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

Good evening, everyone. I welcome you all to Central Bank of India's 4Q and FY '20 Earnings Call. We have with us today Mr. Pallav Mohapatra, MD and CEO; Mr. Shekhawat and Mr. Srivastava, Executive Directors; and Mr. Mukul, CFO; along with other senior members from the management team. I thank Pallav to give us this opportunity to host the call and hand it over to him for his opening remarks. Over to you, sir.

Thank you, Mr. Sohail, and welcome to all the analysts who are on the call. So I will give you a brief background of the major highlights of Q4 FY '20. Number one is -- and the PowerPoint presentation, we have already uploaded on our site. So if any analyst wants to go through it, he can see it in our website. The major highlights for Q4 FY '20 are as under: the CASA deposit has improved from 45.49% in December to 46.83%. The provision coverage ratio has also improved from 73.73% in December to 77.29%. Gross NPA, there is a reduction from 19.99% in December to 18.92% in March. Net NPA, which was 9.26% in December, has come down to 7.63%. The retail, agriculture, MSME combined together constituted around 63.73% of the total advances. The cost of deposits reduced from 5.10% to 5.05%. The NIM has improved from 2.34% to 2.85%. When we go to the profitability, the operating profit of the bank improved for the whole year from INR 3,127 crores to INR 4,344 crores. The net loss -- after 3 consecutive quarterly profits, the bank showed a net loss in Q4, and this loss is INR 1,529 crores. But since there were 3 quarterly profits, so the whole year loss is INR 1,121 crores as against INR 5,641 crores in last financial year. But if I look at INR 1,529 crores of the loss, there are some extraordinary items in this particular loss. One is we had to make additional provision for the pension liability on account of reduction in the rate as given by the -- our actuary. So on an average, we used to make INR 150 crores per quarter, which works out to INR 600 crores per year. But at this time, they have given -- actuary has given a liability of INR 1,115 crores as a provision, on account of which we had to make additional provision of INR 515 crores in this quarter. There is a 5% provision also we have to make on those accounts, which slipped in the March quarter, but which were given the benefit of not being downgraded. And as per the RBI circular, we had to make 5%. So that amount is INR 150 crores. 20% of the provision we had to make as per the 7 June circular of RBI on the framework for resolution of assets, where 180-days period was over. So there, additional provisioning of INR 213 crores was made. And there is one NBFC account where we declared a fraud in the month of May within the period of 6 months of the red flagging of the account. But since other banks had -- 2, 3 other banks had declared it as a fraud in March, so we had to also make additional provisioning of INR 307 crores. So this -- these 4 itself adds up to INR 1,185 crores on a loss of INR 1,529 crores. So had these exceptional items been not there, this bank would have made a full year profit. So this is about the net loss. And same impact -- the impact -- additional provisioning for pension has impacted the operating profit because this provision goes above the line. The third highlight in the profitability is the total income for financial year '20, which increased to INR 27,200 crores from INR 25,052 crores in financial year '19. Noninterest income also improved from INR 2,413 crores to INR 3,637 crores in FY '20. Cost-to-income ratio improved to -- from 65.96% to 61.44%. But in the last quarter, because of this additional provisioning for pension, which was INR 515 crores, in Q4 only, the cost-to-income ratio deteriorated to more than 80%. Otherwise, if you take this out, and even if we include this, so over the year, it has evened out to 61.44%. Business per employee has also improved to INR 14.41 crores in financial year '20 as against INR 12.99 crores in financial year '19. Since there was a net loss -- so we are not taking a net loss per employee, but we are taking operating profit per employee, which improved to INR 12.66 lakhs in financial year '20 against INR 8.62 lakhs in financial year '19. Asset quality, as I've already said that gross NPA reduced to 18.92% from 19.99%. Net NPA, from 9.26% to 7.63%. Provision coverage ratio improved to 77.29% from 73.73%. In the business segment, the total business of the bank increased from INR 4,57,584 crores to INR 4,86,007 crores in financial year '20. The deposits increased to INR 3,10,199 crores from INR 2,95,833 crores in Q4 FY '19. Retail loans in the Q4 FY '20 or the financial year ending was INR 46,106 crores against INR 41,042 crores as on 31/3/19. CASA deposits, as already said, has improved from 45.49% to 46.83%. The capital adequacy ratio as per Basel III, we are still above the minimum level of 11.50%. But it was 12.81% as on 31st December 2019. So because of this loss, it has come down to 11.72%. But if you look at the previous year, definitely, it has improved. But sequentially, it has come down from 12.83% to 11.72%. And the bank's net worth is at INR 18,466.88 crores as on 31/3/2020. During this financial year that is '19/'20, we have taken some initiatives, which were focused on transformation agenda in the bank. We have started a project where we have appointed a consultant, and the project has already started, which we are calling as Disha. This is basically focused on the analytics-based business transformation program, where the focus will be on further improvement in the CASA and also on the RAM segment of advances and also how the analytics can be used to improve our noninterest income. We have also started the initiative of data warehousing, and the entire revamping of the data warehouse in the bank is being undertaken. And this will help in the -- help a lot in the data analytics and taking business decisions based on that. We have set up MSME hubs, where the centralized processing will be done. We have also started the process of Loan Lifecycle Management System, which will be a loan -- not only a loan origination system, but it will also help in doing the credit administration as well as decision for recovery in the NPA account. And so early warning signals, all these triggers will be generated from that particular platform. During the year, we restructured our organization by creating 31 new regional offices and reducing the zonal offices from 13 to 20 (sic) [ 10 ] so that regional offices have a reasonable number of branches under them because earlier, it was hovering around 80 to 90. Now it has been brought down to 50 to 60 so that it is manageable. We also created corporate finance branches and mid-corporate branches, and these branches are directly reporting to the credit department in the central office so that we can reduce the turnaround time and we'll get better corporates on our books. We have made the centralized credit processing system for our retail advances end-to-end through the process of CCPB, that is centralized credit processing branches. We have created 49 such branches, where starting from receipt of the application, processing, sanction, disbursement -- documentation, disbursement and also credit administration will be done by these 49 centralized credit processing branches. And for this, we have also got the approval of RBI. We have set up 7 SAM branches and 8 asset recovery branches. SAM branches are for stressed assets above INR 25 crores, and the asset recovery branches for accounts of INR 5 crores to INR 25 crores so that there is a faster resolution of the NPAs. And these branches are directly reporting to the GM SAM in corporate center. We have also created a separate marketing setup, where the overall processes and policies are being overlooked by DGM ranked officer in central office, but these marketing executives are under the control of the regional managers and they will be doing the marketing for noncustomers for the bank. For the customers of the bank, that is upselling or the cross-selling, it will be done by the branch managers. In the HR front, we have introduced, and this is in process and this would be totally stabilized in the current financial year, that is the Performance Management System, which will be a system-driven performance appraisal of employees. And this will be based on the balanced scorecard and will be focusing on the business. And all the data will be coming from the system. There will be no manual intervention in that. We are also -- we have also embarked upon succession planning and competency mapping. The basic reason for this initiative was that to create a pool, who will be basically taking up the leadership positions in different segments. And for that, we have also created a job family system in the bank so that people are able to get the expertise in that particular area at least for 5 years remaining in that particular job family. We are also revamping the entire training architecture to basically analyze what is the training impact on the employees who are coming for the training. We have introduced the e-learning system in the bank. And mandatorily, everyone has to go through this e-learning and 5 marks in their performance appraisal has been earmarked for the e-learning. If they don't complete the e-learning, then they will lose these 5 marks. And earlier, it was only up to the desktop. Now this e-learning has been also introduced on the mobile, too. And we have also launched a Human Resource Management System also on the mobile, too. To basically have a very effective control over different type of risk and especially the fraud risk, we have launched an enterprise-wide fraud risk management solutions in the bank, and this is being rolled out in phases. And one phase is over, and the another 2 phases will be over by June 2021. We have also introduced new products in different segments and also rationalized some of the products which are not getting much of traction. So this is in short about the highlights of Q4 and the initiatives that the bank has taken. I am open to questions from the analysts.

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

Sir, we had a couple of questions. Firstly, sir, what are your thoughts on the onetime restructuring scheme that is being talked about? Will it be implemented? Any thoughts you can share on that? And the second one is that the fraud NBFC would be Religare? And the NBFC identified as fraud...

Mahrukh, I don't want to name the NBFC. It will be better if I avoid because as per our policy, we do not basically name any NBFC in any media call or the -- so the first question is not, Mahrukh, related to the Q4. Still then, you have asked me. I will give my own views on that. See, onetime restructuring I feel as a banker will come, but it may take some time because the onetime restructuring based on the -- what is actually happening on the ground. Now no one knows that during this lockdown period what is the level of the operation of the unit, what is the capacity utilization as of now happening, what is the cash flow which is being generated. Unless these 3 items of the unit are not known, what type of restructuring can be done? See, a simple restructuring is that if there is a repayment period of 5 years, it can be extended to 7 years. But the question is whether extending it to 7 years, the unit will be generating that much of cash so that if DSCR is comfortable even to repay the loan in 7 years. That will be known only when some idea about the cash flow on the ground is known to the regulators so that whether FITL, WCTL and reschedulement or some additional funding is required or not, then the decision most probably will be more judicious to take.

And sir, would you have offered moratorium to NBFC?

As of now, yes. Some -- I would say very, very few have availed. And because the -- went with an opt-out. That means if you say that I want to pay, then you can pay. It is not the opt-in. So I would say around -- more than 95% of the NBFCs on their own, they are paying the interest and the installments.

Okay. Okay, sir. Sir, and -- I mean, any idea on moratorium? So I mean, any idea on how one will know what slippages from moratorium would be? And would there be a complete overlap in moratorium 2 compared to moratorium 1? Or will there be new customers taken?

No. Can you repeat the question because I was not able to get it? You are saying that whether there's moratorium, as of now, we are able to find out that how much will slip?

And whether -- yes. So what proportion would be not able to pay once the moratorium is lifted?

See, Mahrukh, the data which I have, now if I do the analysis of the data, SMA-2 as on 29th of -- as on 31st of March, right? So that is the data which can -- which will give a better idea while doing the analysis. And that I have -- one second. Yes. So as on 31st March, I have -- across all the segments, I have SMA-2 of INR 5,101 crores. Out of this INR 5,101 crores, INR 2,980 crores, they availed the benefit of not being downgraded. So we made a provision of 5% on that, which works out to INR 150 crores. The remaining INR 2,121 crores, they basically remained as SMA-2 by paying one installment in March. Out of this INR 2,121 crores, which paid the installment in the month of March, everyone has either moved to SMA-0 or have become standard. Now out of this INR 2,980 crores who availed the benefit, INR 1,191 crores are left. And I'm quite hopeful that more than 50% of them will also pay by the time this -- the current moratorium is basically lifted. So what I feel is, if this is the position in Central Bank of India, what I feel is the position will not be bad in other banks. This is -- I'm talking about hardcore data.

Correct. Correct. Correct. Got it, sir. Sir, and the other question is that moratorium 2 will be a subset of moratorium 1, right? There will not be too many new clients or new borrowers?

No. No. No. There will not be. And what we are observing on the ground is those who are -- those who have availed the retail loans, that means P-segment loans, there the percentage of people who are availing the moratorium is less than those who are in the business or who are in the business in lower ticket size or middle ticket size. So there, the availment of moratorium is higher. But in the case of the P-segment, the availment of the moratorium is quite low. And this is also coming down month after month because the realization that their interest costs will go up is gradually dawning up on these borrowers.

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

Sir, first of all, congratulation and your team for working in this target -- tough atmosphere also and banks are open and all the services are ]. So it's really remarkable to the team. So please on my behalf, convey to all of the involved.

Thank you. I will do it.

Sir, there are 1 or 2 questions. By when you think that the bank will be out of the PCA? And whether the bank will require any new additional capital? And the third and the last one is that if you've gone through this INR 20 lakh crores of announcement by our Finance Minister, Nirmala Sitharaman. She very clearly spelt out that any public sector enterprises, where more than 4 units, they will be avail for the divestment or a strategic offer. The same thing last 10 days before, even the Chief Economic Adviser, Mr. Subramanian on CNBC also talked very clearly that any public center enterprises more than 4 in the -- any segment, they will look to divest in a strategic offer. While the question has been asked by [indiscernible], that even that include the public sector banks, so very clear answer from Mr. Subramanian ], that is a Chief Economic Adviser, any and every businesses, where more than 4. So you feel that the remaining -- the 7 banks, which is now not part of the...

The last part, I will not -- I'm not the right person to give you any answer to that because that is a call which is to be taken by the owners of the public sector units, or PSU. If the owner sees that this is a PSU which is -- whether it is a PSP or non-PSP PSU, it is said to be basically where the divestment has to take place, they will do the divestment. So there, I will not be able to give you any answer as a bank guy. Number one is you asked me when we will come out of the PCA. Sir, we were quite hopeful that we will come out of the PCA in the financial year '19/'20. And the only -- even now because there are 3 parameters for the PCA: one is the CRAR, where we are meeting that; the second is the leverage ratio, there also, we are meeting that; the third is the net NPA percentage, where we are not meeting because it has to be less than 6%. I was quite hopeful that if the condition would have not been vitiated by this COVID-19, most probably by the end of 2019/'20, we would have been able to bring down our net NPA percentage by below 6%. I will give you the reason why I was so confident about it. See in the quarter 4, we were expecting a recovery of around INR 4,000 crores in the NPA accounts. And those were -- I'm talking about the large ticket size NPA. And the investors were also there, and only 5% to 10% of the bankers sanctioned or the approval was pending. But somehow from March itself, things went, I think, in a different way, and we didn't get a single penny out of those, where we were expecting INR 4,000 crores of recovery. So that was a setback to us. In the current financial year, we are making a lot of efforts to basically bring down the gross NPA percentage to below 6%, and I'm quite hopeful.

And about the -- will it require any new capital or not?

The way -- in the financial year, what I am seeing is, in the first quarter, both our investment book and also our loan book are growing. And the growth in the loan book, especially in the MSME segment and also in the corporate segment. Now you will ask a question in the corporate segment, which particular industry is doing well. We've got good response from very highly rated NBFCs. And we also got very good interest from very highly rated road developers. So there, our loan book is growing. And in the MSME, the loan book is growing. And the -- in case of the MSME, the best part is that the amount which we are giving under this MSME loan book, there my risk weight is becoming 0 because this is 100% guaranteed by the government of India. So that will take care of my capital conservation. So that's why, sir, I feel that this year may be better than last year.

Sir, the last question. Do you see any unusual, new large NPA like Air India, our exposure and...

Air India will never become NPA, that I can assure you. As a banker I can assure you, Air India will never become an NPA.

What is our exposure in that?

Our exposure is -- as of now, it is 0. They have paid off now. They created one subsidiary, and they got the investment in that subsidiary, and they used the money raised to pay off the debt. So they paid off all our debt.

Large receivable from Bhushan Power, which is now going to be under...

Bhushan Power and Steel you are talking about, right? Sir, last year, in March, we sold that asset. I think the resolution plan currently, whatever is there and whether that will go through or not, is around 40%, 42% of the total claim amount. And we were able to sell that particular asset to ARC at 39% last year. So I have already earned my NPV amount on that.

So you don't expect the large sum surprises in the current year?

I don't think. I don't think.

At least on the corporate side?

Yes.

Next question is from the line of Ashok Ajmera, Ajcon Global.

And of course, I must admire the banking -- entire banking circle for the committed duties continuously even in this closedown, which one of my colleague also has just now appreciated. Sir, now coming to some specifics. Like I will pick up from the answer which you just gave about the advances. That you are getting some good NBFC opportunity and some good infra big road or bridge companies or...

No. No. Not bridge. I only said road, and the 2 HAM projects.

So it means that it is AA, AAA rated kind of...

AAA, sir, as of now, et cetera, very, very few companies in India. No one is getting AAA. But definitely, we are getting AA. And AAA, recently, we got one proposal for AAA, though I cannot give the name of that developer.

It's okay. I'm just trying to get the idea of...

Yes. Yes. We got -- recently only, I will say, a week back, we got a proposal for a road project under HAM, which is AAA rated.

Okay. Because I'm just trying to assess that generally, looking at the present in losses and other things, the bank might slow down its further fresh advances, especially looking at COVID and all that. So it's good to know that you're open to that.

Sir Ajmera, see, I'm sitting on, say, a liquidity coverage ratio of more than 300%, right? If I keep on investing, putting my -- the deposits which are flowing into my bank into the reverse repo and -- or the SLR securities, how much I will earn? The average rate of return over there, including T-bills is 4.25% or 4.30%. So if I keep on doing that, what I will earn? But if I move the book to the loan, at least I will earn something, 7%, 7.25%.

No, definitely. Definitely. It's a very good idea. That's what I'm saying that with that, your profitability also improved. And the money, like your treasury asset allocation is INR 1,81,000 crores. And out of that, you can definitely use it. Your retail book is INR 76,000 crores, wholesale is INR 77,000 crores as far as the asset allocation is concerned. So you have a scope there.

Yes, sir.

Now coming to this profitability only. Like in the last quarter we see, you have validly given valid reasons for the pension provision, 5%, 7 June circular and NBFC INR 307 crores. But in spite of that also, this INR 1,200 crores, still the loss would have been INR 300 crores, INR 350 crores for the...

Yes. Yes. INR 344 crores would have been the loss. But if I take 3 quarters of profit, then the whole year, there would have been a profit.

Yes. Yes. But then whether this INR 300 crores or INR 340 crores, this thing is going to be a -- like even without these provisions also which were extra put on by you, how do we see then the profitability in the coming quarters?

Sir, the profitability in the coming quarter, if you look at the presentation, you will see that my 2 segments, especially the agriculture and MSME, there was a negative growth. Now in the current year, my -- this emergency straight line guarantee scheme, the availability that 20% of the outstanding as on 29th of February, it still is INR 4,000 crores. And the way we are progressing, we have already done 75% of those accounts. So if I do this INR 4,000 crores, that will be on a 0 risk weight. So my capital is not being deployed there, and the average rate of return in that -- in this portfolio is 7.50%. So number two is my credit portfolio during the first quarter in the corporate book has already gone up without the interest by INR 3,000 crores. So if there also I take the average rate of interest, something between 7% to 7.5%, so this year, I am expecting a better interest income than last year on my loan book. So that's why I am hopeful. And this other part is -- I'm not bragging, but the way we are handing our investment book, I will give you one data. In '18/'19, we did a shifting, and there was a shifting loss of around INR 323 crores -- INR 325 crores. In '19/'20, again, we did a shifting, and there was a shifting loss of INR 82 crores. In the current financial year, we also did a shifting and the shifting loss is only INR 11 crores. In the first quarter itself on the trading profit, not on the -- not including the interest on the investment, we have already made a trading profit of more than INR 325 crores in the first quarter.

Okay. Great. And sir, coming to this expenses side also, the other operating expenses are increased by INR 100 crores in this quarter. INR 762 crores against INR 662 crores. And at the same time, the interest income, the expenditure of interest is same around INR 4,003 crores, but the interest expenses have gone up by INR 100 crores. So INR 100 crores there and INR 100 crore here. So this INR 200 crores effect is also...

Sir, that INR 100 crores in just operating expenses, there were some arrear payments to be made. And we wanted to clear it up during this financial year '19/'20. So this is also, I would say, onetime exceptional exercise that we did. And you are talking about the interest expense, which has gone up by INR 100 crores?

I mean the gap between interest earned and interest spent.

Yes, sir. If you look at interest earned and interest spent, that is mainly on account of the treasury interest income. If I go to the interest income detail, the advances -- if I look at -- the advances have come down, yes. Advances have also come down by...

Yes. It has come -- yes.

So this is -- sir, this is, as I said, on 2 segments, agriculture and MSME. And MSME, there was a huge negative growth. And MSME normally gets a good rate of yield as compared to the corporate book. So this -- I am quite hopeful that this particular trend will reverse in this current year. And my focus in this current year is that my noninterest income should take care of operating expenses. And my net interest income should be more than the other expenses so that my operating profit goes up.

But sir, when you said the expenses have gone up because of the revision, sir, wage revision, INR 75 crores...

No. No. No. I'm not talking about the wage revision. I'm talking only about is operating variance.

Per area?

These were the licenses, Oracle licenses. So these -- there were some past arrears which we paid, some in rents, also some old lease which were to be renewed, fully paid arrears in that. So I wanted to clean up the books better for once and for all.

That's very good. Sir, in case of wage revision, you provided INR 75 crores out of INR 300 crores in this quarter. And there was already a provision of INR 735 crores. So it means total wage revision was INR 960 crores? It means -- because INR 225 crores, you've carried forward.

One second, sir. Yes, sir. Yes, sir.

So it means total wage arrears is INR 960 crores?

Yes, sir.

And it will take care of...

Yes, sir. Because we are doing a little bit more than whatever the rate on which discussion is going on so that last moment, we do not suffer from a hit.

Sir, my last question is on those 4 accounts. You provided INR 213 crores beyond 180 days account. How much is the total outstanding in those accounts?

Total outstanding...

INR 1,067 crores.

Those INR 213 crores where we made -- the total, INR 1,057.

1-0-5-7?

1-0-6-7.

6-7. So it means in future also, we might be -- I mean, if it gets further delayed?

No. No, sir. As for the circular, it is delayed beyond 180 days. And that one 180 days period has expired before 1st March. Then we have [ 20% ] provision. Now if -- in those cases, the moment I file the application in the NCLT, I will be able to reverse my 10%. And when this is accepted in NCLT, then I will be able to reverse the remaining 10%. Now the framework also talks about, if the total period is more than 365 days, that means from the stage of the default, then another 15% is to be basically...

Yes. Yes.

So that 15%, as of 31st March, there was not a single case which was warranting the 15%. There is one case which warrants 15% in June 2020. But in all likelihood, most probably, the NCLT application would have been filed today by the lead bank.

Okay, sir. Related to this, sir, just last thing. This divergence provision, divergence for the RBI audit, this is all fully taken care of? There is nothing pending now? Or do you -- you don't see...

All taken care of in December quarter.

I mean there is nothing now in -- there's no further audit or anything pending?

No. No. No, sir. No, sir.

The next question is from the line of Keshav Kanoria from ITI Capital.

I hope you and your loved ones are safe and doing well. And so I have just a couple of questions. So since you're talking about operating expenses, if we look at the operating expense to average asset ratio, which currently stands at around 2.5%, so going forward, do we see any cost curtailment measures that...

This was -- as I was discussing with Mr. Ajmera, this was an all year -- this was onetime excise which we have done. It will not be a repetition. And then I will -- I got this pay. Now sir, this rent and taxes, we see a hike of INR 24 crores. So a lot of very old leases we have now renewed and so we have to pay the arrear on account of that. Now the other is insurance that is DICGC insurance, which has gone up from INR 300 crores to INR 378 crores. This will have the impact even in 2021 because this -- DICGC insurance is paid on the balances as on 31st March. Now that the deposit is going up, definitely, this will also go up. In the financial year '19/'20, there was an additional factor that the rate was hiked by 20% . So on account of this, this INR 78 crores was the additional expenditure. But this expenditure, because if we grow on these eligible deposits for the DICGC premium, that means excluding the government deposits and some other deposits, because our deposit base will grow. So this will grow. Then we have the ECGC premium of INR 123 crores. I think this was some arrear payment.

[Indiscernible]

Sir, here the ECGC premium, this is figuring on the expenditure side as well as on the income side because of -- from the GST point of view. So this is not the impact. Then repair and maintenance, some -- something -- arrear was paid. And then professional fees, when I was talking about like payment to Oracle for licenses and payment to some of these consultants which we have engaged. So these expenses will not recur in 2021.

Right. Right. And what do you think NIM could move into next 1 to 2 years? Where do you see NIMs going forward? Because we have significantly improved our NIM if you look at the last...

Again, even my Board, whenever we discuss the NIM, the NIM will be always considered that if the NIM goes -- becomes very high, very high, say, more than 3.10%, 3.20%, that will show that I am building up risk in my portfolio. My Board is comfortable with a NIM of 3% or 3.10%. Number one is this. Number two is if you look at the MCLR and the external benchmark, linked rate of interest of Central Bank of India, I think only State Bank of India has a better rate than us. All other, we are better than all other banks. So what we believe is, if we are giving a better pricing, we will get good customers. So that is our belief. And we are okay if we earned a NIM of 3%, 3.10% because then the risk of having a credit cost on our book will come down.

Okay. Okay. And sir, do we want to give some color on the proportion of book which is under moratorium right now?

Sir, proportion means percentage, right?

Right. Right. Right.

Give me one second, sir. Let me get the data.

[indiscernible]

If I start from 31/3/20...

[indiscernible]

No. The total amount there, right? The total without agriculture as on 31/3/20 was 21% who availed; 3/4/2020, 21%; 31/5/2020, 20%; and 26th of June 2020, 18%. If I add agriculture, then it is 28%, 28%, 24% and 25%. This is the of percentage people who have availed moratorium.

And before that, are we -- is the Central Bank be able to move to new tax rates, sir? If yes, by when?

No, we have not. We have taken the approval from the Board to be on the existing one.

Okay. Okay. And were there any fraud recognized in the current year or current quarter? And have you made any provisions against this?

In the current quarter, means March?

Right.

No. March, we have a list of accounts where we declared fraud and we made the provision. And all those fraud which were declared in the quarter ending March, that is one quarter, we made the full provision, whatever was the difference from the provision already had.

Okay. Okay. And if we look at the IBC cases, now we have very small IBC cases related to IBC 1 if you look at that. So going forward, what is the expectation of strong cases in IBC list 2 and others?

Sir, it's a very difficult question, what is going to happen in these IBC cases. But as the results which are coming, more of these cases are going into liquidation. We are thinking of analyzing some of these IBC cases and discussing with the special situation funds if we are able to sell some of these cases to ARCs or funds, which we did last year, and we did it well. Last year, in the month of March itself, we sold 4 or 5 cases which were in NCLT. And out of these 4, 5 cases, not a single one case has been resolved through NCLT until now.

[Operator Instructions] Next question is from the line of Amit Kumar , an individual Investor.

Sir, the credit-to-deposit ratio is a little low, sir. So what are our strategies regarding that?

Strategy is basically to increase our loan book. So in the current financial year, we are looking at increasing our loan book by 8.5%. And that will help us in taking our CD ratio to something around 56%, 57%. But one thing I want to tell you, our deposit franchise is very, very strong and 63% or 64% of the branches are in the rural area. And in some of the areas, we are very, very competitive and we are very, very strong. So the deposit growth, I can -- in the current financial year, means 2021, I am trying to match my loan growth book -- loan growth with the deposit growth. But overtaking the deposit growth, it would be very tough because the deposit growth as such, I cannot stop. I have reduced the rate of interest on my deposit, but still the deposits are flowing.

Okay. Okay, sir. Sir, can you give me a breakup of CASA in terms of how much is in rural or urban areas?

One second. If it is readily available or I will send it to you. So my CFO will send it to you separately. Right now, it is not readily available.

How much were retail CASA?

No. No. You mean to say government means institutional CASA and retail CASA.

Yes, sir. Breakup of CASA.

One second, sir. [indiscernible] retail CASA and the institutional. Sir, if you don't mind, can we send it separately? We have amount-wise, bucket-wise breakup. But the institution and retail wise, right now, I don't have, sir.

Okay, sir. Okay, sir. Sir, we have seen a robust growth in your investment book. So what are the yields on investment and our outlook on treasury book, sir?

Sir, see, the outlook on treasury book is definitely -- in the current financial year, there will not be much of growth in the investment book because we are trying to match our growth in the deposit with the growth in the advances. But until now, since the growth in advances was much, much lower than the growth in deposits, so investment book was growing. The average yield which I see in the current year is around 4.35% or 4.50%. So definitely, it is lower than the loan -- yield on loan book. And -- so in the current financial year, the growth will be mostly in the loan book.

Okay, sir. Sir, last question. Sir, as you mentioned in your opening remarks that the bank is taking a lot of new initiatives, so what do you think it will impact on our margin? Can you give some guidance on margins for this year and next year?

Sir, guidance, normally I don't give. But the impact will be positive because when we are doing this analytics-based business transformation supported by the Loan Lifecycle Management System, this will have a very good impact on the customer selection because the analytics will help us which type of customers we want. And the scoring model, the balanced scorecard, which will be done through this loan origination system, will ensure better customer, and this will reduce the credit cost and also improve the quality of our book. And on account of which, our margin will improve. Similarly, this data warehousing will also help us in selecting the type of customer and also trying to find out what type of products one particular customer wants. We will be also able to design the product as per the requirement of the borrower. So -- and when we are doing the centralization of MSME credit processing, centralization of agriculture credit processing, centralization of the retail credit processing, all this will go towards improvement in the customer acquisition and improvement in the margin.

The next question is from the line of Sneha Ganatra from Subhkam Ventures.

Sir, I have 2 to 3 questions. First is your cost-to-income ratio is around the rate of 80%. Where do you see our cost-to-income ratio for this fiscal year? Second question is any credit cost guidance you would like to share with us?

Any -- what is the second question? Can you repeat it, please?

On the credit cost guidance, anything you would like to share with us? And second is considering how do you see the overall moratorium and on the -- how are we seeing our asset quality impact both on the slippages and the recoveries and upgrades? Are we expecting any big recoveries and upgrades from NCLT 1 or 2 account? Or any other [indiscernible] or anything on the recovery, sir?

Okay. On the first question, that cost-to-income ratio in Q4 which was 80%, I gave the reason that one single factor, that is additional provisioning of more than INR 500 crores on pension liability has disturbed this cost to income. It is only a provision, and this is not the payout. The cost to income, which in the current year, which we are looking at, is not to exceed anything between 50% to 55%. And then you talked about the credit cost, right? Annualized credit cost, right? One second. Annualized credit cost, which we are looking during the current financial year...

[indiscernible]

No. No. What we are going to do in 2021. What is the guidance?

[indiscernible]

One second, ma'am. On the credit cost, one second. Ma'am, that is 2.90% we are looking during the current financial year.

Okay. And sir, on the asset quality front, how do we -- are we seeing the slippages to be panning out for this fiscal year? And how are we seeing the recoveries and upgrades? Any onetime in the current year or is there any recovery which...

Some large ticket size recoveries, I am expecting and more from outside the NCLT. And the slippages during the current financial year, not -- no major one in the corporate book. But there may be something in the MSME and agriculture.

So slippage [indiscernible]?

Pardon, ma'am?

Any run rate of the slippage you would like to guide us?

In the financial year 2021, right?

Right. Right. Right.

2021 slippages, we are expecting around INR 4,000 crores.

Okay. And the recoveries and upgrades, how much you are expecting?

Recovery, we are expecting something around INR 10,000 crores, which includes upgradation also.

Okay. And sir, considering your CRAR at [ 11.2% ], are you expecting any capital infusion from the government? Are you planning...

My CRAR was 12.81% as on 31st December. Just because of these exceptional items, it came down to 11.70%. And during the current financial year, what I'm seeing is there is a good growth in the loan book. And this will help in my interest income going up. As of today, I can say that we will be able to manage from our internal accruals for the capital adequacy rather than depending on outside -- rather than depending on the government of India. But definitely, in this financial year, we will go to the public for -- or we will go for the QIP.

Okay. And what is the credit growth guidance you would like to give us?

Both the credit growth and the deposit growth during 2021, we are expecting in the range of 8% to 8.5%.

Okay. And sir, last question on the moratorium. How are you seeing that pan ?

How I'm seeing what?

In the moratorium, how are we seeing the trends in terms of repayment and the installment payment of the customers?

Ma'am, just now I gave the figure. If I look at without agriculture, the percentage of the customers who availed moratorium was 21% in March '20. It remained at 21% in April '20. It came down to 20% in May '20, and then it further came down to 18% as on 26/6/2020.

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

Sir, as I see the results, strength of the bank is very visible as a brand or an image with CASA account holders. So what would be our retail strategy because CASA is enabler for retail? So what with COVID, digitization and a lot of other AI-led driven technologies would be available, can we capitalize on this to grow our balance sheet?

Yes. So the -- with the 8% to 8.5% growth, both on deposit and advances, definitely, our balance sheet will grow. Regarding CASA, that is the retail segment and growth in the retail, agriculture and MSME is the focus of this bank. But at the same time, we should not forget that there should be some nominal growth in the corporate book also. And because if we totally ignore the corporate book then the overall quality of the loan portfolio cannot be maintained. Because if I look today, my corporate book, 78% is investment-grade and above. And around 58% is AA rated and above. They are also giving me good return in the sense that the credit cost in those cases are low. You are right that while doing this retail, we have to focus more on the automation and also on the technology. That is the reason that we are going for this Loan Lifecycle Management System, which I consider because we are a little bit late entrant. But being a late entrant, we are getting the advantage of the better technology available today. And this state-of-the-art technology will help a lot in origination of all type of retail loans, including agriculture and MSME, and also the processing and also the documentation and also seamless opening of the account and also the credit administration. This, plus the warehousing project -- data warehousing project which we are running and the department for the Information and Data Analytics which we have opened, we have also gone through the recruitment of the data scientists, data analysts. And very shortly, they will be joining us. So the focus in the retail segment or the focus in the RAM segment is moving from the manual intervention to the total seamless technological innervation.

Sir, if -- I see that you just highlighted 8.5% credit growth. Can you indicate what percentage growth you would look for corporate because of AAA and...

No. The corporate book growth rate will be something around 5% to 5.5%. The major growth rate we are looking at is MSME and retail. In MSME, I'm looking at something around 12%; and in retail, I'm looking at something around 13%. These are 2 major where I'm looking at the growth.

Sir, in the earlier questions you had answered that you're looking without any impact on equity requirement MSME growth because the government guarantee scheme would be a huge number for us in the current quarter. What kind of number one should assume?

Sir, the number which I am looking at, even if I look at only this Emergency Credit Line Guarantee Scheme of the government of India, where 20% of the outstanding on 29 February we gave the loan, which is -- with a 0 risk rate and no capital is required, that itself is INR 4,000 crores. If I do this INR 4,000 crores on a base of INR 29,000 crores, so that works out to achieve its target of MSME.

Okay. Sir, we must have surely participated in TLTRO 1, 2 and the credit guarantee scheme. What kind of number have we achieved in this and what kind of...

There were 2 TLTROs. The version 1, we raised INR 2,200 crores. And within the time line because as per RBI, the investment was to be made within 30 days. And if the investment is not made in 30 days, then there was an interest, which was to be paid -- penal interest to be paid by the subscriber to the TLTRO. But we made the investment within that time line, INR 2,200 crores. And all these investments were AA and above. TLTRO 2, sir, we did not raise any money under that because we did not get some reasonable proposal because there, at least 10% cost to be given to MFI and 15% to be given to NBFC with an AUM up to INR 500 crores. There, we did not get much of good proposals. In the partial credit guarantee, the government has allocated -- NCGTC has allocated INR 1,414 crores to our bank, out of which we have already done 970 -- is it INR 920 crores or INR 970 crores?

INR 920 crores.

We have already done INR 920 crores. And there are some proposals. We will -- we are quite hopeful that we will be achieving this INR 1,414 crores also. [indiscernible]

Average yield should be around 8.5% combining this?

Yes. Yes, sir. Average yield is some -- yes, 8.5% or 8.75%.

Sir, seeing the treasury performance in the last 2 years, specifically because of low -- high CASA deposits and the franchisees' ability to manage the book well, do we see -- because the yields are not going to rise, basically, bonds are going to give us a super gain for us. I think we've done well in the trading as what I could hear in the con call. What kind of support do we estimate in the current year?

Support from which segment?

Treasury segment.

Sir, this year, treasury segment -- in the trading profit, that means in the noninterest income, we expect good support from the treasury segment. On the interest income, definitely, we will depend more on the loan book.

So the -- if I go by the treasury year-on-year number, almost INR 1,200 crores higher compared to the previous year. Can we assume that if everything goes well, that kind of number...

I'm keeping my fingers crossed. So this is the area where I am devoting at least every day 1 hour in the morning, and I can say that things are moving so far so good.

Okay. Sir, now with CASA doing so well and you have reached -- as our presentation as well as what you speak I hear, is in areas where most of India not able to reach -- the customer is not able to access so many products. So how are we capitalizing on those customer reach, whether it is insurance or any other product? I'm not being specific to any specific product. But I think the kind of customer base we have, many other banks may be failing because the larger banks have CASA in the region of 30% to 40% at max, whereas we are doing much wonderfully well because of our reputed brands being carried by them. So how are we capitalizing ?

Yes. On this -- capitalizing on this good CASA franchise, the noninterest income through these cross-sell, which we really pushed hard from the financial year '19/'20, we could earn a commission. Because earlier, the focus in case of the cross-sell was how much premium we are getting. Now the focus is on how much commission we are earning on the cross-sell business. If I am correct, last year, the commission business, we earned from cross-sell was INR 45 crores.

[indiscernible]

INR 40 crores. And this year, we have a target of INR 90 crores, out of which I think we have already done how much?

[indiscernible]

So this will be...

Our target there is [indiscernible]

Yes. So we will be achieving INR 90 crores. And we also want to add some of the new products like mutual fund in this current financial year. We are in discussion with some of the AMCs, and this will also give us a good benefit. And this benefit may not come that much from Tier 3, Tier 4 cities, but this benefit may come from the semi-urban and other urban cities.

Sir, are we specializing staff towards retail banking or we'll be utilizing the same staff?

No, sir. Recruitment, we are doing. And this year, I think most probably, we will be recruiting around 1,000 clerks and 250 officers. But they will be mainstream officers and so they will basically go into different areas of retail. These officers will not work in the administrative departments so they will go into the retail.

What kind of retirement are you estimating this year?

Retirement, sir, every month, if I look at all officers, clerical and subordinate, I am losing around 40, 45 per year.

Sir, I hope each and every employee or management because of COVID efforts, what -- you all are worries right now, is being insured for every aspect of life.

No. We have. We have ensured -- though not through any insurance company, but we have our own policy of INR 20 lakh for any death on account of COVID-19. And unfortunately, in our bank, there are 4 cases. And all the 4 -- 3 cases took place in the Mumbai zonal office and 1 case was in Delhi, right?

Right.

Sir, my condolences to those members and family.

Sir, I do agree. And no one knows that -- how this is going to impact each and every one of us because -- and especially those who are working in the branches because they are in direct touch with the customers.

Sir, in view of this COVID-19, how much of digitization will improve our technology adoption? Will we be doing it at a faster rate as we are late in the process?

Yes, sir. That is 100% correct, and we are focusing more on improvement of our availability of the ATM, which has gone up from around 80% to now around 90%. We were focusing that -- the ATM availability during this lockdown period, should reach 95%. Because of some issues relating to the vendors where they are to supply the spare part, we were not able to reach, but the focus is there. The focus is also on increasing the number of Internet users, the number of mobile banking users. And we have given the instruction that both the Internet and mobile banking should be as a default when the account is opened instead of sort of opting in by the customer. For UPI, we are doing well. But if we are able to catch up on the Internet banking and the mobile banking, I think my transaction banking will improve. As of now, the total digital transactions which I am doing, excluding ATMs...

[indiscernible]

It has improved by 80%, but the percentage is 64%. But I want to take it to 80% or 85%, which will be comparable to private banks and a public sector bank like State Bank of India.

My last question. Seeing the CASA, this is a wish as a shareholder or an investor for future also for all would be your experience of cards being utilized for CASA. Second thing, I -- since that INR 90 crores of income which you indicated in customer fees for third-party products, with the CASA number at INR 1 lakh 50 crores in current year, or so many branches, insurance and mutual fund where fee is being collected INR 8,500 crores per month can be much higher than what we anticipate. I think it's only a move which you need to initiate.

Sure, sir. We will do. Thank you.

[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Sohail Halai for closing comments.

Thank you, Pallav, sir, and entire management team for giving us this opportunity to host the call. We wish you and the team all the best. Sir, while you have covered most of the things, would you like to add anything before the call concludes?

Yes. The only thing I want to add is, today, we got the approval from our Board for raising capital to the tune of INR 5,000 crores. Only that means through various routes, including QIP. And we will be going to the shareholders to get the approval and the Shareholder Meeting will be in August 8.

7th August.

7th August. After that, I want to come out first with a QIP to test the water. And investors are -- especially these institutional investors should look at the positive sides of the bank instead of looking at one particular figure of the one quarter loss. And I gave the reason that -- why there was a one quarter loss. So I will make a request to all the investors, the bank is on the right direction. And the opportunities will be good for the investors to invest in through the QIP route.

Sure, sir. Thanks.

Thank you. Thank you.