The South Indian Bank Limited (SOUTHBANK) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Q1 FY '21 Earnings Conference Call of the South Indian Bank Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pritesh Bumb of Prabhudas Lilladher Private Limited. Thank you, and over to you, sir.

Good morning, everyone. On behalf of PL, it is a pleasure to welcome the management of South Indian Bank. We have with us the Managing Director of the bank, Mr. V. G. Mathew and his team. We will start with the call -- we will start the call with brief remarks on Q1 FY '21 results, followed by Q&A. Without much ado, I would like to hand over the call to the management. Thank you, and over to you, sir.

Thank you very much. A very good morning to all of you, and thank you for joining us for the South Indian Bank Q1 FY '21 Earnings Conference Call. We are joined by my colleagues, Mr. Thomas Joseph, EVP, Operations; Mr. G. Sivakumar, EVP, Credit; Mr. K. N. Reghunathan, EVP, Treasury; and our CFO, Ms. H. Chithra. We hope that you and your family are safe and healthy. We continue to appreciate the efforts of our employees who have shown strong resilience and the ability to adapt to changing circumstances. Amid the continuing lockdown, with the help of our in-house BCP team, we were able to keep 98% of the branches and ATMs operational across the country following all precautionary measures as per the guidelines. As on July 4, 2020, loans under moratorium stand at approximately 36% of total loans. As stated in the Q4 FY '20 results conference call, we were targeting PCR of 60% in the next 6 months. We have reached PCR of 58% as of June 2020, and we'll positively look forward to cross 60% in September 2020. Now let me take you through the key highlights of the operational and financial performance for this quarter. I'm delighted to state that the bank's operating performance continues to be robust. The bank reported PAT of INR 81.65 crores for Q1 FY '21. We continue to expand our noncorporate portfolio, particularly in the segments of retail, gold, MSME and agri loans, which now forms 72% of the overall loan book. As on 31st March 2020, the total business of the bank stood at INR 148,288 crores. Advances grew by 3% Y-o-Y to INR 65,819 crores driven by continued robust growth in loans under agriculture, retail and MSME segments, while the corporate loan portfolio declined. Retail loans grew by 10%, primarily driven by increase in our desired segments such as mortgages, gold loans and auto loans. The share of corporate loans declined from 32% as of June 2019 to 28% as of June 2020. Deposits, excluding certificate of deposits, rose by 8% to INR 82,469 crores. CASA deposits increased by 12.5% to INR 22,179 crores. CASA ratio improved to 26.9% of the total deposits. Our investment was at INR 20,601 crores, of which esteemed category contributed INR 16,375 crores, while AFS contributed INR 4,211 crores. GNPA ratio improved to 4.93% as of June 2020 from 4.98% as of -- as on March 31, 2020. Net NPA ratio also improved by 25 basis points to 3.09% as of June 2020. Net interest income for the quarter stood at INR 587 crores, registering a growth of 10%. Net interest margin was 2.62% in the quarter as against 2.53% in Q1 FY '20. Other income for the quarter increased by 57% to INR 285 crores. Our core transaction fees contributed INR 49 crores, while treasury income increased to INR 140 crores. We have already entered into multiple distribution tie-ups with leading insurance companies, and we are seeing strong traction in third-party sales. As we continue to expand the retail and MSME verticals, we expect better momentum in the transaction fee and third-party income in the coming quarters. Operating profit for the quarter was INR 403.68 crores as against INR 317.63 crores in Q1 FY '20, an increase of 27%, driven by better margins and treasury income. In Q1 FY '21, the cost-to-income ratio was 53.7%, that's against 55.7% in Q1 FY '20. The business per employee rose by 2 percentage points while business per branch rose by 3 percentage points. We expect positive impact on OpEx ratio as we gain from operating leverage from our centralized operations, higher fee income and increasing productivity from existing branches. The bank has made COVID-19 related provisions aggregating to INR 100.5 crores against standard assets to strengthen the balance sheet. Based on RBI guidelines, the bank is required to make a provision of 10% in respect of all loans overdue as of March 1, where moratorium has been granted over the next 2 quarters. Loans that were overdue more than 90 days as of June 30, but have not been classified as nonperforming, were INR 714 crores. On these loans, the bank has made additional provision of INR 50.6 crore during Q1 FY '21, taking the total mandatory provision to INR 71.4 crore as of June 30, 2020. Additionally, the bank holds an ad hoc provision of INR 29.1 crore as on June 30, 2020, to meet any future impact of the pandemic. The above total provision of INR 100.5 crore towards standard assets is not considered in NPA calculation. Overall provisions increased by 43% to INR 293 crores in Q1 FY '21. These provisions included loan loss provisions of INR 313 crores. Including write-offs, the provision coverage ratio continued to improve and stood at 58.8% as of June 2020 as against 54.2% as of March 2020. In Q1 FY '21, fresh slippages amounted to INR 158 crore, which were primarily contributed by gems and jewelry and trade businesses within MSME vertical. There was 0 slippage from corporate segment during the quarter. Considering the COVID impact, it will be difficult to give a quarter-to-quarter guidance on slippages at this point of time. Bank is confident of holding the gross slippages to 2% of the total advances during the year, taking into account the impact of COVID pandemic. Our overall capital adequacy now stands at 13.49% while the core CRAR is at 10.82%. The bank has a wide geographical presence with 875 branches, 54 extension counters and over 1,424 ATMs. To summarize, the bank continues to focus on strong business growth, especially in the areas of retail assets and CASA, favorable loan mix and improved asset quality. The bank will closely monitor the impact of COVID on our business and assess the outlook closer to December 2020. With this, we open the floor for questions.

[Operator Instructions] The first question is from the line of Vibha Batra from FairConnect.

Sir, my question is on capital adequacy, especially tier 1 capital adequacy. It's 10-plus percent. And if you were to see the scenario for hybrids, AT 1, it's -- the market is very, very risk-averse. So for a bank like you, it will be primarily equity, it will be the internal capital generation or raising market -- raising from the market process? What's your view, especially in light of COVID? And also since you focus on SME related segment, don't you think you should be operating at higher-ish capital adequacy and you should have adequate buffers to meet the unforeseen losses?

Yes, you are right about many of those surmises. But I would also like to highlight that in the last 5, 6 years, we have been managing capital on a very shoe string pattern. And I would say that 13.49% is the highest number in any quarter during the last 6 years -- 6, 7 years. So definitely, we are very sensitive about it. We are -- we have demonstrated that we will be able to plan out and manage with a reasonable amount of capital. But we are open to strengthening that at all times. As the market perception starts improving, we will start looking at all options of raising capital. We will do that. As far as the pandemic is concerned, although we are taking a very conservative view, we have a certain amount of strength in our books because we don't have anything like unsecured loans, a very nominal number that we are talking about. All our secured loans are long relationships. And our portfolios are built up on the efforts of our branch managers and credit officers and business development officers, not driven by the DSA, DST pattern. Therefore, we believe that we have lot of strengths in meeting the situation. However, we are open to looking at capital raising at the appropriate time.

Yes, sir. And what would be appropriate time, sir?

We have to evaluate because, as you know, the growth is not likely to be anything very, very large. So obviously, if you look at the capital position, we have enough money to meet whatever expected growth that we are having in our books. So then the question is about our ability to provide for COVID. We have actually appended some of the provisions as you have seen. We have tackled most of the provision related issues on the current book itself and improved our provision coverage ratio significantly. Therefore, we have a little bit of time available. That is what I wanted to highlight. So we'll just wait and see how the market pans out, how things are improving. Then we will take a final call on that.

[Operator Instructions] The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, my first question revolves around your other income. Now your other income has seen quite a lot of variability in last 3, 4 quarters, if you see. And I think you mentioned about that insurance tie-up and improvement or traction in your other income. So I just wanted to understand some sustainability on your other income would be helpful.

Yes. The basic other income, that the core fee income always remains steady and shows a reasonable growth at all times. What creates an element of volatility is the money that is either coming from the treasury or not coming from the treasury. For example, if you look at 2018, practically no money could be booked in the treasury because that is the kind of market environment that was there. Today, thankfully, the market facilitates a certain amount of income to be booked there. And therefore, we have taken advantage of that. So obviously, we have done some transfer from the HTM book, and we have booked that income to cover our provision coverage ratio -- to take the provision coverage ratio steadily to our goal of 60% plus. So that is what we have done. Otherwise, this particular quarter, typically, what happens is the one-off items are only 2. One is what can come out of the income tax rate -- the interest on income tax refund. That is one number that can come quarter-after-quarter sometimes. So that is not [Audio Gap] this quarter. Another number that can come is what is coming out of the sale of Priority Sector Lending Certificates, PSLC. So this quarter, we have a number of around INR 30 crores, INR 31 crores -- INR 31 crores coming out of the PSLC sales because we have got excess priority sector lending. And therefore, that money is booked. Otherwise, it is always a steady one, and there is no volatility in the core fee income part of it.

So that INR 31 crores that you have mentioned, you're considering that as a one-off, that PSLC income?

Yes, PSLC what we have got in this quarter, it may not be replicated every quarter, it is not possible because [Audio Gap] if you have surplus. There is some surplus still left with us, but it also depends on how much is the appetite in the market. And generally, in the beginning of the year, the pricing is a little superior, and we have booked that now.

Okay. And also basically, this quarter, we were at about INR 285 crores. So even if I exclude INR 31 crores, we are at about INR 250 crores, INR 260 crores, right? So is that a sustainable number one can assume going forward?

Yes, it depends on how much we are able to get from the treasury, like we will definitely try to look for opportunities in the treasury, but it also depends on how much we are able to gain from the treasury operations. That, of course, is a number on which we cannot put a fix at the moment.

Okay, okay. Because last quarter, the treasury income was about INR 238 crores, and this quarter was close to INR 140 crores, right?

Yes, that is true. The INR 248 crore, of course, we explained it is partially because we had sold out -- it there in the balance sheet very clearly. We had sold in excess of 5% also.

Understood, understood. Fair enough. And as we discussed in the last quarter, FY '21 credit cost INR 1,000 crores we are looking at. So you are still maintaining that?

Yes. We said that the credit cost will be around INR 1,000 crores. And upon the basis of our projections and we have assumed that the NPA accretion will be contained at around 2% maximum. That means we are talking about INR 1,000 crores to INR 1,300 crores of NPA accretion and then [Audio Gap] of credit cost that will come in. It might appear to be a little on the conservative side, but what -- the piece that we are missing at the moment is what can come out of the recovery which is not added here when I say all these things. There are opportunities of writing back provisions. There are opportunities of credit back into the provisions from the recovery. These are the 2 elements which is not visible in our numbers at the moment, but these are the things that will ensure that the credit cost is well contained at the level that we are talking about.

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

Sir, a couple of questions. One is on the price slippages side, which was around INR 160 crore. So sir, primarily from -- as you highlighted in your opening remarks that some of this has come from the gems and jewelry and trading community. So do these accounts have not opted for moratorium and hence they slipped? Or we're cautiously recognizing this as NPA despite them being under moratorium?

Yes. Everyone can opt for the moratorium and standstill clause comfort is available. But then we take a very close look at all these things, and we take a very conservative stand. And where we believe, for example, this gems and jewelry, it is a relatively smaller kind of a company. There is no reason why he should have had so much of difficulty. So if he's having a difficulty, then it's better to be classified as NPA. That's our approach. And trade accounts also, I mean, we know there are some -- we know the pattern. We know the pattern among all. We have -- we've got a good portfolio of trade accounts. So we know how the pattern is coming up. So if somebody is having a trend which is a little different from this, then we will take a very cautious and conservative view. That is what we have done.

Got it. So, sir, this INR 160 crore, gems and jewelry contribute how much?

INR 35 crores. Trade is INR 31 crores. Construction is INR 10 crores. And metals -- metals means this trading in all these trading metals and things like that, around INR 10 crores.

Okay, okay. And sir, so now coming to the credit cost side. So when you said this INR 1,000 crore of credit cost in FY '21, does it including the outstanding balance which we have to provide on those fraud accounts?

Yes, yes. We cover everything because we have counted everything on that. What is not visible and not counted is the potential upsides that can come from the recoveries and also from the write back of provisions. For example, one account alone in an IBC proceeding, if that gets recovered, the overall provision will come down significantly. Need not necessarily, I mean, onto the loan book, but it will come on the SR book, it will come down by INR 50 crores, INR 60 crores. So that's the kind of potential that is available. So we are looking at all that. And we are pretty much confident that a INR 1,000 crore number is a good number considering the emerging position.

Sir, just a follow-up on that. So this INR 1,000 crore is also including the potential NTM on SR towards end of the year?

Not at all, not at all, because we believe there is only 1 portfolio which is -- which has given us trouble. Otherwise, no other portfolio, this INR 1,776 crores that we sold out in March 2017, that alone attracted two doses of provision, one in September 2017 and the other one now, and it is already carrying more than 63% provision. And I don't know. I can't just believe that all these accounts which are lying in IBC and also these accounts, along with that, you have got some good retail accounts also there. With all these accounts there, even 63% provision coverage is not adequate is something I can't just believe. But anyway, I mean, this is the correct position. And we are not counting anything for that.

The next question is from the line of [ Lalit Garg ] from [ Global Investment ].

Sir, my question is about any strategic investment. Are we looking for somebody to come on board for a strategic investment? Let me explain what I'm trying to say. There are these new share -- online share trading -- then I read that they are looking for tie-ups with the banks. So is there any movement, anything happening on that front, sir?

At the moment, no. There are no strategic investment discussions that are going on here.

The next question is from the line of Sivakumar from Unifi Capital.

Sir, what are the COVID-related provisions that we are carrying on the balance sheet currently?

INR 100 crores, INR 100.5 crores.

Okay. But do you think that should be sufficient given that our moratorium book is slightly on the higher side at 36% across segments? What gives you that confidence that you will be able to keep the credit cost low at around INR 1,000 crores for this year instead of having a very big AUM under moratorium?

Yes. So what we are looking at is moratorium is -- does not necessarily mean that these accounts are all defaulting or have a problem. The ones who have a problem, and we know those accounts because they are lying in the SMA 1, SMA 2 kind of -- or in various other forms of delinquency, we can see that. And that is something -- that's the reason why we have this INR 714 crores which is there today. And that also has come down significantly. From what was originally there, that number has also come down. And even there, I mean, what we need to look at is this particular -- when you say 36%, we also need to remember another one. That is out of these accounts, if I remember correctly, 21% of the moratorium accounts are having, in their liability accounts, enough money for covering more than 3 installments. So when we talk about 36%, it is not really 36%. But then we have not taken any benefit of that. We are still talking about 36%. And this is a number that we have to really recon. That is the comfort that we are having. So finally, finally, looking at RBI's requirement of provision, we are well above that. We have not taken any advantage of deferring or anything. We have taken the full provision and also provided another INR 29 crores. Then the accounts which are likely to slip, we are again taking a very conservative view, and we have taken a thorough review of everything. And then we are taking a very conservative view that it will not cost more than 2% of the asset side. So that is where the provision numbers are worked out. Then, of course, the potential write-backs, that is also something that we have to keep in mind. This has happened in the past. It can happen in the future also. So we are looking at all those things.

Right. Sir -- and especially in the retail segment, the moratorium related loans is slightly on the higher side at 46%. Given that you have a very big gold loan segment there and most of the segment is secured, can you give some color as to which subsegment is giving this kind of a number?

Yes, I think I should be able to give you that data now. One moment. Right. So the retail segment we would -- we will give the details. If you look at the total home loans, out of the INR 5,463 crore, the people who have opted for moratorium, their amounts add up to INR 4,101 crore, which is 75%. Now the fact that we need to remember here is we have given this offer to everyone. It's an opt-out scheme that we have done. That's the main thing. So we have told everyone that you can opt this and to be on the safer side. And then what is the indicative number that we need to worry about? That is, for example, what are the current balances in this SMA 0, 1, 2, et cetera, as on February 29. In that group, it is only INR 70 crores, which means it is only 1.28% of the total portfolio. Of the INR 5,463 crores, we are talking about a potential delinquency of only 1.28%, INR 70 crores. And other mortgages, total other mortgages, if you look at it, again, that number, the people who have opted for the moratorium is around 52%. But the delinquency part is only INR 69 crores, which is coming to only 1.31% of the total mortgages. Vehicle loans, it is slightly on the higher side in terms of opting for the moratorium, that is out of the portfolio of INR 1,098 crores, 76% has opted for it. But then again, the delinquency part is only INR 15 crores, which means only 1.37% of the total vehicle loan portfolio. And when it comes to gold loans, the ones who are coming in terms of delinquency, that is the SMA 0, 1, 2 is just INR 0.04 crores, nominal percentage. That's all. Others are all -- personal segment loans. The total personal segment loans we are having only INR 1,300 crores. And again, here also, the amount that is opted is only INR 10 crores, which means 0.77% of the portfolio. Then business loans, it is INR 2,898 crores, but what is opted is only INR 5 crore -- what is taking the benefit under the standstill is only INR 5 crores, which is 0.17%. So that is the comfort that we are having. In spite of the fact that they have taken moratoriums, they are also significantly showing capability to meet the -- capability as well as intend to make the repayment. So that is why the position as on 29th February was a very, very small portion. So that is where the confidence is coming for all of us.

Okay. That was very useful, sir. Sir, and within your housing loans and mortgage loan segments, the borrower base would be driven by salaried segment or the self-employed segment?

No. We have actually salaried, which is the most important one. See when you look at the total home loan portfolio of INR 5,463 crores, INR 3,557 crores is coming from salaried class.

I see. Okay. And in the mortgage loan segment?

Mortgage loan segment, of course, it is more like the business class community, which is [ small ], out of the INR 5,252 crores. What we call large business class, that is the one which is the largest chunk there, INR 3,545 crores.

Right. Sir, one last question on the liability side. We're increasingly hearing of reports that the remittances from the Middle East are coming down for the Kerala fraternity. Are you seeing a decline in the traction of deposit mobilization for your branches?

It is just the other way. The deposits are actually improving, and you would have also seen in our presentation, NRI deposits are actually becoming a larger portion, ever-increasing portion. It used to be -- I would just give a color on that. Total NRI deposits as a part of deposits used to be less than 19% in 2014. Today, we are talking about that as 29.90%. In this quarter, it has further improved. Last quarter, it was 28.55%. Now it has become 29.90%, it is growing steadily. NRI total deposits have grown by 12.73% as compared to other general deposit, retail deposits growth of only 8% that we talked about. So obviously, the NRI part of the business is very strong and growing very steadily.

The next question is from the line of Drashti Shah from Investec Capital.

Sir, I wanted to get some sense on the SME segment of yours. So now that mostly -- most of the parts have unlocked, what is your sense on the SME? And how are they faring in terms of business? And are you seeing transactions going up to normal level or what level are they going up and your way forward?

Yes. MSME is a very important sector for us, along with agri. But at the same time, we also need to remember that 47% of our advances, that is all smaller advance because we don't have bulk advances in Kerala. So of all the advances, 47% is coming from Kerala. So one -- thankfully, the position is that Kerala, the lockdown position is a little superior. And therefore, we find a certain amount of improvement in all the areas, all the areas we find -- like if you look at the people who are talking about the retail -- the retailers and also the footfalls in various shops and trading centers, et cetera, we find that there is a significant improvement in the activity level. And if you look at the accounts also, the cash flows are coming. And therefore, we believe that this is one area where we are going to have some more comfort, additional comfort this year and particularly in this pandemic, because, unfortunately, that is not the case in -- right now in Tamil Nadu or Maharashtra or areas under our Delhi region. These are other areas where we have been getting some good MSME business, particularly Tamil Nadu, it was very important. But right now, the Chennai region is not doing very well. So that part is something that we have to live with. But if you look at other regions in Tamil Nadu also like in a Madurai region, Coimbatore region, we don't have a significant problem at all. In fact, we find improvement in the cash flows coming out there. So I think it is mostly these very vulnerable, highly impacted metro centers, which are giving us some concern. Otherwise, we believe that things can really start improving now onwards. Incidentally, my total Kerala advances is 43%, not 47%. 43%.

Sir, and what is our SME moratorium, the moratorium taken on our SME book?

Just a moment. Yes, MSME it is 38.31%. And what is more important is the SMA 1, SMA 2 accounts, which have taken the benefit, that is only a number of INR 48 crores out of INR 16,319 crores of total portfolio, which is 0.29% of the portfolio. So this is the number that is actually a very, very important indicator.

Sir, so in our SME, would we have further classification of what is Kerala and non-Kerala in this moratorium? Just to get some sense because Kerala is totally unlocked.

Yes. I don't have it at the moment. I can share that data.

The next question is from the line of [ Sreesankar ] from [ JBSN ].

My quick question is, sir, you have been mentioning about trying to reduce the corporate portfolio. And if I look at your numbers, in the last quarter alone, above INR 100 crores are reduced from 40 to 33, is it correct?

Yes, numbers have come down, obviously, because the amounts have moved down below INR 100 crores, yes.

Okay. Yes. Sir, go ahead, sir.

Very simple. We are not -- wherever repayments are coming in, naturally, we would have filled up. But in the current environment, we have taken a very conscious decision that we are not filling up. That's all. That's all what is happening. In the process, we are getting an improvement.

Okay. In line with your thought process of reducing the corporate exposure and moving more to retail?

Absolutely, absolutely, absolutely. It is going very well. And particularly in the COVID context, we believe that rationalizing the exposure at the higher end would be the right way forward.

Okay. Sir, on the second side, you answered to a previous question with regard to your home loan portfolio, et cetera, that 75% or 76% of the amount people have opted for moratorium. Did I hear it correctly?

Yes, right. I'll just check the number once again. Yes. The percentage is right, 75.07% have opted for moratorium. Yes, that's right.

And of the total number of home loan people, a significant amount is actually salaried class. And despite, we have seen that option for moratorium is on the high side. Anything that you can link it to? So I'm trying to get -- to understand, has it got something to do with anything with -- particularly cash flow issues to a great extent. Because in this housing loan, is it anything related to Middle East connection or people from there who have come back who are not able to repay, et cetera. Are you able to bake anything? Because this number, for a salaried class being very high, this number looks slightly on the higher side.

Yes. So that is where it has -- let us not mix it up with the NRI portfolio at all, which is separate. So when I talked about salaried class, we have got the local salaried class, we have an NRI portfolio of INR 1,009 crores. Again, there also almost 85% have opted for moratorium, essentially because we are also encouraging them. We also told them that there is a moratorium available. In case you have issues, you better take this. But then what is more important is the delinquency as of March 1 or February 29. So when you look at that number, it is coming to just 1.98% of the NRI portfolio. That's all, just INR 20 crores. And if you look at the business -- salaried class also, it is coming to only 1.04%. And much more important is the indicator that I mentioned earlier, that is of all the moratorium cases, at least 21% is having money with us in the liability accounts covering more than 3 installments. And there are other numbers also along with that. Actually, others who are having the amounts available for 1 installment, 2 installments, et cetera, also I can read out. So 1 to 2 installments, people have got money, average is around 8% of the accounts under moratorium. 2 to 3 installments, another 5% is having money. And above 3 installments, 21%. So we are talking about 34% of the moratorium people having money in their liability accounts with our own bank covering installments. So that is where the comfort is coming. But as a caution, as a careful approach, many of them have opted for the moratorium.

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

Sir, I have a couple of questions. So first, just for a follow-up, this 8%, 5%, 21%, these numbers are by value, right? The 34% of the loans have 1, 2, 3 EMI balance, right? It's by value?

Correct. Yes, it's by the value, yes, yes.

Sir, firstly, on the gems and jewelry slippages. So I just wanted to double check, were these accounts under moratorium or they were not?

Yes, they are substantially under moratorium. And anybody can definitely take the standstill clause availability. We can also extend that if necessary. But our point, as I mentioned at all times, last 5 years, we have not given undue benefit to anyone. We have been recognizing stress where we find that, going forward, they may not do very well. Our experience at all times is to book the NPA upfront and then deal with it rather than postpone that. So here, also the same policy is being followed, nothing more than that. So we have had a very good look at it. As I mentioned some time back, we know the trend. We know the cash flows which are available with the trading community, with the gold jewelers. So if one gold jeweler or one of the companies in the trading community say that they have a pattern which is way different from others, then we need to look into that very, very closely. And that's what happens.

Okay. Sir, in terms of retail loans, you have given opt-out to all retail customers. Then how can a customer become NPA? Then how can you sort of spoil his CIBIL score?

So we are not spoiling anybody's CIBIL score as such. We are looking at the prospects, we are looking at their cash flows, if it is significantly impacted. And we know that the COVID is not going to -- it's not going to go away tomorrow. So obviously, we need to deal with that aspect. There is no other way. So we can merely postpone a problem, but it is always better -- I mean, this is always in consultation with the borrower also. We tell them that, look, I mean, we have given you all the comforts earlier also, we have, if somebody is eligible for restructuring under MSME, we have done that. And again, so we look at the pattern, what is the position that even before COVID, how is the trend? So with all that, we take a call finally. And we also tell them that, look, this is the scenario. And it is better that we deal with this problem and then close this, that is the best thing.

So for these retail customers, they were given moratorium, but you told then that you have to pay. Is that the understanding? That you have given the moratorium to all, but you selected those with inherent weak...

Moratorium is an option given to everyone. Everyone in the bank, moratorium is offered. I'm not talking about a retail customer, specifically, I'm talking about retail, MSME -- actually, the most of the slippages have come under MSME.

No, no, only for retail, how does it work? So if a person is under moratorium, how can it become NPA?

Yes. Like, we need to look at his ability to pay, his ability to -- I mean, there are other factors when it comes to NPA. It's not only -- I mean, it is not only his payment history or his ability to merely take benefit of something and then say that it is going to remain. And then the question is about the DP shortage. If there is a DP shortage, obviously, we have to take care of that also. So these are the things that we need to find out. So on the basis of all these parameters, we take a very conservative call on all these companies. That is what we do.

Okay. And sir, now when you say 2% kind of a slippages for full year, do you believe that this entire moratorium of 36% will just become 0% by the time moratorium ends because 2% is a usual -- business-as-usual kind of a slippages, right? You actually have had slightly higher, but 2% in general would be a business-as-usual kind of a situation. So do you believe this entire 36% will just vanish by the -- everyone will come out of moratorium as of 1st September?

We are not saying that everyone will come out of moratorium as of 1st September. But at the same time, we also know that we have got all those people -- I mean, their relationships are known to us. How their history -- I mean their conducted account is known to us. And on the basis of that, we have always the comfort. We know -- it's not as if you know, we are starting a new portfolio today. This is on the basis of a lot of historical parameters that we have an understanding of how the customer is likely to behave. Now the one thing that you should remember in the slippages which are coming out currently and also the previous slippages that happened over the last 5 years, that kind of corporate book doesn't exist anymore. So that itself is a great blessing for us. So we are now talking about cases which are manageable, people who have the cash flows, people who already have liability accounts carrying money for their installments. So obviously, when I talk about 36%, it is not 36%, it is much less than that because 28% of the people out of the moratorium are already having money for 3 installments -- 3 -- 1 to 3 installments. So therefore, we have the comfort of [Audio Gap] a number of around 2% appears to be quite reasonable to us.

Sure, sir. And just last thing, sir. What would be your NR-linked retail and MSME loans, so loans which have some linkages to NR diaspora -- NR people, yes?

Yes. In any case, the whole NRI portfolio, our total NRI portfolio under retail segment is only INR 1,920 crores, which is just about 2.92% of the total advances. So...

Anything on the MSME side?

MSME is very, very limited, basically. It's all substantially home loans or in some cases -- mostly home loans, and some LAP and also some of the vehicle loans, that is about all. These are the fundamental loans. So it's not as if our -- our NRI portfolio on the liability side is very strong. So against the 28% or 29% of the NRI portfolio on the liability side, the asset side is very different. Asset side -- on the retail side, what I'm talking about is INR 1,920 crores. So what I'm trying to tell you is given that, we have had a very close look. We are looking at a number of around INR 47 crores which requires very close monitoring. So that is what we are trying to -- and that is coming to around 0.07% of the total loan portfolio. So it is not as if NRIs are going to give us a headache, yes.

The proportion is very small at these numbers.

Yes, yes.

The last question is from the line of Rohan Mandora from Equirus Securities.

Just coming back to that salaried home loan customers. I just wanted to understand in case we have had some discussions with them, is there any income impact that they have seen in the last 2, 3 months? And also, if you could share what is the income profile in terms of average monthly incomes of these customers?

Yes. In fact, we -- what we do is we try to look at the cash flows of the customer during the previous year same month, current year same month and try to find out what is the movement. So such effort is always going on in the credit monitoring department continuously. And wherever weak accounts are flagged, these accounts are given for intensive monitoring by the branches. It is flagged with the concerned region and downstream to the branches for intensive monitoring, apart from the monitoring with the collection agencies, which, of course, collection agencies' efforts have come down a little bit right now because there are some restrictions about it. But at the same time, this kind of information is available to us, and we can definitely use our branch channel, the relationship channel to reach out to them and find out what their problems are. But I'm not carrying that particular cash flow number right now. So I can't say that very precisely. But then this is under very clear supervision, and we are very sure about it. And that is why I was talking about the home loan salaried class, the delinquent portion is just about INR 37 crores, which is 1.04% in the total loan -- in the total home loan portfolio. So that is what we are talking about. It is a very, very small component at the moment. So that pattern is what we expect to hold going forward.

Sure, sir. And sir, on this income profile increase, you can share some color, what was the average monthly income of the salaried account customers, home loan salaried account customers?

We will share. I think -- I will Pritesh to share that information, yes.

Sure. And sir, lastly, just a small clarification. We have around INR 228 odd crores of standard restructuring -- standard asset restructuring, but the provision created is only INR 5 crores versus a requirement of around INR 13 crores. So what is it that I may be missing out there? Because I understand 5% of the provision needs to be created on standard restructured advances but only we have did only INR 5 crores of provision.

I don't know, there could be write-backs there. I'm not sure about it. That number, whatever reconciliation is there, we will give you separately. Absolutely no problem. We have provided everywhere absolutely correctly and we have not taken any benefit of deferment or anything. Everything has been taken upfront.

I would now like to hand the conference over to Mr. Pritesh Bumb for closing comments.

Thank you for the management for giving us an opportunity to host the call. Thank you, everyone, for participating. Have a good day, and stay safe.

Thank you. Thank you very much. Have a great day.

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