Bank of India Limited (BANKINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bank of India's Earnings Conference Call. We have with us today on the call, Mr. A.K. Das, Managing Director and CEO, Bank of India; Mr. C.G. Chaitanya, Executive Director, Bank of India; Mr. K.V. Raghavendra, GM Finance, Bank of India. Mr. Shankar Sen, CFO, Bank of India; and other senior executives of the bank. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. A.K. Das, Managing Director and CEO, Bank of India. Thank you, and over to you, sir.

Yes. Thank you very much. I, on behalf of Bank of India, my Executive Directors here and other colleagues welcome all the analyst friends to this earnings conference call. Today, we had adopted our quarterly results by the Board and this customary call, as every quarter we do, is now on. I think by now, all of you would have been given the necessary papers and the data regarding our Q1 results. I don't know whether any presentation we are making? Yes. So we will -- our CFO will make a short presentation, if required, if he feel so. But before that, I will just quickly recapitulate the numbers and the fine prints. We have done fairly well in the first quarter in challenging circumstances. We have tried -- back on the heels of posting a loss in the March quarter. We -- last time around, we were saying that from Q1 we'll be on the profit path. That has come true. We have been able to show a profit of about INR 844 crore with -- INR 844 crore, with improvement in several key parameters, like our asset quality and our provisioning buffer that we have made over and above what the norms stipulate. Key ratios also, our ROA is now in a much more respectable stage. Our credit cost also is well placed. Cost-to-income ratio also at about 45 plus. We are near to the global benchmark, which was very high in the previous quarters. As far as business is concerned, we had about INR 38,000 crore of incremental business during the first quarter. One significant achievement is on June 2, we -- our top line crossed the milestone of INR 10 lakh crore, and we have sustained the same. I think, as on date, it's about INR 10,08,000 crore. June 30, it was, I believe, INR 10,14,000 crore. But most of the business accretion, whatever has happened post April 1, mostly, it's accounted for by deposits. I believe it's an industry trend where not much of an advances have happened. We are about 0.5% YTD growth. Whereas our Y-o-Y growth is quite robust, much ahead of the banking system's growth. It is about -- in terms of deposit, it is 21% growth as against industry growth of 10.8% Y-o-Y. And if it is YTD growth, it's about 3.3% industry and ours is 7%. Similarly, under advances, our Y-o-Y growth is about 11%, whereas industry grew at about 6%. YTD industry was negative. We were marginally positive, as I told in the beginning. So this was a quarter where we saw preponderance of liabilities accruing in huge number. Obviously, one of the reason would be lack of consumption demand. And we could enhance our deposit, both in the retail as well as in the institutional segments. So muted growth in advances was one of the reasons why our NII seemed to be flat almost or slightly negative, and which has, in a way, affected our net interest margin also. Various reasons apart from muted growth in advances could be interest rate transmission, the lag effect, taking more time for deposit rate cuts to take effect and in international benchmarks like LIBOR and all getting reduced significantly over the last 6 months or so. So NII and NIM, these are the 2 things, which will be engaging our attention. We believe going forward, these things also will be addressed as the deposits also get repriced. And net-net, we are in positive territory. Capital, we are reasonably capitalized although because of some amount of retirement of capital and because of increase in risk-weighted assets, we have slightly eroded capital, 12.7 odd to be precise. But I think for the time being, going by the demand and going by our conscious call to go for rated accounts and good accounts and our overriding emphasis on capital conservation, I think for the second quarter also and to some extent, third quarter also, we should have good amount of growth capital. But going forward, when the demand picks up, I think we need to prepare for that. So we are taking a proposal to our Board for additional capital raising, maybe to the extent of about INR 8,000 crores. So when that proposal gets firmed up, we will definitely come back and share the same with you. Otherwise, it's been a good quarter. Treasury, like in many other banks, which have announced results, and which will be subsequently coming out, treasury has added a lot. There are no 2 ways of looking at it. I'm sure going forward, Q2 also treasury offers similar prospects going by the benign -- continued benignness of the yields. And -- but our focus earlier, we were thinking of about 8.5% growth in advances. Now we -- going by the Q1 trend and so far in Q2, we have revised that guidance from 8.5% to 7% for the current year. I think if we're able to achieve 7%, that itself will be a good achievement. But some green shoots are available, we are seeing in retail, especially RAM segment and in the government-guaranteed accounts, government-backed accounts, there is good traction happening. I'm sure it's a matter of time before our RAM picks up and our NII also gets augmented further. So these are the initial remarks. I will also say moratorium context. We have done certain provisions upfront where we are trying to safeguard the uncertain prospect, as they say, of the scenario that are likely after the expiry of the moratorium period. We have done 10% provision in all SMA-0, 1 and 2 accounts. We have also done a stress test where we are trying to gauge the impact -- possible impact in various scenarios. Recovery performance in Q1 was muted because of various reasons, lockdown being the most pertinent among them. We could do only about INR 619 crore of reduction including cash recovery and upgradation. But going forward, I think this quarter onwards, we are going to focus a lot more on better recovery prospects. Exploring more of ARC sale, which had dried up during the last few months because of various reasons. And out of our INR 58,000 crore, about INR 38,000 crore locked up in NCLT. And stall proceeding there also came in the way. But we believe that as the unlock happens and takes further momentum, I think the NCLT proceedings also will catch up, and we'll be able to recover goodsome. So this is in a nutshell about the performance of the bank for the Q1. Now I hand it over to -- if there is a presentation required or as...

PPT is already uploaded in stock exchange.

PPT has been uploaded in the stock exchange. So if all of you agree, we can straightaway go for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global.

Compliments to you, sir, for 2 things. Number one is that you have crossed the INR 10 lakh crore business as a bank, which is still a stand-alone bank, which no other bank has been merged in the bank and still your business now is -- has crossed and you have gone in the club of INR 10 lakh crore business bank. And the second is, yes, of course, net profit even in the -- these gloomy days of INR 844 crore. So my compliments to you, Mr. Chaitanya, Raghavendra and whole team.

Thank you, Ashok.

Thank you, sir.

And sir, now I will have a couple of questions, being the first to ask the question, sir. Number one, I would like to have little, I mean, details about this moratorium accounts, total moratorium given, then TLTRO 1 and 2 advances given among the moratorium, SME and that under 10% scheme. And what are your views once this moratorium gets over on 31st of August, and the repayment starts from the September onwards, how do you see how the whole scenario looks to you because the situation at the ground level is still very bad according to us barring leaving aside the 100, 200 top companies, other businesses are still facing the problem. There are lot of confusion about the lockdown opening and not opening. So your views on that? First, that is the question. If you want, shall I ask another 1 or 2 questions or after you answer the first question, sir?

Okay. So to answer your first question, Ashokji. As of now, as regards moratorium, 41% of our clients have been extended moratorium. And in terms of amount, it is 53%. So this is the position as of now. The amount involved is about INR 166,000 crore. Now...

So sir, this is for the first one, initially, the people who took it up to the first leg and then the people on another leg...

Yes. This is a dynamic figure. I'm giving you the position as at June 30. Total 19 lakh clients and INR 166,000 crore is the amount. Now the kind of apprehension you are sharing, it is quite valid because that's the talk of the town. But in our case, you'll be happy to know that out of this 19.34 lakh clients, 52% as of now are regular with no overdues. And 38% are having default of only 1 increment. So in a way, 90%. 90% are on safe ground, 90% of this 19.34 lakhs. Now remaining 10%, either they have default of more than 2 months or 2 months. And so in a way, out of INR 166,000 crore, INR 148,790 crore is absolutely fine, no issues on that. So -- but yet, we have gone for a stress test, and we have found out 2 scenarios basically. One is a mild scenario where we are seeing post August 31 as at September end, there could be a slippage of INR 3,200 crore. And in the second scenario, we have seen, there could be a slippage of INR 4,500 crore. Now this is, again, numbers which we have worked out depending on certain assumptions. This number also could change, but we have taken the more stringent of the 2 and decided that we will provide upfront 10% not only for SMA-2 accounts, but also SMA-0, 1 and 2 accounts. That's how you will see in the slides, we have provided this quarter, Q1, INR 620 crore for this SMA-0, 1 and 2 accounts. The previous quarter, we provided INR 414 crore in all INR 1,034 crore we have provided for this SMA-0, 1 and 2. In the event of any of our outlook coming through, I think this will help us well. So that is the kind of buffer we have built up. We could have announced higher profit also, but then going by the financial stability report and other perceptions, we thought it's prudent to go for creating some buffer so that rainy days can be taken care of.

But it will still be less than the last quarter of last year provision of INR 7,300 crore. So taking together this quarter and the next quarter, together, you feel that it should be around INR 4,500 crore plus INR 700 crore, so around INR 5,200 crore maximum...

Yes. That's our present reading now. And as I told, this number is not a onetime number. It will be visited and revisited over and over again. And if required, in Q2 also, we will continue in the same vein.

Okay. Sir, 2 questions, more coupled with this. One is that the write-off of INR 3,505 crore in this quarter as against INR 1,368 crore of -- in the last quarter of the -- I mean last year. So what kind of -- I mean, which are the bigger -- these write-offs are there? They are multiple small accounts of write-off or some 1 or 2 major accounts are there in this? This is number one. And on the slippages also, then we have booked only INR 402 crore in this quarter. So some color on this, sir?

Slippage number is not a sustainable number, I can tell you that, and it's more because of the moratorium effect. When the banks will close all banks will have similar numbers only, if not same. And write-offs, yes, we have taken a few chunky accounts also, which have been provided 100%, but with a concomitant view to maximize recovery in these accounts. Otherwise, write-off will be cosmetic only. So previous year also, we got good amount of recovery from written-off accounts. This year, to begin with, Q1 has been little on the back foot because of various reasons. I think going forward, we are going to go whole hog on recovery from these accounts. And once this NCLT proceeding takes the normal kind of speed, I think we should be able to get good amount of recovery from these accounts.

And something on, sir, on this INR 2,000 crore addition in this NBFC advances, and something on TLTRO 1 and 2, rather more in 2, if you can throw some light?

Okay. I'm Chaitanya. Ashok, on the TLTRO, we have -- for TLTRO 1 and TLTRO 2, it comes to around INR 4,000 crores, INR [indiscernible]. And then there is some more amount which is coming under the partial credit guarantee also.

Okay. Yes. Yes. And this INR 2,000 crore incremental in NBFC...

Yes?

These are what kind of -- they're all A+ or AA or there are some BBB also?

See, actually, if you look at my entire portfolio of NBFC, entire I'm talking about, A rated and above, it constitutes around 87% for HFCs and 85% for the normal NBFCs. And the present INR 2,000 you are talking about, it's all A rated and above. You're talking about the TLTRO 1?

Yes, sir. TLTRO 1, in any case, must be A+ or AA?

Yes. True.

So basically 2, TLTRO 2 that INR 2,000-odd crore, which you are saying...

Yes?

These are all BBB+? Or in that also there are A or A minus or something?

Given the preference that it is A and above. Wherever it is -- the bifurcation is there with the INR 500 crores and below and then little above. I have all the investments wherein BBB are only a couple of things -- a couple of [indiscernible].

The next question is from the line of Jai Mundhra from B&K Securities.

Sir, if you can -- so I wanted to get more details on moratorium, sir. So how are we now defining moratorium? As in last quarter, we had given opt out to all. And how are -- so in the second moratorium, is this still -- the option is still opt out? Or have we changed this moratorium policy? And then you mentioned about INR 1,066 billion under moratorium. If you can also provide, let's say, SME, agri, retail, large corporate, et cetera? That is one.

Yes. See, for the moratorium when we looked at, we have -- across the board, we have given a moratorium to all our customers. And then we have given an option to them whether if they wanted to opt out for that. So when we have given that option and when we have -- when we have made that all the accounts as going for a moratorium, we will find around 52.69% as people who have got the moratorium. And out of that, if I see that for the last 4 months, from March to June, all the 4 installments, the customers who have paid all the 4 installments that amounts to around 52% of the 52, that means actually, it comes to around 21% is the -- are the people that who are actually having -- enjoying the moratorium of not paying some installments, some months' installment. In such case, if we see that out of the 4 months, the borrowers who paid 3 installments are 38%. That means I have less than 10% people that who has not paid 1 installment, 2 installment and more. That's on the moratorium front.

Yes. And sir, so this 21% number of customers, how does it translate to loans in terms of value?

In terms of the value, it comes to around INR 91,000 crores.

Okay. So these 91,000 crores is the number, which is -- which has paid -- which has not paid all 4 EMIs, right? They may have paid 1 or more...

I'm sorry, INR 91,000 crores is the amount said -- I'm saying about it. Amount said, it's INR 91,000 crores.

Yes. So INR 91,000 crore is the amount, which have paid only part EMI, right? Part EMI, either they could have paid 0, 1, 2, 3?

Yes. Out of that also, there is an analysis. Out of the 4 installments, there are 60,000 -- which amounts to around INR 63,000 crores, they have paid 3 installments. There is only a 1-month default in that.

Okay. Okay. So rest, let us say, INR 91,000 crores minus INR 63,000 crores, around...

Yes, the rest around INR 16,000 crores, INR 17,400 crores around it comes to, they have paid either 1 or 2 installments.

Or they may have paid 0 installment also, right?

No. No. 1 or 2.

Okay. Sorry. And what is the number, which have not paid any installment, that is again 21%?

That is -- no, no, no. That is not paid, I don't have it. We will just check it up. That we will -- we'll get the figures for that.

Okay. So sir, just to get, sir, this bit correct. So 52% people are tagged as moratorium, of which 52% have paid something, right?

Out of that 52% have paid all the 4 installments.

Okay. Out of that, all 52% -- 52% have paid all the installments.

So there is 21%. Yes. Go ahead, correct.

So INR 91,000 crores is the amount wherein people have paid only part installment?

Yes.

Of which INR 63,000 crores worth of loans have paid 3 EMI?

Yes. Out of 4.

Yes. So then the -- then this balancing, INR 91,000 crores minus INR 63,000 crores, which is INR 28,000 crores, these are the people who have paid 0, 1, 2 EMI. Is that correct or...

Yes, you can click that 0, 1.

Sure, sir, sure. And yes, anything number, sir, on this SME, large corporate?

We'll get you that. Jai, we'll -- in some time, we'll get you that. 10, 15 minutes, we'll get you that.

Sure, sir, sure. And just thing, sir, from my side, this overdue loans. Last quarter, we had INR 74,000 crores as overdue, of which standstill were under INR 4,100 crore, wherein we had provided 10%. What are the numbers for this quarter, sir, as of June end?

These are the dynamic numbers that...

INR 12,000 crore -- INR 13,000 crore at present.

Okay. So INR 13,000 crore is the overdue or standstill?

No, no, this SMA-0, 1, 2 what is being shown here, this is shown -- in the slide it is shown INR 5 crore and above.

Yes.

What is all put together, what is the SMA-1, 2 put together?

Yes, INR 11,100 crores.

INR 11,100 crores.

Sorry, sir, this is the all overdue loans, including SMA-0, 1, 2, even below INR 5 crores also, right?

Yes.

Yes, yes, including.

Sure, sir. And sir, any number for standstill loans?

What is that standstill you're looking at?

Sir last quarter, we had standstill -- loans under standstill at INR 4,100 crore, wherein we had provided 10%. Now you would have recovered some money from that and maybe some would have added. So...

So out of INR 4,200 crores in March, now left is -- leftover is INR 1,700 crore. So rest has been upgraded, recovered and upgraded.

Correct. Rest has been regularized, and this is the only, let's say, INR 1,700 crores, which is there?

Yes.

So just sir, in case, let us say, if these people do not pay, then these people -- INR 1,700 crores would slip straightforward in second quarter?

Yes.

[Operator Instructions] The next question is from the line of Ashok Ajmera from Ajcon Global.

Oh, good, I got the chance again. Sir, so since I got the opportunity once again, this your target of 8.5% of the advances you reduced to 7% now. Even in this 7% also are you looking mainly at the RAM, I mean, the retail-only or you have something else in mind? Because the way I look it, I would not call it exactly as a risk cover, but the banks have become very, very selective and choosy now after having burn their fingers in the past. But because of that, even some of the genuine requirements are also getting suffered. I mean, genuine businesses and genuine requirements are also being denied at the lower level. So what is the exact planning? Because I am -- since I'm in this field also of consultancy and advisory also, at the lower level, the things are not that very optimistic because of this whatever has happened. So what at the top level are you actually planning for this even this 7% also?

I will say this. Ashok, what we are looking at, as you said, that the market is little -- it's yet to get into that total upbeat part of it. That keeping aside, if you look at the way the last quarter has gone and then we moving forward, there is government guaranteed, the 10%, which is coming on total MSME, there is a 10% growth will be coming. And then in the retail side also, we will be selective, and then we will be looking at from the NBFC side where the lateral movement also will be there. Agriculture is totally upbeat and it's moving forward very nicely. And if you're looking at a large corporate where there is a little -- 10% increase is there on the emergency funding, what we have done. In addition to that, if you are looking at an infra, the way the expressways are coming, and all the other civil supplies Markfed and every government-guaranteed advances, there is a still upbeat that's going on. These are the things which we have seen in the past also, and we have grown at the levels of around 10% also. And then though we projected at 8%, we wanted 8.5%. We wanted to come down to around 7% and it will be a challenging number.

And it will be a challenging number. But Ashok, I will supplement to what Chaitanyaji said. That past performance, he was saying, the last year, we sanctioned a total corporate loan of about INR 87,000 crore, out of which INR 60,000 crore was in PSU or PSU backed with government guarantee. The twin advantages were we could enhance the top line, we could also conserve capital. Similar strategy, we are going to adopt. Apart from RAM, we are going to adopt also, I think recently we have sanctioned 2 highway projects, good highway projects with government guarantee. We're looking for more. And government-backed NBFCs also where we have recently done PNB Housing and Can Fin Homes, HDFC. So there are -- in the absence of active corporate demand, these are the things which will help us grow the top line and also conserve capital.

Sir, when you say that the government-guaranteed infra projects, do you mean that the entire repayment is guaranteed by the government? Or they are the government awarded contracts where the risk is carried by that corporate?

No, no, no. Government guarantee means literal government guarantee only. Risk is guaranteed by government.

Okay, sir. On this emergency funding, where also you are expecting some kitty, some more amount to come up to 31st of October. How much was the total eligible or amount or total expected, I think around INR 18,000 crores or maybe -- I don't exactly remember that. Out of that, how much has actually been sanctioned? Or the people have approached? And how much is still the gap, which can still come in?

So entire PSUs if you see and private banks put together, I'm talking about INR 3 lakh crore...

Yes, yes, INR 3 lakh crores, yes, sir.

For which INR 43,000 crore have earmarked as guarantee fund. I think out of INR 3 lakh crore, till now entire system has gone for about INR 140,000 crore, out of which almost 50-50 or a little bit 55% PSUs and 45% private banks. As far as...

That means you're talking about sanction, disbursement is, I think, hardly INR 75,000 crore or INR 80,000 crore?

No, no, I'm coming to that sir. I'm coming to -- when we are working primarily in a feet under street model, the sanction and disbursal, they have to happen concomitantly. And with the kind of COVID thing and all, at the field level, there are certain issues. People not able to footfall has come down in the branches for signing the document and other things. For disbursal level, there will be some roadblocks, that I think we should better appreciate that. So as against about INR 5,400 crore, about 61% have been disbursed. I think it's a matter of time before final leg also disbursal happens. These are very difficult times, sir. Overall -- so at the branch level and that way, I think, PSUs have done a tremendous job, almost more than 90% attendance in office. And all -- I think we need to have little bit of appreciation of their practical problems. In Bank of India itself there are 762 cases of COVID so far.

No, no, sir, I fully appreciate. In fact, the kind of appreciation with this entire banking, especially PSU banking space should get they are not -- what they deserve they are not getting. Most of these announcements are directed only to the police personnel and doctors and medical staff, but not to the bank. There is hardly any mention of that. So I'm seized of this, and I appreciate a lot what is happening and what all the PSU bankers have done. Only thing I'm just trying to arrive at a number that how much out of this additional incremental advances, how much can come in still from -- through this window, In fact, actually.

I think they have recently made some changes. The guidelines is yet to come to us, I think, but we saw in some of the tweets that hitherto individual accounts were not being included for guarantee covers. And they are quite a sizable number. So I think individuals are being included now. Similarly, the turnover criteria and the finance criteria from INR 25 crore to INR 50 crore and INR 100 crore to INR 250 crore, these are also coming in.

Oh, yes. Okay, that will be great. So that will...

So this will help us. It may take little more time, but I'm sure by September end, it should be a thing of the past.

That's good, sir. So on that only, do you think that this moratorium may still be extended beyond August? I mean, what is your gut feeling?

I think we are done with 6 months. I think from our experience, people are really paying up, people have got liquid cash with them. There is overflow in accounts also. I think beyond 6 months, I think -- I would personally suggest moratorium may not be extended. Rather some kind of for the stressed sector, some kind of restructuring package, which is work in progress, I believe.

And sir, one more question in this round. This interest on the working capital on which the moratorium is there up to 31st of August. And this interest during the period of moratorium has to be paid up to 31st March, 2021. So will it be on a monthly basis or on some basis or are a client will have a choice to pay finally on 31st March itself or it will be monthly, whatever the amount of this 6 months interest, will it be paid in installment or he has a choice to pay entire amount on 31st March itself?

See, looking at the type of a moratorium looking at the lockdown scenario and looking at the businesses that where they can generate the cash flows to repay. That's where the FITL come in play. And that is as per the cash flows, they can continue to pay on a monthly basis or they can prefer that what best they can pay it before 31st March.

All right. So choice will be there?

Yes. Yes.

But you will continue to earn interest on that money?

Yes, that's there. It's there on [ accrued ] basis.

The next question from the line of Sushil Choksey from Indus Equity.

Sir, you mentioned in your opening remarks -- congratulations on the results, sir. And great work in the COVID arena. What is the treasury outlook you're optimist and what kind of scenarios we can assume on the working for the next -- current year?

Treasury outlook, as you know, you are the market person, you know it very well. We have done good on the [ sale of the securities. ] And we have done after June also, we have got certain amount of profits. And looking at the type of in yields and then what and the MD said in his opening remarks, the yield levels is looking benign and then a little softening. We look at that making more money in the treasury in the coming days.

Yes. Second sir, what kind of initiative have you taken in view of COVID and future of banking where digital is concerned? Because in last quarter, you did mention when I asked questions that we are initiating a lot of process. So is there anything fructify from digital banking initiatives?

2, 3, things. 2, 3, things I will highlight. By October end or November, we are ready to migrate to Finacle 10. So that is another reason when it's work in progress there, we are not in a position to bring back major changes in the current 7 setup -- Finacle 7 setup. Apart from that, what we have done is we have gone live on early warning signal. On July 31, early warning signal involving all the 81 parameters, where we can post disbursement, we can do more effective monitoring of the accounts and necessary corrective action on time. Then on FRMD (sic) [ FRM ] side, fraud risk management also, I think we are ready to go-live any day. And another major thing, what we're doing is complete end-to-end loan life cycle management, right from lead management to recovery. So we are in touch with 1 or 2 agencies for that. One leg of it is over. I think by the end of this quarter, this loan life cycle management, we should be able to put in place. This is apart from document -- good document management system that we have recently started there, wherein you're major things centralized level, we are doing the KYC and other things. So that is one way. ATMs and all, our ATMs, 5,100 plus ATMs is a good 85%, 90% of time we are maintaining. But interoperable income, we have to go some distance, because we are not in positive territory. That means -- so that part also, we are trying to address. Apart from that, our new [ FEBA ] version Internet banking also, it will be concomitantly released with our Finacle 10, which is like our mobile banking app, has become very popular. I think in the top 5, it comes similarly, Internet banking also. So these are the few digital initiatives we have taken. And by September end, you should see good developments there.

Yes. What would be a stable set of cost to income ratio if I look at long-term?

Ideally, it is 40%. But if you go by our past 2, 3 quarters, we were as high as 58%. It came down drastically to 46% or 47% when our incomes got boosted by certain big recoveries in some -- the denominator effect there. Now this current quarter, 45.18%. It will be a little challenging to delivery, frankly, I think operating cost, we have saved about INR 63 crore to INR 65 crore in the first quarter. And you are aware that not much of transfer, not much of traveling and also, we have saved there. So this 45% is strictly saying may not be sustainable. But by the year-end, we should be happy if we are at around 47% or 48% on a sustainable basis.

That is on an incremental size?

Yes, yes.

Okay. Secondly sir, where do you see your PCR going forward in -- by the year-end because you already had 85%?

We don't want it to go further anyway. Anyway we want it to only -- because if PCR had a spike last quarter when we had to do some aggressive provisioning, otherwise, it was in the range of 75%, 76% only. We only wish that we resolved some of the pending accounts in NCLT and non NCLT cases also. I think 85% should be the ceiling.

What can -- sure. If I intervene here, what kind of recovery are you estimating within NCLT 1, 2, if let's assume 50%, 60% of the cases are resolved between [ March of March? ]

INR 38,000 crore is our block there.

Yes. But based on the provision, what kind of write-backs can you assume if that's postponed?

INR 1,900 crore is what we are seeing in the near term. Based on certain cases, partial progress made in certain cases, but still they are now on hold.

So SBI came and made a statement about housing finance getting resolved by December. If that happens, what kind of recovery are we estimating?

Which accounts?

DHFL.

DHFL. We have got an exposure of INR 4,000 crores there.

And that's 100% provided there.

It is 100% provided there. So [ good will be... ]

That is your estimate. If it comes through what kind of recovery we can...

Difficult to take a call.

[ Now it is 70%, it's...]

It depends on who is coming in? And what's the kind of transaction? It's difficult to hazard a guess on that.

So now your net interest margin of 2.73% and 2.48%. Is it sustainable with higher CASA and higher growth in deposit and business going to government sector, I mean, basically government-guaranteed sector on [ treasury ] again?

So NIM is -- NIM reduction is primarily on account of net interest income, where our interest paid on deposits are more Q-on-Q and sequentially also. And interest collected has about 6% growth, where this has grown by more than 12% there.

Yes, yes. So that's the reason I'm asking with growth in deposits.

Yes. I'll come to that.

But back in government-based guaranteed programs, whereby yield on advances will be lower compared to private sector because of taking lesser risk while at the same time, you improved the end of lending. So will the NIM of 2.73% and 2.48% is sustained? Or it'll...

No, no. It will improve. It will improve because the -- see, we have affected changes in the interest rate in the liabilities also, what I mentioned in the beginning. If -- at MCLR rate cut takes 3 months or 6 months to crystallize and result in less and more interest income. Similar deposit case, it takes little time. I think Q2 and Q3, we will see the rate cuts in deposits taking effect and will be net-net plus.

Where do you see your CASA growth visible based on July basis?

Now CASA percentage-wise, it has come down primarily because of high-growth in overall deposits. It's basically a denominator. We have grown by 15%, 16% CASA.

[ Because this 41% ] sustainable or?

That's what, it can improve only because we are now consciously trying to bring down the bulk deposits. Bulk deposits have gone up from 5% of overall deposits to 12%. Now that we are trying consciously to rightsize it so that the denominator effect will not be there. It is basically a question of aggregate deposits growing much faster than the CASA deposit.

Sir, when your CASA is so good, why our retail credit grows only 61% and our fee income based on cross-sell. So what is our estimate for 9 months?

Last 6 months, as you will appreciate, it's been very, very difficult times. I think no mathematical simulation can give us any idea about this because we are all in a very black hole kind of situation. Only we -- which -- so the retail growth, there were no footfalls in the branches. Many of the self-employed persons, so a lot of traction are happening. Slowly, we are seeing in the month of July, there has been some improvement. Till about June, our retail growth incremental was not something to write home about. Now it is INR 1,500 crores, and that used to be our monthly disbursal figures, INR 1,500 crores retail disbursal figures. So in about 4 months' time, the incremental growth is only that much. So I think September onwards, we will see some improvement, if not full-fledged, I think we'll see some improvement there as well.

Any retail products being tied up to your digital technology, sir?

What are the retail products? Can you, Chaitanya?

Retail products, our -- see, we have already -- it is tied up to the caps. We have caps where it got tied up with all our housing loans and all the retail products are being tied up there. Even MSME is also being done.

Yes, RBL are also. Now from September 1 all RBL are -- we are giving at 6.85% and MSME loans and retail also is very competitive. Rates are not an issue, sir. Now the demand is issue. So we can...

In the overall business scheme, based on government programs as well as -- are we active on the pool side or we are not doing anything on pools?

We are active on the pool side. But see, what happens is to take the pool, we need to keep around 10% of the inspection is a criteria where we have. That is where a little because of the lockdown scenario, it's going on. That's why though we're -- sanctions are there, the disbursements are becoming very less in that.

Okay. My last question would be, sir, we had -- the reason I'm selling of cross-selling Bank of India is most prominent banker to the stock market in Ketan Parekh's camp. Or you can see it prior to that, I think we had 90% share, HDFC Bank and ICICI are now bigger in the market. The touch points of CASA customers, I'm quite sure from the stock market point of view. And looking at the current trend the -- I think Bank of India has a big touch point which I think on a cross-selling should be capitalized and that's the reason I asked that question.

Yes, yes, yes. Good.

The next question is from the line of M.B. Mahesh from Kotak Securities.

Just a few questions from my side. One is, you just kind of made an initial comment on it. If you could just kind of give us some color as to -- of the INR 58,000 crores of gross NPAs that you have? And for roughly about INR 30,000-odd crores that you have on the corporate side. What are you seeing in terms of recoveries for the year? And what would be the large ones that where you have a reasonable amount of certainty that you will be able to close it by the end of this year?

End of this year. See, for -- I'll tell you, roughly about INR 3,000 crores, we are looking at INR 2,500 crores we are looking at for Q2. So that includes some amount of progress in NCLT and revising the ARC sale process, which was not there over the last 4, 5 months. So there about INR 700 crore to INR 800 crore we are planning. And plus our normal recoveries with some new schemes because many of the OTS and compromise proposals they are also in a state of kind of standstill because people are not available, at the moment travel restriction and other things. So in fact, we have extended the time line for example, June 30 time line, interest charging and other things, we have also extended that. We have waived that also. So by September, we see a considerable number of traction there. So roughly all put together, NCLT, ARC sale and normal recovery in cash reserve about INR 2,500 crores for this quarter.

And for the full year sir?

Full year, we have to...

It is equal to upon the NCLT opening and...

INR 38,000 crore, as you rightly told, out of INR 58,000 crore as in NCLT at various stages. And there is a news also that the 6 months thing also may go up to 1 year also. So we have made representation to activate NCLT mechanism so that resolution happens faster. Depending on that, I think the trend rate should be in a matter of about INR 2,000 crore per quarter. That's what it should happen there.

Okay. And the second question is of the outstanding loan books that you have, how much is the loan assignments that you have from the NBFC sector? For example, let's say, Slide #7, you have grown your mortgages?

Pool -- you mean -- okay, assignment -- direct assignments you're talking about India, NBFC typically maybe having around INR 4,500 crores.

This means -- this will be predominantly in the retail loan book, the [Technical Difficulty]

Retail and MSME also.

Retail and MSME, both. The pools are both.

You have just about INR 4,000 crores, is it?

Yes.

Yes.

Is there any -- so you to restrict this -- clarify. Is there any arrangement with the NBFC that if in case there is a default, you could replace the loan or there is a guarantee provided by the NBFC or nothing of that sort?

[ Frankly ] so for a direct assignment, it's directly assigning only. They carry their 10% of the risk. That's what they carry it. Otherwise, it is our risk.

The next question is from the line of Amit Rane from B&K Securities.

Sir, in the initial part of the conversation, you said about scenario 1 and scenario 2 where we are estimating slippages. Can you please repeat that part? And give some color how we have done those estimates?

Yes. When I mentioned about scenario 1 and 2, I was referring to this moratorium extended accounts only. And in an extreme scenario, in a rather mild scenario, we were expecting a slippage to the tune of INR 3,200 crore. And in a moderate scenario, it is about INR 4,500 crores.

So these are the slippages that we are escalating out of the morat book?

Yes, yes.

Okay. And sir, one data point on the sectoral breakup of morat book, if you can give on the retail MSME and corporate?

Yes, I think Jai also wanting that. If Jai is listening, you can also note down. Out of INR 1,66,000 crore presently under moratorium dispensation, agri 8%; retail 20%; MSME 20%, corporate, 36%; others, 15% -- 18%, sorry.

The next question is from the line of Lalitabh Shrivastawa from Sharekhan.

Sir, [Technical Difficulty] congratulations on a [Technical Difficulty] Sir, just wanted to...

Sorry to interrupt, Mr. Shrivastawa. Sir, we're not able to hear you clearly. There is a lot of disturbance from your line.

Hello. Am I audible?

Yes. You're audible.

Yes. Sir, just wanted to have a sense on the Mudra loans portfolio that we have, if you can give us some color as to what is the current outstanding and the health of these loans? And how much of that proportion would be under moratorium? And which sectors or which segments you are seeing stress building up on that segment?

So Mudra, I can tell you, often -- I don't have the exact numbers, but about -- it's about INR 13,000 crore portfolio, out of which Shishu alone is about INR 750 crores and the rest are split into Tarun and Kishor. And like in many other banks, Shishu, we had a concern, although the base is low, but the NPA percentage, there is about 19% to 20% whereas in Kishor and Tarun, it's about 8%. Overall, NPA is about 9% to 10% in the entire Mudra portfolio. And regarding Mudra dispensation and all, I don't have the figures as of now. My MSME GM also is not here. If you want you can send a mail, we will send the details to you. [ Raghav ] Shankar?

Noted sir.

Noted sir.

You're from Sharekhan, right? Lalit?

Shrivastawa.

Lalitabh Shrivastawa.

Lalitabh Shrivastawa from Sharekhan. Kindly, you send -- take the number and speak to him, and we can -- don't mind giving it on email.

Yes, sir. Fine enough.

The next question is from the line of Amit Sharma, an Investor.

Sir, I just wanted to reconfirm. As -- initially, we had a waterfall [ that seems ] we shut from INR 90,000, INR 60,000. So customers who have not paid any EMIs, would be what amount in absolute terms?

What he is asking?

Yes. This is regarding the moratorium, what the customers have not paid any amount. See, we have 10% of these moratorium given accounts, wherein the people the ranging from defaulting from 1 to 3 installments. So this contains in the 10%. I don't have exactly that what comes for the no installment, actually. But it falls under the 10% of it.

The next question is from the line of Sushil Choksey from Indus Equity.

Sir, what kind of provisions have we assumed for the wage settlement?

Provisions, we have done 15%. 15%.

No, 15% is a settlement, but what is the provision we have carried out and what is the...

Till now, cumulatively, we have carried out around INR 1,400 crores.

So we are adequate on the number, which is...

Yes, yes, yes.

Yes, absolutely.

Yes, Sushil.

The next question is from the line of Ashok Ajmera from Ajcon Global.

I think maybe because of Raksha Bandhan, some of my friend analysts are not there today. But I will sir, actually seize this opportunity again for clarifying a few issues. Sir, we have been talking about priority factor advances, like you said, a good opportunity in the agriculture also. And so there is some Food Corporation of India storage, the big silos of projects of INR 40 crore, INR 50 crore each. That also comes under the priority sector, but I think our bank is not very optimistically looking at that. This is one thing which I have just observed. Secondly, is it worthwhile to buy that priority sector and pay the penalty of or fees of INR 40 lakhs -- INR 40 crore or INR 50 crore vis-à-vis actually giving the advances? I mean the cost-wise that is more beneficial to you? To buy it out or to actually lend money. This is one question on this priority sector, sir. I think we paid some fees of some INR 40 crore or something, if I'm not wrong.

To Ashok, your observation is absolutely perfect. We have activated this, you're talking about the silos for the Food Corporation of India.

Yes, sir. But they are pending for 6 months, the proposals are pending in cold storage in the bank for 6 -- 6 months. Where the Food Corporation, total guarantees is there for the business?

Yes, yes. See, now what we have done is we have activated, and we have done in agricultural business centers also. We are pushing them to see that the faster the delivery should happen. Okay. We will look into wherever the cold storages are there, we will look into. And then we will see the disposal is faster.

So according to you, the lending is better than paying the money as a fees and then buying the credit?

Absolutely. And Bank of India is known for the agricultural credit also. And then we will be coming back to that.

And sir, coming back on this moratorium, see 10% is INR 16,600 crore, isn't it? Of the total INR 1, 66,000 crore?

Right.

So when you said that INR 28,000 crore is 0, 1 and 2. And out of that INR 16,600 crore is 0, 1, 2, 3. So it means the residual figure of INR 11,400 crore is those who have not paid anything. I mean, that's what I presume.

See, who have not paid anything, we will get back that figure because I was trying to see that...

Because at one place we have discussed and said that INR 63,000 crore, 3 installment and only 1 installment is not paid. Then we said the residual figure of between INR 63,000 crore and INR 91,000 crore that is INR 28,000 crore is those one who have not paid 0, 1 and 2. Then we said 10% of total moratorium, INR 1, 66,000 crore is -- that is INR 16,600 crore, they have not paid 0, 1, 2, and 3. So it means anyway, I mean, this is just for my personal.

That number, we will give you during the course of this conference only. We have asked for that number. We only took how many -- how much is safe. And 10% was there, but how many have not paid at all, that number we will get to you during this conference only.

And also specifically the numbers what you are looking at, Ashok, we said that around INR 85,000 crores, it is -- they have paid all the installments. And then around INR 63,000 crores, they have paid -- they have paid 3 installments, and there is a 1-month default, right. Taking care of out of INR 1, 66,000 crores. So you are left with around INR 16,000 crores, INR 17,400 crores you are left with.

Yes, another INR 600 crores. Yes.

Yes. There will be a default of 0, 1, 2 install -- no, there is a default of 2 defaults, 3 defaults or 4 defaults. It's like that. The 10% continue.

Yes, 4 default means 0 paid. I mean a...

Exactly. The 10% contains all the 3 combinations.

No, sir that is INR 28,000 crore.

No, no, no. That is INR 11,000 crore. Actually, it contains people SMA-0, 1, 2, all put together around INR 11,000 crore. These were actually not paid 1 installment, or 2 installment or 3 installment, in fact. So ask is INR 11,000 crore. Against which, we have made a provision of because somewhere in these sector accounts we have removed because we make the restructuring provision also. So that our balance left is INR 10,000 crore and all when -- which we carry INR 1,047 crore is the promise.

The 10%.

10%. Okay. Now sir, coming back to this NCLT, total INR 38,069 crore. We have NCLT 1 and 2 of INR 4,329 crore, which is 100% provided for. Then we have the NCLT cases filed by the bank, there is INR 5,552 crore. On that, how much provision is met. And then we have NCLT cases, which other banks have filed for INR 28,288 crore.

I will tell you that in both the RBI list we're 100%. In 80 cases where our bank has filed that where the balance is INR 5,552 crore, there, the provision is 85.24%, 85%.

85%, yes. And...

So then the other banks which are filed there, it is 89.47%.

Great. Good sir. It's a good data.

Overall NCLT cases, our provision is 90%. As against INR 38,069 crore, the provision is INR 34,271 crore.

Okay. So the maximum, something that happened is only for INR 3,800 crore?

Yes, yes, that appears to be so.

I mean, out of that, the provision is required to be made for the balance?

Yes, yes.

And sir, of course, you have replied in part to that question about that NIM that the interest -- the NIM of 2.73 and this year, because of the profit, even this quarter, the ROA is also good. So -- and PCR, sir, AUCA and non AUCA, I mean, this 84.87%. And if AUCA has taken out, I mean there is -- how much is the PCR net?

Net PCR [Foreign Language] 85% is gross, net PCR [Foreign Language] after you take out?

Yes, net PCR, it comes to exactly and till now around 72% to 73%.

[Foreign Language] I mean, 73%?

Yes. It will approx 73% but we'll confirm about that Ashok.

[Operator Instructions] The next question is from the line of Jai Mundhra from B&K Securities.

Sir, based on your moratorium number, right, a lot of people, despite being in moratorium, they are paying, right? As you said, there's a lot of people who have paid all 4 EMIs, then there are who have pad 3 EMIs. And sir, do you think there is a need for onetime restructuring because the only, let's say, 10% are such people which have not paid or which are delinquent or 1 or 2 installment. And in the next 1 month, I mean, they can also be, let's say, come back on track. So do you think that you really -- you have -- I mean, particularly Bank of India needs onetime restructuring? Because otherwise, it looks like things are falling in place for you.

Let me put it like this, Mr. Mundhra. See, when MD comments also, the restructuring, what we are looking is for the selective sectors. And in that also, even every customer borrow at -- whoever -- whatever it is the money it is having he's trying himself to push towards that and then honoring his commitments. But looking at the type of a lockdown looking disruption of the supply chain, what's happening, it is essential that the business should continue as usual, and it should remain as a standard and move forward. That's where we are looking at selectively, the restructuring will be beneficial.

I can only cite an instance of construction sectors. As you may be knowing, Mr. Jai, construction sector is one such sector, which is linked to about 272 sectors through forward and backward linkages. Now construction is also one of the sectors affected by the lockdown. The problem of migrant laborers and stalled projects and earlier legacy issues and all in there. So although some people are saying that it should be only the hospitality, the tourism, the leisure and other things. Similar such sector construction, which are having wider implications for the overall economy and its restarting also should be -- but again, our suggestion will be, instead of blanket thing, it can be on done case-to-case basis, sector to sector basis. That we always -- otherwise, there may be cases of adverse selection or some other things. But I think RBI is working on it now. Ministry also is engaged. I think they will take all these aspects into consideration and devise something which is good for the economy and for the banks.

Correct, sir. Yes, that's very helpful. And just last thing, sir, why, hence, your risk-weighted assets gone up? Because incrementally, most of the lending seems to be sovereign or better-rated corporates. So I just did not understand.

Your observation is very correct because we are doing the type of financing with the risk weight asset is very low. But at this time, we find it that because of the liquidity, what we're having the excess liquidity and way the investments have gone, and then the treasury side investments also. The market risk is one big part of it with the risk-weighted assets have increased.

Ladies and gentlemen, that's the last question. I now hand the conference over to Mr. A.K. Das for his closing comments.

Yes. Chaitanya, I think I having given the opening remarks, I think I will leave it to Mr. Chaitanya our ED to...

I'd say thanks a lot for all the people who participated in that. And then who have come again and again also because of the Raksha Bandhan that other people could not make much. Thanks for all the feedback what you have given. We take your feedback also. We have given our point of view what it is but it is -- one message is that we have crossed the INR 10 lakh crores, and then we meet profit, and we are in the path of our profit. We have made the adequate provisions -- additional provisions also to take care of the moratorium and then looking at the COVID scenario. In course of time, we'd -- we'll put all our efforts to see that we perform very well. Thanks for all your cooperation.

Only one thing I wanted to add that as a matter of abundant caution, we could have shown a much higher profit, not only this quarter or the previous quarters also. But as Sushilji was asking, wage revision is something we never wanted to compromise that. So we provide it in a more proactive manner. So that that should not -- we should not be found wanting there. Similarly, this time around, we could have gone well beyond INR 1,200 crore and all. But then we thought it is prudent enough to -- in good times to build buffer, so that we take all the shocks, if any, limit of ease in the current and the subsequent quarters. So that was the basic intention. I believe all of you have taken the points in the right spirit and whatever feedback and suasion. Your questions also enlighten us a fair bit. We'll work on that. And the questions to whom we could not give answer, we will definitely respond. And all of you are welcome to join us also any other time you feel like. Thank you, and thanks a lot.

Thank you very much.

Thanks.

Thank you. Ladies and gentlemen, on behalf of Bank of India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.