Punjab & Sind Bank (533295) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Shilpa Abraham, the moderator for today's earnings call. I welcome and thank each one of you for joining us today for the Annual Financial Results of Punjab & Sind Bank. Please note that this conference is being recorded. [Operator Instructions] I would now like to introduce the management of Punjab & Sind Bank. We have with us today, Managing Director and Chief Executive Officer, Shri Swarup Kumar Saha; Executive Director, Shri Ravi Mehra; and Chief Financial Officer, Shri Arnab Goswamy. I would now like to hand over the conference to Shri Swarup Kumar Saha, MD and CEO of Punjab & Sind Bank for the opening remarks. After which, we will have the forum open for the interactive Q&A session. Thank you. And over to you, sir.

Thank you, Shilpa, and good afternoon, everybody for having joined this analyst meeting and con call for the Q4 results of Punjab & Sind Bank. I know that the results have been declared on Friday and then the -- subsequently, the presentation has been also uploaded. So I'm very sure that most of you must have been able to go through the presentations for the potential question-and-answer session today. But to set the context for today's meeting and this call. I just like to mention some of the highlights of the bank during the year '23, '24 and particularly of March quarter. The business of the bank grew by 7.72%. Advances grew by 6.15%, deposits at 8.89%. I'd like to mention here regarding the deposit growth and the advance growth. We may have -- we may look that our growth has been muted, but we are trying to build up momentum for sustainable growth. On the deposit side, we are now more focused on CASA and retail term deposits. And we have been able to shed bulk deposits to the extent of 5% during this entire year. So that gives us a strong stability on our liability resources. The CASA grew at 5%. And of course, the -- with CASA and the retail term deposit, we like to improve our liability franchise to a larger extent. As far as the muted advance growth is concerned, yes, we are much below the par with the industry. We'd like to mention here that due to the -- we went during the process of during this year, Q3 and Q4, particularly in Q3, we had done the technological upgradation on core banking and which takes its time to stabilize. Therefore, we had some spillover effect in the Q4 business also. We also were conscious of our growth in the segmental part of the RAM segments. If you find that our growth in the Retail segment has been pretty at -- in line with the industry around 14%-plus. However, the agriculture and the MSME segment were a bit muted. On the MSME segment, we are facing competition from the private sector counterparts because of a geographical skewedness in our branches and offices, particularly in the northern part of the country. But where in the private sector counterparts are much more aggressive. However, that -- notwithstanding this reason, we need to focus much more on agriculture and MSME, which we will take your questions when my ED, Mr. Ravi Mehra will be answering those areas of your concern. The noninterest income, as I said, that the bank is moving towards a sustainable growth pattern, and we are rejigging our business models. We'll find that the noninterest income, again, during the Q4 has grown by 29%. And in fact, if I look into the core fee income also, though at a smaller base, but the core fee income also shows a steady growth of over 21%. The slippage -- the gross slippage ratio has gone down, the gross NPA and net NPA numbers have significantly reduced to 5.43% and 1.63%, respectively. And the PCR on -- as of March '24, has improved by 52 bps on a sequential basis at 88.69%. On a sequential basis, the operating and net profit percentage both grew. The sequential basis, the operating profit grew by 21%, and the net profit grew by 21.93%. The overall impact on the profitability of the entire year was primarily due to the -- some specific write-back of provisions that we got in Q4 last year due to a recovery in some big-ticket resolutions. That is one of the major regions, where we had significant NPA provision write-back. And also, of course, the impact of the -- spillover impact of the DA neutralization that has happened in Q4 over that. And of course, we also -- and during this quarter, we have also had done some forward-looking provisions in Q4 itself. So we'll go and take your questions on those when specifically it comes. So that's all -- and the RAM percentage on the total advances was also improved by 51.73%. The recovery upgradation continued to be robust in the bank. And as we followed up last year, we are around INR 2,100 crores of recovery and upgradation, which is more or less in line with last years of INR 2,085 crores, which has been done this year. The SMA asset quality on the SMA1 and 2 front, particularly of the above INR 1 crore category, has continues to show a decline. And as on March '24, the overall SMA1 and 2 above INR 1 crore stands at 0.84% of the overall gross advances. The capital adequacy of the bank remains healthy and at 17.16% as of March '24, with a CET ratio of 14.74%. So our bank still remains very, very strongly capitalized, and we can build on the platform that we have created. As far as the 3 new initiatives that the bank has taken. So far, as I said in my opening remarks, that the bank has -- is investing heavily in technology. Over the last 5 years, we have invested around INR 800 crores in information technology systems. And in the next 3 years, we expect to invest another INR 500 crores of investment on various technology requirements. We also did a lot of capacity building exercises, which was a key area of identified, which we need to be looked into. So the capacity building exercises also being done. We have recruited CXOs from -- our various positions. And now we are also moving into the other areas of capacity building. In terms of branch expansion, the bank, as we said earlier, the bank would continue to focus on branch expansion. And we have been able to add around 42-odd branches over the last 2 years. We intend to increase to another 100 branches opening in the current year. We have strengthened our CASA vertical with -- for liability resources, and that is paying good dividends for us and we intend to play strongly on how to improve our CASA and have a penetration in the institutional CASA accounts all over the country. The fee income vertical also has been strengthened and that is showing good results so far. As you see back-to-back in the next -- for the last 2 years, we have been able to show a reasonable good growth in the fee income vertical. We're also working very closely on how to procure defense accounts. We have taken -- appointed an adviser on defense accounts. So going forward, we hope that we'll be able to crack some of the accounts related with defense establishments. Now that we are in a stronger IT platform. We have also upgraded our treasury platform. As I said, in -- during my last meeting also. Now it is a time we need to -- while the system has stabilized to a large extent, some minor hiccups where there here and there. But now we find that over the last 2, 3 months, things have stabilized to a large extent. Therefore, we are going to improve our value-added services in our digital app, which is PSB UnIC. So -- and we will be taking a lot more initiatives on various areas. So that is my opening remarks from my side. And now I'm open to the question-and-answer sessions. Over to you, Shilpa.

[Operator Instructions] Our first question is from Mamta, an Individual Investor. So her question is, what is the OpEx growth? And can you quantify how much is staff expenses and other expenses? Second, what is the loan-to-deposit ratio for Q4? And what is the target for FY '25?

Okay. So I'll take the second part and then move to the first part. The CD ratio of the bank was 71.99%, nearly 72% in Q4, and we intend to bring it at the level of 73% to 74% going forward. So that is the second part of the question. The first part was on the operating expenses. It is -- if you see our slides on -- Slide 18 in our presentation. The operating expenses for the quarter was INR 766 crores. It has actually gone down from INR 824 crores in December '23, that is for the quarter. And for the entire year, the operating expenses was at INR 2,931 crores. The establishment cost, I think that was an answer question for that. The establishment cost for the -- the establishment expenses for the quarter is at INR 513 crores. Again, if you see the -- compared to the Q3, the establishment expenses dipped from INR 547 crores to INR 513 crores. However, overall, the establishment cost increased from INR 1,544 crores to INR 1,944 crores, INR 400 crores increase for the entire year, and that is particularly due to the impact of the [indiscernible].

Our next question is from the line of Mr. Ashok Ajmera from Ajcon Global Services.

Yes, sir, definitely, the results as far as the profitability is concerned for the quarter are very good. I mean both the operating profit and net profit are higher than the last quarter. But my concern, as you also raised in your opening remarks, is mainly which I have been repeating in every analyst meet is on the growth prospects of the bank. When they -- like we are at a very, very low base level. And from here, we can go -- we can take a big jump, quantum leap from here. But what is happening is that in spite of all the assurances and even the technology upgradation, which is going on for the last 2, 3 years, discussions and talking, ultimately, it is not reflecting in the results, in the achievements. The credit growth of just 6%. This quarter, of course, it has been a little better, and RAM also is now 51.73%, corporate book 48.7%, whereas people are -- other banks are going for much, much higher RAM and rapidly expanding the business, as well as the corporate book also, especially the MSME. What I feel is that the bank's lending infrastructure, not necessarily only digital even the manual, the underwriting. I mean, we have to go a little above the board to appraise the proposals, whether small MSME and take the right call on that, take a little risk also. Because ultimately, from MSME, we are going to get a big chunk of business. We have to compete with the private sector bank, I understand and other public sector bank. But this is where we can put in more efforts so that we can get good results. This is my first question.

Yes. I appreciate your point, Mr. Ajmera and whatever you have informed was quite practical and those are the areas which we need to work upon. I request my ED, Mr. Mehra to answer what Mr. Ajmera's concerned about lending infrastructure in the bank.

Sir, it was rightly said by you, that our growth is muted in the advances side and not as per the expectations, but there are a few things which we need to take into consideration. First is that as what MD sir told in the opening remarks that we are rebalancing our credit portfolio, moving from corporate to the RAM segment. And once we shift towards RAM segment, the quantum jump, generally is not in that context as compared to the corporate. Secondly, recently, last year, we have moved our entire RAM segment portfolio to the back-end processing center. So when such kind of structural and transformational changes take place in the bank, these things -- sometimes the things get slowed because the branches -- because earlier we are doing so, all the things manually, now the things have been moved to LOS, and each and every proposal, barring some there are very few value loan accounts, be it retail, agri or MSME that has moved to the back end. So things start -- things take some time to settle down. Secondly, in October, we shifted to -- migrated to our Finacle 10 platform as well. So such technological changes, which totally changed the platform also need some stabilization time that is why we could not grow this year. But definitely, whatever you said that is well taken that, yes, all the things are set aside, we need to grow. And this year, we need to work on all the product optimization and whatever we want to do to be in line with industry benchmark, sir.

So what do the target you give on credit?

Sorry?

What is the target you give on credit this year FY '25?

So basically, what we are seeing that we are targeting a growth around 10% to 12% for the credit. RAM segment, somewhere around 14% that we are targeting. And under the RAM segment as well, we can say that the MSME would be somewhere around 13%, 14%. Agri will be somewhere around 8% to 10%. Retail we're almost in the industry level of around 15%. Retail will be doing the same way. And under that the overall RAM segment, we're exploring that co-lending platform adding more partners to that team then bringing digital sanctions as well. So this is our guidance for this year, sir.

Sir, now I come to some specific points of information. Number 1 is that you said, sir, that overall, we put our employee cost from INR 1,544 crores to INR 1,944 crores, INR 400 crores that is because of the wage revision and some of these other factors. So going forward, what will be the run rate on employee cost on a monthly or quarterly basis?

Yes. In fact, the cost will be moderated and whatever cost has been borne in FY '23, '24, we have a lesser cost in the overall macro picture, overall lesser cost during '24, '25 from establishment [indiscernible]. So we will be saving some amount of money here.

All right. Sir, just on Note #9b, NPA account has been transferred one account for INR 14.83 crores outstanding. And consideration INR 1.67 crore, we have received cash of only INR 0.25 crores. It is sold to the ARC. Is it NARCL or -- which ARC?

Yes, yes. This is the resolution under NCLT for a corporate account.

And why we have not received the SR so far, it is said that SR is yet to be received?

I think -- Madam, can you just throw a light on this? This is simplex, I think, no?

Sir, we have received now in that, sir.

You have received now?

Now we've received, sir. Earlier we've not received, now we've received, sir.

Because these are generally the simultaneous transactions actually.

No, there is some lag effect happened. Now we have received that she is confirming. Yes.

And sir, this another note of the stressed loan NPA and SMA, there are 3 accounts, INR 186.30 crores, the consideration is INR 134 crores. So this is all cash consideration?

Yes, all 100% cash sold to an ARC.

Is that our power and water?

Yes. Yes.

Okay.

That was already in the public domain. The news was there in public domain.

Yes, sir.

We got one of the best recoveries in the industry.

Yes. Yes, I understand.

So our next question is from the line of Ms. Palak from Elara Securities. Can you give breakup of slippages and what is the total written-off pool, of which, how much is NCLT and non-NCLT?

The slippages breakup is in Slide #16, out of the overall slippages of INR 370 crores, retail slipped at INR 60 crores. Agriculture was INR 184 crores. MSME was INR 115 crores and corporate and others was INR 11 crores. That is the slippages that was done. And what was the second question, sorry Shilpa?

What is the total written-off pool, of which, how much is NCLT and non-NCLT? And can you give breakup of slippages?

Total written-off is INR 7,200 crores to TW total. And out of which -- right now, we are not having the figure of what is the above NCLT...

We'll provide the data separately. I didn't still understand the question very well. I'll give the data separately. Yes. But slippages for the quarter, the slippages, I've already mentioned in the -- is it mentioned in your -- this chat, the question. No.

Yes, sir.

Anyways we'll move on, I will try to get the answer for that, yes.

Our next question is from the line of Mr. Choksi.

Sir, I heard your remark about the growth pattern, the technology upgradation, and all the changes, including the cost which had gone up led by human resource under the IBA the norms, which you have provided. Now looking at our current structure, will only technology and the upgradation and reforms are moving to back office is going to change the future outlook or there is something more dramatic needs to be done?

Yes. Thank you for the question, Mr. Choksi. I think there are 2 ways of looking into things. One is we need to grow. And the second part, we need to grow qualitatively. So we have to address these issues on -- simultaneously. So the transformations of structural changes happen, keeping in mind both these considerations that we need to implement. So while we moved the back-office structure, it is important to assure for -- from the regulatory perspective also, to segregate the sourcing and sanctioning of loans. So that's a regulatory issue. So -- and it also gives a lot of quality. And in fact, we find that since we have implemented this back-office structure in the bank, the delinquency and the SMA levels is bare minimum in this structure. So we have learned from our past history on legacy loan book and the way we did our credit delivery. So -- and that structure has to -- had to be implemented, both as a -- from a regulatory point of view and also from the quality front of view. We have more such transformation exercises that are in the annual. One of course is opening the back-office structure for -- opening of CASA accounts. We're going to build in and also we'll follow it up with the implementation of the Tap banking for customer acquisition. So -- and again, we will be having certain work for us to do. We're also going to enter into the ForEx trade finance module, which is a task that we have taken on ourselves. And we -- our ForEx business also needs to be looked into in a much more granular fashion. We have very limited ForEx business, though our treasury is quite effective in terms of treasury functioning. However, the ForEx business as such has not been -- has caught up. So there we require a lot of technological interventions for that. The first stage was to have the core banking and the treasury solution getting upgraded. And the next step is creation of back-office structures for the ForEx business, and also create the ForEx model for trade finance, which many of the my competitor banks are offering. We -- on the technology front, we will also move on. As I said, that we intend to invest heavily further in information technology. We have already invested INR 800 crores over the last 5 years. We need to -- we intend to invest another INR 500 crores for the next 3 years, including the -- one of our critical projects of a data warehouse. And once we have those data warehouse and the -- in that in place, though, it's a long project, it takes -- so gestation takes around 36 to 48 months, but it's very essential for the bank. So we are going to venture into that -- investing in that data warehouse project, which will also give a lot of insights in the data part and customization, and then move on AI/ML subsequently. So those are some of the transformation projects that we need to implement. And as far as the -- primarily to answer the second part, is the growth, how do we manage the growth? Yes, if you see '22, '23, we had a decent growth in line with industry. '23, '24, we had the factors of external movement of the interest rates very, very aggressively. And that -- and on a CASA ratio of around 31% to 32% managing liability resources and managing LCR as per the regulatory guidelines becomes a challenge for banks of our size and network. So we had to rebalance our portfolio very, very efficiently and quickly when the interest rates moved very significantly. And the migration of the CASA moved to the retail term deposits. So -- but the more important point, which I'd like to tell here is that, we have more -- see, while we are sacrificing growth at this point of time, maybe we are not at par with the industry, maybe your analysis of ours will not be favorable for the bank. But we also need to appreciate the point that the more importantly for an organization is to have a sustainable growth. And I am very sure with some of the banks have grown very effectively and efficiently. But with a difference of more than 5% to 7% differential between credit and deposit growth, I'm not very sure whether those growth stories will be remain sustainable going forward. But we need to -- we -- as far as our book is concerned, we are -- as Mr. Ajmera has said, we are at a low base. We acknowledge that fact, and we need to grow faster and faster on a qualitative basis. So we are rejigging our entire structure, we're rejigging our entire business processes and we are bringing in changes for quicker delivery of loans, renewals and review of accounts. We are bringing in systemic review of -- renewals of working capital and term loans so that, that repetitive work goes away from the brand and we can more confident on core business. We are going to revamp our call center. That is another area where we are strongly focusing on because today, we -- our call center also becomes a profit center, both from the monitoring aspect and also on customer acquisition and lead management. So we are moving in and we have a 1-year project for revamping our call center. So keeping all this in mind, and these are some of the steps, the fundamental steps which you need -- we are building into our system, though we are late, and these things have been implemented many banks much earlier. But at least, we are now working on those directions to build those platforms where we can have much more sustainable growth. So the branch expansion I've also talked about, we intend to expand very strongly in our branch network. ATM network and BCs another area where we are strongly working on its implementation of the BC network in the bank. A few years ago, we had hardly 357 BCs. Today, we are having 1,709 BCs by the -- very shortly by the end of the financial year, this year of March '25, we intend to have 4,000 BCs in the bank. And by '26, we intend to have 6,000 BCs in the bank. So this is another area which will help the -- both on the acquisition side monitoring side. And I'm very sure, if we can implement this -- these sort of structural processes in the bank efficiently, the bank will much more be on a stronger platform for a healthier growth in the future.

Sir, I have noted your comment on a positive side, led by all the CapEx, digital initiative, call center, back office, processing changes. But technology can be bought, but human resource, whether it's top to bottom or bottom to top, if that is not aligned with technology your entire effort may go take a futile time on a longer process. So what have we done where human resource integrates with the upgraded technology so people transform, bank transform and the shareholders also get transformed, which is predominantly Government of India with the holding they have? And second question is on your current treasury should be a big benefit because today, I see the positive side on you because of your holding maybe because of the inclusion in global indices, a treasury should give you a substantial profit. And third is despite all your efforts and challenges, do you see cost of income in the current tenure of Ravi Mehra and yourself, cost of income going towards 50%, 55%?

Yes. All very important questions, Mr. Choksi. Thank you. I appreciate your questions. And exactly, yes, I missed out. I did give a hint on what we are doing on capacity building in my opening remarks. Firstly, we have got 4 CXOs, CFO, the CCO and the CRO and the CTO in the bank on a different recruitment methodology, which will add value to my key positions in the bank, #1. Number two, a lot of focus has now been given on trainings of our staff members, both in India and abroad. We have identified people, executives, top executives of the bank, who deserve further training and who can be groomed as future leaders in the industry. We are also a very effective part of the overall DFS and FSIB initiative regarding grooming of DGMs and GMs on the industry-wise pattern with some of the banks -- all the banks, in fact, public sector banks are working on. We are very much -- we are now -- in the morning itself, I was attending one training program today on the zonal heads -- zonal heads on leadership development with a very, very reputed institute in NCR. There again, we are trying to project that the capacity building of our people has become very, very important. Internally also, we will be recruiting much more specialized positions in the bank. We have identified those positions at various levels from 2 to 5, Scale 2 to Scale 5. We have taken the necessary board approvals for that. And those positions will be because of the code of conduct issues, we have not been able to go to the market for releasing those recruitment methods. So as soon as the code of conduct ends, you will find a lot of -- a lot of activity going on in terms of recruitment at specialized positions, particularly on where domain knowledge has become a very key factor. So yes, we are very much focused. We understand that IT and HR together are the 2 pillars of banking financial sector. So we are giving very much, very -- a lot of importance on that. And on the second part is regarding treasury. Yes, as I said in my remarks also, I know that how treasury can become a game changer for any organization. And therefore, there, again, we are building capacities. And if you find on a comparative degree, if we have analyzed our performance on yield on investments compared to other banks, we are -- we stand fairly well in terms of our comparison on the yield on advances -- yield on investments compared to other banks. And though a smaller treasury, but we are effectively managing the treasury. And going forward, the treasury -- this was particularly the domestic front. And as I already mentioned, now -- we are now focused on the ForEx business, particularly because we have opportunities on ForEx business. So if you can build platforms for ForEx business and bring in expertise in the treasury and the -- in the authorized dealer branches, I think we can give good returns and my team can go get returns there. And your last question was on cost-to-income ratio. Yes, the bank had a -- has a legacy of the higher cost-to-income ratio, you are able to pull it back a bit in '22, '23 from 65% to 62%. But due to the wage impact that we have this year, the cost-to-income ratio annually has moved up to 72%. But for the quarter 4, we have been able to pull it back below 70%, but that's not a comfort that we are lying on. But going forward, as you said, whether in my tenure or Mr. Mehra's tenure, the cost-to-income ratio will come back to 50% to 55% range. I don't predict that range at this point of time, but we surely predict that this will be below 60% in another 2 years' time.

Sir, my question on treasury. You may have answered, or I've got completed the sentence properly with our indices getting included in JPMorgan, Bloomberg.

Okay. Yes.

India is likely to be having a bonanza or not that only time will say, when [ peoples ] are concerned. Now how are we positioned to capitalize on the treasury book, which we have on one side, the other side is, I've asked this question to most of these big banks, peer banks and PSU banks. The inflow has to be managed, whether it is ForEx, participant, the kind of paper you own. Have we done any internal to maximize the profit out of the holdings what we have?

To a little extent, yes. Not to the maximum extent that you expected. See, first of all, we are going through the transition on this new investment policy of the RBI. So all of the banks you must be also knowing, all of the banks have now rejig their portfolio and have made the changes -- required changes as per the new treasury guidelines, which is to be implemented from 1st April. So we also have now rebalanced our portfolio and certain -- you must be all knowing what are the key areas of differentiating between 2 policies before and after. But as for now, what we have done is that the overall -- as we are allowed for once in -- allowed once for shifting of securities under the new treasury guidelines, we have shifted part of the securities to the trading book and which in case we expect, of course, there will be a rate cut sooner or later, maybe second half of the year. We'll be able to generate some income there. But the other side is that the fluctuation due to the MTM on the treasury book, which was earlier creating some conflict in the overall scheme of things. That has eased out. So the MTMs will now be part of the overall results of either HTM or AFS. And therefore, the balance sheet will look much more steadier, if not healthier, it will look much more steadier than what it was before. And as far as your specific question on whether we have done any homework on building this portfolio. We are -- because it's just a transition phase that we are in. In just 1.5 months old, this policy has been implemented. The markets have moved in a different direction so far, which we were expecting a month ago. So therefore, we are observing this trend very closely in our treasury books. And maybe as we go forward and build up the -- our capacity in our treasury department, as I was mentioning a few moments ago, we will be able to capture more and more possibilities that come out of this new region. How that JPMorgan Index will impact our portfolio that time will say, and we are not in a position to comment on that, but we will be looking out for opportunities to -- my treasury department will give more returns to the bank in the set present circumstances.

We have a follow-up question from Mr. Ajmera.

Sir, I've just a couple of, again, specific questions and the explanation. Sir, our -- they're looking at our size of the bank RBI levying a penalty of INR 2 crores in the whole year and INR 1 crore in this quarter is a very, very big amount for us. So what is this penalty has been imposed for? And what corrective measures are taken to avoid this kind of penalties in the future? Note #60.

Yes. The penalty that was imposed on the bank that you are referring to has been industry-wise penalties that have been imposed on various all banks, who have an exposure to a particular state government account. Whoever has exposure in that account, RBI thought differently on certain regulatory issues, the account is standard. There is no default in the account, but in terms of RBI scheme of things, they have felt that the bank should have been more careful in selecting the borrower and understanding their cash flow. So it is not a one-off case that has happened with our bank only. It is an industry-wise penalty that has been imposed on all banks, which have had exposure in that government account. It's a state government account.

So it's a one-off only?

Yes. Yes.

Sir, in Note #14. On these 2 accounts which are under litigation, funded exposure is INR 119 crores, adequate provision has been made. So what is that adequate provision amount out of this INR 119.28 crores?

Adequate means in an account, which is under litigation for quite some time because we classified as account as NPA, but the borrower went to the High Court and said, don't declare it as NPA. So that litigation is happening. But we have provided 40% in that account. What is the second one? How much...?

[indiscernible].

That is only a small account of INR 5 crores. So that is also adequate. So major account is that one mid-corporate account, in which, we have been declaring consistently. And based on -- so if account slips also, we are adequately provided at this point of time.

Sir, what is our total portfolio of return of our AUCA accounts in aggregate? And how much annual recovery target we have to recover from that written-off accounts?

The overall TW...

Yes.

Portfolio is around INR 7,200 crores. Last year, we had a recovery of, I think, INR 700 crores, if I'm not mistaken, INR 758 crores, my numbers are correct, INR 758 crores. And this year, we intend to have a recovery in TW of INR 500 crores. Overall, we intend to have a recovery upgradation of INR 1,500 crores.

Including this INR 500 crore?

Yes. Yes. Because our -- you see as a bank of our size, the major accounts are getting dissolved one by one. Last year, we kept a guidance of INR 2,000 crores overall, and we achieved them. This year because we only have 1 or 2 big accounts under resolution with the NCLT/NARCL. So we have -- that's why the opportunity of recovery, we have a little bit less than last year.

Sir, when do you expect this -- our gross NPA coming down below 5%?

This year itself? Very soon.

Very soon. In fact last year also, we were hoping this year, which concluded.

We [ added ] 9.42%. See...

Yes.

We appreciate the point. Last 2 quarters, we have not resorted to write-offs, technical write-offs, which many banks normally do. We have also done in the past as of now from all that. But we feel that we still have room on that. So it's just a matter of balance sheet management when we take the call and bring it to below 5%. It's just a matter of time now.

Sir, I'm not sure whether this question was answered because for some time, I was off the call. How much is our project loan portfolio, which will get attracted if these RBI guidelines get implemented?

We have assessed that portfolio. The numbers -- I think what we -- we are more -- we are more concerned with the provision impact than the actual number of [indiscernible].

Yes. Yes. So total, about 15,000 it is total. I mean, including all infra and everything. So out of that, how much is project loan?

Yes. I tell you; we have done some analysis there. In terms of our first-year impact, which we are -- see, there are various phases of this RBI circular. One talks of borrowers are falling under operational phase, where the balance outstanding is more than 80% of the limit.

Yes.

One is where the balance of outstanding is less than 80% of the limit. And there is another phase called the construction phase. So putting all these first in terms of those which are in the operational phase, we have a portfolio -- as this is all back of the envelope calculations, we need to work closely on that. Overall, the figure will be around INR 5,000 crores on the balance outstanding and the impact which we foresee is around INR 100 crores provided RBI brings the circular as it is. We expect that some moderation may happen. But overall, we feel that such -- the operational phase, if you take the operational phase into consideration, the impact would be around INR 100 crores odd. And...

For extra provision, yes.

That is -- and of course, there are other considerations in this area, accounts which are under construction which has not been disbursed so far. So we don't know when these disbursements will happen. There are certain -- what I told of INR 100 crores is already which have been disbursed and the projects have been made operational. Some projects are under disbursal. And we don't know the actual drawing of the loans. So if I take that on a rough back of the envelope calculation, if I include that, another INR 40 crores, INR 50 crores may add up, depending on the actual disbursements that happened. The provision will be actually on the outstanding. So we don't know at what, is very difficult to predict at this point of time. So we are looking at the overall INR 150 crores of impact for the current year.

So with the kind of planning your CD ratio is already 71.99%.

Correct.

Up to what CD ratio you will be comfortable if your loan book growth...?

Yes. We'll be comfortable around 73%, 74%, 73-odd, that would be between 72% to 74%, we'll average ourselves accordingly. We're already at 72%. 73% would be a fair enough CD ratio for us.

And sir, one last question in this round. A lot of banks, including all the public sector bank treasury, who are dealing with the equity treasury, they have made a lot of good handsome money from the IPOs investing into the IPO, whether SME or a main board, do we have any figure or number that are, are we #1, are active in that area? And if yes, have you -- how much profit have we made on that?

Mr. Ajmera, we also do a bit in equity profits. I think we have done around INR 17 crores of income on equity.

That's good.

That's through IPO only.

Through IPO only. Yes. Yes. Yes. Because I was told, I think, I think like Central Bank or this thing we made some INR 55 crores, some bank has made INR 80 crores. But depending on the size. So INR 17 crores is a decent amount looking at our size.

3x, 4x depending on the size of the book.

Yes. Yes. Yes, of course, I've to say.

All the very best sir.

Our next question is from Ms. Shibani Kumar, an individual investor.

My question is, what is your opinion on recent RBI draft guidelines on project finance, which requires a higher provisioning by lenders? Also, what is the exposure there? And would there be any impact on our bank?

Yes. That's exactly what I just said to the previous question. I think you may have missed it out. I may repeat it at the cost of repetition. The overall impact in terms of provisioning, we look into, I don't know INR 150 crores. The book, which is involved in this is around INR 6,500 crores. And if RBI brings the circular in total as the draft circular envisages, that's the current position, but this is a back of the envelope calculation, many granular calculations will be done on this front.

We have a follow-up question from Mr. Choksi.

Depository are not in the bond index inclusion, what my question had further this, are we doing any synergy with any of the participants like foreign brokerage houses or PDs or anybody where we get maximum capitalization on buy sell as well as FX rates?

No, not yet. We have to reach to that levels in our operations of treasury. But if you ask me on separately, these are things are in mind, but we have to build up some of our people to manage this sort of dealings. So...

Seriously sir, if we are looking...

We move steadily, but surely in this direction. And that's why I'm also recruiting some specialists in treasury and ForEx going forward to just to take these things as a part of their business strategies.

Sir, you highlighted a lot of initiatives for processes, human resource. How are we rectifying the business segment, where RAM is concerned and retail is concerned, whereby with CD ratio moving up from 71% to 73% or 74%, we have hardly any appetite left for large businesses and large ticket loans. So the only way you can earn a super profit is your RAM segment or Retail segment gives you a sustainable profit...

Correct.

at good and not only home loans because I see year-on-year portfolio has not done in sync with the bank's balance sheet. So I suppose these 2 segments is somewhere where you have to look at a larger because that pie is larger and your NBFC, HFC is almost at a cap sector. And the reputation in retail and RAM is the most essential part of a good partner in the bank. And that partner in the bank if it's not existing, then the customer is not going to become the first point of contact.

Yes. I appreciate your point, Mr. Choksi. And we'll keep this in mind in our future strategies. In terms of income generation, while retail, we will be focusing in various areas on personal loan also, which will give me higher returns. On the MSME segment, we have one of the very important product that is helping us is the GST ease loan, where our delinquency is bare -- at a bare minimum, and we are getting a lot of good vibes and a lot of good projectiles in terms of our portfolio growth in GST. And that is where we will be focusing on for our capitalizing on the yield on returns on our assets book. So we have plans for that. For that, we need to -- we are also moving into the co-lending segment very strongly, both on the retail and MSME side. We have already built a book of INR 2,300 crores retail plus MSME. We intend to build this book to INR 4,000 crores by the end of the current year. And this -- here, again, our experience on co-lending has been very, very, very good and satisfactory. So we think now that we will be able to build on the platform and the way we are doing our underwriting in the co-lending segment under the RBI guidelines has paying off well. So we will be working very strongly on the co-lending front, where we can look into high-yielding assets also. In fact, because of the present juncture, RBI on -- putting some restrictions on NBFC regarding gold loans, we are just observing that area also because that is a potential area for us. Our gold loan portfolio is also showing healthy growth and we have checked out, internally, we have put in checks and balances for quality growth. So gold loan again gives us either from the stand-alone basis growth or on a co-lending side, both will give us good yields in terms of our growth. So point wise taken, housing loan will have a different connotation, but the other areas will also focus strongly. In fact, our gold loan portfolio is growing at 27% at a lower base. So we have a strong area of growth, which we will pursue in the current year as well.

Sir, all the best in the -- all the aspirations which you have at Punjab & Sind along with your management team. Hopefully, Prime Minister and the Finance Ministry doesn't go for the next year further amalgamation. So we have a year-on-year discussion in the next year ends.

Yes. Thank you.

We have one last question from Ms. Myra Mittal an individual investor. Her question is, is it possible to move to a lower tax regime for FY '26?

Actually, there's a -- it is an optional thing. So according to that, because we have deferred tax and [indiscernible] taxes in our books, so we'll look at an appropriate time when our balance sheet profitability can absorb that thing, then only we'll move to it. So it will depend on how the figures move on the next year.

As there are no further questions from the participants, we now conclude this conference. Should you have any further queries, please reach out to Ms. Mamta Samat at 9930-625-104 or [email protected]. Details were mentioned in Webex's chat and the analyst invitations sent to you earlier. On half of Punjab & Sind Bank, I thank each one of you for joining the conference call today. You may now disconnect your lines. Thank you, and have a good day ahead.

Thank you, Shilpa, and thank you all the participants for joining in this con call. Thank you.