It's not possible for us to comment on other banks. I just don't know. As far as we are concerned, we have not taken any provision. Also, as far as the RBI audit is concerned, that is something that we are required to keep confidential, so I can't discuss the findings of anything from the RBI audit. But suffice to say that we have not taken, as you would have seen, we have not taken any provision in this quarter.
Thank you.
Yes, Kunal, Happy Diwali. On credit cards, like we had mentioned, Kunal, that we are kind of revamping the business. As you know, last year we were in embargo, we couldn't issue any new cards and therefore the credit card spend s year-on-year would be really, really difficult. But with the launch of the new products like Solitaire, the relaunch of IndiGo and stuff like that, I am feeling actually hopeful that we will kind of come back. August was anyway quiet, end of September we saw spend kind of come up, but hopefully we will see some lift into the coming quarters.
In fact, Kunal, on the credit thing, we have always said that personal loans, it is already kind of normalized. MFI, we said last time we believed that Q1 was at peak, Q1 was at peak, we have seen a decline in Q2. Credit card, last time we had said it plat eaued, this time we are saying it is getting better. So, generally speaking, credit cost, like Devang said, hopefully for H2 would tend to be better than H1.
Devang?
Sure. Look, aspirationally, we would like our retail unsecured book to be at 15%, always in line with our guidance. In that three kind of elements, one is MFI, which we have talked about. And we have talked about how we are stepping back and starting disbu rsements. Currently, our disbursements level is more or less equal to the run -offs. But over a period of time, as the credit thing gets better, we will start building our MFI book again. Personal loan is again a very, very important product for us which ou r customers need and we will continue to grow that book and we are doing a lot of work there to really make, to step up the pace of personal loans. So, both MFI and personal loans will be more immediate. Card is one area where we have kind of getting our engine started, launching the new products, trying to get the right product into the right customer's hand. And card, as you know, it takes a bit of time, but it's clearly an area of high importance to us and we will go after it. This quarter, like we said , we launched Solitaire and the Indi Go card. There are other card product launches that are coming up and cards is one area that we will grow quite aggressively going forward. So, our entire focus of trying to climb up and get a higher percentage of our assets and retail unsecured is very much on the cards and we will do it in a sensible kind of fashion.
So, let me deal with that question, Anand. First on the capital management, look, there is no doubt we have excess capital and the way we think about capital is that really it pro vides a fortress balance sheet. And when I say fortress balance sheet, it really means that it gives us the ability to kind of deal with any kind of downturns as well as gives us the ability to take advantage of any opportunities that come for growth. So, we have always said that M&A and inorganic activities would be an important part of our strategy. And we continue to look at every single opportunity that comes along. Now, just because we have capital, we are not just going to kind of spend it and waste it. Obviously, any kind of acquisition opportunity that comes up has to make sense from a strategic perspective as well as from a financial perspective. Now, so keep that on the side. As and when that happens, we will be ready to do that. And we have got a watchful eye. Two is, what are we doing with this excess capital and how are we dealing with it? The key thing is we run our businesses. Devang allocates our businesses at about 15% capital, and he then has excess capital. The way we utili se or invest our excess capital, first call is business, second call is our alternative asset businesses, which historically have given us a very, very good return in the high teens post-tax. Now, you do not see the benefits of that on a quarter -on-quarter-on-quarter basis. It comes in lumpy, but still the returns are there. Three, we like investments in financial market infrastructure. So, things like KFin, MCX and other such opportunities, we are constantly on the watch to say, do other such opportunities because we think long term, that will provide us great kind of growth opportunities. Now, apart from these three, we are looking at other areas where this cap ital can generate a return. It will not generate a return as much as our businesses do. But if we can get, generate a return as close to our businesses, then it is a Nirvana situation where we have the opportunity to take advantage of any opportunities, manage any downsides, yet get a decent kind of return. So, that's how we think about capital management and understand that this is lumpy and opportunistic and doesn't happen in a clean row. But that's how we kind of think about it. Moving to your second question on unsecured book. Yes, the overall book, unsecured book fell from about 11.8% of our total advances to about 10.5% of total advances. Our desired state, obviously not in one year, but over a period of time, is to get to mid-teens. And we will continue to grow that. We like the credit card business a lot. And we are redoing our entire credit card business, rethinking of the strategy and aligning it with the broader strategy of getting the right product for the right customer. So, that's work in progress. But like I was talking about Solitaire, we have just come up with a new credit card for that truly affluent customer which will really meet the needs of that kind of customer as we kind of go ahead. There are important learnings from what we have be en through. See, we have got to recogni se that at its core, at its core, Kotak is an SME bank, right? That's where our strengths are. And that's how we have got to kind of think about it and how we kind of cater to that. Number two, right, we have always been very conservative, and I like that on the corporate side of the house, how do we take it and tweak that on the retail side of the house and get a better balance of risk reward? We went out and we did a whole bunch of tests and experiments. And frankly, we could have kind of put that into a box or limited the exposure that kind of came out of the test/ experimental portfolio. We recognise that we are different from our competition in the sense that we are more SME and less a Corp- Sal kind of bank. And therefore, what are we going to do about that? So, I think we have learned some very, very, very important lessons from this painful episode. And we are committed not to making those mistakes again.
And just to add to that, Shanti, I think linking the asset, the CASA or SA growth to rate may not be really the right thing to do because the elasticity of pricing at the lower end of SA, right, is very, very, very low. And that has been demonstrated over the last four or five months when we initially took down the rate, right? So, I would not equate those two.
So, what I will try and do is I will try and answer the one on the impact of the RBI and the underwriting one, and Devang, if you don't mind if you could pick up the one in cost of funds. So, look, on the impact of the RBI order, let me kind of peel it out for you, right. #1, what the order says is that all onboarding on mobile and digital channels, new customer onboarding is what the RBI has said that you should stop. And two, they said that the credit cards should be stopped. Now depending of course on how long it takes to get back to business as usual, that will have a major impact. But if you say that on an annual kind of basis, the two areas which really get impacted are 811 and credit cards . Yes, we do a lot of other business digitally, like in the corporate Bank we do a lot of stuff digitally when the customer wants to do cash management or when the customer wants to do transactional banking. But that is an existing customer. The onboarding of the customer, at the private Bank or the corporate bank or the commercial bank., a lot of it is not entirely digital. It actually involves a fair amount of assisted journeys where people are kind of involved. Also, we can continue with digital journeys to existing customers. So, an existing customer taking on a personal loan or an existing 811 customer taking on a new fixed deposit, that is not affected. So, the only thing that is affected is new customers in credit cards or new customers in 811. Now, in both these businesses, as we have always been disclosing and credit card, this is a worldwide phenomenon, in year one, there's a J-curve, in year one, the cost of acquisition exceeds the revenue that you make. And therefore in year one in both these businesses, acquisition actually is a drag, right. So, in year one you will actually have a financial benefit. Now, offset to this is going to be incrementa l technology spend. Obviously, like I said, our #1 priority is to get back to business as usual. We're going to step up our efforts to get that. Therefore, I am saying that if you take the offset of the two, the impact is actually minimal. Now, what exactly that number will be, is hard to tell. It's only been seven days since we got the order, but back -of-the-envelope math would tell you somewhere between 300 to 450 crore kind of number, right? No, it's very back -of-the-envelope, it has lots of assumptions baked in as to the timing, but that's the way we are kind of thinking about it. Then I move to the underwriting side. On the underwriting side, look, I think right now if you think about it, India's economy has been doing really well. If you look at what is happening in the industry and look at loss rates and stuff like that post the COVID provisions, it has really been a Goldilocks period for the last 2 -3 years at least since COVID. Now, all of us know that credits go through cycles. At this point in the cycle, to go out and get aggressive on credit, I don't think it is a smart thing to do. We have always been prudent. We will continue to be prudent. We have continued to gain market share . We will continue to gain market share, but we will do it smartly. We are not going to go for a wholesale change in risk appetite, not so earl y on, right. We will continue to grow the business. We will seek to grow the business faster than competitors, right and we feel very go od about, we feel particularly good about our corporate business and the promise that it holds. We will continue to kind of grow that, but right now I am not sure we feel comfortable about making a wholesale change in our risk appetite.
I made it easy for you. I gave you a number.
Guys, just on behalf of the entire Kotak team, I wanted to say a very big thank you and appreciate you doing this on a Saturday evening. And with this I call it to close for this quarter's results. Thank you.