Central Bank of India (CENTRALBK) Earnings Call Transcript & Summary

Hi, very good evening to all of you. So today, we have with us the entire management from Central Bank of India, represented by Mr. Pallav Mohapatra, who is the MD; Mr. Murthy; Mr. Shekhawat; and Mr. Srivastava, who are the EDs of the company; and Mr. Mukul, CFO. So without spending any more time here, I will straight over hand it over to Pallav sir for his opening remarks, post which we can open the floor for question and answers. Over to you, sir.

Yes. Thank you, and good evening to all of you. To start with my opening remarks, I would just outline whatever the initiatives we have taken in the bank on the structure part, process part, HR part and the IT part. In this financial year, we have done the restructuring of our organization setup by creating more regional offices so that each regional office should have a bandwidth from 50 to 60 branches as against earlier of more than 100 branches. So there is a focus on the business, and there is a focus on the control. And we've reduced the zonal offices from 13 to 10, that is because these zonal offices instead of being a second layer of the controller, we have basically created in such a way that they become the extended arms of the strategy maker in their respective geographies. And they will provide the enabling functions through these regional offices so that the regional offices are not bogged down with all these HR matters, the IT matters, so they focus only on the business targets which have been given to them. In order to delayer various layers in the system, especially in the credit side and also in resolution of the stressed assets, we created 7 corporate finance branches and 6 mid-corporate branches. And these are, basically, reporting directly to the GM Credit in the central office. And the proposals emanating from these branches do not get routed through regional offices or zonal offices. This is basically from the two-pronged approach: one is consolidation of the expertise in the credit area and the second is to reduce the turnaround time. The third initiative which we took was, though there were centralized credit processing centers for the retail loans, now they were basically not doing the end-to-end activity in case of the retail loans. They were -- after proposals have been sourced, they were doing the processing, giving the sanction and then there was no role and responsibility of the CCPC. Now this is end-to-end that after getting the loan proposal, they will not only do the due diligence processing, but they will do the documentation, they will open the accounts in the branch cohort from where the proposals have come, and also they will do the credit monitoring. So it is the decision making -- or, I would say, the responsibility is owned by one particular outfit. This was the basic objective for creation of end-to-end centralized credit processing branches. The fourth one what we did was that we created sudden stressed asset management branches for INR 25 crore and above SMA-1, SMA-2 and NPAs and 8 ARBs with amount between INR 5 crore to INR 25 crore, so that there is a faster resolution process, whether it is a restructuring or it is OTS or it is sale to ARC or, if nothing works, then the DRT process or the auction process. Then we have created marketing verticals in the regional offices because branch managers hitherto were doing the marketing for their own customers as well as noncustomers to give more focus to the branch managers to do upsell and cross-sell for their own customers. We created the marketing vertical in the regional offices so that they can basically source the business proposals and also do the cross-sell for the noncustomers. Now they have been given the KRIs, and their performance is measured based on the targets which have been given them for creation of the lead and the quality of the lead, and the quality of lead is assessed on the lead conversion factor. On the HR front, we have started with some initiatives, which are -- which I feel will be game changer to improve the quality of the resources in the bank. One is succession planning, which also will include the competency mapping model, that is, the officers who are having the expertise in a particular area, how they can be groomed in that particular area to assume larger leadership position. We have also introduced a new performance management system, which is based on measurable targets which are given. And this is being reviewed on a quarterly basis. It is not that at the end of the year they achieve the target and they get good marks. So there also, we have built in a level-playing field, where the roles and responsibilities of the same nature are grouped under one particular cohort so that there is no mismatch in the assessment of the officers belonging to different cohorts. Then we have also introduced the concept of job family and the identification process for a job family has been completed. And the people within that particular job family will be posted in their role pertaining to that particular job up to the level of AGM, assistant general manager. The entire training architecture is being revamped in the bank. And we have engaged a consultant for doing the training impact analysis, whether the training modules are the right modules to basically impart the knowledge which is required in this fast-changing banking scenario and how they are upskilled and up to date in these areas. We have also introduced an e-learning module. And now out of 100 marks, 5 marks mandatorily is for the e-learning. If a person has not done this e-learning, then he loses 5 marks. This is basically to focus on imparting the knowledge and to undergo role-based process so that they can upskill -- upgrade their knowledge level. We have also introduced human resources management system, where the managers can sanction -- approve the leave or the advances of their subordinates on the move through the mobile application. On the process and IT part, we have taken the initiative and the process is on, where we are going to have an end-to-end loan life cycle management system, which will start from the lead generation, credit origination, monitoring and various APIs interface would be linked with outside agencies so that the risk mitigation is built into the processing firm as well as in the credit monitoring. We have also introduced and launched enterprise-wide fraud risk management solution. The Phase 1 of that in 5 different channels have been implemented, and this is a phased manner implementation, and we will be completing this exercise by 31/12/2020. We are also in the process of engaging, and we have engaged a consultant for having a business transformation in the bank, where the focus will be on the retail, agriculture, MSME, credit monitoring, cross-sell and how to use data analytics to do the credit assessment as well as the credit monitoring. We have rationalized a lot of retail loan products, which were somewhere overlapping. And in order to avoid the confusion at the operating level and to give more focus on cash flow-based model, we have rationalized around out of 25 existing retail loan products to around 12. And we have introduced a new retail loan product, which is called Cent Business, which will be a shift from security-based financing to the cash flow-based financing. We are also engaging with the fintech companies to get the right platform where we can do this online lending, though we are on -- and all the public sector banks are on PSB loans at 59 minutes. In addition to that, we are also in discussion with other fintech companies how to get the right platform for other type of loans, where it is online processing with risk mitigation which is built in. This is on the initiatives which we have taken. The presentation has been posted in our Investors page in our website. The highlights of the performance during this quarter is that our net profit has improved from a loss of INR 718 crore in Q3 FY '19 to INR 155 crore in Q3 FY '20. The CASA, which is a strong point of our bank, has improved from 44.64% in Q3 FY '19 to 45.49% in Q3 FY '20. There is a growth in total deposit. Our gross NPA has reduced from 20.64% to 19.9%. Net NPA has reduced from 10.32% to 9.26%. And the provision coverage ratio has improved from 69.52% to 73.73%. The NIM has also shown an uptick from 2.74% to 2.92%. This is despite the fact that 40% of the loans will be linked to the external benchmark because after 1st of October, whatever the loans we are doing in the retail, MSE, those are linked to the REPO rate. And there has been some impact on the yield on advances. But since we are able to do more of the CASA, the cost of funds is coming down and on account of which we see an uptick in net interest margin. Operating profit has grown more than double from INR 715 crore to INR 1,696 crore. There is -- net profit has -- the ROA is positive. ROE is positive. And 3 quarters -- these have been positive in the 3 quarters. Cost-to-income ratio has also come down sharply from 69.70% to 48.14%. We have been able to control our operating expenditure, which is one of the main reasons for this significant improvement in the cost-to-income ratio. The capital adequacy ratio also improved from 9.34% to 12.83%. As per the regulatory guidelines, the CRAR for 31/03/'20 has to be minimum 11.50%. As against that, we are already at 12.83%. And the GNPA and NPA also are as I have told. Now this leverage ratio, though it is not given in this presentation, but this leverage ratio has also improved. Now the leverage ratio is more than 4% as against the regulatory requirement of 3.50%. So both on the CRAR and the leverage ratio, we are much above the threshold as per the regulatory guidelines -- sorry, this leverage ratio is given on Page #28. And this has improved from 3.42% as on December 18 to 4.39%. So on the liability side, there has been, I would say, reasonably good growth. And especially in the CASA deposit, the growth is good. But on the asset side, there is a degrowth. And out of this degrowth in -- if I go sequentially from September '19 to December '19. So mainly, it is on account of the technical write-off which we did in case of 13 accounts where 100% provision was available to the tune of INR 2,900-odd crore. Other than that, also, we have seen in this current financial year that though our P segment loan, personal segment loan has grown, especially in the home loan, but there is a degrowth in MSME, agriculture and also the corporate. Corporate, the degrowth we will be able to make up and achieve the target because we are getting good proposals from A-rated and better-rated companies. This MSME, what we saw was that since we moved from the security-based lending to cash flow based lending, so there has been larger repayment in the accounts, on account of which the MSME degrowth is there. We are trying our best, and we ran 2 campaigns during the financial year of 45 days each, and we have seen some uptick in the sanctions and gross disbursement and with the introduction of the new product, which is getting a lot of attention from the MSME borrowers. So we are hopeful that we will be able to come very close to the target, which we have set for ourselves for March 2020. If we look at the corporate asset quality of our portfolio, what we see is that we have around, I would say, around 50% of the book, which is -- 65% of the book, which is investment grade and above. And even if I look at the A-rated and above, there also what I see is around 50% of our book is A-rated and above. So on the quality of the corporate book, the quality is maintained, and there is not much of a stress in that. If I look at my NBFC portfolio, which is 7.81% of the total advances, which includes HFCs also, there is an NPA percentage of 14.27%, and major part of this NPA is coming from 3 NBFCs. One is Dewan Housing Finance Limited, the second is IL&FS Financial Services and the third is Religare Finvest. So these 3 accounts construe around 90% -- 92% of the total NBFC NPA. So as far as the -- other than these 3 NBFCs or HFCs, the NBFC book is performing well in our bank. And since our -- we are basically taking exposure on better-rated NBFC through direct exposure. And in case of the direct exposure, now we are doing more -- as per the RBI guidelines of August '19 circular, where it is based on the on-lending, where we also get the benefit of the private sector loan. We also do give the term loan. Now we have moved from working capital advances to NBFC to term loan advances, through which we are mitigating the risk. In case of the unrated, whatever you see on Page #18, the corporate asset quality, major portion of the unrated is basically state government guarantees or the central government guarantees. And in case of the state government guarantees, though these accounts are unrated, but we get the benefit of 20% risk weight. So from that point of view, also, the quality of the book is maintained. So this is on the business part. During the Q3, if you go to Page 25 of the presentation we have put on our website, there is a INR 4,000 crore of slippage. Out of this INR 4,000 crore of slippage, around, I would say, 45% -- or no, sorry, 55% is coming from the divergence and the remaining is from other than the divergence. In case of other than the divergence, major portion is coming from the corporate book, which is giving a slippage of around INR 1,600 crore, and there are 5 accounts which constitute a major amount. One is the Dewan Housing Finance Limited, other is Seya Industry, third is Flexituff Ventures, the fourth is IL&FS Security Services and the fifth is Simplex Infrastructure. Out of these 5 accounts, we are quite hopeful that in 2 accounts, we will be able to do the resolution before 31st of March. We are hopeful that in the Q4 through the process of sale to ARC and Swiss Challenge and OTS proposals which have been sanctioned and the recovery upgradation of the account through restructuring, we will be able to upgrade or recover major portion of the slippages, which we are seeing now. So this is in short on the business parameters. And on the other slides, which we have given on the alternate delivery channels, there also our share in case of alternate delivery channel also improved from 59% to 70%. And the composition of the digital transactions, major transitions are through UPI. We are increasing our Internet banking users and mobile banking users. And we have the mobile banking application. We have remodeled it, which is more user-friendly. Our contribution in the financial inclusion is also growing. And through these Prime Minister Jan Dhan Yojana accounts, sizable amount of deposits are being mobilized. And this in short about the performance of the bank in Q3. Hello? Hello?

Yes, sir.

So this is in short about the performance of the bank in Q3. So I'm ready for questions.

[Operator Instructions] The first question is from the line of Anirvan Sarkar from Principal India.

Just a couple of questions. So while we have done a good job of recognition of the stress on our books and proactive recognition of the same, we still continue to see divergences being pointed out by the RBI. So what could be the reason for the same? And do we see this coming off in the future? Or what are we doing to minimize the gaps which what RBI sees as a problem and we don't?

See, the major portion of this divergence is coming in the agriculture accounts. Now these agriculture accounts -- because when the bank migrated to CBS, there were some issues in the -- at the time of the migration. Now all these cases have been taken care of. And the system has been cleaned up. So -- and now these type of issues in booking the advance is not coming up, whether it is agriculture or MSME or retail. So henceforth, such type of divergence, even if it comes, because in the corporate, what happens is, the divergence may be based on the issue of the interpretation. In case of agriculture, we have taken care of the system and in both -- in all the 3 cases, agriculture, retail and MSME, we have taken care of the system that henceforth, the divergences do not come. In the corporate, it would be based on how the regulator is looking at the advance. So there, as of now, definitely -- and based on the learning from these supervisory audit by the regulator, we are also improving our processes. So there, there is no issue in the system.

All right. And one more question, if I may? So on one of the bigger HFCs, which one bank has classified as a fraud, now with the promoter being arrested, do we -- I mean are we reasonably sure that now all banks have to recognize it as a fraud and, therefore, have to provide in the next 1 year or how should we look at it?

Sir, each bank basically takes a decision. It is that if suppose some banks have taken a call to declare it as a fraud and the KPMG forensic audit report is now available with all the banks, we are also analyzing the report. And we will take a call suitably as to what action needs to be taken.

Okay. Okay. And sir, one last question. So did we have any recoveries from SR? Did we have it on our books? And...

SR is the security receipt?

Okay.

No, no. You're talking -- SR means security receipt?

No. I'm talking of Essar Steel.

No. Essar Steel, our book outstanding was INR 423 crore. We got a recovery of INR 463 crore. So INR 403 crore went to make the NPA as 0 and INR 40 crore we booked as the income -- interest income. And out of this INR 423 crore book outstanding in NPA, INR 160 crore was the provision held against that. So INR 160 crore was written back as the provision. So the net benefit which we got from this resolution was INR 160 crore as the write-back of provision plus INR 43 crores as the interest income. So total INR 203 crore of income we got from this resolution.

The next question is from the line of Harsh Shah from ICICI Securities.

Sir, I have a few questions. So first one is that to come out of the PCA, the net NPA has to go below 6%. But for us, again, this quarter, we have seen a sharp rise in the net NPA ratio. So by what time do you think we'll come out of PCA?

See, our target which has been given to us even as a road map approved by the Board, so 31/03/'20 is the deadline to come out of the PCA. And all the parameters for PCA, except for this net NPA, we are meeting all other criteria. So the net NPA is becoming -- is now the only parameter on which we are not qualifying. Now if you -- what happened was -- what happens is due to the divergence given by RBI, so these accounts slipped into NPA as on 31/03/'19. So the provisioning requirement is 15%. Now NPA gone up with a provisioning requirement of 15%, so it will pull down the net NPA percentage. So that was the major reason. In the Q4, we are quite sure that we will be able to do some significant recovery or upgradation in major accounts. And we will be able to control the slippage ratio, which shot up in Q3 as against Q2 because in Q2, we were able to contain it below 1% and it has shot up to 3 point-odd percent in Q3. So we will be trying our level that we are able to maintain whatever we were able to do in the slippage ratio in Q2. Through that -- and by increasing our advances, we are trying our level best to bring it below the threshold driven by RBI for PCA.

Sir, the slippage ratio, excluding RBI divergence, what would be that?

Slippage ratio excluding RBI divergence will be -- the slippage ratio without the RBI divergence is 1.88%. It is 1.88% because in this quarter, we saw slippage in Dewan Housing, which was -- with INR 1,000 crore. And there were 4, 5 other corporate accounts. Total together in those 5 accounts, it was around INR 1,400 crore. So that was the reason for the slippage ratio at -- excluding divergence, at 1.88%.

Sir, after the Essar resolution, the List 1 is very small, and the List 2 is around INR 5,300 crores. So what is the expectation over there for recoveries?

See, in the List 2 -- just one second, sir.

Because we held very good provisions, PCR on that.

Yes. So -- one second, sir. Give me one second. So List 2, we have 90%. In List 2, I am hoping that there will be recovery in 2, 3 accounts. One is Reliance Communications. The second is -- but there, the recovery percentage will be -- because some of the accounts, there has been some resolution with 25% to 30% and -- means, around 75 to -- 70% to 75% haircut. But I'm hopeful that by 31st March, in a few accounts, there will be some resolution, right? And so there will be some write-back of the provision. And in the List 2, if I look, see, Alok Industries was in the List 2, which we sold to ARC on a 100% cash basis in March; Bhushan Power and Steel we sold to ARC on a 100% cash basis; and Jayaswal Neco, which was in List 2, we sold it to ARC on a 100% cash basis. All 3 through the Swiss Challenge method in March. So that we have been able to do. And in a few other remaining accounts, if we are able to do recovery in 3, 4 accounts, I will be getting a write-back of around 10% to 15%.

Okay. Sure. That's good. So -- and further, could you qualitatively elaborate something on the power sector resolution?

Power sector resolution, there were -- one account got resolved that is -- and the money has been received by all the banks. That is RattanIndia. The second account, which is Coastal Energen, it was agreed to by all the banks to go ahead with that -- the proposal -- OTS proposal where the money is coming from the investors. Two, three banks are left for giving the approval, though it was agreed to in the joint lenders forum by all the bank. We are quite hopeful that the money will come by 31st March in this account also. In case of Jaiprakash Ventures Limited, we have exposure in 2 power plants: one is Nigrie, the second is Bina. So there, the restructuring was done in 2018 with the current promoters, there was a portion which was to be converted into CRPS. There was some documentation left, and that documentation will be completed by the end of this month, I'm quite hopeful. So that restructuring is through. And in case of the sustainable debt, the company is paying as per the repayment schedule. But since this account will be upgraded only with either 20% of the residual debt or 2 years, since it is a continuing management. So this will be upgraded only in the financial year 2021.

Okay. Okay. Sir, if possible, could I squeeze in 1 or 2 more questions?

That depends on the organizer. I cannot make any comments on that.

So sir, one more, your BB and below book is INR 9,000 crore. Sir, what could be the estimated slippages from that?

See, when you look at INR 9,000 crore, which is BB and below, that is, December '19, INR 9,406 crore is BB and below. Major portion of this BB and below is state government public sector entities, where the rating is below the investment grade, but state government guarantee is there. So we are not much worried on this, and the risk weight is also very, very comfortable at 20%. Regarding exact figure out of this BB and below of INR 9,406 crore, how much is the exposure against the state government guarantee, right now, I don't have the figure. We can send you separately. But I am sure, major portion is basically to the state government -- with the state government guarantee.

Okay, sir. Sir -- and within the asset quality, the MSME book has seen an increase in NPA. So which sectors basically are facing stress? Any sector-specifics that we are facing?

MSME is all across. It is textiles, it is intermediate, steel, it is even the services, it is even -- so it is all across. It is not any particular sector which is showing that much of stress.

Okay. And sir, what about the new tax rate regime? By when will we take the benefit of the new tax rate?

See, we are doing this analysis. And with the approval of the Board, we will take a call, and we have time up to 31/03/2020. You are talking about the corporate rate reduced from [ 35% ] to 25%, right?

Yes, sir.

We will take a call whether we will continue with the MAT or we will switch over to the reduced tax structure. As of now, I cannot basically divulge because until I get the approval from the Board which particular option we have to exercise, then only I would be able to divulge.

Okay. Sir, and one last one. Any inter-creditor agreement that you have signed recently?

Inter-creditor agreement, all with INR 2,000 crore and above we had signed. Some of the cases, the -- that 180 days period has expired by 7th of January or 10th of January. There, we are working with the promoters. And we are quite hopeful that -- we have given the time up to, say, 15th of March or 20th of March. If no restructuring happens, then immediately we will file the application in the NCLT. Then only 10% additional provision is required. But if there is a restructuring resolution, then -- and it is -- the restructuring is completed, then there is no in requirement of additional provisioning. So that we are working out, and we are quite hopeful that not more than 10% additional provisioning we have to make because -- if you do the restructuring, then no additional provisioning will be required to be made. And if we do not do -- if we are not able to do the restructuring, but if we have 10 days' time to file the application in the NCLT by 31st March, only we have to do 10% additionally. And once it is admitted, then this 10% will be reversed.

Okay. Sir, what is the current PCR we maintain on those accounts?

On those accounts INR 2,000 crores and INR 1,500 crore?

Yes, sir.

That I have not -- I can -- individual account-wise I have, but PCR percentage, if you ask me, I have to calculate and then tell you.

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

Just a few questions. One, could you just again give us the details of a few things? One, RBI's inspection, between -- what are they checking in the agri portfolio? Because isn't it quite difficult for them to go account to account to see what divergences are there?

See, these divergence are -- basically what happens is, in some of the states -- hello?

Yes, yes. I'm there. I'm there.

In some of the states, natural calamity took place year after year. Now in case of the natural calamity, the agriculture loans are restructured as per the master guidelines of RBI. As for the of master circular of RBI, not only the reschedulement of the payment is done, but fresh loans are also given. Now in those cases, what happens is that suppose a limit of INR 100 has been given, if there are 3 consecutive natural calamities as against INR 100, the outstanding may become INR 130 or INR 140. So those are the cases where RBI is finding concerns that [indiscernible] outstanding will be more than the limit [indiscernible]. So this is one factor which is basically when they pull out the dump, they find it and they say that these accounts would be downgraded. And there are some accounts, where during the migration from manual to CBS, there were some data issues...

Sorry to interrupt you, sir. This is the operator. Mr. Mahesh, please mute your line.

Yes, sure.

Hello? Now we have done the cleaning up and the system has been put in process that there is no recurrence of these type of divergences in the future. Hello?

Perfect. Sir, just another question on the slippages. Can you just tell us, barring Dewan, you just kind of indicated a few other accounts. What were those? Second, of the recoveries, what are the major recoveries for the quarter? And third, what is your expected recoveries in terms of large accounts for the fourth quarter? That would be it.

So other than the divergence, so it was basically around INR 2,000-odd crore. And out of this, Dewan is around INR 1,000 crore. There is another account, Seya Industries, INR 177 crore; Flexituff Ventures International Limited, another INR 90 crore; IL&FS Securities Services Limited, INR 80 crore; and Simplex Infrastructure Limited, INR 55 crores. These are the 5 top accounts where the slippage in the corporate book happened during the last quarter. And there is another account, sorry -- okay, these are the 5 top accounts. Hello?

Okay. And in terms of major recoveries for the quarter and for the next quarter?

Major recoveries, one is INR 463 crore in Essar, which included INR 43 crore in interest. Then the recovery was in Jyoti Limited, where the recovery was INR 140 crore. And there were -- a lot of accounts, where recoveries ranging between INR 10 crore to INR 20 crore were there. And the total is INR 1,280 crore. Out of INR 1,273 crore, so if I take Essar of INR 423 crore, the principal book outstanding, and INR 140 crore in the Jyoti Industries Limited, so this works out to INR 423 crore plus INR 140 crore, that is, INR 570 crore. And then there were recoveries in like Lanco Teesta Hydro Power of INR 67 crore. And then there was -- we recovered something in the Moser Baer India Limited through the sale of some property of INR 36 crore. So these were the major. Otherwise, there were small, small recoveries also like between INR 10 crore to INR 20 crore in many accounts.

And for the fourth quarter, sir?

For the fourth quarter, the major accounts where I am expecting the recovery or the upgradation will be Coastal Energen, where the -- I have a book outstanding of -- Coastal Energen, I have a book of INR 600 crore. So that NPA reduction will happen. Then I have Matix Fertilisers and Chemicals, but there will be a restructuring with the existing borrowers. So it will be upgraded only in 2021. Then I am expecting upgradation in the account of Religare Finvest Limited, where there is a change in management. So it will be immediately upgraded. And -- so these are the 2 major accounts where I'm seeing upgradation and recovery. And we have also got the sanction for sale to ARC under Swiss Challenge method. And also in small accounts, we are running this nondiscretionary, nondiscriminatory onetime settlement scheme, where we are expecting something around INR 2,000 crore or INR 2,500 crore of recovery. So I'm expecting something around INR 4,000 crore of recovery through this process. Hello?

Sir, the line for the current participant got disconnected. We'll move to the next question. The next question is from the line of Jai Mundhra from B&K Securities.

Sir, I wanted to know what all ICA that we have signed, standard ICA that we have signed?

Standard ICA which we have signed where the exposure was more than INR 2,000 crore is -- one second, sir, is only one left, which is GMR Kamalanga Energy Limited, but there -- it has come out of SMA category. And now the 180 days period will start when there is a first default. So now there is nothing like left. Religare Finvest was SMA, but it has slipped into NPA.

Right. So as of now, there's only one account, which is in ICA and as of now, that has also been resolved, right? Because it has come out of SMA.

Sorry, sir, second account is Bajaj Hindustan Limited, which also came out of SMA category. So that 180 days will only trigger from the date of next default.

Sure. Sure. And sir, in terms of your SMA-2 you highlighted, SMA-1 and SMA-2, around INR 2,000 crore -- INR 2,047 crores. Of 5 accounts here...

INR 2,000 crore SMA -- one second, sir. Yes, sir, of SMA-1 and 2, right?

Yes, sir.

INR 2,047 crore.

Yes. So I want to know, sir, which are the top 5 accounts here.

One second, sir. If I look at the SMA-2, there is no major account where -- except for the Beta Wind Farm Private Limited, which is INR 88 crore, I don't see any major accounts. There are small, small accounts, which we are quite confident that we will be able to -- and there is another account of -- no, there's only major one account that is Beta Wind Farm Private Limited.

Okay. So that is the only account, let us say, which is substantial...

Yes, yes. The major account, sir. Otherwise, those are INR 10 crore, INR 15 crore. We are very confident that a major portion of that we will be able to save from slippage.

Sure, sir. And sir, in terms of your BB and below book that you have highlighted in terms of NBFC slide and also overall, what are the top 5 accounts here in BB and below categories? So let's say, if I see your NBFC book, total is around INR 13,000 crores, of which around 22% is BB and below book.

Sir, BB and below book, we have a significant portion with a state government guarantee. Right now, I don't have that figure with me, but my CFO can share with you. So they are BB and below -- there is no major account. There may be some account with INR 5 crore, INR 6 crore exposure, which may be in BB because since last 2 years, we are not taking a fresh exposure in BB. We are also not seeing down-gradation of the accounts from the investment grade to below investment grade in the last 2 years. So...

Understood, sir. And sir, what is your total power NPA outstanding?

Total power NPA outstanding. Sir, we have an exposure of around INR 9,000 crore in the power sector, out of which the NPA is INR 3,600 crore. And the provision we are holding against that is INR 2,420 crore.

Sure, sir. And sir, any -- so you mentioned that you are expecting a recovery -- near-term recovery. RattanIndia is -- already you have got the money...

In December quarter. Yes. [indiscernible] we will get it by 31st March. Religare, we are quite confident that this will be upgraded by 31st March. There is Flexituff. We are quite confident this will be upgraded by 31st March. There is another account that slipped in December '18, Chemtrols. We are very confident that we will be able to upgrade by 31st March. There are a few other accounts also where we are comfortable, where the exposure size is more than INR 75 crore to INR 100 crore. We are very confident that either these will be upgraded or the recovery will be done. And there are a few road projects, which we are running the process for selling it to ARC because we saw the success in case of the sale to -- sale of the road assets to ARC in the first quarter as well as in the third quarter. So the process is being run, and we will be able to sell some of these road assets to ARC on a 100% cash basis through Swiss Challenge method.

Sure, sir. And do you have exposure to Jindal India Thermal, sir?

No, sir, we don't have.

[Operator Instructions] The next question is from the line of Amit Mishra from Indus Equity.

Sir, 2 questions. Sir, first, as you mentioned in your opening remarks that you are revamping your employee work structure and you're changing everything. This quarter, employee cost has gone down in Q. Sir, what we've seen -- what are we expecting in the future?

See, whatever is the -- yes, sir, you will complete your question?

Yes, yes. That's it.

No, you completed your question?

Yes, yes, yes, sir.

So this entire exercise of the reorganization was completed as, say, by June-July 2019. And within a period of 3, 4 months or, I would say, up to December, we are seeing the uptick and the movement in the positive direction. The improvement in the business growth, the improvement in the recovery, the improvement in the control measures, which are measurable, we have been able to see in around 70% of our regional offices. That means, around the 60 to 65 regional offices. So what we feel and the Board also feels that this restructuring has been done. This restructuring was the right solution as of today, and it was done at the right time. But the full benefit of this restructuring will come in the next financial year. Now all of the measures, which we have taken, whether it is in the HR area or it is in the technology area or it is in the process area, the benefit -- major portion of the benefit will come in 2020-'21. And these initiatives have been taken keeping in mind the sustainable growth and improvement in the bank. It is not basically a quick-win solution which we are looking at. We are looking at -- to make the process, the product, the risk and the structure, which will withstand the pressure and also will be flexible enough to adapt to new changes in the banking sector.

Okay, sir. Sir, is the actuarial valuation for Ind AS done for our bank?

Sir, we are basically doing this Ind AS reporting to RBI every quarter end. And since RBI has basically deferred the introduction of the Ind AS because some legislation is to be passed by the Government of India, so that has not been done. But one thing I can share with you that as for the Ind AS, the profitability position is better. The profitability, if I compare quarter-on-quarter, this financial year, this is a profit. So the profit through the Ind AS is better than this. Even when it was in loss, the profit is better than during the loss period under Ind AS.

Okay. Sir, what is your exposure to Air India?

Air India now is -- now it is 0, sir.

0?

Yes.

You don't have any exposure?

No, no, we had, but they have paid off. It was around INR 1,200 crore, which was paid off in this quarter itself, Q3.

The next question is from the line of [ Anand Ahuja ] from [ Smriti Investments ].

So most of the questions have been answered. So I just wanted to know, what is the future strategy going forward for the bank as in expansion and reducing the NPAs?

On the infrastructure part, the initiative which we took in this financial year, that will basically stabilize or some will be implemented in the next financial year. The technology platform, whatever is the upgradation we are doing and new artificial intelligence integration, which we are in the process of doing, that will happen in the next financial year. So this is on the process, product, IT part. Regarding the -- on the business front, we intend to take our CASA percentage from 46% to around 48% in the next financial year. On the retail asset -- retail, agriculture and MSME, we want to take it from current of 62%, 63% to more than 70% in the next financial year. We want to improve the corporate book portfolio, which, as of now, is, I think, investment grade and above will be more than 60%, around 65% to more than 75%. And we want now to focus more on interest income on advances. If you look at the figures, you will find that interest income on treasury operation has basically supported the earning of the profit. So now our focus is moving more towards the interest income from the advances. In case of the NPA and the slippage and the stress, we want to contain the slippage ratio to below 2% on a quarterly basis. In Q4, definitely, we are going to bring it down below 2% because if we exclude the divergence by RBI, in the current quarter, despite the slippage in Dewan Housing or Religare Finvest, the slippage ratio is 1.8%. So if this is the scenario and both such things are coming out in the Q4, so we will be able to contain our slippage ratio below 1.5%. And we want to maintain the standard of less than 1.5% in the next financial year also. And through this process, we will be concluding our credit cost. And this way, our profitability from the core banking operation will go up.

[Operator Instructions] The next question is from the line of Sushil Choksey from Rosy Blue Securities Private Limited.

Sir, you just stated that your CASA, you're estimating to move from 46% to 48%. Keeping that in mind, what is your outlook for home loan products where we are very competitive? And what retail products are we likely to launch in the next 12 months? And what is the strategy on digital along with that?

See, in case of the P segment loan, since we are in the PCA, so unsecured P segment as of now, we are not allowed to do because we cannot increase our unsecured portfolio even in the P segment from the March 2017 level, which is a high-yield product. But once we come out with the PCA, definitely, we will be focusing on that. With the CASA, as you said, that is currently 46%, which we are focusing or we are pushing for going to 48%. So this will give us a very low-cost funding base. And we will be having a home loan product with a pricing which is best in the market. I don't know whether you are aware of this or not, only recently, State Bank of India has reduced their home loan pricing from 8.10% or 8.15% to 7.95%. We already had a pricing of 8%. And with the benefit of the CASA which we have and the low cost of funding we have, we may look at making it as competitive as SBI, which is now currently at 7.95%. And other than this, the retail, we will be focusing now more on the vehicle loans with the expectation that this will take off. In the current financial year, what we have seen is the demand for the vehicle loan was not as high as it used to be earlier. So this particular product is also in -- on our radar. The fourth point is that we also want to engage with the NBFCs as well as HFCs through the pool buyout or through the on-lending as per the August '19 circular to increase our portfolio under the PSL.

Okay. Sir, what is your aspirational number of percentage in advances via housing loan, auto loan...

Housing loan, as of now, the percentage -- if I look at the percentage, it will be close to -- it will be close to 25%, 26%. But we want the housing loan as a percentage to the total loan book to grow up to 35%. And this would be not only the organic growth in the housing loan, it will include also the inorganic growth, which is the pool purchase.

Okay. And how are you seeing the quality in...

In case of a pool purchase, what I see is, the quality in our bank is quite good, and the percentage of NPA in the pool purchase will be much, much less than 1%. So that particular portfolio is doing very well. It is not only in the housing loan, but even in the other loans like gold loans also, we see the stress level in the pool purchase is very, very low.

Sir, any outlook on digital and human resource initiatives, which you would...

Human resource initiative, in my opening remarks, I said that -- what are the initiatives we are taking. It is basically, the focus is on right people in the right position, for which we are doing the competency mapping. We are also creating job families, where officers up to AGM level will move in that particular family so that they gain their expertise and they contribute more towards the business growth and also maintaining the quality of the business in the bank. We are also trying to build up a level-playing field among the human resources, where the assessment of officers will be done as per the cohort. That means, I will give you an example, that if there is a cohort of Scale 1, Scale 2 officers as branch managers, and if the maximum marks which a branch manager in that cohort gets 80 marks, then it will be AAA because it will be based on the relative assessment of the officers in that cohort. So this will motivate the people. This will encourage the people. Otherwise, what happens is, people don't want to move to those measurable roles or the budgetary roles because -- maybe because of the external factors. The budget achievement becomes difficult. The third point is that all those, we are -- we have most probably made 90% of our total roles in the bank as budgetary and measurable. So it is not that someone is only paying the supporting role. Suppose anyone working in the home loan department or, for that matter, the DGM home loan, his target is the sum total of the target of the home loans given to all the branches. So that means he will be also -- he is also required to drive the business. Otherwise, he will lose the marks. And this is going to happen in this financial year itself.

Sir, basically, my question is more pertaining to that with more housing loans or retail loans, would you need to get more talent in the segment or it will be homegrown? That's it. It's fine, sir.

Sir, what I strongly believe is, in case of the home loan, it is that there should not be any shortage of staff handling it. The talent requirement is -- because the home loan product is not a very, very complex or complicated product. So that type of expertise -- as it is required in case of handling the corporate accounts, that type of expertise is not required. Since we have created now these credit -- centralized credit processing branches, where those who have got a good retail background have been posted as chief managers, so that will take care of improving the quality of home loan as well as turnaround time. So as such that -- I don't think that, that type of expertise, which is specifically required for the home loan, is required because it's not a very, very complicated product.

Any fee-based products which we are capitalizing because of CASA, sir?

The fee-based now we are focusing more on this cross-sell business. So far, we have done corporate tie-ups on the insurance products and health insurance product. Now we are going forward. We got the approval from the Board to cross-sell the mutual fund. So this year, we have given a challenging target of INR 100 crore income from just cross-sell as against INR 20 crore, which we did in the full year last year. So we want to -- and we have gone through the whole process and engaged our consultants for the business transformation. And one of the modules on this business transformation that the consultant will work out is on the cross-sell to improve the other income.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

I think I made my opening remark regarding whatever the initiatives we have taken and what we are doing and which business areas we are focusing on. And the -- all these efforts are in one direction, that is, to make the business in this bank a sustainable business, which is not only the quick wins but which will take this bank forward on a long-term basis. So that's why some transformational changes we are doing. And we will not lose our focus from the retail, agriculture and MSME because our strength is in rural and semi-urban areas. During the current year, whatever was our expectation to increase our interest income from advances, so far we have not been able to do it. But this is now our focus that we have to increase the interest income on advances by booking more of the quality business. And when we booked more of the quality business, we will not lose the focus on the retail, agriculture and MSME. And at the same time also, we will continue our efforts to contain the slippages as well as to make the recoveries through the large extent possible and have an open mind for the resolution, restructuring, sale to ARC and onetime settlement, but within the framework of the policies and also the regulation. Hello?

Yes, sir. Should we conclude the call?

Yes.

Thank you.

Thank you.