RBL Bank Limited (RBLBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the RBL Bank Limited Q4 and FY '21 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Vishwavir Ahuja, Managing Director and CEO of RBL Bank. Thank you, and over to you, Mr. Ahuja.

Thank you. Good evening, ladies and gentlemen, and thank you for joining us for a discussion on RBL Bank's financial results for the fourth quarter of and full year FY '21. I hope you and your families are safe. I want to definitely start by saying that. I also want to apologize for the delayed start to this call. And also for what might come a little longish presentation this time. I am of course, joined on this call by my other colleagues on the management team, who, along with me, will address any questions that you may all have. So at the very outset, I wish to place on record our extreme gratitude and appreciation to all our employees, who have shown exemplary courage and commitment at a great personal health risk to continue to serve our customers in a seamless manner. Our primary focus has been and will be to take care of the health and safety of our employees. And the second wave has been of great, grave concern to me. In spite of our efforts, we've lost a few of our dear colleagues to the pandemic, especially in the last few weeks. I wish to offer my deepest condolences and support to the families in this time of need. For RBL Bank, FY '21 has been the year of building resilience and strengthening the franchise across several fronts. And in terms of focus, these include granularizing both sides of the balance sheet and tightening risk filters; prudent, accelerated and additional provisioning, leading to significant improvement in the PCR; reducing corporate exposures, significantly improving the asset quality and rating profile of the wholesale balance sheet in order to reposition the business for growth; rapid ramp-up of our retail deposit's CASA base, significantly raising capital buffers; driving other income, particularly core fees, ensuring consistent increase in pre-provision operating profit, and therefore, maintaining the earnings momentum and net income at even slightly better than previous year levels despite the impact of COVID. And of course, significant reduction in cost of funds to enhance competitiveness in our -- in lending and to facilitate the build-out of some new secured loan products. Several risk mitigation measures in each of the bank's portfolio [ core ] business segments have been undertaken in FY '21. And our business plan going forward entails further tightening of risk, portfolio diversity, and ensuring healthy collections as important parameters of the bank's strategy. We are confident of managing the future asset quality outcomes at prudential levels. We feel we are well positioned for decent growth in FY '22 and beyond. Let me talk about asset quality, NPAs and provisions to start with. Having recognized and adequately provided for the stress emanating from the identified pool of corporate accounts in FY '20, our slippages during '21 were primarily almost 80% in retail, owing to the impact of the COVID pandemic. This has translated into a gross and net NPA position as of March 21 of 4.34% and 2.12% net, as against our pro forma numbers of 4.57% and 2.52% as of December 2020. So in other words, the fourth quarter, we have seen improvement in asset quality. The bank has maintained the net NPA ratio as of March '21 at broadly similar levels to March '20, despite the pandemic resulting in above trend slippages in the retail segment in FY '21, which is around a little over 2% number, 2.1%. PCR, including technical write-offs, improved to 72.2% from 64% in March '20. And excluding write-offs, it has improved to 52.3% from 44-odd % in March '20, representing an increase in PCR by approximately 800 basis points. Our plan in FY '22 seeks to further grow the production ratios, including PCR, to well beyond 80% including write-offs, and over 60% excluding write-offs, respectively. Our total credit costs for the year were INR 2,230 crore, about 410 basis points. This includes INR 70 crores towards additional accelerated provisioning on our unsecured retail businesses, ex cards. In addition, we've also provided for interest on interest as per the Supreme Court order. Our wholesale advances in DNP and net NPA was INR 1,100 crores and INR 545 crore, respectively. The composition of the wholesale book has been strengthened with negligible exposure to [ volatility-expressive ] sectors. While the bank's recovery efforts relating to the previously identified stress pool of select corporate accounts were affected during FY '21 due to the COVID restrictions, we are now starting to see traction from these and other accounts and are hopeful of seeing reasonable recoveries in the coming quarters. Of our net NPAs in the Wholesale of approximately INR 514.5 crore, around INR 100 crores is from the retail group and INR 200 crores from the Coffee group, where we expect transactions to happen in the near future. And so don't see downside on our wholesale book as a whole, except for the BAU stuff. The target operating model in wholesale, which we have implemented in July '19, has worked well for us. We have improved granularity in our exposures, while at the same time, we've also materially improved the rating profile of the book. Our A- and above book is now 77.6%, up from 72.8% a year ago and 67% in March '19. We have rationalized our exposure in the BBB and below rated exposures also. Incremental lending over the last 18 months or so has been largely to A and better and is reflected, therefore, in the overall rating mix. Hence, we can comfortably say that the wholesale segment is now rightsized, derisked and adequately provisioned. I would now like to elaborate on our 3 large segments in the retail space. During FY '21, the Bank [indiscernible] buildup in the retail segments, including the unsecured segments of credit cards and micro banking and also in the MSMEs [Technical Difficulty]. In each of these segments, the bank has followed a conservative policy of accelerated provisioning for all the unsecured retail loans. For instance, in cards, the bank provides for 100% provisioning and fully writes off at [ 182 ]. In micro banking, we have decided to take -- normally, we do it over 4 quarters as per our provisioning policy. But in fourth -- in Q4 FY '21, we have taken an additional 25% provisioning to make it 50% provisioning on slippages. This is in addition to the fact that approximately 45% of our micro banking book is covered by FLDG, which provides further risk mitigation. In the remaining retail unsecured book [ or so ] we have taken 50% provisioning on slippages in Q4 as against the usual 25%. As can be seen in our largest retail business segments, cards and micro banking, we do follow a conservative provisioning policy. Further, while both the businesses did suffer from higher-than-normal slippages due to the pandemic, akin to what we would call a major stress scenario, the businesses were still profitable at the segment level, despite the accelerated provisioning policy. And this is a very important point to consider from a business model perspective and the related perception of risk. And also that, therefore, we have sufficient earnings power to manage and grow our high-risk retail portfolio, such as cards and MFI. Further, the credit costs in our credit card business, we have been within our expectations, and we believe that these credit costs will normalize to pre-pandemic levels from the second half of FY '22. On business loans, we follow IRAC norms on provisioning. Our LTVs, as we have reported earlier, are approximately 65% on the affected portfolio and there is enough value in the collateral to ensure minimal expected loss in this portfolio. Given the accelerated provisioning done on the unsecured loans, plus the additional prudential provisioning taken, together with the recoveries expected in the secured MSME loan segments, the bank expects to see a further increase in the PCR in the coming year. As I've indicated, it could be an additional 8% to 10% for the year. On restructuring and ECL [ DS ], our total restructuring was INR 927 crore, 1 point -- a little under 1.6% of advances, well within our expectation. Of this, the wholesale was INR 347 crore and retail was INR 580 crore. We have taken requisite provisioning on the same. On ECL [ DS ], we have very prudently extended the [ scheme book ] to our customers aggregating to a value of INR 1,212 crores to help them tie their loss to the short-term stress. Of this, INR 680 crores was in wholesale and INR 530 crores was in retail. Let's talk about the operating performance. First about fee income. Fee income grew 8% year-on-year to INR 2,058 crore. Similarly, our core fee income, despite the shutdown in the country during the first half of the fiscal, was higher year-on-year. This is despite the impact of core fee income reversals of approximately INR 144 crores in FY '21. For Q4 2021, core fee income grew 40% year-on-year and 33% quarter-on-quarter to INR 660 crores, higher than the pre-COVID levels. Our granular retail businesses, led by credit cards, accounted for 80% of the core fee income [Technical Difficulty] percentage of 77% in Q4 FY '21. Credit card fees grew 25% year-on-year and general banking income grew 30% year-on-year in Q4 '21. Given the bounceback we have seen in cards, together with the expansion of our branch footprint, we remain confident of expansion of core fee income in FY '22. Coming to net interest margins for Q4 '21, it was 4.17%, flat sequentially, and 4.4% (sic) [ 4.5 ] average for the full year FY '21. NIMs for the full year were impacted because of the interest reversal, to the tune of approximately 50 basis points, as well as the excess liquidity the bank has been carrying on its balance sheet. We expect NIMs in FY '22 to normalize to the 4.75% plus levels. We have seen sustained improvement in PPOP, the pre-provision operating profit, throughout the year from INR 690 crores in Q1 to INR 720 crores in Q2 to INR 807 crores in Q3 and to INR 877 crores in Q4. For this fourth quarter, the PPOP was up 17% year-on-year and 9% sequentially. In terms of our deposit franchise, our key objective has been to keep increasing the contribution of retail deposits, improve our CASA, maintain healthy levels of liquidity and increase the tenor of our liabilities; and at the same time, reduce cost of funds. I'm happy to report that there has been substantial progress on all fronts. Total deposits grew 26% year-on-year and 9% sequentially to INR 73,121 crores. The proportion of retail deposits, as per the LCR definition, in the bank deposits has grown 32.9% as at March '20 [Audio Gap] from 32.9% as of March 2020 to 37.2% as of March 2021 on a growing deposit base. On an incremental basis, retail LCR deposit constituted 54% of our total deposits raised in FY '21. The daily average LCR for the bank has consistently been well above regulatory requirements, averaging 154% for Q4 '21. In line with our peers, we've also reduced rates on savings and term deposits since March 2020. As a result of this, an improving CASA position, the cost of deposits for the bank has reduced from 6.4% in Q4 FY '20 to 5.45% in Q4 FY '21. We expect continued moderate reduction during FY '22 also. CASA deposits growth was strong, at 36% year-on-year and 11% sequentially. CASA percentage was at 31.8% in Q4 '21 as against 29.6% same time last year. We also calibrated advances growth given the general environment, which has also helped to materially improve the credit deposit ratio. So to sum up, we have seen very robust growth into granular deposits, and we expect this trend to continue going forward, even as we continue to add to our distribution, both physical and digital. Having said so, let me talk about driving digital banking solutions. In FY '21, the bank's focus on digital payments was to build stickier client engagement and transactions and float revenues. Some of the achievements in this space in FY '21 are as follows: onboarded 190 wholesale banking clients in the last 1 year, contributing to current account balances. The bank's AEPS service is being ranked fifth in terms of transactions processed in the country. We process around 30 lakh transactions per month. The bank has achieved over 25% market share of disbursements in the MFI payments segment. The bank has launched rupee drawing power -- no, rupee drawing arrangements, RDA, recently, which is averaging 15,000 transactions per day. During the year FY '21, API hits increased from 30,000 API transactions to 5 lakh API transactions per day. The bank also recently launched eMandate services as a sponsor bank, and currently processes around 10 lakh mandates per month. In our branch banking business, we have been building digital acquisition processes for the past 3.5 years with 40% to 45% of our monthly sourcing of savings account is now [Technical Difficulty]. Balances of digital accounts have grown 4x over the last [ 4 ] quarters, backed by strong hybrid onboarding and engagement strategy of voice plus digital. Over 40% active customers had more than 3 products enabled by digital journeys. So we believe this has been a phenomenal year of performance for the bank. In terms of some other performance metrics, as far as advances are concerned, it grew 4% sequentially and 1% year-on-year. Retail advances grew 13% year-on-year and 4% sequentially, whereas wholesale advances grew 3% sequentially. Of course, wholesale was down for the year. Retail:wholesale advances mix stood at approximately 59:41. Overall, year-on-year total revenue growth was 5%, NII was flat, and other income was up 38%. Tax for the quarter was INR 75 (sic) [ 35 ] crores, down because of the accelerated additional provisioning that we said we have taken, and also on the Supreme Court-mandated reversals. For the full year, PAT was INR 508 crores, just about the same level as last year. Our capital adequacy ratio as at March 31, '21, was at 17.5%, with a CET1 of 16.6%. To sum up, the pandemic has been worse than what we had expected at this time last year. But our balance sheet fortification, through derisking both sides of the balance sheet as well as adding to capital buffers, makes us well placed to take the franchise forward. While we are closely watching for the impact of the second wave, and are prepared to handle [Technical Difficulty]

Ladies and gentlemen, please stay online while we try to redial the management. Ladies and gentlemen, thank you for patiently holding the line. We have the management reconnected. Over to you, sir. You may please go ahead.

Yes. Sorry about this interruption. So I was saying, to sum up, the pandemic has been worse than what we had expected at the beginning of FY '21, but our balance sheet fortification through derisking both sides, as well as adding capital buffers and keeping our revenue engines going, makes us well placed to take the franchise forward. While we are closely watching the impact of the second wave and are prepared to handle any short-term disruptions, our business engines are in good shape and have been further tightened to be in a far better position to tackle the impact of a second wave and any potential partial lockdowns. I do want to take this opportunity to talk about scaling up of our domain expertise to gain market share, and a little bit about our new sort of business products. While remaining watchful, conservative and agile, the focus going forward would also be to scale up in segments where we have domain expertise and critical mass, which is, of course, cards and MFI. And to also invest in new secure growth engines; i.e. housing finance, tractor 2-wheeler, gold. And continue to sustain granularity across businesses and maintain their deposit traction. So essentially, that is the so-called, if I may say, the growth direction and focus for the institution going forward. We are gradually accelerating our retail businesses with a stronger focus on secured retail businesses, while at the same time maintaining our market share in credit cards and microfinance, where we have built industry-leading franchises. In affordable housing, for instance, we have 66 branches currently. And in the current fiscal year, the plan is to add another 75 branches. Just to give you some more information, we ended the year with INR 1,669 crores of home loans through both self-origination and selective portfolio purchases. This will continue. In these 10 years our markets where we run our micro SME businesses, the incremental focus will be on the secured loans of ticket sizes in the INR 10 lakh to INR 25 lakh range. We have moved away in this segment from unsecured loans. In rural markets, we are taking [ major ] steps to build a tractor finance book. This will see greater traction in the coming years. In our micro banking business, we are introducing secured products such as loan against gold, home improvement and 2-wheeler loans as cross-sell products to our large customer base. We will continue to invest in credit card centers through better cross-sell and customer value proposition and are prepared to take advantage of the current market opportunities. Card is now seeing decent growth traction as the situation on the ground has improved. The business has been profitable in FY '21. And as the economy normalizes, the bounceback in these businesses tends to be -- tends to happen faster, therefore providing good growth and ROA impetus. Cross-sell will be a key focus, both from branches originating more asset products, as well as mainstreaming asset customers across MSMEs, and credit cards through further cross-sell. In micro banking, outside of the 3, 4 impacted states, the businesses on the ground are doing well, with overall collection efficiencies at 95% -- at 97%. New originations with tight filters is now approximately half our book and collection efficiencies are at pre-COVID levels; i.e., exceeding 99%. In our wholesale business, we will selectively look at opportunities in segments like multinational customers. And we have seen, including HFCs and IFIs, which have seen decent growth and where asset quality has held stable with no material delays or defaults. We will also look to grow the commercial banking franchise with a focus on multiple bank products. In terms of other opportunities in wholesale, while overall corporate demand has been muted as companies increasingly deleverage, we have been looking at making inroads through digital solutions, foreign exchange, trade and cash management and deposits, et cetera. In fact, our trade and FX momentum in Q4 '21, and even in April, is now at pre-COVID levels. Tactically, given the surpluses we are running, we have also been deploying this for short-term opportunities with the highly rated corporate names. As credit growth happens, some of this low pricing is expected to normalize. In digital banking, we hope to continue to maintain the lead in digital banking innovations for both enterprise and retail customers, driven by innovative product offerings with fintechs for retail and business customers. And lastly, we continue to significantly increase digitization in operations and facilities that have robust backbone infrastructure. Now to talk very briefly on our distribution. We ended the quarter with 429 bank branches, up from 386 in the previous quarter (sic) [ year ago quarter ]; 1365 BC branches, up from 1,245 in the previous quarter; and 412 ATMs, up from 389 in the previous quarter. The focus on expanding the distribution franchise will continue as 1 of the key channels to add relevant customer base to the bank's growing franchise. At this stage, before I come back and talk to you some more, I will hand over to Harjeet to take you through some details on the retail businesses, which I'm sure you're eager to know about.

Thank you, sir, and good evening, ladies and gentlemen. The year FY '21 has been an unprecedented year on many fronts: the ever-evolving situation around the pandemic and lockdown, scale of disruption in the economy, and the challenges in navigating business operations through this situation. As we entered into the lockdown towards the end of March '20, we started our scenario planning exercise in terms of what to expect, and thereby, our business forecast. But I would be the first to admit that we didn't expect a lot of things that unfolded in the subsequent 6 to 9 months: the prolonged lockdown and subsequently the unlock phase and the associated restrictions for over 9 months, extent of disruptions to the small business segment, the 2 moratoriums, restructuring and the Supreme Court standstill the quick bounceback in terms of pent-up demand, and now, unfortunately, the raging second wave and restart of partial and independent lockdowns. However, despite all of this, we still managed more or less to deliver on our forecast and guidance in terms of GNP and credit costs. This was largely due to the ability in the business processes to adapt to evolving situations, and thereby implement portfolio actions, customer communication and collection strategies. Also, during this period, conscious effort was made to ensure that business and portfolios became stronger and resilient. Some of the changes made were structural in nature and will help in navigating such challenges in the future. Some of these are enumerated below: significant migration of business processes to digital, thereby reducing or eliminating the need to physically meet the customer. This is across new customer originations through engagement and service connections, and also internal team management. Our ability to quickly scale up businesses -- business origination run rates the moment external risk environment is conducive for growth. And this, despite tightening [ here ] positions [ risk filters ], ensuring existing portfolios are more resilient to future shocks. Part of this is due to accelerated flow-through to losses of weaker segments during this pandemic. But a large part is on account of the ever-growing contribution of the new business booked, which is superior in risk quality based on learning so far. The analytical risk models, forecasting models, et cetera, today are much richer, factoring in the actual performances seen during the stress period. Ability to run collection operations digitally, bringing down cost run rates quite appreciably in FY '21, not only because majority of the costs were variable, but also a lot of reimagining of cost structures through zero-based budgeting, and altogether eliminating some costs. So for example, today, in our cards business, we are acquiring customers at pre-COVID run rates, with much tighter acquisition filters. Our salaried contributions and geographical distribution in new acquisition is more than the portfolio average. We've also brought down our risk appetite, measured through leading indicators like the 6 MOD 30+ from 3.5% to 3%, and accordingly, risk score cards have been adjusted. Spends are higher than pre-COVID level run rate, March '21 versus March '20 is higher by 28%. Spends per active cards are also up by 8%. We have seen customers remain engaged throughout the tough times, while changing the proportion amongst categories of spend as per their needs. Overall, we have gained market share in spends by 30 basis points year-on-year and are at 4.7% and have clocked slightly higher spends in FY '21 over FY '20 despite the lockdown. We now have a better understanding of how different risk segments perform through extreme stress, and, hence these learnings are built into our risk models, guiding portfolio buildup. Our limit assignment and management strategy is far more prudent than the industry, and it's seen in our lower dollar loss rates for the same number loss rates, that is our loss rate by value versus loss rates by number of customers is around 16% lower than the industry. Details on our limit allocation are shared in the investor deck. Therefore, despite apprehensions that our card portfolio was not seasoned enough, or did not have enough contribution of internal bank customers, the portfolio has performed equal to or better than the industry throughout this extreme stress phase. Similarly, in micro banking, in the last 1 year, we've been able to evolve processes enabling us to seamlessly manage branch operations and customer engagement across our [ 1200 ] [Technical Difficulty] customers across [ 415 ] districts. We've been able to significantly strengthen the collection operations, especially the ability to collect in the absence of Center Meetings. We've been able to engage with the 3.3 million customer base every month consistently on the phone through our loan officers. This has enabled them to collect through Center leaders or individually from customers whenever Center Meetings have not been possible due to COVID restrictions. Our onboarding and other branch operations have now completely moved to digital, and customer identification is through biometric Aadhar, thus reducing instances of fraud, ringleaders, et cetera. So all in all, while we have seen increased stress, especially in a few impacted states, our micro finance portfolio has performed much better than the market. Our 90-plus dpd portfolio as of Feb was at 2.5% as compared to 5.35% for the market, as published by the [ current rules ]. Therefore, to sum up, we have been able to fortify our businesses during the last 1 year, and they are far more resilient to navigate the second COVID wave and, subsequently, quickly ramp up as and when the opportunity presents. I would now like to talk about the performance our businesses in quarter 4 FY '21, and some of the trends we are seeing. Let me start with credit cards. We issued 3.82 lakh new cards in quarter 4 versus 3.5 lakhs in the previous quarter. Overall, in the year, the new card issuance was at 9.8 lakhs versus 14.5 lakhs in FY '20. Market share in terms of cards in force was at 4.7%, up 10 basis points year-on-year. Spends continue to be strong and were at INR 9,170 crore in quarter 4, up 6% quarter-on-quarter and 10% year-on-year. For the full year, spends were at INR 29,500 crores, slightly higher than FY '20. Total card spends and active rates further improved over quarter 3 FY '21. We have a restructured book of only around INR 274 crores, which is 2.2% of our cards book as at March end. Of this, INR 50 crores, which is 0.4% of the book, is in the 30 to 90 dpd bracket. GNPA as at quarter 4 end was at 5.5% [ half rate ] [Technical Difficulty] Credit cost was at 10.4% for the full year versus 7.6% for the 9 months FY '21, and is in line with our estimate at the beginning of the year. We also think that consumers start paying back their dues even after they've being classified as NPA, post the vacation of the Supreme Court interim order. Of the total GNP of 5.5%, 1.3% of customers have been paying 1 or more dues. So the 90+ dpd is at 4.3% versus the NDA of 5.5%. However, we continue to carry NPA provisions on these as well. We believe that GNPAs have peaked and will start coming down from the next quarter as we write off the impaired book. Credit costs would remain elevated for another quarter, or maybe 2 depending on the impact of the currently raging pandemic. And then we will see it coming down to normal levels over the rest of the year. We, today, are the fifth largest card player in the industry, and are confident that we will continue to grow in this business in a prudent manner and maintain or grow our market share. We continue to add more partners and channels [Technical Difficulty]. Technology continues to be the backbone of our success, with digital and instant customer journeys for new acquisition, plus a rich and consumer-friendly card management app, which is used by more than 2 million customers. Let me now talk about micro banking. The micro banking book saw a growth of 6% over the previous quarter and 11% year-on-year. This was despite negligible disbursals in the 4 impacted states of Assam, West Bengal, Maharashtra and Punjab. The collection efficiency improved further and was around 97% on an average for quarter 4 FY '20 -- FY '21. The new portfolio, which is around half of the total book, continues to perform at over 99.5% collection efficiency levels. We are still being watchful in the 4 impacted states and will look for clear signs of improvement before we start doing incremental business there. GNPA for the quarter was 3.67% versus 2.7% in the previous quarter and came in lower than the 5%, 5.5% indicated earlier in the previous quarter. Credit costs were at 2.37% versus 2.5% indicated earlier. This was largely on account of improved collection efficiency in the quarter. About 1/3 of this impaired portfolio is covered under FAD. However, as reported last time, the phenomenon of erratic payment behavior by a certain set of customers continues, with them missing 1 or 2 installments and then paying again. Therefore, they continue to remain in delinquent buckets. This, coupled with the situation in the 4 impacted states, indicates that we may see GNPA levels remain elevated in the next year. However, as compared to the industry, the 90+ dpd numbers for the RBL Bank portfolio are at 50% levels of the industry as of Feb, as per data from the credit bureau. More information on this is given in our investor deck. We continue to closely work with our customers through this period and continue to lend in markets which are not impacted. Our focus in FY '22 is going to be to deepen relationship with existing customer households and offering a range of products from deposits to home loans, 2-wheelers and loan against gold. Our deep branch distribution across 415 districts in the country is our strength, which we intend to leverage as we grow this rural portfolio. Now on to business loans. The small business segment continues to be impacted, though we did see business volumes start to pick up in the last 3 to 4 months. While manufacturing and trading segments are relatively quick to bounce back, the service sector recovery is slow. The advances book declined by 1% quarter-on-quarter, but grew 3% year-on-year. The collection efficiencies, however, came back to pre-COVID levels in this quarter. With the lifting of the Supreme Court stay on standstill status, we expect recoveries to improve. We also have seen the repayment stickiness, which we measure as percentage of delinquent customers who continue to remain regular after resuming to pay their dues, improve to a high of 98%, which is better than what we used to see pre-COVID. The collection efficiency on the current book is now 99.3%, which is [ in total INR 3 ] crores. The collection efficiency on the book, including the delinquent book [Technical Difficulty]. We are still cautious in this segment, and [ true ] disbursals are quite measured and controlled with much tighter filters. Restructured book here is INR 280 crores, which is about 2% of the book. And as of now, around INR 10 crores, which is only 7 basis points of the book, is -- in particular is [ non-D ]. Now let me just share something on the housing segment. The advances in the housing loans were at INR 1,669 crores in quarter 4 FY '21. We now have 66 branches that are operational, and we look to add another 75 in FY '22. The average ticket price is around INR 16 lakhs. We've defined our target segment as between INR 10 lakhs to INR 75 lakh loan size. Approximately 79% of the portfolio is salaried. We will continue to accelerate growth in this business as we see it as a resilient secured book, and this is being built in a manner to be able to withstand economic shocks, as we have seen happen for this industry during this pandemic. Before I end, I would like to give our view on the emerging situation of the second wave of infections and the sporadic lockdowns that have been announced in the country. As of now, we believe it is difficult to give a guidance around the impact and severity of the disruption. We are adopting a wait and watch strategy, but at the same time, we have significantly tightened our acquisition filters further. In Cards, we have cut out an incremental 20% sourcing. In micro banking, we continue to remain focused on collections and are not disbursing in the impacted states. In business loans, we have stopped all unsecured loans and are now doing very selective secured business. We have seen this year that growth can be quickly ramped up when the market becomes conducive. The collection capacities, which we had built up for the higher delinquent volumes last year, are still being maintained. We are quite confident of tackling any worsening situation, as at this time, the playbook is quite well defined. However, we hope that this time, the lockdowns of [ the Indian ] economy will not be as serious because of the rapid push towards vaccination. I would now like to hand over back to Mr. Vishwavir Ahuja for his concluding remarks.

Thank you, Harjeet. Even as one looks at the near-term challenges of managing COVID, it is very important that on the learnings of the last several years, and more specifically, the changes accentuated by COVID. The financial services industry was changing anyways. But COVID has accentuated the changes both in terms of speed and scale. It is no secret that many banks that have been born in the last 10, 12 years have predicated their opportunity on the large untapped market from a quality of supply perspective. The belief was that it is all right if you just build it well. We have held that belief also in large part even as we built this franchise starting 2010, and sort of built it well. And including built new businesses in micro banking way back in 2011 and that of the cards in 2015, leveraging technology and partnerships. However, the changes in the competitive environment, enabling regulations and that of a more empowered customer, has changed this belief forever, we believe, at least in our view. Collectively, these changes are making a significant impact on the durability of the banking modes and the economics of our businesses. It is not an exaggeration to state that while, from the outside, the business of banking might appear the same as before, but the capabilities, choices and tactics that will give banks a leading edge would need to be different and specific to each institution. What is needed, therefore, is to look at the opportunity through different lenses, combine and recombine our resources more intelligently and with speed. It would imply that we have to strengthen some existing foundations, build newer capabilities and deemphasize some old approaches. Some of the foundational capabilities that we will see strengthened are A, agility: the pandemic has heightened the need to rapidly realign our operations, technology, interactions with customers, et cetera, to meet the changed requirements and with speed. While the pandemic will certainly be behind us 1 day, this organization's muscle will be very important; B, use of technology and data. In many of our businesses, we are -- we were always tech and data first. But this will now become almost a base level requirement across origination, risk and customer engagement; C, creating certain right-to-win franchises. The bank was early in microfinance and in cards, leveraging tech and partnerships, as we've said before. And has been able to create scale even in a tough year. These businesses have remained ROA-positive. This will be a constant endeavor. We are now leveraging our distribution [ in para ]. Acquired via micro banking to enhance our product offerings, such as affordable housing, tractor, secured MSME loans and loans against gold. D, changing the internal dynamics around client segments and how we create cross leverage. This is perhaps our most ambitious project. We have nearly 4 million customer relationships in metro Urban India, through our branch banking and card franchises, of which 60% interact with us via digital channels. And we add between 1.5 million to 2 million new customers every year. We have been running an internal project, Abacus, to see how, in a modern way, we can build customer pool for broadening our relationships. Across 1 lakh customers, this has been very promising, and we now intend to give it more momentum in terms of tech, design and branding. We will keep you updated on this over the next few quarters. E, leveraging partnerships to generate new businesses and scale. We do have a deep DNA for partnerships with startups, fintechs and even established players. This we have demonstrated. This philosophy permeates most of our client segments. Our belief is that customers of financial services will use the bank services, not just through a branch and now the app, but also through our partner ecosystem. Embedding our services through these partners will allow us to expand our customer acquisition at lower cost. And now a few risk management principles that we will adhere to: A, granularizing deposits, reduction of cost of funds; B, reasonable diversification of asset businesses across secured and unsecured, reducing concentration risks; C, maintaining strong capital position throughout; D, increasing PCR over the next years [ due ] to the better industry standards; and E, improving earnings diversity and predictability. I'll stop here with this, we will now take questions.

[Operator Instructions] The first question is from the line of Kunal Shah from ICICI Securities.

And hope all are safe and healthy with everyone in the bank. So firstly, in terms of the -- maybe we have mentioned in terms of the strategies of segment granularization as well as in terms of PCR, but do we have any buffer now currently and have we utilized any of it in Q4? And what is the contingency or provisioning buffer that we have on the balance sheet currently?

So Kunal, what we did was we accelerated the provisioning on unsecured retail businesses. And we've also provided for restructuring, which is yet to get implemented. So essentially, to that extent, we are not carrying anything forward in terms of expected provisioning on the current book. We are not specifically carrying anything additional in terms of COVID provisioning. What we have done is we've taken additional provisioning on our NPAs.

So broadly, if I want to understand in terms of almost INR 3,100 crores of GNC, and sorry for this data question. But overall, in terms of additions to GNPL of INR 3,100 crores, how would it be across the product segment? And if I were to look at it in terms of the credit cost of INR 2,400 crore, if you can just give the broader breakup of credit card, MFI, corporate and other retail?

So broadly, on credit costs, Kunal, I think the data is given in the investor deck.

Very detailed data is there on Slide 21 and 22. Full breakdowns are there, exactly to your question.

No Sir, they are largely in terms of the GNPA and the net NPA, I think.

And in the following slide, breakdown by category.

Yes, there is no GNPL.

Yes.

Because there would be write-offs across the segment.

Sure, sure. So broadly, about a little more than 1/3 is cards, about INR 1,300 crores is cards. About INR 400 crores is -- INR 390 crores is MFI. Approximately INR 750 to INR 800 is retail and wholesale is about 600 crores. That would be the broad breakup.

Okay. Perfect. Great. And just recoveries which were there during the quarter, in fact, quite a significant recoveries as well as upgrades. No doubt it would be maybe accumulation of past 3 quarters as well in terms of the efforts. But which segments are actually leading to this?

So again, upgrades are -- we had some upgrades in wholesale and retail predominantly. And some in cards. Recovery also predominantly it's retail, secured and unsecured retail, where the recovery is highest and to some extent, MFI.

So okay. Okay. And last, in terms of maybe the way you articulated the strategy. But finally, when we look at it in terms of the overall book, how do we expect it given the opportunities, which could be there? How do we look at the growth? And finally, in terms of maybe any cap wherein we would have in terms of the credit card that's not getting it beyond 20%, 25% of the portfolio [ or sense ] that you are not going beyond a particular level of the balance sheet?

Yes. Indeed, go ahead.

So I think, Kunal, I think, first of all, it's a little bit of a dynamic environment because we are again into some level of uncertainty. So essentially, we will look at where we think the risk/reward is stacking up given the environment. So there is no hard and fast rule. But having said that, I think on a 2-year basis, we will definitely want to reduce unsecured exposures in retail by predominantly sticking to unsecured between cards and MFI, deemphasizing unsecured outside these 2 portfolios. And adding to secured engines like Mr. Ahuja mentioned in his speech, wherein most new products in retail that we are either scaling up or introducing is on the secured side. And also, more importantly, adjacent to our current strategy, where we are able to either leverage the customer base or the distribution network or both.

If I may add 1 sentence that the proportion of unsecured will continue to go down from so-called this moment onwards, okay? And like you said, in a 2-year time frame, we do hope that it will go down by maybe 7% to 10% of the total book from where it is right now, okay? So that's a broad directional endeavor of the bank in terms of how we want to build the future, yes? And if -- I know it was a bit much, but something that I was trying to sort of say in terms of the forward journey of the bank. That entire shift is something that we need to bring about in terms of the new way of banking. And we see the landscape definitely changing. And we certainly will want to use our agility, our tech and digital strength and also the way we look at fintech and other partnerships. Like we said, to make sure that the future journey is more about how you serve the customer rather than in very traditional terms of building balance sheets, et cetera, et cetera. So that's the outlook. So all of this that you're asking will be very, if I may say, automatic, if we are able to successfully implement our new vision. We actually hope this actually second wave third has come, otherwise, we would have put out our whole vision document. That's what we were hoping to do. But somewhere in the last month or so, everybody's mindspace and energies and time has got a bit distracted on the health front. But that is something we will do in quick time and put this so-called new design and new thing out there for everybody. But to more simply answer your question, I think Jaideep has given you a very good answer. I just want to overlay the sentence like directionally, that is the way we want to move forward, okay? But we don't want to give up where our strengths are. We also don't want to give up our ability to sort of scale up and maintain leadership in the so-called businesses where we already have a premium position, and which are also giving us very decent ROAs.

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

I wanted to check and update in the recovery upgrade, is there any lumpy corporate accounts which got downgraded and upgraded upon restructuring and hence, is that understanding right because...

No, Jai, we've not had any COVID-related restructuring upgrade. We had an old NPA which got upgraded because of change in management control.

Good, sir. And then too, if you have the quantum [ in that is there lumpy ]?

Yes, nothing lumpy, but -- nothing lumpy.

Sure. And second, sir, is on MFI. If you can -- now you had said in your opening comments that in the 4 states, you are not -- you have been kind of virtually stopped disbursement. So if you can share; a, the power book for entire MSI as of now and maybe the growth outlook that you have in the entire MFI space?

So the power book 30 plus in the MFI is about 7%. And from a growth perspective, yes. And from a growth perspective, if you look at it, we are basically, as of now, as I said, cautious. We are not still disbursing in the 4 states. In the others, we are, but with -- as with the pandemic, which has suddenly started raising up again, I think the focus has shifted back to collections. But existing customer disbursals continue to happen. In any case, this quarter is usually a weak quarter for MFI.

Okay. And the last question is, sir, now as we conclude FY '21, I think the entire impact of first wave is there in the numbers. If I were to just look around -- I mean, if I were to just calculate the slippages for the entire retail book would be around 7%, something, and you add 1.5% of restructuring, which is 8%, 9% kind of a stress flow-through for the first week. Now early times, but still, would you hazard a guess that howsoever serious or severe may be the second wave, but the impact should not be -- should be lower than the first wave, at least for the retail portfolio? Or how would you think the second wave versus first wave impact?

Yes. So if you see, when I was speaking, I was trying to say the same thing, that there are 2 things which we have done. One is that the existing portfolio has become far more resilient. And the credit quality has gone up, partly because the weaker segments have gone out. And also because the entire new acquisition, which has come in, is performing much better and is holding up, whether it be the cards business space or the loan space -- retail loan space or the microfinance space. And the same, even today, as we speak, when we saw signs of the second wave coming in, we further tightened the acquisition filters. So the other thing I think we need to keep in mind is that when the lockdown happened in, let's say end March, the first 1 on 2 months were -- everyone was taken by a little bit of a surprise, and therefore, then one -- put in one strategy and therefore got caught into the act. But now I think the operating manuals and the processes are fairly well laid out. You know when a lockdown happens in a particular place what is to be done, what operating procedures are to be put in place. So we are far better prepared to be able to handle this. So if you keep this in mind, definitely, the second wave impact should be much lower. And also, one needs to be at least hopeful that the second wave duration will be much smaller because of the increased vaccination rates, which are supposed to be happening right now as we speak.

The next question is from the line of [ Radish Kumar from Systematic Group ].

Can you hear me, sir?

Very clearly. Please go ahead.

Okay. Sir, my question is pertaining to the wholesale book. So if I see there is a [ end of SAP ] change in the yield, what we have gone through around 7.6%. And considering the funding cost and considering that we have 1.85% growth in PA and 93 bps net NPA number, so close to 100 bps now, number of credit cost is there as well. So like how much is the ROI that we generate on this wholesale book? Which is, I think, driving overall performance for the bank. So if you can clarify on this?

So [ Radish ], so we are in a targeting -- transitioning mode on wholesale. So naturally, when you finish the business deal, the idea is to kind of cost derisk the business. Once at the current income-generating levels with our cost of funds coming down, we are quite confident that once the normalization of provisioning happens, which should pretty much happen unless there is something very extraordinary happening next year, we should start getting into making reasonable ROAs. It's not going to be anywhere close to what one would make in retail given the profile of customers that we will want to deal with. But it also -- it's not only to look at a standalone business of ROAs for the wholesale book. One, it gives you size and scale; second, it gives you a presence; third, it gives you an opportunity to cross-sell SME, commercial banking, retail, salary accounts, et cetera. So you can't look at that business in isolation purely from an ROA standpoint. Having said that, I think we will want to do low-risk, medium return kind of business and that's with granular structure. I think we will not want to, obviously, go back to a multi structure, which hurt us in fiscal '20.

Okay. And sir, like, in the credit card business, what is the delinquency rate that we have in Bajaj and non-Bajaj originated book, if you can tell us?

Typically, the difference is between 25 to 30 basis points on an average.

25 to 30 basis points. And this is for....

That book is better by about 25 to 30 basis points. So not much difference.

The next question is from the line of Manish Shukla from Citigroup.

On micro finance, did I hear you right that you restructured about INR 280 crore?

No, no. INR 280 crores, which we spoke about on the business loan side.

[ that was where we not ]

Okay. My bad. The other question is what is the average duration of the MFI book pre-COVID and post-COVID?

About 18 months.

Not much of a change.

Not much of a change. We do either 18-month loans or we do 24 months loans.

Okay. All right. And in terms of the collection model, is the frequency of collection changing? Or how are you thinking about it?

Our predominantly, our collection model is on a monthly collection model, and that continues. There is a small portfolio, which is on a fortnightly basis, but largely monthly.

Okay. And to an earlier question, Mr. Ahuja answered that unsecured might decline as much as 8% to 10% over the next couple of years. Just thinking how do you think of it in terms of a blended ROA for the bank? Because the yield differential between secured and unsecured would at least be 500 basis points, if not more. So what does it do to your ROA aspirations?

No. So Manish, we are also talking about products where -- which are not like the prime mortgage products. We are talking about affordable, we are talking about gold. And these are -- broadly, I would imagine, in the range of, let's say, 9.5% to 12% range kind of a book. And I think what will happen is that the amount of wholesale banking pure asset growth will be lower, because as Mr. Ahuja said, that will grow in like the high single digits. So that -- and we have some very low-yielding, some customers are carrying exceedingly high liquidity today, and that has been the case over the last 12, 18 months. That should unwind itself. We also have -- in addition to excess liquidity, we also have wholesale book, which is deployed for liquidity purposes in terms of advances. So as we rightsize some of these businesses, I don't think the ROI impact will be dramatic. We will continue to, obviously -- from where we are, we need to go a long way up.

Okay. The last question, a couple of times, normalized credit cost was mentioned. Given the book mix which you think you will get to, what do you think that number will be? And how long before you get there?

Manish, I think it's a totally evolving situation. So I guess we should kind of...

They'll keep coming down.

Yes, directionally.

Where we are is at the peak level according to me, yes?

No, so FY '22 a normalized credit cost year or unlikely, is the question. That's my question.

No, no. Because there is a first quarter impact, no, that is linked towards what has happened, yes?

Fair point.

We all know that. I mean whatever books we are carrying right now, yes. So even seeing the card closing. We have taken 70%, 30% provisioning you have to take the next quarter. So that credit cost still has to be taken. Similarly, on the other business, only on the corporate side, I think we are at the, more or less, BAU level. Again, between some slippage and some recoveries, that may even out. Like -- so it may not be material at all. But on the retail side, there is still, like Harjeet also clarified very clearly. For the first half, we still have to watch. The second half, certainly will reflect much lower credit costs.

Understood.

But first half will be very difficult to say at this stage. It will be lower, but how much lower we cannot say.

The next question is from the line of Saurabh from JPMorgan.

I have 2 questions. One is what will be the loss in the card portfolio for fiscal '21 and the second is on the savings deposit rate, your savings rate and your term deposit rates are very close to each other. So when do you think you can start rationalizing this rate?

The credit cost in the card book is about 10.35% for this year.

And have you in Q4 as well, this would have been a similar number? Or...

We're talking about the full year. So it was obviously the first 2 quarters of the year did not have anything, it's largely come in the Q3 and Q4.

Okay. And as you normalize by H2, you would expect to come back to that 4.5%, 5% ROA?

5%, 5.5% percent by H2.

This is a 5% credit loss I am guessing, right?

Yes, 5%, 5.5% that's what I said, the credit cost is what the normal run rates are.

Okay. Okay. And on the deposit rate?

So on the deposit rates, we obviously continue to rationalize the rates. We have materially reduced the rates at the bulk end of the bucket. So we have an inverted curve there. We want to continue to encourage granular retail deposits so that we get customers into the bank. And then, of course, cross-sell both assets and other fee products. So I guess, that strategy will continue. But at the same time, clearly, both directionally will keep coming down over the next 2 to 3 quarters at least.

Sir, just 1 follow-up. On Slide 39, on the market share. So your spend market share is 5%, your advances market share is 11%. Why is that on cards book business?

So if you look at advances, we've always followed a strategy of doing both spend linked to loans and some of it out of limit loans, et cetera, on our card base. Objective being to try and maximize on our earning book, and therefore, you see this correlation, where the spend -- the advances market share will always be higher. We, along with 1 or 2 market-leading players do have a higher, let's say, advances per customer, which we run with because of the strategy we just mentioned.

Okay. So this is basically the EMI loans, right?

That is right. That is correct. That is correct.

And what will be the mix between the revolves and the loans?

I mean, so the revolve rate, if you look at it on Slide 40. Yes, you will see the book difference...

The next question is from the line of Adarsh Parasrampuria from CLSA.

I had a question on the comment that you made on the unsecured book, right? I believe it's cards and MFI. They are core portfolios and the share has accreted over the last 4, 5 years. So just wanted to understand the state of share drops, it was 33% in FY '21. Over a time period, it will drop by 5 to 10 percentage points, is that correct? This 33% share of...?

So please understand that we do run some other unsecured businesses as well. Partly on the MSME side, we did run some on the business loan side. We had a very small personal loan book as well. So those are the businesses which are not going to grow at all. In fact, a lot of them have been stopped. And therefore, on the other side, the secured businesses will start growing much faster because when we start doing things like mortgages, the tenors are long and the book stays longer, and therefore, the growth in the book is that much more. And that is how the mix will change.

So these comments has nothing to do with how we look at on a forward-looking basis the cards or the MFI portfolio. This will remain as [ COVID ].

As we said, that we will continue to grow in these businesses, and our market share will be either maintained or grown.

But...

Yes. Let me step in here. I think it's being misunderstood. If you take the bank as a whole, there is a certain percentage of unsecured. In the year, that has several components, 2 of which are cards and MFI. And then there are 2, 3 other components coming from the retail part. And there is some component coming from the wholesale part also, yes? Yes, there are many times where you -- even on the wholesale side, you do unsecured for certain names. When you want an entry into a company initially for a few months, you stay unsecured before they bring you into the consortium and things like that. Or you may do short-term lending to public sector companies, which are usually unsecured. So there are many components to unsecured. Overall, the portion -- proportion of unsecured for the bank as a whole. The comment I made was in that context, that, that shall come down. And within that category, we are going to directionally bring down wholesale unsecured and these 2, 3 components of retail unsecured which Harjeet just clarified. But as far as cards and MFI are concerned, these are our pockets of strength. These are our businesses where we have strong competitive positioning and these definitely are our growth businesses also. So there will be a rebalancing of the portfolio from that point of view, overall leading to a reduction in overall unsecured versus the total. Has that -- does that clarify?

Partially because I would still believe that part of the MFI is 33% of the portfolio and they remain growth portfolios. So difficult to -- so until or unless cards and MFI are not going to grow or some parts become the focus areas. Mathematically, I find it difficult to add up to the fact that -- because this 33% is a very large number, and it's specific to us. And obviously, the strength areas. So I don't see how we would get a very -- because -- or if you can broadly tell me out of, like, say, the book, right? 33%, as I said, is cards and MFI, what percentage would be -- of the portfolio would be other unsecured, right? Be it sitting in corporate, be it sitting in retail ex cards? So 33% is cards and MFI unsecured, which is clearly growth focus area? Yes. The ballpark number is good enough.

No, no, I can answer that question. So there's a significant portion sitting in wholesale, okay? Right now. And that is something that will certainly be deemphasized, yes? So -- and has been de-emphasized already. So you will see that number tail off. I think easily a 5% overall reduction on the balance sheet will come from there without touching card growth, yes? So that takes care of most of what I said. Right now -- and on the retail side, 3% is what Harjeet was talking about, about the piece that we don't like. So a 4, 5 there and a 2.5, 3 here it's about 6%, 7%. And that's all I was talking about.

Sorry, okay. So you say that it's correct. Now that part is something that comes off very sharply because either you stop or you are going to let that business run off very soon?

Correct.

Got it.

Also keep in mind that in the last 1.5 years, business loans, which was a secured engine because economic conditions over -- for 1.5, 2 years has not been growing very aggressively. And that's been a conscious strategy. But now when home loan comes in, which is largely due to the salaried segment, that is a segment which will, therefore, grow fast, and therefore, we'll be able to fill in that secured gap, which was, to some extent, in the last 1, 1.5 years, growth was missing.

Yes. The only point that is that with our cost of fund differential versus a lot of peers, right? The point was raised in my last question. Barring this 33% book, which is cards and MFI at blended yields would be 18%, 20%. Rest if the migration is so sharp towards secured assets. And obviously, from a credit side, it's okay. It's good. But I don't know how -- what gives you an advantage to being those businesses per se, right? Like why some of the low-yielding businesses really require presence of low cost of funds. Otherwise, it makes very little sense to do those businesses. So I'm just trying to understand that -- then the 33% is only the profitable part. The rest actually will become -- it was low ROA, and it will become even lower ROA, right? In a normalized business case?

Yes. No. So understand that when we talk of housing, what housing are we talking about, right? The reason we got into housing at this stage is; one, we've defined the segment which we are getting. So we're not getting in the 7% interest rate housing. The second is that we have roughly about 150, 160 small town branches is where the housing is going to come from. So we are talking about a very granular level of housing, where interest rates today also run in the 9.5%, 10.5%, 11% kind of range. That is the housing which we will build. And the reason we're building that and where we have an edge is the fact that we have a distribution. There are not too many large banks which play. There are few HFPs which play there, and that is the competition which we have -- which we will be faced with. So there is a space which we believe we can make an entry into, and there is a right to win, which we see there. We are not, therefore, talking about getting into the bigger cities, the top 30 cities and, therefore, operating at the let's say, INR 1 crore, INR 70 lakhs or INR 2 crores housing levels at 7%. That is not where we are getting it.

And also, we have about 50 bps lower on the cost.

Yes.

And I think one more point I want to make is that given the trajectory of the profile of the deposit franchise, the way it is turning out, easily within this coming next few months, we have the potential of reducing cost of funds by another 40 to 50 basis points easily. So we've reduced by 100 basis points in this last 10, 11 months. And I think there is, easily -- I mean -- and as we have been dropping rates and dropping rates, we have been seeing actually the deposit accretion on the lower granular retail side, not only not to be negatively impacted, on the contrary. As you can see in all our ratios, it has -- the flow has been even stronger. So we do believe that there is continued scope to keep bringing them down, quite immediately actually, and not in any way decelerate the growth of the granular deposit base. So the cost of funds gap is getting bridged. And I believe very strongly that in the next few months, you will see that getting bridged some more. And also, we are managing the credit cost side much more tightly. So ultimately, our entire -- this thing is becoming more competitive from that standpoint. And we've spent a lot of time talking about our digital platforms and those aspects of our business, which also bring down acquisition costs in other ways. And there, we do play successfully already and that is another area of significant competitive strength and ramp-up for the bank. So you have to take it all in totality, in terms of what we are saying.

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

Jaideep, a question for you. In the initial part, you had indicated that the overall slippages was about INR 1,300 crores. And Harjeet mentioned that the total provisions made on the card book was about 10.5%. That itself translates to about INR 1,200 crores. If I look at your slide on the net NPAs on the card book, it shows that there is another INR 250 crores of provisions, which needs to be made. How do you reconcile these numbers?

Sorry, Mahesh, you have to repeat that?

Okay. I'll just give you. So see, Jaideep had indicated that the total slippages on the card book for the year was INR 1,300 crores. And Harjeet mentioned that the card book provisions made was about 10.5%. 10.5% translates to about INR 1,200 crores.

No, it's INR 1,100 crores, INR 1,100 crores. Go ahead, but yes.

INR 1,100 crores, is it?

Yes.

Okay. Because if I look at the slide on the gross and net NPAs, there's INR 250 crores of pending provisions in that book. Is this reconciliation correct?

Yes, that's a net NPA, correct.

Okay. Perfect. That's number one. Second one, in Exhibit 44, can you just explain what is this chart mean in the -- on the stock? The 6 months 30-plus comparison with the industry. I assume that you're talking about in March '20, these loans -- the cards originated in that -- on that period. 6 months later, your NPAs in that book was 6%, is it?

Yes, it's not NPA.

30% plus?

Origination in that period measured for 30-plus 6 months later. Both for industry and for us.

So in September 2020, the origination, which you've made in March 2020, it showed a book of 6%?

Sorry, which one are you saying?

The same slide. I'm just trying to...

Yes, because you had a moratorium in which there was no aging happening. And also, what happened was that there were cards towards the later end of the -- where the applications have come in, which we source towards the later end of March and a little bit in April, which was a spillover. We immediately went into a lockdown situation. And therefore, you saw a little bit of a spike. And that is why the 2 months preceding that, if you see, you almost see negligible 6 MOD30+. So you need to be able to even it out.

Okay. And just one clarification on this. One would have thought that the incremental card origination would almost have a much lower delinquencies than what has been reported even in the previous years, right?

If you had, you have to understand that when you do a 6 MOD30+, okay, for a card, which when we did it, straightaway got into a lockdown situation, you would even have a few cards go up, that percentage looks very high. That is the reason why this is happening. Otherwise, if you look at it, it would have never come down. Most of the cards posting have started happening later. And then you see this curve balancing back again.

Okay. Got it. Okay. This. And this Slide 42, you're still comparing it with March 2020 numbers, is it, when you're looking at the 90-plus indexed delinquency rate?

So I -- delinquency?

Now when you see this -- the shaded portion, with what should I see this number now?

No, no, no. So delinquency -- this is basically saying is that each share on an app -- if you compare that shaded -- I mean, that segment's delinquency at any given point of time, to the average delinquency, then how does it perform. So for example, salaried -- if my average, let's say is 100, then salaried would have been 94 basis points and self-employed would be 114 basis points. That's how to read it.

So when you say source is table of March 2020, why would you do that?

No, that is a typo. That is not applicable here. Yes.

Oh, okay. And one last question...

It's only internal data.

Perfect. I just wanted to understand that. Sorry, one last question. What was the write-off that you experienced in the unsecured wholesale book?

Unsecured wholesale book?

Yes.

Not much. I think it's not material this quarter, INR 20 crores, INR 30 crores maybe.

Okay. And can we assume that the profitability that you have now shown in the wholesale book can we [Technical Difficulty]?

Sorry, we couldn't Mr. Mahesh...

We couldn't -- we couldn't hear you.

If I look at the segmental data on profitability across segments, corporate book has turned profitable this quarter. Just wanted to check, should we now assume that we have [ this appointment ] -- this should be a base run rate in which we are running?

I would say it is perhaps better because we are expecting some old recoveries to happen also now, shortly.

There is some recovery in our [ ideas, ] but on an average, yes.

Thank you. The next question is from the line of Hiten Jain from Invesco Mutual Fund.

I have one question. So there has been a good growth on core fee income, both year-on-year and sequential. If I just look at the drivers, it looks like it has come from Trade and others. So that used to be around INR 30 crores, INR 40 crores at the quarterly run rate. But this quarter, I get it at around INR 140 crores. So what has exactly happened here?

No, no. There is a INR 60, INR 70 crore recovery from a written-off account in wholesale, in addition to all the recovery and the upgrades that we discussed earlier in the call. When we recover from written-off accounts, it comes -- shows up as revenue. So there is a INR 60 crores, INR 70 crore element there.

Okay. Even if I was to exclude that, then still, the number is kind of doubled from a normal quarterly run rate. So is it -- I don't know what it is, fee income, what drove this growth? [Technical Difficulty]

Ladies and gentlemen the questioner has ceased to be online. I will [ give ] the management back to the conference [Technical Difficulty] We request all participants to stay on the line while we reconnect the management back to the conference. Ladies and gentlemen, thank you for patiently holding the line. We have the management reconnected to the call. Sir, we have the question from the line of Mr. Hiten Jain from Invesco Mutual Fund.

Yes. So that question was that this INR 40 crore has become INR 140 odd crores in trade and others. I think even if I was to exclude the INR 70 crores of one-off, which could be a recovery from a written off account, still that number has doubled. So is there anything more to it in terms of one-off?

No. Then we've had a little bit above trend granular recoveries from all other retail because, obviously, you are having a slightly higher base of return of accounts, given what's happened in the last 6 months.

Okay. So it's largely recoveries from written-off accounts. Okay.

FX business is trending above trend. Trade is on similar lines. And it's the unusual bump up of Q4, nothing out of the ordinary.

The next question is from the line of [ Shivan from Point 72 ].

Just a quick question on the collection efficiency. I think for MFI and cards, we have done pretty well March quarter at 700 percentage level. Do you mind to give us some color on how is it doing in the month of April?

Yes. So in the month of April, the lockdowns typically started only from the middle of the month. So for the last 15 days, we've seen a drop by about 3 odd percent, 2% to 3%. So not material, but one has to see how this situation plays out in the coming months.

Got it. So 2 to 3 percentage point drop, that's similar for MFI and cards as well?

That is correct.

Got it. Understand. Just now I think you were commenting that credit cost -- we already saw the peak this quarter. And going forward, the first half also still has abated, but could be lower, right? Just wondering whether you can provide more color on what is it driven by? Is it because this quarter, we have the accelerated provision to put the coverage unsecured and, going forward, that will not happen? Or it's going to be driven by slippage coming down faster from the current level?

Yes. So the way it happens is that there was -- post the moratorium, there was a certain bulging of the delinquency buckets, which was there. And with every subsequent quarter, either they get resolved or they flow into NPA and then in cards, for example, they get written off. So the last portion of that is something which will flow in the next quarter, but majority of it is already done. And post which the regular run rates come in, and therefore, the slippage also comes down and hence, your credit cost starts coming down.

Okay. Got it. So slippage likely will come down from current level as well in first half, right?

That is correct.

Ladies and gentlemen, that was the last question for today. We will now conclude the Q&A here.

Can you give us a minute.

We need a minute.

Yes. So please go ahead.

Yes. So to the participants, I just also wanted to clarify on the provision coverage ratio as slippages come down over the next year and we start continuing to provide on our current book basis policy, we automatically should expect PCR to materially improve over the next 9 to 12 months in the range of 7% to 10%. So just wanted to clarify that in case there was some misunderstanding on that question. Yes, that was the last comment, yes.

Thank you. Sir, can we conclude now?

Yes, please. Thank you.

Yes. Thank you very much for everyone to be attending the call. Thank you.

Thank you. On behalf of RBL Bank, we thank you for joining us. You may now disconnect your lines.