IndusInd Bank Limited (INDUSINDBK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the IndusInd Bank Limited Q3 FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Romesh Sobti, Managing Director and CEO IndusInd Bank Limited. Thank you, and over to you, Mr. Sobti.

Yes. Thank you. Thank you for joining us once again for the quarter 3 earnings call. We have uploaded our investor presentation on our site. So I'm sure you -- it's all in your hands already, and you have absorbed some of the numbers. So I'm going to talk a little bit about the operating environment and then take you through the headlines of the results, try to cover a few questions that may be in your mind and then we'll take questions from you all. So I think as far as the operating environment goes, it remains sort of tough overall. But there is some growing evidence that there's stabilization of economic activity at lower levels, so some degree of stabilization is there. There is some anecdotes -- anecdotal evidence that some of the issues are there, but not more than that. For instance, we have read about one manufacturer talking about a sort of increase in the inquiries on commercial vehicles, for instance. We are seeing some stabilization in the flow of credit to the NBFC sector. It's not as broad-based as one would have thought it should be by now. But certainly, it's not as harrowed as it was, say, maybe 6 months ago. As far as consumption and demand goes, well, I don't think there is any evidence so far that things are turning. But I think the flow of money to NBFC sector remains probably the highlight. And some of this flow has really come from offshore markets, bond markets, yes. So I think the monetary policies have remained extremely accommodative. Liquidity in the banking circuit is now a figure of INR 3 trillion. Rates are still slow in falling. They haven't followed the trajectory of the repo rate. But I think what we are seeing is certainly a reduction in the cost of funding in the liquid market. So in that background, I think our performance in terms of the quarterly numbers, we've shown a top line growth of 20% in the loan book and 23% in the deposit book. The loan book is spread across 4 sectors. We have -- I think, quarter 2, we've seen some slowdown in, for instance, our microfinance book, but there's a return to momentum now, and that book grew 44% year-on-year and also 10% quarter-on-quarter. The nonvehicle retail book grew by 17%, the vehicle book grew by 16% and the corporate book grew by 8%, but corporate growth was sort of, I think, muted because of some recoveries -- welcome recoveries and payments and repayments. So that's on the loan book side. On the liability side, we have shown a sharp growth of 30%. And I think quarter-on-quarter also a growth of as high as 8%. The retail deposits, as defined in the LCR, that grew by as much as 48% in the quarter. So we are seeing that surge continuing, and more importantly, by almost 10% Q-on-Q. So that's the liability side. The -- we have been talking about the interest engine beginning to hum. Certainly, we are now seeing it's revving up. We have seen interest income grew by 34%, well ahead of the growth in the loan book. And as a consequence of that, we are also seeing interest margin improving. So I think this is the third consecutive quarter that we have shown a 5 basis points increase in our NIM, which is now at 4.15%. Other than that, the fee shows steadiness, growing by 22%, and core fee by almost 19%. I think one of the highlights for us is really the growth in the operating profit, which grew by 30%. The PPOP to assets ratio at 3.83%, probably now is amongst the highest in the industry. So that's a good development for us. PAT for the quarter was INR 1,309 crores, which is up 33%, and this is after making accelerated provisioning of INR 251 crores. If you'll recall that in quarter 2, we had made accelerated provisioning of INR 355 crores. So in these 2 quarters, about INR 606 crores of accelerated provisioning. And if you were to exclude the accelerated provisioning, then the profit for the quarter was INR 1,497 crores, which will be up 52%. So we also worked on, therefore, strengthening the balance sheet. The PCR has improved even further. I think over 2 quarters, we have moved the PCR by 10% from 43% to 53% as a consequence of the accelerated provisioning. The loan book quality is stable. GNPA is slightly down. Net NPA is pretty -- significantly down from 112 basis points to 105 basis points. The capital adequacy is at 15.43%. And the client base has grown pretty handsomely. We added about 2 million new customers during the year to touch a figure of 25-odd million. Other than that, I think one area that certainly you'd be interested in is really on asset quality. We are -- gross and net NPAs, I've already talked about. The credit cost for the quarter came at 28 basis points. And for the 9-month period, it's coming to 59-odd basis points, in line with what we have been saying. The slippages and reductions were elevated during the quarter. The net slippage was actually lower than last year and almost flat going quarter-on-quarter at about 42 basis points. What we have done during this quarter is to proactively classify a couple of accounts, which have been lingering, I think, in the books of banks, both in the case of a housing finance company and a travel company, and we have taken this and recognized them and also made provisions. So these have been treated as frauds, and we have made provisions amounting at about INR 240 crores as a consequence of this particular recognition. So I think that's really what causes the slippages to go up. Other than this, I think, in the other areas, small movement up and down: CVs, MFI, but I think the absolute numbers in terms of the gross NPA movements are pretty sort of small. There's -- for several quarters now, we've been giving you the exposures to the 3 stressed accounts. And if you really turn to Slide #18 of our presentation, you see that from a high of 1.9% in quarter 4 of '19, the exposure has now come down to 0.47%. I think this is the last quarter in which we will show this slide because I think it's becoming meaningless to continue this thing. But we are happy that as a consequence of recoveries, repayments from these groups, we have successfully sort of brought down this exposure to an extremely manageable level and what is -- whatever is residual is also well secured with the security of almost 170%. These accounts remain the standard in the bank's books. Other than that, yes, we've given a slide on NBFC exposures. NBFC exposure has actually come down from 3.7% to 3.2%. I think this slide shows the granularity of our exposures to the sector. And of course, the association are very strong sponsors, typically doing more of the retail business and the resilience of the portfolio as well. Okay, then what else is here? I think the investment profile or the rating profile of our corporate book, if you see that the sub-investment grade has fallen even further, I think, by another 1% or so?

Yes. It's just over 3%.

So you see that on Slide 16 is now hugging the horizontal line, which is a very small number. And this, if I understand correctly, is based off external ratings.

Internal ratings.

Sorry, based on the internal ratings. If you take external ratings, I think the figure is -- becomes even more insignificant. It's even better. Okay. The vehicle finance portfolio, I think there's nothing much to really talk about there. Any other...

Fees.

Yes. Fees grew by 22%, and the core fee grew by 19-odd percent. I think the only feature which shows quarter-on-quarter -- year-on-year sort of reduction is really on the foreign exchange income portfolio, and that's because I think there were muted activity in the foreign exchange markets with few new issuances and things like that. So that's the only reason that has happened. Otherwise, I think you're seeing very handsome growth on trade remittances and distribution fees, loan fees, et cetera. Okay. Then -- yes, yields and PODs (sic) [ CoDs ]. The cost of funds actually fell by 17 basis points during the quarter. And the yield on our assets fell by about 12 basis points. And that's why, as I said, our interest margin went up. NIM went up by 5 basis points. Okay?

Credit cost.

Credit cost, we already talked about, 28%. Yes. So I think that's a summary of the thing. We can swiftly talk about Bharat Finance. But I think Bharat Finance is well on track now on its momentum. And I've already mentioned a very handsome growth of 44% as we're seeing. So that's it as far as we are concerned, but we are more than happy to answer questions.

[Operator Instructions] The first question is from the line of Ravi Singh from HSBC.

My question is on the rating mix for the corporate book. So this reduction of roughly 1%, does that broadly explains the corporate NPAs we have seen? You've highlighted paper and on travel accounts, so is it coming from the below-investment grade? Or what's the linkage here?

The recoveries are coming.

Yes. The recoveries are coming from there. Exactly.

No, no, no. My question is that quarter-on-quarter, while there are these 2 additional corporate slippages and while there is a reduction in the below-investment grade book, so is that reduction in the below-investment grade book linked to the NPA movement? Or -- so these 2 slippages are coming from the above-investment grade or below-investment grade? How is the change in the rating profile coming from?

As you said, this comes from the sub-investment grade. That's where the -- this thing has really come from.

And it's been higher on investment-grade sources.

It comes from the sub-investment grade, short answer.

Okay. And again, just a clarification in this rating mix you have, also the last point for NPA default, where this time it has higher share for the unsecured fund based. So what explains higher unsecured rates coming? Does it mean that...

Negligible. I mean it's really negligible. When you look at -- if you look at the number ex the net NPA number, it's absolutely negligible because the part that you are seeing is nonfunded or unsecured, is coming from the NPA, largely. So that is already being recognized. You need to look at the sub-investment grade book net of that NPA number, in which case, it gets even smaller.

Okay, okay. And just finally, these credit card slippages have been gradually inching up over the quarters. Industry numbers, slippage is more closer to 1.7%, 1.8% against that credit card here is 2.6%. So any comment there on the credit card delinquencies?

Yes. I think the number -- absolute figure is INR 16 crores if you see that. So the percentage here is a misleading number. If you see that 2.4% to 2.57%, actually, absolute number, the thing is INR 16 crores.

Okay, okay. And this is also the...

And these are gross NPAs, these are not the credit cost.

The next question is from the line of Prakhar Agarwal from Edelweiss Securities.

Yes. This is Kunal over here. So just to clarify with respect to the slippages on the corporate side. So there is a note which says that's really travel, diversified group and paper. So outside of that, if we look at almost like INR 530-odd crores, so that would be again largely because of one HFC, which you said like it's fraud and it's classified in GNPL. So would that be the entire proportion of corporate? Or there is...

No, no. It's also, consumer is also there?

No, no. Consumer is INR 700 crores separate. I am saying INR 1,200 crores, which is corporate, in that we have INR 282 crores travel, INR 177 crores paper and INR 250 crores diversified. So in corporate, there is a balance, which is INR 528 crores. So I just wanted to know this HFC, which -- yes.

Yes. So if you look at the disclosure, the names we have given are the larger names, over INR 100 crores, right? So the rest are small accounts.

No, sir. Just in terms of this HFC, which is treated as fraud and provided for, is it a part of slippage for this quarter or no?

No. That is part of the investment book.

That is a part of investment book. So then maybe the slippage in the corporate is outside of all of this. Okay.

Outside that one, yes.

Okay. Outside of this one. And if we can even get the provisioning breakup because almost like INR 1,000-odd crores is the overall provisioning, out of which, we are saying like INR 250-odd crores is the accelerated one, okay, maybe in terms of taking the coverage up, then INR 240 crores is towards the fraud accounts?

Correct, correct. That's 500 -- that's half the provisioning.

Half the provision -- yes. And then when you look at in terms of the note which is given when we are disclosing these 3 accounts separately in terms of the HFC, there, we have mentioned that 25% is something which is taken from P&L and 75% is routed through balance sheet. So this -- and since given that HFC is also classified as a fraud, so should we assume that maybe there is 3x the proportion, which has to be routed through balance sheet over the coming quarters?

Yes, yes.

Yes, yes. That's correct. That's correct.

So INR 240 crores into 3, which will be -- yes, so INR 720-odd crores will -- has been adjusted through the reserves, and that's where the...

Yes, yes. That's correct. That's correct.

And flow-through at the rate of INR 240 crores each quarter.

Each quarter INR 240 crores unless there's a resolution in the interim period because the provisions are now going to eventually go to 100%, but the loss-given defaults may not be 100%. It may be much lower.

Got it. Got it. And just in terms of the write-offs towards this IL -- maybe this large infrastructure NBFC, INR 250-odd crores. So that is also again maybe provided this quarter and written-off? Or it has -- was provided and just written-off? So in terms of the provisioning, it's the write-off of INR 250-odd crores of large infra is also getting included in this INR 1,000 crores?

INR 250 crores that we wrote-off on IL&FS.

Yes, yes. It is -- that's right.

Yes. So provisioning, so broadly INR 250-odd crores is towards the accelerated, INR 240 crores fraud, INR 250 crores of IL&FS. So out of INR 1,050 crores, INR 750 crores is clearly towards these 3 accounts? Or maybe these 3 things? Yes.

Yes.

The next question is from the line of Abhishek Murarka from India Infoline.

Hello?

Yes. Go ahead, please.

Yes. So my question is -- first, the question is relating to the repayments you all are getting on your corporate book. Can you, A, quantify how much you -- was repaid this quarter? And B, also, what -- how is this repayment happening? Is it just refinanced through other financial lender and other lenders? Or who is really refinancing this? If you can shed some light on that?

No. There is no refinancing. I think it's the repayment in terms of, for instance, in one large case, which is a diversified thing. This was the -- we had the shares.

Stressed accounts.

Yes. These are all -- basically, these are all related to those stressed accounts that we are talking about, right, first of all. So this is not outside that. Mostly, these recoveries are relating to the stressed accounts. So the largest of this number actually it comes out of sale of security as a share that we have held because the value of this security was much higher than the outstanding. Then also, the accounts have been standard in our case. And in the case of one company, for instance, we have received payments as per the payment schedule. So there are also payments as per the payment schedule, also enforcement of security.

Okay. So what was the quantum of repayment/recoveries in your corporate book this quarter?

It's difficult to say what is the amount in the overall corporate book because those repayments and re-disbursals keep on happening on a regular basis.

So out of these 3 accounts, we can talk about...

Yes. Specific to these accounts, we can tell the number.

So these 3 accounts alone, it has come down from 1.1% to 0.47%.

About INR 1,200 crores.

About INR 1,200 crores. Yes.

INR 1,200 crores this quarter. And I think if you look at the aggregate of even those outside these names, in the last 3 quarters, the number would be between INR 5,000 crores and INR 6,000 crores. So...

Yes, yes. That's what I was actually looking for.

So when you look at our Q-on-Q growth, which is 5%, it is after the recoveries of this INR 5,000 crores to INR 6,000 crores, but the underlying growth actually has been a bit higher.

So the normal repayments outside of this have either come from asset sales because we've seen one of the companies do a large asset sale repaid the facility or it has happened from bond raising, which we have repaid. So that's what we've seen.

Sources.

Sources.

Yes.

There was another large NBFC, which was not stress in our book, but there was a lot of media attention to it, and we requested prepayment. That has also reduced our book significantly.

This was that HFC-RE which you had disclosed last time?

Yes, yes, yes. Correct.

Yes. We lost something like INR 2,200-odd crores on a consolidated basis over a period of time with that NBFC specifically.

So between last quarter and this quarter, you would have got INR 2,200 crores there and maybe around INR 5,000 crores for the across accounts, including the 3 stressed...

For the last 2 quarters.

The last 2 quarters. So INR 7,000 crore of book you would have sort of got repaid through various sources.

Yes. Correct.

Fair enough. Okay. And the other quick question on this accounting. So you have about INR 1,300 crores of PAT, but the net worth movement on a Q-o-Q basis is just around INR 630 crores. Can you help reconcile the remaining INR 670 crores?

No, we have talked about it earlier already. There are these...

INR 450 crores -- oh, the INR 720 crores, okay. Right, right.

Yes, yes. INR 240 crores.

That's, yes INR 720 crores.

Exactly right.

We'll move on to the next question that is from the line of Saikiran from Haitong Securities.

Just quickly on these provisions taken through the reserves. What's the -- what are -- is there any RBI regulation, which helps us to do through the reserves?

Yes. Correct. It's as per RBI regulations.

So if it is a fraud, then you can do it through the reserves. Is it the right assumption?

No. You do it through reserves, but then you have up to 4 quarters to actually provide for them.

So under what conditions you can...

You can recognize them. You recognize them fully from the reserves. And then each quarter, you can make a provision. In 4 quarters, you have to provide the 100%. So it has to go through the P&L over 4 quarters.

No, understand that, sir. But what kind of accounts you can route through the P&L? If it is a fraud, then you can do this through the reserves and then after that, you reverse it in the P&L. That's how it is?

Yes, yes. For fraud, there's a special dispensation for frauds.

Got it. Understood. And the second question is that, sir, the loan processing fees has been pretty strong. And if you look at further breakup, actually, the retail banking fee you say is growing at a very fast pace. If I look at 3 quarters back, it was somewhere around 13% of the overall fees, now it is almost like 17% of the overall fees. Just can you please explain us what is the reason for such a high growth?

Distribution fees.

No. Not that, the loan processing fee.

Loan processing fee, it varies. You'll see certain -- in certain quarters, you will have negative growth. So this is -- loan processing fee is charged both on renewal of a proposal and also charged on fresh disbursements. So fresh loans also and renewals -- annual renewals, those things. So it depends on when the annual renewal falls. See, there's a bunching for the annual renewal, then you see a bump up in this particular fee line. And in some quarters, it is not so, you'll see a little reduction. So you've seen up and down on this line, so there's no uniformity because this is not spread out evenly across the 4 quarters.

Got it, sir. And one last question. You mentioned in your opening remarks that on a quarter-on-quarter basis, retail deposits have grown by 10%. But at the same point of time, the cost of deposits, if I look at on a sequential basis, have also come off. Can you just explain us like what is helping us to drive such kind of a high retail deposit growth?

The retail deposit growth are coming from 2 courses: one is the savings account growth, which has grown 30% year-on-year, and I think at a lower cost of deposit; and the second is the retail deposits, where we reduced our term deposit rates to now 6.75%, actually. And the -- I think the rates -- we were at 7.2%, we've reduced it to 6.75%, and that's also helping us in reducing the cost of deposit.

We will move on to the next question that is from the line of Digant Haria from Antique Stock Broking.

My question is on the microfinance and the two-wheeler business. Sir, this quarter, we had a lot of disturbances in the east of India and there was this NRC- and CAA-related disturbances also across north. So you could still grow 10% in a single quarter. So just -- I just wanted to understand like -- because that's not even the sector growth for the quarter, like we are much, much higher than the sector growth for microfinance. So what -- just some color there? And second question is on two-wheeler. The two-wheeler sales also were very good for the festive season, but they dropped significantly in November/December. But there, again, we have a 10% sequential growth. So you've definitely taken a lot of market share. Like, does it come at a lower yield? Or what -- just some color on two-wheeler as well?

Okay. First, microfinance. Yes?

So Digant, we slowed down significantly in Assam, 2, 3 months back itself. In fact, the earlier month, we just disbursed 5 lakhs in Assam. We slowed down in West Bengal also, partly because of aggressive lending by a few people and the whole education surrounding this CAA and so forth. But the rest of the growth has been secular from across the country. Essentially, we focused on our existing customers. If you see the customer addition, it has been only 6 lakhs quarter-on-quarter. But we focused on our existing customers who completed their loans and gave them -- converted them into fresh loans. That resulted in this growth. So the rest of the states other than Assam and West Bengal are seeing secular growth.

Two-wheelers? Yes.

See, two-wheelers, essentially, the growth has been due to the festive season increase, which happened this quarter. Therefore, quite a lot of vehicles which got -- which was in the pipeline in September got fructified in October and the October/November has been reasonably good. December was slightly slow. But we are doing it in regular pockets only, and I don't think there is any pattern which is totally different from the previous years in terms of our acquisitions.

And market share movement?

Market share has been -- has increased, but it's very, very -- not very significant.

We'll move on to the next question that is from the line of Rakesh Kumar from Elara Capital.

Hello?

Yes. Go ahead, please.

Yes. So just sir, pertaining to the notes of accounts of these 2 fraud accounts. So this INR 240 crore what we have made, this is for 2 accounts, not for the 1 account, correct?

Yes. That's...

Two accounts.

Two accounts. Correct.

And what it was for the one account, HFC?

Yes. We don't give break up here.

Out of INR 240 crores.

You've got the INR 240 crores, and you know what's coming in the subsequent quarter. I think that should be sufficient.

No, for the other account, how much the provision number could be?

No, no. We are not giving a breakup. He's just given you a total figure.

Okay. And sir, second thing, I was just trying to understand, like, this quarter, like, we have reduced the MCLR number for ourselves, and then there were delinquency also slightly higher in the retail segment. Then still, if you see the yield number, it is kind of a same Q-on-Q. So why that is happening? Like, why the yield number is...

No, that's because of the mix. If you look at the retail part of the book, the CD part has actually been flat to very marginally down, and it's been the other parts of the retail business that has grown faster. And of course, if you look at MFI or two-wheeler, as we just discussed, the yields are higher there. So it's more of a mix change. That's why the retail piece has held up in terms of the portfolio yield, overall.

We'll move on to the next question that is from the line of Christine Rowley from Sloane Robinson.

I have 2 questions. The first was with respect to your credit cost guidance for the year. So if I look at Page 24 in the IR presentation, your credit costs net to date basis points on advances is 59. Could you give us an update on where you expect the net credit cost to close for the current fiscal? And to the extent that you have any insights about the next fiscal, it would be helpful to receive that guidance? And then the second question is just kind of more about principles question. Could you explain a little bit about why you decided to use a debit to reserves for the diversified HFC exposure...

Sorry to interrupt, Ms. Rowley. Ma'am, can you speak a bit louder? We're not able to hear you clearly.

Okay. I'll repeat the first question. The first question is, what is the credit cost guidance for the year? In the current fiscal, the company has done 59 basis points year-to-date. And secondly, does the company have any guidance for the next fiscal?

Okay. I think the -- Christine, the first part is the credit cost. And the normal sort of BAU credit costs range around the 60, 65 basis points. And we do expect that, that should be the credit cost sort of going forward in the next fiscal, in that range of 60, 70 basis points. In the credit cost this quarter -- this year so far, we have taken, I think, preemptive sort of steps to, in a way, recognize and make provisions more aggressively. I think that will -- we should in the vicinity of -- for the full year, hopefully, we'll be in the vicinity of about that 80 basis points or so, give or take 4 or 5 sort of basis points. So I think ex IL&FS, we should be in that range of -- next year, ex IL&FS, we should be in the range of that 60 basis points. Well, 60 to 70 basis points.

Okay. That's fine. And then, the second question I had was just with respect to the decision to spread the provisioning cost against the diversified financial NBFC -- diversified NBFC company through the reserves and instead of taking that through provisions. I appreciate that you have that latitude from the RBI, but is there a reason why the group decided to put part to the P&L and part against reserves? I don't know that the stock market is very enthused about that decision.

Yes. I think the answer is very simple, Christine, that this -- if you put it through reserves and then put it through -- if you put it upfront and take the whole provision, not taking into account the fact that there is a resolution on the cards for, for instance, that housing finance company, it's already at a very sort of advanced sort of stage. So we do expect that well before these 4 quarters lapse, I think this would have been resolved. Probably, it will get resolved even before March. That's why I think we've chosen to take this sort of path instead of making a full provision upfront. Of course, it's not just reserves, we also have taken 25% at least through the P&L. So our own sensing on this particular housing finance company based on the resolution plan that is being sort of discussed now is that the -- this haircut -- essentially, the haircut is going to come on the basis of present value because there isn't a plan that does not envisage haircut, but lengthens the period of repayment. And as a consequence of which, the present value could be in the vicinity of 25, 30 or maybe 40 basis points -- 40%. I think that's the reason that we have chosen this path. Do you want to add to this?

Yes. I mean if you look at IRAC norms in the event of an NPL, it was 15%, and we have provided 25%. And if it gets sorted out by next quarter, and we don't expect probably a haircut more than half of the amount, I think by next quarter, we are covered. We do expect that.

Yes. IRAC norms if you recognized it, it would have been 15%. You had the option of doing 15%, which was a higher sort of provisioning norm.

Okay. And then the last question's do you have any update on the resolution of the IL&FS exposure in terms of recoveries or expected losses?

Yes. So I think we have -- over these 2 quarters, we have raised our provisioning. So the accelerated provisioning that we do, we did in quarter 2 and quarter 3 actually, has gone entirely towards that particular group. And therefore, our provision coverage has increased significantly. March of last year, the provision coverage was 55%, now the provision coverage is 75%. That is one part. The other part is that the operating companies, which is the SPVs, the bids have already come in and, in fact, the bids there were in for the last 2 months. And the committee of creditors has sort of started working on now how the proceeds are to be shared. So I think there's a little bit of a debate that's going on between the committee of creditors and the management of that company, IL&FS, on how this is to be shared. But it is an expectation that at least that large tunnel project and one road project, where the committee of creditors have accepted the bids, should get resolved hopefully before the end of this quarter.

The bid values...

And the bid values, in fact are -- has surprised people positively. For instance, in -- at one particular tunnel project, the debt is around INR 4,100 crores and the bid value came in at INR 3,930 crores. So I think there is a little debate now on how much of this should actually -- what percentage of this should actually be given to IL&FS even though they are unsecured creditors. That's the real debate that is going on. But overall, I think there are good chances that recovery should be in the vicinity of 75%.

On the SPVs?

Yes. At least on these -- this particular -- the one large tunnel project, which is the largest part of our SPV exposure.

We'll move on to the next question that is from the line of M.B. Mahesh from Kotak.

Just a few questions from my side. One, this -- again, this question on the reserves part. Has -- these 2 accounts, has it also moved through the NPL line as well?

Yes. One of them.

Only one of them has moved so far. Okay.

Yes. One is an investment and one is a loan.

The other one, you just kind of mark it down on the investment book?

Yes. You mark it down. Yes.

Perfect. This quarter, recovery has been reasonably strong at about INR 345 crores, if you can just give some color to that?

INR 345 crores, where did he get from? No, that is a much higher recovery.

Yes, that is a higher recovery. INR 650 crores.

It's INR 630 crores. Okay, okay. NPA recovery you're talking about? Yes.

Yes. This is in Slide 25. There is a recovery amount of INR 345 crores.

Yes, yes, yes. That's 1 of the 3 stressed groups that we talk about, which is covered in that slide. So this is a diversified group where the recovery came in through a particular sale of shares.

And it was an NPL in the previous quarter?

No. During the quarter, it was partly a SMA-2 in the previous quarter, INR 250 crores of it.

Sorry, it went into NPA this quarter, and it came out of NPA this quarter?

That's right. That's right.

Because of recovery.

Because of recovery.

Okay. Perfect. And one question on the SMA-2 book. Despite an addition of sizable slippages in the current quarter, the SMA-2 book is still at about INR 14 billion. Some color to that one?

Yes. I think if we look at -- which slide is this? Slide 14, I think that gives the details. So if you look at the sectors that are more talked about, there, of course, the numbers are very small. I think these are smaller groups. If you see our 101 sort of account in the SMA and SMA-1 and 2. I think they are smaller values. They come and go, they get resolved and move out.

Okay. So you wouldn't worry too much into it?

Yes. I don't think we should read too much into this particular number.

And one last question. Any progress on the change in management at the senior level?

Well, the status here is that we -- I think we've already informed the exchanges and all that, that the name has gone. RBI takes its time. The guidelines stipulate that the processing time is 4 months. We actually put in this thing 5 months in advance. And to the best of our knowledge, I think their process is going on as per track. So we can't say when they will convey formally to us. But so far, I think it remains on track.

We'll move on to the next question that is from the line of Roshan Chutkey from ICICI Prudential AMC.

Just one question. How are the SMA trends in the CV business for us?

CV business?

Yes, sir.

Okay. For the last quarter, there has been an improvement even SMA.

If you can share some numbers, quantify some trends here?

We don't -- we have not so far provided. But again, it is not there for CV as a group, which we declared, but for larger accounts, we do monitor, but it is not given as a part of presentation.

But qualitatively, is it worsening? Is it improving?

No, no. That's what I said, qualitatively, it has improved this quarter.

Okay. And year-on-year?

Year-on-year, it has not improved. And there was -- it has -- normal tendency is that the portfolio in CV segment improves from September onwards until March. And during the first 2 quarters, it deteriorates.

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

Sir, just on this fraud classification, just wanted to know this classification is your internal thing? Or was it mandatory in nature as in you would have received some communication from RBI, that it should be? Sorry?

It's not mandatory. It's not mandated. If you look at the guidelines, we are -- in terms of these classifications, each bank has the ability and freedom to determine the status of accounts like these. There is no particular mandate that it has to be uniformly accepted by everybody and things like that. So this is not like that. It will see NPA classifications and things like that. So this is left to each bank to actually do that. So we have taken this step proactively in recognizing that. And in the process, we have made a provision, which is higher than the provision that you would be required to make if you were to classify it as an NPA.

Correct.

And sir, last quarter, you had shared the exposure to HFC/RE developers was around some 80 basis point, and you also mentioned that some exposure you have seen some repayment from that group as well. But if you can quantify, sir, what is the, let's say, outstanding balance roughly? Even that would be helpful.

Yes. I think we have received another tranche of repayment this thing up to another INR 250-odd crores. So I think that is still -- that is going on track as far as we are concerned. Not a single day is overdue. The market is sort of talking about it, the exposure is reducing well before planned dates in that process because sort of we requested the company and the company -- actually, nobody has an overdue in the market for that thing. But we requested that if this can be prepaid and another prepayment has also happened on that basis. So actually, that percentage has fallen. I don't know exactly what percentage it is, but the percentage has fallen over the last quarter.

Yes. But in absolute terms from 2Q, you have received around INR 250 crores from that net account, right?

Yes, yes.

Yes.

Sure. And sir, did I hear correctly that the PCR on that diversified infra conglomerate on a group level, including SPV, is 50%?

Not diversified. That is the infrastructure.

Infrastructure conglomerate.

Yes. So infrastructure conglomerate that the PCR as of 3Q is 50%?

No, no. 73%.

73% on -- blended on entire INR 3,000-odd crores exposure?

Yes, yes. There is pre write-offs. It is -- it's -- when we did the regional provisioning, if you recall, March of 2019, then we had weighted a 70% provisioning on the holdco and 25% provisioning on the SPVs. So the blended provisioning was 50% -- 55%. That has moved up to 73%.

The next question is from the line of Sagar Shah from Alpha Line Wealth Advisors.

Sir, my -- I just had one question related to our telecom exposure, actually, which stands at 1.2% of the total loan book. Can you, something like, quantify under which means do we have an exposure on which the company has to actually answer on the 24th of this month?

Well, is there any company which doesn't have to make a payment? So all of them have to make payment. And even going beyond that, even the nontelcos have to make payments by 24th. So I think that -- whatever you hear and read in the newspapers is what actually the fact is. So people are preparing to make some payments, but I think these payments are to be made on the basis of self-assessment. I think that is the key word in that whole thing. On the basis of self-assessment, you make your payments. So everybody is busy now doing this self-assessment and making payments and see how it works out around the 24th of this month.

But do we have -- do we -- are we exposed to just one of the companies in the, say, 3 companies? Or are we exposed to all the companies on the telecom group?

We have exposures on, I think, 3 of them.

Yes.

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

Just to clarify, we have received repayments/prepayments of almost INR 7,000 crores over the last 2 quarters?

Yes, yes, yes. 3 quarters.

Actually, 3.

3 quarters.

INR 5,000 crores over 2, and INR 7,000 crores over 3.

Okay. And just one more thing, in the corporate book, have you done any sell downs this quarter? Last quarter, this number was roughly around INR 3,000-odd crores?

Yes, yes. We have done, I think, it's INR 1,500 crores?

INR 1,500 crores.

INR 1,500 crores this quarter.

Okay. Yes. And that is...

Yes, yes. INR 1,500 crores. Yes.

We'll move on to the next question that is from the line of Kashyap Jhaveri from Emkay Investment Managers.

Hello? Hello?

Yes, yes. Go ahead.

Congratulations, sir, for a decent set of numbers. My first question is on our CET1 on Slide #27. If I look at the capital funds absolute number from INR 30,363 crores to INR 29,673 crores, this is largely due to adjustment of that provision? Or is there anything else out here?

That's right. Yes, yes, yes.

Okay. Second question is on your opening remarks where you mentioned that retail deposits have grown by about 47% Y-on-Y and about 10% Q-on-Q. Have they made any difference on our deposit concentration as we reported in the previous annual report?

Yes. I think the...

It is down slightly.

It is down slightly. And the more I think this momentum sort of carries on over the next few quarters, it's been going on for 3, 4 quarters now, the more we will see. We are -- we've got an internal road map on reduction of dependencies; A, on the bulk part; B, on this concentration part. The focus is more on reducing dependencies on bulk and therefore, building up the solid retail franchise. And I think that is reflected in the performance that you see in the quarter. In fact, previous quarters also, I think we had moved up nicely, but this quarter has been particularly robust.

So would you be able to quantify that reduction at this point of time?

I think that we'll do at the next quarter, but it's certainly come down.

Sure. And on your savings deposit as well as term deposits, can you help us with the proportion of differential rate deposits?

Differential rate?

Yes, your slabs.

Slabs.

So we have 3 slabs on the savings account. It's up to 1 lakh, 4%; 1 lakh to 10 lakh -- or 1 lakh to 1 crore, 5%; and then above 1 crore, 6%. On the term deposit, our rate for 1 year...

Sir, actually, I have that number. I just want the proportion of deposits within the sub brackets.

Percentage.

We don't give that.

We don't give that.

Ladies and gentlemen, we'll be taking the last question that is from the line of Pranav Gupta from Birla Sun Life Insurance.

Sir, just a clarification. You spoke about share sales in the media group, which was larger than what your exposure was. Why do we still see...

Not on the media group, that was in the diversified.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Sobti for his closing comments.

Well, thank you for joining us. As happens every quarter, we're more than happy to interact and engage to give you more color and more details on a one-to-one basis. I think the only last remark which I did not cover in our original -- in my opening remarks is that our RBI audit was over almost more than a month ago, right? And all of us are still smiling. Thank you for joining us.

Thank you. Ladies and gentlemen, on behalf of IndusInd Bank Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines. Thank you.