can that be a reasonably stronger growth figure? Just to gain confidence on that piece itself. And the second thing is, sir, more obviously in September, we saw a deputation change from Repco Bank.
P.K. Vaidyanathan, sir, went back within a very short period, and Sumanth, sir, had come up. Just wanted to understand that, does this also align with now Repco Bank being aware that probably in the last four, five years, because of many reasons, could be lower spending on tech, a bit of bureaucracy, that the growth was. I think Repco Home Finance was not able to grow to its potential. And are they acknowledging those things and working towards a much, towards the potential of where Repco Home Finance can grow? Just want to understand the deputation and the thought process of the Repco Bank with respect to their housing finance subsidiary. And obviously, the first question is more, what gives us that confidence of the numbers which you are saying for Q2?
I think more not as just as a guidance, but what are the processes that are giving us that confidence?
Mr. Raja will answer first question on business side. Mr. Raja?
Yeah, I am there. Yeah, all the points that you mentioned whether we have done, I would like to say we have done all those points. We have developed our sourcing team, we have developed our DSA channel, we have developed our DST channel. Now the branches are more confident in picking up the cases. Our processing team has helped us through. So, there has been a lot of changes in the process, also in the systems. The systems also we have got into, and the LMS has now stabilized, and we are also having an We are in the process of giving a mobile app to my sourcing executives. So, we have got into the track of getting things done through technology and also concentrating on the sourcing channels and increasing our penetration.
That is what is giving us the confidence and committing numbers, and that growth is showing in the numbers, whatever you are pursuing from your side, thankfully.
In addition to that, we have also revamped our entire incentive structure. We have introduced a special incentive for improve the sourcing channel. With these all initiatives taken by the management, I am confident that we will be in a position to achieve the disbursement numbers. Just now I have given as a guidance for current quarter as well as next quarter. Coming to the deputations, Mr. Vaidyanathan, deputation, I mean, deputed from Repco Bank for the company for initially three years. Almost he has completed about close to two and a half years. I guess it done and really acknowledge its performance. He has done a good job in recovery side. Since Repco Bank does need his services, so they withdrawn deputation from our company.
They posted Mr. Kannan, and he is also expert in the recovery. He handled important portfolios in Repco Bank and headed a few big branches in Repco Bank.
No specific reason for withdrawing deputation of Mr. Vaidyanathan. It is administrative. It is a routine in nature. I hope I answered my questions.
Sir, we do not see his connection in the queue yet. We will move to our next participant, sir. We have Saik iran Pulavarthi, an individual investor. Saik iran, you can go ahead now.
Yeah. Hi. Thanks, sir, for taking my question. Congratulations on good set of numbers, sir. Just two questions, sir. What helped a sharp improvement in the asset quality, both on the gross and net NPA, probably on the Stage two assets as well? What has helped you to achieve this? Point number one. The second question is, thanks a lot again for increasing the dividend payout. How one should think about the dividend payouts going forward? Thank you.
Yeah. From recovery side, to improve the asset quality, we have taken a lot of steps. Right now, we have here is my initial call, I said we have introduced a verticalization system in our company. We are having a separate vertical for collection of, I mean, overdues, even NPAs also, we are segregated into soft NPA, core NPA. We have assigned with responsibility, roles and responsibility. We fixed the target for our team, which is really impressed to improve our performance in recovery side. We brought it down from NPA to below March level from almost INR 425 crore in June NPA level. Coming to this-
Sorry. Do you see further improvement in terms of the asset quality as we move forward?
Yeah. Our target is to bring it down to below 2% by year end. If you look at NPA history, this is almost the present gross NPA level, this is close to about 2.4%, which is almost a 16-year low. Post our RBI circular during 2021 November, our NPA levels gone up to 8%. We have taken various initiatives like strengthening a recovery team and SARFAESI side, we have taken a lot of initiatives to sell the properties. These are the initiatives really helping us to improve our asset, I mean, to bring it down our NPA. I am confident that going forward, you can see the improvement in recoveries of NPA. Our guidance or internal target is to bring it down NPA level of present NPA level from 2.4% to below 2% by year end.
Even if you look at Stage two numbers, even we have seen substantial improvement in Stage two numbers quarter on quarter as well as year- on- year. Which all those things indicate that the effective steps taken by the management to recover NPA as well as other delinquencies accounts. Dividend payout, yes, our board has declared interim dividend of INR 5 per share. Final, based on our profitability and other things, final dividend will be decided during finalization of our year-end results.
Sir, do you consider at least any percentage dividend payout you have in your mind, 10%, 15%, or 20%, something like that?
Right now, very clear, right now, we don't have any numbers in our mind. Going forward, I will be in a position to come back to you with what is the number for dividend payout ratio. Right now, really, I am very frank, I don't have any numbers, specific numbers.
Got it. One last question from my side, sir. As the financials of Repco Home Finance is improving, do you foresee any benefit on the cost of funds apart from the diversification mix which you already talked about, like NHB and other things?
Yeah. NHB, we got INR 600 crore. Now the NHB also liberalizes some of their schemes. I am expecting more sanction from them. Coming to the rating side, my NPA is right now is 2.4%. I am expecting it come down to below 2% by year end. I am positive of the rating upgradation once my NPA level came down to below 2%, which will really help me to reduce our cost of funds going. If I get a better rate, I can go for market borrowings at a better pricing.
Thank you, sir. Yeah. Thanks.
I answered your question.
Yeah. Thanks also. Thank you, Raja. This is really helpful.
Thank you so much. Team, we have Harshit Toshniwal back in the queue. We will allow him to ask his question again. Harshit, you can go ahead.
Yes, sir. Sir, really pardon, but actually I somehow the connection got lost at the second part of the question. I think on growth, you answered that DST channel, a lot of incentivization has happened. If you can just tell that probably is 2Q the start of that, timelines, these changes, et cetera, I think which gives us more confidence going forward, or was it from the mid of 2Q that it happened, which is why that 3Q, 4Q it can continue at a much larger scale? And the second question I completely missed what you would have commented, sir, on the Repco Bank deputation changes and the alignment in terms of them realizing the need for growth, for realizing the potential of home finance business.
Yeah, initially Mr. Vaidyanathan deputed to us for the period of three years due to administrative reasons. Since the Repco Bank need of Mr. Vaidyanathan's services, they called back. It is only administrative decision. In his place, Mr. Kannan is posted. He is having a vast experience in the banking industry. He handled crucial portfolios in Repco Bank. He handled large branches in Repco Bank. There is no specific reason for withdrawing Mr. Vaidyanathan.
Got it. Got it. And sir, I think the other alignment that have we seen some directional change from what Repco Bank expects that has helped in the last quarter, last few, I would probably take the last six, seven months, that our disbursements have been scaling up, though gradually. But is there any stance or is there any expectation change from Repco Bank from what the way they used to operate earlier versus today?
No, Harshit, there is no change in the operational. We are professionally managed company, except at board level decision-making, there is no interference from the promoter. So these are purely internal strategic change which are yielding result.
Okay. Okay.
We used to keep arm's length distance with our promoter and associates company. They will not intervene day-to-day operations of the company, except a small credit facility with Repco Bank and deputation of Mr. Kannan and other things. We do not have any connections with our promoters. We used to keep arm's length distance with our promoters.
Got it. Got it. Sure, sir. Sure, sir. I think these changes which you mentioned on the DST channel incentivization, if you can also help some timelines to it that probably from where the effectiveness of these changes have started. Just to understand that probably, can the deltas in disbursements be much higher than even what we are driving? Is it a substantial change in your opinion? Because you have been there in the organization, sir, for last many years, and you have seen how Repco has operated in probably the best of its days to probably some of the earlier years. But if you can help us to give some qualitative feedback on the extent of change that is happening around.
On the, say, Raja here, I will take the question. On the changes timeline, it is an organic thing. Say, like, the day I want to increase my bandwidth or my channel growth is not going to happen on one day. It was the investment of past 2.5- 3 years, which we have been doing it gradually, and now the results are visible. Yes, we look at growing more on the same lines, so our delta should increase.
Can you-
So that-
Yeah. Go ahead, Raja.
The BSM channel has been built over a period of almost two years now, and now we are dwelling on increasing my feet on street. So, this kind of an exercise is going to continue, and it will be organic. It cannot be sudden, so it will be organic.
Rightly said, it is a change, it is not a one-time exercise. It depends on need, we will make changes.
Yeah. All right, sir. Yeah. Sir, all the best. We deliver on our expectation. Probably, one constant feedback which we have always received, at least as an investor we want to put, is that the alignment of Repco Bank towards Repco Home Finance in a way that the subsidiary can realize its full potential, I think. Whether that means allowing more investments in technology, reducing some of the bureaucracy and red tape, et cetera. Everything should contribute towards these numbers. But all the best, sir.
Thank you.
Thanks, Harshit. We will take our next question. We have Sanjana Sivaram of DAM Capital. Sanjana, you can go ahead now.
Yeah. Hi, sir. Firstly, congratulations to the team on a very good quarter on disbursements and even healthy show on asset quality. I just wanted some clarification around spreads. So this quarter, our spreads seem to have expanded around 30 basis points, and our yields have seemingly gone to around 12. So we were originally expecting that we would get growth by lowering some yields. Spreads going forward, and what would have happened this quarter with the yields?
No, that yield, as for the half-year, is about See, what the yield I am getting from my assets on, I mean, half-year basis is about 11.83%, and cost of funds is about 8.35%. We are maintaining a spread of 3.47%. Yes, post-repo, I mean, rate increase, a few of our bankers already increased the interest rate, which is not So far, we have not passed on to our borrowers. Most probably this by month end, we are going to have an ALCO meeting. This ALCO meeting, we will decide. So whatever the cost increase is, will be passed on to the borrower with slight time lag, number one. Number two, improve the business, improve the disbursement, to retain, to arrest a BT out, we need to pass on some rate benefits to the borrowers.
It will impact our overall spread. So maintaining a 3.4% spread, it is really very difficult.
Immediately, it will not come down drastically. My spread will stable at the level of around 3.2%-3.25%, one quarter or two quarters down the line.
Right. Just another question. I wanted to understand, we have been doing quite well on asset quality, and I wanted to know if the team has done any sort of assessment as to how much of our portfolio would be in drought-affected areas in Maharashtra, Karnataka, or just wanted to assess what sort of risk would we be having in the improvement we are expecting going forward. Is there any sort of assessment done over there?
Yeah, we have done assessment. These incidences, our majority of the branches, majority of our loans are in urban or peripherals of metro tier one and tier two cities. This thing will not affect our quality of the asset. I have given a guidance of bring it down to NPA to below 2% by March end. I stick on my guidance. As of now, we have not seen any kind of stress in our loans in any part of our country. Even our cheque return ratios is almost stable. We have not seen any spike. Majority of the cheque return cases, they can able to recover by month end or first week of next month.
We have not seen. Yes, we have done assessment, but we have not seen or we have not experienced any kind of dilutions or threat in the quality of the assets or threat in increase in delinquencies levels.
Right. That actually is quite encouraging and very helpful. That is all for me, sir. Thank you so much.
Thank you.
Thank you so much. Ladies and gentlemen, we will take this as the last question. I will now hand it over back to the management for their closing remarks. Over to you, team.
Yeah, thank you for all the participants for actively participating this call. Wish you happy Diwali and festival season. We will meet in next one call. Thank you all. Thank you, Mr. Rajiv, for hosting this.
Thank you, sir. Thank you.
Thank you so much. On behalf of Repco Home Finance Limited, this concludes today's conference call. Thank you all for joining us, and you can now click on the leave icon to exit the meeting. Thank you all for your participation.