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

Good morning, everyone. Welcome to Bank of Baroda's -- I'm sorry, apologies. There's been some echo going on. So I'll repeat it so that we can start. Good morning again. Today, we have on the call Shri Sanjiv Chadha, who is the MD and CEO of the bank. He'll be leading the call along with the Executive Directors. The call will start with brief remarks by the MD, followed by a Q&A and then the closing remarks. Over to you, sir.

Yes. So very good morning to everybody. Thank you very much, Sameer. Let me first begin by wishing you all a very good morning and also I hope everybody is well. I have with me my fellow directors on the Board of Bank of Baroda: Mr. S.L. Jain, Executive Director, who is in charge of Corporate Banking and International Banking; Mr. Vikramaditya Singh Khichi, who is in charge of our Retail Banking; Mr. Ajay Khurana, in charge of IT and Digital Banking; and Mr. Debadatta Chand, who you might be meeting for the first time, quite possibly, who is our Executive Director in charge of all the platform functions, including risk management, compliance and HR. So I think you would have seen the results and the presentation, so I will not impose myself on you by going through the details, which you have seen except to say that it has been a year which has been difficult, the beginning of the year, because of the second wave. But the bank has largely delivered in terms of what we had guided at the time of the last quarterly meeting. Our focus has been to make sure that we keep a tight discipline in terms of both the liability side as well as the asset side. On the liability side by making sure that our deposit growth does not run too far ahead of our loan growth. And also since we are not taking deposits in an indiscriminate manner to make sure that most of the growth comes from CASA deposits. On the loan side, it has been to make sure that the liquidity overhang does not overly impact our net interest margins, and therefore, to make sure that the core growth comes from the retail side. And in case we cannot get a risk return right on the corporate side, we would let those opportunities go because we are of the view that as the year progresses, the liquidity position is likely to normalize, and we might have a little more pricing power as compared to where we have today. So you would have seen that we have seen a bit of a runoff in the corporate book. Most of it was very low yield and it also consumed capital. So on account of the fact that we have been disciplined, we see both an uptick in the net interest margins as also in capital efficiency. The NIMs have moved north of 3%, and the capital adequacy now is above 15%. So in terms of asset quality also, we have been guiding for the past few quarters that we would expect stress on the MSME and retail. It had been more than we might have expected because of the second wave. But nevertheless, we have been of the view that improvement in the corporate credit cycle would more than offset that. And therefore, we should see a sustainable and continuing improvement in credit quality, including a lower credit cost. So I think things have largely transpired on those lines. Thank you very much again for joining us. And now we're open for questions, please.

[Operator Instructions] So we will open the floor to Mr. Ashok Ajmera.

Yes. Can you hear me?

Yes, Ajmeraji, we can hear you.

Yes, sir. So again, good compliments, sir, for the good set of numbers in such difficult times. But sir, having said that, number one, there was a pressure in the other noninterest income in this quarter. I mean we see it declining from INR 4,848 crore in the last quarter to INR 2,970 crores, mainly because of 2 reasons, the recovery from the technical written of accounts and also, the another head, where the noninterest income has come down. So it is a drastic reduction of almost about INR 1,900 crore, if you compare with the last quarter. So this is my first this thing on which if you can give your comments and observation and how do we look at for the next 3 quarters? My second question is on the credit growth. Sir, you said in your own starting opening remark that with the improvement of the corporate credit in the future, we can offset some of those things which you have said. But then how do -- when the credit is so much declined, so total book has gone down from INR 7,51,590 crore to INR 7,11,487 crore. And -- so where do you see that credit coming from? I mean, where are the opportunities we shall see in the next 3 quarters? And what could be your guidance for the loan book for '21/'22? Because ultimately, the bank business is to lend irrespective of the whatever the times which we are facing. And we cannot depend all the time on the treasury income and -- which has, of course, performed very well, giving an income of INR 1,566 crore as compared to INR 940 crore in the last quarter. So these are some of my initial questions, sir, if you can just -- and 1 more data point only that we also purchased and sold some PSLC certificates. Small and marginal farmers we had to buy, and then we sold it for the micro credit. So how much the cost which you have incurred or amount of commission which we have earned or you've to pay on this?

Okay. Thank you very much, Mr. Ajmera. So I'll just address the 3 comments that you have raised 1 by 1. First, when it comes to fee income, you would notice in the presentation that our fee income has actually gone up by 28%, right? And this has been Y-o-Y. In terms of comparison with the last quarter, there is always -- in Q4, bank generally tend to book a higher amount. The first quarter tends to be a little softer. But if you look at a Y-o-Y comparison and both the years, the first quarter was impacted by COVID, right? The first phase and the first instance and second wave and second instance, but nevertheless, we have had about a 28% increase in fee income. Now the -- if you look at the total other income, of course, yes, you are absolutely right that there is a decrease which is there, particularly if we compare it with the last quarter, and that is, as you pointed out, because of recovery in TWO accounts. Now this is one thing that I always resist to predict is that what is going to happen in NCLT cases, in which quarter would any particular recovery come? And that's something that, very frankly, if it comes, it's manna from heaven, but that's not what we hold our breath for. So I think that kind of volatility will keep on happening, but that's not really something that either we should focus on or we should be losing sleep over. When that recovery comes, it comes. But our focus is to make sure that the fee income that we get from our normal business, that is something that we increase, and we take it on a sustainable basis. So if we look at that, even in key categories for instance, one of the areas of emphasis for us has been the [ Cashman ] product, where we again recording a Y-o-Y increase of about 70%. So I'm a fairly positive that both on the fee income from corporates as also in terms of ForEx income, we should continue to see good growth going forward. As far as treasury is concerned, yes, this quarter has been good, and that is something which might continue for maybe -- another maybe 1 more quarter at this because we know that we are in a regime where the interest rates are likely to go up. It makes sense to front end some of that profit booking, which we are doing. And we expect that as that peters out over the next few quarters that they should correspondingly be matched by an increase in the loan offtake and the interest income from loans. So I think that's something which is perfectly normal, where you might find that there's account cyclicality when it comes to treasury income vis-à-vis the NII that you get from your loans. The second point that you made was about credit growth. So this is, again, something where we have been fairly focused that we would want to grow credit, where we believe we can grow at a healthy risk return equation. So you would have noticed that our retail loans organically have grown by nearly 12%. Within that, categories that we are focused on, which we believe that even in these pandemic times that they are reasonably safe for us to do, gold loans, car loans, they are doing very well. Our gold loans have gone up by 35%, car loans by 25%, home loans also are going pretty much as per market. So I believe the categories which really we would want to grow, we are growing. In corporate, everybody is aware that there's a liquidity overhang, and I don't believe that, again, lending out money only for the sake of topline helps anybody. That is changing, it's ought to change, and I don't believe from next quarter onwards now that we have run down a book which was at some optimal spreads, particularly given the fact that we expect spreads to improve, things should start building up on a more sustainable basis. The third piece was about PSLCs. So typically, again, this is something that happens over a year where you might have a particular quarter and a particular segment you might be short. You buy PSLCs there. And then over a period of the year, you actually sell them also as your book builds up. Last year also, we had bought PSLCs in the first quarter, sold off PSLCs in the subsequent part of the year and ended up making some money on a net-net basis because the priority sector is above the benchmark of 40%. So that's something which is, again, you might say, in the normal course of business. But in terms of the exact amount that we expended on the PSLCs, I'll just request Khichi Saab, our Executive Director, to chip in there.

Thank you. Thank you for putting this question. So I think more or less, MD, sir, has already explained why we had bought these PSLCs, and bought the similar transaction we had done last year also and ended up making money on that. This year, again, now Reserve Bank of India had actually increased the priority sector lending on small and marginal farmers from 8% to 9%. And similarly, for weaker section from 10% to 11%. So we found ourselves a little short in the small and marginal front. But simultaneously, we were okay on the micro enterprises. So we bought up a little piece of a small and marginal farmers, but sold on the micro enterprise front and the exact amount is INR 109 crores for -- we bought around INR 3,500 crores of small and marginal farmers. And in the micro enterprise, we sold around INR 1,000 crores and made -- I mean for -- INR 24 crores. So that's the net and net, but this whatever we have bought is for the entire year.

Sir, if I may just ask 1 more thing like the current, the telecom company now, which is in the -- now suddenly in problem and news, have we started thinking something on that, that depending on the exposure which we have of making some kind of provisions or taking stock of the situation and looking at it? Any views on this, sir?

So our exposure is very small as far as that piece is concerned. It is also a nonfund based. We do not see any possibility of any crystallized position in the near future. So really, it's a very marginal issue for us.

All right, sir. If I'm permitted, 1 more small...

Mr. Ajmera, kindly come back. Sir, now we move on to the next set of questions from Ms. Mahrukh Adajania.

Sir, my first question is that there were upgrades of around INR 3,400 crore during the quarter in the NPL movement, so for the sector Future and MMTC -- Future Retail and MMTC have been upgraded. So would you have similar upgrades or do you have more than these 2 accounts that were upgraded? Because the amount is quite large at INR 3,400 crores.

So I request Jain Saab to address that, please.

Yes. So 1 is that -- yes, rightly said, 1 is the Future Retail. We are not having exposure in MMTC, so the other accounting, international operations there.

Sorry, the other?

One more account is in international operations.

Got it. Got it, sir. Sir, and just in terms of Future Retail, if there is -- if there are -- if the arbitration goes on for a very long time, then what is the time frame within which this account would slip? Because you have to honor various covenants at various points in time, right? So even within moratorium, you have to honor some covenants, otherwise, even if you are in moratorium, you can slip, correct? Is my understanding correct, sir?

Jain Saab?

Yes. This is basically based on our restructured terms, they have to pay us as per restructuring terms. So if they are failing, then it will slip, but presently, we are not seeing that kind of situation.

Okay, sir. Sir, and my last question is again on loan growth. It's good that you've shared your lower-yielding corporate loans. But why were the lower-yielding corporate loans having a higher capital charge as well? So what sectors were these loans in?

So I think there will be a variety of sectors. Some of them would be -- by way of [ home ] credit, for instance. Others would be other corporate advances. So there -- we'll be -- again, all of us are aware that last year, in particular, there were challenges in terms of loan growth as well as, again, an abundance of liquidity. Our view is that those challenges should abate, which is why we are positioning ourselves to make sure that we switch over to what might be a higher-yielding asset base.

Yes, sir. Sir, and just 1 last question that the retail slippage, of course, there was COVID, but slippage in the retail segment has also been high in this quarter. So your -- basically, your retail was based on credit scoring, right? So which are the segments in retail that have really seen high NPL? Because your overall retail slippage was on the higher side this quarter. So is it home loans as well? And is it from the salaried section or self-employed?

So I think, ultimately, the credit scores are based upon past payment records and also the stable circumstances, which obtain. The second wave, in particular, was, I think, entirely exceptional. We did not have such an impact of the first wave even when we offered restructuring last year around, people did not really take advantage. This time, there have been both slippages as well as restructuring. So I think it is simply because of the fact that the circumstances were entirely out of the ordinary. And you might say that the credit scores were not necessarily, at least in the short term, again, the good indicators. So I think there have been challenges which have been there. But having said that, we have discussed in the past that 70% of our retail book is mortgage backed, most of them are home loans. And also when you look at the slippages also, home loans still are a fairly large proportion, more than 50%. So therefore, while there are issues in terms of the liquidity mismatches people face because of expenditure on health care that has transpired, we believe that the stress that we have seen was pretty much peak in the last quarter. It should now dissipate as we move along. So I think it reflects pretty much the entire book, including the home loan book.

Sir, now we move on to the questions from one, [ Mr. Rakesh ].

Hello? Hello? Can you hear me, sir?

Yes, please do go ahead. Thank you.

Yes. Sir, the first question is with respect to our rating profile for NBFC standard outstanding. So number in below -- BB and below has risen on a sequential basis. So -- and number now is around INR 3,700 crore. So what is the exact position there? Like are there -- are these potential stress for the bank? And what is the status, if you can help us understand, sir?

So there is 1 particular NBFC, which has been stressed. It was on the watch list for the better part of last year, right? And which is now -- and it is -- and there's been a rating downgrade, so that is the major part of that. So you might say otherwise, excepting for that 1 NBFC, I don't think there are any change in the nature of the book.

And how large is that 1 particular account?

I'll just request Jain Saab to take that.

Yes. There are 2 accounts. So aggregate outstanding is close to INR 2,100 crores.

Okay. And sir, this India Infradebt, which is focused on renewables and transport and performance is quite good. So if you can help us understand, like do our bank like in our -- does our bank also take any kind of loan through that transaction in our book in renewables and transport sector?

So again, it's an independent company. There may be a coincidence of clients which might be entirely accidental. But again, I don't think there's any deliberate policy to have coordinate lending. Risk appetites tend to be different. And also in terms of scale, I think it's still relatively small. So even if there is a convergence, it is very marginal.

And sir, could you clarify, sir, on notes to accounts #19, where we have discussed about interest on interest number of INR 505 crore, some amount might get credited back. So what is that? If you can just help us understand, like what is the position there on the notes to account #19?

So I'll just pass it on to Mr. Debadatta Chand, our Execute Director, who's also in charge of finance function.

See, this is a provision that we have made for March quarter and the payout out of that. It's a normal disclosure as far as the balance sheet is concerned. So nothing specific to anything. So it's pertaining to the provision that we have made in March and the subsequent payout in June.

No. But we have said that amount no longer required on [ fiscalization ] of such liability will be credited to interest earned during the quarter September '21.

See, every -- the payout that we have made in the quarter ending June, so it has to be duly audited and all. So there is a provision with regard to [ fiscalizing ] anything in the September quarter. That is what has been mentioned.

It has not happened as yet?

Yes, [ Rakesh ], can you come back?

I'm saying that, that has not yet happened, you are saying -- you mean to say that?

Yes. The complete view, audit of the entire process of payment that is yet to happen in the June quarter itself. So that is what we capture in the September quarter.

Sir, we move on to now -- for questions from Mr. Jai Mundhra.

I have a couple of questions. First is on your restructuring. So we have given restructuring number -- I mean, in 1.0 and 2.0. And we also were running MSME schemes, wherein we have restructured some INR 9,000 crore. So I mean, if I were to look at the outstanding restructured number, so should I just add INR 9,000 crore? Or is there any overlap in the MSME, which would have been there in 1.2 and 2.0?

I request Khichi Saab to address that, if it's possible?

Sorry, can you come back on that deck once more?

Yes, sir. So Slide #20, you have said that the restructuring under 1.0 is INR 11,000 crore and under 2.0 is INR 4,300 crore. Now we were also running a separate scheme for MSME wherein the restructuring is around INR 9,000 crore. So -- I mean, should one add all these 3 together or there is some overlap?

No. Definitely, there will be some overlap because this is a cumulative number, INR 9,151 crore of the total restructured MSME is basically over a period of time, and there is definitely an overlap. What an extent that I may not be having the figure write now that I can share, but there is an overlap, definitely.

Okay. Understood, sir. But the over -- and can you give, sir, the retail corporate MSME breakup of the outstanding or at least the INR 15,000 crore restructuring under 1.0 and 2.0, that how much is corporate, how much is retail and how much is MSME?

No. I'm giving you the numbers, right? In a resolution framework 1, we have restructured INR 11,070 crore, right? So of that retail is INR 1,025 crores and corporate is INR 10,045 crores. But here, again, in corporate, in 10,000 -- 3,000 crore of non-fund based included, right? So this 11,070 -- and we are having a provision of INR 1,257 crore as against this. So if you see the funded outstanding, it works out 7,000 plus 1,000, 8,000. Against INR 8,000 crore, we are in the provision of INR 1,257 crore, which works out to be around at 15% or so. This is about the framework 1. When you talk about the framework 2, in a framework 2 we've restructure of INR 4,359 crores. This includes retail of INR 3,800 crore and MSME of INR 552 crore. And the provision there against is INR 637 crore.

Okay. And sir, this INR 3,000 crore of nonfund-based exposure which has been restructured, this is pertaining to which industrial segment?

So what happens, when we give the limits, we give the funded and nonfunded put together. But the RBI said while doing restructuring, you have to make a provision for total exposures, so that is why it is INR 10,045 crore, includes funded and nonfunded. So these are -- there are various sectors. It is in retail, it is retail trade, it is in some road, some other companies as well.

Okay. That is helpful, sir. The second question, sir, is on this retail account, which has been restructured and has been upgraded. What is the moratorium on the loans? Or is there any moratorium on the loans for the, let's say, next 3, 6, 9 months under the restructuring?

No, this restructuring has been done as per the Kamath Committee recommendations, right? So their moratorium is also there for some period as per the Reserve Bank of India schemes.

Right. No, so the reason I'm asking, even if, let us say, if there is a moratorium on the loan repayment, so this company can remain standard, right, even if there is litigation which may keep on -- which may not be settled in the near term, right? Is that understanding right?

Yes. So far, if they are meeting our restructuring terms, they will be standard.

Right. No, no. So I'm saying when does the repayment start? Is it like in next 3, 6 months or maybe over 12 months?

That we have to see, sir. That we have to see, go deeper into that.

Okay. Understood. And second question is, sir, on your notes to account 8 -- notes to account #8, which says that apart from Delhi Airport, there are 4 accounts which have been standard as per the court ruling and the exposure is somewhere around INR 3,200 crore. I think you had mentioned there is 1 account -- NBFC account, which has INR 2,100 crores exposure. But I was just curious to know what -- because the residual exposure itself is like INR 1,000-odd crore, so what could -- what segment could these 2 accounts be from?

So there's 1 big account having a power exposure for our company. And you see this in our notes, INR 3,200 crore plus Delhi Airport INR 200 crore, so INR 3,400 crores, right? And we are having a provision of INR 1,800 crores there, I guess. Besides this, we are having around close to INR 400 crore provisions on account of [ 7 June circular ]. So this provision, we are having around INR 2,200 crores, which works out to be around 63%. So though these accounts are standard, but we are having a provision of around 63% on an average.

Correct, sir. Okay. And the last 2 data question, sir, if you have the corporate GNPA PCR, right? So you've given the corporate NPA at around INR 20,000 crore, if you have the corresponding net NPA number or maybe the PCR there? That is one. And second is, sir, in CET1, in absolute amount, has gone down by around INR 500 crore. So what could be the reason? I mean not in the percentage, but in absolute amount, CET1 has gone -- declined by INR 500 crores? So these 2 questions, sir.

Yes. In CET, basically the decline is because of 2 reasons. One is the DTA components. Some part of the DTA component is there. Suppose we make certain DTA which is above your threshold naturally it will be reduced from your CET1 because it is more than 10%. So this is 1 part.

Right. And corporate...

What was your second question?

Corporate PCR, sir, on your INR 20,000 crore corporate net NPA -- corporate gross NPA, what is the provision that you are carrying?

That exact calculation may not be there, but it should be on a similar lines.

Ideally, it should be higher, right?

We are having 83% of PCR and 68% of PCR exclusive of PWO. So it should be on a similar line.

We move on to now questions from Mr. Saurabh Kumar.

Sir, just 2 questions. The first is, sir, this note 11, you have this INR 14,400 crores restructuring in the corporate book. This overlaps with the number which you commented earlier, right?

So this 7 -- this note is regarding 7 June circular, right? So 7 June circular talks about your PA and NPA box. And where the exposure is more than INR 1,500 you have to make a provision of -- in -- if the resolution has not happened in 190 days, 20% otherwise, 35%. So this INR 14,463 crore, which we talk -- both PA and NPA and we are giving a provision of around INR 4,800 crore on account of this.

Okay. Understood, sir. And secondly, sir...

Which is around 35% of it.

Okay. Okay. Got it. The second is, sir, on this NARCL, have you got any idea on to how much NPAs will move out from your book? And the last thing is if you can even guide to what you think should be your net NPL by the year-end?

So I think as far as the NARCL is concerned, it's still my same formation. I don't think it's fair to talk of numbers, again, given the fact that the incorporation is still taking place. But let me at least say this that for us, it is not a very large figure. And if we are looking at our asset quality and if we are looking at our recoveries, it is not so much contingent upon what happens in NARCL. For us, it's not really an overwhelming proportion of the likely recoveries. So that's one. Which brings me to the second part of the question in terms of NPAs. So I think we had guided last quarter also that we believe that our net slippages should be below 7%. We believe that despite the second wave, we should be able to move on the same lines for the rest of the year.

Sir, I'm sorry, net slippages should be below?

2%.

2%. Okay. So sir, just 1 follow-up on that. So if you look at SBI, the net NPL is now in that 1% ballpark. Would you also want to take accelerated provisions and kind of get your net NPL to that level by the year-end? Or...

So look, the factors that at the end of the day there is cycle, which is there, right? In India, you provide as per what the regulatory requirement is and the tax regime also supports that kind of provisioning. So I think there's a natural cycle to that. So I don't think that there is any room for accelerating it beyond a point.

Sir, now we move on to questions from Mr. Manish Shukla.

Could you tell us the total restructured loans outstanding under the different schemes of RBI? What is the aggregate restructured loan book today?

Jain Saab?

Yes. You see the restructuring, we've given disclosure about framework 1, framework 2, right? And the MSME direct one note is in the -- in an offshore accounts. So around INR 9,500 crores of this in -- under MSME and another INR 10,000 crores have been in framework 1, which includes, of course, a nonfund 3,000. So 9,000 plus 7,000 -- 16,000 plus 4,000 is that framework 2, so around INR 20,000 crores.

And June 7 circular?

June 7 circular is not restructuring. June 7 circular talks about that -- whether -- about the resolution plan. So if we have not gone for resolution within 180 or 365, you have to make a provision of 20% and then accelerate to 35% as we have to move to the NCLT.

Okay, sure. And in your opening remarks, you mentioned that the yields have got boosted because you let go of some lower-yielding corporate loans, I would assume that this will carry lower risk weights as well. So ideally, if your book is shifting towards higher-yielding loans, your spread should also go up, right? So capital consumption of the book should go up. Is that correct? Or am I missing something?

Yes. So 2 pieces again. So 1 is that we were in those funny time where even if capital consumption was higher, still yields were low, right? So it's right -- so that's again, what we are trying to correct. I think there has to be a correspondence between the consumption of capital and the yields you derive from that. So that is the improvement we are trying to bring in. So it may not necessarily be a logical corollary in these difficult -- in these strange times. The other part is that we also have been looking at our international book and try to see how we can, again, optimize that in terms of what's capital consumption as also in terms of yields. So to my mind, to my mind, it should be possible to achieve an improvement in yields while also making sure that capital consumption is more efficient as compared to what was in the past.

Okay. And really the last question, despite the second wave, the SMA book as of June is lower than that of March on a lower balance sheet. So can you please help us understand what has exactly happened there? And what does it mean for asset quality going forward?

So I think partly you might say that what happened in March was really the fall out of the first wave, Supreme Court judgment and so on and so forth, right? It was a very abnormal kind of situation. So has been the case also, you might say to some extent, in the second wave. But then we've also had restructuring which has happened. Also, recoveries now seem to be picking up. The third part, which I think is ultimately the most material is that the continuing improvement of the corporate credit cycle, I think that is coming through. And to the extent that always used to be a large part, I think that's the trend that we should continue to see that improvement in the corporate credit cycle should be showing through in all categories in terms of slippages, NPAs and also in the SMA book.

Okay. And the last question, sir, on the domestic credit book, right? How do you see that book growing this year relative to the banking system? And I'm talking only domestic book here and ignoring the international operations for now, given the stance that you've taken on the wholesale books?

Yes. So our stance always has been we would want to grow as per market, but while growing as per market, we would want to make sure that we put an equal or larger emphasis on improvement in margins and capital efficiency. So I think if you look at last year, that was pretty much what we had delivered. We had grown our book by 5% to 6% -- 5%-odd, which is where the market had grown, but trying to make sure our margins remain intact, capital improves. I think this year is going to be similar. We would want to grow as for the broader market, protect our market share, but while doing that, make sure we are disciplined enough to again sustain an improvement in net interest margins and also make sure that capital is optimally utilized.

Sir, now we move on to questions from Mr. Sameer Bhise.

Just wanted to check on the BB and below NBFC exposure. What explains the rise over the last 1 year from around INR 1,000 crore to INR 3,700 crore?

So I think that was possibly addressed in the previous question, but let me just again reconfirm that it is on account of single account, which was earlier had a higher rating, that had shown signs of stress, was already on the watchlist, which now has had a degrade in terms of ratings, that's about INR 2,000-odd crores. Or it is 2 accounts actually, which again are from the same group, which add up to INR 2,000 crores.

And just a minute, and we are having around a particular percent provision in this account.

One is in NPA and second one is in 7 June circular.

Okay. This is helpful. Secondly, 1 small question on the gold loan portfolio. It's showing decent growth on a Y-o-Y basis, of course, on a small base. What would be the LTVs on this book incrementally?

So our loan-to-value ratio would be, I think, maybe about 65%, 70% range because the max we lend is 75%. That would be the -- what we are looking at. But again, I'll just send it to Khichi Saab for any clarification or amplification there.

No. That's right. Our LTV overall on the general portfolio is around 60% to 65% because the maximum that we are lending is only 75%. We are not lending beyond that. So that -- on an average portfolio, it comes to around anywhere between 60% to 65%.

This is agri as well as nonagri both?

Yes. Yes.

Sir, now we move on to questions from Mr. Mohit Surana.

Sir, I wanted to know in terms of the upgrades that have happened in this quarter, how much of those upgrades are the slippages that have reversed in the same quarter?

So my sense is that these are accounts which have been restructured which accounts for the majority. But again, I'll pass it back to Jain Saab to clarify that.

No, major upgrade is -- upgrade is basically the previous year's slippage. And whatever has been upgraded during that quarter is not -- we are not reflecting it basically. Now with the daily movement of NPA, it will come.

Okay. And sir, the second question is that in terms of the flow of NPA and non-NPA provisions in this quarter, there was significant non-NPA provision in terms of standard asset provision and other provisions. So can you clarify what are these? I believe these are against the restructured book, if I'm not wrong?

Right, you are. Majority of these provisions are for restructuring.

Moving on, we have questions from Mr. [ Mayank Gulgulia ].

My question is regarding like any potential capital raise. So we are already having a capital adequacy ratio of 15% and we are looking at more efficient use of capital now. And we have Board approval for fund raise of another INR 2,000 crores. So what is the broad thought process around that? And like whether we will be comfortable at fund raised below INR 90 or like what is broad thought process around that?

Yes. So I think your assessment is correct. We are comfortable in terms of capital with the overall CAR above 15%, CET above 11%. So I don't really think that the current circumstances or the likely growth in the book warrant any fresh capital raise. We believe that the growth in the book this year should be fully funded from internal accruals, whilst maintaining our capital ratios. So it's unlikely that we would be going to the market to raise capital. The Board approval was only an enabling cross, I don't see the possibility I think standing there.

Moving on sir, we have next set of questions from Mr. Gaurav Agrawal.

Hello?

Yes, we can hear you, sir.

Yes. My question is to Mr. S.L. Jain. So sir, you mentioned a number of INR 20,000 crores, where you added restructuring under framework 1 and restructuring under framework 2. Sir, and what is the INR 4,000 crore, INR 5,000 crore balance? I couldn't get that figure, sir. If you could help me get some clarity?

No. I talked about 3 things, sir. One is a framework 1, second is a framework 2 and third one is the MSME group, right? So framework is around INR 11,000 crores, right? Out of this INR 11,000 crores, I have excluded INR 3,000 crores for nonfund. Generally, we talk about the funded outstanding when we talk percentage and all. So this is a INR 8,000 crores. Around INR 4,000 crore of framework 2, which we have mentioned in our presentation, so INR 8,000 plus INR 4,000, INR 12,000 crores. And INR 9,000 crore of amount MSME restructuring. So that is around INR 21,000 crore also. Maybe small amount of resolution plan may be there, but this is not a big amount. That is -- maybe small amount for the 7 June, which we might have done earlier, small amount, maybe.

Perfect, sir. And sir, on the SMA, I was looking at the presentation that you uploaded in Q4, that is March 2021. So that time, for the period ending March '21, our SMA plus SMA2 was 3.87%. While in the latest presentation, you have shown that number to be 3.23%. There is about 56 basis points difference for the same period. So is there a change in the way you show the semi data to us? Or is there any number which you used to include in that slide or which you have excluded now? So what has been the reason for this change?

The basic reason for change is earlier, we have considered exposure. Now, we considered exact outstanding because exposure doesn't make much value because in the denominator side, we are taking the outstanding, so why should we take a numerator side exposure. So both side outstanding, that will be presented.

Okay. And so if I were to ask what would be the exposure then this 2.68 hypothetically, I know that it doesn't pose any risk...

Yes. It should be slightly higher. It should be slightly higher. Not much.

Okay. Maybe 3% kind of a number?

Exact number, I don't have, but it should be slightly higher.

Okay. And sir, last time this SMA number used to -- there was a note below that, that it includes the restructured accounts of INR 2,800 crore that is for March 2021. So is there any similar number for this quarter, whether some part of restructured is part of SMA1 and SMA2?

Yes. Not much amount because SMA1 and SMA2 can obviously happen. Suppose you have done a restructuring and there is some delay, so then it will come in SMA1 and 2. But I have seen the SMA1 and 2 not much amount of the restructured book is there.

Okay. Similar for Q4? Like for the revised number 3.23%, so is it similar...

Q4, I would reexamine. As far as June numbers are concerned, it's all good.

Sir, moving on, we have questions from Mr. Nilanjan Karfa.

Am I audible, sir?

Yes, please.

Okay. Sir, just to keep on going back to this restructured number. I just wanted to check of this INR 11,000-odd crores that we report in OTR1, but then if you look at the notes to accounts #18, what is that INR 10,600 crore number, sir? What is the difference between these 2 numbers?

What happens in reporting, there is a INR 10,600 is a balance outstanding, right? And the difference is additional funding we have given while doing this OTR. So if you add these 2, it will -- works out to be INR 11,070 crores.

Okay. That INR 380 crore in the next...

Yes, that is the additional funding...

Okay. Okay. Okay. All right. Yes. And sir, the margins were fairly strong, Chadha Saab has already explained. I just wanted to understand if there are a few -- any more one-offs which is related to any OCA recoveries, which are also booked into that line?

So there would be, there would be certainly. I think there was one [ dead end ] account where the bookings came, part of it would have been booked under the interest head. So my own sense is that the margins, we believe, should be improving y-o-y. But again, you might say that they could always be exaggerated or depressed by what happens in a particular quarter.

Sir, any quantification of that one-off interest income that we...

So it's not very large, very frankly, in this quarter. But as a general proposition, I'd say that once again, this quarter also the bigger impact might have been more than accounting the fact that the loan book came down, there was a runoff of the low-priced corporates. So what we are looking at is maybe a 15, 20 bps improvement in the net interest margin. And in any particular quarter, there could always be small distortions. So that would not really bother us. But in this quarter, there was not any significant [Technical Difficulty ] on that account.

Right, right. Okay, sir. And sir, 2 data questions. Do we have the total ECLGS that we have disbursed till the June quarter? And if you can split across 1, 2, 3, 4?

So we had sanctioned, I think, loans under this category of about INR 9,000-odd crores. 90%, which means more than INR 8,000 crores has been disbursed. This is what my sense is. But Khichi Saab would, again, have a better understanding. So I'll pass it on to him, please.

Yes. Thank you. Sir, the total amount of ECLGS that we have sanctioned up till 30th June is around INR 9,600 crores, out of which INR 8,350 crores has already been disbursed and that constitutes almost 90%. And you have asked for a breakup between the 1, 2, 3. So ECLGS 1 comprises the main amount, that is around INR 7,753 crores that comes from ECLGS 1. ECLGS 2 comprises of a very bigger amount of around INR 13 crores to INR 15 crores. And ECLGS 2 non-MSME that is around INR 544 crores.

Right. Sir, have we seen any incremental slippages from this ECLGS book? Any early color? I know I think the moratorium probably starts ending September onwards. Any indication how...

Early days.

Okay. Okay. And sir, last question. Have you -- have we -- any color on the total exposure to the Future Group, sir, you want to disclose?

So I think there have been a lot of television tickers, I think going, right, we'll keep it at that.

Sir, we move on to questions from Mr. Shashank Verma. Mr. Verma, can you hear us? Okay, so we'll come back to Mr. Shashank Verma. We move on to Mr. [ Sanjay Pareek ].

So one good part we really appreciate is the judicious capital allocation and not doing unremunerative business in corporate and also not needing capital because it certainly is not accretive at our current book value. So that is really appreciated. Sir, in terms of -- I mean we are beyond COVID now, hopefully. And we don't -- if we assume there's no major third wave, if you were to plan internally for a ROA and ROE, not in the next 12 months, but over 24 and 36 months, which are the areas where you would want to improve? And what would be an internal target you would have for '23 and '24?

So I think in terms of the ROA and ROE, they are just, I think, 2 or 3 drivers which will move the needle, right? One is, of course, to make sure that we keep our discipline on the liability franchise. And there, the improvement we have seen in terms of the CASA franchise, that should be something which should give us a biding value. So now the -- our CASA ratio is above 43%. We believe there's still maybe a little bit of improvement, which might be possible. So I think that's something which is going to be important. The second piece, again, is that if we believe that the interest rate should start rising wee bit as we go along, then I think there should again be a bit of a benefit because of the fact that there will be a lag in terms of the liability repricing. Third, again, I think, and what would be the overwhelming proportion of the upside comes from the fact that the credit cycle is expected to improve and it will disproportionately benefit banks which have a large corporate book. So our corporate book is 50%. If we include the international, it up -- moves up nearly 60%. So I think that's what we saw in this quarter also that although we had slippages, we've got exceptional circumstances in MSME and in retail, but nevertheless, the overall situation remain under control. Now if we were to extrapolate that, and say that the corporate credit quality should continue to improve, which I believe it should, and also the pressure that we felt on account of the second wave should dissipate, so I think that should be a key driver. So credit costs should, on a stabilized basis, tend toward the 1% mark over the kind of time period that you indicated. I think from there, it is -- I think these would be simple to extrapolate what it does to the ROA and ROE.

Yes. Just -- I mean, would there be any targets that you would have internally set even if you don't guide us for '23 and '24 in terms of ROA?

So to my mind, again, as we go forward, we believe that what we should aspire for is, again, ROA, which is at 1% there or thereabouts and also an ROE, which is in the mid-teens. I think that's what we might be looking to target over that kind of period.

Sir, we have 1 question from Mr. Vishal Goyal on the chat. The question is how much was interest reversal due to NPA in this quarter versus Q4?

I'll just pass it on to either Jain Saab or to Chand Saab in terms of these figures, please.

Jain Saab, would you take it or...

You, please. You, please.

CFO, can you just answer this question? Mr. Ian?

Yes. So we need to get back to you on this question. But typically, this is something that we reverse in normal course.

So I think we'll have to come back on that. My apologies for that.

Sir, we have a question from Mr. Shashank Verma on the chat. Can we get to know the overall SMA1 and 2 numbers, including accounts less than INR 5 crores also? And also our next question from him is, what would be the unrealized gains on our treasury book? [Technical Difficulty] Can you hear us?

Yes, am I audible?

Yes. Thank you.

Yes, thank you. Sir, so on the restructuring again. So on the corporate side, out of the INR 10,000 crores, does this also include the overseas book?

Yes.

And how much would that be?

Close to INR 1,000 crores.

INR 1,000 crore, is it?

Yes.

Okay. And sir, how much COVID buffer are we holding as of -- excluding the restructured provisions?

So we are having the provisions as per RBI. So of course, what the RBI says you have 10% over the existing provision, which is more. So we are holding more. In case of framework 1, it comes around 15% as against 10%. And likewise, in framework 2 also is against INR 4,300 crores, we're having INR 600 crores provision, so which is around, again, 15%.

Okay. But other than towards the restructuring asset, we are not holding any provisions. Is that the right understanding?

Yes. I think that is the right understanding. Our prognosis is that in terms of provisioning, which ultimately passes into credit cost, we would see a downward trend. Therefore, we do not see any reason to have any extra provisioning.

And sir, just last question, how much recoveries are we building in for FY '22?

We are expecting a recurring of INR 14,000 crore in the current financial year, right? So around INR 5,000 crore of recovery we've done in the first quarter. And for the remaining 9 months, we are expecting that around INR 9,000 crores-plus. And the basis for this is around -- out of INR 1,20,000 crore of NPA book, INR 50,000 crore is in NCLT. And in NCLT where the resolution plan has been approved, we are likely to get INR 3,000 crores or even from the restructured or the account which has gone into liquidation also we are likely to get even INR 1,200 crores. So around INR 3,000 crore to INR 4,000 crore of a recovery we expect from NCLT, we expect good recovery from services sales from the compromises fund account asset sales. So put together, we are expecting a recovery of INR 14,000 crores in the current financial year.

Sir, we will just take a couple of questions from the chat before we close. One of the questions is from Mr. [ Siddharth Bortika ]. He wants to know what is the total restructured book, including MSME, COVID and other schemes?

The answer I've already given.

Okay. And the last question is, sir, when is the DHFL recovery expected in Q2 or Q3? What formalities are still remaining for DHFL recovery?

Account-specific discussion, madam, we don't give that.

Thank you, sir. Sir, thank you...

Sir, would you want to give some closing remarks, MD, sir?

We wanted follow-up question...

Yes. So I think I just want to thank again all our friends who had joined for the call. And in case there are any supplementary queries, again, please feel free to reach out to Ian, our CFO; and also Sameer, our Chief Economist. So thank you very much again.

Thank you so much, sir, and thank you all the participants who have joined us on the call today. Hope to see you in person during the next quarter. All the best. Stay safe. Thank you.

Thank you, everybody.

Good, sir. Great. Thank you.