Indian Bank (INDIANB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Indian Bank 4Q FY '21 Conference Call, hosted by Emkay Global Financial Services Limited. As this call has been restricted, the media people are not allowed. We have with us today, Ms. Padmaja Chunduru, MD and CEO; and the top management team. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Dama of Emkay Global. Thank you, and over to you, sir.

Yes. Thank you, operator. Good morning, everyone. We are pleased to have Indian Bank's MD and CEO, Ms. Padmaja Chunduru and the entire top management team to discuss the fourth quarter FY '21 result highlights in brief as well as outlook on the growth and asset quality in view of COVID-induced disruption, post which we can have a Q&A session. Over to you, madam, for opening remarks, and would request you to keep the opening remarks brief so that we have more time for Q&A. Thank you, ma'am. Over to you.

Thank you, Mr. Anand Dama. Welcome to all the analysts for this financial year '21 analyst conference from Indian Bank. This year has been very challenging for the bank. As you all know, the first year of amalgamation and also working under the COVID scenario, but it has also been very satisfying, a very good year for the bank. I think the bank is based on a solid footing with good performance. In the first year, if the performance has been stabilized so well, I think the bank is poised to better and improved to get its full potential in the years to come. All the key ratios have met the expectations, I think, and exceeded also in many ratios. A good team is in place to take it forward. Apart from the record operating and net profit, the capital ratio is very strong. The asset quality is under a very good control. A good visibility about future earnings is there. Now I think the uncertainty around amalgamation has sort of dissipated. The only uncertainty is about the COVID scenario, how it will pan out, but that's common for the industry. So I think among the industry players, Indian Bank is very well positioned to take -- to some -- to improve business also once the economy opens up fully. So I think we have already put the analyst presentation on the website, and you must have all gone through. I think we will -- I will just end with saying that we will continue to focus on our core strengths, which are the RAM network, RAM portfolio, agriculture, MSME, the BC network, priority sector lending. All these are very strong worlds of Indian Bank and now after the merger across India also. And there is a very good eye on cost control and strong credit monitoring and recovery. The corporate lending has been very strongly fortified. The risk appetite is there to take off when the demand picks up. And there are investments in technology, and all the digital initiatives will now start taking off in this year. COVID scenario, we are unable to really comment on how the year would pan out. But I think from what we are seeing from last year, we have some control over all those slippages and also working very fast on the restructuring that RBI has given and also government has come up. So I expect a better performance in the coming years. I think this year has been very satisfactory for the bank and personally for me, too. Thank you very much.

[Operator Instructions] The first question is from the line of Mr. Rishikesh Oza from RoboCapital.

So my first question is on except for the last quarter, the yield on advances were around 7.5% or so. So is it fair to assume same yield going forward?

Yes. I guess so, because if at all, interest rates are going -- either they will be steady or they will only go up. I think there is no downside now. I mean, there will not be any further reduction in interest rates, but the yield on advances, yes, I think we will maintain that. Our focus has also been on the interest expenditure, bringing down the cost of funds, bringing down the cost of deposits and also improving efficiencies in the system, which is very visible through the reduction we could bring in the interest expenditure.

Okay, ma'am. And second question is for the next 2 years, FY '22 and '23, if you could share the credit cost guidance and loan book growth guidance, please?

The credit cost, we would like to -- and we think we can keep it below 2, which is what we had anticipated this year also and despite all the challenges that worked out. Going forward, given the various initiatives the government and Reserve Bank have also come out with and the banks own strength in the monitoring and recovery, we expect that the credit cost will be below 2 for '22 and '23 also. As far as business growth is concerned, we had expected and we had strategized for higher growth, say, around 14% CAGR up to 2025. But right now, the current year up to May has been very, very dull across the segment for reasons known to everyone. I think once the -- in the Q2, it should start improving and maybe we would expect at least 10% growth between 10% to 12%. Last year also, RAM was the driver of the growth. This year, we expect RAM to keep its pace, but the corporate also to pick up because the demand from the corporate sector has to come in. And there is a -- I believe that, that would happen after -- either in Q2, it might start, but more in Q3 and Q4. So we are having this anticipation now, but we will revise our estimates once clarity emerges.

The next question is from the line of Mona Khetan from Dolat Capital.

So my first question pertains to this infra NBFC account. Has that been taken as NPA for you this quarter?

Which one?

The Calcutta-based NBFC?

Srei Infrastructure, yes, it has not yet been taken as an NPA because it is under the -- it was just NCLAT had just come out with the statement. But we have made already 20% provision on that. So a provision of 20% has already made in March for that, INR 400 crores has been made against the INR 2,000 crores exposure that we have for Srei.

Sure. And what would be the recovery pipeline for next year?

We expect not less than INR 5,000 crores recovery during the financial year '22, driven both by NCLT and non-NCLT account, also the smaller accounts, less than INR 1 crore accounts. This year also, there was a good recovery through OTS and other mechanisms. Next year also, we expect -- we are giving a guidance of about INR 5,000 crores overall recovery.

And this will include DHFL as well?

Yes.

And other than DHFL, what would be the large accounts that may be under pipeline for you?

Other than DHFL, I think Chenani-Nashri is already done, and it will come in the June quarter. That recovery has already come. I'll ask Mr. Ramachandran to respond.

You're talking of recovery, no?

Right.

Yes. Recovery, we have DHFL and then we have Kamineni Steel, Appu Hotels, cell manufacturing...

These are small, no?

Settlements are there, and we expect that we get to around INR 1,000 crores. And out of that, the NPA reduction will be around INR 5,000 crores roughly. And non-MSME again, we have quite a few of them. There are 2 names, already we have received it. And then we have [ GPR Power, ] Coastal Energen which can get upgraded, so.

Okay. And Chenani-Nashri, what is the kind of recoveries, if you could just share that?

The amount is being collected and it is kept in an escrow with State Bank of India. Once they both stay with it, we will be upgrading that after. We'll be getting the recovery and we upgrade also that one because the toll collections are still happening in that account.

Sure. So what is the exposure? And what is the extent of recovery?

Exposure is around, Chenani-Nashri is INR 161 crores.

Okay. Okay.

INR 151 crores is our exposure, and we expect around INR 70 crores to INR 75 crores recovery.

Sure. And when I look at your current account deposits, there has been a sharp year-on-year growth this quarter. Anything to read into it?

It was -- I mean, the amalgamation, one of the bigger advantages or the synergies that kicked in was the current account growth. And as you know, the last quarter opened up in the sense that because after the pandemic's first wave, this was a small window that was available for people to go, meet institutions, meet customers and then get the deposits up. So we are very happy with the kind of growth in current account, 32% overall year-on-year. I think one issue I would like to flag is that this year, I think we need to see the last year's amalgamated entity vis-à-vis the new -- I mean, the first year financial year full year figures, because in between the quarters have been very volatile in a sense.

Okay. So it's more structural in nature, the kind of growth that you're seeing in the current account?

Yes. I expect that. I don't think there has been any -- there is a very steady growth, steady efforts being made, and there is a very good government relationships in many states that the bank is present. So all that, and we are also digitally tying up with them, so that the stickiness is there. There have been a lot of MOUs that have been signed and a lot of the digital platforms that have been provided for the government department so that their transactions are routed through us. It happened in Delhi. It is happening in Chennai and also in Bombay. So those details, I think, are there in the presentation. We have been able to really garner good relationships that way.

Sure. And does it also have anything to do with the RBI circular on current accounts? Has that held in any way?

That is happening. In a way that wherever we are lending more than 10%, we are insisting that the collection account should be with us, and also following up with other bank for closure where there is no real reason to have that account. But that, I think, would more pan out in the current year, because it has just started happening in September, October. It will pick up during the current year.

Sure. And the SMA 1, 2 data that you've shared in Slide 32, does that pertain to the entire book, including accounts less than INR 5 crores?

It's the entire book. It is the entire book.

Okay. And how much would be your SMA 0 also if you have the data with you?

SMA 0 is generally, I mean, higher in terms of -- I think it would move to -- from 9%, it might move to around 18% to 20% if we include SMA 0.

Okay. And lastly, on the capital raising plan, you've taken Board approval for about INR 4,000 crore. So with the CET1 of 11.3%, I just want to understand what is it that is resulting in a plan for capital raise because we will result in equity dilution, we will lead to -- this will lead to an equity dilution.

Yes. So there was this COVID scenario planning and stress testing that we had done of our portfolio. And in anticipation of this kind of a scenario playing out the worst-case scenario, we have taken Board approval for INR 4,000 crores of equity infusion. But given the way the year has panned out, the slippages have been lesser than what we expected. I think the performance has been better and also various initiatives, again, as I mentioned, which helped. I think we will take it as it comes. So when the market is good and when we can get a good price, so that is when we will do the QIP, but we have the approval necessary, all necessary approvals in place.

Okay. So your stock price is currently trading below book. So is it fair to say that you may not end up raising equity if the prices continue to be below book?

Below book is 250 or something, but the book value, it is -- so what we want to do is 2 things. One is, again, make the balance sheet strong, which is already there with 15.7% capital adequacy. The second thing is that we need to bring down the government ownership below -- the government stake below 75%. So that was also one of the triggers for this approval from the Board, just to keep the things ready, but we are in discussion with the Ministry. We will take it. If that works, then we would be able to not -- there may not be any immediate requirement for capital infusion. So we will observe the market trend and take a call.

This is the operator. May I request Ms. Khetan to please rejoin the queue for the follow-up question. [Operator Instructions] The next question is from the line of Ashok Ajmera from Ajcon Global.

I'm Ashok Ajmera from Ajcon Global. Madam, at the outset, congratulations for showing the good numbers. The book has improved because of this kind of profitability. But the major profit has come from the tax credit of [ INR 913 crores, ] I mean, which is in this quarter. So having [ INR 930 crore ] aided in the profit, and this quarter's INR 500 crore or INR 600 crore, whichever would have been the profit, INR 150 crore, INR 200 crore would have been the tax. So looking at this, I think this quarter's performance -- net performance is not that very encouraging as it looks. My second point is that your interest income and expense for the quarter. While the -- your income from interest has reduced, your interest expended has increased. So that is one of the major reason, I think, for a little lackluster performance. So what do you have to comment on that, ma'am, first?

Thank you, Mr. Ajmera, I think, both the points. So my first thing is about the DTA, benefit to the net profit. What we have done is this DTA, the benefit we have taken only in the last quarter. Whereas if you observe only the first 3 quarters, we have already taken a hit of INR 800 crores on account of reversal of DTA. So instead of smoothening and equalizing over the 4 quarters, it happened that INR 800 crores was already taken in the first 3 quarters, that was the hit, and INR 900 crores credit came in the fourth quarter. So it is only a net-net INR 100 crores benefit to the bank for the full financial year on account of DTA. Secondly, this DTA is something that is going to happen. I think all the banks are doing it. And the tax advantage came from the accumulated losses that are there on the book. The -- after amalgamation, there is no tax requirement, tax payment requirement from the bank. And so that actually also boosted the profit. I don't think this is a -- this is any one-off or these accumulated losses are there on the books. And as the bank makes higher profit, higher operating profits in the coming years, at least for the next 2, 3 years, we don't have -- we don't foresee any tax on the books. And so this should continue. The second part is if you want more details, our team will give it to you about the DTA we have...

Yes. So that will give a major because this is analysis, this is what we do?

Yes. It's not -- and even that INR 930 crores is only 1/3 of the overall profit. If you see in the last quarter, the profit was INR 1,700 crores, even not taking DTA into account, and that would be M&A -- including the DTA, so it would be at least INR 800 crores, which is much about last quarter also. But I don't think DTA is something that came only in the last quarter. It appears that the credit came in the last quarter, whereas all the debits came in the first 3 quarters. So you can -- we will send you the calculation so that, that equalization is understood. Secondly, on the interest income part, I think the -- as I mentioned already, the 3 quarters have been quite volatile, and everything played out in the Q4 because Supreme Court judgment that came saying NPAs can be recognized. These were recognized in Q4. If you see the notional NPAs of INR 5,100 crores was there up to December, and all that was recognized in the Q4, and interest had to be reversed. So INR 700 crore interest was reversed in the fourth quarter. This happened, I think, across the bank. Overall, again, out of the INR 700 crores also, we had earlier provided INR 400 crores interest reversal, but that provision comes below the operating profit. So that was -- the interest income is that way muted for the fourth quarter. Other than that, we had also reversed INR 230 crores. So that was the penalty -- penal interest, interest on interest judgment again of Supreme Court. So that and this and others all put together about INR 1,000 crores was the interest reversal in Q4. That, I think, explains the interest part. As I again mentioned, you should also focus on the interest expenditure control that was made during the year. This has been a very strong performance from the bank. Right from the day 1, the focus was also on cost control. So interest, that there is no high-cost deposit or borrowing on the bank book. Only INR 1,000 crores out of -- from INR 15,000 crores, it has come down to INR 1,000 crores. That has come because of CASA and CASA increase, which we are able to -- also it results in a lower interest expense or cost of deposits, everything. It gives a lot of support.

Appreciate, this clarifies a lot of issues. Ma'am, if you look at the segment-wise results, the profit from -- as compared to Q3 to Q4, INR 350 crore additional has come from the treasury income, whereas it has gone down tremendously by almost about INR 700 crore in the corporate wholesale book, maybe because of the excess provisioning which has been done. But in retail banking also, profit came down to INR 317 crore from INR 584 crore, almost half or 40% reduction. So there also there is a lot of provisioning has been done in retail banking?

Second, I will ask ED Mr. Shenoy to respond.

See, Mr. Ajmera, regarding DTA and just to what madam [indiscernible] from 2 points. The DTA record we created as per [indiscernible]. And secondly, whatever the excess provision the bank create [indiscernible] over the above Section 170 of the Income Tax Act...

Sorry to interrupt you, sir. We cannot hear you clearly.

No, that point has been clarified. Only thing I have got a message from ma'am's answer is that in the future also, you are going to get a lot of benefit of tax, which will help us in calculating and making the future projections. But what I'm asking is here in this segment-wise...

See one point, in case we are not making excess provision, there'll not be any need to create the DTA, so it will not affect the profit as such. So that is only a book entry, which we are taking the benefit now and adding it on interest rates whenever we are reversing the provision required on the books. Okay, as regarding with segment-wise, we'll make a little bit more study and we'll come back to you separately. I'll tell my CFO to give the clarification to you.

Sorry to interrupt, may I request Mr. Ajmera to please...

You have clarified on the SMA 0, it has gone up this thing. But what is the collection efficiency? What is the collection efficiency?

The collection efficiency has been quite good, 90% above, 92% until about March. But in April, the collection efficiency is down to about 86%, 87%. So -- and May also will be low. Last year, it was okay despite the COVID situation. But this year, again, we have to see when the lockdowns will be lifted across the country, yes.

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

Three questions from my side. One is of the total corporate NPL book of 18,000, which is sitting there, could you just tell us what have you thought about in terms of transfer of assets seem to be the NARCL?

So NARCL had identified about 100 accounts. I think INR 82,000 crores was the first lot, 22 accounts with INR 82,000 crores was identified for the first phase 1, of which we have exposure only in 8 accounts. And that is about INR 1,900 crores. So that is what is the visibility right now. About the phase 2, again, we have to see how much we have another 8 and -- we have overall 33 accounts, so another 25 accounts are there for the phase 2. But again, there, we'll have to really see, take a call on how much is possible outside without going to NARCL, if the recovery, because there the recovery might be a bit muted. We will take a call of CoC or the consortium, and then that will happen. For the phase 1, 8 accounts, so INR 1,900 crores is what is identified.

Ma'am, what are the timelines in terms of the transfer? And how does the accounting work for this?

The time lines, I think, would be quite aggressive because NARCL is going to be formed in this month June. That is the expectation. And then maybe by September, this first phase should be over. I expect so because all consortium meetings have been held, the ascent/descent decisions have been given. As far as the reversal, I mean the impact on the book is all these accounts are fully provided for. Depending on how much recovery we can make by transferring it to the NARCL, that much of the provision can be written back. But we have not factored it into the projections for the next year because that would be a cushion if it comes. It might be only, say, between 18 -- they were mentioning between 20% to 30%. So on an account-by-account basis, depending on the valuation, so those figures would come in.

Okay. Ma'am, just one clarification. You had steel exposure NPL of about INR 3,600 crores. And then you have power of about INR 2,000 crores. Whereas, you don't seem to be very excited in terms of recovery from this year on these names. Just trying to understand what are we missing here? It's because the names that you had indicated earlier did not seem to be showing anything from these 2 sectors.

Steel and power -- you are asking about that our recovery prospects in steel and power sectors?

Because in Slide 30, you have INR 3,598 crores of NPAs in steel, and another INR 2,000 crores in power and about INR 1,300 crores in textiles. There is no demand for these assets.

You are referring to which slide?

Slide 30, ma'am.

Yes. This year, we had a good recovery in steel with Bhushan Steel coming in. So -- yes, about this...

Power? No -- the power we have about 32 accounts amounting to around INR 4,199 crores, INR 4,200 crores roughly is our exposure to the power sector. And as regards the other one, no, steel also because now that the prices of steel have picked up and then we find some traction. So we hope that either it will be through NCLT or through other options, we will be in a position to offload some of these whichever is there. The other one is that NINL, no, that Neelachal Ispat and MMTC there, which we hope that there is a move by the government itself to -- for divestment. And if that happens also, we'll see good recovery in that account.

Perfect. Perfect. And my last question, ma'am, your ECLGS disbursements, if I could have the quantum. And also just to understand, you have an SMA book of about -- a little over 20% in the MSME book. Why is the restructuring in this segment low? And why is ECLGS -- if I could have the ECLGS disbursement, it would be great.

You are asking about the MSME restructuring, but your question was not very clear. We couldn't hear properly.

You have approximately a little over 20%, which is sitting in SMA 1 and 2 in the MSME book.

Right.

Yet restructured loan for the MSME book is just about 2%. What is preventing you from restructuring a much larger proportion of the MSME book? That's the question.

So MSME book restructuring work happening. Even last year, it has -- as you mentioned, yes, the eligible accounts -- out of the eligible accounts there more than 85% have been restructured. Not every MSME account is eligible for restructuring given the RBI norms. This year, the norms have been a bit -- they have identified -- they said all the standard assets can be restructured. And even on the earlier restructuring, they have given us a window to extend the repayment moratorium by another 12 months. So we expect that this year, the MSME restructuring will pick up much better. And also the COVID again, impact of the lockdown, people not being available, both at the bank side and the borrower side. So MSMEs have a lot of vulnerabilities that way. This time, in the new dispensation, all the banks have templatized the less than INR 10 lakh loans, and that would make it much more with [indiscernible] and that we also have come out with that portal. We have a direct connection with -- connect with the MSME. So this year, we expect the restructuring to be better in terms of takeoff. But last year also in terms of that, it was whatever could be restructured, except where the unit was closed or the borrower was not available for some such reason, otherwise, there were restructured.

Sure. And ECLGS disposal?

And MSME is going to be vulnerable even in the current year. If there is 1 segment of the bank that is we are continuously focusing on, that is MSME, both in terms of growth and also -- I mean in terms of the new loans or whatever relief we can give and the restructuring also, so that we keep on keeping -- it's both in the interest of the industry and the bank.

Sure. Sure. And ECLGS number, that's the last question.

What is that? ECGLS?

ECLGS, what has been your total disbursement and sanctions...

Yes. ECLGS 1 scheme, our sanction was INR 5,894 crores and disbursement was INR 5,200 crores. And in ECGLS 2, the disbursement was -- though the sanction was high, the disbursement was half -- INR 926 crores sanction and INR 561 crores disbursement. This was -- then there is ECGLS 3 that is introduced during the current financial year. So there, I think it is still about less than INR 1 crore, but it will happen. This is the hospitality, travel, tourism, leisure, yes.

The next question is from the line of Ayushi Garodia from ITI.

So basically, what I wanted to understand is your slippages in corporate segment is around 2.3%. So can you give some color on what are these sectors or some companies where you're seeing the slippages from?

Yes. Just 1 minute. So there was a slippage of a future group. The INR 1,000 crores overall was exposure on future, but it is expected to be implemented, and it will come back. It's already implemented, okay. So in the June quarter, we have this future retail due for upgradation. Also, the -- yes. So that was one of them. And Neelachal Ispat and MMTC, we already discussed these are government accounts. Others are all small accounts in textiles and in infrastructure.

Sure, ma'am. And after restructuring invoked of 2.42%, how much you think will get implemented going forward because as of now, it's just 0.33% in corporate?

Yes. In corporate, again, I think wherever we had the exposure, the implementation has -- it's in our control where we have the consortium leadership or it is a bilateral arrangement. But wherein the consortium -- I'll just give you the figure. So that 0.72% which is implemented will go up to 1%. Against the invocation of 1.64%, we will be able to implement 1% only.

Okay. And this rise of around 28 bps will come from corporate only, it will not be a retail or MSME led?

Which one?

The rise which you're selling from 0.72% to 1%, it will come -- the rise will be from the corporate still?

Yes, yes, corporate.

Sure. And ma'am, if I look at your retail performance, the slippages of 1.60% is very low as compared to the private sector bank. So is it that in FY '22, we'll continue with this performance or some slippages from retail front can be seen there?

I think, again, it is book and -- mix of the book that makes the slippages lower than private sector. We don't have unsecured loans on our book. That is a very small part, the credit card. Otherwise, it's...

More than 68% is housing loans...

And more than 68% is housing loans. So again, that also gives a lot of comfort. This -- that's the reason why the retail slippages could be lower. And also -- but in the current year, we expect it to go up a bit. It won't probably be at the same level, given the kind of stress that is there in the economy. And so we expect that there would be restructuring or there would be this fresh COVID loan support that we would be giving to the retail sector in terms of this emergency loans, so that RBI has also put it under the COVID portfolio. But apart from that, we expect that to go up a bit.

Sure. And ma'am, what will be your guidance for slippages for FY '22?

This year, it was 2.8% slippage ratio. We expect it to keep it below 3%. But as far as possible not go beyond 2.8%. So that is the way we are looking at it, because agri is quite okay. Retail only a small notch up. MSME is where, again, the issue would be, but that is also under control, and this restructuring and additional loans will help. So we expect that this slippage will be below 3%.

Sure. And ma'am, like you've mentioned previously also, MSME book of slippages is 4.3% and 40% of the customers, if I do the math calculation, have availed benefit of ECLGS. So are you seeing more incremental pain there even in the ECLGS book? And how is basically -- if you give some more color on the MSME book?

Yes. So the -- in the restructuring we had done on MSME, we had restructured about INR 5,400 crores. That was restructured. And out of that, the INR 4,400 crores is outstanding as of March '21. So the slippages in those accounts of INR 5,400 crores was about INR 800 crores. So that would -- the restructured book already restructured. Again, this year, there has been a slight facility provided that the moratorium can be extended. So we expect that, that would help these units. In terms of ECLGS, I think that additional funding was given only where the units were running, and there was some kind of a further liquidity or for whatever immediate expenditure. In the interim 3 months or 4 months, there was activity picking up. We saw that those units were quite coming back to normal. Again, now last 2, 3 months or last 2 months, at least there is a lull, but we need to observe this portfolio. We cannot really comment on it or give any very confident assertion that yes, we will control. But even if it goes up a notch, I think the bank is well positioned to take it in its stride. It won't go much beyond. We have a continuous monitoring of these units.

Sure, ma'am. That's comforting. And last question, if you have any unallocated COVID provisioning which you're carrying in your balance sheet?

No. There is no more unallocated COVID provision. Whatever we had made was adjusted against actual provisions in the Q4.

The next question is from the line of [ Venkat Birla, ] an individual investor.

I think congratulations for good set of numbers. So first of all, I would like to thank the leadership team and all the employees of Indian Bank for the fantastic work you have been doing. Two things I'm very happy by going to [indiscernible]. I think number one is, if you don't drive capital until the bank reaches stock price is book value. I think this is a lot of confidence it brings the investors because other banks are raising capital, Punjab National Bank, Union Bank of India, a very low rate. And the other thing is even I think, we postponed raising AT1 bonds because of high interest rate. I think that's the -- I mean, I think that's what I would like to congratulate for the good work by management team -- sorry, leadership team and the employees of Indian Bank. I mean, I think even -- I think now a government has something like pay for better performance. I think these employees and management as what I call should be -- I think even monetary benefits also should reach them. I think fantastic work. Thank you very much. That's all. I don't have any questions. Just I want to congratulate leadership team and employees of bank.

Thank you. Thank you very much, sir. Yes, as you mentioned, the AT1, not only there is probably no immediate requirement, but also we had redeemed the bonds that were earlier raised at a higher rate. So that also brought down the cost of this equity for us. This is all, I think, going in the right direction. The focus is on the cost control, apart from earnings. The other part is I thank you for complimenting the management team and the staff. This has been a very, very difficult year and also with the amalgamation going on simultaneously, I think you said it when you said that it is a fantastic job from the staff. We have already announced performance-linked -- productivity-linked incentive of 15 days salary as a bonus to all the staff members. So I think that will go down well. That would be a good moral booster for them. The other part is that we have -- the Board has recommended a dividend of 20%, INR 2 per share. And that would also, I hope, reverse the trend of no dividend from the bank. I think this could set off a trend of higher and higher profits and dividend. I expect that the operating profit and net profit, what was recorded this year, will only go up in the next year. This is all based on a very steady performance and a very solid platform. So I think that's good days are ahead, once COVID releases its -- as COVID flattens. Thank you.

The next question is from the line of Ashok Ajmera from Ajcon Global.

Ma'am, you've really done the excellent job. And I think now when you will be parting now, it will go definitely in the history that the kind of -- I mean, the way you managed this bank and in spite of after this even amalgamation, the whole process and brought it on the main or the mainstream of the bank, congratulations for that and all the best for future. Having said that, ma'am, you said now that the advances opportunities for future, the credit growth from the corporate sector also looks brighter. So as per your study, I mean, which are the segments or the areas or -- because most of the banks have suffered in the past by lending to the corporates heavily. So where you see these green shoots? Or where do you see this opportunity for growing your business?

Yes. Thank you, Mr. Ajmera. Yes. Thank you, again. So I think when I said corporate, we already in this current year also, we brought in lot many well-rated and strong track record corporates into the book. Indian Bank earlier was a bit -- we did not have so much exposure on many corporates. There was gas available. With the large exposure, framework and all of RBI, many bigger banks have actually run out of exposure ceiling -- I mean, they have almost breached the exposure ceiling for many corporates. So that could also -- that turned out to be an advantage for us. We have brought in good corporates, and we are also interesting that wherever we do the home loans, we get a share in the working capital and nonfund-based business. In fact, as much business has been done in the last year on corporate, it was also on the nonfund-based book. So that reflects more in the earnings, not in the figures. We are looking at a good growth across the board. We are also looking at government, PSUs, wherever those guarantees or there is some kind of a comfort, HAM projects, then LRDs because our exposure on commercial real estate is very, very low. And we are picking and choosing the right groups and the right cities to actually go in. Once this clarity emerges after the COVID, I think we would be in a better position. As of now, we have more than INR 30,000 crores to be disbursed in this first or second quarter.

That's great. Ma'am, on this COVID loan scheme of RBI of INR 50,000 crores taking it a repo rate and also getting at the same time, the 40 basis point benefit when you put the money back in this thing. On that front, is there any scheme which has been already circulated by the bank? And how much business have you already sanctioned out of that? And what do you target out of that INR 50,000 crores of medical loans or so called COVID loan? And would you be comfortable for through the NBFCs for onward lending?

Yes. I think, yes, INR 50,000 crores RBI has announced, this is again for the hospital, for oxygen manufacturers and the health ecosystem. So this will pan out across the sectors. It is also for retail people, for individuals who would like to use it for their hospital expenditure, et cetera. So there is a retail book involved, there is MSME, oxygen manufacturers or those plants. And there is this testing lab. There are hospitals. So across the verticals, we have already identified many of our own customers to lend to also new customers. I think we have already -- we have taken a target of about INR 4,000 crores for the retail plus corporate. So about INR 4,000 crores, which we should be able to do. I think we've already cleaned in the bank that we have already sanctioned about INR 600 crores or so to be disbursed. It is getting disbursed as we speak, like maybe about INR 20 crores or so much have got disbursed across. This has come only in the last 1 week or 10 days. The Board approval came 1 week back. So we have launched all the 3 products. One is for the personal loans, which is the unsecured loan. So that is in the Kavach. Then there is Sanjeevani, which is for the oxygen plant. And there is another scheme Aarogyam for the hospitals and the nursing homes. So there is good traction and there is good interest. I'm glad that this portfolio is going to give a plug in another opportunity at earning more. So there is a lot of enthusiasm in the bank to do this business.

So will you also be doing through the NBFCs for onward lending to this sector?

Yes, we will. We are in talks with them depending on the portfolio, we will be interested in the lending to NBFCs also.

Ladies and gentlemen, as this was the last question for today, I would now...

I'm not able to hear you. Hello?

Yes, ma'am?

I couldn't hear you.

Ma'am, this was the last question, and I would like to hand over the conference to you for closing comments.

Yes. Thank you. So one more point we have to mention is we have created the investment fluctuation reserve fully. This year, INR 290 crores was fully complied with that 2% requirement. And this quarter, INR 465 crores was provided for and overall INR 1,100 crores. So this is a cushion against the future MTM. And all the fraud accounts have been fully provided for. There is nothing that is left there. So as closing comments, I would again thank the investors, analysts for tracking the bank. And I think we are coming up to your expectations and your estimates. I keep tracking what is the analyst estimate and whether we are there. So I think it's a good synergy that is building up. And I would also like to assure that the bank is on a very strong footing now. The systems, controls, everything is in place, so the reorganization has already happened. There is a transformation management office, which we have put in place to track all the digital and physical initiatives that we have launched. So there is a weekly tracking happening. I think all this will further take the bank into the future. And any management changes also will not result in any kind of disturbance. In fact, it would be only towards the better. Anyone, the MD and CEO has been sort of identified by BBB. He was earlier with Allahabad Bank, so his knowledge of Allahabad Bank is good. And I'm sure he comes with very good experience and expertise in BOB also for the last 3 years. So if once the government clears, if he or whoever comes here, I think the platform is very strong, and it would all go further better. Thank you.

Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.