Bank of Baroda Limited (BANKBARODA) Earnings Call Transcript & Summary

Good morning, everybody, and thank you for joining to hear the highlights of our quarter ended and the financial year ended for the March 31 full year ended. I would hand over now to Sameer to make the initial announcement. Thank you.

Good morning.

Sameer, we can't hear you. You're on mute.

Good morning, everyone. Welcome to Bank of Baroda's Analyst Meet for Q4 and FY '21. Today, we have on the call senior management of the bank led by Shri Sanjiv Chadha, the Executive -- who's the MD; the Executive Directors Shri S.L. Jain, Shri Vikramaditya Singh Khichi, Shri Ajay Khurana and Shri Debadatta Chand. Now I hand over the call to MD for his opening remarks, which will be followed by a Q&A. Thank you. Over to you, sir.

A very good morning to everybody, and thank you very much for joining the call. We are all conscious that this has been a very difficult year, and we continue to live in difficult times. So I hope all of you will have kept safe, and thanks again for being associated with the bank and for joining this call again. I'll just keep my opening remarks to maybe just 5 or 6 minutes, just touch a few broad themes, and then we can have question and answers because you've had some time to look at the results. So just, Sameer, if you can come up with the slide, if you say, would that be all right?

Yes. Sir, we'll just load it up.

So I think when we look at the past year, given the background of the pandemic, I think the central question for all of us both in BOB as well as in -- on banks was that how would asset quality really measure up, whether we would have the resilience when it comes to asset quality to get through this year. And I think if we were to look at the numbers, the one thing that does stand out is that the asset quality has been fairly resilient. Sameer, if we can look at the first slide, please? Sameer, can you put on the first slide, please?

Yes. Sir, we're just hanging up. We're just going there.

So if you look at the numbers in terms of credit cost, I think the most significant change we will see is that there's 67 basis point improvement as credit cost is concerned, which in a year that we have seen is something which -- at least we, at the beginning of the year, were certainly not expecting. And the reason is what the guidance that we started to give in the second half of the year. That estimate was that it would be corporate credit and the improvement in the credit cycle when it comes to corporate credit which would outweigh the possible downsize, which were there as far as MSMEs and, to a lesser extent, retail is concerned. What is even more heartening for us is that the domestic credit cost has come down even more sharply by nearly 1 percentage point. The reason is that a significant proportion of the credit costs this year came from our international operations, and those were more one-off. There were a few accounts which slipped and now are getting restructured. So if you look at the total slippages in the international book, I'd say 50%, 60% of those accounts should get restructured. Some will get upgraded this year, some others early next year. So therefore, we are fairly sanguine about the fact that we may have room for a further improvement in credit costs. As a general proposition, we would have guided that our credit costs should be between 1.5% and 2%. Now given where we have seen credit costs and given the likelihood that the international book should stand up better this year, our guidance is towards the lower end of that range. You'll also notice that slippages are, in the last year, lower as compared to the previous year. And therefore, on account of the slippages being lower, the credit costs being lower, both of the GNPAs and net NPAs have come out at lower level as compared to where we started the year. And the provision coverage ratio during written of accounts is also a little higher as compared to the previous year. So I think this is, to our mind again, the '17 because given what we have seen over the last few years and given the preponderance of the corporate loans in the portfolio of the bank, if there is one thing that moves the needle for the bank, it is really where credit costs are and how we are able to deliver the volatility of that. The second theme that was important for us was the liability management. Because we were in a situation of abundant liquidity, getting deposits was very easy. And if you don't keep your eye on deposits, they're very likely to run far ahead of their growth. So we had guided at the beginning of the year that we want to keep our deposit growth almost exactly in line with our credit growth, so that we don't end up picking up the most -- higher costs and then deploying them at lower yields. And we have been successful there. If you look at our credit deposit ratio, that pretty much has been steady. What is good again is that the composition of the deposit growth has been absolutely first-rate. So we took advantage of the fact that we were in no desperation to raise deposits to make sure that the focus was squarely on the CASA ratio. So you would notice again that the growth in CASA deposits is more than 16%. And the CASA ratio has actually expanded by nearly 4 percentage points, let alone 3 percentage points. So now the CASA ratio for the bank, which had dipped postmerger, is not only back to where it was but significantly above where it was. Partly also, this is because we have paid down bulk deposits. And we have been very disciplined in terms of our term deposit rates, which have been pretty much the lowest in the market. So we have had still a positive term deposit growth, but I think the standout has been the increase in CASA and also within that, the current account deposits, where one of the enablers for us, of course, has been the RBI dispensation, which requires that clients and particularly corporate clients keep their current accounts with the lending banks. And given the fact that BOB is the second largest corporate lender in the country, that certainly gives us an advantage. The other part which has helped us capitalize on this dispensation is our cash management product, which has been very well received over the last few years. And if you look at the presentation, what you'll find is that the fee income on account of cash management has gone up 75% Y-o-Y. And we believe that the kind of traction that we have seen over the last few years is something that we can sustain. So it's just very fundamental, fundamental in terms of both the cost of funds and again, if you look at the current accounts, in terms of the proxy, in terms of fee income on the cash management product. The third theme here we want to again focus on is the retail growth. So when the year we began, as we mentioned, there was an abundance of liquidity. And the abundance of liquidity meant that when it comes to the highly regulated corporate accounts, the yields were very, very low, and they were going south. So we were, again, clear that in terms of comparative growth, we want to tamp down on corporate lending, if it is suboptimal, in terms of yields and particularly relative to risks and make sure that whatever growth we're looking at comes from retail lending. So the growth in the overall loan book is nearly 5 -- domestic loan book is about 5%, which is at par with the market. But within that, the organic retail growth is significantly faster at both 14%. And within that, we have seen that certain categories have grown even quicker, which would mean person loan, which, of course, is in a low base for us but which has now been successfully delivered at scale; home loans have grown 11%, car loans by nearly 28% and gold loans, which is both agri as well as personal, have grown by nearly 35%, 36%. So I think for us, this is the story that we have been able to grow in areas where we have chosen to grow at significantly higher than the industry growth rate. We -- as a consequence of the 2 things or 3 things that we have seen: A, the reduction in the cost of credit; b, management of the liability franchise; and c, making sure that the loan growth comes from our preferred categories, the profitability of the bank has shown a significant improvement. So therefore, what we would see is that we have this year closed with a profit before tax of about INR 5,500 crores. Now that's something which was, again, more than what we expected. The quarterly profit before tax was even higher at about INR 2,600 crores. So we decided that this is the right time to move to the lower tax regime. Because there were one-off forces that, although it might show up in a quarterly profit, which is negative, but the fact is that this will not impact the internal accruals at all. So we would have made a PAT for the year of about INR 4,000-odd crores, and it is this amount which has gone back and added to our capital. So which means that the increase in shareholders' funds is INR 4,000 crores, which would have been the case even otherwise. But the advantage that we get moving to the lower tax rate is going to be abiding, which would mean that the move in terms of the return on assets, there is a bump up of about 10%. So I think that's something, in terms of your calculation sheets, should also help in terms of projections as far as the ROA and the ROE of the bank is concerned. Now because of the fact that we were able to have significant internal accruals, which added to the capital account, and in addition, during the course of the last financial year, we successfully accessed the markets through a QIP, which was very well received, we raised INR 4,500 crores there, which was at the upper end of our appetite. And also, in addition, we raised AT-1 Bonds at very competitive costs. So as an aggregation of these 3 factors, the internal accruals of the bank, the QIP and equity capital that came and the AT-1 Bonds, the capital adequacy of the CRAR of the bank has moved up 170 basis points from 13.3% to 15%. So we're very comfortable with that capital position as it stands. In fact, it's also significant to note that even in the last year, even if we had not raised any capital, our internal accruals were adequate to fund our growth. And this year, too, we believe that with the likelihood that credit costs may still be lower, internal accruals higher, and given the prognosis for growth, that is, we believe our internal accrual should be, again, adequate to take care of our growth, so the accrual that we have taken from our Board in terms of raising fresh money is more by way of contingency, which means that there's an accrual that you have take and see how things are at the end of the year. But as things stand, we do not believe that it may be necessary to visit the markets, and our internal accrual should be adequate to fund the growth. So that really was the highlights from our perspective. And we believe that the bank, with the transition into the lower tax regime, is -- and also, with credit costs trending downwards, the corporate book, in particular, which is 50% for the bank, looking fairly strong, I think the bank is easily well positioned as we go into the new financial year. So thank you very much once again, and now we are open for questions.

Thank you, sir. So we'll open the floor for Q&A. [Operator Instructions]

[Operator Instructions] We will take the first 2 questions from Mr. Ashok Ajmera.

Congratulations, Chadha and the entire team, led by all the EDs and GMs and top management of the bank. You deserve a very rich compliment because despite of such a tough time, I mean, you have given the fantastic numbers for the quarter and the year. Having said that, sir, I don't have many questions on the existing performance. But I would like to know something about -- because the things which are happening now, from April onwards, again, the COVID 2, the second phase, like how do you now see what is happening? I mean, from your experience of -- like I would start first with the collection efficiency ratio only. That -- what was your experience up to March, the collection efficiency was and now April and May? And going forward, how -- what have you -- I mean, what kind of calculations have you made about it?

So thank you very much, Mr. Ajmera. So as per March calls, the collection efficiency bumped up a little bit as compared to December. In December, we had about -- a figure about 92%, which moved up to 93% in March. As far as this quarter is concerned, it is still early days, but we do believe that there would be some challenges in the short term as far as MSME and retail is concerned. But in terms of the general prognosis for year, I think what happened last year, to some extent, can be a guide for us, which was that the MSME segment is something which was recovering and which has been hit. So we believe that the enablement coming in both from the government by way of the ECLGS scheme and also the restructuring option, which has, again, been put out by the Reserve Bank of India, we should be able to make sure that we can help our MSME borrowers to get to what has indeed been a difficult tariff. But when it comes to retail, our experience last time was that while there was certainly an impact on retail borrowers and they fell back on a few installments, but when it came to electing restructuring, it was a relatively lower percentage of retail borrowers who chose to do that because of obvious implications in terms of costs as well as net credit costs. So I don't believe that we may possibly be seeing something similar this year. And just to take your question forward, as we saw last year that whatever challenges they were -- that were there on account of MSME and retail, they were more than made up by the fact that there was an improvement in the corporate credit cycle. And we believe that improvement should sustain. In fact, last year, there were some doubts in terms of how they would pay out for the corporate sector. But now what we see is that the impact, particularly on large corporates when it comes to second wave, is muted. So that is something where the collection efficiency really should not be impacted. And given the fact that large corporate is 50% of our book, and agriculture also, we expect longer monsoons, we believe that the overall book of the bank should be in reasonably good shape with -- again, to reemphasize the improvement in the corporate credit cycle making up for whatever challenges which are there in MSME and retail and which, to a large extent, can be mitigated and be addressed because of the enablement from both the government of India and also Reserve Bank of India.

We now move to the next participant, Ms. Mahrukh Adajania.

My first question is that what were the interquarter upgrades in the fourth quarter? So in the third quarter, you had said that around INR 3,000 crore of pro forma NPLs could be upgraded in the fourth quarter on restructuring. So what was the actual number of upgrades?

So I'll pass on the question to our Executive Director who's in charge of both corporate as well as stressed assets, Mr. Shanti Lal Jain.

Yes. Because of the Supreme Court decisions, the accounts have been classified NPA only in the month of March. So in the pro forma slippage, we have culled about INR 8,600 crore accounts and is against this total slippage of INR 11,000-some-odd crore in the year. So the difference is basically incremental slippage. Now interquarter, it is very difficult to calculate. But we have told you about 2 or 3 things, we don't do that. Some of the accounts will be upgraded on implementation of OTR, right? So around INR 1,000-odd crores have been upgraded because of OTR. The remaining OTR, we have done with that this quarter.

We will take the next question from Mr. [ Akshay Jain ]. [Operator Instructions] Okay. We shall now move on to the next attendee, Ms. [ Anshi Garudia ].

Congrats on a good set of numbers. So what I basically wanted to understand is your slippages and restructuring in international book as well as the corporate domestic book is pretty high. So can you give some color on basically which are the corporate from this, this has come and your guidance for FY '22 on the same?

Just -- could you just repeat the question? You are looking at the restructuring, is it?

Yes. The slippages from the international book is pretty high at around 6%, as there is the domestic book. So slippages with restructuring, which are the major accounts you saw in international and domestic book from where the slippages and restructuring has come? And what is the guidance for FY '22?

So thank you very much. So I think as I mentioned in my opening remarks, we had a bit of a rough time as far as the international book is concerned, and this was due to certain one-offs. There were some accounts in the Middle East which were impacted. And also, in addition, there were 2 other accounts which were there, which were manufacturing concerns, which were impacted by COVID. Now these are accounts which are fundamentally sound, and we are going ahead restructuring these accounts. So in terms of your specific question, the slippages in the international book were because of these one-off factors. 60% of the accounts which account for these slippages are likely to get restructured. The restructuring might mean, if it is successful, that one of these accounts might get upgraded this year. And the other is likely to get upgraded early next year, which is the larger account. As far as the slippages are concerned, we expect significantly lower slippages in the international book this year. In fact, they should return back to what kind of levels were. And this is on 2 accounts. One, because as we mentioned, these were these one-offs which were there. Number two, in terms of recovery, what we are seeing, of course, is that the global recovery is ahead of the recovery in India. So that also gives us room for optimism in terms of the quality of our international book. And given the fact that the domestic slippages were, to that extent, significantly lower, right? If you see, overall slippages for the year are slightly lower as compared to the previous year. And this is why we include the higher slippages for international. So now, therefore, if you were to adjust for the higher slippages for international, even last year, the domestic slippages were trending downwards. And we would expect that trend to continue.

The next question is from the line of Mr. Vishal Goyal.

Can you hear me?

Yes, Vishal.

So I have actually 2 questions. One, at a high level, what is the ROA and ROE we are targeting for the bank? Because there has been depressed ROE for some time. And part of it is credit cost, and part of it is also because our PPOP has also been weak over the last few years. So any color on that would be great.

So I think for us, if you look at our numbers over the last few quarters, these -- as I mentioned in my opening remarks, the thing that really moves the needle most is credit costs, right? And we have seen that it has come down significantly for the domestic book even in the year under review. It has come down as much as by 1 percentage point. So I think that will be the main driver as far as the improvement in the return on assets is concerned. As we are guiding, we believe there is hope for further improvement as far as credit cost is concerned for 2 reasons. One is that the international book should not see the challenges that we saw last year. And secondly, in the second wave, it is very unclear that the large corporates have been left largely unscathed. And given the fact that 50% of our group is corporate, and we saw the impact of that in the last year in terms of credit costs, I believe with the improvement, this is sustainable. In terms of guidance when it comes to ROA, I would believe that this improvement in the cycle should play out probably over the next 18 months or so. So we should see continued improvement both this year and going into next year. And by the end of next year, we should be pretty much in terms of what had been trend in credit costs as compared to where they were over the last 2 or 3 years because of volatility when it came to the corporate book. We are acutely conscious that while credit cycles may be improving when it comes to corporate, we would want to guard the bank in future against the kind of volatility we saw in the earnings over the last few quarters. And therefore, in terms of growth, we are trying to see that there is a bit of a rebalancing of the book from the corporate to the retail. So you will, on the other hand, see the bank benefiting from the fact that we are nearly 50% corporate. And on the other hand, what you will see is that because we have been able to demonstrate the availability to grow in retail in our chosen segments at a rate which is faster than the market, we should also see some improvement in margins vis-à-vis what margin might have been on the corporate side at time when liquidity isn't abundant. Number two, what we're also trying to do is to make sure that when it comes to our corporate book, we capitalize more fully on the opportunities to capture a larger part of the corporate value chain. And the 75% increase Y-o-Y in the cash management income is one of the cases in point in terms of what we are trying to do and the fact that we have seen very good success there.

The next questions are from Mr. Kushal Shah.

Yes. So firstly, in terms of retail and MSME, I know you alluded to the fact that maybe there would be short-term challenges. But when we look at FY '21, there were hardly any slippages. When you look at out of INR 18-odd-thousand crores, major part was domestic and international. So how should we look at it in terms of the outlook? Maybe you said there are challenges. But if -- would it be possible to quantify in terms of the slippages, which we could see? And secondly, even in terms of the ECLGS, now with the government also expanding the scope for ECLGS, would we go ahead and give the credit of additional 10-odd percent to the existing customers who are already there? So on both this front, if you can just highlight and any kind of a guidance on incremental restructuring, if you could provide for retail as well as SME.

So thank you very much for the question. So I think when we have been emphasizing that challenges are there on MSME and retail and in terms of the performance of the portfolio, then that is where, again, we expect a few more issues. It is because of the comparative base which is there. So when we look at historical levels over the last few quarters and years, the corporate slippages have been much higher. And slippages in terms of retail, in particular, have been very, very low. In fact, retail has not seen significant challenges possibly over the last 10 years. So our argument has been that if we were to compare with the past and ultimately, any trend has to be in the context, so given the context, relative to the past, we would expect slippages to be lower as far as corporate is concerned. And relative to the past, we would expect to see slippages which are higher both for MSMEs and, to some extent, also in retail. And we stand by that guidance. We have also guided simultaneously that because of the composition of the book and the fact that the corporate's being chunkier, they produce far more volatility, the volatility is likely to come down. And overall provisioning is also likely to come down. So we saw in the last year that it really came down by 25%. So I think that is still our guidance. In fact, we can now possibly guide with a little more conviction because the last time, it was up from losses that corporate cycle, credit cycles should keep on improving, and that fortunately came true. This time, because of what we see as the impact of COVID, where large corporates are pretty much functioning the way they were functioning even in maybe February and March, to a large extent, of course, there would be an impact on demand and, to that extent, on corporate earnings. But that impact on demand and corporate earnings does not really impact the quality of the books of banks directly. Now coming to the restructuring part, again, if you see the restructuring we did last year, I think there are 2 things which stand out. One, restructuring turned out to be lower as compared to what our initial estimates were. Number two, last year, maybe 2/3 or more of the restructuring was for corporates. Now given the fact that this year, one, there's no window, special window as far as the Reserve Bank is concerned for corporate restructuring; and two, also the objective circumstances won't seek to warrant that kind of restructuring, therefore, the 2/3 of the restructuring composition is not there. On the other hand, personal finances have been impacted even if job losses have not been the way they were in the first COVID wave because of the lockdown. But nevertheless, the health cost that families had to bear has impacted personal finances. So therefore, there is a possibility that when it comes to retail, there may be a little more in terms of restructuring as compared to what we saw last year. But nevertheless, given the fact, as we mentioned, that there is a general reluctance if people can manage without restructuring, they will like to manage the restructuring. Therefore, in comparative terms, restructuring is likely to be lower than what we expect. But nevertheless, if you're holding it to broad numbers, I would say, overall restructuring this year will be lower as compared to last year because the corporate component is not going to be significant. And also, the MSME restructuring, to some extent, which would have been done, will now get mitigated because of the ECLGS option that has come. So we'll see restructuring but a lower level as compared to last year.

Sure. And just on ECLGS, please.

Yes. Go ahead, please. Go ahead, please.

Yes. Just on ECLGS, if you can highlight as to what our stance would be post yesterday's -- maybe whatever government has expanded, the scope. So are we looking in terms of how much we had given? And what would be the incremental which we would be giving out in terms of the ECLGS?

So if we see the overall number for the banking system, right, about maybe 80% has been used up, about INR 140-odd thousand crore, INR 3 lakh crores, which is available through this incrementality, so you might say that gives us the ballpark in terms of, if we compare it with last year, what is likely to be the incremental ECLGS disbursements this year. So last year, I think the figure for us was thereabout INR 9,000-odd crores, right? So I think we can probably extrapolate from there. On our part, I think we were very proactive in terms of making sure that the customers take full advantage of this. So nearly 90% of the people who were eligible for ECLGS actually opted for benefiting from the scheme. And 90% -- or 90% actually got disbursed, is already disbursed. So I think the offtake in the scheme was fairly high. And so to the extent that this option is available and to the extent that in MSMEs, in particular, I think there is a requirement for strengthening their liquidity position, I think we will be very proactive in terms of helping our borrowers. But I will just request our Executive Director, Mr. Khichi, who has his ears close to the ground, to give us an idea of what his expectation is.

No. I think you have put it rightly, sir. This ECLGS, which has been extended yesterday, also has a limit of INR 3,00,000, and we have already exhausted around INR 2.5 lakh of that. And in the last year, we have restructured almost INR 8,000 crores, which has been disbursed. We have sanctioned around INR 9,000 crore, and around 90% of that has been disbursed. Going forward, I think with all the -- I mean, with all these interventions and all, I think the result has been very nicely and very rightly observed that our slippages even in the MSME sector as well as the retail sector and the agri sector has also come down on a Y-o-Y basis. And the delinquencies have gone down. So that is because of the interventions and the support of all 3, sir, including Reserve Bank of India, which has given us this window; the ECLGS, which has been provided by the government; and the proactive steps that the bank had taken. So all in all, we had actually been able to mitigate the stress which was there. It is there. But then nevertheless, going forward, I think we should be able to do a similar thing. And we are looking almost around INR 2,500 crores of additional disbursement in ECLGS this year, sir.

The next question is from Mr. Nilanjan Karfa.

Just question on the overall SMA1 and 2. I mean, why you have alluded to the problems in the small ticket loans? And even in the QIP prospectus, I mean, if you look at the overall SMA1 and 2, that was nearly twice that of in the INR 5 crore -- INR 5 crore plus ticket sizes. Just wanted to get a sense of where those numbers are for the March quarter. And similarly, for March '20, it looks like there has been a restatement. So the overall numbers used to be about 2.5% for SMA1 and 2 for the entire book. How come we have raised just for the INR 5 crore plus to about 3.4%-odd?

So I'll just make one broad observation. Then I'll hand it over to Mr. Jain to talk in more detail about the likely SMA numbers and what our assessment is. I think a lot of concern over the SMA numbers came from the QIP papers. I think we have to see it in the perspective that the figures that were there were for December '20, and the comparison was made in March. Now March '20 was artificially depressed on account of the fact that by then, the moratorium had kicked in. And December '20 was artificially exaggerated because we were just coming out of the moratorium. So I think that is a broad perspective that we need to see. But otherwise, if you were to compare the SMA numbers, say, on what were the stable SMA numbers in December '19, right, before, again, the moratorium came in, and compare that to, again, as we are exiting from the year, the numbers are higher but not that much higher. So I think to that extent, the bank has been able to contain the impact of the pandemic well. But let me just hand it over to Mr. Jain to give you a little more color in terms of where we stand.

Yes. Sir, you talked about the SMA number which we have reported while coming out of the QIP and then what is the current status. So in fact, it came out in QIP in February. At that time, there are the Supreme Court decisions, costs, not declaring the NPA and all. And also, at that time, SMA 0 was slightly higher, SMA 0 was. But if you see SMA1 and 2, I compare December '19 and December '20 or March '21, so numbers are, of course, slightly higher at March '21. But excluding 1 or 2 big accounts where we have now corporate guarantees and all, so our numbers are basically comparables from the December '19 numbers. Of course, in December '20, it was slightly up.

We move on, and the next questions are from Mr. Mahesh.

Sir, I had 2 questions. One is on the NARCL, which is likely to be launched in this quarter, what is your expectation of the total assets that could move out of your books? And second, on the recovery and write-offs, this year, you had about -- somewhere closer to about INR 6,500 crores of recoveries coming in from the NPL line and about INR 3,500 crores from the written-off line. How do you see the pipeline for FY '22?

So I thought I'll just give you, again, just a quick answer to the NARCL piece and then hand you over to Mr. Jain in terms of the recovery prognosis. So NARCL, the company, is just about to open the process of formation. And then like any other ARC, they will be looking at giving -- their appetite in terms of what the kind of accounts they would take over. So we, as of now, would not have any clear idea in terms of what the parameters would be. But to my mind, the guiding principles probably would be that these are larger accounts, where -- which are shared across banks because the prime -- the benefit of the NARCL is aggregation and, after getting aggregated, to achieve bigger results. And the second part is that these are likely to be accounts which have really high levels of provision. So -- but I think these are the broad, I think, guidelines which we believe are likely to operate. But in terms of numbers, we'll have to see in terms of what the accounts that the company might like to buy. My own sense, again, is that in terms of -- for us, possibly, it may impact maybe between 5% to 10% of our nonperforming book, probably not more than that. But I'll just hand over to Jain again in terms of what his assessment is because again, he keeps his finger on the pulse all the time and also in terms of what is the likely recovery he is seeing.

Yes. So you talked about 2 things. One is the recovery and slippage and what should be the expected numbers and all, right? So if you see the recovery of the last financial year, it was around INR 11,000 crore as against the INR 9,500 crore of '19/'20. So it is 15% higher. So if you further go deep into it, you will find our recovery in write-off is just double. Now what should be the recovery for the current financial year? So in fact, you see in our presentation, around INR 49,000 crore of account which are in NCLT where we are having around 93%, 94% provisions. Out of this INR 49,000 crore of a book, around INR 14,000 crore of a book were resolution is already approved. And we are likely to get around that INR 5,000 crores at least maybe this year, maybe in the next year. Second point is out of this, again, INR 49,000 crores, around INR 15,000 crores which has gone into a liquidation, there, we are expected to get a liquidation values in this year and the next financial year. So we have a pipeline for that also. In addition to that, in compromise generally, we are close to INR 2,000 crores of recovery every year, we are having on account of compromise and all. So we are having around a pipeline of INR 750 crores. We have already sanctioned our compromise amount, which is likely to be received this year or maybe by the end of this year, next financial year slightly. In addition to that, we have also identified the asset for sale, and we are expecting a recovery of around INR 750 crore from the asset sale in the current financial year. Besides this, we are having around INR 3,000 crore of assets which we have identified to sell under the [ surface ] [indiscernible]. So we are expecting a good recovery there as well. So we expect a better recovery in the current financial year.

Sir, one question, if I may ask, on a clarification with respect to your notes. In the notes to account, you have kind of indicated that the total restructuring in MSME is about INR 9,039 crores. Whereas in the presentation, you have mentioned that you have INR 9,434 crore of total restructuring requests. What is the difference between the two?

So I'll just see if Khichi has an answer or any detail. In case he has it readily, he can give it to you. Otherwise, I think we're trying to reconcile the figures off-line. Mr. Khichi, anything you might want to add there?

So there are basically 2 types of restructuring. One was pre-COVID when the -- I mean, the first set of restructuring, which was a window which was made available by Reserve Bank of India, that was all the accounts which are in stress as of 1st January 2019. And then it was put to [indiscernible] before 1st January 2020. And they were a little bit of a restructuring therein. And then came the COVID restructuring. So we were basically talking about, I think, with -- and one of the places, I think the entire restructured book of MSME would have been put in one place for us. I'll just have to check on those figures, but perhaps they could be only the restructuring available under this COVID restructuring. So that could be the minor difference there.

Yes. Yes. In that sense, should we add both? I mean, should we add INR 9,000 crores plus -- essentially, should we add [ 1 over 22 plus point number 16 ] for understanding what is the current restructured number?

Mr. Khichi, would you want to again take that? If you would take again, you have exceptional clarity? Or do you think you want to get -- come back later?

Only one thing I just wanted to clear here. That total restructuring we have given one side. Only one, as per notes on the account, we had to declare the restructuring under COVID. And still, we are declaring notes on accounts. But by total restructuring in NPA, whatever the analyst has asked, total recovery is same. Total restructuring is same.

Thanks. What we'll do is if you need any further clarifications, we'll just give them off.

Let me clarify something.

Okay, Jain.

This talks about the restructuring application received under the sixth -- under circular of Reserve Bank of India, where we are doing COVID restructuring. So here, basically, if you -- there are applications received from the retail. There is an application received from the corporate as well. So this INR 9,400 crores is a total application received by us under the retail and the corporate.

So hope that answers the question.

The next line of questions are from Mr. [ Sanjay Parekh ].

Sir, my question is getting to an ROA of 1% and ROE of around 15%, a very sweet spot. Today, as you would see that our valuation has a steep discount to book value. In future, for our capital needs, that -- to get to that milestone will be very important because that would lead to valuation rating -- re-rating upwards. So sir, in terms of our efforts, be it credit selection, the right allocation because some of like international -- by and large, for the sector, international business has not been very ROE accretive, overall operating profit growth, cost controls and most importantly, as I said, tighter credit cost for the future lending, all these would clearly get to your ROA, as I said, 1% and ROE of 15%. And if not this year, maybe there's a possibility of '23. So sir, how do you drive the whole organization to that milestone, sir? That will help us.

So thank you very much. I think what you have just laid out, we might say is a summary of, again, what should be our objectives going forward. And you are absolutely right that when it comes to the international book, the margins are lower. The net interest margins, in fact, are about half of what they are in the domestic book. But if you also look at the cost of credit historically, and we're not looking any large share alone, historically, the cost of credit has been also substantially lower in the international book as compared with the domestic book. So if you were to take the adjusted rate of return, it may not be that different. But having said that, what you're saying is correct. And given the fact that net interest margins are under pressure in the international book, we believe that there needs to be, again, a discipline in terms of the assets that we underwrite internationally. So we are trying to do 2 or 3 things. One is trying to focus on geographies where we actually are making very good money. And for instance, our operations in Africa, in particular, are really very strongly accretive when it comes to either ROA or ROE. Our subsidiaries in Kenya and Uganda are making returns on equity in the range of 15% to 20%. So we want to make sure that we keep our focus there and expand our allocation of capital here. But where we believe that there is not much value, which is occurring either today or likely in the future, we would again be absolutely unemotional in taking those decisions. So even as we speak, we have sold off our subsidiary in Trinidad and Tobago, for instance. Our Hong Kong operation has been closed. We are looking at certain other geographies where we might want to exit. What -- and the other thing which we are doing to make sure that in terms of ROA, we have better outcomes is that, for instance, ECBs, which can pretty much be done out of any geography, and the other businesses also, which, again, actually are geography agnostic, we are trying to see how we can do those out of our GIFT City operations, where, obviously, there are tax advantages. Three, I believe that given the short- to medium-term outlook for margins in the international operations, there is likely to be a movement of capital from the international book to the domestic book. Even this year, you would see that there is negative growth when it comes to international loans, right, and significantly slower as compared to the domestic book. I would believe that if the interest rate outlook continues as it is, that may be a trend that remains for the next few quarters. So please be assured that we are fully conscious in terms of the impact of the international operations on our return on assets. And we are constantly trying to see how we can fine-tune them by not destroying any value which might be there for the medium and long term but to make sure that we can recalibrate, reallocate capital to make sure that our return on capital is optimal. So your concern is absolutely valid, and that is precisely the direction which we are moving.

We have some more questions from Ms. Mahrukh Adajania.

Sir, my question is that if you see the published CET1 figures, there has been a strong increase in CET1 between 3Q and 4Q of around 100 billion. So how does one explain the movement? Has there been a favorable impact of DTA? And how much is it? That's my first question. And my second question is if you could give the number, the amount of interest reversal on pro forma NPL and the penal interest reversal for fourth quarter?

So let me just give you the broad sense, and then I'll probably request our Chief Financial Officer here to give you the precise numbers. So you are absolutely right. One, of course, is that in the last quarter, the DTA reversal has again helped us. So -- but again, I think it's very important to appreciate, let's assume we had not done the DTA reversal, then I think a large part of the accrual would -- anyway would have happened again through the profits getting added back. And of course, we had the QIP issuance of INR 4,500 crores. So these 2, I think, aggregate pretty much the all-COVID proportion of the figure. But let me request Ian to see if he can give you the precise numbers.

So in terms of the overall DTA that we saw getting adjusted, it was our DTA getting adjusted of around INR 3,800 crores. What we had worked is a reversal of tax that we had provided in the earlier 9 months of around INR 300 crores. So the net impact of the DTA adjustment was around INR 3,500 crores. And we also have a corresponding impact in our capital adequacy. So while the DTA has been negative in terms of our PAT, in terms of overall tax impact on the bank, from a capital adequacy, it has actually been favorable. And it contributed to our accruals for shoring up our power capital adequacy. Is there any other question on the DTA?

So I think maybe what you can do is, Ian, give an offline -- give Mahrukh exactly the breakup in terms of the increase in the CET1, what have been the sources, how much has come from where, how much it came from internal accruals, how much came from the QIP release, so that, again, she can reconcile the numbers, please.

Sure, sir. We will do that.

Thanks, Mahrukh.

Mr. Ashok Ajmera is back with us, and he also has a few questions, sir.

Anyway, sir, I also just have some few specific small questions. One is that this INR 500 crore of estimated liability on -- as per the note number 13, Jain, by now, it must have been crystallized that on account of that interest reverse, note #13, if you look, that INR 500 crore estimated liability has been provided. So now we are in the end of May. So what was the actual amount out of the estimated liability provided?

Yes. Yes, he's talking about the reversal on account of interest and penal interest which we have provided, INR 505 crores.

Or I would put it this way rather, sir, that can you give a color that up to 31st of March, I mean up, to 31st of March, that is the -- up to 31st of December, that is the last quarter because the circular came only in March 2021. So how much out of that has been reversed and how much out of the current quarter? And this provision of INR 500 crore, what was the actual amount?

So if I were to understand, you have 2 questions actually. One is relating to interest reversal on account of NPAs, which was stayed because of the Supreme Court order. And so we did not declare NPAs after 31st August. So in -- but we had made a provision for such interest reversal in the December results of INR 370 crores.

INR 300 crores, okay. Yes.

Yes. So that is one. The second impact we are talking about is a different one, which came from the same Supreme Court order, which vacated the stay on declaration of NPAs, but this was a different one. In terms of -- the Supreme Court guided that any penal interests or compound interests charged on the borrowers should be refunded. So that amount is INR 505 crores. This was not provided for earlier because this is a new [ number ].

No. No. What I'm asking is the auditor has used -- I mean, in the note, you use the estimated liability. So what is the -- now we are already 2 months in this year. So what was the actual liability? Was it INR 500 crore only or...

The liability is INR 505 crores. There may be a slight variation, but it is within that range.

Okay. My second question, sir, is, as said...

This is INR 510 crores, INR 509.89 crores. And you see my notes on accounts number 12.

Okay, sir. Sir, second is that up to the August, what was the interest for which -- which was to be paid before 31st March 2021? What were the status update? All those accounts were regular. I mean, all those people who have taken the benefit of getting forward the interest up to 31st March 2021 for the interest from the, I think, March to August, whether all have paid or what is the actual position on that, that interest component? As for the dispensation, interest from March to August was to be paid on or before 31st March 2021.

Yes. Sir, the expiration.

So Ian, you want to reply or I reply?

Sir, I didn't quite understand the question. What was the question?

The question is very simple. INR 510 crores interest on interest, that pertains to 1st April to 31st of August, right?

Because of moratorium. We have calculated based on the account-wise outstanding. So these accounts are regular. This is one question. Or any NPAs there. I think this is only question, sir? [indiscernible].

Yes. Yes. That -- so as for the moratorium up to August, whatever interest was left to be paid, which borrower had the opportunity to pay up to 31st of March 2021.

But this amount we have to refund because other interest or penal interest on that particular period, we have to refund. And that is why we made this provision. And we'll pass on to the credit of the customer's account.

Anyway, sir, I'll take it -- in fact, my question is that what was the amount of the interest of the moratorium up to 31st August 2020 which was to be paid by a borrower of up to 31st of March 2021? Out of that amount, how much is paid and how much is not paid which goes into NPA?

So I think it is the FITL issue probably that Ajmera is alluding to. I think, Ajmera, maybe you can have a conversation off-line, and we can just again work [indiscernible] okay? Thank you.

Yes. I'll discuss it with you, sir.

Yes. Yes. Sure, sir. One small other clarification, that the standard advance and the provision of INR 1,663 crore has been reversed into -- from Q3 to Q4. And the provision for NPL bad debt written off instead of 4,500 and -- I mean, it has become INR 4,593 crore from INR 2,080 crore. So on the standard advances, the reversal was on what account?

So we had made provisions due to the Supreme Court stay. We had made provisions under the standard advance category since we could not declare these accounts as NPA. The other part is that we had also made provisions for the moratorium cases which had also got reversed. So it's a combination of these 2 impacts which you are seeing as a reversal in the standard asset provision.

Ajmera, sir, since these accounts were standard, classified only NPA in March. So the provision, what we have done, we have made a provision for interest reversal. We have made a provision at 30% as per bank's guidelines, and this provision was lying in the standard asset columns. Since this account has been classified NPA, the relevant provision has also been shifted from standard asset to NPA table.

My last question is, sir, on that note number 8 of INR 500 crore of this floating and counter-cycling provision, which has been utilized with the Board permission in this quarter. So had that provision would not have been there, this quarter would have been affected by INR 500 crores? And secondly, is there anything left out of it, still any such provision, floating provision or counter-cycling provision, any amount that has been left to be taken benefit in the coming year?

So generally, you are absolutely right that this is -- this provision has been now reversed because, again, as we have seen, the credit costs have trended downward as compared to what we anticipated. I think in terms of what the guidelines are in terms of provisioning and what is the excess that we carry, that is largely on account of the fact that we made larger provisions on certain asset categories as compared to the regulatory guidelines. I think we have on prior occasion mentioned before that we continue to make a 20% provision, for instance, on substandard assets as compared to the 15% required. To that extent, the bank does continue to carry certain higher provisioning as compared to the regulatory requirement.

Now I understood your question. You were asking about the FITL reversal to my mind. Because this was an interest from first offer to 30%, which we have created to FITL and just to be repaid by the customers. I think this was your question.

Yes. Yes, sir. That was the first question [indiscernible]. No issue, sir. We will talk later because let others help you out.

And the next set of questions are from Ms. [ Samia Agarwal ].

Yes. I had a question related to your COVID-related provisions. Those were around INR 1,700 crores as at end of December. So what is the COVID provision now? And secondly, once the COVID risks abate, what is your strategy? What would you be doing with the excess provisions? Would they be netted off against the standard assets? Or can you also use it to net it off against the slippages?

So again, I will hand it over to Jain to clarify. But my understanding is that the COVID-related provisions again were to -- again, if the accounts, of course, became NPA, in case the account did not slip, in that case, there was a possibility of reversing provision on 31st March. This is what the RBI guidelines were. And we have as gone as to the RBI guidelines. But again, request Jain to make any clarification which may be there.

So you correctly said, sir. But the RBI says that for a COVID-related account, you have to hav3 a 10% provision or if you are giving a higher provision, keep that provision. So what -- as per that guidelines, we are keeping the provision of 10% or 20%, whichever is higher in this particular account as a part of the calculation in our books.

Okay. And what would that be? What would be the COVID provisions outstanding be as at March 2021?

So to my mind, there would be specific 2 accounts. For instance, again, there may be an account which, as said, been classified as an NPA, right? And now the restructuring is going to happen. In case restructuring happens, the provisioning would migrate from 30% to 10%. So these all would be account-specific, not in any general provisions.

Okay. And in terms of the write-offs during the year, you had some INR 15,000 crores of write-offs. So how much would be technical write-offs out of these? Or are these all pure-play write-offs?

Jain?

This is a technical item. Doesn't it? Doesn't it?

Yes. Yes, these are -- all are technical items at all. And we are not doing any complete write-off during this financial year. We have not done any write-off during this financial year.

The next set of questions are from Mr. Gaurav Agarwal.

So sir, just wanted a bit more clarity on the SMA question asked by a previous participant. So if I see your 31st March 2020 presentation, the SMA figure disclosed was around 2.4%, SMA1 plus SMA2, which was, I think, on the total advances. And that comes to around INR 16,000 crore. And in the latest presentation, we have given the number at 3.34%, which is around INR 23,000 crore. So sir, which of the 2 number -- am I calculating in the right way? Is the latest figure that you have given, is it on the total advances? Or is it only on the advances above INR 5 crore, the denominator for calculating this figure?

So I'll pass it on to Jain again for that.

I think this is based on the credit report, and this is based on the exposures. Sameer, am I right?

Right, sir. It's based on...

My query is on the discrepancy in data, March 2020 data, what you had reported last year versus what you have reported this year for last year, 2020, is different. So I'm just asking whether I'm calculating it in the right way. So last year, what I am doing is you reported 2.4%, 1.2% plus 1.2%. I'm multiplying it with your total advances, which is -- which comes around INR 16,000 crore. In the latest presentation, you have reported it 3.34%. I'm multiplying it again with your total advances for that year, which comes to INR 23,000 crore. And previously, we used to report for the whole book. Now it is only above INR 5 crore and above. So if you could clarify why I'm getting this discrepancy.

Sameer?

Yes, sir. Sir, in March '20, the demand wouldn't have been raised because of the moratorium that was put in place. So because of that, there could be a difference when we reported the numbers that time around. So Gaurav, we can take this with you, perhaps we can explain it to you how it went. And Mr. Rajneesh Sharma can also sit with you and explain you the entire...

Fine, sir. Fine. And secondly, sir, in the -- for the restructuring, so you have MSME restructuring of around INR 9,000 crore. And then we have COVID-related restructuring requests of INR 9,000 crore. So if I understand correctly, COVID is for retail and corporate, and MSME is obviously for MSME. So these are like numbers which should be added. So total restructuring, MSME plus COVID, is around INR 18,000 crore for us. Is that understanding correct?

So my understanding would be that one may be, to some extent, a subset of other. So I think that Khichi has clarified that when it comes to COVID restructuring, it is segment-agnostic, right? When it comes to MSME, it could be COVID or it could be a pre-COVID dispensation also, which is why I think the aggregation, the way you are saying it, may not be the best way to do it. But again, hand it back to Khichi because, again, I'm anticipating...

Sorry. To an extent what he says may be correct because MSME restructuring has been going on for quite some time, and where the provision required was only 5% of the restructuring. It wasn't 10%, and now it is there. So now the total restructured book under COVID is, for the corporate, it's around INR 7,700 crores. Under MSME, it is around INR 5,550 crores. And in retail, it is around INR 1,200 crores. So the total restructuring under COVID is around INR 9,434 crores. And if I have to talk about MSME, apart from COVID, there's under INR 8,000 crores that is there. So there is a part overlap in that as when I talk about the overall MSME restructured book, there's around INR 9,000 crores, out of which INR 550 crores is a part of the COVID restructuring also. So all in all, the total restructured book for MSME is around INR 9,000 crores, which includes INR 550 crores of the COVID part.

Got it, sir. Got it. That's very helpful. And then last...

Let me clarify further. Now one is a MSME restructuring. Second is a COVID restructuring, where we are talking about the application issues. So these accounts have not been restructured. Some of these might have restructured. So till we are restructuring, as per the existing guideline, majority of this account might lie in the NPA book because when we will do restructuring, it will be upgraded from the NPA. So if your A -- then NPA numbers are different, then A plus B plus C, it is not like this.

So sir, if you could clarify how will it be? Because we -- sitting outside, don't know how these numbers work in your bank. So total is INR 9,000 crores plus INR 8,000 crores broadly. So it comes to INR 17,000 crore. So INR 17,000 crore, what would be the NPA so that we could -- we don't overcalculate these numbers?

Yes. This INR 9,000 crore piece of number, 8 -- out of INR 8,000 crore, how much restructuring we have done? We have done only INR 2,000 crores of restructuring so far on account of COVID. And remaining restructuring, we will be doing in the current financial year because we can do up to June. And...

No problem, sir. That's okay. I understood the answer. And sir, just last question is on the watch list, if we have any watch list for corporate, SME. Any expectation that we could share for FY '22 based on our stress test that this could be the bulk -- [ bare case ] slippages for FY '22? If things go very bad from here, then these could be the slippages. And if things improve materially, then these could be the slippages. If you could share any calculation that you would have done, would be helpful for us to understand the trajectory for the bank for FY '22.

So I think we don't have a watch list anymore because the SMA1, 2 data is what, I think, is the standard way. I think more banks seem to be reporting that. But the guidance again for slippages is that we expect slippages to be lower this year as compared to the previous year. And as we discussed earlier, that will be very, to a large extent, be driven by the fact that we do not expect slippages in the international book on the scale that we saw in the last year.

We have next Mr. [ Mangesh Kulkarni ] asking a few questions.

Sir, my question is regarding any unlocking we are looking, JVs and subsidiaries in FY '22 or going ahead?

Yes. I think I got the gist of your question. When it comes to joint ventures, I think this is what we had occasionally talked about since the last quarter. There are 2 joint ventures and -- they're not 2 joint ventures. There are 2 subsidiaries where they spoke for some unlocking of value. One was the life subsidiary where we had guided that we believe that there will be an opportunity towards the end of the next financial year, right? Because that is a company which has gained critical mass. It is the fastest-growing private life insurer. And therefore, we believe there's an opportunity to take into the market, but that will come in the next financial year. This year, we may look at -- for a partner for a credit card company, but that is to be a priority round. And the reason why we might look at that again is because we are seeing reasonable traction as far as the credit card business is concerned. The company has been in the -- in terms of relative size, outside the top 10. But in the last quarter, in terms of attracting new card customers, it was in the top 5. So I think that gives us some room for optimism that the company has been now able to leverage the strength of the brand and network significantly. So we believe that towards the second half of the year, here, we might have discussions for a private [ pair up ].

Moving on, sir, we have the next question from Mr. [ Sushil Choksey ].

Congratulations for a stable result. Sir, I want to know, we have taken great initiative for digitization of the total processing in bank as well as back office between Baroda GIFT City. We were looking at loan processing through digitization, SME business and digitization. And what kind of spend are we looking at digitization and digital products in the current financial year? And secondly, you briefly spoke about asset monetization, where credit card is concerned. Anything on any of the SLBs or subsidiaries or any asset monetization of any other nature, if you could highlight?

So in terms of the digital agenda, that has obviously gained a large degree of momentum over the last 12 months, I think not only for us, I think for all businesses. And I think the investment that the bank has made over the last few years, they have proved to be very opportune, both in terms of our back-office services company, BGSS, and also investments in the data rate, for instance. So that has meant that as we have tried now to take the digitization process in such a way that it works for our front-end customers, I think the time to market has been relatively short. On the liability side, 90% of all accounts that we open, all savings accounts that we open, are now opened through Tab banking. On the asset side, we are rolling out a very aggressive program in terms of digital lending. And then progressively, personal loans, home loans, car loans, MSME loans will be on more the digital platform. But I request again Mr. Khurana, our Executive Director, who has been driving this initiative very aggressively, to possibly again give you a bit more color in terms of what we can expect to see in terms of progress in the coming financial year.

Yes. Thank you, sir. Our digital lending, as well, you have heard that we have been doing really, very aggressively on that and hopeful that in next 3 years, 90% of our lending should be on this platform. So here, on that side, this is -- and a major portion what we are facing is the adoption. Our mobile products, our mobile banking, our Internet banking, our -- these products are excellent in our market, well appreciated by the users. And we are still working on it to improve its usability and acceptability by the customer. And adaptivity, we are doing -- this is the issue where we are -- that every bank, public sector bank is facing challenges. So here, at the ground level, hand-holding of the customers through webinars, through our feet on the street in every branch, we are providing and making sure that every customer gets shifted to -- they get to start using these products. And we are getting -- our staff is available for other sales purpose.

Sir, any outlook on NIM and gross NPA, net NPA for FY '22 and treasury also?

Yes. So I think as far net interest margins are concerned, I think because of the second wave, whatever expectation there was that the liquidity might be withdrawn from the market, I think that seems to have been pushed forward by a few quarters. So therefore, I think the overhang of liquidity will remain as far as corporate lending margins are concerned. And therefore, our emphasis in terms of protecting our margins is going to remain through 2 ways: One is to grow our book on the retail side more aggressively while making sure we keep discipline on the corporate lending; and number two, as we discussed earlier, to see whether under these circumstances, we can move some capital from the international book to the domestic book, where still margins tend to be better. So my own sense is that at least for the next few quarters, margins will remain in a narrow range. As far as treasury is concerned, I think, again, the -- there seems to be a dip in terms of 10-year rates. But I request our Executive Director who's in charge of our treasury function, Mr. Debadatta Chand, who, of course, you would not have met before. He's joined us in this quarter. So I think it's a very good time to get used to him, and he can give us his thoughts and his assessment in terms of how the scenarios could pan out.

Thank you sir. See, the last year has been very good as far as the treasury profit is concerned, and that's for the entire industry also, so is Bank of Baroda also. But going ahead, all will depend upon the market movement because unless [indiscernible] has substantial like downward move, the trading profit won't be high. But normally, it is like a year where the trading profit is high, but treasury income is slightly muted. And the year where the trading profit is low, the treasury income is normally high. So going ahead, anyway, whether it is a trading profit or treasury interest income, the contribution from the treasury group would be substantial to the bank, sir.

Since we are running out of time, we will have the last set of questions from Mr. Saurabh Kumar.

On the operating cost, sir, you would still expect the INR 1,500 crore to INR 2,000 crore kind of cost savings for next year? I mean, you gave an INR 10,000 crore guidance for 5 years. So I was just wondering how much would that be? Secondly, on the restructuring again...

Can you just repeat that, please? I didn't get it clearly enough in terms of what you're asking.

Sir, I was asking on the corporate -- on the operating cost, sir, given that the merger is now over, would you still stick with the INR 1,500 crore to INR 2,000 crore cost saving guidance over the next 3, 4 years? And specifically, what will this be for next year? And the second, sir, was on the restructuring. So this INR 2,800 crores-odd of international NPA, that's part of your NPA. But it's also part of your restructured pool. Would that understanding be correct, sir?

So let me just separate the 2 questions. In terms of operating cost, I think the benefits of the merger have flowed to the bank, precisely in the manner which was anticipated. And we have guided here over a 5-year period, we expect about a INR 10,000 crore savings for the bank. If you were to look at the operating costs even this year and if you were to separate the salary costs, you will find that part of these savings have got affected in the operating cost of the bank in nonsalary costs, which actually have come down. And a significant portion of the savings actually has come because we have closed down 1,300 branches. This has been the most ambitious program in terms of branch rationalization postmerger that we have seen in the industry. And very obviously, the new shutdown of branch during the end of the year or towards the end of the year, the savings are only partial in that particular year. And you could say it will come in the next year, which is the current year. So we are very positive in terms of the fact that the savings from merger would continue to flow through. And this year, we should see the full impact of those savings going -- as far as that is concerned. So that is as far as the operating cost is concerned. And the second part of your question, once again, if you can, sorry, I lost track of that.

Sir, the international -- there was an entry in the international book. I'm wondering if that's also included in the restructured book. So there's -- in terms of an overlap on those 2. And sir, on the operating cost, sorry for that, I mean, your guidance will still be fiscal '22 or '21, we should still see a reduction or no?

So I think what happens is that typically, in practical terms, you will expect about 8% to 10% increase on inflation in costs, right, as general proposition. So these cost savings effectively neutralize the increase you might have seen. So -- and my sense is that what you will see is that for Bank of Baroda, in terms of nonsalary costs, in particular, and some salary costs also because we are not really recruiting for numbers at all, you should see a lower growth rate as compared to other banks.

Okay. On the international book?

And international book, I'll just request Jain to again clarify that, please.

So in the international book, let me give you a clear picture. INR 6,600 crores is the base. 60% of this INR 6,600 crore is in 2 accounts, which is around INR 3,700 crore or so, is a part of restructuring: One, under the COVID restructuring; and one at the 7th June restructuring. This INR 3,600 crore is already sitting on NPA. So this COVID restructuring, close to INR 1,000 crore, will upgrade immediately. And it is a part of restructuring of this INR 9,000 crore number we are now talking. Remaining INR 2,700 crores is a part of 7th June restructuring, and it will be upgraded next year. So it is not part of that. Because here, we are talking about the COVID restructuring.

Thank you, sirs. That was -- we will be closing with the session -- the Q&A session with these questions. To all the attendees who have mentioned the questions in the chat box or in the Q&A box, we have taken a note of those questions, and we'll be addressing it offline. Sameer, I hand it over to you for the closing remarks. Thank you.

So on behalf of the management of Bank of Baroda, I sincerely thank all of you for taking out time and joining us today. Stay safe. Stay well, and we'll be in touch next quarter as well. Thank you. Thank you so much.