Union Bank of India (UNIONBANK) Earnings Call Transcript & Summary

Can we go ahead?

Yes, sir.

Yes. Good evening, everyone. On this con call, we'll have the opening statement by our MD and CEO, and then the floor will be open for interaction. However, before getting into the con call, let me read the disclaimer statement. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statements based on the current expectations. These statements involve a number of risks, uncertainties and other factors that cause the actual results to differ from the statements. Investors are therefore requested to check the information independently before making any investment or other decisions. You are also aware that Andhra Bank and Corporation Bank were amalgamated into Union Bank of India with effect from 1st April 2020. Accordingly, financials have been disclosed to the stock exchanges. However, to facilitate our investor community to have like-to-like comparison. The investor presentation is based on aggregating the audited or reviewed numbers of 3 banks for September '19 and March '20 and do not entail any adjustments. With this, I now request our MD and CEO for his opening remarks. Thank you.

It is my pleasure and privilege to welcome you all to this con call to discuss financial results for the half year ended 30th September, 2020. I trust all of you are in good health. The second quarter of the financial year has been encouraging for us with business getting back to the pre-COVID levels helped by gradual unlocking of economic activity. Despite the macroeconomic challenges across the globe, India seems to have -- doing well. Demand resurgence is very much visible in many sectors. Economic indicators allude to a steady recovery in almost all sectors, with some sectors shooting above their previous year levels as well. Positive outcome from the implementation of Atma Nirbhar Bharat package and unlocking of the economy is evident in India's high-frequency indicators like sales of passenger vehicles, 2-wheelers, tractors and also growth in rail freight, cargo traffic and e-way bill. The GST collections, UPI transactions, purchasing managers' index, et cetera, indicate a month-on-month recovery in economic activity. There is also a strong demand seen during the festive season. However, the challenge is to ensure that the economic rebound continues in the next couple of quarters and beyond. Speaking about the banking sector, credit growth remained lower at 5.26% Y-o-Y, while deposit growth remained robust at 10.51% Y-o-Y in September 2020. However, the credit growth should be seen in sync with the support provided by banks to commercial sectors through investment route. Going into Union Bank's performance, I would like to give you a brief on where we stand in terms of amalgamation process before I get into the numbers. We had major developments on amalgamation front during the quarter. Having completed the financial harmonization during preceding 2 quarters, including loan provisions and employee benefit provisions, the focus during quarter ended September 2020 was on organizational redesign and technology implementation. Our organization structure has been revamped in line with our strategic focus. Bank has initiated multiple projects aimed at realizing synergies, improving efficiency and digitization. Over 40 cost synergy initiatives are being pursued. Around 350 branches were identified for rationalization and 22 branches were rationalized successfully on pilot basis. Rationalization of around 160 ATMs is in concluding state. On technology integration front, significant progress has been made in core banking system migration. Two phases of migration for 525 branches, that is about 25% branches of e-corporation bank has already been concluded till date without changing the account number for customers. The e-Andra Bank migration is all set to conclude in early Q4 of FY '21. We have already integrated applications like IMPS, ATM Switch, NEFT, debit card and RTGS for both the banks. Let me now share the highlights of performance for the quarter ended September 2020. The operating profit for the quarter ended September '20 increased by 1.9% -- 1.98% to INR 4,735 crores compared to INR 4,643 crores in the corresponding quarter of the previous year. This increase was supported by growth in net interest income by 6.05%, which stood at INR 6,293 crores. NIM stood at 2.51 as compared to 2.52 in the corresponding quarter last year. Provisions aggregated to INR 4,218 crores. Net profit of the Bank stood at INR 517 crores, a 55.26% increase over the previous quarter. There was a net loss of INR 995 crores a year ago. Coming to business, deposit growth stood at 3.98% Y-o-Y. CASA share stood at 34.61%. The gross advances grew by 1.87% Y-o-Y and stood at INR 651,062 crores. Retail advances registered annual growth of 7.8%, while MSME registered a growth of 2.9% compared to a negative annual growth during the preceding quarter. Gross impaired net NPA ratio declined to 14.71% and 4.13%, respectively. Provision coverage ratio increased to 83.16%, while credit cost stood at 2.29%. The CRAR for the Q2 stood at 12.38%, registering an improvement of 76 basis points quarter-on-quarter from 11.62%. CET ratio is now at 8.91%. On digital front, during the quarter, bank initiated a pilot program for end-to-end digital lending of preapproved personal loans. This is an analytics-based offering. And based on encouraging response we received during the pilot, the offering will be gradually expanded to multiple locations. Further, bankers also started analytics-based offering in various other areas like home loan takeover, working capital limit enhancement based on sales, home loan top-up based on repayment pattern, et cetera. Through -- though uncertainties remain. However, with the encouraging trend of revival in business sentiment, we have the following guidance for the year: deposit growth between 8% to 10%; advances growth between 4% to 6%; CASA ratio to be in the range of 35% to 36%; NIM to remain steady, around 2.5% to 2.6%; delinquency around 2.5% to 3%; restructuring of 2% to 3% with downward bias; the credit cost of 2.5% to 3% range. This is what I wanted to share with you in brief. And now we are open for interaction and your feedback. Thank you.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.

Sir, my first question is on your collection efficiency, what would be your collection efficiency September and then maybe in October?

Our September collection efficiency was around 75%, but it will improve now because in October month -- because we do very soft calls at this point of time. They're not into aggressive recovery mode, but 75% is the collection efficiency for September.

Okay. So that means of the total book, 25% of loans have not paid. That's correct?

See, actually, it is -- this is based on a lot of logics, what we put into the system. It is not an indicative. Because if you look at my SMA-2, it is only 1.7% of the book. So like if you say collection efficiency of 75%, 75% rural like you will project that it will become NPA. That is not true, actually. Because SMA-2 is our 1.7%. So collection efficiency is like a broad listing because we also have an amalgamation now, Andhra and Corporation. The data quality issues are also there. So like because since we have done the assessment, it is coming around 75%. But then don't conclude that the other 25% is stressed book.

Got it, sir. Sir -- and what would be your SMA-0 plus 1 plus 2, all the 3 combined or just the SMA-0 plus 1?

We generally don't give that number. I think we are giving only SMA-2 number. SMA-2 is I think the 1.7%. But it is INR 11,000 crores? It is around INR 11,000 crores.

Got it, sir. Sir -- and my second question was on restructuring. Of course, you mentioned that it will be 2% to 3%. So if you could give some color in terms of corporate restructuring, retail restructuring, and within corporate between large and mid corporate, and stand-alone and multiple banking?

Yes. I think we have worked out certain numbers. These are very broad estimates. We are expecting, on the maximum side, about INR 16,000 crores of restructuring to happen. Out of that, INR 7,000 crores is expected to be from the corporate book. These are very broad numbers at this point of time. The clarity is there are 12 accounts in the corporate side, amounting to about INR 3,600 crores, where the restructuring process has started and there is application and all that. This is what is very clearly on our books, although we expect INR 7,000 crores. Right now, only INR 3,600 crores. The restructuring process has started. On the MSME book, about INR 5,000 crores we expect that it can be restructured. But up to now, about INR 500 crores has been done. So like next 2, 3 months, we'll have a fair idea how much it will happen. On the retail book, we have put a number of about INR 4,000 crores, which -- it is likely to be restructured. But the number wise, it is even below INR 100 crores as of now, restructuring. So we are not very sure how much of the retail will get restructured. It can be a much lesser number but broadly, based on our feedback, the ground level connect and some assessments that we have, we expect that on the maximum end, it can be about INR 16,000 crores. I think that answers all your doubts on the restructuring.

Correct, sir. Sir -- and in terms of large corporates, how many proposals would you have received in terms of multiple banking arrangements?

Out of INR 3,600 crores, only 3 accounts are above INR 100 crores.

Okay. Got it. Okay. Got it. Sir, I also have 1 more question, which is on this [indiscernible] scheme. In terms of interest on interest that you have credited to borrower accounts. So even those borrowers who paid on time have got this credit, I just wanted to know whether this -- for this credit borrowers who paid on time had to apply or you did it on your own?

It is already credited for everyone. It is already credited.

I know. But -- okay. So you did not wait for them to apply, right? You just credited it.

Yes, yes, yes. All eligible accounts have been credited already.

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

Hello, am I audible, sir?

Yes. Yes, Ashok.

Congratulations to you. Again, have been seeing -- showing good profit in the bank, controlling the NPAs also, and PCR also is good. Sir, one concern is on the NIM. I mean, the NIM of our bank has been comparatively lower. And then now also, I think it is from 2.52 to 2.51. And your target is also not much encouraging, I mean, from 2.52 to 2.6. So one is on that how we can increase our NIM, which will ultimately strengthen the overall profitability of the bank? My first question is on this. Shall I ask you 2, 3 -- 1, 2, 3 more questions after you reply on this? Or shall I...

Yes. I'll answer this. Actually, see, like one thing is the NIM estimation varies from bank to bank. We should understand. Actually, you would have seen some of the banks, particularly on the collection, recovery in NPA accounts, some of the banks take it to interest income so that their NIMs may be another 20, 30 basis point higher than what we show. In ours, since we don't book it as interest income, we straightaway reduce the NPA, actually. So there is an accounting difference, which like maybe has to be balanced somewhere. And then there is another way of looking at NIM, like it is on earning assets on total book. My 2.5% is on total book, actually. But if you take a NIM on only earning assets, which some of the banks show, I think my NIM also can be -- if these 2 things are factored, our NIMs also will be between 2.8 to 2.9. So you can just compare the top 5, 6 banks that like look at these 2 things, how they account for recovery? Whether they book it as interest income or they reduce NPAs? And the second thing is whether they calculate on the total book or only on earning assets? I think -- yes, you can do that...

No issues. As long as you are comfortable, no issue on that. I just wanted to draw this point because we want to see Union Bank among the top, not 5, 6 banks. Among the top 2 banks, also.

Thank you. But then comparably, we are also -- if you look at that, we may be also showing 2.8, 2.9. But then we are on the very conservative side. So 2.5, 2.6 is not bad comparable because many people report 2.8, so people think it is lower, but it is not actually not lower. That's one thing. Second, see, like the whole industry is going to work on a lower-margin businesses now. So the competition is quite high, and the margins will be lower. Only we have to look at volumes now. That is the future, actually. We have to work on volumes.

Yes, sir. My second question, sir, on -- again, on the same -- which Marukh raised that, efficiency, collection efficiency, where you said it is 75%. I just want to know that interest on the working capital, which was there for the 6 months of moratorium, how much amount of that interest was there? And out of that, how many people, how many corporates have opted for 31st March 2021? I mean, are they paying monthly regularly? And whether this amount comes in your demand when you calculate efficiency ratio?

I didn't want to go to that detail. Actually, when I said 75%, actually, this is what exactly hits us because lot of requests of corporates for FITL now were converting it to [indiscernible] March, they're all in the process action. So that's why actually this collection efficiency number since everybody is giving, we gave that. By the end of October, we'll be able to give you a correct number because I think we should be also reaching close to 90%, 92% collection efficiencies looking at the stressed book what we have. But then at this point of time, because it is all data based. I can't give you a different number from what my computer gives. So that's why we said 78%. But then, yes, during this month of October, all this work of shifting that interest demand to March and all that work is going on.

Sir, at that time, this -- any communication from you will help because if you compare the largest bank, the efficiency collection ratio is 97%. That is why we are concerned about it. Maybe because of certain methods, different methods are being adopted or the datas are not properly collected or that. But communication maybe later after 10 days or 15 days in this regard, if it is permissible, I mean, will definitely help us. These are our concerns actually. And sir, now coming to this advanced growth, sir, 4% to 6% growth in the advances. Here also, sir, I mean, what kind of a growth you are looking at? Because this growth target, again, seems to be a little lower even in spite of the bad times as compared to some of the other banks where it is 7% to 8%. So here, your focus is going to be not much on the corporates or that is why the growth is less? Or you are concentrating more on retail and housing loans and other things? What are the plans for this increasing the -- or in the advanced growth?

Actually, we are very active in corporate credit. Actually, we may be one of the banks which is actively sanctioning. We have a very good sanction pipeline on corporate credit, including infra. So -- but then that offtake is likely to happen by Q3, Q4 only, mostly Q4. So -- but then we are not losing our focus on corporate credit. That will continue to be there. The retail book actually is growing between 7% and 8% as of now. And like you should also factor in that we went through amalgamation, 3-way amalgamation. So the first quarter, actually, like COVID plus amalgamation, the growth was not up to the expected level, but the second quarter, we have picked up. As we go forward, I think we should be reaching at least 6% credit growth level, but it will come both from retail and corporate books. They're not like a slowing down on corporate.

Okay. And one is, sir, on the credit -- this capital adequacy ratio up to this 12.38%. Sir, there, you don't find any concern that this also needs to be strengthened and because if you are going for the corporative one including infra or maybe construction loans and other things, you will be needing more capital because the risk weightage will be higher in some of these loans. So what are the plans for that? And how do you -- how are you looking at it? Are you comfortable at this level?

See, for the plans for this year up to March, we are okay. We are raising some capital. So Tier 2 bonds, we raised INR 1,000 crores. Now another INR 1,000 crores we are planning to raise. Tier 1 bonds, we may be raising another INR 2,000 crores shortly. So on that side, we'll be doing. And the equity side, like looking at the market conditions, we may be like planning something in the Q4, like we have taken the necessary approvals, but then it will depend on the Q3 performance. And then Q4, we'll plan. And you are right, we need growth capital, but that will happen during next year, most probably.

[Operator Instructions] The next question is from the line of Jai Mundhra from B&K Securities.

Sir, first question -- I have a couple of questions. First is on -- sorry, collection efficiency. Again, and as you mentioned that there is a bit of a difference in the calculation of margins across banks. And you rightly pointed out 2 very large difference in the accounting, both in numerator as well as denominator. Is there -- do you suspect any kind of such difference in collection efficiency because 75 and 95 or 97 is a huge difference. So any comments there?

No. Like, I think, don't give much -- see lot of focus was on moratorium, you remember?

Right.

At that time I was telling, don't focus on moratorium that, that will go away. Now today, nobody is talking of moratorium. That number -- there are a lot of difference in the moratorium numbers. Ultimately, things are back to normalcy today. Now actually -- see, today, I'm sitting like midway through Q3 now. So even though I'm not able to disclose, but then we are all like in the midway of Q3 now. So we have a better sense of numbers. So this collection efficiency based on the logic put like that data has come, and it shows that 75% of the installments in September are collected. But then there are a lot of areas, gray area. So maybe like we are working on that. But without proper numbers, I can't disclose anything now. So this is what has thrown out. But then I don't think that because collection efficiency is on 75%, the remaining 25% will become NPA, that is a wrong assumption. Because my SMA-2 book is still 1.7% only.

Right. But I mean, basically just to get this understanding, correct, so let us say the way you are saying that of the September month demand raise, 75% have been collected in September or till now. I mean...

No, not till now. It is like maybe first week of October, till first week of October.

Okay. Right. And then maybe...

After that like -- because generally what happened now that like it happens with some lag also, some color [indiscernible] . And particularly on the certain accounts, restructuring and all that, they are under process, some large accounts. So because these are all computer-driven and for me, the data comes from 3 different servers because I also have Andhra and Corporation, which is not integrated as of now. So the data quality -- also issues will be there. So that's why don't get carried away by this number.

No, sir I'm asking that if, let us say, if you were to draw that number today or maybe at the end of October, people would have scaled even with the lag, right? Then this number would be how much? I mean, I understand that there would be some usual delay because people are coming out of moratorium.

Yes. 90%, it should -- because, see, the stress book generally goes around 10%. So like that mean 90% gets collected. So this will not be different. The stress book can be anything between 10%, 11%, 12% generally. So that include the SMA-0. See, when I say SMA-0 because generally, we don't put out SMA-0 numbers because the data is yet to stabilize. But then SMA-1, SMA-2 numbers, SMA -- yes, 1 and 2 numbers are quite low, even now. So -- and you know the logic which is built into the system on recognition and all that have to be fine-tuned now. So I think the collection efficiencies ultimately will reach 90% levels.

Right. Okay. And sir, within this 75% collection efficiency, is there a -- let us say, maybe retail is paying or as good as , let us say, any broad trend, sir, retail, corporate SME?

Agriculture throws up about 50% collection efficiency. Corporate book shows about 84% collection efficiency, like that, like sector-wise if you go. But then like -- see, this is the first time we are taking out their data because everybody has spoken about it. So we also pulled out the number. But then I will not vouch by the like the correct size of these numbers. So sector-wise, if you look at it is growing up as a very different number. MSME also is quite low.

Right. MSME would be lower than 75%, right? Because...

Yes, it will be lower than 75%.

Right. Okay. And just last 2 questions, sir. One on this -- with 3 accounts, which we have got more than INR 100 crores exposure, if you can name the sector of these 3 accounts, where you have already got the restructuring requests?

I think you are already aware, yes. Why -- generally, we don't discuss individual accounts. I think maybe you are aware of this.

Right, Okay. No worries. Sir and last question, with regard to Slide 9, so wherein we have given the COVID response, COVID support, right? So first is COVID emergency line of credit. This is -- I believe this was a scheme when it was announced just after the COVID, right? And so these numbers are additive. So if I -- should I add, are these all different or the CELC is same as ECLGS? I mean, 7,000 -- looks different, right?

They are different. Actually, the first one was the scheme announced by the individual bank, a 10% credit line for the corporates, so before this guarantee credit line was announced. And this is applicable for all corporates. So whereas the fourth one, the guarantee line of credit was applicable for 1 section of the customer. So both the things are open, so like they are different schemes altogether.

Right. Right. And this personal loan scheme is also for your government employees, right? It is not for everyone.

This is mostly our housing loan and other people we give that type of line.

Right.

These are the immediate reaction for the COVID, immediately the lockdown was there. So this relief was given much before this guarantee line of credit was announced.

Right. And the last question, sorry sir. So on this next slide, Slide 10, where we have given a rating mix. So 18%, which is below BB and below, but you have -- I mean, you would have spoken to most of the, let's say, above INR 5 crores, INR 500 crores ticket size account. And then you would have arrived at INR 7,000 crores kind of a restructuring number, right? I mean because this 18% looks a bit higher, but you would have been monitoring all this portfolio as well, right? Because I suspect a lot of restructuring requests were probably from BB or BBB.

Yes, restructuring question is coming from -- see, these ratings basically is not a very good indicator now. Like we get a restructuring request from a AA customer also, whereas a BB customer doesn't need a restructuring because, like particularly at the lower end, the ratings generally are depending -- because from February onwards, there is a lockdown and all that. Some rating impact has happened in some small, medium accounts. So it is very difficult to draw a conclusion and link restructuring to rating. So yes, let us not try to link that.

The next question is from the line of Jayant Kharote from Crédit Suisse.

Sir, I wanted to understand in our MSME book, there has been a slight jump in the NPA, reported NPA number. Can you explain from INR 15,000 crore to INR 21,000 crore? That's quite a large jump.

Actually, you are comparing with the last quarter's presentation, right?

Yes.

And there, actually, it was not MSME, it was MSE only, micro and small. This time, we have clubbed it as the MSME sector as a whole. That's why you are seeing the difference.

Okay. And sir, on slippage and credit cost guidance, so how do you estimate the next 2 quarters versus FY '22? I mean, how much of provisioning would be -- does the management intend to upfront versus some of the peers that have done like that?

See, about INR 1,187 crores of provision, we are holding for likely slippages for the next quarter. This is not NPA provisions. These are COVID-related provisions. We already had about INR 600-odd crores of provision as of previous quarter. In addition to that, I have done about INR 422 crores of provision for the slippages, which would have happened in September. But because of the court ruling, we didn't mark it as NPA. And then about INR 150 crores of provision we have done for the probable interest reversal on the -- like slippages, which would have otherwise happened in September. So that way, we have sufficiently cushioned ourselves for the kind of slippages, which are likely to happen. So in addition to that, like we already have a sense of the operating profit, what we are likely to make in the next 2 quarters. In -- like and in addition to that, we are expecting roughly INR 1,400 crores recovery, which is mostly a write-back in 1 of the NCLT accounts, which is close to resolution. So with all that cushion built in, I think we have sufficient cover for the probable slippages, which are likely to happen in the next 2 quarters. So the INR 1,187 crores is something which we are carrying for the slippages during this quarter. Once the court ruling comes, when the NPA recognition happens, we'll absorb that.

And sir, next year?

Next year, Q4 -- see, most of the things will happen in Q3. Actually, by December, we will have a fair color of the slippage because that moratorium, no, got over in August, moment that like whatever accounts, which have to slip, they will slip before December. And on the corporate side, we are not seeing much stress.

Okay. So would you expect your earnings -- I mean, credit cost to come to 2%, 2.5% next year?

For '21, '22?

Yes.

'21 and '22, I think it will be much lower than that because, see, all the aging provisions are happening. If you look at my provision coverage, it has reached 83%. So like only unpredictable thing for us now is how much of the NPA will happen in Q3 and Q4? How much COVID impact will be there and all that? That is the only unpredictable thing. Once that numbers are there, then we will project for '21 and '22. If it is according to our estimates, then the next year, the credit cost, according to me, can be something between 1.5 to 2.

Last point, sir -- MSME collection number, what did you say, sir? What was the collection number in the MSME book?

MSME collection was 62%.

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

Sir, again, I've been dwelling upon this -- our collection only. When we say that the agriculture collection efficiency was 50%, and MSME was 62%, corporate, 85%, it means it is giving a fairly good indication that we are -- it may be around 74%, 75% overall or 72% to 75%. So sir, I mean, in spite of all -- whatever explanation has been given, is it not -- I mean, required to revisit again into these numbers because we feel personally, the way we look at -- because we are also in the [indiscernible] with market and the corporates and the people being project finance consultants and corporate advisers and helping them in restructuring, other things. That the situation is not -- was not that bad that the collection efficiency has to be only 75%. So I think either some -- maybe some recording -- some procedural -- lack of something or it's from different...

There is another bank, which was on TV today. They also said about 67%.

But in case of Union Bank of India, I mean, the way -- see, the collection efficiency has been ranging from 97%. I have not heard about this 62%.

67%.

But we were today itself, we had 2 other banks...

I heard 67%, actually, one of them say.

67%? So anyway, I mean, this is just 1 point, which is again coming -- again back to our mind. And secondly, sir, when you say that now you're open up for the growth, the advanced growth, even in the infrastructure and maybe to some extent, I think, good quality construction companies or real estate companies, there has to be some more aggressive capital-ready plan because I feel that even with this INR 1,000 crore and now this INR 2,000 crore and the ratio being about the 12.56 something, still, there will be some pressure because this will be -- some of them will be the more risk-weighted advances. So on that, also some more, I think, thinking should go. And I mean, if you can just...

Yes. Yes. I fully agree with you that the capital should be better. But then you should also understand. See, we just went through amalgamation, where huge harmonization provisions had to be made. We absorbed it in March month and some in June. So we are just out of that, actually, like -- and now we are consolidating. And see, the market also has to understand that, see, at this point of time, just out of amalgamation, people are watching us. So at this point of time, with the kind of valuations what I have, it is not a point to be get aggressive on capital raising. Maybe like once the market realizes that our books are clean, we have sufficiently provided for the legacy book, there is no damage by amalgamation and like when the market starts realizing that, at that point of time, it is suitable to hit the market. I think maybe like we will be doing more damage at this point of time by raising equity than [indiscernible] benefit to anyone. So let us wait, actually, like -- see, only unpredictable in the system today or item is how much of slippages because of COVID? See, ultimately, this collection efficiency, moratorium, everything will reflect only in that actually. How much slippage in December. Once we have that number, the system will have absolute clarity.

You're right, sir, because you have picked up very finest of the officers from the Andhra Bank and Corporation Bank and have put them into the very high positions in the bank. So definitely, with the combination of Union Bank hold an experienced staff, and these people, the Bank will definitely perform much better than what it was in the first quarter or maybe second quarter.

The next question is from the line of Abhijeet from Kotak Securities.

Just 2, 3 questions. The SMA-2 number that you said includes everything, right? Like retail, SME, below INR 5 crores.

Yes, yes. Everything. We can give the breakup of that also.

Sure. That would be helpful. And just a related question is if you can tell us, over the last 2 quarters, how -- what share of the loan book would not have paid anything so far?

I think that number will be difficult to say at this point of time because we have not done that analysis. You want to say -- you want to ask that March to September, what part of book has not paid anything? Like practically, they avoid full moratorium.

Exactly. So you've given the restructuring number, which is INR 15,000 crores.

Yes. It is the expected [indiscernible] number.

So against this number, how does that number look like?

That number, I think we are not worked out at this point of time. We'll see actually, like we'll have to take that out and -- because this is -- actually, like we have a very mixed portfolio. Out of the 6-month moratorium, there are many accounts which paid 1 installment, 2 installments. Some people paid full, some people didn't pay anything. So like we'll work out. So we'll try to share that number at least in the next listing. Right now, I don't have that number.

INR 11,000 crore SMA-2 number includes the slippages that are deferred to the next quarter, right, about INR 3,000 crores, INR 4,000 crores?

SMA-2, yes, it will have that number also. We can give the breakup. We can you the breakup SMA-2, [indiscernible]

So retail is around INR 2,700 crores, out of the 1.77% of SMA-2. Agriculture is around INR 3,000 crores. MSME is around INR 3,700 crores. Remaining is corporate, very small amount, less than INR 2,000 crores.

Sure. And sir, I missed the comment around a few accounts that you mentioned, which are above INR 100 crores going for restructuring. If you could just mention about that and the sectors, which are sectors for these accounts?

I think that will -- because this is broadly known news, actually. See, what I mentioned is, as of now from the corporate book, there is 12 accounts, which are under various stages of discussion for restructuring amounting to roughly INR 3,600 crores. Since they wanted to know what size, out of this, actually, they are mostly smaller accounts. Only 2 -- 3 accounts are above INR 100 crores. There is 1 large one, actually, but others are like below INR 500 crores, you can say.

And the sector for this one is, the large one?

That will straightaway indicate that account. Broadly...

Okay. All right. Fair enough. And sir, on the employee cost, when do we expect the normalization? And what that number will look like?

I think they are very stable. This quarter numbers are going to be stable throughout. See, in the March, actually, because of certain additional provisioning because of the pension and all that, harmonization-related, there was a spike. Otherwise, Q1 and Q2, our employee numbers are very stable. Establishment cost, operating cost is very stable.

This is the run rate to work with?

Yes. This is going to be stable now.

Okay. And sir, just finally, a question on the restructuring estimate. You're saying that the merger process is still going on, and there could be some data-related challenges. So in that context, is there an upside risk to this restructuring number that you're giving us? Because if we are not fully sure about how the merged numbers or collection numbers are looking like, especially in the retail and the smaller ticket loans. That will be all.

We have no risk in that because the NPA harmonization was done, checked by the auditors, for all the accounts during March itself. So that, that is already taken care. So I was telling the data issue basically on the collection efficiency side. Because actually, when we collect this collection efficiency, it is a -- like a logic we built in the system and try to take the data from 3 different servers. So that is where some challenges come because when agriculture says 50% collection efficiency, puts me down. So I don't believe agriculture collection efficiency is 50%. It can be much higher, but then maybe the way we look at that data in different banks. So that's what I was trying to indicate. I'm not trying to project on NPA and all that. NPA recognition and harmonization of provisioning is done and dusted. In March itself, we have done everything, and auditors have certified that all the accounts are checked and all the accounts are normalized. I don't see any upside risk with like data integration and all that. No.

Got it, sir. Sir, sorry, 1 final one. What is the full year estimate for recovery in upgrades?

Actually, like if we still stick to that number. We have put a number of INR 15,000 crores for recovery upgradation. Out of that INR 5,000 crores, we said it will come from NCLT and INR 10,000 crores from normal recovery. So -- but then the NCLT, nothing much has happened, but we expect some actions during the Q3 and Q4. But it may not be INR 5,000 crores, it may be slightly down. On the recovery upgradation side on the other account, apart from NCLT, I think the first 2 quarters, we have done about INR 3,000 crores?

INR 4,000 crores.

INR 4,000 crores. Recovery upgradation is about INR 4,000 crores. So we expect another INR 6,000 crores to happen. So that INR 10,000 crores is online. INR 5,000 crores of NCLT, like, let us see how it will shape up. At least 1 account, I'm very sure, where we expect about INR 1,400 crores to INR 1,500 crores of recovery. One still account is there, which is close to settlement.

The next question is from the line of Mahrukh Adajania from Elara Capital.

Sir, on the collection efficiency, you mentioned about the FITL. Could you please run through it again? One of the reasons...

[indiscernible] amount is INR 1,230 crores [indiscernible]

But then the whole account will show as a default because of that? The amount will be small. But see if it's a INR 100 crore account, FITL may be INR 1 crore, but the whole INR 100 crore will be shown as not collected.

But sir, we have opened separate account and time lineage of March2, '21.

I agree. See, what are they trying to say is...

Maybe you can connect offline on this.

Yes, Mahrukh, I'll connect to you and explain to you. Actually, FITL amount is small, like what is getting deferred. But because of that, the system will show that account is not collected. Suppose if it is INR 100 crore account and if there is INR 1 crore of interest, which has to be deferred to March and before September, if I have not marked it as a FITL account, which is to be collected in March, the whole account will be shown as amount to be collected, like it is a default kind of thing because the demand is raised, they have not paid. So that kind of thing. So that's why -- like unless I really study, I would not like to comment on that. It's a broad indication. There's various reasons why this collection efficiency can be lower. So actually see other 10%, 15% collection efficiency would have improved by October end. We'll just check that and come back. Offline, we'll connect on this, and we'll explain to you exactly how it happened because I also didn't have much time to really analyze.

Got it, sir. Sir, my other question was on the MSME scheme ECLGS. Now what was the -- what do you think would have been the end use by the borrowers? What did the most borrowers take up these loans for?

Actually, it was meant as a sustenance, actually at that point of time. See, what happened in March, when the sudden lockdown, even maintaining a unit like paying certain bills, paying salaries and all that, so that was the issue. And many of the people who we spoke to, they had a problem in the receivable collections because they supply to various companies, and there were delays. So actually this money was used for that so that they can restart their businesses. But then most of them are stable now. Actually, what we see is MSME is actually -- like we are not seeing much restructuring request also. Units which are closed or which are like practically like where there is no viability, they will slip and all that, you are seeing that number. But other MSMEs are back to normal. So this money has really saved these MSMEs who are otherwise good.

[Operator Instructions] Well, ladies and gentlemen, that seemed to be the last question for today. I would now like to hand the conference back to the management for their closing comments.

Thank you. Actually, I think the numbers you would have gone through. I think the bank has stabilized well in Q1 and Q2 post amalgamation. If you look at our operating profits, net interest income -- the kind of provisioning we have done aggressively, I think it indicates a very, very stable book as of now. The 83% provisioning coverage there is not much left, actually, as of now to provide. So next 2 quarters, we'll try to cover up the remaining provision required. So books are very stable, earning is very stable. The growth also is very visible. So like -- and we are very aggressive and like the sanction pipeline is also very good. So we expect that as we go forward, the cost has stabilized, and we have a lot of cost synergies also because of amalgamation, which will play out. So that's one thing. The only unpredictable thing in front of us, as I mentioned, that what will be the slippage in December. Maybe in under 2 months, we'll have excellent clarity on that because whatever moratorium impact and collection efficiencies, everything will play out in December. So -- and I made this statement many times because we are totally connected to the ground, talking to people understanding the situation. Things are not as bad as it is made out to be. Things will be very stable. And we are very confident that the restructuring numbers what we are projecting is on a much higher side, it will be much lower than that. On the NPA side, also, what projections we have done, I don't think there is any chance of going beyond that. So I think accordingly, we can work on your numbers, and we will be happy to give any clarifications required. And don't get unduly carried away by the collection efficiency numbers. Banks have a different way. It is like your moratorium numbers we saw in September. And we also clearly put out what was our slippage in September. So to give abundant clarity that like about INR 4,200 crores of slippage would have happened, but for the court ruling. And we also said that more than INR 400 crores of that INR 4,200 crores is already collected. Plus we also made very clear that whatever provision at the level of 15% required for the slippage is already done, including about INR 150 crores of provision for the probable interest reversal, ultimately, big account slip. So that way, we have sufficiently covered that. So like even if a portion of that slips during this Q3, so we have already made provisions. So further slippages during this quarter, we -- I think it should be within our projections. So with that, I think maybe we have reached a very stable level. So we just hope that Q3 numbers play out as per our projections. With that, I think we will reach a very, very stable level. So -- and on the capital raising, we have plans. So we are -- like as per the projections, we are stable up to March. But then Q4, we will be looking, depending on the market condition, for some capital raising. But otherwise, definitely next year, we plan for capital raising. Thank you. Thank you for all the participation and all your questions. Thank you so much.

Thank you.