City Union Bank Limited (CUB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the 3Q FY '22 Earnings Conference Call of City Union Bank hosted by AMBIT Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Kumar from AMBIT Capital. Thank you, and over to you, sir.

Good evening, everyone. Welcome to 3Q FY '22 Earnings Call of City Union Bank. On this call, we have Dr. N. Kamakodi, MD and CEO of the bank; and Mr. V. Ramesh, the CFO. So without further ado, over to N. Kamakodi, sir for his opening remarks, and then we will move to Q&A. Over to you, sir.

Good evening, everyone. Hearty welcome to all of you for this conference call to discuss financial results of CUB for the third quarter and 9 months ended 31st December 2021. Board approved the unaudited results today, and hope you all have the copies of the results and the presentation. First, you all are safe, and hopefully, all of us are out of the COVID wave. We shared with you all the following expectations for financial year 2021 and financial year 2022 during our fourth quarter financial year '21 call on 28th May 2021 and subsequent calls for first quarter and second quarter. We said that the credit growth to be at mid- to high single digit for the financial year '21-'22 if the economic environment and the COVID second wave gets better and if the COVID second wave was like last year. We are on track with our expectations and achievement. We have achieved a credit growth of 8 percentage, and we may end up the end of the year with a slightly higher growth rate. We also said that overall slippages to closing advances to be slightly below that of financial year 2021. For the financial year 2022, the slippages may be more front loaded with increased slippage in the first and second quarter of financial year 2022. Gross and net NPA for the financial year 2022 will be lower than the closing figures for financial year 2021 with probably a few quarterly spikes. The results, we are exactly on track, except the fact that the RBI circular on 12th November 2021, on NPA classification, slightly altered our equation, which I will explain later. But here, we are almost on track with maybe some minor aberration. We said that recoveries to be impacted because of the lockdown on nonfunctioning of government registration departments. Courts are more sympathetic towards defaulter, more than the banks and things like that. Things have improved in the current quarter, and third quarter recovery is the highest in the history of the bank. The present situation is much better than the year beginning, and we could see improvement in the recovery also. We also said that ROA to reach the level of 1.5 percentage towards the second half of the next financial year, '22-'23. We are on track to achieve that. We are already firmly over your financial year -- I mean the ROA of 1.3 plus. We are on track to achieve whatever we communicated to you all. And it could even improve from there, which will be clear as we move forward. Also during the last few con calls from December 2019, we have been repeatedly saying that we have not preferred to push for growth due to unfavorable economic conditions, and we'll push the growth pedal only when we see clear visibility on the general economic situation. And until then, bank will concentrate only on gold loan, ECLGS, and other 0 risk-weighted assets. We have also said that we will slowly and steadily move in double-digit credit growth in the next financial year once these things improve. Despite the second COVID wave and Omicron threat in the form of COVID third wave, the performance during the period was in tune with our expectations, whatever we shared with you all and also getting better and better. The highlights of the financial performance of third quarter financial year '22 and 9 months financial year 2022 are as follows. Deposits recorded an 8 percentage growth from INR 43,288 crores to INR 46,722 crores. Between 31st December 2020 to 31st December 2021, credit grew by 5 percentage from INR 36,504 crores to INR 38,387 crores. Thus the business grew by 7 percentage and presently stands at INR 85,109 crores on 31st December 2021. CASA recorded a growth rate of 17 percentage, vis-a-vis the deposit growth of 8 percentage to INR 13,918 crores from INR 11,890 crores -- INR 11,898 crores. And the CASA percentage to deposits improved about 30 percentage in Q3 financial year '22 against 27 percentage in Q3 financial year '21. Net profit improved by 15 percentage and 14 percentage for Q3 financial year '22 and 9 months financial year 2022 and in absolute terms stands at INR 196 crores for Q3 and INR 551 crores for 9 months against INR 170 crores and INR 482 crores for the corresponding period last year. ROA stands improved to 1.36 percentage in third quarter financial year '22 against 1.29 percentage in financial year -- Q3 financial year 2021. Of course, there was standstill class during Q3 last year. So the figures are not exactly comparable. NIM currently for the third quarter stands at 4 percentage against 4.16 percentage for the corresponding period last year. Gross NPA is at 5.21 percentage and net NPA is at 3.44 percentage, both sequentially has started showing reduction. And hopefully, the pace of reduction should increase as we move into the future. The progress made so far is slightly even better than what we had expected earlier and shared with you all. The credit growth between December 2021 and December 2020 was 5 percentage, and we expect that there will be an improvement on Q4 to Q4. It could be a minor improvement, but there could be some improvement definitely. So far, we were growing only through gold loan and ECLGS loans as we are not having confidence on the general economy. Presently, the current general economic situation is giving us confidence to start growth. And we are in the starting to push the growth pedal slowly. And we believe that we should be having high single-digit growth, I mean, slightly more than 5 percentage, for financial year '21-'22, and it will improve to low double-digit growth for the next financial year, as we shared with you all during the year beginning. So overall, whatever reservations we had and all had come down to a greater extent, not only from the macroeconomic indicators, which are getting published but also through the SME figures and other anecdotal evidences from our discussions with the customer base is giving us enough confidence that we can start slowly pushing the growth pedal. After the last con call we had on 12th November 2021, the same evening, RBI issued a circular on IRAC norms with respect to upgradation of NPAs, which resulted in additional slippage of INR 50 crores to INR 60 crores over the level we had expected for Q3 financial year '22. We had been following an upgradation policy where if an NPA account pays money and overdue reduces less than 90 days on any day, it could be upgraded as a standard account. The November 12 RBI circular said that the upgradation should happen only if the overview is 0. So the -- now we are in full compliance with the RBI circular for which we had to face extra slippage of INR 50 crores, INR 60 crores in addition to NPA in this quarter. Minor spillover effect could be there for 1 or 2 more quarters, but it will be very minor. The slippages during Q1, Q2, Q3 financial year '22 are INR 482 crores, INR 297 crores and INR 275 crores, respectively. The slippages during Q3 financial year '22 is shared better than Q2 financial year '22. Despite given the effect to the revised RBI circular on IRAC norms, the slippages will come down significantly starting from the next financial year, which will be inclusive of all slippages from, let's say, regular accounts, restructured account, non-restructured accounts, ECLGS portfolio, et cetera, et cetera, reaching to a level where the recoveries should be more than the slippages. And we will share the exact expectations, our expected numbers during the Q4 financial year '22 results. In Q3 itself, the total recoveries were INR 228 crores against a slippage of INR 275 crores, where the gap between the recoveries and slippage is only INR 47 crores. So this gap should go on improving, and probably we could even see negative territory as we enter into the future. Our bank has a cash credit exposure of INR 100 crores towards SpiceJet Airlines, which was sanctioned in the year, financial year 2014-'15 based on the long-standing customer relationship with then promoter, Sun TV Group, which was collaterally secured by a fixed deposit in the name of the promoter. In March 2015, the Enforcement Directorate provisionally attached the said fixed deposit. The trial court ruled against the Enforcement Directorate attachment, but the ED preferred to appeal in the High Court. Meanwhile, it is reported in the Media that there are court cases going on asking for liquidation of SpiceJet. As the account operations were not satisfactory, we have decided to recall the advances given to the SpiceJet. If the SpiceJet does not close the account, it may have to be classified as NPA, and the provisions need to be made until the final judgement on ED case is received. We have provided INR 30 crores in this quarter for this purpose as the provision requirement for the COVID-related stress is by and large over. We have earmarked about INR 10 crore provisions from the earlier made COVID provisions, which could be utilized for this, making total provision available for this as INR 40 crores, and we should be able to make adequate provisions if needed in the subsequent 2, 3 quarters. Meanwhile, SpiceJet has paid interest and dues on CC until 31st January 2022. The overall outstanding balance of borrowers who availed ECLGS on 31st December 2021 is INR 13,644 crores. And the SMA-1 and SMA-2 portion was INR 151 crores and INR 245 crores, respectively, For the same on 30th September 2021, it was INR 339 crores and INR 235 crores, respectively. The percentage SMA-1 and SMA-2 to ECLGS portfolio got reduced from INR 2.94 crores in Q3 financial year '22 from 4.67 percentage in Q2 financial year '22. Remember, all these accounts are continuing to repay their regular term loan installments and there is no moratorium given. So you have to, like say, consider them as, like say, accounts which are paying regular installments. And this SME position gives you the true opinion about the status of the account in terms of the overdues and arrears. So the overall SMA-1 and SMA-2 position is only -- currently is only 2.9 percentage for this ECLGS portfolio, which is, I mean, not much compared to whatever we had seen in the past. As at 31st December 2021, about [ 3,179 ] accounts amounting to INR 2,205 crores remains as restructured category, out of which, an amount of INR 661 crores, constituting 30 percentage of the restructured book where the repayment has already started and for remaining INR 1,544 crores, the repayments, like say, the demand for repayment as per the schedule is yet to commence. However, of those accounts where the repayment demand has not started or otherwise still the moratorium is -- who are still in moratorium period, about 70 percentage of those accounts have already started repaying their monthly installments, paying more than 3 months even before the start of the repayment demand, leaving only 30 percentage of that part, otherwise about INR 500 crores have made repayment for less than 3 months, of which only INR 252 crores are yet to start the repayment and availing moratorium. All -- except this INR 252 crores, all other restructured portfolio have already paid one installment or more to it. And even in that, most of them have already started -- already made minimum 3 installments or more already. The outstanding portion of SMA-2 in this category is only INR 187 crores. So these -- and these figures give us enough confidence or at least give a fair idea of current level of stress, which are very much under control, which gives us enough confidence to say that, incrementally, the incremental slippage ratio, incremental slippage will come down while recoveries will increase. And overall, we'll be getting into the, like say, a negative territory or positive recovery over the slippages as we enter into the future quarters. We have discussed many times about the SMA-2 numbers, which used to be in the range of 5 to 7 percentage in the pre-COVID days, which was reduced to 3.04 percentage in first quarter financial year '22. And it further decreased to about 2.59 percentage in Q2 financial year '22. The current SMA-2 numbers for Q3 financial year '22 stood at 1.98 percentage. And even SMA-1 numbers reduced to 1.9 percentage in Q3 financial year '22 from 2.79 percentage in Q2 financial year '22. Overall, improvement in the economy as well as our, like say, improvement in the way of constant follow-up and monitoring efforts, which we took in the pandemic period has, in fact, resulted in reduction of SMA numbers. And also the accounts which were having problems earlier, whether they have already -- some of them have turned into NPA, some of them have sold their properties to reduce their outstanding or whatever it is, but to sum up, overall, SME numbers are much better compared to even pre-COVID time. In the earlier quarters, we discussed about delay in legal recovery process. And how defaulters got sympathy from the legal discount. But now things are showing improvement, as I told earlier, with the legal proceedings are coming back to the normalcy. The numbers we saw in the third quarter financial year '22 and what we expect for financial Q4 under the current circumstances are very much in line or even slightly better than our earlier expectations we shared with you all during the earlier con call on the recovery front. In Q3 financial year '22, we recorded a total recovery of INR 228 crores, comprising of INR 186 crores from live accounts and INR 42 crores from technically written-off accounts, compared to INR 189 crores comprising of INR 128 crores from live accounts and INR 61 crores from technically written-off accounts in Q2 financial year '22. The current quarter, the recovery is being highest in the recent years, but still has to improve from there. We expect this trend to continue in the next financial year as well. We expect that the slippages would decline and the recovery should improve. And the improvement in the recovery, coupled with the reduction in slippages, will be a driving force for ROA improvement over the next couple of years. During the third quarter financial year '22, we had a treasury profit of only INR 1.38 crores. And in 9 months period, it was INR 60 crores as against INR 93 crores and INR 203 crores, respectively, in Q3 financial year '21 and 9 months period financial year '21. We had -- this is one of the main reasons for, like say, not having sufficient growth at the operating profit trend. We had already shared our expectations of lower treasury profit during financial year '22 during the -- due to nonavailability of favorable yield movement. The yield has started increasing, and we expect this trend to continue in the financial year 2023 also. We expect the other income will sustain like last year only because of improved recoveries from the technically written-off accounts. The cost-to-income ratio for, like say, Q3 financial year '22 and the 9 months financial year '22 was at 43.13 percentage and 41.41 percentage as against 36.73 percentage and 39.5 percentage the corresponding period last year. The reduction in the treasury profit as well as increase in the operating expenses as a result of the increase in the cost-to-income ratio, but main contribution is from the reduction of treasury profit. This is more or less closer to our general guidance of 42 to 45 percentage. This overall cost-to-income ratio will continue for the next financial year as well. The capital adequacy of the bank stood at 19.39 percentage for financial year -- Q3 financial year '22 versus 17.39 in the Q3 financial year 2021. And the same would be about 21.16 percentage if we had the 9 months profit. We have -- remember, we have not infused any major, like say, capital through QIPR rights in the last 7 years. And the last time, we have raised the funds was through July 2014 through QIP route to the tune of about INR 350 crores. We could tie it over the COVID crisis without any issue of fresh equity through rights issue of our QIP. The existing profitability itself was able to take care of that. As such, LIC, we are acting as a corporate agent for Life Insurance Corporation of India for cross selling of life insurance products. And we have identified 2 more insurance companies for tie-ups to boost the insurance income. For Q3 financial year '22, we have earned an insurance income of INR 12.4 crores in 9 months financial year '22 against INR 7.39 crores in 9 months financial year '21. We could see some positive improvements on other income as well. During the year, we had opened only 2 branches, and there could be another 23 branches before the end of the financial year so that we are planning to have 725 branches during the closure of the current financial year on 31st of March 2022. The pandemic has provided us an opportunity to look into our organization structure. Like, even though from outside, it may look that the growth rate of the bank had been lower, we took many initiatives during the last 2 years to overall the organization and to make it future ready for the next phase of growth. The major initiatives we took can be broadly classified into 3 areas such as human resources, digitization initiatives and customer management. It will be -- the initiatives, whatever we have taken, they will be having deeper impact in terms of both the growth and also in terms of the risk management practices in the future. On HR front, during the peak of the pandemic, we entered into an agreement with our other officers' association and the staff union that we will be migrating to cost-to-company basis remuneration structure starting from 2023 onwards to align with the HR practices of the new generation bank. Starting from that period, even the annual increments will be based on the performance of the individual team member and not as per the time scale, which had been the practice and which is also the current practice in many of the public sector bank and old generation bank. This transformation will make our HR policies more in sync with the new generation bank, and it will completely change the approach of employees and will have deeper impact on their individual performance as we are moving from collective bargaining to individual performance-based remuneration structure. Also, we have conducted time and motion study, which has provided us an opportunity to identify the, like say, surplus resources and to channelize their utilization for a better use. On digitization front, we had implemented infrastructures for loan process automation and for offering application programming interface, API. The COVID period also has helped us to improve our digital transactions by 10 percentage, which means that the transactions happening through the digital means stands at 96 percentage. In other words, the manual transaction at the branch level has come down to 50 percentage of what it was during the beginning of the pandemic, which is giving us, like say, surplus capacity within the system, which is getting now channelized for better purposes on both, like say, with business development and better customer engagement and things like this, which could help to improve the productivity and revenue per person, even third-party sales and all in the future, and we are in the process of doing those fine-tuning within the system. The human resources surplus capacity identified through the time in motion study as well as the surplus capacity created by the way of improved digital transaction were channelized properly to get in touch with our existing customers on more frequent basis to understand the credit health and needs or deepening the relationship with the third-party, like say, sales, building effective customer relationships, closer and the effective monitoring of borrower accounts and better recovery process, which all positively will result in better credit portfolio and better customer management as we progress. This is the culmination of multiple levels of progress achieved over a decade of collaboration and negotiation with our officers' association and staff union. In a nutshell, we have made a strong foundation during this pandemic period, on which our next decade of growth will be built upon. Also, I wish to inform you that we don't have any unprovided liability towards the family pension scheme like many other banks, since we have a defined contribution towards the pension, which is managed by the Life Insurance Corporation of India. We hope that we will achieve 1.5 percentage ROA by the second half of 2022-'23, as we have been stating in the earlier con calls. And right from -- in the past, almost 6, 7 quarters, whatever we assured you, almost everything we were able to achieve at a pace we shared with you all. So the progress has been extremely in tune with whatever expectations we shared with you all. While the treasury income and the cost-to-income ratio provide moderate headwinds to ROA, we expect the reduction in the slippages and the effective recovery management will provide a tailwind to achieve the desired level of 1.5 percentage ROA in the second half of financial year '22-'23 as we committed earlier. And also, the increase in the growth will also be adding its own share, like say, to improve the ROA, like say, beyond 1.5 percentage. The operating profit for Q3 financial year '22 was at INR 370 crores compared to INR 448 crores for the corresponding period last year. As we shared, there has been a reduction for about INR 70 crores to INR 80 crores from the profit opportunity from the sale of, like say, profit booked on the treasury itself. So for 9 months period, it was INR 1155 crores in financial year [ '19 ] against INR 1169 crores for the financial, I mean, 9 months of the financial year 2021. The total provision made during the Q3 financial year '22 was INR 174 crores against INR 279 crores in Q3 financial year '21. For 9 months period, it was INR 604 crores in financial year '22 against the INR 688 crores in 9 months financial year '21. The net profit for Q3 financial year '22 and 9 months financial year '22 was at INR 196 crores and INR 551 crores as against INR 170 crores and INR 482 crores for the corresponding period last year. Net interest margin stood at 4 percentage for Q3 financial year '22 compared to 4.16% on Q3 financial year '21. It cannot be a direct comparison because we had a standstill class during the same period last year. The net interest margin could -- we shared with you all the net interest margin should be between 3.8 to, like say, 4.2 with midpoint at 4. And currently, like say, it should be staying between 3.8 to 4 percentage for near future, as discussed during the first quarter results con call. On the HR front, securities research for NPA, the outstanding is at INR 143 crores -- was at INR 143 crores on 31st March 2021. We had received a payment of INR 25 crores in H1 and INR 6 crores in Q3, making the outstanding on 31st December 2021 at INR 112 crores. We hold a provision of INR 81 crores as on 31st of December 2021, which will be sufficient and even there could be a write-back from these provisions as well. During the last con call, we had provided a glimpse of our technological initiatives, starting from the adoption of core banking implementation to internet banking and mobile banking era to introduction of robotics and multilingual chatbots, automation of loan processing and things like that. In continuation of our digital journey, as the next step towards neo banking or open banking, we have launched 2 contactless payment solution through wearables, by the way of CUB Easy Pay or CUB Keychain debit card and CUBFit watch debit card. We are the first bank in the country to offer these wearables, which could be used in almost all POS machines. The customers can make payment smartly and conveniently without taking their wallet or card anymore. Even, the regulatory prescriptions allow payments up to INR 5,000, can be done by just tapping the wearable without even entering the PIN. Our existing customers as well as noncustomers can easily apply for these products through City Union Bank all-in-one app in just 3 steps. The app is available both in Android and in the, like say, iPhone platform, the Play store. Through this launch, we are expecting, like say, a good amount of attraction. We are already seeing some improvement in that. It will strengthen our -- add convenience to our existing customer base. And the -- it could, like say, be an incentive for the noncustomers also. I request all of you to make an attempt to get a firsthand experience. You can download, install your app, just be giving your Aadhaar number. And then, with that, the selfie account will be opened. If you add money through the, like say, UPI, you can also directly apply for those products, which will be an interesting product to see. We all have implemented new infrastructure for offering API, application programming interface banking by partnering with IBM. This architecture paves way for more partnership with fintechs to improve our customer service further and also strengthen our digital journey, be it the digital lending or partnering with account aggregator framework or any service that are required can be done with ease. We are sure that this will help us in meeting the existing customer demand, also attract the prospective customers. APIs will definitely increase customer engagement and meet the customer needs in a secure and agile way, tie up for buy now, pay later and a new launch of credit card and all also are made possible through this API platform. Integration is in progress. Remember, we are only keeping infrastructure ready and all our steps will be measured taking into consideration our risk appetite. So we will not be in a hurry to push anything up, but we will always be ready for any future challenges or introduction of any new products that are coming in the market to be at par with the best in the industry. The customer onboarding are also made easy through our video KYC for both the savings and current account opening, a few of these, one of the pioneers in launching this even in the year 2020. Apart from meeting the customer needs, our internal processes are also digitized. The risk management, like say, the monitoring and all are also improving because of this digitization. We have implemented robotic process automation for more efficient internal processing and also, like say, implement a digital document management system. We have been like -- we have seen considerable improvement in all our internal processes and all during this pandemic period, which is giving us considerable, like say, confidence and considerable improvement in the efficiency of our operations. To sum up, the performance of Q3 financial year '22 is slightly better than our earlier quarters and what we shared with you all. The slippages and the recovery are doing positive trends. The treasury income will continue to be on the lower side in tune with the yield movements. The gross and net NPA percentage have shown a dip compared to Q2, and we expect that, that will be on a track to have lesser gross and net NPA percentage for 31st March 2022. Recoveries have improved and we have seen improvement in the, like say, in the last 2 quarters. The impact of COVID is by and large behind us, and we are preparing ourselves for the next phase of growth. Improvement in the market condition gives us confidence that we can push for growth, and the results will reflect in the coming quarters. The last 7, 8 quarters since the onset of COVID helped us to internally reorient ourself for the next phase of growth. The changes in the HR policies, the digitalization of processes, structured asset monitoring and management, et cetera, have undergone upgradation, increasing the confidence to not only achieve ROA of 1.5 percentage, but also increase our belief in increasing ROA beyond 1 5 percentage also. So with this opening remarks, I believe the forum for -- I open the forum for questions.

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

So firstly, on this fee income, despite the healthy growth you've seen this quarter at 3%, the fee income levels declined both Q-on-Q and year-on-year. So any color on that?

Yes. That's why I said the other income decline is because of reduction in the treasury profit, which we did about INR 90 crores reduction in the actual profit, which was booked in other income between last year Q3 and this year Q3.

Right. So referring to the core fee income, which is ex of the treasury profit, which is at INR 72 crores, even that has declined so -- yes...

See, basically, on Q3 last year, we had INR 219 crores of other income, which include about -- compared to INR 160 crores now. In that, like say, the -- all the other guarantee commission, fee collection, locker rent, all those things are, by and large, the same as the last year. Nothing major impact. So the -- if you give impact to this particular item, in fact, if you see the -- our loan processing fee and all also, like say, they stayed stable. So overall, other income stayed stable which is normally in tune with our credit growth of 5 percentage or whatever it is. This particular item had disproportionately pulled off that thing. So when you have between INR 160 to INR 212, about INR 60 crores, about INR 90 crores is explained by the reduction in the treasury profit.

Okay. Okay. Got it. And on the standard asset provisions, so apart from the general provisions and those made against restructured book, do we hold any other standard asset provisions and the INR 40 crores you've just made on the call against SpiceJet?

See, you already have regulatory prescription on, like say, standard asset provision and also provision for standard restructured assets and things like that, there are regularly prescribed provisions, which we hold. Beyond that, we had made the COVID provisions. In this quarter, we had made that additional INR 30 crores provision, which we have earmarked for the -- as COVID provision, I mean, in the, like say, comes to, but it is basically earmarked or we are mentally keeping it ready, if at all, any provisional requirement for SpiceJet comes.

So apart from the INR 30 crores you made this quarter, how much was the COVID provisions you made until last year?

Yes, we first made about INR 100 crores last year. We made -- we have about INR 40 crores or so something which is there -- which is yet to be earmarked.

Okay. And this INR 40 crores is ex of the INR 30 crores we have made against [ COVID ]?

Yes, yes. And from that INR 40 crores, I have -- during the course of discussion, I told maybe INR 10 crores I earmarked for this.

Okay. Yes, you do. And the SpiceJet exposure that you mentioned, currently despite the recalling of the loan, our current exposure stands at about INR 100 crores?

Yes.

Okay. And just finally, on the ECLGS book, what has been your experience on the slippages size from that book? Any color if you could give?

We had, as I told you, the current SMA numbers I have already told. And about INR 245 crores had already become NPA, which works out to about 1.8 percentage of the overall portfolio, which received ECLGS advances.

Okay. And most of this portfolio is about, whatever, INR 300 crores -- INR 3,000 crores or something. This is entirely -- the moratorium against this is over by now?

See, as I told you, if the accounts are not restructured, their term -- regular term loan repayments, they continue. So they will be making or whether they, like say, all the accounts, except those restructured, they may be having moratorium for their ECLGS portions repayment. But their general repayment schedule for their existing portfolio, it continues.

Right, right. So I was just referring to that other portion where we had this principal moratorium for 1 year. Is that over for a large part of the book? Or what percentage is it over, if you could give some color there?

Almost for 50 -- half of them, even they should have started the repayment of the ECLGS portion also.

The next question is from the line of Abhijit from Sundaram Asset Management.

This is Madan here, probably logged in through Abhijit's number. Sir, so there's a clear recovery that we are seeing, so happy to hear that. The first question is, there is this fear that a lot of restructuring book that -- restructuring that has happened and the ECLGS, probably as we go forward in the next, say, 6 to 9 months, some of this can slip back, it's a fear, but are you seeing improvement in cash flows of many of these customers, that is giving you more confidence that we may not end up seeing more stress on that book.

See, let us be candid about it. The, like say, the restructured book, like say, the fear, whatever you have, don't think them that, like say, they are -- they don't totally discount them as sick accounts. At the same time, don't think them, they are absolutely healthy account and all, some minor [indiscernible] and all were there. You also need to take into consideration the restructuring facilities were not given to, like say, sick accounts as an 29th of February 2020. So all these accounts were healthier accounts. They cannot be -- if they're SME account, they cannot be -- they could not have been an SMA-2 account or if they are non-MSME account, they could not be even an SMA-1 account as on 29th February 2020 as per the regulatory dictate. So all the issues were mainly because of the, what you call, the COVID-related stress. That's why I told -- when I explained, a major portion of them, even those whose repayment schedule has not yet started, they have started making, like say, only INR 200 crores or so have not yet started making repayments, even 1 installment or other. Even -- the actual beginning of their schedule, even they are making advanced payments, even out of their repayment schedules. And many of them have made 3 months payment and all, which gives the satisfaction that already sufficient, surplus cash flow has come and they voluntarily make their monthly repayment even though their repayment schedule has not yet started. So that particular thing gives us enough confidence that things are improving. I will not say you will be having 0 slippage from -- to NPA from this segment, but definitely, the indications currently gives us that, like say, only less than 10 percentage of them have not yet started making repayment. Balance, all have started making their repayment, which is given enough confidence that surplus is being made. So this is -- we are able to see this much amount of improvement in the asset quality, particularly in the last 3 months. If this general situation continues, the slippages, in fact, I had even discussed in 2008, just around the Lehman crisis, when the restructuring facility was given, we had the highest restructured portfolio in the industry of which restructured portfolio, only 10 percentage slipped in the next 3 or 4 years and all. This time, we expect that number could be much lower. In fact, the percentage restructured is also lower and the slippage from that restructured portfolio to NPA should also be substantially lower compared to our earlier experience, ease the comfort to what we have currently. Of course, the other uncertainties are probably -- it is not, like say, 0 probability even, I think you might have seen that Nadal's score from 3 -- how he won from -- able to lose from 3 match points and things like that. So anything where the probability is not zero, some profit is always there. But what I can definitely assure though the confidence which I have, what I can communicate to you is that things have improved a lot in the last 3 months. If this holds good and improve, I think bulk of the problems are, by and large, over.

So we will recover like Nadal after the [indiscernible]?

It looks currently, after the match point, one more set we have won. That's what we see at this point of time.

Nice to hear. That's really good. Next question that I had, after a long time, you take the right call on the growth. I always appreciate that. Looking at how the scenario emerges. So you are talking about growing the book now. Just to get your thought on this is the new growth trajectory will be in terms of mix, will it be same like focused on the MSME book and the same thing or can there be some new products that we will be adding seriously as we go forward, some high-yield books like, say, personal loans or something like that, which we can think of or it will be the same mix? On that, one more point that I have is recent commentary from, say, HDFC Bank or even ICICI Bank, they have grown very fast on the MSME side and the SME side. Is it some market share loss that would have had probably because we were a little cautious during the last, say, 1, 1.5 years are not so much. We wouldn't have lost the market share as such?

See, basically, like nothing significant, like say, we lost. We lost, I mean, maybe a few hundred crores, but not much, but we decided to take that call. The -- we are not thinking of, like say, going for any high-yielding or anything like that, we will just focus on the segment where we had been doing so far. We will be sticking ahead with the same segment. And this is where things are currently at this point of time.

The next question is from the line of Dhaval Gada from DSP.

So first question was relating to the pricing environment. So we see consistent sort of decline in lending yields. So I just wanted to understand how is the pricing environment and, overall, your thoughts on loan spreads into next year?

See, the -- you can clearly see what you call a parallel movement between the reduction in the cost of funds and the yield on advances book. When you have a surplus liquidity in the system, definitely, there will be [ weight ] for yield and all. Yes, the pressure is there, but it is not, like say, we have been holding. We are not, like say, just like that, leaving our [ fork ] and all. So we are able to very well manage the -- still we are able to have our net interest margin close to 4 percentage and all. The 5 basis points here and there are also because of, like say, changes in the average credit deposit ratios and things like that. So you could clearly see the direction of, like say, cost and yield movement on both funds and advances. They are, by and large, margin. Like say, 50, 60 basis points in 1 year time frame, I won't say it is a very steep reduction or whatever it is. It is gradual without any, what you call, creating any panic. That's what I can say.

Understood. Sir, the second question was relating to....

And also I have to add, the bulk of our growth rate had happened because of the gold loan. So incremental gold loans are mainly coming at around 8 to 8.5 percentage, which is lower than our average yield, which is also pulling down the average yield on advances, which could be giving you, like say, mathematically, you can prove that though there is a, like say, pressure on yield movement, it is not as much to create panic or, like say, worrying too much and all.

Understood, sir. Perfect. Sir, the second question is relating to growth. So you've -- obviously, situation has improved. It has surprised you positively, and we can see that. Just overall, what is required to go back to, like say, 15%, 17% kind of growth next year? Is there something still missing in the environment, which is not giving you confidence? You mentioned low double-digit growth. Just what is required for 15%, 17% growth, if you could sort of give some perspective? .

So what is first needed is the time. Now I have to reorient my entire team, okay, by the period of inward looking is over, we have to start looking outside. So identify customers, to start meeting the customers and then start processing the proposal. I have to completely, like say, like it's something like starting a factory after the maintenance work. So put everything in place and it's what you call, a few months it will take for things to enter in and enter out and things like that. So these were the -- fundamentally, even I have to make my market know that I'm back in, like say, growth mode if at all anybody needs credit with proper -- their credit profile matching our risk appetite, we are here to tell. So our communication so far had been that for right growth we are taking now -- because of the COVID, we are not into growth mode whatsoever, our internal communication and also at the market. So I have to change all these things and get into the market and to start -- that's why I said -- so it's like, like say, start the engine and push the growth pedal.

Got it. Sir, just one final thing. On the HR changes that you talked about, just, in your view, is there any risk that we can see in the near term system getting adjusted considerably? It's a shift that we see? Any risk or any points that one needs to be aware? Any thoughts that you have on that?

See. Basically, we learned from the experience of some of our peers who wanted to do these changes at a much faster pace and paid the price. So we took a sufficiently long time to explain all these things and incremental changes over a period of time and all. So the system is, by and large, aware of what is to be expected and mentally ready for these changes over a period of time. And hence, the changes have happened at a pace which is acceptable and agreeable to the entire system, and we are not pushing anything beyond what the system can take.

The next question is from the line of Rohan Mandora from Equirus.

Sir, the first question was on the employee count and we've seen almost 400-odd employee reduction in last 2 quarters. And if you look at employee head count, that was somewhere around 8.7%, 8.8% that's pre-COVID and it has come down to 7.8%. So do we -- would it be fair to expect that there can be some rapid addition to employees going ahead after we move to the CTC structure? Or is this the new structure that we are working with where the employee base will be lower? And if so, will the origination of new business be impacted? That was one. And related to the employee thing. Another thing that I wanted to understand was that as you move to CTC structure? How should one look at the cost changing? Will there be any adjustment on to that? And also, whatever are the pension linked provisions, will that be reversed or paid back to employees? How will that accounting work?

See, basically, the year-end employee count will be, like say, even slightly more than what we have. What we have planned, as I discussed through the time and motion study, reduction in the workload and the proper internal process reengineering and all. So even for 31st of March 2023, next year, next March, after probably getting the number of branches to between 750 and 775, the total number of staff members on 31st March 2021 and 31st March 2023 will be, by and large, the same. So this is what we are expecting at this particular point of time, which will be, definitely, as you said, people per branch and all would have got reduced. This is mainly because, like say, like the operational workload has substantially reduced. The, like say, the resignations whatever happened, we had a freeze for some time. We did not replace it and the system also has understood these changes. So -- and since there is a 50 percentage reduction, that sufficient time is also being there for, like say, the origination and things like that. So the -- without any major change in the, like say, loan origination and the business growth, like say, the -- there won't be a lot of reduction, but the number of persons per branch will have some moderation, which will be slowly visible on the number of persons front. On, like say, cost front, I don't expect any major change. See, the earlier, based on the, like say, time-scale based things and all, there were a lot of discrepancies between the responsibility and the cost and the annual incremental -- increments and all were , like say, based on the time-scale with no correlation to the performance and all. These changes in culture and the policies will bring greater accountability and will improve the productivity, is what we expect basically culturally, which is going to be a major shift. We don't expect like a magic wand, a major change in the productivity or major change in the cost in a short span and all. It's basically a cultural shift. It will take some time for the system to absorb this and to see the results as we move forward. But it is going... [Technical Difficulty]

Ladies and gentlemen, please stay connected. The management line got disconnected. Ladies and gentlemen, thank you for patiently holding the line. The management line is reconnected. Thank you, and over to you, sir.

Yes. Sorry, it got disconnected and I'm back. Just to continue, don't think that there is a magic wand to, like say, improve the productivity or reduce the cost immediately and all, but this is going to be a strong foundation and it is for the future. And it will take time to see tangible results, but there are going to be -- the changes in the culture are going to be very firm. And it has to be a mix of positives from both old generation sector and also the new generation, like say, productivity and things like that. And on pension, we had always been, like say, contributory pension, even right from the beginning of the pension scheme. That's why it is not going to have any extra effect or anything because of -- any major change because of that.

Even this pension, the reserve which has been created, that thing will still continue. And on retirement, these people will continue to get some portion of the pension?

Absolutely. See. The -- when I say contributory scheme, it is like a new pension scheme right from the beginning, every month, employee makes its contribution and the management also makes its contribution. On the day of his retirement, the annuity is purchased, and it goes to the concerned employee. That system will continue for both new joinees and also for the old, existing employees.

Sure, sir. And sir, on the restructured book, once the book was restructured, will it be fair to think that the DPD got reset to 0, I mean, let's say, they were in, say, 30 OD or 60 [indiscernible]?

The overdue will be based on the revised repayment schedule.

Sure. So sir, if I got the number right, we have INR 187 crores of SMA-2 in the restructured book. So this would be a part of the INR 661 crores if they started the repayment. Would that be a fair assumption?

Yes. And also, I said that remaining who and all have made payment even before actually the onset of repayment schedule, which should be giving you sufficient understanding about the overall surplus and profitability created in repaying the loan.

The next question is from the line of Renish Bhuva from ICICI Securities.

Congrats on a great set of numbers. Just one question from my side is on the provision coverage ratio, which almost drops to 35%, which is lowest in the past 18 quarters. So what is the take on this lower coverage ratio, I mean this is because since we expect a better recovery in those equities going ahead because mathematically sort of this coverage ratio going forward? Or we see a lower [indiscernible] in this cycle and things we tend to sort of maintain coverage, which is right or wrong? Just sort of your thoughts on this [indiscernible] will be helpful, sir.

Yes. The point is we always follow the provision coverage ratio based on the RBI definition, which takes into account the technically written-off accounts also. Based on that, we have a coverage -- we maintain a coverage ratio of about 60 to 62 percentage as always. The 60 is the base, which we always keep in mind. We always keep that above that. And the technical write-off is what we make for, I mean, other purposes and all, which doesn't actually affect the, like say, recovery of the money, point number one. To answer your direct question, if you -- based on our own internal assessment of the recoverability of, like say, individual accounts, if I guess the entire money today, there will be, like say, a write-back on the provisions we have already made or in other way, our uncollectible portion is fully covered. And like say, the -- whatever we will be collecting from the residual NPA is more than the, what you call, like say, provisions -- the provision gap whatever we have and so there will be a write-back of provision.

Got it. Got it, sir. So basically, you are hinting at lower LGDs than what we are having currently?

Exactly. We have our own expectations and calculations on how much we can collect based on the, what you call, collateral, what we have and things like that.

Got it. Got it, sir. I think the -- just last question from my side on the growth side, again, what [indiscernible] has. So I mean, since we are in sort of pretty beginning of February, which is at the part of next year. And we are guiding at lower double digit kind of a growth, so keeping in mind, let's say, we still have a couple of months to sort of realign the manpower and the branches to the new strategy, which is a growth focus strategy. So is there any, let's say, upside risk to what we are guiding currently? I mean assuming there is no further COVID risks and things should improve at the current pace?

Yes. Definitely, it is there.

Got it, sir. So comparatively, we are guiding in double digit and if things sort of stabilize...

See. The -- yes. So put it in your question, if, like say, there is no COVID risk, general economy is also supporting that, overall, like say, okay, we will shift to one more gear and go for a few extra percentage growth and all, we -- whatever visibility I have today, I have communicated to you. It is what we are seeing at this point of time. If things improve, it is always possible. And you have also made assumptions that you are not going to have a, like say, a bad economy because of one more COVID wave or anything like that.

Yes. I mean, that is what we have learned from the third wave. I mean, our limit [indiscernible] that third wave has literally no impact on the...

Yes. You have not factored into, say, Russia versus U.S. potential Ukraine war. There are -- many elements are there. Based on whatever visibility we have, I'm commenting to you.

Got it. Got it, sir. So basically, I just wanted to sort of get a sense that, infrastructurally, we are ready for a higher growth. I mean, if economy continues to remain conducive, I mean this is what on that side of [indiscernible]?

Yes, that is the sum-up. I had withdrawn from growth in December 2019. Now we are saying that we are getting back.

The next question is from the line of Darpin Shah from Haitong Securities.

Yes. Most of the questions had been answered. Just on competition, how do you see that? Because you have seen many banks talking about faster growth initially. We also hear a south-based leading NBFC talking about entering into SME and doing faster growth in the next couple of years. So how do you see that? And second is on SpiceJet provisions. So the remaining INR 60-odd crores, do you think we're doing in next 2 quarters, should we assume that?

See, basically, the, like, I mean, you put it once again?

Okay. So first part was on competition. We have heard many private sector banks, large private sector banks and even -- and a leading NBFC talking about entering the SME segment and doing faster growth. So how do you see competition, first is that? And second was on...

Yes. First. See this. Basically, for whatever growth rate, I have, like say, visibility and the immediate possibility, I have already given to you. And this competition and all have been there always in the industry. There is nothing new in terms of this competition and all, but there are enough market opportunities to see them getting into the next level.

So has it intensified in last few, few quarters?

Pardon?

The competition is already there, but has it intensified further, sir?

No. We don't see any major change or any drastic changes and all there. Even before, like say, 5 years before pre-COVID period, whatever had been there, those things only continue to come in, in different forms.

Okay. Okay. Fair. And second was on SpiceJet. So the remaining INR 60 crores provision, which was there, should we assume we'll be taking it in the next 2 quarters?

It depends, say, there are -- as I told you, they have paid up to 31st December -- I mean, 31st January. They may -- there are a lots of, like say, things which are unknown, but that's why we are preparing ourselves safely for any eventuality.

And would you continue with that in December quarter and -- sorry, in March quarter as well?

Yes, yes, yes. So, like say, we will -- but ready to make a full provision as quick as possible.

The next question is from the line of Rakesh Kumar from Systematix Group.

So the first question was related to transition on the external benchmark lending process. So how we are progressing on that front?

So it is almost, like say, for all the fresh sanctions as per the regulation should be there. Almost more than 70 percentage of the -- our portfolio should be with EBLR except those term loans, which got sanctioned before that.

Okay. Got it. Very good. Very good. So sir, considering the relative movement in the credit composition like because now we are at more than 20% of the gold loan composition. So change in credit composition and the asset composition, how do we end up transition to EBLR, whatever the loan remaining to be done? So what net interest margin we are looking at for next fiscal year?

In fact, I conveyed this, I think, a couple of quarters back and reiterated today, the range should be 3.8 to 4 -- 3.8 to 4. 2.

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

Just 2 questions from my end. The outstanding ECLGS dispersed amount would be -- what would be [indiscernible] INR 1,940 crores last quarter?

Yes, very technical and pointed question, once again I get the number and tell you.

And while you're getting through that answer...

The outstanding portfolio of the entire ECLGS -- the borrowers who received ECLGS portfolio is INR 13,643 crores, which inclusive of both the ECLGS and non-ECLGS.

And what would be the dispersed amount, sir?

Yes. It is the outstanding. Say, for example, we have been disclosing this because the ECLGS portion may be used to close your existing portfolio. So this is the outstanding of total borrowers who received ECLGS in whatever way.

Perfect. And just one, the second question with respect to, again, the question that you've been asking on the call for the change in the employee policy. A couple of things here. One, this requires you to take an approval from the -- from, let's say, representative from the employees? Or do you have to go through each and every employee accepting it and whether they have the right to say yes or no in this?

No, it is based on the, like say, settlement agreement signed between the staff union and officers' association through negotiation.

Okay. And when you -- and if the settlement is done, it has to be unanimous. Is it the employee...

Yes, we have one union representing workmen and one association representing officers. We, like say, almost 4 -- we always decide our remuneration through the mutual agreement and mutual negotiations bi-partite settlement, what we call. In that, we had taken this as our long-term objective about 15 years back. In every settlement, we used to take one or more steps towards this final objective. And finally, we're saying that this is what is going to happen. We're saying that with the effect from, say, 1st January 2020. But the effective date, '20 or '21, '21, 1st of January 2021. And the effective date for implementation of this will be, like say, for 2023, 1st of July. And every new employee joining after 1st January 2021, we'll directly join through the cost-to-company basis. This is basically purely based upon, like say, negotiated settlement, which had happened over a period of time, and it's a settlement entered with the officers' association and staff union together.

And one clarification again on this. In your assessment, if you were to project the numbers for, let's say, a year from now in terms of employee costs, what is your sense as to how does this change because of this?

That's why I told you the agreement is that, like say, the existing remuneration will be the floor. So the increments which used to be based on the, like say, your time scale, which will typically be an average for everyone. Now there will be differentiation based on the performance. As I told you, you will not be having a major incremental change immediately, but it is going to be a long-term change in terms of the working culture. For example, earlier if it is a 5 percentage or 6 percentage or increment comes with that, like say, DA and another thing is that the concept of dearness allowance is also taken out. It will be a fixed DA, not linked to the, what you call, your -- what you call -- and that inflation -- index-linked DA. The DA will be fixed DA and the annual increment will be better on performance. Earlier, normally, you say, for example, the total increment per person, both basic and DA or remuneration together, you say, 6 percentage. That average 6 percentage will be for everyone across the table. Now somebody may get 20 percentage, somebody make get 10 percentage, somebody may get 2 percentage or somebody may get 0 percentage depending upon their individual performance. But overall, I don't anticipate any major reduction in the overall thing, but productivity wise and accountability wise, things will change as you move forward.

Just wanted to understand this because if you look at some of the large private banks, they have been able to go through this transition mainly because they have a reasonably high attrition rates. And when we look at most of the banks to the regional side, the attrition rate tends to be quite low, and the cost ends up being very sticky in nature. Over and above, if you're building in productivity measure as well, just wanted to understand whether it goes up or goes down?

See the -- for example -- see, for example, the new generation banks right from the beginning, they did not have this problem. They got this problem only when they took over an old generation bank or an existing bank with this culture. But since their existing size of people were large, the, like say, from the merged bank, they become as insignificant minority and they got dissolved in that overall scheme of things. So that's why they were able to manage that. But probably, we will be one of the first steps where there is an agreement to go for this transition.

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

Sir, first comment on your growth. You had mentioned a double-digit growth for next year. So just wanted to get a sense, if I look at your loan book, if Tamilnadu, your home state is around 66% of loans, going ahead, when you see double-digit growth, I mean, do you think it would be more or less similar or you suspect higher growth in Tamilnadu versus the rest of India or maybe the other way around? .

You will see these numbers altering maybe over a period of next 3 to 5 years. And on an annual basis, that changes may not be very significant, maybe 1 or 2 percentage this way or that way.

Okay. Understood. And second question, sir, in your opening commentary, you had mentioned that slippages should hardly come down. Anyway, you had INR 50 crores, INR 60 crores one-off in this quarter, and then your recovery upgrade should move also. So that would mean your net slippages and slippages net of recovery upgrade should continue to sort of come down. That comment was for fourth quarter or maybe you're looking -- I mean that was also valid for FY '23?

I'm taking it as a trend. Yes, the issue is like this quarter, like say, if the change in the regulation has not come, probably I should have achieved that in this year itself. So there will be some spillover effect on that maybe for the next 1 or 2 quarters also. So I'm talking that as a trend.

But sir, if I look at Slide 37, it looks like there is a huge gap, right? I mean you -- for this 9 months, you have added around INR 1,000 crores...

Yes, it's annually -- the 3 quarters you have -- this quarter you have started seeing it in, like say, less than INR 50 crores. So as a trend, you will be seeing it sooner. This is what I'm trying to say.

Okay. So from '23 perspective...

Immediately don't put in your spreadsheet that in fourth quarter itself, whatever that happened in the 3 quarters will get reversed and not that way, don't look at that way.

Sure, sure. Understood. And second and lastly, sir, I had missed your -- this number on overall SMA-1, SMA-2. I think you had mentioned some numbers that I missed that. If you can repeat that.

Yes, overall, as a portfolio, just a minute, the SMA-1 and SMA-2; for 31st December 2021, the SMA-1 is 1.97 percentage and the SMA-2 is 2.14 percentage or so.

The next question is from the line of Rohan Mandora from Equirus.

Sir, just wanted to check on the strategy that we are following at a branch level of [ 10, 6, 3, 1 ]. So does that still continue? Or with CTC, we will look at some changes because when we are trying to focus more on efficiency than maybe depending upon the geography or depending on the capability of an individual and they may look to do some other set of businesses or maybe target on certain set of products. So how do we look forward to change that?

Yes, the tool of 10 phone calls and 3 meetings per day will not change. For what purpose, they use, how effectively they manage it because we -- basically, to do these 10 phone calls and 3 meetings, they will get surplus time now because of the reduction in the operational workload. The 10 phone calls and 3 meetings will be done more efficiently by the system now, which had a lot of hiccups or pressure or stress, whatever way you call, to execute that with the available manual operational workload. Since the operational workload has come down more than 50 percentage during this pandemic time because of the, what you call, utilization of your alternate channels and all, every team member will get extra time to do these phone calls and meetings, which will increase the productivity and also result in whatever like deepening our third-party products or whatever it is.

The next question is from the line of Kashyap Javeri from Emkay Investment Managers.

Am I audible, sir?

Yes, absolutely. Can you come closer to mike, please?

Is it better?

Yes, better, much better.

Right. So just to recap [indiscernible] what you were saying about growth over the last about, let's say, 12 to 18 months, let's say, that the business take over by the larger banks has not been an issue. Is that something that you mentioned?

Yes. It was about a few hundred crores.

Because in some of the product line versus March '21, like, for example, wholesale trade, home loans and all, we have seen a significantly sharper cuts...

Yes. In fact, in many cases and all, like we went for wherever needed, the reduction of the balance and all. Wherever, like say, right from the beginning of the pandemic where initially customers had problems during the lockdown and all. We convinced them. Wherever they had to reduce the overall borrowing and all, we did that.

But is there a way to check whether, whatever limit that we reduced, were they able to get it from somebody else because in that case even if you want to sort of...

Yes, when I share that, like say, a few hundred crores, INR 400 crores, INR 500 crores or INR 500 crores, INR 600 crores, this is purely based on the accounts which were taken over from us. There is a clear-cut differentiation between that. If they continue to have that limit, they might have reduced the -- paid -- made repayment to their term loans and things like that. That's why -- that's how it gets managed.

Right. Right. Right. And second question is on our NPAs. You mentioned that this 35% provision coverage is sort of enough looking at the recovery trend. But if I look at, like say, last about since March '20, till date, almost about 7-odd quarters, we would have lost almost about INR 2.5 thousand -- sorry, about INR 3,000 crores in terms of gross slippages and would have recovered something at about INR 800 crores, INR 900 crores, do we understand it over a fit of, let's say, next about, let's say, 6 to 8 quarters, then the recovery should amount to almost about INR 1,200 crores to INR 1,500 crores, in which case the 35% provision coverage will be justified?

No. No. First of all, I want to object the concept, what you said. The provision coverage ratio is 35 percentage. Our provision coverage ratio is 62 percentage as per the regulatory class definition, which is inclusive of the technically written-off accounts. You think this way. So the coverage ratio is, say, 62 percentage or what we have given. Normal recovery support, like say, even 65, 70 percentage or so. So we have about 20, 30 percentage surplus provision made. You think in that way.

So okay. Let -- if I were to sort of look at it in a slightly simpler way of the unprovided NPLs as of today. This should amount about -- almost about INR 1200 crores, INR 1500 crores of recovery over the next 2 years as well.

I answered your question this way. My, like say, my recovery from the, like say, my entire NPA and technical written-off pool, like say, my recovery estimation based on the value of collateral, a realistic estimate if everybody comes today. It is going to be much more than the net NPA level, which will cover the net NPA and also make certain quantum from the provision reversed.

Okay. Okay. So when we talk about recovery, one should look at recovery, including the technically written-off account and then versus that what is the provision needed, and that should be the surplus available?

Exactly. Even that's why in our presentation, when we mark the credit cost, we say total provisions made minus recoveries from the technical written-off accounts, you see net credit cost is what we give in that presentation.

The next question is from the line of Gaurav Jani from Centrum.

Just a clarification on the shift in employee policy. So we would not depend on RBI approval, right, sir?

No, no need for RBI approval.

Okay. And secondly, then on the same subject, this transition, as you mentioned from 1st July 2023, this should be on the entire staff, right, sir? From that, there, the entire [indiscernible] it's not the transition?

Please repeat the question. It should be -- it is for the entire team.

Yes. So my question is it will be from 1st July 2023, it will be on the entire team, right?

Yes. 1st July 2023 for the entire employees for the bank.

Sure. So second one on the asset quality, basically a fast run rate of next little bit close to about INR 60 crores to INR 90 crores. I think also [indiscernible].

Yes. Some disturbance is there. I'm not able to clearly hear what you are trying to say.

Can you hear me now, sir? This is better?

It's better.

Yes. What I was asking you, sir, after for many quarters, we've come to a net slippage or run rate of about INR 80 crores to INR 90 crores, which is actually the usual run rate, right? So do you think this could be maintained?

It should get better because the, like say, the -- since you have a larger NPA pool, it should get better. It's what I've told. The net number is only INR 47 crores for this quarter. If you take into account the technically written-off portion also and it should get better.

Got it. And sir, just this bit on technical written-off, although obviously, most of it is TWO. But what explains the larger amount of write-offs? And could this sort of moderate in the coming quarters?

See. The -- you have already a trend. We had been doing this for the last 10, 15 years. And every quarter, you have a stream which is coming from -- as an income from the technical written-off accounts, and it will continue.

The next question is from the line of Dhaval Gada from DSP.

So just one point. On the provision, I just wanted to reconcile. So apart from the restructured provisioning and the [ assigned ] provisioning, is there any other [ buffered ] provisioning as we carry? And if yes, how much that is?

That's what we said, COVID provision of about INR 40 crores and all is there from and we earmark about INR 10 crores for this, what you call, SpiceJet thing. This is what I told.

Okay. So excluding SpiceJet, INR 40 crores is more to say...

See. Excluding SpiceJet it should be INR 30 crores.

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Yes. Thank you all for patiently attending this. As I told, things are turning for, I mean, a positive direction. Anybody having any more data points or any clarifications, they can always get in touch with Mr. Jayaraman whose contact number is there in that presentation. Once again, thank you all for all the support you have been providing so far. Stay safe, and good evening to everyone.

Thank you. On behalf of AMBIT Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.