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

Ladies and gentlemen, good day, and welcome to the Bank of India conference call. [Operator Instructions] Please note that this conference is being recorded. We have with us today, Sri A.K. Das, MD and CEO; Sri P.R. Rajagopal, Executive Director; Sri K.V. Raghavendra, Executive Director; Sri M. Karthi Keyan, Executive Director; Shrimati Monika Kalia, Executive Director; and other top management team from Bank of India. I would now like to hand the conference over to sure Sri A.K. Das Gupta -- Sri A.K. Das, MD and CEO. Thank you, and over to you, sir.

He confused us. Thank you. Thank you very much. Good afternoon. I extend a very warm welcome to each one of you for today's interactive session and share with you the financial results for Q4 of last year and the entire full financial year FY 2021. At the outset, let me thank all our customers and stakeholders, including our analyst fraternity for their unstinted support during the challenging times. During the financial year, the bank, among others, extended financial support to various sectors of the economy for alleviating stress caused by the pandemic. The bank, at the same time, continued its core strategy of improving asset quality and reorientation of advances growth towards RAM segments and other segments. Gross and net NPL of the bank during the year witnessed improvement, both quantum and percentage-wise. The net NP ratio, as you might be seeing in the presentation, declined from 3.88% in March 2020 to 3.35% in March 2021. The bank maintained a high PCR of more than 86%. Slippage ratio came down from 4.61% in March 2020 to 2.40% in March 2021. There has been a marked improvement in credit costs also, which came down from 4.06% in FY '20 to 1.80% in FY '21. Although pandemic Indian stress in various economic sectors is inevitable, the bank remained always resilient for moderating its impact, especially on overall asset quality. As a deliberate strategy, the bank, apart from catching with the corporate segment, redirected, in a more reinvigorated way, higher credit flow towards RAM segments, which witnessed a credit growth of 10.57% and its share in advances increased to more than 50% there. Credit to MSME segment went up by 12.7% and retail credit by 11.9%. The bank has taken several initiatives to enhance its competitiveness in the area of IT. We are upgrading our system definitively then very shortly. We decided within the month of July. The platform is being instituted for providing our customers an end-to-end digital journey in lending processes, apart from enabling bank to widen customer outreach through improved MIS system and data analytics. Specialized processing centers in the field of MSME, retail and agri had been revamped, and their number is being increased. It is these centers that will prove to be key drivers of growth with improved tax and margins. During 2021, the bank's capital has been augmented through 81 bonds of INR 1,352 crores. And coupled with infusion of capital by government to the tune of INR 3,000 crores and flowback of internal accrual, the capital adequacy ratio has improved from 12.51% in December '20, with significantly higher 14.93% in March 2021, with CET1 of 11.51%. We will continue to build and maintain the bank's well capitalized fund to support growth and boost resilience. I'm happy to share that the bank has posted a net profit of INR 250 crores for the quarter 4 of FY '21 and INR 2,160 crores for the full year FY '21. I thank again all of you for your continued support, and place on record my sincere thanks to all customers, other stakeholders, including government of India, the Bank of India and our staff pool of 51,000 plus who battle all odds during COVID times for helping the bank reach the present stage. I now invite -- there is a presentation or?

No.

Okay. I think with these opening remarks, we open up the floor for interaction. Thank you very much.

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

Sir, the performance of this quarter is little dismal. In fact, it came much below our expectations, because this quarter -- I mean, the last quarter, we were very gung-ho. But this quarter, I think we have failed on most of the parameters. So it's straightaway like the advances -- like in the last time, you had assured that there will be good growth of the advances. Even the profitability front also, we are a little bit disappointed. And if you look at the -- I mean all the ratios, everything in this quarter has become negative, whereas the COVID effect for the second wave started only from April. So my first question, sir, is what is our -- what was our collection efficiency, sir, in March, April and May, sir?

Our collection overall was 91% overall in the month of May. March, April and May, it is over 90%.

That collection efficiency is giving a good assurance for the -- if it is good in April and May also. Having said that, sir, on recovery front from the written-off accounts, as we have failed that it has been lower, much lower than the expectation. And if you look at the -- even the like pro forma -- credit pro forma provisioning or pro forma NPA, the actual NPA is about that. How much was the -- this calculation in the judgment of the pro forma NPA over and above? How much we had to provide?

INR 7,198 crores to be precise, where the pro forma NPA that crystallized soon after the regiment. I think overall, it has been INR 8,000-plus slippage compared to about INR 15,000 the previous year. And our 8,000 slippage, if you have observed the numbers of other banks, it is much, much better than. 8,000 slippage is a good number according to us. Kindly compare this number with other -- the major peer bank numbers also. The slippage is 1 area where we have done exceedingly well last year.

Good to know that. Sir, on the operating profit also. I mean our -- the cost-to-income ratio has gone up to 58% from the 51% in Q3. What could be the major reason for that?

Quarterly trends showed it as gone up to 58%. Although for annual, it is 49.92%. The major factor there was, first is payment provision for wage settlement. Second more important factor was the denominator aspect, where our operating profit has been lower for various reasons, which I will come to a little later. So the income part -- net total income part also is affected. So it has reduced, because our net interest income also was negative. So that has affected the ratio. So 49.92% is the overall full year cost-to-income ratio, which we are planning to bring down below 47% by the end of current financial years.

Yes. Because again, the income of -- which has -- came down to INR 11,380 from INR 12, 310. The interest expenditure remains almost the same except INR 110 crores. So total net income is only INR 4,990 crore as against INR 5,807 crores in this quarter. So what exactly went so much wrong? I mean, that is what we were wondering.

Nothing wrong. Nothing wrong, except the fact -- the core fact that our advances grew at 1.28%, which was very low, that we acknowledge. And a lot of rate transmission happened. And over the last year, we tried to switch over many of our accounts. For example, MSME, 63% of our accounts are now -- RBLR linked. Similar in retail, about 31% of our accounts RBLR linked. So obviously, it will have an impact on the income level. But the major factor is low advances growth, which we tried our level best. We did a lot of sanctions. For example, in corporate segment, we sanctioned about INR 92,000 crores. The offtake was only to the tune of INR 46,000 crores, so 50%. Similarly...

Sir. There is a lot of scope in MSME, sir...

Can you let me finish, Mr. Ashok? Can you let me finish?

Yes, sir. Yes, sir.

You asked a lot of questions. I need to answer it to your satisfaction. And similarly, in line of credit or the CC, the availment, 63% only. It has remained like that for the entire year. All of us are aware of their demand issues. The real sector uptick is not there. So I think it's a matter of time before things start picking up. And accordingly, we will move. So our credit book is also a function of the overall demand scenario. So this being the case and rate transmission compared to 250 basis points policy rate cut, we have as in about 135 basis points in our MCLR. That also has affected income. I think it's a temporary phenomena. But gradually, we have to move down to lower spreads. Like in most advanced countries, 3% is slowly becoming kind of a luxury. So we need to operate more efficiently within a narrow spread. That is what is our take, and we are aligned to that reality.

Sir, what I was saying only in the MSME space...

Sorry to interrupt, sir, this is the operator. May I request you to rejoin the queue, please, for any follow up? [Operator Instructions] The next question is from the line of Jai Mundhra from B&K Securities.

I have a couple of questions. Firstly, sir, if you can tell us the restructuring or I mean onetime restructuring that we have done so far? And what is the number under implementation? I mean, where we have received the proposals.

Okay. Once again, I'll hand you over to my Executive Director, Mr. Karthi Keyan. He'll respond to your questions. Please.

Sir, certainly, we have done restructuring, which are eligible amounts -- amounting to INR 33,400 crores, of which we restricted about INR 4,428 crores as on 31/3/21. The segment being in personal segment, personal loan segment, it was about INR 738 crores. In MSME, we did about INR 3,449 crores. And in corporate credit, it's about INR 640 crores. Thus, the total came to around INR 4,428 crores.

Sure. And what is the -- I did not hear the number correctly. What is the total number? So INR 4,400 is the -- which have been implemented? Is there anything which is over this in pipeline, et cetera?

Yes. Going forward, probably in the COVID 2, yes, there's -- initially, if you could see, sir, the percentage of arrangement of restructuring was a little bit less because the impact was much lower. But going in the COVID 2 scenario, probably, yes, the security is going to be a bit harsher. So our COVID 2 restructuring will give a lot of scope for that. Nearly about 19 lakh accounts are eligible for it and a book of about INR 91,000 crores. So we feel about 60% of them will undergo -- there's a good -- we have started that process. So we can see about a good number of responses coming in or accepting this portfolio.

Okay. Sure, sir. So that is -- there was one. And sir, secondly, on your SMA-2 book, right, where you have given the number which is clemency data. But if you can give the number which includes below INR 5 crore exposure also, would you have that number?

Yes. So presently, you would appreciate that our SMA book our [ CEO code ] last year, if you've seen the beginning of it, it was around that 20% of the book. But due to our efforts, we have reduced it to about 12% at 31/3/21. And going forward, in just couple of months, we have reduced it to 11.5%. So there is a good fresh slippage control, which is happening as our MD and CEO told in the opening remarks. Our fresh slippage is much, much better when compared to the peers in the market. We have the numbers. In SMA-2, we have total of INR 16,460 crores, which is the SMA-2 portfolio, of which, retail is about INR 4,076. Agriculture will amount to INR 3,091 and corporate credit will be around INR 6,423 crores. So there is a good numbers happening, and we are sure that this ratio, we intend to not cross more than INR 3,000 crores. That's our plan for Q1.

Right. So if I hear the number correctly, sir, what is the total -- sorry, if you could repeat what is the total SME to retail, corporate and total including below INR 5 crores?

I'll give you present numbers or you want March 31?

March 31, and whatever number, sir. I want the total number, I mean, below INR 5 crores or so.

INR 46 -- INR 52,164 is the number, sir.

This is SMA-1 to 0 all put together?

Exactly, right.

Of this, you said -- and this is the present number, right? March, April end or what is this, March end? May end?

March end.

Okay. And this would have gone up only, right, because of the pandemic in the April, May?

It has come down. That is what I'm saying.

For the quarter, Mr. Karthi has told you, Jai, that SMA, total SMA portfolio as a percentage of loans outstanding, it was 20.17% in December 2020. It has come down to 12.59% in March '21 and further to 11.51% in May '21. So there is a progressive improvement in the stressed-asset portfolio.

The next question is from the line of Rahul Kumar from [ Demand Asia ].

Sir, just one question. Did you mention how much was the reversal -- interest reversal this quarter?

Interest reversal is around INR 660 crores.

INR 660 crores?

Yes.

And secondly, in terms of credit growth now, system credit growth is still close to 6%. For next year, what are you targeting? What are the key levers, as you mentioned about sanctioned pipeline?

Yes. Around 6% to 6.5%.

Around 6%. So maintaining what the industry growth would be next year, sir, something like you're confident to deliver?

Yes.

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

My first question is, you've consolidated the bank well over a period of last 12 to 24 months, including in COVID. And seems that bank's full top management team is now in place with new ED [indiscernible]. How are we well placed? How are we capitalizing on the situation with sufficient equity available and our PCR is also there? Recovery has been stable. And you are seeing the recovery process for the current collection is also good. So how are you seeing if COVID over? And if India is going to grow at the GDP forecasted by RBI, how are we well placed to capitalize?

Yes. As Mr. [ Suresh ] said, we are, at the moment, projecting a guidance of about 6% to 6.5% growth in credit, but I'm sure that number will undergo some revision once we are through with Q2 when we will see the full impact of COVID going away. So -- and a lot of economic activity. Plus there are the related dispensations and new schemes, ECLGS IV and COVID 2.0. I think we will -- the 6% and 6.5% will be a minimum we are aiming at, but it could go up. So we will need a revisit, and maybe while we are sharing the Q1 numbers, we will be able to give a definitive kind of guidance on that. And capital part, we are well capitalized, INR 14.93 is group capital and CET1 of INR 11.5-odd. So I think there are no issues. Capital will help us expand our credit book. And also resilience to us to take any kind of shocks, if at all there is any. So we are well poised. I think only we are waiting for the demand segment to get revived and the normal activities to start.

Okay. Secondly, sir, if there is media highlighting since yesterday that [ media ] will short listed 2 candidates, and 1 big bank and 1 small bank. So our name is surfacing in that. Do you have any cues or any indication if we are the candidate? How are we going to?

Absolutely. Absolutely no cues because not 2 alone, but there are different kind of permutation and combinations making rounds in the market. So I think it's prudent to wait for the final call in black and white and then respond to that. As of now, we don't have anything official in this regard there.

Second question, sir. With inflation likely to rise because of commodity inflation, especially to you, and if the demand is going to increase post COVID, assuming everything stabilizes in the next 30 days, and we don't call -- we don't face another phase after that. How are we placing the treasury, sir?

Sorry, we like to?

How are we placing the treasury? With the rising inflation trend, the bond market will definitely have a turbulence. How are we placed in that?

Yes. My Treasury Head will respond. Yes.

Yes. Yes. The inflation expectations have been at an elevated level since the beginning of the financial year, but the RBI has been incoming with the asset overtly and overtly and answering, technically, 6%. And RBI has today announced you'd have 2 also with the kind of corporate market cooperations and conventional commercial to RBA building. We think the treasury bill points to reputed performance in the next year only.

We are comfortable with RBI's direction rather than worrying about what leads led by inflation. That's today?

Inflation and supply cost will remain. But I think RBI has been reassuring the market with its open market operations with takes over and COVID interventions in the markets, and the yield has remained, I said, around 6%. And we expect the yields to remain in this range.

Considering the accounting policies to become RBI customers [indiscernible].

Yes.

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

Just 3 questions from my side. One, on the -- in your Page 26, there is a restructuring of an aviation exposure there. Did it move to the NPL line also?

No, it has not. No, it has not.

It is in a state it was restructured directly.

Yes, yes. It was restructured last year only.

No, it's not visible in FY '20. It's visible in FY '21.

See, the point is no, it is not slipping into NPA for a very simple reason that there is a sovereign guarantee available from that particular account from central government. As of the IRAC on -- if there is a sovereign guarantee, it may not be marked down as NPA.

Okay. Okay. Perfect. And sir, some of the other banks, the recovery or the income from written-off accounts has been on the lower side this year. Any broad suggests -- you've got indications how are you seeing next year?

Members of the management...

The NCLT recoveries -- since NCLTs have started, We feel that NCLT recoveries would actually bring us good recoveries in written-off accounts, because most of these accounts are written-off accounts, those that are not NCLT. And most, we have equity of around INR 40,000 crores there in the NCLT, where the -- they are looking at the potential recoveries, the current yield..

Okay. Any broad indication in numbers or?

It is very difficult to give indications, with the NCLT not fully functioning, but part of the things will be clear.

Okay. My last question is on the NERP. Any broad indication as to what would be the benefit for you? And have they told you anything with respect to how the accounting giving you a percent?

Yes. Harit, you can respond?

Yes. NERP, as things stand today, we have identified accounts aggregating with exposures, aggregating INR 2,000 crores.

Sorry, how much, sir?

Sorry to interrupt. Members of the management, your voice is very muffled.

Yes, yes. I'll just respond to that. Just listen to me. My hedge is like this. The advantage in terms of exchanges is offset from bank to the NRPL books is very apparent in terms of gross NPA numbers coming down substantially in the asset side of the book. And in the investment side of the book, anyway, NAV will be calculated and they're all valued properly. And whatever derating that is required with respect to those assets will be derated and then it will be booked at the value it is supposed to be booked over there in the investment books. So there will be both reversal of provisions wherever possible, and if there is an appropriation of provisions also in some cases. So accordingly, in terms of my asset book, it has substantial benefit in terms of reduction in the gross NPL levels.

The other question was in quantum around it...

We have -- in the first short list that has been drawn up, there are about 21 accounts. We are involved in 21 accounts amounting to INR 5,500 crores.

And these are all currently gross NPLs? Or it's already been written off and more out of the books?

All the accounts are 100% [ provided ] accounts.

Okay. So add backs, you're saying there will be some reversal on account, sir?

Yes.

And when are you expecting this -- when is it expected to be completed?

It will start functioning from the end of June, we are envisaging. Let the things crystallize, then we will -- in Q2, we will be in a position to tell how the things pan out.

The next question is from the line of Rahul Gupta from Morgan Stanley.

A couple of questions from my side. You earlier mentioned that around 4,400 restructuring is implemented until now. So what would be the restructuring which is involved and not yet implemented under restructuring one?

That's what I -- earlier, I had said that nearly 47 lakh accounts were eligible for restructuring in COVID 1. Only 15 lakh accounts were restructured. But now going forward, COVID 2, we anticipate a book of nearly about INR 91,000-and-odd crores aligned with that. And of this, we anticipate about 60% of that will get certified in the COVID 2.

So wanted further to clarify what Karthi has said. Basically, we don't have any cases where they remain in book, had to be restructured. So whatever accounts where invocation has happened, where borrower has given consent for restructuring were eligible for an -- they have satisfied the criteria for restructuring, they stand restructured as of date. There, there is nothing currently booked and they have to be restructured. Of course, in terms of COVID 2, we are envisaging around INR 4,000 crores of outstanding book May of restructuring because, again, all these schemes are opt-in schemes where borrowers have a right to opt in or opt out. And in our case, what happened is the first COVID 0, COVID 1.0 restructuring, many borrowers did not opt for restructuring. So we are just waiting and see whether it's COVID 2.0, there may be demand for restructuring. That's what we have been envisaging, because there's a lot of stress in the MSME books from the borrower side.

Got it. Got it, sir, very clear. So my second and last question is that you earlier mentioned that overall SMA loans outstanding would be around 11.5% by May end. So what would be this number only for SMA-1 and SMA-2 as of May end?

Can we have the number then?

It will definitely -- come, see the point is the restructuring will definitely see that the fresh slippages are going to go down. And as of now, I was just saying it has come to 11.5% in May. So going forward, it will go much better. We anticipate lower numbers on this.

Yes. Historically, if you see -- Rahul, historically, the bank, in the past years, in the absence of COVID, we used to always have an SMA book of around 6% to 7%. Okay. It never exceeded that even in the last of times in terms of the -- - in-balance sheet prices that the banking industry has. So it will continue to be at 6%, 7%. So what has happened is the COVID has actually at aggravated. Added to that, the moratoriums given, and then some MSME book coming into a little stress, and then retail book is also coming into stress. All these have added to this kind of percentage is in the assessment level. We feel that it will taper down to -- back to 6%, 5% going forward.

Okay. I got it. Very clear. My question was that out of 11.5% overall SMA loans, what could be SMA-1 and SMA-2?

The SMA-2 is around 4.5% as of date.

And what about SMA-1, sir?

The SMA-1 is also -- some of it is not even lessened that around 3%, 3.5%.

In fact, the entire SMA number is equally spread over 0, 1 in India.

The next question is from the line of Suraj Das from B&K Securities.

So I have a couple of questions. First question is on ECLGS. So sir, if you can just give us the amount which was sanctioned and disbursed under total ECLGS?

ECLGS? 5,000 -- the total listing sanction was INR 5,200 crores, out of which dispersal about INR 4,700 crores under ECLGS. And in the current ECLGS 2.0, I think about INR 700 crores has been sanctioned and INR 500 crores have been disbursed.

Okay then, my second question is, sir, if you can give us the absolute amount for BBB and BB-rated exposure on the corporate book? And what is the corporate -- I mean corporate GNPA?

[ SCRL] Corporate [ GMP ], we will not be able to give.

We'll share with you those...

PCR specific to corporate accounts, we will not be able to give you right away but will be booked -- I'll tell you, as of March, AAA is INR 3,300 crores. AA, 14 accounts, INR 8,950 crores. A, 13 accounts, 6,296.

This is -- BBB is -- BBB as of now is around INR 3,804 crores in absolute numbers.

Yes. And BB, sir?

BB is not -- it's very, very less, very less. It is at INR 10,000 crores.

Okay, sir. And sir, my last question is on the -- moving to new tax regime. So sir, I mean, what is your thoughts on moving on to the new tax regime? And what is the outstanding DTA that you have on your balance sheet?

Thank you, sir. I see the new tax regime currently in [ that effect ], we have -- that something is pending in the court regarding the MAS credit. The MAS credit, that less the entire decision comes under MAS credit, there is around [ INR 845 crores MAS credit we are yet to take in our books. And then subsequently, we will go for a new tax regime. After we get the very savings in our new tax regime, once there is a good profit the next year. DT was out INR 8, INR 9.

DT is around [ INR 14,000 ].

This year, it is like this. Basically, what we are looking at is the switch over a new tax rate of 22%. Of course, the frozen counts of it, we are still bearing it. And it will largely depend upon the decision of the court on minimum out of net tax. So if they're going to get that, then that benefit will go on the year [ derived ]. And in terms of switching over to new tax regime [indiscernible].

Okay. Okay. Understood. And just one clarification. So on the Slide #26 that where you have given the restructured advances slide. Sir, it includes the COVID-19 restructuring as well. I mean is this a total restructuring book that you have?

Yes. Yes. It is INR 11,000 crores you are talking about, no?

Right, right.

Yes, it includes COVID.

The next question is a follow up from the line of Ashok Ajmera from Ajcon.

Sir, now is in my second opportunity, sir, I would like to have some of your comments on the segment-wise reporting of the profitability. Sir, while the treasury profit has gone down from INR 1,564 crores in the Q3 to INR 844 crores, there is a major loss of INR 1,438 crores in the retail banking. Generally, it all depends on the provision which you make into the various segments. So can -- do you have any ready calculation for this? That why the retail banking has given the loss in this quarter of INR 1,438 crores, wholesale banking has given the profit of INR 1,025 crores, treasury, INR 844 crores and unallocated items have given loss of INR 166 crores. Whether someone can explain this that why such a variance is there in the numbers of Q3 and Q4?

There are 2, 3 things. Basically, what has happened is the -- of course, you know what the treasury numbers are already, and the corporate book continues to be at a particular level, and there is a switchover in many cases in case of retail to RBLR and the quantum of interest that we gained in these loans have come down substantially, okay, in the last quarter also. Because the lag effect was there and then it's got into the last quarter further in terms of net interest income. Apart from that, there is also -- you are also aware see what has happened is Q3, Q4, we also answered a question earlier, this point saying that there was a moratorium for 6 months from Supreme Court, okay, sorry, from RBA, and there is a -- there is a Supreme Court moratorium also continuing with respect to loan accounts, okay? Now they were not marked down at NPA. They continue to accrue interest in these books. Now at the last quarter when Supreme Court judgment came, we had actually marked down many of these accounts as NPA. Now if you see whatever markdown has happened, that there will be a reversal of interest. So there will be a last to that extent. So this reversal of interest which would otherwise have been tapped for over 4 quarters, that accumulated and had to be reversed in the last quarter. So if you see around [ INR 660 crores or INR 700 crores ] of interest, which otherwise been normally is aggregated against each quarter, not accumulated in the last quarter had to be reversed. This is the major reason for us not being shown from Q3 to -- over Q4.

And mainly in the retail book?

Naturally. Not only in retail, because after book, the moratorium was not -- many people enter moratorium. Even MSME book also, many people did not take moratorium. So this is basically a book where moratorium was away. I was there when marking down the NPA.

Yes. I got it, sir. My second question was, sir, there is the transfer of the securities from -- to HTM to AFS of almost about, I think, INR 15,200 crores if you take both the central and state government. So every time of transfer, is there any process of either booking a loss or profit on that transfer siding and the holding price? And is it connected with the profit from the investment -- sale of investment of INR 2,447 crores?

Yes.

At the time of transfer of securities from HTM to AFS, there is sustained loss. These are transferred at amortized costs. In case the value of the security level part, these are transparent commoditized costs. If the distributions are transferred from AFS to FCM, we have transferred it at market value as the group value is higher than the market value, then there is a lot which we'll book. And that's, in 2020, was a small number in 2020. '21 also, it has been a rather insignificant kind of number. If we net off the end-to-end gain on the securities transferred from HTM to AFS, in terms -- with the capital loss on account of transfer of securities from AFS to HTM, the interim gain is substantially higher.

All right, sir. So after the transfer to AFS, I mean, the securities were netted by the profit on the sale of investment is higher in this quarter as compared to the last quarter?

You're talking about Q1 of this current year?

In the current quarter.

Securities are transferred once in a year at the beginning of the financial year. So we had sold off the securities that were transferred in 2020 by the current quarter. There is no profit that has accrued to us at the close of sale of securities that was transferred from HTM to ASF in the fourth quarter.

Mr. Ajmera...

Just a question. Just one more and a little observation. Sir, in note #15 as for the RBI circular, those, I think, 6 accounts were beyond -- I mean, 30 days to 180 days period, beyond 180-days period, which has not expired on March 1, 2021, it is written, number one. So what is the significance of March 1, 2021 in this note? And secondly, these 6 accounts of INR 9,836 crores, what is the probability of this account getting resolved or restructured? Or what is the NPA component topic? Note #15, sir.

See, most of these accounts, their restructuring is in process. You are aware of that potential framework occurred 7th June, where 180 days have the significance of our Smart, well, our Smarts were written for the purpose of additional provision that we have been able to make in these accounts. There was a reckoning as to whether additional provisions in terms of 5% into SEBI rental payment structure has to be made of that. So in that quarter, there was no requirement to make additional process in terms of the RBI guidelines. That's why the operation was not made. And then subsequently also, these -- most of these accounts are likely to be restructured. They are in path to restructuring. Like typically, future got already restructured, okay. So our [ full year ] already got restructured. Those are loans only, okay?

The next question is a follow-up from the line of Jai Mundhra from B&K Securities.

Yes. Sir, in your agri portfolio of INR 55,000, if you can break that up into crop loan, maybe gold loan or -- yes, basically -- or any other -- any other cuts there is, how much is backed by gold? And how much is crop loan and how much is other things? That was one. And -- no, no, sir, the entire loan book of agri book.

Agri, right?

Yes.

Yes. See, the gold loan in our portfolio is around INR 11,000 crores, so only that much. The remaining are all crop loans only. We can take assets, okay?

Yes, sir. And sir, secondly, sir, what would be your expectations of slippages in absolute amount and credit costs in absolute amount? I mean, you can give a range also if you have that number? How should we see the slippages?

Any indication where -- which quarter you are talking about?

Full year '22, sir?

Full year '22 is very difficult year. We'll, hence, see the impact of COVID 2 is very, very difficult to predict as of now. We'll let you know, because as on that, no, I don't foresee a great problem in terms of the corporate book. Because corporate book is fairly good now. It has become under because earlier last year and earlier years also, most of the credit cards used to come from corporate book. Even last year, the credit cards was very high, because of 1 single account. That is -- so that is not an issue now. So we are looking at the stress in the retail agreement MSME book very seriously and these restructurings succeed, and then the economy grows and everything is on the right path. In the past quarter, we have to see within the first quarter and observe how this pans out. So once it happens, then we'll be able to know what will be the slippages and what is that. The slippage ratio is around 2.4% that continues to be there. And I don't think it will be huge in so far as we are concerned, because our retail book as well as the MSME and agri book is fairly okay. And there is a stress, no doubt in that, because of the COVID. Once COVID reverses, we see substantial improvement in this book. If there is a substantial improvement in this book, naturally, the slippage ratio also will not be as much. And then the credit card also will be -- will not be as much. Another thing I would like to share with you that we used to always have what is known as a salvage ratio, substantially at 12% to 13% for the slippages book. So that has come down substantially due to COVID. So again, if it reaches back to 12%, 13% salvage ratio, we don't foresee a great slippage ratio as well as the credit cost going forward in 2020. So that is not a clear picture only in Q1.

So sir, if I want to look at your book, corporate is probably taken care of. Agri, as you said, 11,000 only backed by gold, and in retail, hopefully, should hold on. What could be your rough sense on the MSME stress? I mean, is -- could it be large enough to have the full year slippages slightly higher than 22%, 21%? Or even if that were to go -- it should not outweigh the improvement that you will be seeing on your quarter?

It will never -- it will definitely not out by 2021 slippages. '22 will be perfectly okay, because there is a lot of support that is coming to MSME. [ Loans to ] MSME are stressed as of date. And our composition of our MSME book is such that we have a huge micro loan and small loan segment over there that as we see a lot of stress as of date. So one, there is a lot of support from the government, a stimulus strategy is also expected. And added to that, there is an extension that is given to ECGLS and all by government. And there is also, currently, support that will come to MSME substantially. And you are also aware that today, RBI has declared a special dispensation to save. It will be by INR 16,000 crores of TLTRO. There will be a lot of support on MSME. So we don't see that book behaving very badly in 2022. As you already observed, agri and retail book will be taken care substantially.

Right, sir. And last thing, sir, what would be your recovery expectations? I mean, apart from D1, is there any account where you're seeing near-term recovery or maybe over the next 6 to 9 months?

So D1, of course, is very close to resolution. We will be happy if it gets resolved in this quarter itself. Other than that, see, INR 8,000 -- future -- so INR 8,000 crores is what we are looking at there. We -- our recovery target. But again, I think it has an upside there going by the fact that about -- and similar things are going in ILFS also, where we have more than 3,000 [indiscernible] projects. See, in that sense, I feel, as you know, INR 38,000 of that in NCLT. And in that, about 8 or 9 big accounts, which are at various stages, they aggregate to about INR 18,000 crores. So through the year, if NCLT is reactivated, I think there will be substantial gains in terms of NPA reduction as well also, at least partial write-back. This support, even [indiscernible] happens this year, then as we told earlier, INR 5,500 crores, that could be hived off from the NPA numbers and also with some attendant benefits of write-backs. Plus another 2, 3 schemes we have launched for the remaining amount of NPA where traction was not happening until recently because of COVID lockdown in various places. Now people are moving into different areas, reaching out to the NPA borrowers. So that also -- in this quarter, for example, we had a target of over INR 3,000 crores, out of which about INR 2,100 crores or INR 200 crores we have already achieved D1. And similarly, AF share also, we are contemplating about INR 500 crores worth of sale. If not this quarter, early next quarter, we are there. And we are having mega early auction every month. The first 2 such auctions have happened. But again, states, they put some curves in such exercises. So I think from the next month onwards, July 15 is our next mega e-auction, where 600, 700 properties are being put up for auction. I think all these things, I think, definitely, they will improve the recovery climate quite significantly during the current financial year.

All right. So sir, just 2 clarifications. You said this INR 8,000 crore number that you said, is the recovery plus write-off or just the plain recovery that you're seeing?

Plain recovery.

Plain, sir. Okay, and second thing, sir this INR 100 crores that you have already achieved, this would include this large retail account, which would have moved to -- this will move to restructure, right? Is that the right understanding?

No, mostly, it is cash recovery plus upgradation. That is the overall number. And when last year also, we arrived at OTS with lots of clients and there are milestone payments. So there also, money is coming in. So all this put together, we have achieved about -- plus we have equally recovery camps for smaller accounts. So that all those things put together, about INR 2,100 crores is the recurring number on that date.

So what happened to the large retail account, I mean is it NPA or upon restructuring, it has become standard? Or where is it now? I mean what is the status?

No, it hasn't restructured and status will be...

Standard.

Standard

So standard restructure, right?

Yes.

The next question is a follow up from the line of Rahul Kumar from [ Demand Asia ].

Sir, just wanted to check on margins. Now you said that a lot of repricing has happened on the yield on advances. Do you have any levers to grow margins from the contraction we have seen as close to 45 basis points in this year. So any way you can recoup 20, 25 basis points in the coming years in margins?

Ideally speaking, if we reach a level of 2.6% that, should be quite significant. Again, I will reiterate that the 3% benchmark, the paradigm has completely changed. At times, it may be easy because of one-off accruals and all. But on a stable basis, I think we should be happy if you are maintaining a margin of 2.5% to 2.6%. That's what we will be aiming at.

So understood. Sir, in that overview, in terms of you reaching to a -- maybe a target ROA of 0.7%, 0.6%.

0.5% is what we are targeting. See, I mean, let's be realistic. With these kind of uncertainties for us also, it's quite a tricky exercise to give specific numbers. We can...

My point here is given the fact that it's a new paradigm of a 2.5 to 2.60 basis points of margin to improve profitability, what the levers that the management has, except the credit cycle, that it's playing us in all. Anything that you can do in terms of saving cost or augmenting fee income so that the overall profit -- profitability of the franchise can be better? Because 30, 40 basis points of structural margin shift downwards -- I just want to pick your thoughts on how do you think you can mitigate it by other levers if you have on the cost side or any other -- that was already...

Yes, 3 things. I would like to add what [ Mitra ] told couple -- it is like this. See, the interest expenses have not come down, because there's a lag effect on the interest that we pay on the liability franchise. And it has been -- we have been reducing and even the industry is also reducing substantially the interest expended on the viability plan. So the real benefit of that -- the interest reduction in the liability franchise will approve to us during this current year. That is one point. So another thing is there is a very, very palpable shift from corporate book to retail book. You see the ramp has also gone up to 51% today for the bank. And there, the margins are better compared to the corporate book. Corporate has actually seized our margins substantially, and we have to have a lot of problems in terms of our yield on advances in the corporate book. So yield on advances are likely to be anywhere between 8% and 8.5% going forward, if you actually shift our focus to MSME and retail. It all kind of support that we get in the -- to the stimulus from the government. We see a lot of scope there in MSME and retail book growing substantially, because last year also, we have grown substantially around 11% and 12%, respectively. So we continue to grow, and we actually aim to grow at around 18% in the case of retail book. We also aim to grow around 15%, 16% in MSME book, considering the support, we have that margin support. So that's why we are looking at and we try to improve the margins over there. This is our basic focus in terms of improving our margin from present 2.4% to 2.6%, what Mitra has told. Okay, this is the idea. And insofar as you have other aspects of it leveraging the past aspect of it, they are substantially brought down the cost. The cost that is attributable is only the wage cuts that we had incurred last year. Some of the wage cuts is there, will be there the current year, number one. Number two, as the net interest income goes for us, naturally, the cost also is going to come down, because we have not actually envisaged a huge expansion in the physical network that we have. We are shifting our focus to digital from physical. So from that perspective, there will be a complete cost reduction during the current year, which will approve in the year coming and going forward. So apparently, our margins are likely to improve this year and this current year as well as the next coming years.

We take the next question, a follow up from the line of M B Mahesh from Kotak Securities.

So just one question. On the INR 3,800 crores of corporate slippages which happened this quarter, if you could give us some color on sectors which drove that slippages? That would be all.

Yes, just one second. We will give you finance details. Okay? Yes. See, there is no big account that has actually slipped in the corporate. There are 5, 6 accounts that have slipped. I'll give the details. With sector that core happened, we cannot give you. We can't give you sector-to-sector detail.

On finance, can you send a mail, and we will send reply.

As there are no further questions, I would now like to hand the conference over to Sri A.K. Das for closing comments. Over to you, sir.

Yes. Thank you very much, all analyst friends and all. Today, it was almost 1.5 hour interesting session. And we are happy to get your feedback on certain areas of strength, also gray areas where we need to work further, Harit, please, can you please?

So we value your suggestions and feedback, and we look forward to your support also. And hope to see you soon after Q1 numbers have finalized. And once again, thanks from team Bank of India to all of you. Thank you very much.

Thank you. Ladies and gentlemen, on behalf of Bank of India, I announce that this conference call is concluded. Thank you all for joining us, and you may now disconnect your lines.

Thank you.