Canara Bank (CANBK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Canara Bank Q4 and FY '20 Earnings Conference Call, hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sohail Halai from Antique Stock Broking. Thank you, and over to you, sir.

Thank you, Faizan. Good afternoon, everyone. I welcome you all to Canara Bank's 4Q FY '20 Earnings Call. We have with us today Mr. V. Prabhakar, MD and CEO; Executive Directors, Mr. Rao, Mr. Krishnan and Ms. Manimekhalai, along with other senior management from the management team to give us insight about the performance of the bank and address all your queries. I thank sir Prabhakar to give us this opportunity and hand it over to him for his opening remarks. Over to you, sir.

Thank you. Good afternoon, ladies and gentlemen. Before I talk anything about the figures because figures are already in the media and you all are aware of those things. Before that, let me talk about the COVID impact on our bank, then about the amalgamation process, then I will come about the -- I'll talk about the business. Regarding the COVID impact. In Bangalore, our head office is situated. And our data center, also, we have taken care regarding the functioning without any difficulty. That means we have made a standby provision even if DC and DR is affected, even then we can function remotely. And as far as head office is concerned, we have bifurcated our functions so that these functions can be carried over from various buildings. For us, the fortunate thing is our head office is located in various buildings, not in a single building. So luckily in the last 3 months, there was no issue regarding the business disruption, and we could carry out our functions normally. However, during the month of April and May, we -- most of the people have worked from home and others, they have come to the office, and we have maintained the social distancing. Branches. They worked normally with about 97% of the branches are being opened. ATMs. About 92% of our ATMs were functioning during this lockdown period, and our BCs are functioning as usual. And transactions were normal, especially as far as the government sponsor schemes credits are concerned like PM-KISAN, PMJDY accounts, all those things. Without any problem, we could credit the accounts in their accounts and also disburse the amounts to the needy people, apart from our -- serving our regular customers. During that period, amalgamation has also taken place. And we promised to our customers that about 12 services we'll be providing from any of the branches of Syndicate or Canara. So those 12 services we could successfully provide and the transactions are taking place in those 12 services. Coming to amalgamation issue, we have bifurcated this amalgamation into 3 broad heads: one is HR issues; second one is IT issues; and third one is structural issues, that is the organization structure. As far as organization structure is concerned, we have completed the consolidation work of regional offices, circle offices and head office and the people who are stationed in these places are already transferred and especially up to scale 5 we have implemented all the transfers so that they will be in place for the coming 9 months and they can concentrate on the business. Even promotion process, all those things we have completed by 31st March, including some peon to CGM level we have completed. And regarding the transfers of Scale 1, 2, 3, we have taken a call that since -- if we transfer these people at the, what you call, Scale 1, 2, 3 level, they will face a lot of problems like they cannot shift their family, they cannot shift their children. And even if they move, they have to be in quarantine. So the bank business will get affected. So we have taken a call that up to 30th June, we'll not be disturbing them. So structure-wise, up to RO level we have completed. Then regarding the branch rationalization, we are already going ahead with the plan, and we'll be implementing first decision in the Q4 of '21. Regarding the IT, infrastructure amalgamation and database automation. As per the proposed plan, the things are moving. During April and May, there was a big delay of 4 days, 5 days, but that has been made up now. So we'll be rolling out the first 11.8 version of Canara Bank in the second week of next month. So that subsequently after that, we'll be rolling out the branches on a large scale. So as far as the IT infrastructure is concerned, we have successfully managed after the amalgamation and our net banking services, mobile banking services, ATM services and CBS services are functioning without any difficulties. So there is no disruption of our business activities. Regarding the infrastructure, everything we have provided and we have ensured that these things function even at the time of any disturbances like lockdown and other things. So basically, we have ensured that amalgamation process is going on smoothly in spite of lockdown and also the business activity is continuing without any disruption. In that only succession planning, all those things also we have completed for the coming year. So as on date, we can say that total top management transfers, promotions, placements have been in place. Now they can concentrate on the business activities. These are the 2 things which I thought I should be briefly give what actions we have taken regarding the amalgamation as well as the business continuity during the lockdown period. Going forward, I think we will not face any of the difficulties because now we have decentralized our actions. And also, as per the requirement, we are ensuring that proper social distancing is maintained, and our people, they use the masks and use the sanitizers, all those things. So I think the effect will be less. And as on date, I think 100-plus people are affected by COVID in our bank. And out of this, more than 50% have recovered. So -- and only -- we are sorry to say that only 2 people have passed away. And for those people also we have taken steps, and we ensured that all the benefits have reached their family members in time. So this is regarding the 2 aspects. Regarding the business. In the last 2, 3 months, we were concentrating on how to improve our baseline and also how to see that during the lockdown period, the disbursements and also the account opening and also the growth in deposits takes place. For that, frequent interactions with our people we are continuing. Most of the times, we are interacting them through VC. And circle heads, RO heads and the branch heads, they are also been sensitized very frequently. And whatever government schemes are available, where we can take advantage of that and pass on the benefits to our customers, at the same time get a benefit to the bank, those things we are aggressively implementing. Especially if you see the present emergency credit line, which is 100% guaranteed with 0 risk weight, we are one of the top-performing banks compared to -- among the public sector banks. And in terms of the disbursement of government benefits, all those things also we are taking care. There is no compliant. And if at all there is a compliant, we are addressing immediately, so that this time, the satisfaction of the customers is maintained. So these are the 2, 3 things I thought I will be sharing with you. And regarding the provisioning, which you may be very, very interested, in a broader aspect, let me tell you, we have taken an informed call that because of the amalgamation and other things, wherever provisioning is required and it has to be done proactively, we have taken care of that and we have done proactively. That is why if you have seen the figures, the provisioning has gone up. Even in terms of staff costs also, we have made adequate provisioning, taking into consideration the discussions that are taking place between the IB and the union leaders and the association leaders, where the wage revision will be there, and we have projected that it will be in the tune of about 13% plus. So we thought that at the rate of 13% we have to make a provision, and we have made 13% provision as far as establishment costs are concerned. Other operating costs, yes, almost they are flat. And this year, we are going to concentrate on operating costs, how much we can reduce? And we have taken a target of about, what you call, 20% in specific sectors of the operating costs as directed by the Government of India. Recently, DFS has issued a letter to reduce cost in particular aspects. But we -- as a, what you call, cost-cutting measures, we will be extending that to some other sectors also, so that the operating cost will be less than the last year. That is one thing we have taken. Second one is regarding the focus on our... [Technical Difficulty]

Sir, this is the operator. Sir, there's some disturbance coming from the management line. Sir, we are not able to hear you. This is the operator.

Yes. Now it's clear?

Yes, it's clear, sir. You may continue.

Yes. Yes. So going forward, we -- at corporate level, we have taken a decision regarding the credit growth. We'll be concentrating more on retail, simultaneously we'll be addressing the requirement of the corporates also. And under retail, we are very strong in south in the sense that our retail growth, as you have seen in the last YoY, it is around 12% plus. In that, housing is about 18% plus. And best point of it is the NPS under the retail is less than 2%, which is really, I can say, a very good thing as far as public sector banks are concerned. So as far as the deposit sales are concerned, last year, we have concentrated on savings bank deposit, and the growth is visible. It is around 12%. And CASA percentage we are interested to increase from the present 32.59% to 35% by December, and above 35% by March '21. This, we are concentrating because in the last 2 months, if you see the December figure, it is around 30%. So we could make an increase of about 173 points in the CASA. And second one is we are concentrating on retail term deposits, and we are not encouraging the bulk-term deposits. And we are very sensitive regarding the cost of the term deposits. So liability side, we are going to concentrate more on FB and retail term deposits. And in the asset side, retail, along with retail, to some extent, a balanced approach in terms of corporate credit also, including NBFCs. With these remarks, now I request -- I think we can take the questions.

[Operator Instructions] The first question is from the line of [ Mahrukh Adajania from Elara Securities. ]

Could you give us an update on divestment of Can Fin Homes? That's my first question.

Ma'am, we have 8 subsidiaries, which are doing very good. In that, Can Fin finance is doing very well. But as of now, we have not taken any decision regarding the disinvestment in the Can Fin. Next week, we are -- second week of July, we are going to have a Board meeting, wherein we'll be discussing about the rising of the capital that will be from the market, maybe in terms of QIP, our 81 bonds is available in the market.

Okay. Sir, as of now, no firm plans on Can Fin Homes, right?

Yes, ma'am. Yes.

Okay. And sir, just in terms of corporate asset quality, most banks have been selective in giving moratorium to corporate. So how do you think the corporate asset quality will pan out in FY '21? Will you see big delinquencies? How will it be going ahead?

In corporate, when we talk about corporate, I think NBFCs also we are including in that one because we take more than INR 5 crores as corporate advances. So our bank NBFC portfolio, the percentage of moratorium as far as the outstanding concern is only 3% -- around 3%. So this is because for NBFCs, we have supported them in terms of additional financing and also in terms of TLTRO 1 and 2. Regarding the corporate, yes, we also see that there will be some challenges. But however, as of now, corporates, which we are having because in our corporates book, if you see most of the corporate book, there about INR 20,000 crores is guaranteed by state government and INR 5,000 crores is guaranteed by central government. And about -- in INR 1.5 trillion, about 63% is AAA, A and above. So going forward, yes, we have to be cautious. We have to be regularly in touch with the corporates to know about their cash flows, the requirement and necessary steps which bank has to take has to take. And we always feel that because of this COVID impact, the corporate loan book will be -- will -- has to be monitored closely.

Right, sir. Sir, do you have exposure to Air India?

Very insignificant, ma'am.

Okay. Sir, and my last question would be that in TLTRO, how much funds have you deployed totally? And how much of that is to NBFCs?

Ma'am, in TLTRO 1, we have taken about INR 1,500 crores plus, and that is deployed. And second, in TLTRO 2, we have taken about INR 850 crores. That is also deployed. But most of the fund has gone to NBFCs.

Oh, so most of it is to NBFCs only, not others, is it?

Yes.

The next question is from the line of [indiscernible] Securities.

Sir, may I know, sir, why -- when your corporate segment, I mean, wholesale banking segment will come to the, I mean, significant profit?

Can you please elaborate your question, please?

Yes. In segment reporting, in wholesale banking, when you can expect to report a significant amount of profit?

See, if you see the wholesale banking that is corporate credit, our [ EPA ] as on date is 10%, right? And going forward, we don't see any of the big accounts [ skipping ] in the near future, maybe [indiscernible], what you call, to 1. Whereas, we see a resolution of [ company ] corporate account, that is Bhushan Power and Steel, where we have significant exposure getting resolved. Hello? Hello?

Listening. Go ahead.

Yes. So that is another account where we are expecting a significant recovery. Maybe if not in Q2, maybe end of the Q2 or Q3.

And then what would be the amount of that turnaround in terms of -- amount in terms of... [Technical Difficulty]

Hello. It's about... [Technical Difficulty]

This is the operator. Sir, there has been disturbance coming from your line, sir. It's not audible.

Now it's okay?

Yes, it's okay now.

The outstanding is about INR 1,800 crores, we did 100%.

Mr. [indiscernible], do you have any more questions?

Yes. Sure. I have another question, sir.

Yes, please.

Sir, another thing, sir. Sir, in terms of, sir, integration of merger process, sir, how many quarters would it take to complete the merger process, I mean, in terms of the branch rationalization, in terms of your workforce rationalization? I mean, how many quarters would it take?

Shall I answer the question in 2 parts? First part is, I'll say that regarding harmonization. Second one is regarding the merger. As far as harmonization is concerned, we have taken the impact of harmonization totally end of the Q4 of '20. [ In a sense, ] if you have seen our balance sheet, we have made about INR 340 crores additional provisioning. And we have taken about INR 553 crores NPAs, which was standard as NPAs and we have classified them and taken as fresh NPAs. This is regarding the harmonization. Under harmonization [indiscernible], regarding the -- you might have seen our operating expenses and the staff costs have gone up because we have provided sufficiently in the staff costs. For example, if you see the bipartite agreement, which is going on, there is an increase of 13-plus percent. So what [ it is ], we have proactively made 13% impact provision in this one itself. [indiscernible] as far as harmonization is concerned, [Technical Difficulty] cost of the staff and cost of the, what you call -- in terms of, what you call, NPA and provisioning. And if you see there is staff costs also, proactively in the only one quarter, we have provided INR 432 crores additional. And if you see year as a whole, we have provided more than INR 1,000 crores. And the cumulative amount which is available for the wage revision, if at all wage revision takes place to account for, is about INR 1,142 crores. This is regarding harmonization. Now coming to amalgamation. We have identified the branches which are 250 meters -- within 250 meters. We have about 1,100 branches plus. These branches are targeted, and we will be starting the first exercise of rationalization of these branches by Q4 of '21, by which our database will be merged. Then after that, the rollover will be very fast. And next month second week, we are rolling out our first Canara Bank latest version, which is 11.8. So this will be our plan for amalgamation. And as far as RO offices are concerned, circle offices are concerned, we have already amalgamated.

[Operator Instructions] The next question is from the line of Mona Khetan from Dolat Capital.

On the -- on your notes to accounts, you mentioned about this fraud account where you are yet to provide another INR 15 billion over the next 3 quarters. Is that DHFL?

The fraud amount, which is taken is around INR 2,350 crores, out of which we have made a provision for this quarter, the 25%, which comes to about INR 497 crores. So in this, about INR 440 crores is only DHFL. Here, the issue is we have classified the DHFL as fraud in Q1 '21, that is June quarter. However, as a proactive step what we did is, we have made provision from the bad debt, that is in the March itself we have taken provision so that the 100% provision we'll be completing by December. And Q4 of '21, we'll not be having any left out provision to be made.

Okay. Got it. And -- so this is pertaining just 1 account or a couple of accounts...

Ma'am, out of this INR 2,350 crores, this demand is around INR 2,000 crores. Remaining miscellaneous accounts are there, which are about INR 300 crores. Nowadays, as a good corporate governance, as soon as we find any account where fraudulent activities there, we are immediately declaring. We are not waiting.

Sure. Got it. And on the moratorium aspect, your presentation mentions of 17% moratorium by value. So in fact, which date is this number as of?

Ma'am, our Executive Director, Manimekhalai ma'am likes to interact.

Yes. Good afternoon, ma'am. The moratorium has been given as per for the Reserve Bank of India guidelines. We have extended this to all our customers. Many of the customers have opted out of this facility because our clientele base is very good. We have given this facility -- if you look at our retail book, most of our customers are salaried and government employees and have permanent jobs. So we did not -- many of them have not opted for this facility. Only 17% of the amount and 19% of the customer base, if you look at, they have taken it for this purpose. And this is as on 31st March, and we've also taken the present numbers also. As on the present date also, the number is 17% and 19% of the amount.

Okay. So the number has remained same from March to...

So it has actually improved. The numbers have actually improved. We had quite a big number at the earlier stage because people who were not -- we have given the option to the customers and who have not taken this option. But afterwards, they have really taken this option. And then now the present numbers is at 17% and 19%.

Okay. And just to understand a little on how you define moratorium. So is it like accounts that say even -- borrowers that pay even 1 installment out of 3 in May -- March, April, May, are they considered as -- to be under moratorium? Or how do you treat it?

Ma'am, we have taken those customers who have not paid the 3 installments, that is the customers we have taken under moratorium. And people have already paid 1 or 2 installments, that we have not considered under this category.

Okay. So roughly, for 83% of your loans, all 3 months, the payments were coming?

Yes, ma'am. At least 1 or 2 installments have come in.

Okay. Okay. So even for 1 installment, you would treat it as non-moratorium?

Yes, ma'am.

Okay. Got it. Got it. And the other question was on recovery from written-off accounts. It was -- you've seen a good recovery in this quarter. Could you just throw some light around it? Are there any large names out there? Or what...

This is the operator. Sir, there is some disturbance coming from the management line.

I am D. Mukherjee, Executive Director of Canara Bank. Now this quarter, our recovery has been -- from written-off account has been quite good, INR 1,470 crores. So this has been consistently -- we are recovering consistently from our written-off accounts. So this quarter was not an exception. So we will be continuing this in the coming quarters as well.

Sure. And how do you expect recoveries to pan out going forward? Do you see a dent there? Or do you see -- or are there any large accounts that you expect to be recovered over the next 1 year?

Now -- next 1 year, we expect our recovery to be in the range of INR 9,000 crores to INR 10,000 crores. Out of that, from NCLT resolution process, we expect somewhere around INR 3,700 crores and the balance from other recoveries from midsized and smaller assets. Now one name comes into my mind that is Bhushan Power, which itself is a big amount of INR 1,800 crores, as our MD has previously told you. So including all these things, I believe that the recovery would be in line with what we have been doing this last financial year.

Sure. And on the merged numbers as on 1st April for Canara and Syndicate, could you give some details around the GNPA, net NPA and network level?

Actually, we have not yet placed those results to our Board, which we intend to do somewhere first week of next month. So we will disclose those figures only after we -- the Board looks at it and adopts it. But even though the figures have not yet been adopted by the Board, amalgamated, but we still feel that we will be able to maintain our gross percentage of NPA, net percentage of NPA in line with what we are now...

Okay. And...

This is the operator. There is some disturbance coming from the management line. Please check. [Technical Difficulty]

Hello, can you hear us now?

Yes, it's audible now.

Please continue, if you have any other questions.

Yes. Sir, last question from my side. If you could share the segmental breakup of slippages?

Yes. There has been slippages in various sectors. MSME, the slippage has been around INR 3,900 crores. Agriculture, about 3,000 -- again, a bit more than INR 3,000 crores. Then large industry about INR 2,000 crore roughly. So that is how it is. So far as this slippage is concerned sector-wise during the financial year '19/'20.

And retail, sir?

Retail around INR 400 crores.

[Operator Instructions] The next question is from the line of Sushil Choksey from Indus Equity Advisors.

Sir, I had a couple of questions. Canara Bank, Syndicate Bank both were headquartered in Bangalore. A lot of synergies, including local culture, assets, all housed in Bangalore city. What benefit are we reaping specifically where real estate and staff is concerned? Is my first question.

See, Syndicate bank, they are very good in CASA. And Canara Bank, now we are picking up from 30% to 33% like that. And second part is, as far as staffs are concerned, [Technical Difficulty]

There's disturbance coming from the management line. Please check.

Yes. I think now it's clear.

Yes. It's clear now.

Yes. Yes. So as far as the culture of the people are concerned, I can say almost that is the synergy. And to address this, what we did is, first one is we want to address their grievances. Grievances in the sense that their expectations are, they should get the promotions in time. So we have completed all the promotions of e-Syndicate and also Canara bank, and we have given the promotion effect on 1st April '20. So in that way, we have addressed that whatever the due, what you call, right is there that is being given to them. And second one is regarding the posting, we have mixed the people and we have ensured that they also get the #1 post, in the sense, they are also heading the ROs. They are also heading the circle office. So we have ensured that talent is recognized, and at the same time, proper representation is given to them. And the third point is, whenever we interact, we interact as a group and as a unit, it is not like Syndicate Bank or Canara Bank because of which the people have got confidence, and they have understood the culture of the bank as a whole as a combined entity. And now they are a part of the bank. And now they don't feel that they are from this bank or that bank. And the other thing is, now we said that for us customers are most important and no customer should leave either Canara Bank or Syndicate Bank. For that, we said that our only culture is we have to be best servicing bank in the south and in India also. So in that way, I think most of the issues were addressed as far as staff is concerned. And the other point is regarding the benefits of the staff. We have given the best benefits available in both the banks to both the bank staff and officers. So in that way also, they have got the maximum benefit. And now everyone thinks that because of the amalgamation, they got benefited in terms of perks, in terms of knowledge, in terms of future opportunities. So I think I -- as of now, today, I don't see any difference among the, what you call, employees, and they are now working as a unified entity at Canara Bank.

Sir, my question on asset monetization, specifically real estate between Canara Bank and Syndicate. Any benefit are you likely to reap this year?

Asset monetization, see, some customers [Technical Difficulty]

Sir, this is the operator. Sir, there's -- again, there's disturbance coming from the management line. Please check.

Yes. Yes. I think...

It's audible now. Please go ahead.

Yes. Regarding the asset monetization, as far as the fixed assets are concerned, I think we have identified a few, but the amount is not that significant. So whereas in terms of our, what you call, joint venture in Moscow with the State Bank of India, I think we are coming out of that, and we'll be getting about INR 14 million from that, what you call, joint venture. So State Bank will be taking it, and they will be, what you call, giving us whatever equity we had invested that is about INR 14 million. Other than this, I think no other fixed assets we are going to dispose it on.

Sir, what percentage of our CASA comes from Karnataka and market share in southern states?

Specifically, I can say, if you see the Karnataka and Tamil Nadu, these are the 2 places, combined together, we have around a presence of 5,000 branches as a combined entity. And out of this, what is in the CASA, I can say exact percentage regarding these tours, I have not worked out. But majority of the CASA is being generated from these 2 states. Apart from these 2 states, I think we are getting some deposits from UP also.

Okay. Sir, on digitization, specifically led by COVID, most of the banks or businesses are taking a lot of initiatives for digitization even in customer services. As the bank merged with Syndicate, it's still not have been upgraded and you might have aligned both the system because you are on a common platform. What further initiatives you are taking as you are part of Tamil Nadu and Karnataka on a larger market share, where learned society is a larger number? So what kind of product initiative and technology adoption are you likely seeing?

Regarding the digitalization and technology adoption, as you know, first step is we have decided that we should be having the latest version of the CBS system, which is 11.8. And I said, in the second week of next month, we are launching the first branch with the new version, and subsequently, many more branches will be rolled out, so that by 31st March, all the branches that is e-Syndicate as well as Canara, they will be on version 11.8. Once... [Technical Difficulty]

Sir, this is the operator. Again, sir, there is some disturbance from your line, sir, please check.

Yes. Once we are on 11.8 version, it can be -- hello?

Yes, go ahead, sir.

Yes. It can be used for multi purposes. But however, we cannot wait up to 31st March '21. So keeping in view the COVID, one thing what we did is office functionings we can do now by working from home as far as controlling offices are concerned for the staff members. Now coming to the facilities provided to the customer, we said that all the digital transactions, this is especially ATM transactions, maybe any of the ATMs, maybe -- it maybe e-Syndicate or our ATM, we said the charges are free. We are not going to charge anything. And we are pushing the debit cards to these customers, and we are making a rather compulsory that with each and every account open, they have to give the debit card and also encourage them to use our mobile banking as well as Internet banking facilities. So I think with these efforts, and also, we are putting in place some incentives for using more and more digital transactions.

Sir, how is the behavior in moratorium in BA, specifically in first part of June? And how is your credit growth outlook between wholesale banking and retail banking business?

In the past, if you see, our retail banking is having a decent growth, that is about 12% plus, whereas as far as corporate is concerned, it is almost flat. It is not negative. That means whatever repayments have taken place before, what you call, this COVID impact, all those -- that have been taken care by giving the additional financing. Going forward, I think in retail, we will be continuing to grow at 10% plus, whereas corporates, it will be a bit less. So both the corporates and retail put together, our growth may be around 7% to 8%.

Any target on CASA for the year?

Yes. Target on CASA is, as I said, in terms of percentage-wise, some 32.6% we want to bring it to 35% by December, and maybe 36% by March. And in CASA, we have projected a growth of around 12%. And I think we are already on track as on date.

Sir, any large VRS or retirement likely this year between both combined [Technical Difficulty]

If you see the, what you call, past data, about 3,500 people will be retiring in normal course. So -- but because of this, what we call, amalgamation, a few people have opted out and they were already relieved as on 1st of April.

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

Sir, at the very outset. Sir, kindly accept my and convey my deepest condolences to those 2 staff members and -- I mean, their family members who have lost their lives in COVID. In fact, the bankers are the one who from the day one stood to strengthen the whole financial system and take care of it. So it may not have been recognized the way it should like police and doctors. Please accept my condolences and convey it to their families. Sir, now coming to the results, sir, yes, we are in -- I mean, the bank is in losses. And with you there -- and with both these banks coming in, my first question is -- hello?

Yes, yes, please. Carry on.

Sir, the merger of Canara Bank, I mean, Syndicate Bank with the Canara Bank, it signifies that both 2 southern banks have been merged. So what do you think, I mean, the character of this bank is going to be the Pan-India bank and you have some proper plans for that because your major business is concentrated in South. Your CASA is also more, as you said, in 2 states. So at the outset, I would like to know what are the plans to take the bank forward in the whole country in a very, very strong manner. What are the plans for that?

Yes. If you see the presence as of now, as you said, yes, the number of branches, which are present in the south are significant. But however, if you see for example, if you see UP, we are having around 1,300 branches, which is a significant amount. And even in Gujarat, there are about 243 branches. Even if you see Bihar or West Bengal, in Bihar, we have around 400; West Bengal, again, what we call that, 200 branches. Then even in North, we have around, say, 500 branches. So in real sense, we are Pan-India. There is no doubt that. But the only thing is concentration is there in the south. If you take any other [Technical Difficulty] western based banks or North India-based bank or eastern based bank, naturally, wherever there is headquarters, the number -- the presence or the number of branches will be more there. But going forward, we want to capture or we want to serve the customers Pan-India. That is our plan. And in that direction, we want to use our PCs. We want to use our ATM, also want to use the network of the branches. During amalgamation, we require 2 or amalgamate 2 branches and to open another branch at another place, we will be using that opportunity. Basically, we want to be a Pan-India bank, not a South Indian bank. But of course, we want to -- we don't want to lose South. We'll continue with that one and about the other untapped areas also.

Sir, now coming to the profitability in 2021 of the bank, the major amount which you have to provide is for the fraud, which is almost about INR 1,500 crore still to be provided for. And there are other provisions. And also, the provisions might be required because once the moratorium is over, I would like to know that how much will be the impact because in the working -- interest on the working capital, the -- up to August, it is there. Thereafter, people have to pay this 6-month interest as well as the current interest also up to 31st March 2021, if I'm not wrong. So how do you see the overall profitability of bank going forward in 2021? From where do you see the profits coming in, in the -- overall in the bank as against the loss of INR 3,260 crores.

Yes. Now first, let me just address what you call the figure of INR 3,200 crores of loss, which we have shown during the financial year '19/'20. This is important because how we are going to project our future balance sheet that is -- I think it has a relevance of today's figures. Regarding the Jet Airways account, there is an outstanding of INR 525 crores. It is classified as NPA during the current year. We have made total INR 525 crores provision for the Jet Airways. Especially INR 393 crores is provided in the Q4 of '20. So Jet Airways, I will not make any provision going forward. Same way, there is an account called [ Apan ]. There, we have made INR 210 crores, which is 100% provided. Then if you see the DHFL, knowingly, we have preponed the provision of 25%, which comes to about INR 440 crores to first quarter -- that is Q4 of '20, so that Q4 of '21 we'll not be having any [Technical Difficulty] we have made [Technical Difficulty]

There is some disturbance coming from the management line. [Technical Difficulty]

Even if you see the delayed RPs, we have made a 20% additional provision because 180 days plus 30 days have been lapsed. That is to the extent of about INR 460 crores. So the day we filed the NCLT case, from this INR 458 crores, 50%, that is 10% will be reversed as per the RBI circular. And apart from this, we have also made a provisioning of about -- in for COVID, about INR 94 crores plus other miscellaneous up to INR 127 crores. And then in another, what you call, subsequent provision, we have made about INR 512 crores, which is relating to these big accounts. And with this, the provisioning has gone up to INR 5,300 crores. So basically, in this provisioning, what we did is in one way we have front-loaded or we want to see that the provisioning coverage ratio increases because our provisioning coverage ratio as on last year was only 68%, which is one of the lowest in the industry. So we thought it has to be increased. So we have increased to 76%. And going forward, I think it will be increasing to 78%, 79% also. And apart from this, staff cost also, we have seen that about INR 1,100 crores increase is there. In this INR 1,100 crores, about INR 746 crores we have made provision, taking into consideration, the increase that we may have to absorb in relating to pension, relating to leave encashment, relating to gratuity and relating to settlement, that we have loaded during the current year. And during the current quarter, we have loaded about INR 432 crores, INR 133 crores under pension, INR 40 crores under leave encashment, gratuity INR 106 crores and settlement INR 153 crores. So during the current quarter, we have taken care about the staff costs, which I have to provide in future that has been done now itself. In some big accounts, where I can do in the next quarter that also has been done during the current quarter. So going forward, a provisioning requirement will be less as per the present scenario. Apart from this, Bushan Power & Steel where our outstanding is about 100 -- INR 1,800 crores, where we have made 100% provision. Even if I get back 50% of that amount [Technical Difficulty] 900 [Technical Difficulty]

Sir, there is some disturbance coming from the management line. Please check. [Technical Difficulty]

Even the resolution, if it happens in Q2 or Q3 or even Q4, we'll be getting about 50% of that one, that is INR 900 crores. So INR 900 crores will be directly added to my bottom line. So taking into consideration all these things, I think going forward, the quarterly, what you call, provisioning requirement will be very nominal or within control.

Those who have taken the benefit here, as ma'am said, the quality of our accounts are very good. And then...

[Operator Instructions]

Yes, yes. Just last question on this. On this moratorium front, like once it gets over in August, the interest on working capital, which is there, how much -- I mean, you see how much percentage of that may not be in a position to pay these areas as well as the current interest because they have to pay the entire deferred amount, I think before March 2021? So do you think that they will be able to take care of that because the business as many of them are not yet started even? So will it be...

You are right, sir. We are also a bit worried about this one. But, what we call, silver lining is whatever interest is accrued during the 6 months, it will be converted into FITL. And this FITL, they will be paying up to 31st March in installments. And second point is regarding the installments which they are taking moratorium, they need not pay immediately, it will be backloaded, back ended. So I think -- but even then, we are still cautious, and for the past 1.5 months, we have created a separate vertical in our head office and also in the field, where we are calling each and every borrower who have availed moratorium to explain them better to pay the amount. If you want additional financing, we are ready to give them. This has given good results. But definitely, going forward, it is a challenge for us. And we have what you call seen the situation and, yes, I expect that some portion of this one definitely will become NPA.

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

Sir, first on, if you can give the moratorium number in rupees crore for retail, agri, corporate, MSME? I don't know if you have already given because there were some line disturbance and I got disconnected also. So I'm sorry for that if I'm asking that again.

Yes, the numbers for the moratorium is, for corporates, we have got about INR 16,000 crores. And retail, we have about INR 2,300 crores out of total number of borrowers, total amount being 46 lakh 538, that is the total volume. Under that retail, we've got about INR 2,300 crores. Corporate is around INR 15,000 crores. MSME is about INR 17,000 crores.

Okay. On agri, ma'am?

Agri, actually, there is no moratorium because they have -- they make the payment on a quarterly basis or in a half-early basis. So it is actually seasonal. So it is -- moratorium is -- yes, allied activities, of course, we have got about INR 2,000 crores, that is dairy and all those things. But agriculture, as such, we do not have anything.

Sure, ma'am. And then this data is of which date?

This is as of on the present date.

As on June, right?

No, 31st May.

Okay. May end. Sure, ma'am. And in -- ma'am, your second moratorium, now RBI has, of course, extended. What is your sense that, let's say, in agri now maybe some of the guys who are on a half-yearly basis, some of their dues will become -- fall due in this quarter.

Yes, there is a challenge, sir. But the KCCs are getting renewed. There is -- the Kharif season is on. So we do not see much of a challenge. And of course, the government has also given a lot of incentives for the allied activities. So I know there will be a challenge in this. But of course, the Kharif season is on, monsoons have been very good during the time. We will be having challenges, but not the way in the previous years, it was. And the same accounts will probably continue.

Sure. And ma'am, if you have the similar number for the merged entities, some of the banks, they have actually given -- they've not given the...

Merger, we will not be able to right now talk about because as and when it is getting approved from the Board, only then we will be doing. Of course, what we have observed internally is it's almost on the similar line, sir, whatever I told earlier, 19% of the total amount and 17% of the number of customers. And that is how -- it is almost on the similar lines. Nothing, no major deterioration in the numbers.

Sure. And ma'am, now you mentioned that the moratorium calculation actually excludes any partial payment. So just -- I mean, so this number is actually not comparable if you look at any other bank because they are giving moratorium. They are calculating in a way that if all installments have not been paid, then that is the number under moratorium for them.

So as MD was already telling you, we have a separate vertical in our head office and the circle offices, who regularly call the customers, tell them what is the problem if they did not pay the amount and how it is going to affect their repayments. So we have -- we are creating a lot of awareness. And as I told earlier also, our customers are well rated and salary class, so we have not -- so we have taken, of course, the 3 installments have not come that only we have considered under the moratorium, sir.

Yes, ma'am, that is well understood. There is a lot of customers are salaried and state government or government enterprises. So just for a like-to-like basis, if you were to include all people who have, let's say, taken moratorium, I mean all those people who have not paid, I mean, all people who have, let's say, taken moratorium and have not paid all their dues, all their 3 EMIs...

Sir this is -- yes, this has come only in our MSME sector, sir. But for this, as we've already told you, we have given that 10% emergency line of credit. And so the challenges were there only. But of course, in the other, my retail books, I have not found any much of a problem, neither we have done and found any issues in our NBFC books also. The only issue was with MSME and where we have given our 10% line of credit sir. And for NBFCS, we just have about 2.94%, who have availed of this moratorium facility.

Sure, ma'am. And ma'am just on these overdue loans, so that number is 1,800 -- INR 1,900 crores roughly. But that is as of March 1, right? That would have moved substantially downward. Would that be right understanding?

One minute, sir. Sir, it has actually come down. It was INR 1,800 as on March. Now it has substantially come down to almost half the number sir now.

Correct. Okay. And ma'am the difference between overdue loans at INR 22,000 crore and SME 012 that you reported in the presentation at around INR 13,800 crores. What is the difference? Is it mainly because this is all ticket size and SME 012 is above INR 5 crores? Or is there any other difference?

Sir, what you are saying is fine -- right, sir. Above INR 5 crores only. INR 13,000 crores.

Sure. And my last question is ma'am. I mean, the situations are very, very fluid. We understand that. But still, what would be your best case range of slippages, let's say, for FY '21, you can give a range maybe for parent bank and may be for merged entity. In terms of...

Sir, it will be -- that is the credit cost. Yes, the credit -- no, it will be in the same range sir, because, we are -- we cannot say aggressively, but we are creating a lot of awareness with our customers. And of course, we are very -- giving out our loans. We are very aggressively following it up. And if you observe in the last -- in this quarter, of course, we have given loans up to INR 91,000 crores. In our GECL loan also, it was about almost like -- not this -- GECL. INR 2,700 crores, we have given under our -- sorry, not in the GECL, but the Canara's COVID loans. That also we have given, sir. Under the GECL, we have sanctioned about INR 5,073 crores of loans and sanctioned close to about 3,000 loans. We have about 6.89 lakh customers were eligible under the scheme. And then we have sanctioned loans to almost like 2.5 lakh customers. So we are very aggressively seeing that the -- whatever the government has given us the mandate, we are pursuing it with a lot of customers. And we hope that our numbers will not deteriorate further, sir.

Okay. You're saying similar slippages, not higher?

Yes, sir.

The next question is from the line of Mahrukh Adajania from Elara Capital.

Sir I have 2 questions. Firstly, just to clarify on moratorium. So if you paid even one installment, you are not counted as part of moratorium. Is that correct?

Yes, ma'am.

So even if you paid one installment, you are not under moratorium, right? Or more?

Yes. Whoever not paid that 3 installments, we are considering under moratorium.

Okay. Okay. And the other thing I wanted to check is that is Religare classified as fraud now?

Classified as -- it is classified as fraud.

Okay. In which [Technical Difficulty]

[Technical Difficulty] classified it as fraud. It has been classified [Technical Difficulty]

There is some disturbance coming from the management line. The next question is from the line of M.B. Mahesh from Kotak.

Just 2 questions. One is at the subsidiary -- sorry, on Syndicate Bank, can you at least probably give us some color as to what major adjustments would you have done for the fourth quarter? And second, have you, at the Board level, taken any decision on your ownership stake in CanFin?

I'm Krishnan here, Execute Director. As far as the Syndicate Bank is concerned, MD was telling about the harmonization. The provisions required for harmonizations where we have the common accounts, the provision has been totally factored, whatever is required. So that has already been factored, so there is no further requirement will be there from the point of view of harmonization. Can you repeat your second question, please?

No, sir. I just wanted to clarify that we understand where the exposures are forming, you would have made provisions. But in terms of the after adjustments pertaining to the staff side, especially on the retirement side, what major changes has happened on Syndicate Bank's portfolio?

In case of staff...

[indiscernible]

There is no much one, and that has been addressed. MD was also telling that the necessary provisions have been made as far as the staff is concerned. The -- about -- whether it be the wage revision or the pension, everything has been taken care. So we do not find anything additional that will be required post merger.

Yes. I understand that. I'm just trying to understand, is it possible to at least quantify what has been the impact of it?

We are yet to go to the Board for the adoption of the operating balance sheet. Once that is done, we will be able to give the exact number and where it comes.

Okay. I just want to check, qualitatively at least an approximate how challenging or difficult or how big was kind of an impact on account of these?

So we do not have much of -- we do not have an impact. That is what I can tell you. [Technical Difficulty] But this is one [Technical Difficulty]

This is the operator sir. [Technical Difficulty]

Yes. Now it is clear?

Now it is audible.

Yes. See, we do not expect any impact or any additional burden. And your question is what could be. So I say that we do not expect any additional impact at all as far as the HR cost is concerned going forward.

Perfect. And with respect to CanFin?

With respect to CanFin?

CanFin Home.

Okay. See, the MD was already telling that we have 7 to 8 subsidiaries. Everyone is doing well. And CanFin is also doing well. As of now, we do not have any plans of disturbing that. The capital requirement, MD was stressing upon that, we will be going to our Board next month to get the approval for raising the capital, maybe by way of equity or by way of AT1 and the various mode of pricing will be discussed as far as the CanFin Home or any other subsidiary is concerned, as of now, we are not going to disturb.

Just to confirm this, if by any chance, CanFin does require equity capital, you're ready to invest your share in it? Or?

We will be taking a call as and when it is required.

The next question is from the line of [ Punit Palani ] from HDFC Securities.

Just 2 questions. This year, in major recoveries, in Q4 and your NPLT recoveries are overall close to INR 38 billion -- hello?

Yes.

Yes. So for the recovery side, just wanted to know the sources of these recoveries, like is it through ARC settlement, is it through OPS? Like what modes have you observed like?

Okay. Okay. Let me clarify. First of all, our bank has not been taking the ARC route for quite some time now. So no ARC settlement. That is number one. Number two, so far as the major accounts are concerned, it -- INR 3,700 crore has been from our NCLT recoveries and major accounts. So some major recoveries, which have come, you are all aware, Essar Steel, Prayagraj Power, Jayaprakash Venture, et cetera, et cetera, so these have contributed. But the major portion has been from the smaller accounts also where we have gone for OTS, we have gone for recovery. And in the normal process of recovery, [Technical Difficulty] Can you hear us?

Sorry, sir, there's some disturbance in the line.

Okay. [Technical Difficulty] Can you hear us now?

Yes.

Yes, sir.

Okay. So as I was telling, even for the smaller and mid-segment accounts, we have been constantly successful in going for onetime settlement as well as going for recovery, our SARFAESI action and all those actions, which we formally take for recovery. So it has been a mixed sort of effort, both big accounts and the mid-level and smaller accounts. So we cannot say it is only the big accounts, which has given the push. It is a mixture. And we propose to continue it also, this financial year.

Right. So this year also, you expect the same amount of NCLT recoveries? Like what will -- like if you could just give some color on that? Like you mentioned that Bushan Power...

Last year, our recovery from NCLT has been around INR 3,000 crores -- 3,700 crores. This year, also, we expect a recovery of around INR 3,000 crores.

Okay, sir. Last question, what would be the breakup between retail deposits and corporate deposits, if you can just mention that?

Actually, if you take below INR 5 crore and above INR 5 crore, that distinction, our RAM portfolio is around 55%.

[indiscernible]

Deposits, sorry, sorry, deposits.

Yes, deposits.

Deposit portfolio is -- just a moment, I'll just [indiscernible]

60-40.

It is 60-40. Retail is 60.

[Operator Instructions] The next question is from the line of [ Deepak Mark Abadia ]. He's an individual investor.

Sir, bank holds an equity stake in Bajaj Hindusthan Sugar. So it's a NPA account or a standard account, sir?

So it is a standard account as of now. But because of that CDR issues where all the banks participated, so some equity infusion [Technical Difficulty] so some equity participation has been there.

So it is resolved now or it is NPA at present?

No, no, at present, it is standard. At present, it is standard. But S4A, if you remember, there was a scheme a few years back. So on the basis of that scheme only, all the banks have participated, including our bank.

Yes. And what is the combined book value after merger, sir, approximate?

Book value.

As I told you earlier also, our MD sir has also emphasized that we are going to the Board in the next week -- first week of next month for adoption, then we'll come out with all the figures, post amalgamation.

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

Sir, you said that your corporate and noncorporate, you are just having a limit of INR 5 crore and above that, you call it as a corporate account. Don't you think that now looking at the size of the bank and the way the banks are getting consolidated, there is a lot of thinking required and the change in the policies and programs because you need a higher amount of loans to be focused more and sanctioned a larger amount, this gives a very misnomer numbers and the figures, even for the working internally also. My second question is how do you plan to grow your loan book in these circumstances? You said your focus will continue to remain on the retail but you will also welcome the corporate account. So when you call corporate, are you talking about [Technical Difficulty] INR 200 crores limit in some of the top infra companies and some of the projects which are coming up with the opening up of the lockdown? What are your views on this, sir?

Fine. Krishan here. I'll answer both of your questions. The first question is your suggestion as to -- as the bank has grown big, particularly post amalgamation and the INR 5 crore. Let me clarify that the bank has a well-defined vertical. We have a large corporate. We have mid corporate. And of course, the MSME, separately, it is there. So all these, as far as the business perspective is concerned, the focus is totally, totally customer-centric and that is being closely monitored. So that is what from the business perspective. Internally for the calculation, even if you look into the Reserve Bank of India guideline or the Basal guideline, it says that any exposure of INR 5 crore -- below INR 5 crore is only retail and all others are corporate. This is what is the definition. So that is being followed for the purpose of classification. But as you rightly said, as a big bank, yes, [Technical Difficulty] Coming to your second question of the focus. The focus, yes, as it was said that the focus will be on retail, it does not mean that it will be only on retail. We have currently a mix of about 45 corporate and 55 of retail, a mix will be maintained, and the bank is totally open for corporates, including the infrastructure. As the MD was telling that from the day of COVID pandemic, we have disbursed about INR 96,000 crore. And in that, about INR 56,000 crore or INR 55,000 crore is towards the corporate. So all the infrastructure one, whichever is coming, Canara will be there to participate.

The next question is from the line of Rakesh Kumar from Elara Capital.

Sir, just like -- because of this environment the asset quality certainty is not there because what will happen post moratorium gets over, we are not very sure about it. And it is not only for Canara Bank, for any other bank also. And like the overall situation is quite fluid. And also the credit growth, it's very difficult to ascertain that how much credit growth actually, generally, a bank can do in this scenario. So like I was just wondering what is the -- like how much focus we need to put on NPA recovery and reduction in the OpEx. And what are the measures we are taking on these 2 fronts? Because during this time, I think it was better to focus on these 2, 3 areas rather than on credit growth, maybe -- or because the slippages also will not be very much under control of -- because the macro scenario is very, very different this time around. So I just would like to get your opinion and the steps that we are planning to take on these 2 areas on the OpEx and the NPL recoveries?

Rakesh, you are absolutely right, the situation is very fluid in the -- for industry as a whole as to what will happen after this moratorium period and how the cash generations will be there. It is in a fluid situation. Having said and it is also absolutely right that it is most important to improve and have an enhanced monitoring to maintain the asset quality. You may agree [Technical Difficulty]

Sir, this is the operator. Sir, there is some disturbance coming.

Yes. Is it okay now?

Yes, sir.

Rakesh, you may recollect the conversation what we were having during this meet where the MD was also telling, and my colleague, Executive Director, Manimekhalai was also telling that wherever the moratorium has been given, we have been contacting the customers and educating them as to the requirement or in their own interest, it will be better if they can repay that. So the customer education is one where it is a part of the enhanced monitoring. So it is going on. We have put in additional people for this so that we will be able to address this challenge. The next question is on the OpEx, the cost. Again, they have to recollect what the MD was telling that about 20% of the cost election, what we planned, that we have been -- now we have started closely monitoring the expenditure wherever avoidable expenditure is there that is being curtailed so that we are able to bring in the austerity. And at the same time, see that wherever expenditures were required, but absolutely for the purpose of the customer service or to do the day-to-day transactions, that is being done. So we also take cognizance of this aspect, and we will be reducing the OpEx. Having said this, as far as the credit is concerned, credit growth we don't -- actually, today, the credit offtake is not there as much. But what we are telling is we are focusing on the retail where there are offtakes, definitely. And we are also open for the corporate, where the good projects are coming, we are also open for that.

Okay. And how the situation is -- how much situation is conducive right now, sir, for asset monetization because there is a lot of overlap because both the banks were large banks. So how fast we can do asset monetization, which will lead to what time...

As far as your questions are concerned about asset monetization, we do not see much for asset monetization with both the banks.

Ladies and gentlemen, that was the last question for today. I will now hand [Technical Difficulty] for closing comments.

Sir, before actually we end, I have a couple of questions from my side. So basically, I clearly see that we have improved our provision coverage ratio to around 76%. But that is still lower than the industry average. So...

Yes, please. Carry on.

Yes. So in terms of provision coverage ratios, we have definitely improved an interest up around 76%, including technical write-off. But if I look at some of the other banks, it is slightly on the lower size still. So what is your outlook in terms of aging of the provision hitting us in terms of FY '21? And secondly, if you could just give some comments on how do you see the margins panning out in terms of FY '21 itself?

Let me understand the margins question first. As far as our NIM is concerned, now we have seen that is at 2.29%. So we expect that it should be around 2.35 plus. Why I'm telling this is the deposit cost has come down significantly. Now about INR 45,000 crore of deposits, which we have taken in Q4 of '19 -- FY '19, which already got matured and which you have paid. So now as a conscious decision, we are encouraging retail term deposits because we need a customer base. And regarding to bulk deposits, we have discouraged in the past 2, 3 months. Because, obviously, if you could see that as far as the term deposits in bulk, there is a what you call a stagnant or negative growth, whereas in retail, there is a growth of around 11%. So we are very conscious about the cost of the deposit because of that, in the beginning, I said that our focus will be to increase the CASA from 32.6% to, it should be coming above 35% by December. And going forward, it will be still more. So the NIM, yes, it is under our radar, and we are going to improve it. Now coming to the PCR, provision coverage ratio, yes, 76% compared to some banks, it is less, and compared to some banks, it is okay. But the issue is here, we want to make provision proactively wherever there is an opportunity. So as I said, going forward, I think, by December because March again, by that time, the things will be very clear by December. And as of now, with the present existing circumstances and the situations, we see that the PCR should be somewhere around 78% plus by December.

So thank you, Prabhakar, sir, and the entire management team for giving us this opportunity to host the call. We wish you and the team all the best. Sir, while we -- you have covered most of the things, do you want to add anything before this call concludes?

So [Technical Difficulty] I should thank you for hosting this one. And really, we got very good inputs. I think based on these inputs, I think we'll be working further to see to what extent we can improve the balance sheet and also to take -- or put in place the necessary measures to address the risks that are going to crop up because of the fluid situation, which have arisen because of COVID affect. So thank you very much. Thank you for my executive directors, and my management team, to all the people who have participated, and for you, sir, for hosting the call.

Thank you, sir. Thank you for the opportunity.

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