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

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

Thank you very much. Good afternoon, everybody. I extend a very warm welcome to each one of you for today's interactive session, while we share with you financial results of the bank for the Q3 of '21-'22. As you all are aware, the economic growth is gradually returning to almost pre-pandemic level. As for the advanced estimate of NSO, the GDP growth is expected to be about 9.2% during the current year. In recently announced Union Budget, the government also has reaffirmed its support in the form of both supply side as well as demand side measures, including a 25% jump in CapEx, which will improve the economic growth in coming days. There are certain concerns such as a limited level of inflation relative and possible reversal of the accommodative policy by major central banks, which could affect the market rate yield and, consequently, the financials. Against this backdrop, banking system credit growth, which was subdued initially during the year, has improved subsequently. Till 14th Jan 2022, banking system has recorded a YTD growth of 5% and year-on-year growth of 8% in credit. Credit outreach programs conducted by the banks during the festive season of Q3 has also helped in boosting credit flow, with the expansion of credit to all segments, including agriculture, industry, services, personal, MSME, et cetera. The bank's performance during Q3 has been noteworthy, especially in terms of reorientation of business strategy, with advances growth exceeding deposit growth. The Y-o-Y credit growth of the bank till December '21 has been 5.4% in credit, while deposit growth has been at 1.84%. Going forward, we still have a favorable impact on the bottom line of the bank. Continued thrust in asset quality has resulted in reduction of gross NPAs, with GMP ratio coming down from 12% in September '21 to 10.46% in December '21. Net NPA ratio has also improved to 2.66% from 2.79% in September 2021. RAM advances have expanded by 12.5%, and CASA percentage ratio has gone up to 44.07%. Regarding profit numbers, during Q3, our bank's net profit went up by 90% to INR 1,027 crore year-on-year. Return on assets improved to 0.51% from 0.28% in Q3 of the previous year. Similarly, return on equity has also gone up to 11.59% from 9.54% during Q3 of FY '21. The operating profit of the bank, however, was impacted by various factors, including lower treasury income due to the firming up of G-Sec yields. There has been fall in interest income and NII. However, the fall appears magnified also on account of inclusion of one-off items during the previous period. The bank is in the process of reinforcing its technology platform. Migration to Finacle 10 from Finacle 7 has been completed, though some pain points still exist. End-to-end digitization, that is, e-platform, is under implementation. All these technological upgradation will help improve customer convenience and ensure higher business growth in future. We will continue our emphasis on credit growth and better asset quality management. During the current year, we expect our advances to grow by 7% to 8%, as against 5.4% at December end. Gross NPA ratio will be further brought down to below 10%, and net NPA ratio to around 2.25%. With the current thrust in RAM and mid-corporate segments, we expect our global NIM to improve from 2.27% to 2.4% by year-end. The domestic NIM, however, which is higher at 2.51%, will be targeted to improve to around 2.75%. I once again thank you all for your support and your presence in this video conference. The floor is now open for discussion and question and answers. Thank you.

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

Congratulations on good numbers. I have a few questions. One is on corporate slippages that we have shown in this quarter at around INR 1,800 crores -- or INR 1,900 crores. So if you can share some more details here, sir, which segment, and are they coming from divergence sort of an exercise? Or -- if you can provide some more details here?

Corporate slippage is not -- total slippage is about INR 1,800 crores, including corporate slippage. And when I say corporate slippage, it pertains to only 1 major account, retail chain, that is about INR 1,079 crores, which had to be marked as NPA. So excluding that, the slippage is about INR 700-plus crore in Q3 compared to INR 1,300 crore in Q2. Only 1 account, INR 1,079 crore. And as a matter of prudence, we have already provided 47% of that account.

Sorry, you have provided 47%?

Yes.

Okay. And sir -- I mean just to understand -- just to get this correct, this account for system, right? Other banks have not made this provision as yet, right? Because this [indiscernible] restructuring kind of an account, right? So why -- what was the need for you to downgrade, if my understanding is right?

You tell me one reason why we should not provide for it? When we are having good amount of profits, when we give so much of stress on risk mitigation and all, is it not a prudent...

No, no. Provisioning part is very good, sir. All I'm asking is this -- the downgradation. I mean other banks have not done this, and it looks like it will be coming in fourth quarter. So was there any regulatory requirement or -- just to understand that, what actually happened? Have they breached some milestone and hence, you have to -- you have downgraded or...

There has been a breach of the time line. And since -- before the regulator comes and asked us, I think many other banks also...

Have also done it. Couple of banks have done it, and it is in sanctum sanctorum of the OTR policies of the Reserve Bank guidelines.

Okay. Understood. So that same amount -- I mean your restructured accounts have also been lower, right? Standard restructured accounts should also be lower by that amount, right? Because it was there, right?

Yes.

Right. And sir, how hopeful are you on this resolution? Because there are a lot of court litigation cases. And I think, 1 or -- today also, I think, lenders have requested that at least the assets should be kind of auctioned. So any sense on the recovery -- ultimate recovery from this account?

Yes. See, there are 2, 3 options. One is that yesterday, you would have seen from the press report as well as from the hearing that the lender's counsel have submitted before the Supreme Court that both Reliance and Amazon should give a sealed cover if they are really interested to resolve this matter. And the same has been placed before the honorable bench. And the bench is yet to give an order. That may be 1 option. If the bench gives us permission, under the court supervision, this process may work through. Otherwise, there are other options like IDC mode or SARFAESI mode. And this is from the banker's point of view. From the company's point of view, the option is that, you know, further, they can approach the banks under 7/6/19 circular for further restructuring of this account, which should be considered on merits depending on the RP4 rating and other compliances of RBI circular.

Understood. Understood. And sir, this would mean that you would have also downgraded any bond exposure here also, right? Or -- I mean that has some different kind of a treatment?

No bonds. No bonds have been downgraded.

Okay. Understood. And second question, I think on your slide, this thing, 19 of the presentation where we have given the provisions breakup. Was there any MTN hit on the AFS portfolio during the quarter?

There was no MTN hit insofar as SLR is concerned. There was 1 account which was resolved and the bonds had flown into the investment portfolio, which we had to mark down. Major impairment is on account of 1 account that we had to mark down the investment, which was actually securities issued in lieu of debt.

Okay. And sir, what level of -- because after the quarter, the yields have also firmed up. So any -- what is your sort of a threshold that within which, it will not hit your AFS book? Is there any -- what is the book yield of your AFS book so that until when -- I mean until that threshold, there is no hit on the MTN side.

There is going to be some hit on the MTN. Again, I would like to distinguish between our exposure to SLR and non-SLR. Insofar as SLR is concerned, the M-duration is 0.78. You would understand the impact would be minimal, even if the use go up from this current level. There will be a very small hit on that. Insofar as non-SLR is concerned, our exposure is only INR 12,000 crores, where the M-duration is 3.3, and if move around 50 basis per year, we would be potentially taking a hit of around INR 150 crores.

Understood. Great. And the last question, sir, from my side is the credit growth. So one is clarification that gross advances growth is around 5% or 6% Y-o-Y. But if I see the net advances growth, right, which is a 9% kind of a number Y-o-Y. So is -- I mean both these numbers are correct, right? The gross advances growth are around 5%, 6%, but net advances growth is 9% Y-o-Y, right? So the numbers are correct, right? I mean that is how it is?

Yes.

Okay. And second, sir, is -- what is your visibility on this credit growth? I mean how are you seeing the credit growth going forward?

See, we -- as I told in the beginning, 7% to 8% is what we are targeting for March 31 for the full year growth. Now industry has already reached 8%. We are slightly behind the industry, but we got a lot of catching up to do in corporate advances, but we will require the demand. As I told, I think the OD/CC availments are also at about 69%. Even the fresh sanctions also, which we have done, about INR 55,000 crores, only 35% has been availed. We have in the pipeline about INR 12,000 crores of proposals as of now, but again, all depends. The rate war going along -- amongst the banks and the corporates changing hands from one bank to the other and all. So corporate credit continues to be of a little concern. So in that context, we will focus majorly on the RAM segment, which has gone up by 12.5%. So we will be expecting a 16% growth in RAM segment and PSU and PSU-backed entities and government sector. And if corporate sector revives, that will be a plus -- that will be a bonus for us. And -- so overall, 8% -- 7% to 8% should be our target for March '22.

The next question is from the line of Akash Jain from Ajcon Global Services.

Congratulations on a good set of numbers. I had certain queries. As regards to corporate credit growth, we have seen in the budget that the government is focusing more on infrastructure side, especially doing more CapEx. So are you getting queries from iron sector, steel sector, cement sector?

Sir, as regarding road, our exposure is almost full because we have utilized our road sector exposure with Government of India undertaking. I'm not naming the account. And if headroom created, we are definitely going to take some exposure. But in other sectors, we are taking the exposure but secured one. And secured one -- and secured also, we are having some issues. And whatever is announced in the budget, actual impact will come in the Q1 of next year. We are ready with it. If any good proposal comes, we are definitely going to bid for it.

Okay. And in agri-related infrastructure like cold chains, food processing, are we getting any inquiries?

Food processing, we are getting. Cold chain, a little bit subdued. But now, government has given thrust to ethanol also. There also we are getting. And wherever we are getting good proposal, we are sanctioning it also.

Okay. Also, the credit cost -- annualized credit cost has gone up from 0.26% to 0.71%. So what is the reason for that?

Again, that big account. Big account, which we mentioned, INR 1,079 crores. But for that, it would have been 0.21%.

Okay. Okay. I understand the NIM has been subdued because of hardening of yields. So on a sustainable basis, what kind of NIM we can expect in, say, coming 3 quarters?

Yes, our immediate target is March 31, 2022, where domestic NIM, we are planning from 2.51% to 2.75%. That's a tough ask, but we will make all efforts to reach that, eventually to cross 3% in course of the next financial year. So for March 31, 2022, we will be aggressively targeting to make our NIM reach 2.75%, domestic.

And in this quarter, recovery looks a bit subdued, and the write-offs also seem to be very high. So going forward, what is your recovery target?

Go ahead. Go ahead. Please complete your questions. Please complete your questions.

Yes. This quarter, recovery looks a bit subdued. For coming quarters, what is your recovery target? And what is your expectations from recovery from NCLT accounts?

Yes. See, this year, when compared to last quarter, yes, because of last quarter, we had 1 big account, which you all know, on account of which the cash decor is on the higher side. This quarter, INR 1,309 crores is a bit subdued, but we plan for a reduction of INR 2,500 crores during Q4, of which INR 1,700 crores to INR 1,750 crores will be cash recovery. And a lot of efforts have been on to engage with our customers. The monsoon, everything being good, and the economy being revived, COVID 3 wave subdued -- going on the downward trend, we anticipate a good recovery and our INR 2,500 crores of reduction in NPA levels is not a distant dream. We'll -- we are very confident of taking the gross NPA levels to less than -- into single digits, in and around 9%.

To answer your other question, NCLT, we are expecting about INR 800 crores of reduction. Again, this could have some upside if the NCLT workings improve as the government is already creating a task force. I think there will be -- if there are improvements, it could go further up, but at least INR 800 crore is what we are expecting through NCLT.

Okay. And sir, is our bank looking for co-lending proposals of NBFCs?

Yes, yes, we have had 1 or 2 tie-ups already. So numbers are not looking very promising now, I think, but they are potentially good tie-ups. And we are looking for more number of partners also.

Okay. And sir, what has been our exposure to [ SHREYAS ] account and what -- and how much we have provided for it?

INR 1,095 crore is the total exposure to [ SHREYAS ] and 50% has been already provided.

The next question is from the line of Aashiesh Agarwaal from Crescita Investment Management.

So if you could help us understand how your interest income has moved during the quarter, especially given that we've seen our advances increase. So when we look -- when we do the math, it seems that the interest yield has dropped pretty sharply. So if you could just help us understand that movement.

As I mentioned in the beginning, interest income also has been affected by certain extraordinary items in the quarter, a year back, where there was standstill clause invoked, but incomes were being booked. So that led to reversal of about INR 290 crore. Similarly, in the previous quarter, that is Q2 also, there was some reversal of URI/UCI, that is, unrealized interest and uncharged interest, to the tune of INR 200 crores. This is one part. Second, what we told is advances growth of 5.6%. That is the aggregate advances, gross advances. Interest income and advances growth, they are not linked in a linear fashion, as you must be aware. There will be a lag effect. We would like to see that there is a steady growth in advances because the timing of the advances, certain disbursals might have happened towards the end of the quarter or the middle of the quarter and all. But whatever growth has happened, definitely, the impact will be visible in Q4. So the time lag has to also be reckoned for understanding the interest income part. Also, 5.6% overall gross advances growth was on the lower side, that we are quite conscious of, and we will try to address that in Q4, so as to bring our NII to positive territory.

That was a very helpful clarification. But I just wanted to just maybe belabor a little on the advances growth part. So for the first 9 months, we are seeing a growth of like 5.5% and then to take it to like 7-plus percent, that's like a lot of catch-up. And given that we are like halfway into the quarter, I mean are we -- I mean can we say that we are reasonably confident of achieving that target?

Yes, we are. We are in mission mode now. This is the last opportunity for us to set right the full year financials and address the issue of lower NII and NIM, while all other issues like slippage management, recovery has been -- almost been addressed in a sustained manner. So this advances growth is one thing which will be catching our attention all through the next 50 days. So I think there will be a major difference observed there.

And on NPA, you did mention that you're looking at a 2.25% kind of a net NPA target by the end of the year. So could you also -- I mean this would be excluding whatever NCLT. If you can just take us through what's happening on the asset quality front on recoveries. I know that you didn't mention, but if you could spend a little time on that as well.

Thank you.

Hello?

Yes?

Yes. So I was hoping for the response on the asset quality, a little more detailed one.

I thought you said all the best, I thought it's over.

Earlier discussions, we had said that our Q4 numbers are around INR 2,500 crores, of which cash recoveries will be in the range of INR 1,750 crores to -- INR 1,700 crores to INR 1,750 crores. So we are on track on that, and we see a good -- a lot of efforts being taken. We are planning to conduct a branch [ Adalat ] tomorrow across the nation. So -- and primarily, we are now -- if you can see our numbers in INR 5 crore and above category, the -- even the slippage part, it's only 1.1% of that. So major problems we are encountering is in the segment of below INR 25 lakhs. So a large part of these audience need to be aggressively engaged. We have taken steps to be in touch with them through the SMS mode, e-mail mode, our field business correspondents, the call centers. They're all being geared up and these numbers look very much achievable, and we are on track to see the -- somewhere around 2% in net NPA and reach a level of around 9% for Q4 on March 31.

I would also like to supplement here to what Mr. Karthikeyan, our ED, has said. See, we are trying all possible means to ramp up the recovery numbers, because we know there is a lot of headroom there. Out of INR 45,000 crore of NPA, we got around INR 34,000 crore in NCLT. So remaining things -- number is quite huge. So we are -- as I told, we are in mission mode. We are involving every staff, 52,000 staff. For example, I can tell you, you'll be happy to know that we have about 7,000-plus subordinate staff. We have engaged them very productively through a scheme called Star [indiscernible]. And during the 9 months, they have been able to give us leads of about 80,000 accounts involving INR 700 crore plus. And out of this 80,000, nearly 50,000 have converted into NPA recovery amounting to INR 593 crore. That segment also, we are focusing very much this remaining 2 months, and we expect another INR 300 crore to INR 400 crore in that segment also. So also and then, I think we are game for it. INR 2,500 crore could be -- could have some upside also. E-auction also -- e-auction also, monthly e-auctions, we are getting good support and good conversion strike rate there also. So I think recovery will continue to attract our attention all these 2 months.

Right. And I also noticed on one of the slides that your SMA-0 has seen a sharp increase in the quarter. If you could...

Yes. Sir, it is like this. See, in the first moratorium of COVID, nearly INR 1.03 lakh crore amount outstanding were under moratorium. And there, if you see the pain is just about 6% only. In terms of this SMA-0 number, total of the INR 45,805 crore, the numbers in SMA-0 is an account of norm that on 36 and 39 days, if you see, the numbers are very much down, very much below. So all these numbers of INR 23,000 crores are getting paid off in the month -- first 7 days DPD. So our numbers may look like that apparently. But over a period of time, you can see those numbers I just narrated to you. June '21, the SMA-0 level was 1.96%, it has come down to 1.87%. In December, you noticed that it's gone up to 5.4%. But in the first week of January itself, it has come down to, again, 1.85%. That is how the trend is. So that is the reason you see high traction in SMA-0 on account of DPD issues, and it is being addressed. Now we are counseling the -- our borrowers to see that they pay those dues not on the day of the last when the demand is raised, at least 2, 3 days beforehand so that this type of SMA-0s won't occur.

The next question is from the line of Dixit Doshi from Whitestone Financial.

Just a couple of questions. What kind of -- yes, you mentioned about the NIM. What kind of credit cost we expect next year?

Credit cost, we will always -- as the benchmark says, we will try to keep it well below 1% because although most of the stress is behind us now, our remaining accounts, we are trying to monitor it properly and continue. That is mainly through very low slippage of assets. As you would have seen in the presentation, probably, that in March, the slippage ratio was 2.05%, which has come down to 0.4%. Despite stress being there, our slippage management has been very good. And 0.4%, I think, by far, could be the best in the industry if I may say so amongst PSBs. And this 0.4% is -- further, it will come down if we remove that 1 account which slipped -- which we had to mark as NPA. So I think below 1% will always be okay for us. But in effect, we could reach max 0.5%.

The next question is from the line of Akhil from Robo Capital.

My question has been answered.

The next question is from the line of Akash Jain from Ajcon Global Services.

Sir, I wanted to understand about your SME book. What kind of credit we have sanctioned in emergency line of credit in, say, last 1.5 or 2 years? And what kind of restructuring and slippages we have seen in that book? And what is your outlook going forward in case of normal SME book?

To answer the second part first, Akash. The -- in -- in RFCRS-1, we had sanctioned about INR 3,637 amounting crores as a restructured asset, of which MSME constitute 42%, that is INR 1,430 crores. In terms of RFCRS-2, we had done restructuring in the -- to an extent of INR 8,528 crores. And in that, MSME happens to be 39%. And in OTR, totally INR 6,904 crores have been the restructuring proposals handled and of which MSME is 30%. FITL, though you know very well, INR 1,800 crores of dispensation was made, and 96% has been paid out and only 4% has been to NPA.

To answer your first part of the question, during emergency credit line 1, 2, 3, 4, all put together, we have disbursed about INR 6,000 crores in the MSME segment.

Okay. And going forward, what is your outlook on the sector as a whole?

I think the situation will continue to be a little under stress, maybe for the remaining 2 months. And as the activities become more normal and the pre-pandemic level comes back, I think MSME segment is still trying to recoup from the shock it got from the COVID. From bank side, I think all possible support, public/private bank, they have given a lot of support. What we are planning is to handle them, we have gone for a digital end-to-end platform, which we are likely to launch by the end of this financial year, where without much human intervention, with quick turnaround time, we can reach out through marketplace to these MSME segments. And by that time, I think, because of the multiplier effect, thanks to the government's initiatives in the budget and otherwise also, a lot of downstream activities also would have got further boosted up. So I think from Q1, we may see some tangible action in the MSME segment.

Okay. Secondly, sir, your cost-to-income ratio has gone up because of increase in operating expenses. What kind of expenses are these?

It is mostly -- it's a combination of operating expenses and our net total income. But I think the ratio looks elevated. Although for the 9 months, it is only 52%, but stand-alone Q3, it is 60%. It is more on account of the net total income, the denominator. As you know, NII and other income, they have been a little under stress. The numbers have not been very good compared to the previous. So that is why it has affected the ratio. Operating expenses, we have done normal our -- think some staff related -- which are -- we give preference to -- priority to those kind of expenses. So -- like, family pension and other AS-15 related. So it's not as much on account of operating expenses as due to net total income. Once the NII and other income starts improving, I think we'll see a good improvement in cost-to-income ratio.

Okay. And sir, what kind of target we have internal for ROA and ROE, say -- in say 1 or 2 years' time?

Ideally, global benchmark is 1% ROA. So I think we will aim for that. It's now 0.51%, I think, or 0.53%. I think -- we will aim for 1%, probably by the end of next financial year.

[Operator Instructions] The next question is from the line of Aashiesh Agarwaal from Crescita Investment Managers (sic) [ Management ].

So this query was again with regard to NPA. So as you pointed out that this quarter, the corporate slippages were high on account of 1 single retail chain for the fourth quarter, do we have any sense of any large account which might possibly be recognized as NPA or slipping? If you could throw some color on that? Or would you think that we are unlikely to see any such large slippage in this quarter?

Mr. Aashiesh, as I already informed you, there isn't any pain because above INR 5 crores in the outstanding levels have been continuously being monitored. We don't have any pains in the above INR 5 crore segment for this Q4. We don't have any surprises like that.

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

Sir, on this retail chain account, this would have directly gone to D1 category, right? Because it would have been NPA from restructured time.

Yes.

Okay. And secondly, sir -- I mean it's slightly -- I think you had mentioned, but I'm still curious because it looks like we are the first bank to declare it as NPA. So I did not quite understand that. Is it -- have they -- I mean they had missed the payment, obviously. But is this something else also? Or they had, of course, missed the 90 DPD or it is just something else also?

See, it is not Bank of India alone which has declared this NPA. Even prior to us, there were 3 or 4 private sector banks who already marked it as NPA as per the regulator's direction, which was informed to us in the meeting held on 29th December. On 29th December, we had a meeting. During that meeting itself, 4 private sector banks have told us, they have already marked it as NPA. And because 1 bank in the entire consortium implemented it later. One private sector bank implemented later because -- and in view of this, the regulator had taken up this account and some banks were already told to mark it as NPA, it is not Bank of India alone. And further, as per that OTR scheme, it is very clear that as on 31/12, the particular amount, if it is not paid, their cure period was only 30 days available. So on 31/1, it should have been marked as NPA as per the OTR scheme. So we have complied with the regulatory guidelines in this regard.

Understood. Now understood, sir. Right. Okay. And second thing, sir, on restructuring slide, if I look at it. So there is 1 restructuring 1.0, then there is a restructuring 2.0. Sir, what is this OTR? I mean one-time restructuring, is this the earlier all schemes? Or what is this OTR? But I think during COVID, there was only R1 and R2.

No. OTR is the Kamath Committee's...

6/8/2020 RBI circular, which enables -- which -- for which a special committee was also formed, which is commonly known as Kamath Committee, where accounts with INR 1,500 crores will go for vetting. Their plans will go for vetting by that expert committee. These corporate schemes were covered under that. 6/8/2020 RBI guidelines for COVID. The other thing which you are probably mentioning will be 7/6/19 circular, which is available throughout the year.

Understood. Understood. And do we also have any legacy restructured loans like -- which were -- like 12 -- Feb 12 circular or even before that, CDR or any other those cases?

No. As per the OTR scheme, whatever corporate accounts have been restructured only, the support was causing concern. All the other accounts are going as per the OTR terms. As of now, we do not find any issues in any of the OTR corporate accounts.

Understood. And we also have this MSME scheme, wherein we have also restructured some INR 1,770 crores as per BSE disclosure. So should one be adding this INR 1,770 crores because -- that is a different scheme, right? These are COVID schemes and then that was a separate scheme.

What was done earlier -- earlier prior to COVID -- No.

Yes. So note #11, I think.

One second, Jai.

I've already said that restructuring -- you wanted to know the percentage of MSME under the RFCRS-1 and 2, is that what you are asking?

No, no, no, sir. So what I'm asking is, [ in notes to ] account, there was another separate scheme going for MSME loans, right, restructuring. That was January 2019 scheme.

Those are all included in the OTR scheme only.

Jai, if you look at Slide #25, in one-time restructuring, we have added MSME also. So this whatever MSME we have mentioned, that includes the prior scheme.

Understood. Understood, ma'am. Okay. And the last thing, ma'am, did I -- I mean did I hear it correctly that you said SMA-0, which was 5% -- I mean INR 23,000 crores something. It has come down to 1.9% as of January 1 week. Did I hear that correctly? Or that was...

That's correct.

Or that was related to this INR 9,400 crores, that has come down to 1.9%?

Totally, it was INR 24,000 crores under SMA-0 as on 31/12/2021. That constituted morely, around INR 19,000 crores to INR 19,500 crores will be paid on the first 7 days DPD. So that stands at 1.90% now.

So there, we are talking about percentage of overall SMA to gross advances, that was 5.40%. That we have -- it has come down to 1.90%. This has happened because in this quarter, we had 1 day extra. So DPD has come before we could close the accounts. That is why in most of the accounts, 0 to 7 days has triggered. So they have come into SMA-0 category.

[Operator Instructions] The next question is from the line of Sohail Halai from Antique.

Congrats on a good set of number. Sir, a couple of questions from my side. One is probably with respect to the top line. So in terms of -- sir, where do you think, basically, in terms of cost of deposits, we are headed? And probably, your outlook on NIMs, not only from the next quarter point of view, but probably from 1, 1.5 year point of view?

Yes, 1 second. Ma'am?

The cost of deposits have been coming down significantly. We are at 3.75%. That is almost, if you look at the other peers, we are already at the -- probably at the lowest -- lower end of that curve. And with respect to the NIMs, I think our MD has already stated that we are looking at around 2.75% domestic as of March 31, '22, and for the next 1, 1.5 year, around 3% for domestic NIMs.

The NIM improvement will be targeted mostly through higher yield on advances and through volume growth in advances. Because as madam rightly told, we have almost hit the floor as far as cost of deposit is concerned, because resources are also very important for us. As it is deposits, we have consciously brought down the growth to below 2%. We wanted to address that issue in March '21 when deposits grew by 13%, advances by 2%. So that, we have been consciously targeting. And NIM growth will be predominantly addressed or targeted through volume growth in advances and also in higher yield on advances.

Sir, in your view, what is the optimal CD ratio for a bank or for you? Because if I look at the CD ratio at 70% or on net advances at 65%, 66%, we are still far away from the optimal level. So probably, is it so that you would not have to raise deposit rate for a longer period of time? How do you view in terms of the CD ratio as well?

See, there is nothing called optimal in CD ratio, but anything between 72% and 75% should be good enough. That is number one. And we have no major issues on liquidity as of now. In the -- and we have also adequate capital. In the event of a significant increase in loan demand and all, always we have the option to raise deposits. Deposit raising is not an issue at all.

Right, right. And sir, coming to basically in terms of asset quality, a good set of numbers there. But just wanted to understand a couple of things. One is this restructured book. So is the entire book paying both principal and interest?

Restructuring is a moratorium given to them up to 2 years. There may be some of the borrowers who've opted for 6 months, 8 months, depending upon the cash flow they generate. So it is our prerogative to engage with them quite frequently and ensure during the end of their tenure being over, the demand sets in and they have been asked to pay their advances. Proactively, we are even asking them -- with the surplus they generate during the period, we ask them to pay advance also. And some occasions where they have a shortfall in cash flow things, we are even -- try to counsel them to take a higher period for repayment. As and when the stress is over, they can start paying. That is a sort of engagement we are in with them.

Sir, would it be fair to assume that 30%, 40% of the book has started paying principal as well or not?

Under INR 18,826 crore is the standard restructured. We can take around 25% started paying.

Regular is 63% in the RFCRS-1. Regular [ effect ] is 63%. RFCRS-2, it is around 65%. So that means more than 65%, 70% is well paid -- that interest is being paid...

65% to 70% have started servicing the account out of both RFCRS-1 and 2.

And sir, this would -- would this have basically in terms of the rise in SMA-2? Would have basically any correlation with the restructured book as well?

So actually, if you could see our figures, the SMA-2 is the one area which we have been controlling very well. Those [ accounts ] referred in SMA-0 category, but SMA-1 and 2, that is where the RBI monitoring starts, the potential [indiscernible] ratio, has been well under control because the fall is not happening. They are a little bit stressed, but once the revival takes place, the upward trend from 2 to 1 and standard happening. So we don't see any stress on those segments falling.

Okay. And sir, last question from my side. If I look at the PCR as well, you are holding on to the PCR at a relatively high level at 77% and 87%, including technical write-off. So in future, aging-related provision, any comments on that? What could be the aging-related provisions there? And the asset sale to NARC?

Yes. Asset sale to NARC, we have identified about 6 accounts amounting to INR 2,400 crores, number one. Regarding aging of provision, that's a very good question. That is where we are targeting. Normally, if you see earlier, the numbers will be around INR 600 crores, INR 700 crores. Whereas now, we are engaging with those borrowers frequently and asking them to come for a table for a compromise. And these numbers are getting reduced over a period. It's around INR 250 crores now, and going forward also, it will come down. We don't feel any stress there.

Okay. So broadly, basically, the future provision costs would be largely linked to the future slippages, where, probably, we are doing a better job right now. Is it fair to say that way?

Yes. It's bang on.

Ladies and gentlemen, that was the last question. I now hand the conference over to Shri A.K. Das for closing comments.

Yes. Thank you very much. It's been a very enlightening interactive session. I think the participation was also reasonably good. And we also got a lot of learnings and takeaways. And I would request all of you to keep supporting us, guiding us. These are difficult times. I think, with our collective effort, we will be able to show much, much better numbers even for the full financial year. So thank you very much once again.

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

Okay. Thank you.