State Bank of India
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State Bank of India
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Good evening, ladies and gentlemen. My name is Hemant Kumar. I'm Deputy General Manager in Performance Planning and Review Department of the Bank. On the occasion of declaration of the financial results of the bank for third quarter of FY '20, it gives me immense pleasure to welcome the analysts, investors and our colleagues present in this hall. I also extend a warm welcome to the analysts, investors and colleagues who have joined us for this presentation through live webcast. We have with us on the stage, our Chairman, Shri Rajnish Kumar; Managing Director, Retail and Digital Banking, Shri Parveen Kumar Gupta; Managing Director, Global Banking and Subsidiary, Shri Dinesh Kumar Khara; Managing Director, Commercial Clients Group and IT, Shri Arijit Basu; our new Managing Director in charge of Stress Assets, Shri C.S. Setty; and our DMD and Chief Financial Officer, Shri Prashant Kumar. Our Deputy Managing Directors, heading various verticals and Managing Directors of our subsidiaries are seated in the first row of this hall. We are also joined by the Chief General Managers of different verticals and business groups of the bank. To carry forward the proceedings, I request Chairman, sir, to give a brief summary of the bank's quarter 3 performance. We shall thereafter straight away go to question-and-answer session. However...
Safe harbor.
Yes, sir. Before I hand over to Chairman, sir, I would like to read out the safe harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. Now I will request Chairman, sir, to make his opening remarks.
Good evening to all of you, and a very warm welcome. I think presentations have all been loaded and are available with all of you. So a very strong operating performance, you can see. And there will be many questions I know around that, exceptions, Essar Steel, Dewan Housing, but that is all part of the game when you are in the bank and the banking industry. So otherwise also, if we remove all the exceptions, the bank's performance is very consistent. So that is the first thing which I would like the analyst community to note that. We are very consistent in terms of the performance, whether it is NII, whether it is NIM. The profit, of course, dependent always on what is the tax rate and what are the loan loss provision. Asset quality, consistent improvement quarter-after-quarter. Gross NPAs, quarter-after-quarter, they have been coming down. Net NPAs are coming down. Provision coverage ratio is consistently going up. I don't think that there has been a quarter where we have not increased our provision coverage ratio, whatever be the circumstances. So this is about -- I'm not repeating the numbers. The one thing which we have given in our press note as well as to the stock exchange that the reversal of DTA as far as the DTA related to the loan loss. And that INR 1,300 crore we have provided, and that's why, otherwise, the profit would be around INR 7,000 crore. So that is one important point to be noted. And in the current quarter, which is now March '20, we will be to the revised corporate tax rate, which is 25%. So whatever performance comes hereafter, that will be with the revised tax rate. This is the highest ever profit, but I believe that if all goes well, so this will not remain highest ever. We can probably show better performance than what it is. And on the business front, I don't have any concern as far as the deposit growth is concerned. CASA percentage, you will say that it has come down. But the fact is that if you've done term deposits, SBI's rates are one of the lowest, but is still, the rate of growth for term deposit is higher than the current and savings account. So that's why CASA percentage has come down. Our loan growth has been very good as far as the retail is concerned. And International Banking book has also grown by 16%. So only corporate credit, which has been much discussed and is being discussed everywhere; there, the growth is negative until date. But hopefully, that reversal also should happen going forward because our sanctioned pipeline is fairly good. And the underutilization of working capital limits, I'm hoping that as the demand picks up in the economy, that reversal will also happen. In terms of the leadership on the technology front, YONO has been doing very well. And as we speak, we have crossed more than 1.8 crore registration. Now 90% transactions of the bank happen outside the branch. It's a different matter that even that 9% is still our branches are crowded. And 63% of savings accounts are opened through YONO, which is digital on-boarding. Multiple products, 34-plus products are available. The personal, PAPL loan book has crossed INR 10,000 crore. And number of transactions which are happening on YONO platform, the -- whether it is YONO cash, that is cardless withdraw from ATM, more than 100,000 transactions now. And wherever or whatever facilities we have provided on YONO, they are being effectively used, all features. So which is a very encouraging sign that it is not just the number of registration is increasing, but the actual usage of the features is also on continuous increase and is still the impact on the cost-to-income ratio, it has not yet come, but it will come. I'm very confident about it. As we realign all our branch processes, that productivity gain will be visible. And financial inclusion, again, bank has done phenomenal job in the area of financial inclusion, number of accounts, DBT, number of transactions, the social security scheme's performance. So everywhere, there is a growth and a good growth. And finally, the performance of the subsidiary, all of them, it is continuously improving. All of them, as I said, that they are either leader or on course to become a leader. So SBI Mutual Fund, I think, Bhatia-ji? #1, #2?
#2, sir.
#2 today. But #1, very shortly. So SBI General, again, it is one of the fastest-growing private sector. SBI Life, it's a listed company, its results, they all have been before you. So whichever subsidiary you take, they all are doing very well. So all business segments, all subsidiaries, the costs, I would say, other than 1 cost, which is relating to the retirement benefits, all other costs are very much under control and well within whatever was budgeted for. HR, we have not put a slide, but even on the HR front, the kind of initiatives bank has taken to recruit talent as well as to upgrade the skills of the people, the reorganization of the credit verticals as well as now a major shift or major reorganization, which is happening in what we call our retail and digital banking group, a massive reorganization is planned, which will happen from 1st of May. And again, we believe that it will do many things. One would be definitely in -- visible improvement in the customer service; and second is the capability to compete in the micro markets as well as the -- what we call the retail segment markets. So many of these things, they don't come in the presentation, that is an internal reorganization, internal process, but its benefits are going to be immense. So these are some of my opening observations. And then all your questions, I will answer other than Yes Bank. So please, floor is open.
Thank you, Chairman, sir, for the opening remarks. We now invite questions from the audience. [Operator Instructions] And the first question would be from....
[Foreign Language]
No, sir. Sincerely, I mean, you definitely deserve very rich compliments, the entire team of the State Bank of India, because…
Thank you.
This is not that this kind of a profit has been generated in the normal time of business and economy doing well, in the normal. This has been generated in the very, very abnormal time, which is very encouraging and really commendable. And what is more important is that your own confidence in statement that this is not the best, best is yet to come and immediately in the next quarter -- I mean the current quarter in which we are, so that gives a lot of confidence. And you have been so transparent in your discussions everywhere that there are very few things which are left to be asked, which are hidden or which may come out, out of this discussion. But still, I mean, just for a little more clarity and to be updated...
And after all, you have come all the way here...
No, it's not only because to complete the formality, but yes. So on -- sir, on this Dewan Housing now, DHFL, the time has come now when the provisions have started. So I believe that the overall exposure is around INR 10,000 crore, if you take that bond and loan together.
Bond and loan taken together.
And as you said that you already provided on bond 50% and the remaining...
20% on loans.
20% on this thing. So overall, around 30% has already been provided. Now how do you look towards the resolution or the recovery from this account? So that when you go to 40% in the coming this thing, how much net impact could be there from this? And yes, on other little more details on the accounts in ICA, the recovery prospects, a little bit on -- insight on the NCLT cases and which are going to settle, and the money is going to come in the -- in this current quarter, which are in March quarter. And how do you look at the future loan growth if you a little bit more segment it actually into the various segments of the economy? And how your overall perception now going forward in this coming year? But before that, just a small direct question, you already explained to some extent. This income tax provisioning, can we know a little more; full clarity that out of the 9 months profit of INR 10,000 crore, INR 9,000 crore is the income tax, so total pretax profit is INR 20,000 crore. And if you take this quarter, then, of course, it is INR 5,583 crores and versus the provision is also INR 5,386 crores. So what are the...
That explanation we'll give.
What is the clarification on this? And how it has been calculated? And what would be the impact in this March quarter? Whether there will be write-back substantially when you go to 25%, so on that, if a direct -- some calculations can be given?
Yes. That we'll give, you have asked 7 questions in one question, but the [indiscernible] is in there. So this tax part, I will leave it to CFO to explain. And rest of the question about the Dewan Housing. So net, we are carrying it now at INR 7,000 crore, INR 3,000 crore is already provided. An expression of interest has been invited by the administrator. That process is on. What I believe that if not by June, by September '20, this account will be concluded. So your loss will ultimately be crystallized in the next 3 quarters, March '20, June '20 and September '20. So unlike in the past, when you had the luxury of D1, D2, D3, so in IBC's regime or when any NBFC is under administration, within 12 months, in any case, it gets crystallized. So this quarter, again, we will watch the situation, and we will do some more provision. This quarter means now, March '20 quarter. But overall, my own assessment is that the recovery to the all set of creditors is expected in the range of 40% to 50%. That is what the expectation is. But that is not to guide anybody whoever is willing to put an EOI, it can be better. It may be not what I'm expecting, but that is the range, and that is the range from the beginning. We have taken a worst case scenario. And in such a scenario, you can imagine that if we save, for example, by March '20, if I hold a INR 5,000 crore provision, I think we would have completely aligned with the estimated loss. And if there is something remaining, so June and September quarter as and when it happens, we will crystallize. So this is the situation on the Dewan Housing. ICA, in all, there are 32 cases or were 32 cases, there's no new additions. So 8 were fully resolved. And this is the breakup we have given on Slide 20. 9 are in NCLT. So additional provision requirement is just INR 1,100 crore and INR 397 crore is what could potentially slip in this quarter, which is March '20. So ICA impact also is very, very manageable and INR 1,100 crore is the worst case scenario where the accounts under Category 3, if nothing gets resolved by March '20. Otherwise, it will be lower than this. So this is about your ICA. Then other than that, we have our normal aging provisions, which kick in. And all taken together, I think our provision in March quarter, may be in and around INR 10,000 crore, INR 1,000 crore minus or INR 1,000 crore plus. That may be the range, or we may even do better than this, but I'm just taking sort of a worst case scenario for the bank. On the recovery side, at least 3 visible recoveries. One is the textile accounts, almost INR 1,800 crore. Bhushan Power and Steel is in advanced stage of resolution. There is a written undertaking. It was coming in this thing. If that gets resolved, that is another INR 4,000 crore for the bank. Then there is one power asset where we are expecting another INR 1,000 crore. So INR 7,000 crore is something, which is over and above the, what I call, the normal. In normal course also, we have a smaller recoveries INR 300, INR 200, INR 500, something like that. And the last quarter, anyway, the profit is always higher. So currently, if you look at it on a quarterly basis, the bank's profit, average is coming around INR 14,000 crores per quarter, all exceptions excluded and so that is the scenario that where you can in normal profit, PBT, anyway INR 17,000 crore, INR 18,000 crore reference. And plus, we have certain plus SBI card IPO. So that's the scenario. That's why this gives me that optimistic statement I made, that maybe this is not the highest ever, and we can look forward in this quarter to beat the performance in this quarter, but there are variables, which are quite a few. And about the credit growth, of course, retail, I don't see any issue. We are growing at a very decent pace. Corporates, if the demand comes, then I think we can easily go up to 10% almost. We may not exceed 10%. But that all depends upon how does the corporate book performs. Anything else, I'm missing?
Sir, all this growth [indiscernible]
So this is a good sign.
I know. This -- it means lot of...
Sanctions are happening.
Sanction [indiscernible]
Across, across. It is across. Yes. Sectoral means it is across. There is balance sheet funding...
[indiscernible] or...
Not necessarily.
Or takeover of some [indiscernible]
No, no, it is across, because loan processing fee, it comes retail, SME, corporate, project loans, upfront fees. So it is very difficult to pinpoint any particular sector. It is broad-based. And this itself is an indicator that the number of sanctions in this quarter have been higher. And our people also have been very careful that there is no income leakage. As soon as they sanction, they recover also.
Yes, so that is one indicator.
Yes.
Or might have -- you might have increased your fees?
No, we have not. Nobody allows us to increase the fee. So Prashant has found that income tax thing, if you can explain.
So in case of the -- for the first 9 months, we have calculated the provision on the tax at the higher rate of interest -- higher rate of taxation, okay? And now, at the end of the third quarter, we have decided to move from the higher tax rate to the lower tax rate. At the beginning of the year, we were carrying a DTA of almost INR 10,000 crores. So now, since we have decided to move this DTA, we need to revalue at per the current rate. So there is a hit of INR 2,838 crores because of the reevaluation of the DTA. Similarly, we were also carrying a net credit of INR 554 crores. So that would also not be available once we move to the lower tax rate. So the total impact is INR 3,392 crores. Since now we have decided to move to the lower rate for the entire 9 months, now we would calculate at the lower tax rate. So the benefit which we are getting out of this, because of the 9 months we have earlier calculated at the higher rate, and now we are calculating at the lower rate, the benefit is INR 2,059 crores. So the net impact is INR 1,333 crores, which we have taken a hit through our P&L. And as of now, now we are -- the entire DTA has been reversed. The entire DTA, which we're carrying...
For March, whatever profit, it will be at 25%.
At 25%, that's right.
Okay. Is it calculated with...
Yes, yes, absolutely.
Yes, yes, absolutely.
So maybe that many of the companies [indiscernible]
Right from the fourth quarter, we will get the benefit, yes.
Sir, what is the write-back through NII of your NPL recoveries this quarter?
INR 4,000 crore plus.
Sorry. Through NII -- through the net interest income?
It is the interest income.
INR 4,000 crore?
INR 4,000 crore plus.
Yes, INR 4,000 crore.
Approximately that is.
INR 4,000 crores, okay. And provisioning write-back is there -- I mean, the...
INR 7,800 crores.
Sorry?
INR 7,800 crore.
So these 2 add up to the total recovery income, INR 7,000 crore and INR 4,000 crore. Okay, sir. Sir, and the other question is that in your slippage under IBG, also you have recognized the housing finance accounts. So how much amount is there in the IBG?
The entire, I think, INR 1,694 crores.
So it's a INR 1,500 crore in IBG.
Right, INR 1,500 crore.
And INR 5,500 crore in the domestic offices.
Got it. And that would be what ECB or, I mean…
ECB, but crystallized.
Yes, ECB.
Sir, this is Aarsh Desai from Vallum Capital. Sir, my question was the telecom sector exposure that you've given, that is the total exposure, that is, as in fund based plus nonfund based or...
Only fund based.
Only fund-based exposure. So -- and what is our nonfund-based exposure to BBB and below, sir?
No, there's no BBB and below, fund based.
Basically, this is Vodafone for BBB.
So it is -- is it BBB now?
BBB.
Okay, okay, okay. So that is another INR 11,000 crore.
Other companies also...
I think it is about INR 11,000 crore, if I'm not mistaken.
INR 11,000 crore nonfunded, sir?
Yes. INR 11,000 crore nonfunded, but that is for the spectrum charges, which have been deferred by the government for 2 years. So that guarantee, at least, we are seeing.
For 2 years, it can't be invoked?
It can't be invoked.
And, sir, you have taken the entire divergence provision this quarter?
Everything.
Yes, yes.
It's not only this quarter. We had taken earlier quarter also. So many of the divergences, which came in March as per the supervisory review, many of those we had recognized in first quarter, second quarter. What was the remaining when we did the stock exchange filing, all those numbers were given, they all have been accounted for in this quarter, whatever was remaining.
Okay, sir. And my last question is, sir, we saw a very good growth in housing. So what is the reason for that? Any specific reason for such good growth in our housing finance?
But housing finance, we are growing at that rate, 15% to 16%, 17%, so as the size of the book grows. So in percentage term, growth comes down a little bit, but otherwise, the demand for housing loan from State Bank of India, it is very good. And the sanctions, the disbursements, all are going up.
Sir, and on the wind power account, we provided completely?
Yes.
Even the nonfund base?
Yes.
So September [Foreign Language]
Sir, [ Neelam ] from Emkay Global. So I wanted to ask out of your corporate slippages of about INR 9,500 crores, so apart from DHFL that you mentioned is INR 5,500 crores, what are the other major accounts?
But normally, like we don't mention the individual accounts.
Sir, even the sector would be fine.
Sector is a separate thing. So basically, if you see the remaining part is only hardly INR 3,000 crores of slippage, okay? And this is not particularly related to any specific sector. And not a very large account is there, number of accounts.
Number of small, small accounts there.
Sir, Ramesh Bhojwani from Mehta Vakil. In your opening remarks, you laid a heavy emphasis on digital transactions. You said 1.8 crore people are on board.
On YONO.
And 91% transaction are through other than normal channels. That thought -- that expression gave me a thought that your technological backbone could be so powerful that it should prevent/avoid going forward, any kind of data pilferage, data attack and cybersecurity or cyberattacks. Because this phenomena, which I'm speaking, globally is the best of the best can't stop it. As a bank, we have initiated this. Along with that, if we can initiate a fireproof, fail-proof system, cannot be 100%, it will help going forward.
So no, I think it is a very -- I would say, a very valid and timely observation because data security and cyber security are the 2 real threats and, particularly, for a bank like State Bank of India, which is a very important institution in the country. So that way, to the best of our capability, one, in terms of providing the resources, whether manpower, financial or the partnership with the best-in-class vendors, so that is very much there. Time-to-time, we keep on doing our vulnerability testing. And many new companies and, particularly, start-ups and fintechs, they also have very good solutions, so bank is very actively engaged with these fintechs. And we are very impressed with what they are doing. So it is a continuous process. And we have state-of-the art SOC that is there. So further improvements, it is, I would say, the people would do mischief, they keep on updating themselves. We also keep on updating them.
Sir, on SOC -- yes, exactly. On SOC, we are going into a next-gen SOC. So we already have a Security Operations Center. We have approved the next-gen SOC, which should be operational, which has been -- as of now, whatever is the cutting-edge technology that is available. So this is top of our mind as far as...
Yes, that's very nice to hear that you are virtually trying to keep one step ahead of the criminal cyber fellow.
That I don't know.
Whether we are one step ahead or they are one step ahead...
They are one step ahead…
Nobody knows.
And sir, the second thought was, you have -- by virtue of your size, you lend to almost all sectors of the economy and all segments, large, mid, medium, micro and everything. How are you seeing them and reading the situation, which has arisen even from quarter 3 until date? Are you seeing small signs of improvement, recovery, confidence coming back? Or is there a crisis of confidence? Or maybe a quarter from now, you will be in a better position to answer and address this?
No, I think -- I mean if you look at -- see, particularly, if you look at retail, I think on the retail, we have been seeing continuously that recovery is happening. In fact, we didn't see slack there at all, actually. So retail has generally been performing well. On the other side, we are seeing lot of sanctions happening. See, we are seeing some decline in even SME portfolio or even in the corporate growth. It is mostly on account of working capital limits not getting utilized actually. So we do believe that -- we were expecting by this time the utilizations would improve. They have not improved, but there is a good pipeline, a lot of sanctions are happening, so hopefully, going forward, so those things start getting used. I think it's basically chicken and egg story. The consumption and investment, what happens first actually. So we want investment to happen. The consumption, unless that is there, the investment doesn't get justified actually. So hopefully, at some stage, the cycle will start moving, actually, and we'll see a lot more growth coming.
Perfect. And sir, one last thing. The March ending, can we see a ROA of 1%? We are at...
March '20?
Yes.
We are not superman.
We are at 0.6% today.
So we will remain at 0.6%.
No, if you see the ROA for the 9 months, we had 0.39%, 0.6% is for the quarter. So cumulative, it is 0.39%. So from 0.39% in 1 quarter to 1% is just difficult.
I just want to bring to your attention [indiscernible] prevention of cyber cafe -- sorry, cybercrime. Just want to bring to your attention that there is a lot of siphoning happening from SWIFT. So I wonder if you're aware of this. Are you paying attention to it? Is this something new to you? And I just want you to be careful of that. That's all. Because that's -- there's a very huge siphoning happening from there.
Ma'am, we are fully aware, and we actively track, in fact, wherever any incident happens globally. And there is a system where we get alerts also from various sources. So it's a very proactive approach we take. But nobody in today's world can claim that nothing will happen. But we are very mindful of the fact that, as the largest financial institution in the country, we are the most vulnerable. That goes without saying. So that's why the responsibility is more on us than any other institution in the country.
This is Vishal Goyal from UBS. Thanks for your efforts in this challenging time. Slide 25, you mentioned that around INR 6,800 crores are worth 5 accounts, which are regularized by other banks. The footnote, INR 6,788 crores. So how much of this are NPA for us?
No, nothing.
They are all standard for us?
With all the banks. It's not written other banks. It's with all the banks, they have been regularized.
Okay. And they were part of the first category, right, where you have some provisions...
While this statement has been made, to make it clear, that it is not that it is a standard with us. It has been because it is ICA, and unless the account is a standard and regularized with all the banks, you cannot put in this category. So it is treated as fully resolved because all banks there is no overdues. Okay? So it accounts fully...
What is the color of this in the sense in terms of sectors? These are all power or...
Not all power. Different sectors, 32 accounts.
No, no, the 8 accounts.
8 accounts. One would be power, one major account in power sector. But some other smaller accounts also will be there.
Sure. And we want to reconcile your net interest income number from previous quarter to this quarter. So now when you say INR 4,000 crore is, let's say, the NPL kind of your recovery in NII. So that means our NII went down by INR 1,000 crore quarter-over-quarter?
No, is it so? Not as much. Let us see.
So like, if you see the quarter 2, NII income was INR 24,600 crores, right? And this time, it is INR 27,779 crores, okay? When we are giving you INR 4,000 crores, this is approximately INR 4,000 crores. So NII is almost flat, if you take out the recovery of interest on account of these 2...
INR 4,000 crores is not -- one is, not an impact on NII. INR 4,000 crores is the impact on the interest income.
So that would be...
So you have to take interest income. Quarter 2 was INR 64,000 crore. This is INR 67,692 crore. So it is almost the same as for quarter 2, marginal decline only. And considering that MCLR has come down, so it's a good performance, and then you make up by reducing your cost of deposits or borrowing costs.
Okay, okay. So maybe I'll have to understand it much better.
No.
No, I think you have understood correctly. The only thing is you are saying this is a much decline, we are saying it is almost flat. That's all.
That's the only difference.
Okay. And I think the question which you already kind of forbidden, I'm asking in a different way is, will SBI be required to do any kind of national service, not especially one bank, I mean, there can be another bank which can come up which could be in trouble? Or you think that for some reason SBI need not be called and somebody else might be required to bail those banks out. If you can give some color?
Why are you asking this question? So one is that I have always maintained that we did our duty by merging 6 banks, tight? So after having done that and being the largest bank with 23% market share in deposits and 20% market share in advances, so from any risk management perspective, it doesn't make sense that you go for any other acquisition and merger. So there is no business case that we spout around. Does that answer your question?
Yes, it won't be a business case for you.
Anand here from HDFC Mutual Funds. Sir, if you can give -- what was the interest reversal on Dewan Housing exposure this quarter, interest income reversal on the NPA?
That we don't have, sir.
Interest reversal hits you when there is an account which is a restructured account, and then backdated, suddenly you have a standard restructure and failed restructuring, it becomes DC, then it hits you or the interest reversal on agriculture when backdated, they become NPA. That interest reversal happens because it is like one quarter only, and it has moved to substandard, not a very...
Even there also, I think, we recognized it even before it became NPA in a technical sense, actually. Okay? So there was...
So in terms of order of the account, it would not have become an NPA as on December 31. But because of developments, the investment had turned into an NPA and the fact that it was taken into NCLT, that is why...
That is one basis we might have recognized the income fully.
That's right. We could have recognized and kept it standard as per the RBI guidelines, but we chose to declare it as NPA.
But this interest reversals, they keep on happening every quarter. Ultimately, what you get here, the interest income, it is net of all those reversals. That is an automated process, no manual intervention.
Sir, on the slippages slide, there were slippages from the international loan book also.
Which one?
On the slippages slide, you see there was a slippage from international loan book also.
That is, again the same.
Again, for the same account, housing finance account, 15...
Sir, out of INR 7,100 crores, INR 5,500 crores is there and rest is, this is in international banking book and one more small account.
INR 1,500 crore is on account of that housing finance company and other small account.
And see, if I have to look at the provision line, this time, we have a mark-to-market provision of almost like INR 3,000-odd crores...
Out of which, one is on the bond of the HFC, INR 1,500 crore. INR 700 crore mark-to-market and rest on Essar, security receipts.
Sir, what's the outstanding security receipts we are having?
INR 7,700 crores.
About INR 8,000 crores.
INR 7,700 crores.
Sir, there was a news article that we have also done a tie-up with a developer in which we are guaranteeing the construction. If you can give some color on that? What's our plan? Are we looking more such tie-up? Do we earn extra fee because of we putting a guarantee for a project?
So the way the scheme has been designed. One is that we determine first that, what is our comfort on the exposure which we are willing to take on the builder. That is the first criteria. And obviously, they will all be top-quality builders, where bank will do its due diligence. And based on the cash budget method, which bank historically has done, we determine the exposure limit. And within that exposure limit, whatever money gets mobilized from the home buyers, so that is deducted and becomes a nonfunded exposure in a way. The idea was just to give confidence to the home buyers and give us little bit of a boost to the segment. And 7 centers we have said that, to begin with. So we are looking out, and it has generated good interest. So our department is working on it. And the response, I would say, initially, it is a good response. And as I said, that it is all -- we are treating it as an exposure on the builder. We're just facilitating that if the money comes from homebuyers, and we have tried to make it not legally, but otherwise, bankruptcy remote because we will be the sole creditor to the project. That is the intent. So if at all, it goes to bankruptcy, it will be SBI which will take it to bankruptcy, no one else. So that is the structure. And obviously, when we issue the guarantee, we will get our guarantee commission from the builder. Whether he recovers from homebuyer, what does he do, that is up to him.
How much such tie-up expected? How much project do we think we will be able to do in next 6 months? Or any plans we have, sir?
Prasad, you are there? What is the demand for the product, maybe INR 10,000 crores we can do in 6 months?
[indiscernible]
12 projects.
[indiscernible]
And sir, on your agri...
Sorry for interrupting, but I request you to -- we'll come back to you.
Kunal over here from Edelweiss. So if we adjust the margins, then the domestic margin seems to be below 3%. If we adjust this for...
No, it's higher than 3%.
3.22%.
Okay, it should be higher then. And where do we expect it to settle, maybe given the -- this kind of an environment?
[Foreign Language]
Okay. So maybe it's somewhere around 3%.
More or less stable. Because our interest rate on deposits, we are almost at the bottom, right? And whatever was the repo rate cut, all that we have passed on. So it will be -- the margin or the NIM gain is largely coming from the quality of the portfolio as we have more performing loans, then your net interest income improves. So that is where the margin gain will come. That's all. NII improvement...
Okay. And in terms of the employee cost, with this new mortality table which has come in, are we taking any hit in this fiscal? Or are we planning to do it in Q4?
We are doing it as per actuarial valuation quarter after quarter. And that's why if you look at on the expenditure side, the normal salary increases are just hardly 3%. Whatever increases in employee cost is coming, it is all coming because of the actuarial valuation at the requirement to provide for retirement benefits.
No, sir. This new mortality table we have adopted for all...
I presume so.
I think we are already adopting this new mortality rate for last 4, 5 years. Nothing new has come so far.
Okay, so nothing new?
Nothing new has come.
Sir, first question is can you update us on the MSME restructuring that was announced last year? Where are we today in terms of total amount and the provision levels?
Most of the eligible accounts have already been restructured. And we restructured about 70,000 accounts worth about INR 3,600 crores.
Anything this quarter? Anything this quarter?
In this quarter, yes, this quarter also quite substantial. About half of it would be in this quarter.
Okay. And sir, second one...
All were standard accounts. That is...
That is one of the conditions for the...
That is the condition for this restructuring that only standard accounts.
And what kind of pipeline do you see for the next few quarters?
No, as I said, most of the eligible accounts are already over.
As per RBI scheme, it's all done. And if there is any new dispensation comes, we'll see.
Okay. And second, a clarification on the SMA 1, 2 versus the standard ICA. Any sort of overlap there or 2 separate exclusive buckets, right?
No overlap.
Okay. And what is the current nonfund outstanding on the entire NPA and the SMA group.
Every month, we are seeing INR 300 crores, INR 400 crores...
The nonfund based is actually typically around 25% at the most of the fund base. If you take the overall book, of any account, if you take the overall book, in some accounts, the nonfund base is a little higher. We can give you the nonfund base number also for all these accounts.
And sir, third is on SBI Cards. Where are we in terms of revolve rates? And what has been the provisioning number for 6 months and 9 months -- sorry, the third quarter and the 9 months?
Yes. As far as SBI Card is concerned, the percentage of NPA -- net NPA is at 0.83%. Gross NPA is at 2.67%.
And credit costs?
Credit costs, I'll have to check the number. I may not have it readily available right now.
This is Jai Mundhra from B&K Securities. Sir, I wanted to know -- I mean, we had shared this corporate rating profile in our Analyst Day. It was around 7% of the total corporate book. So if you can share if there is a change in the corporate rating book, specifically BB and below corporate rated.
Have we given that last time or not?
Sir, actually, on the Investor Day, this was given in the rating. But what we have seen, there is a improvement like for investment grade BBB and above, we have improved by almost 2%. That is the position.
Sure. And secondly, sir, on this ICA slide that we have given, now the first row of that table says that there are some INR 8,000-odd crores accounts and some of them have already resolved. So how does the provisioning -- I mean, what is the time line when we can reverse this provisioning?
One year.
Can I just -- in case of additional provisioning, if you refer to the NCLT, until it is admitted, you need to hold 10%. So if you see the first one, then you can...
[indiscernible]
So in INR 8,314 crores accounts, INR 702 crores is held on restructured account. So that will be reversed only on 1 year. There are other cases where we have completely recovered. So there's no provision there.
Ashwani from Nippon India Mutual Fund. My question was your retail book has grown to INR 740,000 crores. So in a slowing economy, which is gradually recovering maybe, do you see a risk to retail loans of NPS? That's one. And second is in terms of the national infrastructure plan. As they propose to double the investment in the next 5 years, how well is the bank prepared to take advantage of that situation?
So we don't have any concern as far as our retail portfolio is concerned. For the simple reason that our housing loan portfolio, as you can see, that we have brought down NPA percentage from 1.60% in April '17 at the time of merger to 0.92%, and it is hovering around that. And in terms of LTV, in terms of EMI and EMI ratio both, the bank is very well placed. 92% of these housing loans are where people live in those houses. So these are many things which ensures that home loan portfolio quality remains strong. And same goes with auto loan. Xpress Credit which gets classified under unsecured, but earlier also I clarified that these are all salaried people, either government, defense, teachers, which are not impacted by the current slowdown. Our market segment for this is slightly different. And project finance, of course, the -- we have a strengthened project finance team, a lot of specialization has been built in. And the opportunity, in most of the cases, SBI is leading the transaction and will continue to do that.
Sir, also, when we, let's say, see on the news channels, et cetera, there is one complaint which comes from some section of MSME, et cetera, that there is lack of funding. So would you like to say a few things about this? What is the situation? I mean are you also very serious in your credit standards? Are you saying no to giving loans in some markets?
Parveen?
No, I think if you see all the action that we have been taking in terms of even giving public advertisements asking people to come and take loans, in fact, we have been making so much of outreach to MSMEs to come and take loan. I think, as you know that we launched that 59-minute portal also where anybody can go and apply for a loan. Yes, there are, of course, appraisal standards that we have to meet, and anybody who falls and satisfies those criteria does get a loan. From the bank side, there is a very active outreach to go out and, in fact, contact MSMEs and ask them to take the loan. But I think it's overall the business environment, which is probably holding them back. So there are a lot of other initiatives that are in the pipeline, things regarding bill discounting, things -- what more can be done actually so that the MSMEs get the money on time, actually. So once the overall climate improves, I think the MSME also should improve. But there is no good MSME who has ever been denied credit by the banks. I can tell you that much.
Sir, I just take a couple of questions which are from the webcast. So one question is that what the reason for increase in the NIMs. I think we have already explained, this is on account of almost INR 4,000 crores of interest income, which we booked on the -- some 2, 3 large recoveries. The -- another question is that, why is the investment depreciation so high during the quarter. I think this has also been explained. There is a MTM of INR 716 crores, and there is a depreciation on the bond portfolio of a housing finance company to the extent of INR 1,500 crore and a provision on the security receipts. And sir, the -- another question is, has the wind power account been recognized as NPA?
Which one?
Wind power account. So that has been recognized and 100% provisioning...
That was recognized as NPA in September itself. And what has happened in December is just the standby letter of credit, and which we provided in September, and it got converted into funded exposure in December quarter, and that's why you see increase in outstanding.
And sir, another question is that, have you seen any impact of farm loan waiver on the agriculture portfolio. Farm loan waiver.
No, that is visible. And that's why our NPAs are going up in agriculture.
Mahesh from Kotak. Just on Slide 12 of the presentation, sir, can you just reconcile some numbers there with respect to the reversal that you've done of INR 2,475 crores as well as the INR 1,752 crores?
So INR 1,752 crores, again, it's a housing finance company, which was not categorized as NPA during the last quarter. But we were -- made a provision of INR 1,400 crores. So that has now gone to the loan provisions. And for other provision of INR 2,475 crores, this is the -- we were making 100% provision on the nonfund based facility of a renewable energy plant, so -- which has also now gone to the loan side.
Okay. Second question, have you -- in the divergence report that you got this quarter, we understand that the divergence also includes some small ticket loans like agri as well. Has -- and I think in the press meet, you made some comment that it is -- you've asked for some clarification from the RBI. Has that accounts -- has those accounts been declared as NPAs this quarter?
Agri.
Whatever is the norms on which the divergence in agriculture was pointed out by the supervisors, all such accounts have been classified as NPA.
So from a divergence standpoint, everything has been...
Everything.
Okay, perfect. And the third question, too, on the recovery side, have you recovered all the accounts which were in the public domain, like on the power side, the FMCG side as well as the steel? Everything has come in?
So in the public domain, Bhushan Power and Steel is still remaining.
No, we are talking about Essar, Ruchi Soya, Jaiprakash...
They all have been done.
All of them have been completed?
Yes, yes, yes.
And Prayagraj Power as well.
Yes.
And just one last question. Of this recovery that you're likely to see, which you've reported in the power side, what is the time lines are we -- that we are looking at now? Because you mentioned only one account in the fourth quarter. If you could just give us some color as to how are you looking it progressing?
No, the power sector, we have given the slide on page number -- where is this slide? Just open that? So this OTS is likely to happen within this quarter by March 20. Restructuring, we will try that all 4 happens, but definitely 2 will happen, 2 may go to the next quarter NCLT as per the process. We are not taking any guess there. So this is the position. So we -- out of 6, row first and row 2, so first 2 OTS, 99% chance that it will happen within this quarter. And restructuring, all 4 are possible, but 2 we are more hopeful. Done?
Yes.
One is already done.
And how is the recovery environment now in the distress market? Have you started seeing some activity levels improving from the distressed players after the IBC clarification coming through of Essar?
I think a lot of investors are interested in terms of -- the liquidity also has gone up after the Essar money is received. There are inquiries, but we'll have to see how actually it progresses. Then again, the interest is in a few sectors, not across the spectrum. Power, obviously, there is an interest. We were able to close a couple of major transactions post Essar. So there is definitely an increased interest.
Wherever there are tangible assets, the chances are that you will recover good money. Wherever there are not tangible assets or many tangible assets, there the recovery rate will be obviously poor.
Do we have more questions? So I trust all the questions have been addressed. So if we do not have many more questions, let me end the evening with thanking the Chairman, the top management team, the analysts, ladies and gentlemen. To round off this evening, we request you to join us for high tea, which is arranged just outside this hall. Thank you so much.