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

Thanks, Reja. Good evening, everyone. I welcome you all to Central Bank of India's 1Q FY '21 Earnings Call. Today, we have with us Mr. Pallav Mohapatra, MD and CEO; along with Executive Directors, Mr. Shekhawat and Mr. Srivastava; and Mr. Mukul, CFO, along with other senior members from the management team, to give us insights about the performance of the bank and its future outlook. Without further delay, I would now hand over the call to Sir, Mohapatra, for his opening remarks, post which we can open the floor for question and answers. Over to you, sir.

Thank you, Sohail, and good evening to all who are on the call today. I will start with the highlights of the Q1 results. The bank has earned a net profit of INR 135 crore as against INR 118 crore last year in the first quarter, and showing a growth of 14.41%. Our CASA share has also gone up from 45.77% to 47.30%. The PCR has also improved from 76.85% to 79.12%. Gross NPA has come down from 19.93% to 18.10%. And net NPA has come down from 7.98% to 6.76%. If I go only into the profitability parameters, the operating profit of the bank has improved from INR 1,291 crore to 1 -- has improved -- sorry, from INR 1,104 crore to INR 1291 crore, showing a growth of -- Y-o-Y growth of 17%. And net profit have grown from INR 118 crore to INR 135 crore, showing a Y-o-Y growth of 14.41%. The net interest margin has also improved from 2.62% to 3.08% during this Q1 financial year '19 to Q1 financial year -- sorry, Q1 financial year '20 to Q1 financial year '21. The cost-to-income ratio has also improved from 57% to 54.79%. Business per employee has also improved. Operating profit per employee has also improved. Net profit per employee has also improved. On the asset quality, already I have given you the figures. The gross NPA has improved, net NPA has improved and the PCR has also improved. If I go into the business highlights, the business of the bank showed an increase of 7.53% from INR 4,52,883 crore in Q1 financial year '20 to INR 4,97,748 crore in Q1 financial year '21. The total deposit registered a growth of 7.88%, investment registered a growth of 13.36%, DTA loan registered a growth of 11.68% and CASA also registered a growth of 153 bps and now it is at 45.77%. On the capital front, our capital adequacy ratio came down from -- it is at 11.50%, and it was at 9.22% in June 2019. So it has improved from 9.22% to 11.50%. But if I look at sequentially from March, it has come down from 11.72% to 11.50%. These are mainly on account of increase in the asset base in the bank. Bank's net worth is now INR 18,660.50 crore. Digital banking also improved during this quarter. And during this pandemic, since most of the people were not able to come to the branches, so we ran a lot of campaigns to increase our digital footprint. So this improved from 45.46% to 70.79%. This does not include the transactions done on the ATM. This is excluding ATM or other digital footprints we have. Internet banking users also improved considerably, showing a growth of 24.09%. Mobile banking showed a growth of -- registered users showed a growth of 28.78%. UPI transaction, which is the forte of this bank, showed a growth of 86.82% on a Y-o-Y basis. The active debit card users registered a growth of 12.84%. In the financial inclusion also we had done good work. And under Pradhan Mantri Jandhan Yojana, we have now 146.12 lakh live accounts, having an outstanding of INR 3,668.74 crore balance. Performance of the bank under various social security schemes also showed improvement. Under the Jeevan Jyoti Bima Yojana, this enrollment increased to 14.33 lakh. That is showing a Y-o-Y growth of 13.91%. Under Suraksha Bima Yojana, it showed a Y-o-Y growth of 14.49%. And under Atal Pension Yojana, it showed a growth of 32.48%. As on June 30, we have in total 4,649 branches, and 63% of the branches are in rural and semi-urban. We have 3,642 ATM. There also around 62%, 63% of the ATMs are in the semi-urban and rural. And we have around 6,300 BCs. And if I include the BCs of our RRBs. So the total BCs in our entire bank plus RRBs will be more than 9,300. These are on the numbers part. But at the same time, we have also started with the new initiatives so that we are ready for the future. And we do the business in a very tech savvy manner. So we started a project, which we have given the name as Disha, where we are trying to do a sort of a transformation changes in the bank regarding the business we do and how to do that particular business. So this particular project has started -- the pilot run has started on 20th July 2020. We are hopeful that this entire project will be completed by June 2021, and we will start reaping benefits in the next financial year. We also started with the initiative of revamping our data warehousing. And with all the modern technology available for doing the data analytics, new data warehousings are not exactly new, but revamped data warehousing is being installed. This also, we are very sure that this will be completely implemented by June or maximum September 2021. Now we are moving all the processing from the branches because we want the branches to be marketing outlet and only for the distribution of the products, the rest to be done outside the branches. On these lines, we took the approval from RBI for 50 MSME processing hubs, out of which, 35 we have already set up, 15 are in the process of being set up. On the same way, we are also doing processing hubs in agricultural loans, and we had done around 49 processing sectors for the retail loans. We have taken a few initiatives also, which have been given in this presentation. We want to change the basic outlook of the bank and people or the human resources who are working in the bank. And we want to bring in more of the professionalism in not only in their approach, but also the bank's approach, organization approach towards these human resources. So in this direction, we have initiated the process of assessment of our training modules. We have implemented a tidy audit in our bank, which is one of, I think, the first in the banking industry. We have also started with a new performance management system where more of the objectivity is given in assessing the performance of the employees. On the technology initiatives, the 2 major initiatives which we have started, these are loan life cycle management system. This I can tell you, sir, that with the learnings from different loan origination system from different -- in different banks, this element is going to be one of the state-of-the-art technology when this is fully implemented by March 2021, and it will have lot many APIs through which the process would be automated to the extent of 95% to 98%. And there, the collection of the information will be from different sources. And these collections of the information will be through the APIs. We have also implemented enterprise-wide fraud risk management solution. This will help the bank in early detection and also to be proactive and also to be predictive in detecting the frauds. So this has been -- the rollout has started. The first phase has been completed in June 2020, and we are hopeful that by 31st December 2020, we will be completing this entire project. These are in short about the bank and the initiatives, which we have taken in last financial year and continuing in this financial year. And these initiatives will take the bank forward in all the areas. So this is the opening remarks I wanted to basically share with all of you. And I'm now open for questions.

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

Sir, actually 1 wanted to know about PCA. By when we are planning to get out of PCA? Can you elaborate something on that?

Okay. Regarding the PCA, there are 3 parameters as per RBI. On the 2 parameters, one is the leverage ratio, the second is the capital ratio. We are already meeting those thresholds. Only on the net NPA, which should be less than 6%, we have started the journey towards that. As you can see from the presentation that the net NPA percentage has come down to 6.76%. We are very sure that by December end, we will be able to bring it down below 6%. So this will help. So with this, all the 3 parameters will be met. And hopefully, RBI will take us out from the PCA. But one thing I want to make it very clear that though PCA word doesn't look very nice, but the question is under the PCA, as such there is no restriction in doing quality business. Like, RBI says that you cannot increase your unsecured loan from the level on the date on which this PCA was imposed. So normally, we don't believe in doing a lot of unsecured loan. The other way is the MOU, which we signed with Government of India, there we had mentioned that we will not be doing anything below the investment-grade accounts. And I think for any banker, if they do more of investment grade, the quality of the portfolio is maintained. As such, there is no restriction on increasing the business, but the capital consumption -- capital conservation has to be maintained. Secondly, there are some restrictions on opening of the new branches. And -- but these restrictions are not there for rural and semi-urban. So we are fine with that. But we want to basically get out of this tag of PCAs.

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

Sir, I just wanted your thoughts on the onetime restructuring that has been announced. We've had various forms of restructuring even earlier, and a lot of those schemes have failed, right, because a lot of accounts that were restructured earlier became NPL. So what is your view on the current offering? I know that there's an expert committee and not everything is final about the new scheme, but still from whatever information we have?

So you want to know my views on one-time value...

Yes. And what type of segments? Yes, that's correct.

But you don't have any question on the numbers of the bank?

Yes, I do have, sir. But this is my first question because this.

Okay. Okay. So since you have asked that question, I will -- this is my response. See, why the earlier restructuring tools, which were implemented sale because these were not -- those were not onetime. But there was a CDR, CDR fail; then there was a SDR, SDR fail; then there was a flexible restructuring, that failed; then there was this -- what is that? That also failed. So the question is that if there is repeated restructuring, the risk of failure is very, very high. Now in this case of onetime restructuring, what I have read as per the circular and as per my understanding, they are making certain things very, very clear. Number one is, they are saying that there should be an ICA approach. That means 75% by value and 60% by number. If they sign, then that particular resolution plan will go through. Not only this. They have also said that those who are not signing this ICA, within that 30 days period, they will be penalized. So that means the -- because what we have seen in the restructuring plan or the resolution plan that all the lenders are -- don't come on to the same page within a reasonable period of time. And then this type of resolution plan goes haywire. So now this type of penalty will impose some sort of a discipline on the lenders. So this is one good part. The second good part is that this time, they have basically -- they are forming an expert panel. And this expert panel is going to give the benchmark on various financial parameters for different sectors and different activities. So it will not be one size, which fits all. So this is another good sign of this restructuring plan. The only thing is that this is -- here, the eligibility is that as on March 1, it should not be overdue for more than 30 days. That means they are taking into account only SMS-0 accounts. They are not taking into account SMA-1 and SMA-2. Now what is going to happen to SMA-1 and SMA-2, that is not very, very clear from the circular, which has been issued by RBI. So this is my take. And they have also included the personal loans in this restructuring exercise. This the first time they have done. And the third is the MSME restructuring is going on. So this is the third one. I think first one was January 1; second was -- 1st January 2019; second was 1st January 2020; the third is 1st March 2020. So all okay, but not including SMA-1 and SMA-2 in the restructuring for other cases, that is other than the personnel, and also, excluding, this is my understanding, that this is not also applicable to the NBFCs.

Okay. Okay. I thought it was applicable. Okay.

No. I think some are mentioning that this is not applicable to the financial institutions. So -- and they are quoting some financial institutions as defined in circular so and so.

Yes, yes. So you cannot restructure NBFC loans. That's correct?

Yes. So that I'm talking of. I'm talking about the onetime restructuring to be done, excludes the exposure on the NBFCs.

Yes, yes, yes, of course. Sir, my other question was on your moratorium. So how have you defined moratorium?

The definition of moratorium is that we have given a opt-out. That means this is available to all unless you tell us that I don't want to avail. So this was based on the opt-out. When I do the analysis of my portfolio on the moratorium, what I find is, if I exclude the agriculture, there's -- the percentage of my borrowers availing the moratorium have come down from 38.30% in April to 31.91% in June. And if I include the agriculture, because there less number of people have availed the moratorium. Moratorium is on the principle in case of the agriculture, the principal repayment is based on the harvesting of the crop. So that is a longer period. So that has come down from 23.81% to 20.53%, those who have availed. So here, the major chunk, which has availed this moratorium, is from the MSME category. The moratorium, as a banker, I am not that much concerned in the sense that because this will be basically back-ended, and this will happen after, say, 2 years, 3 years, 4 years, whatever is the resort period of that particular loan. And whatever we are seeing, the problem today during the pandemic, in all likelihood, this pandemic would have been taken care of after 3 years or 2 years or 4 years, that means after the period. So I'm not -- as a banker, not that much concerned on the moratorium. I'm more concerned about the deferral of the interest payment. Now deferral of the interest payment means, that means from 1st of September -- from 1st of March till, I think, 31st of August. Whatever was the interest, which has been applied, which have not been paid, that will be converted into a term loan and it will be paid over a period of 6 months starting from 1st of September up to 31st of March 2021. There what I see is, if I take without agriculture, then the customers or the borrowers who have availed has come down from 32.30% in April 2020 to 17.60%, if I do not include agriculture. But the moment I include agriculture, this percentage really goes up because most of the farmers, they have availed the interest deferral. So this is the scenario in our bank. On the interest deferral, it is -- if I exclude the agriculture, so it is as of 30th June 17.60%. And most probably in July, it has further come down. We will be -- I'm quite hopeful that we will be able to manage this interest deferral in our portfolio.

Okay. So sir, you are viewing the term loans and interest deferrals separately? We have a...

Yes, ma'am. See moratorium is the EMI. That is a principal plus interest, right? And when I am talking about deferral of interest, it is basically the interest payment. So the interest payment can be in 2 forms. One is the interest payment on the running accounts that is OD or CC. This can be also the interest payment during the moratorium of a term loan. So as of now, what I feel is that things are within control. It has not gone out of control. We are trying our level best that people -- because I also, whenever I address any webinar or any MSME group, I always tell then that if you have the cash, it is better-for-you to pay. If you don't have the task, okay, that's fine, then you avail the moratorium or the deferment of interest. But if you have the cash, which is better-for-you to pay. Otherwise, in the bank, since there is a compounding concept, your interest cost or the total cost will definitely go up if you are not using your cash to basically repay the installment or interest.

Got it, sir. Got it. And sir, the other thing I wanted to check is that what is your outlook on loan growth now?

Ma'am, the loan growth what we have seen is. See, if I compare my portfolio with last year, last year there was a degrowth. And this year, in the first quarter itself, we have started showing growth. And we are showing the growth as per our plan. And if I have to give some sort of a guidance, then in this year, we are planning to grow our total advances by around 9%, out of which retail will be 12%, agriculture will be 8%, MSME will be 13% and 5% will be corporate. The way we are going ahead, we will be able to achieve this advances growth number. But for that, we need capital, and we will be approaching the market for getting the capital.

Got it. Sir, on MSME, the ones that are under moratorium, they would be availing the emergency credit line?

They have. Under the MSME, they have availed the emergency trade line, both. One was our own scheme. That was not only limited to MSME. That was for MSME as well as the corporate. And -- but that scheme ended, I think, on 31st July -- 30th June. And then this emergency guaranteed scheme of government, where 20% of the outstanding as on 29th February was given, so there the MSMEs have availed. And I can say that some of the MSMEs, they opted out because they were not in favor of taking additional debt because they were not -- basically, they didn't want to increase their business. If I take out that 15% to 20% those who opted out, remaining 80%, we have given sanction in number of accounts to the extent of 92%. And the disbursement out of these sanction amounts, we have given around 8%. So there also, we are doing well. And this has helped us in growing our MSME book. And this growth in the MSME book is good for us in the sense, because on this 20%, the risk weight will be 0. And I need not basically deploy any capital on this 20%.

Correct. But sir, most of the moratorium customers only would have availed of this or...

No, no, no. It is a mixture of all. And it is not that if they bear in need of the money and they were basically putting it in the business, we did not force them to basically pay it towards the moratorium. Wherever they felt that they have to reduce their interest costs and they use some part of the money to pay off their installment, okay -- that was okay. But we never force anyone to basically use any part of this money to pay out their installment or...

Sir, one final question. This new current account guidelines, how does that impact you?

Just -- a new current account guideline should have come, I think, 5, 6 years back, number one. Number two, as of now, they have not brought the guidelines. The guidelines that they have brought in is only on the inflow, right? That means the money which is coming in. We are very sure because we always make a condition. If we are the sole banker that you have to maintain the -- your transaction account with us. If you want to do the transaction through the CC OD, and we also have a product that if minimum 85% of the transaction sales rooted through the CC OD, then only we will consider your next year. Otherwise, we will not consider your announcement, irrespective of whatever collateral you give to us. This is one. The second is, they talk about -- the talk which is going on is that these borrowers look forward for CMP products and other facilities where normally the lending institutions are not able to get. The question is very simple. That if you are taking the loan, then if suppose that bank or the set of banks do not have that particular facility to the level which maybe other banks have, then don't take the loan from those banks. On the one side, you want to take the loan and you don't want to route this sale proceed through that particular bank, which is not acceptable at all. Now even this particular circular, they also say that more than INR 50 crore, there has to be an escrow account. Now small banks can have -- small lenders can have collection account, but they are saying that the only, which will be allowed is basically to send it to escrow account. What is wrong in that? And this will bring in the discipline if it is followed too strictly.

So sir, will the state banks, such as you, benefit of the people now start taking cash credit from private banks? How do you think it plays out from you? It's quite confusing, so asking.

So Mahrukh, I think you may be knowing more about the private banks than I know. But one thing I know that private banks normally do not give the CC or OD limits. They prefer to get the term loans. They normally do not get the CC, OD. CC, OD, if you do a survey, I think more than 75% of the CC, OD is given by the public sector banks.

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

2 questions from my side. If you could give us some clarity -- some color on what are the large cases, which is pending to be recovered during the course of this financial year that you have a reasonably good amount of clarity? And second...

I can give you 4, 5 cases, exactly the list I am not caring with me. I was very hopeful that in the month of March, we will be able to make a recovery in 4, 5 accounts, which, because of all the lockdown, we were not able to do it. One was Aban offshore because of the -- and there, it was offshore drilling rig for which some investors from outside India and from the Scandinavian country was interested. But because of this lockdown, that didn't go through. I am hopeful that the moment the lockdown is globally lifted, they will come back and -- because that really is a good rig, and so they may come back. I was quite hopeful of getting the money in Coastal Energen. But somehow, because of the lockdown, the investor did not bring the money by 31st March. I was quite hopeful, but still I am getting the letters from the borrower that the investor is still interested in putting the money. So I'm hopeful that in coastal also, we will be able to get the money. So these are the 2. And the third was, I was hopeful for the upgradation of the account of [ Flexi ] which is not a very, very big account, which may not be in your radar. But we have an exposure of INR 250 crore. So we are hopeful that we will be able to upgrade this particular account. So like this, there are 3, 4 -- 2, 3 more accounts. Can you give me? There is another account of Matix Fertilizers, where almost all banks, except for 2 banks had given their approval for the OTFs. And these 2 banks, since they didn't give it by 31st March, that didn't go through. We are hopeful that we will be able to get the approval by the end of this quarter or maybe by the end of December quarter. So that will be also resolved. So these are 4, 5 where, in total, we were expecting INR 2,500 crore to INR 3,000 crore of recovery in March quarter. Somehow because of the lockdown, it didn't go through. But I'm quite sure that with the economy opening up and these investors still in touch with us, it is not that these investors have run away, they are still in touch with us, and I'm hopeful that maybe by Q3, we will be able to make a good recovery.

Okay. Useful, sir. But lot of these accounts, we've been in discussion since March. We've been in discussion about these accounts. All these accounts for the last now a little over 6 months now.

No, no. These accounts we have been discussing. I, myself, discussed these accounts, when I -- when we declared the results of December. I was quite hopeful of getting the recovery in the fourth quarter. But as I told you, because of certain reasons, we were not able to get the recovery in the fourth quarter. But these borrowers are still in touch with us, and they want the resolution through the OTF to continue so that they are able to pay by December end or -- I'm quite hopeful that by December end, we may get money.

Perfect. Sir, the second question, on the fact that this entire disbursement under the Credit Guarantee Scheme, any particular reason why have you not been a lot more aggressive with your SME borrowers? Because it releases capital, which is sitting out there locked in those SMEs...

No, no. What is your question that why the banks are not giving this loan?

Yes. So in the sense that, for example, when we look at the total credit, which has been taken by MSME borrowers by public sector banks, it's a little over INR 50,000 crores...

No, no, no. I think the total amount which has been sanctioned, if my memory is correct, is more than INR 1,50,000 crore. And the disbursement, if my memory is correct, is more than INR 80,000 crore.

Yes. So when you split that number, you can publicly -- let's assume that you take it as -- I think the last number, which we have is about INR 50,000 crores for public sector bank. Now why have you not given it to all your existing MSME borrowers?

We have. If I give my number, sir -- as I told Mahrukh earlier, if I give my number, around 15% to 20% of the MSME eligible borrowers, they opted out. They didn't want to avail this particular loan.

No, no. Let me just read this question, sir. Rather than they opting out, why have you not replaced your existing credit through the credit guarantee scheme so that it releases capital for the borrower. And I can use it...

What do you mean by replacing the existing trade with this guarantee scheme?

If in case the borrower has INR 100 with you, why not asking to repay INR 20 from the credit guarantee scheme, and he actually uses that INR 20 given by the government because for the borrower...

This cannot be done. And some of these complaints have gone to Government of India, and Government of India has come down very heavily on those banks. They are very, very clear that this is our money which we are giving to these MSME borrowers. This cannot be used by the bankers to adjust their own whatever is the stress level in their boats. But in our case, I can give you the numbers, around -- if I take out this 15% to 20% opted-out in -- out of 80%, 92% sanctions have been done and out of 92%, 87% disbursement has been done.

The next question is from the line of Anirvan Sarkar from Principal.

Sir, just a couple of questions. First, how much of wage increase are we factoring in? And how much have we provided towards that?

Sir, the wage increase, whatever we are factoring in is around, I think, 14% -- 13.5% to 14%. We have to factor in another 1% for that, and which we will cover in the remaining 3 quarters.

How much have we provided till now?

INR 810 crore we have already provided.

Okay. Okay. And we will provide, what -- the similar amount for over the next 3 quarters or...

Yes. So what I'm saying is around -- something between 13.5% to 14% we have already provided. The increase is 15%. So the remaining, we will be adjusting in the remaining 3 quarters.

Got it. Got it. And sir, do we have a plan for raising capital?

Yes, sir, we have. We have. And most probably, I will be going to the market for QIP in the second quarter itself. And maybe SPO after that. Because the plan which we have and what the growth which we are seeing in our bank, I need the capital for it.

Right. Do we have a Board approval for that?

Yes, sir. We've got the Board approval. We got the shareholders' approval. Of course, that approval is an Omnibus approval for INR 5,000 crore. That, of course -- to that extent, we don't need the capital in this financial year. But most probably, we will need around INR 2,000 crore of the capital to grow our entire balance sheet by around 12% or 13%.

Okay. And sir, regarding our BB and below book...

Pardon?

Regarding our BB and below book, I think it's around INR 12,000 crores, if I'm not wrong?

BB, you are talking about in absolute terms, right?

Yes, absolute terms.

BB and below. BB and below is INR 11,927 crores.

Got it. Got it. Sir, then what would be the concentration of this book? I mean what would be the...

The major of this will be in the MSME and the remaining in the corporate. Major amount will be NPA.

Okay. So this includes your NPA...

Sorry, sorry. It will not be NPA because this is only standard. So the major amount is MSME.

Got it. Got it. So sir, can we make an estimate as to how much of slippage we should expect from this book?

From this? From the BB and below?

Yes.

I don't think, sir, because the MSME normally has got the below investment-grade because they do not have that type of, I will say, on through which they will be able to get a good rating. I don't think that there will be a major slippage out of this.

Okay. Okay. And sir, sorry if this has been discussed earlier, I joined the call a little late. But how much have we disbursed under the Credit Guarantee scheme, MSME Credit Guarantee scheme?

Amount wise, actually, if I go by 20% of the eligible accounts, it was in INR 4,400 crore, out of which, the opted-out was another, say, INR 1,090 crore, so INR 3,000 crore we have already disbursed around -- 87% of that, INR 2,220 crore we have disbursed.

Got it. Got it. Got it, sir. Sir, and one last question. Can we have the provision breakup in terms of provision for NPAs and provisions?

Yes. This is given, sir. If you go to the provision, they have given for the standard as well as the NPA. Now you go to Page #40. You have that slide with you, PPT?

Yes. Yes.

So again, the NPA, we have provision as on June '20, INR 496 crore against restructure account INR 20 crore; investment, INR 282 crore; standard assets, INR 182 crore.

Out of this, INR 162 crore is because of that RBI scheme.

And have we made any COVID-related provision, sir?

Yes, we have. In the standard asset, we have.

And what is this onetime outstanding till now? I mean this quarter, how much have we made and total outstanding?

Sorry, it will be only in this quarter. How much?

INR 162 crore, this quarter; INR 143 crore, last quarter.

INR 162 crore in case of COVID?

Yes.

And INR 143 crore, we made in the March quarter. So INR 162 crore plus INR 143 crore, INR 305 crore.

Got it. Got it, sir. And do we have any fraud accounts? Anything fraud that happened in this quarter in terms of...

Yes. Declared thus far, but all those accounts already 100% provision was there. These accounts are D3 or loss assets. And we have taken some additional provision on our DLF -- not DLF. DHFL, which was declared a fraud. We made INR 300-odd crore provision in March and INR 200 crore we made a provision in this quarter.

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

Sir, just 1 question. In terms of wholesale book, what is the split between working capital and term loans?

On the corporate?

Yes.

Okay. Do you have the figure? Sir, once second, let me go to that particular page, corporate. Corporate -- 1 second. We have INR 67,009 crore as on June '20. Out of it, around INR 48,000 crore will be the term loan.

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

First of all, congratulations on the great set of numbers. I think we have performed really well this quarter on all fronts if I look at it broadly. Regarding, I think most of my questions have been answered. I think I just have a couple of questions. Has the bank completely moved to the new tax rate structure?

No, no, sir. We have basically opted for the old structure. And -- so we have not moved to the new tax structure right now.

Okay. And if I look at the IBC cases, now we have very small IBC cases related to IBC 1. And so just wanted to understand what are the expectations from cases in IBC list to and others as we hold 95%...

Sir, in case of total IBC, whatever is there in list 1 and whatever are there in list 2, I am hoping a recovery of around 15% to 20%. And if I get a recovery of 15% to 20%, I am expecting a write-back of provision of around 10% to 12%.

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

Sir, in ESG portfolio, sir, yesterday Bank of Baroda downgraded an infra finance NBFC to their watch list. So have you had any such experience with your NBFC book? Do you have any infra finance NBFCs?

Infra finance, madam, we are not done. And this, I can say with a lot of confidence that my NBFC book as of today, after taking out DHFL, after taking out ILFS, after taking out Religare, is quite good. And I don't see any risk on this portfolio. And we have not taken an exposure on the infra side NBFCs.

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

Sir, give us a color on our CASA, which is the best in industry. How much are we getting from large towns? How much from urban and midtowns? And how much from semi-urban and rural?

Sir, in the CASA, the SA of the CASA is showing a very good trend. The CA is not showing that good trend. And of this CASA, I can give you the percentage. As of June '20, rural has -- the rural CASA was 60.78%, semi-urban has 54.81%, urban had 44.14% and metro had 38.37%. So that is very clear that the major portion of the CASA is coming from our RUSU. Even if I look at the growth, Y-o-Y growth in the CASA, around 27% -- around 30% has come from rural and semi-urban. And if I include the urban, so another -- so it will be total as 40%. So there's a good growth, and we have got a good number of outfits in RUSI. That's the reason that our CASA percentage is good there. I'm sorry, this number I have given only for the current. If I go into the savings, as I said, sir, our current portion of the CASA is lower than the SA portion. If I look at the savings growth, the rural has contributed 15.46% -- not contributed, rural growth was 15.46%, semi-urban was 10.88%, urban was 11.38%, metro is only giving 8.69%.

Strength lies in the -- barring the metro and your current account will only function post this RBI where they can give you. So now what is the strategy to capitalize on the actual, which is visible from all angles Central Bank is concerned? Whether it's brand, customer loyalty? Quarter-on-quarter, we have done well. So what are we going to achieve over a period of next 6 months, which can be a road map for banks potential earning from this...

Sir, the road map for next, I would say, 6 months or 9 months, if I say, the full financial year is to basically take our CASA percentage -- 1 second, sir. our CASA percentage to 49% and total advances growth to 9% and total deposit growth to 8.50%. For this growth in the advances of 9%, we will be going to the market to raise the capital because that is really required for -- as a growth capital. So number one is this. Number two is during this financial year, the initiatives which we took in '19/'20, most of these initiatives will be either 80% completed or fully completed. And these initiatives are, I will say, some sort of a game changer. Like in the technology, we have the initiative of loan life cycle management system, which is going to be a game changer in not only loan origination, but great administration, but -- and also generation of the alerts and also creation of the database. The second major technology initiative which we have taken is an enterprise fraud risk management system, which is going to be really very, very predictive in and also basically finding out the pattern of the transactions, which may have the risk of the fraud. The third major initiative in the technology which we have taken is the data warehousing, which we call single data repository, which will be the repository, which will give -- which will be a single source for any type of data, which is required, not only the data, but also the analytics. So now we will be working -- especially in case of the retail, we will be using the analytics to basically do the financing. And for that, we have started with a transformation journey where we have engaged a concentrate for that, and we are calling it Disha, where our focus would be to increase the retail, agriculture and MSME by going more through the technology and the marketing efforts, and also the entire processing centers, and also to increase their fee-based income through more of these cross-sells. And the fourth will be analytic-based financing. So these are the major initiatives which we have taken last year by getting the approval from the Board, and all these initiatives have started. And 75% to 80% will be completed in this financial year and the remaining will be completed in the first quarter. So this will take the bank and make it a really future-ready. Some of these initiatives are, I can say, with my experience, state-of-the-art technology. And it will be great for the bank to have these [indiscernible].

Sir, my question was -- I understand that Disha which you're putting the bank towards road map for long-term synergy and requirements. If I look at current CASA, and I'm assuming that the capability of the best-in-class is possible from a technology angle and you deployed. The multiple sales touch point, which we are already having, which other banks are steadily even to have in CASA accounts. What kind of generation of income we can generate with -- be it in CDSL, MSDL, 3-in-1 accounts and where booking is concerned, insurance, car loans, home loans, credit cards. So to be piloted to actually tap the nonurban customers of Central Bank in these products?

Non-urban means you are talking about the retail and the semi-urban?

Non-metro customer, which is a...

But the major portion of the CASA is coming from them.

Sir, how are we capitalizing on them with all these other products? It will become a big...

Sir, other products, during the last financial year and in this financial year also, what we have seen is that a cross-sell has helped us in improving our savings bank portfolio in the rural and semi-urban area. When I look at my cross-sell business, major portion of the cross-sell business has taken place in the rural and semi-urban. And if we include -- but I cannot say anything about NSDL and CDSL, how that demat we can really push into the rural and semi-urban. But this 3-in-1 accounts, like your -- basically a trading account or the demat account and the running account, that we are trying to basically set up in our bank, which will go a long way in providing the services to our customers who are into the capital market, but they are using their accounts with other banks, maintaining their main account with us, but using the other accounts for doing these trading. Once we have this platform on our book, that will help us great in retaining major portion of the balances in our account.

My question was answered partly by you that because of the loyalty, we are getting tougher and because you will provide all these facilities, I would not look at other banks because in the current environment, everybody is looking for safety in a bank, which is a public sector and has total in the bank. [indiscernible]

No, sir. I think a public sector, but if you look at the performance of our rural and semi-urban branches, even compared to the other public sector, peer banks, our performance is much better in the CASA with them.

Sir, that's what I'm trying to say because you have the best in comparison, given private sector where these local -- barring urban towns, you're getting the support, so why are we not capitalizing. So you answered my question, I'll move on to the next question. Sir, what is your plan on Indo-Zambia bank? And what's the plan [indiscernible]

What is the plan?

Indo-Zambia bank.

As of now, Indo-Zambia is not on the radar. But this Cent Home finance is on the radar, you might have seen the ad.

Yes, that's the reason I'm asking you.

So Cent Home Finance, we are quite hopeful to complete the transaction by the end of third quarter.

End of third quarter. Second, sir, I think you answered the question previously to Mahesh or Mahrukh. On the NCLD accounts, on a total outstanding of INR 25,000 -- INR 21,452 crores comprising of RBI list 1, 2 and others, you estimate totally whether it's a period of 12 to 18 months, 15% to 20% recovery or lesser?

So I am expecting a recovery of 15% to 20%. And if we are -- I'm able to get in 15% to 20%, there will be a significant write-back of proceeds.

Okay. Sir, if I ask you on overall basis, I'm not asking a number. Your experience on moratorium, which is the traditional question in every con call. So I'm not getting into numbers, what is number opted and how many of them. What is the touch point as a banker with experience who has managed retail in the past with SBI cards even today? Is the visibility from your point that will retail this time breakdown or retail is not indicating anything negative from that perspective and...

What I see is question of the breakdown is not there because if I look at the entire retail segment, whether it is credit card usage or basically buying auto vehicle or going for the home finance, except for the home finance and except for loan against pension or loan against salary, the other retail are more discretionary in nature. And these retail customers as of now are not going for it. And we are not seeing much of interest being added on vehicle loan; on credit card usage, which has really come down sharply. But home loan is picking up. And education loan, of course, it remains the. normal. For retail, I don't think -- it has broken down from discretionary spend point of view. But it has not broken down on whatever is the necessity for the retail customer.

So what's your outlook on our treasury as our investment book is almost equal to [indiscernible].

Yes, sir, because that is the reason...

I'm aware of the position. I'm asking what's your outlook? Because that can be a big turnaround...

Outlook, sir, as of today, it is 60-40. And the moment I get the -- I'm able to mobilize my capital, this will move to something around 75% to 25%.

No. That's fine. But I'm assuming in the next 6 months if interest rate drops, this 40% will likely remain...

No, no sir. We are aware of that. If the interest rate takes the reverse direction, what is going to happen on the investment book? We are quite aware of that. And we have started taking basically steps in that direction.

Sir, but are you sensing in the current quarter and the quarters to come...

No, no, not in the current quarter. I have done my analysis. And what I see is, unless there is an increase in the interest rate of around 125 to 150 bps, my portfolio is not going to be the investment portfolio.

Sir, my question is, sir, where are you seeing -- how much is sustainable profit in 2 to 3 and 4 in treasury? That's what I was asking.

Sir, that treasury profit is sustainable. Regarding the other things, because it's a very difficult question how the economy is going to basically pan out. So it will all depend on that because, say, in case of the aviation, in case of the airport, in case of the commercial real estate, in case of even LRD, we are seeing some stress. So it all depends on the economy, how it pans out. But we are taking more exposure -- like in the commercial space, we are taking more exposure in the HAM. And there, in case of the HAM, I don't see any problem. And so far, we have not seen any problem. Similarly, when I am looking at in the power sector, the renewable, there also those which are not very, very large, not like Suzlon. So in those cases, also, we see that the stress level is not high. Similarly, if I look at some other, like transmission lines, I don't see much of a stress in that. And we are taking exposure in state government entrepreneurs where we get 20% risk weight. So we are balancing out our books in a manner so that I'm able to reduce my -- number one, reduce my risk to be extent possible and how best I can use the capital I have.

But in hindsight, if we have not linked that aggressive in the last 18, 24 months, we may get the benefit when the economy stabilizes...

No, no. March cannot be under...

I understand. Sir, secondly, where you see our NIM being sustainable number? This quarter was fantastic, but where do you see a stable number?

Sir, stable number, whatever is the number in this quarter, maybe that is stable number. I cannot...

So you are saying 3% is a sustainable profit because of our CASA and the balance of the book or it is something more?

Yes, sir.

You see that is sustainable. Okay.

Yes, sir.

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sohail Halai for closing comments.

Many thank you, Mohapatra sir, for giving us this opportunity to host the earnings call and sharing what is your insight about the bank and environment. All the best, sir, for future quarters. And sir, anything that you would like to add in the concluding remarks?

One thing I would like to add if the analysts are still there on the phone line. Sir, okay, there were some issues, and the bank basically went through those difficult phases. But some of the parameters if the analysts have a look at. Number one is the parameter, which is CASA, which Mr. Choksey was talking about. So despite our bank basically reducing the rate of interest in the savings bank and linking it with repo, our growth in the savings bank is still continuing. So our franchise -- CASA franchise is very, very strong. Number two is, if you look at the LCR number, liquidity coverage ratio, which we have given in our presentation, which is 376%, sir. Now here, the question is, there are 2 aspects of it. Since I have not deployed money in the loan book, so it is in the LCR. Now if I am in the LCR, normally LCR means that I'm going for the high-quality liquid assets. If I go for the high-quality liquid assets, then my yield on the investments should come down. But if you look at the yield on the investment, including the trading profit, it is going up. And the trading profit year after year is going up. So that means we are playing our game in a manner so that we expect the best out of whatever we have. Today, if I have the capital, and I will go to the market for the capital, I feel that the risk in investing in Central Bank of India because of these positives is much, much lower than in any other bank. And even if you look at whatever is the price-to-book ratio today, it is just half. This is a closing comment I want to make because I will be basically approaching the market for capital.

Great, sir. Thank you, sir.

Thank you all.