Karur Vysya Bank Ltd

NSE:KARURVYSYA

Earnings Call Transcript 2021-Q4

[Abhinesh Vijayaraj, VP of Equity Research & Banking Analyst]

Good afternoon to everyone on the call. On behalf of Spark Capital, I welcome you to the 4Q FY '21 earnings call of Karur Vysya Bank. We have with us today the management team of KVB, represented by the MD and CEO, Mr. Ramesh Babu; President and Chief Operating Officer, Mr. Natarajan; CFO, Mr. Ramesh Murthy; Company Secretary and Compliance Officer, Mr. Srinivasa Rao.I now request Mr. Ramesh Babu to take us through the highlights of the quarter gone by, after which we will open the floor for questions. Over to you, sir.

[B Ramesh Babu]

Yes. Thank you, Abhinesh. Good morning to the investors and analysts. At the outset, I welcome everyone to this call, and thanks for your participation. We all believed in the hope during the past 1 year and continue to be hopeful despite the second wave racing across the country, on account of COVID.The ingenuity of the mankind resulted in the quicker development of the vaccination by the scientists to safeguard all of us from the pandemic. The pandemic also forced us to think differently. The new normal way of life, maybe it is the work from home, or virtual meetings or dealing digitally, all these things, they made us or forced everyone to do on these lines.The positive point, as far as India's COVID is concerned, the affliction curve continues to trend downward. The reduction in the new cases, the positivity rate and the active cases, coupled with the recovery rate and the vaccination what all progressing, there's a lot of hope that the situation will become much better in the days to come.Due to this ongoing COVID pandemic, as a bank, we, too, have faced formidable challenges on the personnel as well as the business front. Being an essential services, so we have continued to deliver uninterrupted services to our customers while taking all necessary precautions to post -- to safeguard our staff, their families, our customers.Employees are the biggest strength of the bank. At the bank, like any other good organization, we have done our very best to make sure that our employees are both safe and continue to work with reasonable comfort.Despite our best efforts, I'm sorry to share that we too have suffered casualties amongst our colleagues. I can emphatically state with pride that difficult times did not deter our teams to achieve what all we have planned at the beginning of the year.So I'm happy to share that our total business at the end of March '21 stood at INR 1,16,098 crores, a growth of 8% as against a degrowth of 3% during the corresponding period of the previous year.Likewise, the gross advances, excluding IBPC; we have repaid the IBPC what all we had at the end of March '20; and they have grown at 11% and credit growth has come from all verticals and majorly from the retail, that too at a lower risk-weighted asset percentage.From our PPT, you can see that improvements in many critical parameters: CASA has moved to 34%, capital adequacy at near 19% and we are able to manage our NIM also more or less flat, despite severe pricing pressure on account of liquidity in the market.PCR has improved. Percentage of GNPA and NNPA, credit costs are down due to better collection efficiency. Credit costs and slippages, in percentage terms, if you look at it, they are the lowest in the last 5 years. Business per employee has been improving sequentially, and you can see that it is the highest in the last 10 years.Likewise, business per branch also is the highest in the last 10 years. So coming to this operating environment, second wave, these sort of things, we will gauge the position closely and we will calibrate our growth in the near term, so post the second wave, how we need to go forward.We are open both for the organic as well as inorganic growth, and every opportunity, what all comes, we will try to capture. And age of the employees always have said that 35 years and the entire team is now committed and geared up to deliver a sustained growth, of course, if the external environment is conducive.Our bank has backed the following awards during the year, clearly receiving a thumbs up from the industry for the digital initiatives. Uipath Automation Excellence Awards for the Robotic Processing of one of the processes. And Confederation of Indian Industry for Video KYC. And the DX Awards 2020 Best Price Practice Category. And we have received award from IBA also on the artificial intelligence and the information security.Now let us come to a few specific areas to provide clarity to all of you. First one is the operating profit. As we have been guiding you in the past, our cost of funds have further reduced to 4.99%, and this has helped the bank to overcome challenges on account of drop in yield of advances and investments and sustain the NIM at 3.46%. We are confident to maintain this level during the current year.Operating profit during the quarter has degrown, and this is due to -- there are 4 reasons are there: one is interest reversal of INR 25 crores on account of compound interest and simple interest difference in terms of the Supreme Court judgment and as per the IBA workings; so second one is interest reversal of INR 15 crore on interest capitalization account on account of moratorium accounts; third is INR 62 crores towards wage bill expenses kept in provisions during the last quarter, debited to wages account by a write-back of provisions during this quarter, this has not impacted the net profit; and fourth is fall in the investment trading profit, you can see that from the treasury.Operating profit during the year has fallen by 19%, mainly on account of onetime wage arrears paid and drop in the service charges restrictions for the first 2 quarters.But if you can see the subsequent quarters and the March quarter also, more or less, the fee income and all, they're coming -- have come back to the normal. The first 2 quarters only we had to take a hit, not only for us because of the guidelines from government and RBI.During the current year, we are hopeful of maintaining NIM and normalized income and expenses. However, considering uptrend in the momentum field, our profit or gains from treasury will be on a lower side. Any large recovery from the written-off, our fully provided accounts, will support our efforts in improving operating profits this year. We are working towards this.As we -- I mentioned last time, we have created a separate credit monitoring department under the leadership of a general manager, and we have strengthened that vein, so that at least we need to recover from the written-off as well as the other accounts. So this is a focus area of the bank that we'll take it forward very seriously during this year.Now coming to establishment expenses. On account of 11 biparted wage settlement, bank calculated wage arrears of INR 246 crores payable to the employees. Bank had expensed INR 49 crores up to quarter 2 of the year '20 based on estimates.The final impact was calculated, and accordingly, bank had incurred INR 197 crores in quarter 3. This last quarter when the con-call was there, I explained it. A sum of INR 135 crores was debited to establishment expenses under operational expenses, and a some of INR 62 crores was kept in the provision account last quarter. This INR 62 crores was written-back and debited to establishment account during quarter 4. That way, it had no impact on the net profit. We clarify that expenses related to wage arrears were fully accounted or provided in quarter 3 and earlier quarters. Our normal run rate of wage bill, including estimated AS 15 provisions for the current year, is estimated at around INR 260 crores per quarter.Now coming to slippages. Post Honorable Supreme Court order dated 23rd March '21, bank continued to classify the advances as per the IRAC norms of Reserve Bank of India.We have indicated pro forma net slippages of INR 885 crores for the period up to December. As against that, our net slippages during quarter 4, even if some quarter 4, some additions are there for the slippages, after excluding technical write-off of INR 740 crores -- technical write-off, our net slippages are at INR 740 crores as against our pro forma net slippages as at the end of December of INR 885 crores.This was made possible due to the aggressive collection strategy followed by the bank. Our gross slippages for the whole year was at INR 959 crores, which works out to 1.82% of our closing loan book. And net slippages other than technical write-offs was at INR 527 crores, which works out to less than 1% of our loan book. We have made a technical write-off of INR 598 crores during the year. And after adjusting technical write-off, our gross and net slippages were negative during the year.SMA 30-plus balances as at the end of 31st March '20 was at INR 861 crores, which is 1.63% of our loan book. Ideally, every time until last quarter, we have been providing this information. Somehow inadvertently, we have missed out that one and all. So we will take care of this one and all. Next time onwards, this number would be there in the presentation itself. Further, further details are available in our Slide 28 and 29 of our investor presentation.Now coming to restructuring. During the quarter, bank has restructured INR 798 crores and our overall standard restructured book as of 31st March 2021 was at INR 957 crores, which is 1.81% of our loan book.If you can recollect, when a point has come up for discussion during last few quarters, we have broadly indicated that it may be around 2.2%, and we are at 1.81% of the loan book because we were relatively conservative, and we have seen wherever the scope for the recovery or the unit coming back, those cases we have considered.Further details are placed in Slides 30, 32 of our presentation. Reserve Bank of India has issued guidelines for resolution of COVID-19-related stress of individuals, small business and MSME in the month of May, and we are in the process of implementing the schemes.So broadly, if you look at the revised scheme, last time itself, our percentage is at 1.81%. Now if at all, these people they come back, as per the revised scheme, one more year you can give additional moratorium. It will not have a bearing on the amount of restructuring what we are going to do.Now if few more people that come now, we may have to consider those cases. We are actively in touch with all our customers wherever it is required and all to approach us. And once we gather that, how to go forward, we will see. And -- like last time how we did, this time also, judiciously, we will see and we will do. Somehow, we feel that the incremental cases whoever are there, only they will be approaching us now who had the problem in the last 1 quarter.But somehow, I feel those who will approach now, the quality of the restructuring cases will be relatively better because they have weathered, they won COVID 1 and they are able to manage well. And COVID 2 had a deeper impact on them. That is the reason they are coming. But whatever it is, we will extend our lending hand for restructuring whoever approaches and by taking a judicious call.Now coming to the provisions. As of 31st December 2020, bank had a provision of INR 301 crores towards pro forma NPA and COVID-related stress. Bank has utilized these provisions during the quarter. In addition to provisions as per IRAC norms, bank has provided a sum of INR 59 crores towards certain stress accounts. Investment depreciation of INR 48 crores is mainly on account of [ SRs ] and other debt-related instruments.Provision coverage ratio, excluding technical write-offs, has improved to 57.11% as on 31st March '21 as against 55.80% as on 31st March '20.Now coming to collection efficiency. Our collection efficiency continues to be at about 95% levels during the last quarter of the year 2021 and even in April '21, too.Considering the country-wide lockdown, we expect a drop in these levels during the month of May. Anticipated the challenges, we created a separate collection team to closely oversee the stressed assets, particularly SMA 0 and 1.So we felt saying that the efficiency of the collection needs to further go up. So we have created a dedicated team now and with expertise whoever is having and all, and they will be using the call center as well as the feet-on-street and the branches, all these they'll be using to further strengthen and focus on the collections.Now coming to the ROA. ROA, in our earlier meetings with the investors and analysts, we have indicated that we will be -- we will try to reach ROA of 1% at the end of financial year '23. So this is our aim.We are working towards this, and bank has worked out a 3-year strategy to reach 1%-plus ROA in the year 2024, and some of the strategic points are shared in our presentation from Slide #41 to 49.So we had an internal series of discussions with various stakeholders to -- because it is not top-down approach. The strategy has to come from the bottom. So we have a series of discussions. We explained them what is the reality, what we need to do. Based on that, we have brought out some sort of action plans and all.So in a nutshell, I can say that while discussing our strategy for not only the current financial year, but also the next 2 to 3 years, we are very clear that we need to fine-tune our offerings across different segments to put customer at the center of any decision, become much more digital and grow our presence in the underpenetrated markets, given the advantage of having 54% of our branches in semi-urban and rural areas. Hence, our strategy is to deliver sustainable and consistent financial performance by providing superior services to our targeted customers.Now coming to the growth. We have been periodically briefing you on the growth strategy of the bank. As indicated, we are continuously moving towards granular portfolio by diversification of our lending and reliance on corporate center is kept at minimum.Our retail loans and small business loans are completely on digital platform and quality of loans under return digital platform is performing well. Performance of the digital portfolio in the face of pandemic has demonstrated the robustness of our underwriting and portfolio selection in recent years.For the time being, we have stopped unsecured loans, and we will restart after making a study on the market and collections. The digital platform is highly scalable, and we will make use of this to expand our assets.Now our dual-loan portfolio, both agriculture and personal segment, is doing well, and we continue to focus on this during the current year considering the opportunities available.We have kept our LTV at 75% of the personal segment to manage the price risk. Under corporate banking, we continue, with our internal per borrower exposure of INR 125 crores, while onboarding new corporate or many of the existing customers, the exposures of existing customers also has been brought down to this level, except few certain borrower accounts and few other borrowers.Coming to the commercial segment. So commercial is a strategic priority for us, and we've bet on the strength and future of MSMEs in India. It remains one of the most profitable segments for us even today. We have created a specialized business units to oversee this business, and we continue to onboard new customers with prudent underwriting standards.Our new business model is progressing well as planned, and they built a loan book of around INR 1,400 crores at the end of 18-month period. We have plans to expand their area of operations in the current year.The precious metal department, another initiative taken by the bank, has completed their full -- first full year of operation. And during the year, they dealt with 3 tonnes of gold valued at INR 1,361 crores. And metal loan book at the end of the year was at INR 310 crores.The business will scale up further during the current year. The transaction banking group handles supply chain finance. We are offering vendor finance, dealer finance, factoring programs. We are actively participating in the trucks platform for financing MSME vendors. Total portfolio under this business is at INR 345 crores.With these diversified activities, we plan to expand our asset base, and we expect a growth of around 12% during the current year because if you look at the first quarter, more or less the e-mobility, both our staff as well as the customers, so it is a deterrent to go out and book the business. So we may have to do rest of the business most probably from the July onwards or, if at all, some sort of openings and some freedom comes in the month of June. So that's the reason we have planned this way.And with these things, I have covered all the specific points what all are there. And I wish every one of you safety and good health. And hopefully, when we meet next time, we will have a much better situation on the pandemic. Let us pray for that and let us all -- all of us work hard towards making sure that we save lives and livelihoods.Thank you all. So thanks. Back to Abhinesh, please.

[Operator]

[Operator Instructions] The first question is from the line of Amit Premchandani from UTI.

[Amit Premchandani, Fund Manager]

I had a question on the...

[B Ramesh Babu]

Yes, please. Please, go ahead.

[Amit Premchandani, Fund Manager]

If you look at from a 10-year perspective, average employee cost per employee has moved from around INR 5 lakh to INR 5.25 lakh to around INR 14 lakhs, even after taking into account the one-offs, excluding that one-off that you said if you have a INR 260 crore per quarter employee cost expense, the average employee cost is INR 14 lakhs. So over a 10-year period, it is almost 2.7x, 2.8x.And if you look at private sector banks, their employee cost per employee has moved from INR 7 lakhs on an average to INR 8 lakhs to INR 9 lakhs in this 10-year period. And if you look at PSU banks, their employee cost on an average has moved from INR 6 lakhs to INR 7 lakhs on an average to around INR 12 lakhs on an average, so double.So you are worst among the lot in terms of how you manage the employee cost. And until you kind of take a handle on this, it is very difficult to see a scenario where your ROA profile will improve sharply. So what are the steps that you are taking to control this cost?

[B Ramesh Babu]

Yes, Amit. In fact, we are aware of this one. We have seen that. As you know, we are a part -- we have signed along with the IBA, and we are moving along with that. So now what we did is, in addition to the IBA, what all few of the benefits which we have given it, we have rolled them back. And progressively, we want to work on those lines. That's the first step.And second thing, if you look at it, for the last few years -- so we are taking for the market directly, not on the IBA front and directly with the CTC structure and all we are going for that. So progressively, the existing teams when they go on retiring, so the pension load also will come down because fresh, whoever will be coming, they'll be on the NPS and they'll be on a different wage structure than the IBA.So we are in the process of this transition now, and we are well aware of this one. Wherever we have these sort of lose ends are there, we are trying to contain that. And not only that, it's a 2-way: one is on the cost and second thing on the productivity.So that is the reason, while immediately with the magic wand, you cannot bring down the cost, we are focusing on the productivity also. We have taken many measures during the last quarter by sensitizing all the teams where we are, what we need to do. And that is the reason you can find that, so against the degrowth of last year in the advances as well as business levels, we grew by 11% despite the trying conditions during last year. So all of them are geared up.So unfortunately, because the second wave of COVID has come, otherwise, that trend would have continued. So it's a two-pronged approach for us: one is to improve the productivity, and second side to improve the -- reduce the cost over a period of time, that way we will balance it. We are very well aware of this issue and all. We will handle that, yes.

[J. Natarajan, President & COO]

Yes, Amit, in addition to that, what I'd like to add here, you're right, because generally, the most of the operations are happening -- were happening at the branches, that's why if you remember, a bank has implemented 2 specific projects: one is the centralization project and another is the expenses centralization project.Both the projects are now put in place. So that is why if you notice, our total number of employees, when you compare to the last year, something around 200 numbers has come down. So it is going to be a continuous process. And this year, we have also noted a lot of surplus people because of this centralization. Now we have just started moving all these people from the operations to sales. So both the numerator as well as the denominator we have to expand the assets, productivity we have to improve, at the same time, the cost also should come down.You are right, we are very -- it's a serious point, and we are very closely overseeing this point. I think in the coming quarters or the coming years, there will be in a position to -- you will be in a position to see the good changes in this area, Mr. Amit.

[Amit Premchandani, Fund Manager]

And of the 7,746 employees, how many are covered under IBA and how many are not covered?

[J. Natarajan, President & COO]

See, the C2C concept, we've just started 2 years back. If you see the 90% of our employees are under -- still under IBA. Only in the -- during the recent recruit -- now we have completely stopped the IBA recruitment, wherever we are recruiting for the past 2 years, so we are doing only on C2C basis. So now the 2 points we would like to share with you: one is, whatever the incremental recruitment we are doing is only a specific job oriented and it will be only on C2C basis, completely based on performance. And existing employees also, now we are seriously thinking how we can migrate these employees to performance-based C2C structure. Probably, we're be doing some subscripts during the current year.

[Amit Premchandani, Fund Manager]

And some of the efficiency of the private sector banks have come from building a proper pyramid structure. What are you doing to ensure that there is a proper pyramid structure in the employee base? This bloating entirely occurs because there is hardly any pyramid kind of a structure in the employee base.

[B Ramesh Babu]

Yes. So now there are 2 aspects. One is marketing and operations. Operations is concerned, our President has already told you saying that we are trying to shift it to the back. And there, all these operations, the team will not be handled by our own team. So we'll be going for an outsourced team and all, that way the cost will be coming down.So likewise, if you look at it earlier, the lowest level, we used to recruit our own people, offices at our IBA cost and all. That we had [Technical Difficulty]. Now for the sales, it can be a business development both for the assets and liabilities, we are taking from the market, we have created a different structure altogether, where the salary structure is pretty low. And rest of the payment what we are giving is based on the performance, that's variable pay. So which is not as per the IBA. So the lowest level, which constitutes the maximum expenses there and all, we are trying to set right there, so that the incoming inflow what all is there, the costs will come down there.

[Amit Premchandani, Fund Manager]

Sir, just to understand the -- in terms of numbers, for example, the segment that you spoke about, if you are having an average, shall we say -- I don't know the number exactly, but company average of INR 14 lakhs, you are replacing them now with what cost per employee?

[B Ramesh Babu]

Now suppose, a lower level marketing someone we are taking, a fixed salary of INR 15,000 to INR 16,000 would be there per month. And -- so in addition to the variable, what we need to pay, we'll be paying. So this is what is what we are working and taking the people.

[Amit Premchandani, Fund Manager]

And you said, sir, there were -- so around 7,935 employees were there last year and that has gone down. But generally, how many employees would be affected by the change in the strategy that you just mentioned in terms of outsourcing, et cetera?

[B Ramesh Babu]

No, it's not like that. What happens, we want to focus on the liabilities now because the liabilities we need to grow when we are trying to grow aggressively on the advances front. So for that suppose, if we need to go for the marketing and these sort of things and all, so the existing people whoever are there, we are trying to bring few of them into the marketing. And we need to take additional people also for mobilizing this CASA as well as liabilities. So that incremental portion what all comes, we'll be taking on these lines. Currently also, around 200 to 300 on the business front -- business development we have taken them. And rest, they'll be coming on these lines.

[Operator]

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

[Jai Mundhra, Research Analyst]

Sir, the SMA -- plus SMA 30-plus number that you had mentioned, INR 60 crores, is this the CRILC data or this is for -- at the bank level, including below INR 5 crores number?

[J. Natarajan, President & COO]

No, the 30-plus data is our internal data. It's not a -- you're talking about 30-plus only no, I mean...

[Jai Mundhra, Research Analyst]

Yes. Yes, sir. Okay. So this includes your, I mean, below INR 5 crore ticket size also, right?

[J. Natarajan, President & COO]

All put together. See, normally, we publish the percentage in our presentation. And since it was not published, we are mentioning it. In the bank, entire -- all the portfolio -- the entire thing we have included under this.

[Jai Mundhra, Research Analyst]

Right, sir. Now sir, I mean, this data is as of March and considering the -- I mean, the system as a whole, we saw strong headwinds starting into April and May. And apart from the ECLGS extension, there seems to be no blanket moratorium or any other thing. So do you suspect that in the near-term slippages, at least in first half FY '22 could be much higher, especially from this pool and even otherwise?

[J. Natarajan, President & COO]

Jai, the first point what we are making is, you know that in the history, in the past, our ratio was something around 3.5% -- 350 basis point that is 1 and 2. So now it has come down to something around 1.7% level. You are very right, and the market was not as it was in the last 2 quarters. And if you see our collection efficiency, in the month of April, we are comfortable. The same efficiency was there in the earlier years.But in May, we have to check because completely it is locked down. We expect that there will be a fall in the collection efficiency level. So naturally, the SMA 0 level, particularly, it will start moving up. But the bright point is, historically, we were at 3.5%, now we have come down to 1.7%. Even if it -- some increase is there, I think we are better than the earlier times, that we have to see how it is moving. So accordingly, we have to take our collection calls.

[Jai Mundhra, Research Analyst]

Right. Sure, sir. And if you can quantify the collection efficiency, sir, for April at least in how...

[J. Natarajan, President & COO]

In April, we are 93-plus. So already we have given. So the last quarter, all the 3 months, it was 95 -- well above 95. And April also, we were able to maintain above 95. Only May probably today end, we will just check, how it is behaving.

[Jai Mundhra, Research Analyst]

Sure sir. And the second question is on your commercial/MSME slippages, right? So while the numbers are very much contained, right, in a way, in a pandemic year, the full year -- I mean the 4Q is more or less equal to full year.So the full year commercial slippages are around INR 485-odd crores. If you can provide some insights there, I mean why did these accounts slip? Did they not got ECLGS? Did they -- any sector, anything which actually impacted them and not the rest of the portfolio in the commercial? Because the stress, it looks like was a very widespread.

[B Ramesh Babu]

No, you have to see it this way. What happened, it is a combination of 2 factors. One is who were actually in the month of March of 2020, February-March, they are on the brink. So naturally, because of the moratorium, they were maintaining this standstill clause. So those things will have to come because at March also, we had this issue and all. So that has come.And second thing is when sudden shock of the COVID has come, so many of them, they couldn't withstand because who are in the borderline cases and all, they had to. But whatever it is, wherever the possibility is there, our people, they have been talking to them and all getting these things done.But one good thing is in the commercial portfolio, if you look at it, so particularly the small business group where majority of these things will come up, so majority of them are collateralized. So the customer or the borrower also will have some sort of an interest to get back to this one or we'll be -- over a period of time, we'll be able to dispose or the collateral will be able to get back the money, it's a question of money. That's time, that is.So that way, there are 2 combinations are there. One is the previous year's carryover will be there. And second thing is the COVID effect what all is there together they have come. So coming to restructuring, as I was mentioning, we were very selective as far as restructuring. With our very request, we have rejected many of the cases also. And wherever we found saying that this account is going to be back to normalcy, those cases we have done, unlike asking everyone and handling that one. So this also has created.

[Jai Mundhra, Research Analyst]

Right. So you're saying, sir, most of the SMA slippages have actually come from the delinquent borrower as of -- before COVID, right, and hence...

[B Ramesh Babu]

See, I cannot say that. No, no, I cannot quantify the number. It's a combination of these 2. What I say, because they were there as a borderline cases earlier also. So then naturally, as it is they are weak. When the COVID hit has come, they couldn't sustain that. So straight away, there was a issue. So that -- these are the cases, actually, there's a sudden fall. In addition to that, progressively who could withstand, those things is too have added.

[J. Natarajan, President & COO]

But Jai, if you notice, the last 2 quarters, for commercial, you are talking about, we have indicated INR 475 crores pro forma slippage. And if you see the current quarter, there's not much change, INR 485 crores minus INR 81 crores, something around INR 400 crores. So these are the accounts -- as you rightly told, these are all accounts already they were -- probably before COVID also they were suffering. And because of this, the environment, their position has deteriorated. So there is not much change in the -- as far as the commercial is concerned.

[Jai Mundhra, Research Analyst]

Right. No, I'm saying the performance is very good, sir. I mean despite the pandemic year, slippages, I -- if my number is right, even the last year, your commercial book also saw similar slippages. So Y-o-Y INR 485 crores is more or less comparable with the previous year, full year slippages? So -- right? So it is not a meaningful delta anyway.I was just wanted to understand if there is any sector or if you have noticed any underlying theme within the people who have slipped? Yes, so that was the question, but yes. And the third and last question, sir, is from retail side, if you have a broadcast number, how much of your retail home loan borrower would be salaried/self-employed/, let us say, government employee, et cetera? Anything on the retail side, sir? How much is the broad level, how much is salaried and a non-salaried side?

[J. Natarajan, President & COO]

Jai, if you notice, we have started the retail lending only a couple of years back. So the immediate marketing strategy is to encash our existing customer support. Generally, in our bank profile, if you see our existing customer profile, the salaries and self-employed percentage is higher than -- I mean the self-employed percent is higher than the salaries. So accordingly, I can say at least 70% of our -- the home loan portfolio is from the business and self-employed people and remaining 30% from the salary group.

[B Ramesh Babu]

But Jai, I guess, if you see, as I was telling earlier, so these are the cases which are backed by a collateral, it's a question of time. So you may not be able to -- because our position is not conducive, even if you go to the market, you may not be able to dispose off. Once maybe after 6 months or so, you will be able to dispose off, you'll be able to get back the money. The question of only time. It can be self-employed, it can be private sector employee or public sector employee, anyone whoever is there. So it's a question of time only.No, but only the point to here is, these are all existing customers. We have an established relationship and maybe 5 years, 6 years like that. So that's why the customers are known to us. The slippages in these sites will be lower when compared to the new-to-bank customers.

[Operator]

The next question is from the line of Vikas Sharda from NTAsset.

[Vikas Sharda, Senior Analyst]

One question on employee cost, even after taking INR 62 crore as a one-off in this quarter for employee costs, it still comes out around INR 290 crore, which is higher than the previous few quarters run rate and your guidance of INR 260 crore for next year per quarter. So could you explain, I mean, what were the reasons for that?

[B Ramesh Babu]

You're right. See, the only point here is this is the AS 15 provisions, it varies depending upon these -- the yield and other -- the discount factor. So that is the difference amount. But that's why we have given guidance in the coming quarters and -- what would be our normalized establishment expenditure.

[Vikas Sharda, Senior Analyst]

All right. And secondly, the ROA guidance, if I'm not correct, you mentioned for FY '23 or '24 for crossing 1%?

[B Ramesh Babu]

At '23, we are aiming for 1%. But at that time, we were not expecting such a severe second wave. But even then, we will put in all our efforts to reach 1% by '23. From '24 onwards, 1-plus on a sustained basis, we want to go forward. That's what our strategy and we are internally working on those lines.

[Operator]

The next question is from the line of Anand Dama from Emkay Global.

[Anand Dama, Research Analyst]

My question is also related to the ROA. You said that you have an aspiration of a 1% ROA by FY '23 and more than 1% by FY '24. Can you please run down in terms of how the margins will look like, how the fee income will pan out, how your cost to assets will look like and in your operating profits so that you will have a sustained 1% kind of an ROA going forward?

[B Ramesh Babu]

I'll tell you one thing. So last month itself, we have conducted our detailed strategy meeting and all. So we have prepared our blueprint. Here and there, some sort of loose ends are there, we need to fix that. So once we fix that, we'll internally discuss with our team and all, then we'll have an absolute clarity.

[Anand Dama, Research Analyst]

Okay. So basically, the 1% ROA target and all is still fluid for us?

[B Ramesh Babu]

Yes. Yes. Because you understand one thing, so we would have planned many things in the month of December, but we never estimated the impact of COVID second wave will be like this and all these things. So now we're at the end of June, once some sort of normalcy restores, we'll be knowing what's happening and all. So which particular head or parameter is going to take a hit and how we need to compensate where these things we need to work out, then we'll have some more clarity rather than talking about that now.

[Anand Dama, Research Analyst]

Yes. But that would largely impact your FY '22 numbers, right? I mean why would it really impact the FY '23 numbers?

[J. Natarajan, President & COO]

Yes. So okay. See, Anand specific to your question, there are multiple -- I mean, 3 or 4 metrics. As far as the NIM is concerned, we've already indicated we are confident and comfortable in maintaining or at least improving this yield -- I mean NIM. So why I'm saying improving is, if you see our yield on investments, it is one of the lowest because of the interest rates were bottomed out. Consciously, we kept our -- this duration very low. And whatever the investments we are doing only in the treasury bills and the short-duration securities. So all these things we are -- it is going to be the repriced now. So from now we are -- in terms of instead of treasury bills, they are going for higher-yielding securities.There, definitely, there will be some improvement in the income on investments. In addition to that, in the [Technical Difficulty], we are able to manage the spread. And if you note our cost of deposit, if you notice the last -- that is March of last year, still it is lower than the entire full year. So there will be some benefit will be there. The only thing is the competition, how are they going to -- the yield on advances going to impact that we have to check.And second point is with regard to the fee income, we are -- by and large, we are comfortable with the existing course. But definitely, there will be some improvement. The only thing is -- the question mark is, what is the treasury gain? So treasury gain at this moment, we are not able to predict. So it depends upon the interest rate movement.Coming to the expenditure, already we have worked out the establishment. And other expenditure also bank has taken a lot of initiative in reducing this expenditure. If you noticed last year also, it's almost flat. So this year also, we are planning for the same flat type of expenditure planning we are doing it. So the only the silver line is, we have a huge INR 6,400 crores as the nonperforming assets, which last year, many things have materialized, but we are not able to complete the process because of the SARFAESI was not there, NCLT was not functioning. So a couple of accounts, definitely, it is going to...[Technical Difficulty]

[Operator]

Participants, please stay connected. We seem to have lost the line for the management. Please stay connected while we reconnect the line with management. We have the line from the management reconnected. Over to you, sir.

[J. Natarajan, President & COO]

Sorry, Anand, the line got disconnected. So this is what we are hoping. And all these things materializes, but still we are very confident of one because we already indicated last -- sorry, our MD has already indicated last year. And only what is the change is the strategy document, which are disclosed in our presentation also. We have done a lot of work towards this. And our aspiration number is, we need to craft this 1% in 2024 and should sustain and consistently maintain that. So that is why the strategy document which were published.

[B Ramesh Babu]

Yes, 2 more points, just I would like to add. One thing is you see because during 2021, the first 2 quarters, we had lost income on account of maybe ATM or minimum balance, all these things, this will not be there this year. And second thing is the onetime hits of the employee cost, what all was there is already over. That way, we'll get that benefit also this year. And third thing is, now we have geared up our growth for the advances.You would have seen that during last year, excluding IBPC, we have grown at 11% because last few years because we were not growing on the advances, and other side, we were providing profusely for the NPAs, so we had a double whammy. Both sides, we were taking a hit.Now we have set right the momentum and all and people are in line to grow, particularly under the retail wing. The advance is what all growth that will start giving some income. And second side, we have created the collections team also now so that the grip will be there on the slippages and all. So the lower provisions this side and growth in income, interest income the other side and the income, what we had as fee income, and the reduction in the cost, as President was mentioning, all these are going to contribute towards the ROA, and that's what we are planning, actually.

[Anand Dama, Research Analyst]

Yes. That's major the hope. But sir, you'll also not have treasury gains as the way you had it last year.

[B Ramesh Babu]

We didn't factor that because we know it, it may or may not come because of the uncertainty in the market. So we are working this 1% even without reckoning the treasury gains.

[Anand Dama, Research Analyst]

Okay. Sir, another question is about your resolution pipeline. So you said that there are some accounts where you're expecting a resolution. I'm not asking about the time line, maybe I know it might take about 6 months, 12 months or so. But if I have to say that there will be some resolution still happen in FY '22, then which are those accounts? And what is the exposure that we have? If you can just detail out 2, 3 large accounts over there?

[J. Natarajan, President & COO]

Anand, I think, right now, you don't have it, but we'll share with you offline.

[Anand Dama, Research Analyst]

Okay. Sir, another thing is about the COVID provision. Sir, how much COVID contingent provision are we carrying on the books now?

[B Ramesh Babu]

The provision what we have created INR 301 crores, now that the Supreme Court judgment has come, as per IRAC norms, you need to classify an account as per NPA, we started doing. And what all is required as at the end of March, we have provided the INR 301 crores has been utilized and additional provision what all is required, we have provided. From now onwards, anything stress coming and all from the profit, what will be in earning and all, we'll be providing.

[J. Natarajan, President & COO]

Only thing is in addition to the -- as per the IRAC norms, we already indicated in our presentation. So the additional some INR 59 crores provision is kept in the other reserves, I mean, other provisions.

[Operator]

[Operator Instructions] We take the next question from the line of Pranav Tendolkar from Rare Enterprises.

[Pranav Tendolkar, Investment Analyst]

Congratulations for a great set of numbers. Sir, I just have one question. You said in the opening remarks that this -- some remarks on slippage. But what I make out is that your gross slippage in this quarter looks like INR 959 crores for the whole year. And for the last -- up till last quarter, it was around, I think, something like INR 59 crores reported and then there was INR 885 crore in pro forma.So actually, in this quarter, slippage looks very low. So can you just reconcile? Because you mentioned some number like INR 400 crore in the opening marks, which I lost. So can you just say what is the gross slippage in this quarter?

[J. Natarajan, President & COO]

No, Pranav. See, in our MD's guidance, so what we are trying to mention is, there are 2 points we have told. One is about the quarter and another is the full -- whole year. So the whole year, what he said is that INR 959 crores was the gross slippages, which we already indicated in the presentation.So what we are trying to say is out of this INR 985 crores what is the net slippages we have reduced in our reductions. You cannot compare the quarter-wise because the same quarter, some accounts may -- would have recovered also. So you cannot compare the quarter-over-quarter with this, you have to see the overall year.

[Pranav Tendolkar, Investment Analyst]

Okay. So which is INR 959 crores, that's it?

[B Ramesh Babu]

That's right. That's right.

[Pranav Tendolkar, Investment Analyst]

That is better to consider that one.

[B Ramesh Babu]

Gross is -- gross slippage is INR 959 crores only.

[Pranav Tendolkar, Investment Analyst]

Yes. Correct. Yes. Sir, also, there was a bank in which Tier 2 bonds we had invested, so that write-off is over?

[B Ramesh Babu]

Yes, over, over. Yes.

[Pranav Tendolkar, Investment Analyst]

Over, right?

[B Ramesh Babu]

Last quarter itself. Yes, yes.

[Operator]

The next question is from the line of SivaKumar K. from Unifi Capital.

[K. SivaKumar, Assistant VP & Fund Manager]

Sir, my first question is with regards to the tax rate. This quarter, we see the tax rate at almost 42%. What is the sustainable tax rate that we should assume for -- from FY '22 onwards?

[Unknown Executive]

Yes. Tax rate is slightly higher because last year, we had some onetime benefits on...

[Unknown Executive]

I'll just -- sorry, I'll just explain. If you look at -- so the DTA benefit sort of skewed the tax rates if you compare Y-on-Y. But going ahead, if our provisions are down, then the tax rates will be 25-plus something.

[K. SivaKumar, Assistant VP & Fund Manager]

Okay. So the normal tax rate, sir, right? Sir, in...

[Unknown Executive]

It's all depended on the provisions which we are going to do because that is the only major item of benefit which banks derives from taxation point of view.

[Unknown Executive]

It's 25% only.

[K. SivaKumar, Assistant VP & Fund Manager]

Right, sir. Right. Sir, and with regards to your provision coverage ratio, what is the number you'll work towards from the current 57%? Would you strive to get to something like 65%, 70%? Or are you comfortable at a slightly lower number?

[B Ramesh Babu]

Mr. SivaKumar, actually, this -- the PCR is basically, if you work out it based on the LGD. So when you compare our LGD, still, we have a very comfortable the PCR. And what we are internally thinking is at least 60% should be the ideal number, that is what we have been working on it.

[K. SivaKumar, Assistant VP & Fund Manager]

Okay. Sir, if that is the case and given the various positive attributes that you are expecting in FY '22, wouldn't we be crossing then ROA of 1% in FY '22 itself, assuming that the provisions are around the same lines and things move in the right direction as far as NII is concerned?

[B Ramesh Babu]

SivaKumar, what I suggest as an opportunity be given in '21 itself, I thought of doing 1%. But the question is, now everything is uncertain now till such time this June the second wave is completed because everyone is immobile now. So how it pans out, no one knows. So that's why instead of thinking of ROA at 1% now let it be over, then from our side, we are on the job. We will not wait '23, '22, what all is there and all, every day, we'll work towards that only. All levers whoever are there, which are going to touch the ROA, we are focusing on each of the lever, and we have created owners also for the levers and all, and we'll work on that to see how we need to reach that number.

[K. SivaKumar, Assistant VP & Fund Manager]

Right, sir. Sir, one last query on the recoveries part of the business. What are you aiming at for FY '22 in terms of recoveries from GNPAs?

[B Ramesh Babu]

It will be currently too difficult to say because when we are going for the auctions, so hardly, we are able to dispose off initially in the first round around 5%. People off late stopped coming also for the auctions.Now again, you've got a revise this thing you go. You reduced the price another 2% to 3% will go because the question is outside environment is weak, people are conserving the cash. So till such time some clarity comes, the security what all you have, we'll be able to dispose off. It is not an issue, it's a question of time.So now we will not be able to give any guidance at 3 months or 6 months, 9 months and all. So though there are many cases where an advanced stage also is their bigger cases as well as the smaller cases where security is there. So it depends on the environment where we -- our ability to dispose off. Otherwise, absolutely, we are on the job. We have created a separate structure to focus on this. All these things from our side, we are ready.

[Operator]

The next question is from the line of Prashant Poddar from ADIA.

[Prashant Poddar, Portfolio Manager]

Sir, this recovery -- I have 2, 3 quick questions. This recovery from written-off accounts of INR 30 crores, this is all the recoveries that we have or these are cash recoveries and then there are other recoveries as well? Because if I remember right, we have a large gross...

[B Ramesh Babu]

It's a cash recovery, straight cash recovery.

[Unknown Executive]

There is no other...

[Prashant Poddar, Portfolio Manager]

Sir, my question is, you have a INR 5,700 crores block, of which 57% -- this is an old number, I don't know what is that number right now, the written-off block, of which 75% is corporate. What I'm trying to understand is of that, we recovered only INR 30 crores in financial year '21 and only INR 9 crores in financial year '22 -- '20, is that the right number I'm seeing?

[Unknown Executive]

Actually that amount of cash recovery in technically written-off account which we took it to P&L. There could be other recoveries, which should have resulted in write-back of provisions or principal reductions.

[Prashant Poddar, Portfolio Manager]

Okay. And could you share that number for financial year '21?

[Unknown Executive]

'21 was -- last year, it was INR 9 crores. '20 -- current year, it is INR 30 crores. Previous year, it is INR 9 crores.

[B Ramesh Babu]

Prashant -- we'll give a breakup separately, Prashant.

[Prashant Poddar, Portfolio Manager]

Okay. Sure, sir. Sir, the second question is about your margin guidance. You've said that you would reduce the unsecured -- as of now, you are stopping to give unsecured loans. Will that have any impact? And this is only a flow number. So which means on the asset side, the impact will not be as much into the mix. But what gives you the confidence of net interest margin being maintained at 3.46%? And if you could also help us understand how does the bank see the impact as interest rates goes up? I mean is it net positive or is it net negative for you -- for your margins?

[B Ramesh Babu]

Yes. There are 2 components, Prashant. One thing is, so it's not a question of now stopping, when the COVID started at that time itself, we were skeptical and all this unsecured, we have stopped more or less last year April-May itself. So that is the reason you can find that. Overall unsecured for the portfolio is around 1%, which comes to around INR 520 crores, something like that. So this year, actually, we didn't get any incremental benefit on account of unsecured. That is the first thing, okay?Second thing, if you look at it, we have shifted our focus on the commercial. Commercial, if you look at it, the fresh, particularly the small business group, what we call INR 2 crore, INR 5 crore, these sort of cases, even under the digital when we are booking, if you look at the stress levels and all, the stress is relatively much low even if stress coming from the pre-digital.The yields on account of this is 10.5-plus. Even today, last year, what we have booked, the incremental for the commercial is 10.5. So which is backed by 130% or 160% of the collateral. So this is a kicker for us. If the normalcy restores, we had to focus on this particular segment, and we had to get that. And once -- again, when we get the confidence and all, the unsecured portion will also start going up. But in the normal course also, unsecured personal loans is not a great kicker for us because of a portfolio of INR 53,000 crores, it is only INR 500 crores. Yes, anything you want to add?

[Unknown Executive]

Yes, that's what...

[Prashant Poddar, Portfolio Manager]

Okay. Sir, one last question from my side, question comment, whatever. I think enough participants have pointed this out. The key challenge for the bank is that the number of branches have remained constant for a long time, but employee costs have continued to go up. With the help of technology, you are -- as you are saying that we are likely to see more employees being used for other productive users as they are not required for core businesses of banking as thought earlier.Could you help us understand the -- from the finance side, what are the -- I mean, how do you look at this employee cost block of about INR 260 crores a quarter? How will that move over the next few years? Because this is the single biggest disadvantage of old private sector banks and public sector banks versus private sector banks I would say.

[B Ramesh Babu]

Yes. See, there are 2 points here. Only as far as the existing employees are concerned, as you rightly indicated, we are down by IBA, particularly the AS 15, the pension and other graduate provisions, this cost is continuously going up. So particularly, in the last 2 years, because of the drop in the discount rates, it has drastically gone up.And second point is as regard to -- see, we have to improve the productivity level. So we have already limited role in managing the cost on these employees. Whatever, for example, 200 number of employees retired or resigned during the last year, we have not filled it. So we know that there is surplus people are available because of the centralization and other projects. So we have make use of it. In the beginning of the year, so when we do the annual transfer, we found that another 200 employees are surplus in the branches. So we have moved the entire 200 employees for the sales side.So now once our operations and other projects are settled, we still -- we have -- we'll be in a position to reduce the number of people working at the branches for operation. We can move towards the sales. So once it started happening, definitely, we will be online with the other banks, whatever you are mentioning it.You know that -- so we're all branch-oriented people. The transactions are [indiscernible] in the branches, that is why we have taken this project. But you will be seeing the changes -- this transformation, it's not possible in a very short period of time. It requires some time, but we are doing it. So that's what we are trying to say that in the coming quarters, you will see the productivity level as well as the cost.

[Prashant Poddar, Portfolio Manager]

Sir, a quick question on the employee cost block, I'm saying, you would have a clear clarity on how many people are retiring, et cetera. So how do you see this employee cost block of INR 260 crores? If you have to forecast 2 to 3 years from now, will this number remain largely constant because there will be some retirals, some inflation, et cetera, and therefore, they will match out each other? Do you think this number can stay at that...

[B Ramesh Babu]

Yes. See, numbers may stay because the focus what we are doing is at the branch level, the operation level, we are reducing the number of employees. At the same time, for especially, for example, NEO, so once the business expands, we need to recruit more people. We are trying to enlarge the operations in different states. So you need to recruit people. For precious metal, we just started. Now when we're expanding, we require a specialized team, far that we cannot stop the recruitment. What we are trying to say is, the people required for the routine operation will come down substantially. So that -- other things, whatever we are recruiting, these are all performance based. That's there will be the visible result on account of these recruitments. So over a period of time, you will see the people required for operation will come down. Whatever people we're adding will directly contribute for the sales. So that is the metrics we are working on it.

[Operator]

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

[M.B. Mahesh, Director of Research & Senior Analyst]

Sir, one question. In this -- in Slide number -- on Slide #28, the deletions of INR 520 crores that you have shown on the corporate side, can you just kind of give us some color as to what happened there?

[Unknown Executive]

So Mahesh, this is mostly from the technically written-off cases. There are recoveries, but by and large, you can say some 80% is from the write-off cases.

[M.B. Mahesh, Director of Research & Senior Analyst]

80% -- sorry?

[Unknown Executive]

Out of this 80%...

[M.B. Mahesh, Director of Research & Senior Analyst]

It's only write-down, right?

[Unknown Executive]

Yes, technical write-off because of the age of the account and [indiscernible] provided, so we are technically written-off.

[M.B. Mahesh, Director of Research & Senior Analyst]

So there was no resolution yet, so just essentially written-off.

[Unknown Executive]

No, no. Not much. Very small corporate recoveries were there, but large accounts, no.

[B Ramesh Babu]

Because last year also, if you see, Mahesh, in fact, I'm MD speaking. So last year also, if you see many of the courts they were not working even the NCLT also a lot was there, and I think I think much most moving and all. So that way now the things may move now because many of them are more or less in the brink. So taking it forward. So we are pushing these cases also. If we can get a few big cases, we can crack this year, that would be pretty good for us. Otherwise, we are focusing on each of the big cases and how to resolve it.

[M.B. Mahesh, Director of Research & Senior Analyst]

Okay. Just one clarification. You have INR 2,000 crores of NPL book on the corporate side. And in addition to the question, Anand asked earlier and Prashant, what is the chances that you'll see some good recoveries in FY '22?

[B Ramesh Babu]

If you look at it, many of the accounts, what we see, the collateral what we have is pretty low. Many of them are under consortium or even if you have multiple banking also, they have big accounts and all. So that way, if you look at it NCLT cases, what they are getting resolved. So how much of amount we are able to salvage we have seen. So that way, we cannot expect too much of recoveries from that and all.And above all, in respect to the consortium cases, we are absolutely dependent on the leader. So they have been pushing and we people are talking to them and all. So that way the consortium we are relatively helpless and pushing them. And wherever we have the sole security with us under the multiple banking also exclusively given to us, we are proceeding against them. We are trying to salvage that money, first of all. So with this backdrop as well as the experience only, we -- until and unless it is an extremely good account, we are not going for a consortium accounts. Also, we are reduced under corporate also with the learning what we had.

[M.B. Mahesh, Director of Research & Senior Analyst]

Just one clarification here. This INR 2,100 crores of gross NPAs on the corporate side, what would be the provision sitting against it, if you have it readily?

[B Ramesh Babu]

We will get you separately because readily, I don't have it with me. So I'll ask my people to pass it on to you.

[Operator]

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

[Renish Bhuva, Assistant Vice President]

No, sir, my questions has been answered. Yes. Thanks.

[Operator]

The next question is from Nikhil Vaishnav from IDBI.

[Nikhil Vaishnav]

Yes. I had just one question. What is our capital raising plan for this year or next year?

[B Ramesh Babu]

Now if you look at our risk-weighted percentage has come down to 53%. And our capital adequacy ratio is also around 18.98, 0.02 short of 19. So if -- we do not require capital at this stage. Even the stress test also last time what we have done for the COVID 1, so with that also the worst case scenario, 4 levels we have seen.The worst scenario also, we'll be able to meet the RBI stipulation, and we are above the RBI stipulation by 1%. So if suppose if under these circumstances if we raise the capital, we will be putting the capital for an inefficient use. So it may not be required, but we are engaging continuously. As and when any warranted the sort of requirement is there, we'll go for that. But currently, nothing on the cards.

[Nikhil Vaishnav]

Okay. And are we expecting like more restructuring headcount?

[B Ramesh Babu]

Restructuring, as I said earlier, initially, when the scheme has come, we were a bit skeptical. We were discussing. We were thinking of around 2.2% and there'll be enough flow of restructuring proposals will be there. But internally, we took a call saying that instead of entertaining every account which comes to the restructuring, we need to see the intrinsic worth of the account actually where they will be able to come back on to their feet or not. And we try to support only those cases. Where just to postpone the case and to put it under the carpet, we took a conscious call not to do that. So that is the reason if you can see that, our restructuring percentage has come down to 1.8. And if you see this 1.8 includes up to March '20 pre-COVID what all restructuring was there.If you take the -- during last year period, it is much, much lower than that. So that way, if you look at it, those who have already gone for restructuring, so they will not come for the restructuring. Even if they come, they'll at the most ask for a moratorium extension of another 1 year because it has become 4 years, it has become 5 years now. That you will give it. That's not going to impact the amount of restructuring.But whereas those who are going to come from fresh for the restructuring incremental, so that already we have in touch with our -- all the borrowers. Wherever this requirement is there, like how last time we have considered, we will judiciously see and we will evaluate the position. But in the initial address what I was mentioning, the quality of the people, those who are going to approach this time, would be relatively better because the first wave what all is there, they didn't approach even for the restructuring, they are able to manage on their own.So that way they have an intrinsic worth as far as their standing is concerned. So if really they come forward and all we'll be able to do. So that way, we don't expect a huge flow of restructuring under this major circular. And if at all something comes, we'll hand it, it should not be an issue. Anything you want to add?

[Nikhil Vaishnav]

So any quantum you can say? Like are we expecting that much?

[B Ramesh Babu]

No, no, quantum, we will not be able to say because on a portfolio of INR 53,000 crores, our restructuring portfolio is around INR 900 crores, which you have seen that, that way. And if those what all have been exhausted, the weak links which are there, those have been exhausted, now a set of people will come. It may be quite marginal. It is not that much material that's what we feel.

[Operator]

The next question is from the line of [ Sri Shankar ] from Ingrid.

[Unknown Analyst]

Sir, I have 2 questions. The first one is a continuation to what Mahesh asked about your corporate-led NPAs. What is the kind of NPDs that you have been seeing in the corporate levels? You will have around 3.5% of plus NNPA which is outstanding. So what's -- and your biggest problem is the corporate side. So what is the level of LGD that you're expecting there? That's the first thing.Second, you had large number of questions on the ROA front. You also mentioned about the various strategies. My simple question is how -- what are we doing to improve our underwriting to that extend?

[B Ramesh Babu]

Yes. I'll respond. If you look at the corporate up to last year, the major pain was coming from corporate and major provisions were also going for that. And this year, if you look at it, even during the pandemic year also, the overall numbers, if you look at it, the corporate numbers in the quarter 4, quarter 4 is the main quarter where more or less every addition has come because the rest of the 3 quarters standstill clause was there. So you are able to see INR 209 crores addition there.And later, if we look at the rest of the pipeline, which is weak also, so there are a few accounts here and there will be there. When it's a commercial organization, naturally, some accounts will be there. But the big ticket, which we were having earlier, those sort of incidents have come down drastically. So now COVID, these impacts we need to see. So what all is there, which are in a manageable position, from the normal earnings what we get. Unlike early system of chunky accounts, lumpy, these sort of things, they may not be there, that is what the indication as well as the SMA book, if we look at it.Now coming to the ROA underwriting is concerned, in the inaugural remarks itself, I told clearly saying that the digital, what the measures, what we have taken, so it is really supporting us, particularly on the retail as well as the commercial. So we always gauge our book based on predigital and postdigital. So whenever our risk management department also works on that, what the stress level under the predigital and postdigital.Clearly, we are able to see what all has passed through the digital, the stress level is absolutely minimal, and it is comparable -- much, much comparable with the market and the best banks whoever they are there. So that way we are reasonably sure what all incremental business we are booking, they are relatively safer under these trying circumstances COVID also. When the stress level under the digital booking is reasonably good, that gives us enough confidence saying that the homework what we have done under the digital is actually delivering now.

[Unknown Analyst]

Sir, that is the whole point that I'm trying to drive at. You mentioned the digital way your lending has actually seen better in terms of, what you call, quality of the assets. So -- and from that I heard that you mentioned that in the corporate side, you are limiting yourself to maximum INR 125 crores exposure, correct?

[B Ramesh Babu]

Yes. Yes. You're right. You're right.

[Unknown Analyst]

So now the whole issue to this is what has been our NGDs in corporates? Because at the end of the day, you're provisioning to a great extent those RBI norms and everything is there, if your decision to the extent of what is the LGD that we are normally seeing in this kind of account when you actually start doing provisioning? So if I look at your entire portfolio of INR 52,000 crores also, the significant amount of NPA is actually for the corporate book. And if you say that in the corporate book, we are not actually going to get any much of a recovery, then the provisioning also will remain high, LGD also will remain high. That's what I was trying to raise, sir, understand.On the other side, you also mentioned that as the commercial side, your yields are 10.5-plus, you have better real assets and we don't see the much of slippages out there. So you don't have much of an issue. So we can all help you to go to that ROA target of 1%-plus provided you don't have much slippages in those accounts. So what is the NGDs that we are talking about in your corporate book, that you have not answered, sir?

[J. Natarajan, President & COO]

Yes. See, I will add with MD. See, first of all, as far as the underwriting is concerned, today, all our retail loans and small business banking, which we call up to INR 200 lakhs, it's completely the [ BRE-based ] digital platform we have created. It is working well and the delinquency is a very, very negligible numbers.What you are telling is right. So with regard to the corporate account, whatever we are talking about, these are all legacy accounts. So whatever accounts we have onboarded during the recent years, we have not come across any delinquency. We are very careful. Our underwriting standards are stringent, and we also reduced our threshold limit and all. So if you see -- if you talk in terms of LGD. So the LGD is basically -- we are talking about the legacy accounts, corporate accounts, you are very well -- you are very right that the LGD will be very high, for example, 50% or 60%.But what we are trying to say is what our accounts we have onboarded, which are all working fine, number one. And number two, with regard to the existing portfolio of whatever the INR 2,114 crores, roughly more than 70% is already provided, number one. And in addition to that, we have to bifurcate this portfolio into 2. One is the consortium accounts where we don't have much to say. These are all -- the duration also almost 4 or 5 years. So we have to wait for something to change, whether it's a bad bank or something we have to wait it.And as far as the sole bankers are concerned, we are certain large accounts, where there are sole banker or multiple banker and specific securities are available. We have a fair chance of recovering this money. But only thing is they are all different stages, something in NCLT, something in SARFAESI, different stages are there. So still, since all these accounts are minimum 4 or 5 years duration, we expect some sort of a recovery will start from this year because last year also, there are many accounts in the final stage.And because after the operation and other environmental issues, we are not able to take it forward. So this year, all these things will start materializing and when we are working out the ROA, we are also hoping on it.For example, we have most to INR 6,300 crores, including technical write-off portfolio. So where we are expecting a substantial recovery during this year. In fact, when we are putting the budgets for this team also, we are very cautiously -- we have given the targets. We have created a separate team for that. And in addition to that, for collections, we separated team. So the entire focus on the bank is how to encash this INR 6,300 crores, how much is possible this year? This is our important agenda for the bank.

[Operator]

That was the last question in the queue[Audio Gap]