Canara Bank (CANBK) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining in. On behalf of Antique Stock Broking, I welcome you all to Canara Bank's 3Q Earnings Call. From the management side, we have Mr. MD sir, Shri L.V. Prabhakar; ED sir, Shri M.V. Rao; Shri Debashish Mukherjee; and Mrs. A. Manimekhalai. Without further ado, I would hand over the call to Mr. MD sir for his opening remarks, post which we'll open the floor for Q&A. Sir, please go ahead.

Thank you. Good afternoon to all the participants. Before we take the question and answers, just I want to highlight some of the achievements and some of the significant points in the balance sheet. As far as Canara Bank balance sheet is concerned, since beginning, we are concentrating on strengthening the balance sheet so that we are ready for the future challenges. When I say strengthening the balance sheet, we have concentrated on business growth, especially CASA growth. And you have seen that savings bank growth is at 14%, then our CASA growth is at 15%, then our retail term deposit is at 18%. Bulk deposits, we have reduced by 10%, so that we can save a lot of high interest on that. And apart from that, as far as credit is concerned, domestic credit, it has grown by 7.55%. We concentrated a bit more on RAM sector and retail sector. Retail, it has grown at 9% plus, out of which the housing loan has grown at 13% plus and this time, agriculture also have shown good traction, growing at 11%. MSME, yes, year-on-year, it's 6%. And then RAM as a whole, we have grown at 9%. But here, the important point is, as the economy is picking up, our credit offtake is also picking up, and this is evident from the quarter-on-quarter growth. In retail, quarter-on-quarter, we have grown at 3.3%. Annualized, you can understand it is about 12% it's growing. Agriculture, yes, around 6%. MSME, about 3.65% and RAM, we are growing at 4.5% quarter-on-quarter. And corporate also, yes, there is a traction, and we are growing at about 1% as far as quarter-on-quarter is concerned. And domestic advances as a whole, quarter-on-quarter, we have grown at 2.81%, and global credit has grown at 2.86%. This indicates that there is pickup in the credit. And we are disbursing the advances to various sectors, not concentrating in any of the 1 sector. Then the other point is we have concentrated on recovery. Since this quarter, previous quarter and coming quarter is going to be challenging as far as recovery is concerned, so we have put in more efforts and last quarter, you have seen that our cash recovery was at INR 1,504 crores and upgradation was INR 657 crores. This year, we could do cash recovery direct of about 2,300 -- INR 2,003 crores, plus from fully provided and return of accounts, we have recovered about INR 890 crores. This has helped a lot to our bottom line. And upgradation was about INR 774 crores. So overall, if you see, the gross NPA and net NPA we could bring down, and the ratios as on date, it stands at, net NPA is at 2.64% and gross NPA is at 7.46%. Now the most important thing is how we are taking care about the provisions. One year ago, 31st December, 2019, the provision coverage ratio was 70%. Today, the provision coverage ratio is 84.89%. There is a growth of about 15%. This indicates that sufficient provisioning has been made in the balance sheet to take care about the future impact. And apart from this, we have also made a provision for the future NPAs, like about INR 1,901 crores, we have made a provision to take care about the future NPAs. Apart from this, another important and prudent step what we have taken is, about INR 413 crores of interest income relating to the accounts which are as on date NPA but not classified as NPA because of the Supreme Court direction, that portion of interest, about INR 413 crores, we have not accounted for interest received as well as operating profit. Generally, the banks make provision for this but what we thought is 1 step ahead of making the provision that we don't recognize it at all, so that as on date, whatever figures we are showing you as far as interest received or net interest income and operating profit, it reflects a more transparent picture. So this INR 413 crores reversal is there apart from INR 1,903 crores (sic) [ INR 1,901 crores ] of provisioning, which we have done. Now as far as the interest income and expenditure, both the sides we have managed well, in the sense, interest income is almost stagnant if you take the 3 quarters, that is 9 months figure, and interest expenses, yes, we have reduced. And this has resulted in an operating profit of INR 5,382 crores, which doesn't include INR 413 crores of reversal amount. And provisions, yes, we want to be future-ready. So we have made a provision of about INR 4,686 crores, taking care of routine provisions as well as the provisions that are required for future also. Then other provisions out of this, you can see that about INR 1,300 crores we have made as other provisions, and for NPA, about INR 2,600 crores. And then for income tax, yes, INR 361 crores we have made the provision. Now coming to the restructured portfolio as per OTR-1 and OTR-2, which we have started from 1st January, 2019, and second 1 is 1st January, 2020, about 1,64,000 accounts are restructured under MSME. Amount is about INR 5,200 crores. Apart from this, there is another OTR, which is in the lines of the recommendations of the Kamath committee, where in the last quarter, we have given a guidance that may be around INR 13,000 crores to INR 13,500 crores of loan book maybe onetime restructured. But as on 31st December, the proposals which we received are the invocation where we have affected is about INR 11,000 crores, including non-fund business. For this, as per the RBI guidelines, when we implement it, we have to make a provision of 10%. But as a proactive step, in this quarter, we have made a provision of about INR 494 crores against these OTR accounts so that in the coming quarters, there will not be much burden on the bank. And this has also helped us in making the balance sheet a bit strong. Now coming to the other expenditure, people may be interested, and you may be interested to know that because of the wage revision, what is the impact that the bank is going to have in the future? As on 31st December, 2020, all the arrears are paid, and it has been booked in the P&L account. So there is no question of any additional provisioning, which we have to make in the coming quarters, except the payment of regular salaries. So as far as wage revision is concerned, that also we have taken care. As far as OTR is concerned, yes, 50% we have taken care. And as far as the restructured accounts are there, which may be converted into NPA, for that also, sufficient provision of about INR 1,900 crores has been done. Now let me just share with you some information regarding the pro forma NPA. Suppose say, today, I have classified the accounts as NPA, keeping aside the Supreme Court judgment, hypothetically, there will be about just less than INR 10,000 crores of portfolio can be slipped into NPA. That comes to about 150 basis points. So even though I take this into consideration, my gross NPA figure will be less than 9%. It may be somewhere about 8.95%. And net NPA, there may be an increase of about 130 basis points. It may go up to maybe 3.93%, which is less than 4%. So with the calculation of a projected NPA as on date, still, we feel that proper provisioning has been done, and the ratios are within control. And the most important thing is regarding the amalgamation, everyone will be interested to know. Now I request our Executive Director, Mr. M.V. Rao, sir, who is spearheading this amalgamation process and he will be sharing some interesting information with you. Thank you.

Yes. Good afternoon to all of you. Regarding the amalgamation, just continuing with our earlier discussions, what we did, at that point, there were unified policies and harmonized products that were brought into the common platform, where 13 products and services were made available to all the customers across the 2 entities. Now going forward, on the structures part, now we have stabilized. Overseas is working as a single entity, and both the treasuries are working as single entity and all regional offices, which were there as amalgamated entity, 210, which were optimized to 176 and all are working as a single entities. Circle offices, which both the entities were around 31 was rationalized to 24 and learning centers and inspectorates what we have, that number is continuing because of the increase in number of the staff that is up to 90,000, that is skilling and upgrading their skills are required that we have not rationalized our learning centers. And then inspectorates that we have not reduced because of the complexities and also new products and processes that we are bringing in, that necessitates the oversight -- better oversight, that's why we have not reduced the inspectorates. That is on the structure part. On the HR front, already this amalgamated entry undergone a sea change. Promotions are also taking place and all the transfers, around 18,000 transfers in between we have undertaken, that mix up of the people is in place and it is working as a harmonized entity. Coming to the main important software amalgamations, IT platforms, we are very happy to inform you, just 2 days back, all the branches, 10,400 branches are on the single platform now. All the products and services are available across the bank to all the customers. Now 13.5 crore plus customers are accessing to our products and services in a uniform manner without any restriction. And 1 more thing, what I would like to tell you, from the customer perspective, they are not encountering any of the operational issues in the mobile banking, even in the NEFT, RTGS, IMPS, UPI, whatever the beneficiaries that were there in their databases were also got transferred onto the new platform. They need not work again. They need not feed again the borrowers, beneficiaries list, that also we have taken care. And all the ATMs, 13,000 plus, now they have migrated on to a common switch and both the customers of the Canara Bank and e-Syndicate, with the existing cards, they can operate on this switch. They need -- we need not replace any of the cards. So that is 1 more additional benefit our customers are having, they are having the very ease in doing their transactions on a day-to-day basis. So with this software amalgamation, ATM movement and then making the cards functioning uniformly across, 100% we have completed our integration well ahead of schedule of 2 months. Earlier, our commitment was March '21, that we have completed in January '21 itself. This is the updates. Thank you.

Thank you, sir. Should we start the Q&A, sir?

Please. Okay. We'll take questions.

[Operator Instructions] Our first question is from the line of Mr. Ashok Ajmera.

Sir, at the very outset, accept, Prabhakar sir, my compliments for all-round performance. And just now Mr. M.V. Rao has also narrated that how fast you accomplished this integration of such a big exercise well ahead of the time. So you all deserve rich complements for the same. The results are competitively, I mean, better. All your parameters are good. But having said that, I would like to ask now what is the like road ahead because though now because of various dispensations and various benefits and transitions schemes given because of the COVID, now today, okay, we may not know exactly the -- our slippage numbers or our -- exactly what would have happened. But provision wise, as you said, that you are very comfortable provision wise, and even that pro forma on that almost about how much you said, about INR 11,000 crore, INR 10,000 crore, on that also, adequate provision has been made. But I mean, how do you view it had this -- some of this dispensation would not have been there or when the time comes near to the completion, how much pain you see you may still have or how much of this can be transferred into an NPA or slippages? And my second question is that, yes, you are on the growth path also simultaneously. So which are the main sectors or industry or maybe NBFC or you are looking at it for this advanced growth, and you are open to receive it, the applications?

Yes. Thank you very much for all of your good complements. As far as future road map is concerned regarding the NPAs and restructured book, we want to take tomorrow's pain today. That is why what we did is, in the current balance sheet, we have made ample provisions, and we have declared a profit of about INR 696 crores. In this direction, as I already said, the first point is the pain of the interest reversal, which we are going to experience in the next quarter, that is Q4 of FY '21, we have done this quarter itself. INR 430 crores, we have not booked the interest, and we have reversed it. It means, going forward, in the Q4, I need not worry about the interest reversal. Rather, during this coming 2 months, I will -- my people will be monitoring the pro forma NPA. And out of this I think a significant portion we'll be able to recover because of which whatever interest I have not booked, I will get an opportunity in the next quarter to book that interest. And since sufficient provisioning has been done, for example, in June, about INR 1,038 crores provision we have done for the whole amount. And at that time, the whole amount was about INR 10,380 crores. That now it has come down to INR 2,221 crores. The issue is, again, in Q2, we made a provision of INR 125 crores, floating provision for the future NPAs. In Q3, we did about INR 738 crores of provision for the pro forma NPA or future NPAs. So everything put together, it is coming to INR 1,901 crores plus INR 413 crores of interest reversal. That means the book is amply supported by provisioning and the measures taken. So going forward, even if this INR 10,000 crore slips, after the, what you call, whatever outcome will come from the Supreme Court, the Honorable Supreme Court's judgment, our NPAs, as far as gross NPA is concerned, it may jump by 150 basis points. Net NPA will be jumping by about 130 basis points. But we have time and we can do better coming -- going forward. And as far as the pain is concerned, yes, it is a continuous process for the financial institutions, to be alert, at least for the coming 2 to 3 quarters and to have proper strategy as well as proper execution for monitoring all the accounts, especially SMA accounts. Now let me share with you regarding the SMA accounts. If you take SMA accounts of above INR 5 crores, in SMA-2, I have about 320 accounts amounting to about INR 10,000 crores, that comes to about 1.28%. In SMA-1, I have about INR 5,391 crores in 219 accounts, which comes to about 0.67%. To put together, it is about INR 15,500 crores, and the percentage wise it is 1.95%. This is the bracket where we are concentrating very seriously, and it will give results because 320 plus 219 accounts, if I concentrate on 540 accounts, I'll be concentrating on INR 15,000 crores of SMA-1, SMA-2. So SMA-1, SMA-2, SMA-0, as on date, they are also under control. And going forward, we are going to monitor more seriously regarding this thing. So yes, there is pain in the system, and we have identified it, and we have addressed it well in advance, at least 1 quarter in advance. And going forward, I think as far as my business is concerned, as I said, we'll be growing at about 8% as far as liabilities are concerned, the deposits and other things. And credit will be around 6% to 8%. And with this, I think we will be in a better position to give good results in the coming days also. Thank you.

[Operator Instructions] Next question is from the line of Mr. [ Aditya Singhania ].

I had 2 questions. One on just your thoughts given that you have already made significant provisions, what is your expectation of credit cost or provisioning for loan losses in the coming year, FY '22? That is 1. And I'll ask my second question. And along with this, if you could also indicate is there any significant quantum of recoveries that 1 is expecting from fully written off accounts, given that you're carrying 100% provision on your NCLT list?

Your second question is regarding the expectation of recovery from 100% provision accounts. Let me bifurcate this into 2 parts. One is NCLT accounts. Second 1 is other than NCLT accounts. Other than NCLT accounts, yes, Canara Bank is very good in recovering the amount from those accounts where 100% provision is made. For example, in Q3, there is a recovery of INR 890 crores from fully provided accounts. This quarter, we have still an ambitious target to surpass the existing achievement. This is regarding the recovery from the fully provided accounts other than NCLT. Now coming to NCLT accounts. As you all know, there are good number of NCLT accounts, especially 1 or 2 accounts, where every bank is expecting a resolution very soon. If suppose, since it is in the public domain, I can take the name also, if it is Bhushan Power & Steel, if it is resolved, we have an exposure of about INR 3,000 crores, 100% provided. Whatever recovery I get, say, around 50%, so INR 1,500 crores of provision will be written back, and my gross NPA will be coming down by about INR 3,000 crores. So another small accounts are also there. But during the current quarter, I don't say there is a good recovery from NCLT accounts but we could get in 18 accounts, about INR 287 crores of recovery in the NCLT accounts also. So this is regarding the recovery as far as the fully provided accounts are there and here the plus point for Canara Bank is, the provision coverage ratio as on 31st December, 2019, was only 70%. Today, it is 84.89%. This shows that wherever and whenever I recover money from the NPA accounts, it will directly help in reversing the provision and it will help finally in my profitability. Next, FY '22, we see a very stable business for Canara Bank because during the worst times, Canara Bank has shown the results with adequate provisioning and with a credit growth as well as liabilities growth and a stable balance sheet. So I strongly feel that FY '22 will be very encouraging and very prospering. Thank you.

I just have another question, if I may. So you've already raised a significant amount of capital now. Just -- and you also have significant value from -- in your subsidiaries. So just wondering on when you would like to monetize some of that value and in case you're planning another capital raise in the next maybe 1 or 2 years.

I should thank the investors, in the last calendar year, that is in March 2020, we have raised about INR 3,000 crores of Tier 2 Basel III compliant bonds at 7.18%. And afterwards, again, you all know that we have come out with AT1 bonds of about INR 1,184 crores we have raised at 8.3%. Then QIP, we have come up with INR 2,000 crores, and it was oversubscribed. And really I should thank my investors, it was oversubscribed by 2.5x. Then again, we have come out with AT1 bonds of about INR 1,635 crores we have raised because of which today, my CRAR is at 13.65% and CET is at 10.45%. So I can say, as on date, my capital is comfortable position as far as the regulatory and growth is concerned. Now the second point is subsidiaries. I have 9 subsidiaries. All 9 subsidiaries are doing good. They are giving me the dividend and they have good value. And in future, I'll get still further very good value. As on date, Canara Bank as a stand-alone is capable of generating operating profit and net profit and also is in a position to raise the capital as and when required. In the given situation, I think it is good to hold on for the subsidiaries till such time when excellent valuations will come. Till such time, we don't take any call on the diluting our stake.

Just as a final observation, our only observation was that rather than diluting stake in the bank itself at such a low valuation, would it not be better to sell stake in subsidiaries, but...

We'll wait for the appropriate time.

Our next question is from the line of [ Mr. Pranav ].

Could you repeat what you said about restructuring? So there is around, I think, INR 5,300 crores, INR 5,400 crore of restructuring on which you have done some provision. So I missed that provision number.

Yes. My Executive Director, Mr. Mukherjee, who is handling this recovery, he will elaborate in detail. Please, Mukherjee sir.

Good afternoon. Now so far as the restructuring under OTR, onetime restructuring is concerned, the data which we had told you earlier, for MSME, it was 1,64,000-odd accounts amounting to INR 5,200 crores. So that was 1 data. Now so far as the corporate OTR scheme is concerned under Dr. -- under Mr. Kamath committee, there, we have so far received application for invocation amounting to around INR 11,000 crores, as against our earlier submission of INR 13,500 crores. So that was the data which -- this, it is still under work in process, the second one. So that is why -- because these amounts have been invoked. So from that only, we are now telling you.

Right. And you have done 10% provision for the INR 5,200 crores?

Yes. Yes.

So INR 520 crore?

Because this as and when we do, we will provide.

Right. Right. Sir, also, you said in the discussion that there will be 150 basis points jump in the GNPA and 130 basis points in NNPA. So this is above pro forma or above current reported?

It is above pro forma. It is above pro forma. Like as we have already shown earlier that as against this gross NPA ratio of 7.46%, we are expecting it to become 8.95%. So roughly that increase we are seeing, if everything slips, whatever we have assumed to slip.

Right. Sir, there is 1 little confusion. So after this pro forma is materialized, do you see more pro forma arising in Q4? Like suppose whatever is pro forma gets into slippage, then is converted into GNPA, above that also, you think that there is a considerable pro forma divergence that will happen in next quarter?

We have tried to do a thorough analysis in arriving at these pro forma figures. During course of this quarter, till the Supreme Court verdict is out, we will not stop recovery in these accounts also. So it may be something otherwise that this pro forma amount may actually come down a bit.

Our next question is from the line of Mr. Ashok Ajmera.

Sir, what it your collection efficiency in this quarter? And how do you describe this denominator and numerator of the collection efficiency?

Now so far as the collection efficiency of this Q3 is concerned, it is somewhere around 95%. Are you with us, Mr. Ajmera?

Sir, we have our next question from the line of Ms. [ Pooja ].

Yes. I'm from HSBC Asset Management. My question is that on credit growth, credit growth has been dismal for past 1 year. So how are you approaching the same going forward?

As far as growth is concerned, the business growth, if you see the domestic credit growth, it has grown at 7.55%. And domestic business, it has grown at 8.7%. And deposits domestic growth is at 9.5%. And if you see that in absolute terms, the amount of business which we have added in the last 1 year is about INR 1.27 trillion. And out of this, if you see the savings bank, which we have added, is about INR 40,000 crores. And term deposits is about INR 64,000 crores. So business -- domestic business is growing very well. But as far as international business is concerned, when you discuss about the global business, there, there is some reduction in the sense the global business has grown by 6.97%, that is roughly 7%, and global deposits have grown by 7.8% and global credit is by 5.8%. In the international arena, we have taken a calculated call to consolidate during the current financial year and then go ahead in the coming quarters. So that is why our guidance for the coming quarter is we'll be growing global deposits at 8%, business also will be roughly somewhere about 8%, and credit will be somewhere about 6% to 8%. Thank you, ma'am.

Our next question is from the line of Mr. [ Saket Kapoor ]. Okay, we'll take the next question from the line of Ms. Mona Khetan.

So on the restructured book of I think all the corporate and MSME loans add up to about INR 15,000 crore for you. And you mentioned slippages of -- pro forma slippages of about INR 10,000 crore. Are there any overlaps between the 2?

Madam, the issue is that out of this INR 15,000 crores, as you said, INR 15,000 crores or INR 16,000 crores, INR 11,000 crores is still work in process. So if you recall, even if these accounts slip, it will come back to the original IRAC status once the restructuring is completed. So this is one part where we don't expect much slippages. Now so far as the other part is concerned, which we have already done, that is the OTR-1, OTR-2. Some slippages have happened, but then not overwhelming amount. Because many of these restructuring has happened during this financial year as well. So that way, the whole purpose of restructuring is to give it such a tenure for term loans and the working capital so that the cash flows will permit to run the company in a proper way, and it will not slip. So we don't expect much slippages. Yes, we cannot rule out 100% that, yes, no slippages will be there. That nobody can predict. But mostly, it will be standard assets.

Sir, what I'm also trying to understand is, of this INR 11,000 crore that is still work in process, there could be some accounts that are already 90-plus DPD. And even though you may be planning to restructure, they may have been in the notional slippages for you. So what would be that quantum?

We have very few accounts which have now crossed this 90-day status. But then, that amount is about roughly INR 1,300 crores. So that way, yes, you can say there is a possibility of this slippage. But then again, it will come back to the original status.

Okay. So INR 1,300 crore could be part of the notional NPA for you, which is part of the pro forma NPA, but they may get upgraded once the restructuring is done. Is that a fair understanding?

Exactly, madam, exactly.

Got it. And under ECLGS, if you could share what have been your disbursements under both 1.0 and 2.0?

Here, let me share with you. Under GECL or ECLGS, we have sanctioned 4,75,000-odd accounts amounting to 10,000 -- more than INR 10,000 crores. And out of that, disbursement has been somewhere around INR 9,500 crores.

Okay. This includes both the ECLGS programs?

Yes, yes, both 1 and 2.

Okay. And while for now asset quality parameters look very contained, whether we look at pro forma slippages or the restructured book, do you envisage tail risks from -- as we go ahead, especially once the Supreme Court dispensation is done with.

No, as we have already explained or we tried to explain that we have made a detailed analysis in arriving at this pro forma NPA figure. So that also includes that tail risk, which you are saying because we are -- we have already provided for more than -- or around 20%. If you can see, it is INR 1,900 crores, which we have already provided for in this balance sheet plus INR 413 crores of interest derecognition proposed. I mean, we have thought that such amount will be derecognized once these become NPA. So this will -- this is somewhere around 20% provision. So we are well ready for these slippages. And as I also told you, some of -- out of this pool, some of them will also be recovered because that recovery process is always on.

Madam, to add what Shri Mukherjee has said. Basically, if you see the NPA data of Canara Bank, for example, let me discuss about the NPA in the retail sector. In retail sector, our NPA is -- gross NPA is 1.38%. Out of that, under housing, the NPA is 1.21%. Vehicles loan, it is 1.76%. Education loan it is 0.95% and personal loans, it is 1.84%. So even if there is some tail risk as far as slippages are concerned, it will not be significant. And the way in which we are making the balance sheet strong, effect will not be visible in the coming quarters as far as the provisioning and other things are concerned, since in advance, we are doing the provision for these things. But as you said, yes, there will be some effect, which we call it as tail effect, it will be there.

Got it. And lastly, the collection efficiency number that you shared, 95%, does this include the collection and demand only for December month? Or would it include the arrears as well?

Ma'am, actually, we include the policy called DCB, demand collection balance, as per that we will be doing.

We have a question on the chat. I'll read that. It's from Mr. Dixit Doshi. How much recovery we are expecting from currently written off accounts in Q4 and FY '22, next year?

Let me take you through the present recoveries. This quarter, as far as written off is concerned, we have recovered about INR 890 crores. Q2 FY '21, we have recovered INR 449 crores when lockdown was there. And now going forward, for Q4, we are expecting the figure under recoveries under written off will be more than INR 890 crores. Then as far as FY '22 is concerned, we will be trying to maintain the momentum which we have gathered in Q4 of FY '21. However, as far as cash recovery and upgradation is concerned, we are targeting for the Q4 about INR 6,000 crores to INR 7,000 crores of recovery under cash recovery as well as upgradation. That is our guidance. Thank you.

Next question is from the line of Mr. Jai Mundhra.

I have a couple of questions. First is, sir, what is the net interest margin for the quarter. What we have given is the 9-month number. So that is one question.

Yes. You can go ahead. Any other questions?

Second, sir, so yes, I have a few of them, sir. And second is, sir, the restructuring slide, at least to me, it is a bit confusing. So one -- I mean, if I were to look at the total restructuring outstanding plus invoked, what is that number? Is this number INR 5,200 crores, which is -- INR 5,800 crores, plus INR 5,036 crores, plus INR 9,794 crores or -- I mean what is the total -- grand total?

Okay. Shall I answer?

Yes, yes, sir. I have few more questions.

Yes. No issue. No issue. I'll take all those questions. First one is regarding the NII. For December, it is INR 6,081 crores. And this INR 6,081 crores does not include INR 413 crores, which we have reversed notionally and this comes to about 21.47% Y-o-Y growth as far as 3 quarters are concerned as on December '19 and December '20. That is regarding the NII. As far as the restructuring, that is a format which we have given, wherein we have said that OTR-1, OTR-2 that we have given in the bottom, that is regarding the MSME restructuring under OTR, where the outstanding is less than INR 25 crore. In that, 1 and 2 put together, that is -- this is from 1st January, 2019, the number of accounts is 1,64,000, and the amount is about INR 5,200 crores. Now the top column is what we did is we have bifurcated for further clarification stating that about INR 9,794 crores is the OTR as per the Kamath committee recommendations under which -- under corporate we have did. And under retail, it is about INR 300 crores. INR 36 crores retail personal and INR 58 crores retail housing, this we have already implemented, and we are expecting about INR 76 crores under personal, INR 130 crores under housing loan to be implemented but invoked. Like that, we have bifurcated the figures, but overall figure is INR 5,200 crores plus INR 11,000 crores.

Okay. So this INR 5,800 crore, which is the line number one, right?

Yes.

Where is this number then? I mean, ideally...

It is not exclusive figure. It is a part of many figures.

Okay. So the total number is...

So that's for your clarity, I'm giving, the total book is INR 5,200 crores plus INR 11,000 crores.

Right. Okay. Great, sir. So that is helpful. Second, sir, yes. In terms of collection efficiency, so you had mentioned 95% is the collection efficiency. And if I look at our SMA-0, plus 1, plus 2, then that number is 2.8% or maybe 3.6%. So I'm a bit confused. I mean, so -- I mean, what is the balance? I mean, is it -- how do you calculate that number? Because I thought the collection efficiency, 1 minus collection efficiency should be SMA-0 plus 1 plus 2.

Let me tell you. As I said, this collection efficiency we have given based upon the DCB calculation, demand, collection and balance calculation. So wherever we have not received installment, that we have computed as balance.

Right. Okay. So just last 2 questions, sir, from my side. One is -- yes. Sir, if you can share that deferred tax asset because maybe from next year onwards, when you intend to shift to the new tax regime, probably, you will have to take a write-off on DTA. Because now if you are in steady state kind of a slippages trajectory, then probably you will look to migrate to the new tax regime. So what is the DTA number that we have?

Yes. Let me introduce my Chief General Manager and CFO, Mr. Ramachandra. Please, Ramachandra, can you respond?

Yes. Good afternoon. The DTA number is around INR 12,000 crores. And of course, we have taken the appropriate permission. And it is commercially justifiable that we are not going for a new tax regime. And we are -- as you know, as per -- in accordance with the merger, we are getting the benefit of merger, where there is a taxable loss. So we are not going for a -- we need not have to go immediately for that change of act.

Okay. Right. And sir, if you can highlight the top 5 individual account sector, which have come for the COVID restructuring out of that INR 11,000 crore. So the top account may be of large organized retail, then it could be -- I would just need the sector of the top 5 accounts?

Sir, if you see the OTS portfolio, it is retail and corporate is 80/20, that is 80 is corporate, 20 is this one. Out of this 80 corporate, major portion is 1 account which is a steel account.

Sir, I'm asking about onetime restructuring, INR 11,000 crore number.

Yes, that's what. That's what. That's what. Under INR 11,000 crores, 20% is about retail and 80% is corporate. And under corporate, there is 1 big account, which is a steel account. So the major portion is going to steel sector. And 20% is going to personal and housing loan sector in retail. And the other is, it is spread over, not concentrated in any 1 of the sectors.

So we have a few questions on the chat. I will read them before we go to the next question. [Operator Instructions] There are a few questions from the chat of Mr. [ Saket Kapoor ]. He wants to know, sir, steps taken to improve the image of the bank being a PSU, bank's shareholder rewarding policy and ROA targets. Sir?

Now so far as the improvement of the image of the bank, that was the first question, I believe. Now we have taken lot of steps in publicity and in refurbishing the hoardings and other publicity materials of our bank. We have also gone in for social media in a big way to put forth the bank's image as a strong and 1 of the largest lending institutions in the country. So we believe that the image makeover which is actually not required because Canara Bank is known by most of the -- our customers as well as most of the general public. But still, after the merger, we wanted to make our image more clear. So we are on the job, and you may be also witnessing lot of changes in our publicity. What was the second question? Can you please repeat?

Further, just I would like to add regarding this, our bank has already embarked on the digital journey. And on the social media and to get the millennials and also the new gen customers, it is totally -- now we are moving on to the digital platform where we have data analytics team and also data scientists who are continuously working. So we are also working on our upselling and cross-selling from the existing 13.5 crore plus customers' database.

Further, let me add. Recently, the DFS has ranked the banks in terms of performance under various parameters. As on September, results are out and Canara Bank is ranked as third best bank. And we are ranked as second position as far as governance and outcome-centric HR practices are concerned. And the other thing is deepening financial inclusion and customer protection. And we got third position in institutionalizing the prudent banking. See, customer protection and customer service, in this, we give lot of importance and because of good customer service, the image of the bank is now on a very high scale. We give lot of importance to customer facilities and customer convenience and ease of doing business by the customers with the Canara Bank. I think this is the way in which we see that the image of the Canara Bank is reflected and projected in a proper way. Can we have your second question, sir?

Yes, sir. Bank's shareholding rewarding policy, ROA targets.

Can you please repeat? Could not get your...

Bank's shareholder rewarding policy.

Rewarding policy?

Yes, sir.

Yes. We have policy. And this policy is as per the industry best practices policy. However, as you know, ours is a public sector bank, and we follow the instructions of the regulators and also the Government of India in the best interest of the stakeholders and also the shareholders. We will be implementing and we'll be trying to give the best as and when it is possible and it is permitted. Thank you.

The ROA targets?

ROA, yes, we have targets. As on stand-alone basis for this quarter, it is about 0.24%. But cumulative, it is 0.19% and we are proposing to have 0.22%.

Okay, sir. We have another question from -- on the chat from Mr. [ Avinash T ]. In MSME, how have accounts been selected for GECL versus OTR scheme? What has been the historical slippages from MSME restructuring?

As far as Guaranteed Emergency Credit Line is concerned, as per the government guidelines, whoever is eligible, we have given 20% of the outstanding as the additional facility to about 4,44,000 borrowers. And this has really helped the MSME entrepreneurs to bring their business back into full steam. And also, they are able to pay the installments and run the business, and indirectly, it helped the bank to, I can say, getting the accounts out of stress. And as far as OTR is concerned, this is also as per the scheme, whoever is eligible, for them, we have given.

Our next question is from the line of Mr. Rahul Nair.

Yes, I just had 1 question, sir. So our loan growth has been in the retail sector, mainly housing loans, vehicle loans side. So do we expect this to continue in the coming quarters? Or we'll start focusing on corporate and SME as well?

See, our strategy is, as far as RAM sector and corporate sector is concerned, we want to have a ratio of 60-40. As on date, we are at 57 and 43.

So 60 is for retail?

Retail. Retail is 57. And it includes small loans, that is RAM sector, what we call. And as far as the growth in housing sector is concerned, year-on-year, we have grown at 13.32% and quarter-on-quarter, we have grown at 3.56%. And going [Audio Gap] I think we'll be growing somewhere about 15-plus percentage as far as housing is concerned. The reason is we have 215 specialized verticals in this bank who mobilizes, does excellent underwriting and turnover time is very minimal, and with convenience and ease, we are doing the advances because of which, even under the COVID time, our housing loan portfolio has grown by 13.32%, and it continues to grow. Thank you.

Our next question is from the line of Mr. Abhijeet.

Sir, few clarifications, actually. One was the SMA number and the restructuring number, is there any overlap between the 2?

No, the restructuring numbers we had just now discussed, like we said, that restructuring under OTR for MSME is around INR 5,200 crores. Along with that, the proposed restructuring numbers is INR 11,000 crores. So you can add up, that is the total restructuring number, which we have.

And the SMA-1 and 2, about INR 15,000 crores, that is separate from this?

SMA-1 and 2, it is -- it cannot be told to be separate because these restructured or to be restructured accounts, they also come under this category. So it is a composite group.

Yes. So the overlap would be significant between the 2 models?

Pardon, can you please repeat?

No, the overlap between the INR 15,000 crore, let's say, SMA-1 and 2 and the similar number in the restructured bucket?

That is just a coincidence. It is not that all these restructured or to be restructured are coming under this. There are other accounts as well where we are not doing restructuring, which are under SMA-0, 1, 2 also.

Okay. So yes, so that's the overlap that I was looking for.

Overlapping is there, always there.

Okay. And the SMA number, it's above INR 5 crores, right? So if you can give us the numbers on the overall loan book that would be helpful.

Actually, this is what we disclosed to RBI. So that is why we have shown you this number. So SMA, above INR 5 crores. And these are representative numbers you can say. So our SMA -- total SMA at 3.63%. And now it is much less, 2.80%. Now it is 2.80%. So this can be taken as a representative number.

Okay. And sir, last 1 on capital. So we managed to raise about INR 2,000 crores. This is lower than what we initially planned. And as you said that you do plan to sell stakes in any of the subsidiaries. Would this imply that you would look to raise capital again in the next [Technical Difficulty]?

As on date, we have sufficient capital. CRAR at 13.69% and Tier 1 at 10.45% and common equity at 8.77% is sufficient for us. And in the future, we'll be taking a call as per the direction of the Board.

Sir, I have 1 last clarification on the FITL slide. It looks like there is not much of a reduction on a quarter-on-quarter basis. How do we look at that number? Does this potentially become part of the restructured book or it is already part of that? This is Slide 38.

These are 2 separate entities. This FITL is what the interest for CC/OD accounts we have capitalized and these are to be paid by 31st of March. So this has got nothing to do with restructuring per say. This is not that FITL what we normally use for restructuring. This is a separate thing as per RBI guidelines which we had done. So this is INR 2,200-odd crores, which you -- which we have already published in our presentation.

But that number has not seen much of a reduction over the last 3 months. So that's why I was wondering.

No, no, they are supposed to pay by 31st of March. So if somebody is paying, they are prepaying it.

We have 1 question in the chat. I will just read it out. It's from the line of Mr. [ Rahul Gupta ]. Can you explain the calculation of pro forma GNPL and NNPLs based on F2 Q1 '21, and F3 Q '21 upgrades, recoveries, write offs, gross pro forma slippages are implied at INR 10,400 crore in 2Q and just INR 500 crore in 3Q. So he wants to know the calculation of pro forma GNPL and NNPLs.

As we have already told you, we have made a very detailed analysis of these NPA, pro forma NPA accounts where we have taken the exact figures of what the accounts which have crossed 90 days and if today, the Supreme Court comes out with vacation of the stay, these accounts will become NPA. So these are actual numbers what we are talking of. Based upon that, we have arrived at these figures. And of course, the ratios come automatically based on the -- these numbers only.

We have 1 more question from the line of Mr. Ashok Ajmera.

Please don't mute me. I have got just a couple of small questions because you are always muting me immediately after I ask a question. So sir, my -- on this FITL part only, on this moratorium of 6 months which was given on the -- especially on the working capital where you have to pay the amount of the interest up to the 31st March, 2021, there may be a lot of people who must not have gone for the documentation for paying it up to 31st of March 2021, but are paying it on a regular basis. So in your SMA-1 and 2, is there any analysis has been done that the people who had availed the moratorium, how many of them are paying them regularly thereafter without opting to pay up to 31st March, 2021? And what is the default percentage in that? This is my question number one?

You see, it is like this. This SMA classification is done from the system. If a person is paying and paying as per the schedule, he or she will not be a part of the SMA. So it is system-generated totally. If somebody is paying, then -- if somebody is not paying, then that account will be part of SMA. So it is system-generated, and we have left nothing to chance here. So whatever is the actual figure is in front of you.

Sir, my second question is on this note #12, INR 855 crore fraud reported during the quarter. So first of all, am I correct that this INR 855 crore is during this quarter only? And secondly, what kind of these fraud accounts are -- I mean, are they -- are they multiple accounts of a small amount? Or is there any account more than INR 100 crore or so?

You see, let me elaborate a bit. During this quarter, there are 28 fraud accounts, which have been detected as fraud. And out of this, majorly, it is the credit frauds, 18 accounts, credit frauds, which have been detected and 10 number of frauds, which is noncredit in nature. So majorly, it is credit frauds, which has been reported.

Any evaluation, any analysis of recoverable amount of this because you have provided, I think, as per the rule -- as per the RBI this thing, I think 1/4 of the amount or some amount has been already provided in this quarter. So how bright is the chances of recovery of the remaining or it has to be totally to be written off?

Here, let me tell you, it is not 25% provision. It is almost 50%. If you see the amount, the differentiation which you have taken, it is about INR 440 crores is already provided against INR 850 crores roughly. And this is -- the initial stages, it is not that fraud doesn't mean that total amount is fraud. For a classification purpose, for declaration, it will be declared as fraud. But from this also, there is recoverable amount. In many accounts which were declared as fraud, from that also, we have recovered the amount by OTS and also by legal actions. So it doesn't mean that total amount is what you call has to be written off, no. We'll be getting case to case, it varies from maybe 50%, 30% to 100% also.

Okay, sir. Sir, now since this NCLT working now is starting, what kind of recoveries which we expect in the next quarter, that is last quarter of this financial year, which can be unexpected kind of recoveries and which can add to your profitability straight away. You said one name, Bhushan Steel & Power. But are there some other accounts where you have done some calculation, which you can get it in the next quarter for the debt, to have a little idea about the profitability of the next quarter.

Yes. For your information, during the current quarter?

Yes, current quarter.

From NCLT accounts, we have recovered about INR 287 crores in 18 accounts. Going forward, as I said, Bhushan Power & Steel is on the limelight. Apart from that, we have internal working where we are expecting some recoveries. And the guidance which I have given, that is about INR 6,000 crores of recovery, which are going to do in the next quarter -- during the Q4, where cash recovery and upgradation is involved, in that, I am not calculating or including the NCLT recoveries that are going to come. Because whatever we get from NCLT, I will take it as additional recovery, apart from what we have actually planned, that is INR 6,000 crores.

Sir, just last, a small question, just your observation on the...

Please. Observation on the...

He got muted, sir. I did not mute him. Sorry. Sir, please unmute yourself.

No, you again muted me. Sir, there are 344 investor complaints which wasn't resolved. But since these are very high number of investor complaints, what kind of complaints during the quarter we must have received?

Sir, this is generally regarding the nonreceipt of the -- noncredit of the dividend. What happened, all our old customers have not registered their account number or -- so we could not be able to remit the dividend by way of RTGS or NEFT. So that is a major reason for the complaints, sir. It is not all complaints are resolved [indiscernible] both the banks together, both the banks together, merged banks together, Canara Bank and -- as well as Syndicate Bank.

Next question is from the line of Mr. Jai Mundhra.

Sir, on the slide where we have shown the rating wise mix at the Slide 15, we have BB and below account at INR 44,000 crore. Could you share some more light on this? I mean, are these accounts -- do you see any risk there? What are the key sectors here? And how is the collection efficiency, particularly in this INR 44,000 crore pool? Any qualitative comment? And sir, the net interest margins for the third quarter FY '21, I mean, for the current quarter? Yes, these are the 2 questions.

Yes. Regarding the external rating. If you see A and above A in terms of absolute amount, it has increased from INR 1.25 trillion, it has increased to INR 1.285 trillion. That is, however, percentage-wise, there is a reduction of 2%. But amount wise, there is no reduction. It means that the financing which we done under BB and below has increased because of which the percentage has come down, but absolute amount, it has not come down. Same way, if you see BBB, it is about INR 35,000 crores previously. And now also it is INR 35,000 crores. Again, the percentage is because of the overall figure. So basically, as far as A and above and BBB, absolute terms, amount is same or it has increased by about INR 3,000 crores. Now coming to BB and below. In BB and below, there is a traction or increase in amount because of 2 reasons. One is, if you see the emergency credit line, that is Guaranteed Emergency Credit Line, which we have given to 4,44,000 people, amounting to about INR 9,500 crores, majority of this component is reflected in BB because, as you know, MSME borrowers, even though they are very good and even though they are supported by collaterals or other guarantees and also by the stock, they generally come under BB or below. So this INR 9,479 crores, which we disbursed under Guaranteed Emergency Credit Line, reflected in that BB and below. Apart from this, we have done some other advances also where we have sufficient securities and high yielding. At the end of the day, there is no meaning in only doing A and above accounts. There should be a mix of both to earn interest, along with calculated risk. That is why the ratio is this, BB and below has increased to 21%. But going forward, the amount wise in A and above and BBB also it will increase, but percentages may vary a little. Now coming to NIM. NIM, we are maintaining at 2.80%. Last time, it was 2.82%. Previous to that, it was 2.51%. Before that, it was 2.50%. So gradually, NIM is increasing and stabilizing, and it will be around 2.80%. And please appreciate, this 2.80% NIM is after excluding INR 413 crores of interest which we have not counted.

Right, sir. Sir, actually, I was more [Audio Gap] 2.8% is for the 9 months, right? If you have the number handy for third quarter. Otherwise, it is also [Audio Gap].

Correct. Thank you.

Since this was the last question, and we are running out of time, MD sir, would you like to give your final remarks, if you have any?

First of all, thank you very much for all the participants, for very good questions, and it has given us an opportunity to explain and to put before the investors and participants, the way forward what we are thinking and the way, how we have handled the balance sheet and how we are going to handle the business in the coming future. Thank you very much.

Thank you, sir. On behalf of Antique Stock Broking, I would like to thank all the participants and the management of Canara Bank for their precious time. Thank you, everyone. Have a great evening. Bye.

Bye. Thank you.

Thank you, Mr. [ Anubhav ].