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State Bank of India
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Analysts, investors, and our colleagues present here, and also those who are joining through webcast. In fact, there is a chat facility which is made available in the webcast. They will be also asking questions.[Audio Gap]All of you, on this occasion to the analyst meet and on the occasion of declaration of Q4 and FY '18 results of our bank. Before we proceed with the proceedings, let me introduce the dignitaries on the dais. We have with us our Chairman, Shri Rajnish Kumar, here at the center. To his right is our Managing Director, Corporate and Global Banking, Shri B. Sriram, who also holds the additional responsibility of Managing Director, Stressed Assets Resolution Group. To the left of the Chairman, he is our Managing Director, Retail and Digital Banking, Shri Parveen Kumar Gupta. And our Managing Director, Risk, IT & Subsidiaries, Shri Dinesh Kumar Khara, is seated next to Shri P.K. Gupta. To the right of Shri Sriram, he is our Deputy Managing Director and Chief Financial Officer, Shri Anshula Kant. And we have with us, the Deputy Managing Directors, heading various verticals in the front row, and we also have, we stress, Chief General Managers, representing various business units from the business groups. Before we -- I request our Chairman to go through the small presentation on the performance of the bank in the Q4 and FY '18, I would like to go through the harbor statement -- Safe Harbor statement. There are certain statements in these slides that are forward-looking statements and these statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements, due to a variety of factors. Without much ado, I would now request our Chairman to go through the presentation, and over to you, Chairman sir.
Yes. So welcome to all of you. And before I go to the presentation, a couple of points about the result. So all of you know that 2017, '18 was a very challenging year for the banking industry and of course, it includes State Bank of India. But if we leave aside the profit number or headline profit number for the quarter in that year, the balance sheet of the bank has become very strong, despite the fact that the [ NPs, which enters the gross ] [indiscernible] was to the order of INR 95,000 crores and the provision which the bank has made is almost about INR 70,000 crores, despite that in terms of the CET1 capital [indiscernible] provision coverage ratio. Everywhere, we have emerged as a much stronger bank. And also the fact which needs to be recognized is that it's not one bank's performance, but 7 banks' performance. And to consume 6 banks in one year, it speaks volumes about the capability and inherent strength of the State Bank of India. So performance in terms of quarterly P&L and annual P&L, apart from the loan loss provisioning, the other factors were the mark-to-market provision of almost INR 6,000 crores, INR 900 crores by way of gratuity provision, the amendment came in the last week of the March and suddenly there was a liability of INR 900 crores in that quarter. And three more quarters we have to provide. All the accounts have been recognized and the provisions have been made in terms of the revised framework of Reserve Bank of India, 12 February. The provision coverage ratio, YoY, it has improved by almost 500 basis points. And CET1, we are holding 56% provision and the estimated recovery, based on whatever offers we have received in respect of these accounts, indicates that we are holding excess provision on NCLT 1. NCLT 2, we are holding provision of 75%. And again, I think, the recovery will be much better than 25%. So this is hope that within this year, we will get some write backs in provisions as far as the NCLT cases are concerned, and all of them are to be resolved within this year, NCLT 1 in the first half and NCLT 2 by the end of the year. The capital position, as I mentioned, that continues to be fairly strong, both in terms of CET1 and that has been brought about the capital infusion of almost INR 23,000 crores, INR 15,000 crores by way of QIP and INR 8,800 crores by the government. But the major factor is also the conscious decision to reduce [indiscernible], which has gone down by 720 basis points. So this has also helped in maintaining the capital, required capital and going forward also the strategy is superior management of the credit risk with [indiscernible] assets and the focus on risk reward metrics. The NIA, when we look at the performance, it has been impacted amongst other things, as the impact of reversal, because large amount of NP has got recognized and some of them with the retrospective date, so which has resulted into muted growth in NIA, but because going forward this year, there are no such cases so that's why automatically, there will be an improvement in the NIA. The Bank's portfolio is very well diversified now. Over domestic advances, now 57% is retail and only 43% is corporate. And within the corporate, also the higher [ weighted ] advances the percentages has gone up. The benefits of merger and a couple of changes which have been made in the organization and are in the process of being -- implementation, particularly the corporate banking is Stressed Assets Resolution Group and project finance. This will yield very good results in the coming years. And we are now, I will say ready to exploit opportunities for growth in both in project finance as well as corporate credit, with very sound risk management, governance architecture in place and we are ready to support the economic growth. On IT front, couple of projects, which are of far-reaching consequences, which is Project Lotus, where we rolled out, a world-class application on the June, which has received -- which has been very well-received and I am told that in India, currently, there is no such application which is available. The CRM, implementation of CRM, which is also complete by almost 70%, and [indiscernible], which is around the risk management and which enables banks to do a very granular analysis of the customer profitability and branch profitability. So this again, it's going to give benefit in multiple ways, enhance customer experience in dealing with the bank, enhance revenue and the cost efficiencies. A complete overhaul of banks' training system is being done and [ the skill of gradation ], building of the leadership pipeline, skill enhancement as far as the risk management area is concerned, and technology and innovation. So these are some of the focus areas. In fact, there are 5, which have been identified in banks. Apex institutes have been reorganized to take care of domain-specific knowledge. First time bank has been able to complete [ published ] promotion exercise, the last result will be out, internal promotion tomorrow. So which is, again, a record that in 45 or 50 days, we have completed the entire promotion exercise and this is, again, a very critical factor that within the first quarter, all the new positions or all the people who have been promoted, they will be in position. And 1st July onwards, they will be on the job to take the bank towards the growth. Our subsidiaries, all of them are performing exceptionally well. They have all emerged as leader in their respective field, and there's a huge potential and value, which is sitting in the subsidiaries, and bank is preparing and is ready to unlock that potential. These are some of my opening remarks, and now we can go through the presentation quickly. And then I will be open to all your questions. Yes. So Anshula, can you going to take it through because [ I'm a little bit -- bad foot ].
So I think -- good evening. You would have seen the presentations and the numbers on our website. But just to quickly make these points. Net interest income Q4 over Q4 has come down by about 5% and largely it has been driven by lower interest income because of fresh slippages. Also, because MCLR and base rate came down during the year. Interest expenses have been very well contained; actually, interest expenses declined by 5% and that is due to sustainable increase in CASA and retail term deposits. Non-interest income, while it looks muted at 2.23%, actually the fee income has grown by more than 13.5% and recovery in written-off accounts is also up by 21%. It's only the profit on sale of investments that has come down because of the hardening of bond yields. Operating expenses, both overheads and staff expenses, are extremely well contained and staff expenses actually, despite as Chairman was mentioning that we did more provisions for gratuity and wage revisions versus last year, but because there has been a net reduction of about 16,000 employees during the year, our staff expenses have actually come down significantly. Operating profit, of course, has come down, again, because of hardening of bond yields, higher NPA provisions and also because of staff provisions. Loan loss provision has gone up, but because of that, our PCR, with and without AUCA year-on-year has gone up by almost 500 basis points over the year. For the full year, the performance is actually a little better. NII has been flat. There has been no decline in NII. Interest income although is lower by 1.55%, but interest expenses have come down by a higher percentage at 2.11%. In fact, if you'll see our numbers in the analyst presentation, which is there on our website, you'll see, sequentially, our NII actually is looking very healthy and very strong. That is Q4 over Q3. Similarly, non-interest income, also Q4 over Q3 is a very strong growth. Fee income, even Q -- YoY has gone up by 10.51% and recovery in written-off accounts is up by 35%. Operating expenses, again, a similar trend, very well contained. And operating profit, we have been able to maintain at the same level as last year, despite the significant increase in loan loss provisions and the MTM hit that we have taken. Profit after tax is at minus INR 6,547 crores for the year. Again, as Chairman was mentioning, we remain very well-capitalized. There is an increase, both in CET1, Tier 1. Tier 2 is lower, mainly because of maturity of Tier 2 bonds during the year and credit risk weighted assets to gross advances. This is a ratio which is a key metrics which we are tracking within the bank. It has come down by 780 basis points, largely because of higher increase in AAA and AA public sector enterprises, home loans. Those kind of credit, where the risk weights are lower. So we remain very well-capitalized and which is way above the regulatory requirements as described by [ RTI ]. These are some of the, a snapshot of the same numbers. Slippage ratio, you can see, is lower than last year, despite such higher slippages, at least, it is lower than last year. And despite these significant slippages, the PCR has gone up. So the total corporate slippages are INR 29,000-odd crores. This INR 17,435 crores has slipped from the pool of stressed standard assets, which we had displayed in the quarter 3 results, which is, in one way or the other, restructured S4A or SDR or 5:25. Again, as --[Audio Gap]out in telecom which is outside that INR 50,000 crores pool, that has slipped in this quarter. Total corporate slippages, as a result, has been in INR 25,000 crores, INR 11,000 crores of that is in the power sector.[Audio Gap]Going forward, we expect the -- we've identified about INR 26,000 crores of loans, which may be under stress during the year. Not all of them will slip, but again, largely INR 10,575 crores is in power sector and then, there are the other sectors, as mentioned here. A few things I'll just make clear here, we do not have any standard SDR account anymore. All SDR accounts are now classified as NPA. Five S4A accounts are a subset of this watch list, which continue to be standard, but they are in the watch list. And two very small, other S4A accounts are neither in the watch list nor they are NPA because they're fully implemented and they are regular in all mean -- by all means. And what we have given this INR 5,662 crores number at the bottom, that is basically the number that is slipped during the quarter, which was standard SDR or S4A as on 31st December. And the other point to highlight is that all SME 2 accounts under the corporate sector that MCG and CAG corporate SME 2 accounts, all of them are a subset of this watch list. SME 1 also, we have scanned and seen whatever is under stress, we have put on this watch list. So it's a fairly comprehensive watch list we have made here. This, of course, the Chairman has said, we have very well-covered mezzanine provisions. Hereby, we have taken a write-back in 4 accounts as per RBI dispensation from 50% to 40%. Despite that, the coverage in NCLT list 1 is 56%. Only in 4 accounts, in the list one, based on our expectations of recovery. In NCLT list 2, we are not, of course, written back anything there. Sir, would you like to go through these 2 slides?
Right. So this is about like we are talking about financial year '20, and there are certain targets which we have kept. [ CAGR ] of 12%. NIM, it should be around 3%, and that's not difficult to achieve, particularly, because as I mentioned, that when accounts became [ NP available ], a lot of interest reversals in the past year, but we will not have that problem in the current year. Credit costs, even for financial year '19, I have said that it will not exceed 2%, it will be less than that. First revisions also will be less than that and our target for ROE is 0.9% to 1%, by -- to be achieved by financial year 2020. While this is all about like what is our expectation or estimation about slippage ratio. GNPA, definitely, there will be an improvement this year. This year alone I am expecting that there will be a reduction of at least INR 50,000 crores in the GNP. And depending upon the credit growth, this -- the number which we are targeting for March '20 is achievable and same goes true for the NPA, given our PCR. We are targeting that [ in early ] March '20, but even by March '19, ideally, we would like that PCR on all of our accounts which is currently 50.5%. So we would like to increase it to 60%, so that we are aligned with the, in these prescribed guidelines. If they got implemented from 1st April, 2019. These are some of the steps, which I mentioned in my opening remarks, also the focus is entirely now on the risk weighted assets and the risk reward metrics. We are for growth, but any growth and particularly in corporate credit, will come, where the accept -- risk is acceptable, and not only the risk is acceptable, but the reward should also be acceptable. It will not be just to push up the headline numbers in terms of growth. So we are no more in the game. And we will price the credit appropriately and will not compromise on that. The overheads. They are under control and will continue to remain under control and whatever measures we have taken in the area [indiscernible]. So that should also give us not only a [ steady revenue ] from the customers, but also help us in maintaining the cost. Legacy NPLs, provision compensation, you have already seen. And this year, we are expecting a lot of recovery upgrades in resolutions. INR 78,000 crores is sitting in NCLT 1 and 2. So that should happen within the year. Then the underwriting, the reorganization of the corporate accounts grow. We have now -- we have reduced the number of branches from 8 to 4, and very select top 230 clients will be handled by this group. The entry barriers for corporate accounts group has been raised. The focus of this group will be to capture the ecosystem around the corporate rather than just be [ purpose-drawn ], lending to a particular corporate. That is the major change we are seeing. We are putting the CGM in charge for operations and the main function of the CGM in charge of operations would be to drive the innovation in the corporate banking area. The bank has done a lot of work in the retail banking area, but corporate banking area is where now we need to focus and bring in the latest technology and applications for the benefit of the corporate clients. IT will be again playing a critical role as far as the asset quality is concerned in the retail sector and the bank is making good use of data analytics to further define the risk models. SME, tremendous work has been done in the last two years to reorganize the methodology of assessing the risk. The tools to have a check on the flow of funds. So many measures have been taken and with the GST implementation, I am very hopeful again, that bank will be able to capture the new opportunities. As far as SME financing is concerned, housing sector is, again, showing signs of recovery by the discussions with all the real estate developers indicate that they are seeing an uptick. So it is a [ inferred story ], where government spend is pretty dominant. I am not seeing any large private sector investment in the [ infrastructure ] sector and consumer banking remains strong, both car loan, housing loans, personal loans. So this will be the drivers of growth. And as said, that SME will be definitely a focus area for bank, where we have taken the steps to risk mitigate the entire portfolio. Bank's dominance in digital and the e-commerce space. It continues and it continues despite all the fintechs, all the competition in the market. Our market share in all the payment methods is anywhere in the range of 25% to 30%. Even credit card, now, the [indiscernible] very well, both in terms of the fresh card issuance as well as the spend where the market share is going up. Debit cards, I don't think the competition is anywhere near. And in terms of the debit card [indiscernible] also. We are the market leaders. So this is some of the statistics we have. The alternate channels, the transaction has moved up to 80% as by the end of March '18, and only 20% transactions are happening in the branch channel. And further, I think, we should be able to take it to 15% or 16% for the branch channel, and 84% or 85% will come through alternate channels. And the [indiscernible] as a result of this migration from branch channel to alternate channel. So some of the staff, we already reduced by 16,000. But not only the headline headcount reduction but a lot of staff is getting redeployed in the sales role. So this again, some of the statistics to show that the bank remains undisputedly the [ leader in the ] transaction business. On the technology front again, the State Bank has emerged the leader and we will do everything to remain the leader. There are a lot of projects which are going on, and our GITC [indiscernible]. It's the hub of all the activities, but ultimately, what is the objective of all this? The objective is, one is that consumer experience with the bank should improve. Second is IT and data analytics should be used for improving our risk management. The third is that it should lead to cost efficiency. So these are the three main objectives which define our vision for the use of technology and innovation. As I said, that even at the product training and the [ skill of gradation ], a dedicated [indiscernible] of technology on innovation that has been -- it was already there, but now their focus will be on technology and innovation and we intend to exploit the technology to the full extent, and the [indiscernible]. Now this is, again, like what we are doing on the technology front. Wealth management is something we started in January 16 and now it is at a stage where it can take off. Internally, a loan bank has 400,000 customers who can be and who are the target for our wealth management business. The capability and capacity in terms of the relationship managers and the manpower to service these clients, that is being ramped up, a lot of the [indiscernible] recruitment we are doing this year. And this initiative is now ready for takeoff, and in the next two years, the impact should become much more visible. Right now, with 24,000 clients, it will not look as big, but the target is big. I have already spoken about how are we doing [ detail ] and capacity building. There is a very focused approach on the [ skill of gradation ] and the training is long. It is the core of building the State Bank of India for the future. The bank has five Apex Training Institutes, and we all have been given one domain for [indiscernible] should become leaders, for example, as Institute of Leadership Calcutta, so we're positioning it as a very premier institute not only building the pipeline of leaders for State Bank, but for other banks in the country and in the other countries. And the same goes for [ Gal ] which will be focusing on risk management. The Hyderabad [indiscernible] and which will be focusing on consumer markets. We have [ an expert ], which is renamed now as the Institute of rural markets and SBI Institute of Innovation and Technology and now the ownership of this training Institute is also moving out of strategic training unit to the businesses who are the users of all the training capacity. As I mentioned, that in record time, this time we have completed our promotion and placement exercise, and that gives also like -- it's a disruptive process. So we thought that we should complete this disruption in the first quarter itself. And second quarter, they will then be on their job and will start focusing on what they are supposed to do. So that we have taken advantage of the first quarter. Subsidiaries I have already spoken, that they are delivering great value to the bank. They are leaders, all of them, in their own right, either they are #1 or #2 in their area. [ Maybe accepting as we are generalized ]. We [indiscernible] have a big plan to enhance its value as an investment banker and project finance, it will all be moved to State Bank of India. We're looking for a partner for [ SBI caps ] within this year. SBI General [indiscernible], is smaller before we list the company next year. SBI Cards and SBI Funds Management, likely to be listed next year. So there is a plan for unlocking the value in the subsidiary. SBI, all of you know, and we are thankful that SBI is a recognized and trusted brand and that is where the synergy with all the subsidiaries comes in, and there's still [ a huge cache ] of customers with the subsidiaries [ intact ]. Our cross-selling income, in fact, this year has crossed INR 1,600 crores last year. So that is a jump of almost 70% over the previous years. So there, all the networks of the subsidiary banks, which we got, and they started in SBI more in the second half of the year. So that will like, we have the network, we have the capability, we have the technology, we have the balance sheet strength, we have the management [indiscernible]. So I see no reason that why State Bank of India will not be delivering superior performance going forward. Thank you.
Now we will move to Q&A. Before we do that, there are couple of appeals I need to make. [Operator Instructions]
My question on the loan growth guidance for next year, you gave guidance of 10%. So what is our assessment of corporate SME and the mid corporate segment growth, because that is a large book for us. So what kind of growth we can see in that book?
The domestic advance is, the mix is now 57% is rating. Rating includes SME. And 43% is corporate. The way I look at it, that on the retail banking front, which is the 57%, we have done very well and we have been doing very well and we dominate housing loan market. We dominate car loan market. We dominate the personal loan market. It is the corporate banking which is something, which was pulling down for obvious reasons. One was the challenge on the politics. And second is that there was a slowdown in the investment loans. So what -- in terms of ratio, probably we would not like to disturb it, not too much. So 57% will become 60% and yearly corporate banking should give me 40%. And because the market situation for the competitive situation is such that after having put our house in order, we should be able to grab all those opportunities that will come. The project financing, for example, with the risk mitigations, which we have put in place, then I don't see that any project in this country can be financed without SBI's participation. But definitely, the learnings from the past, we don't intend to forget. And safety, will have to be insured, don't want to be in a similar situation after 3 or 5 years. But at the same time, any good viable proposal or opportunity, where the -- as I said, risk and reward, if both are acceptable for us, we will take that on.
And the small data point. What did the interest rate [indiscernible]
You didn't give name and affiliation.
[ Manish ] [indiscernible] from [indiscernible] securities.
We will come back to you.
[ One mission ] point in the sense that the corporate book also needs to take care of the markets, in the sense that the last couple of years, we have tried to push a lot of our lending towards the bonds and the CDs. And going forward, with the large exposure framework is also kicking in. We would like to have that mix and the [indiscernible] as the Chairman said in the opening remarks that the -- we are looking at better rated corporate, who will play between the loan book and the market book. So corporate loan book will not be growing at a very great pace at a time but together, the both of them, may see some sort of uptake. What we are targeting now is they are of the 10%, 12% that has been -- most of it will come through the retail SME. Around 5% will come out of the corporate side. That is the estimate at the moment. But as the year progresses, we will try and be [ reviewer ].
[indiscernible] on retail, we are expecting 18% to 19% growth, of top of which home loan should be around 14% to 15%. Auto loans, around 16%, 17%. And retail unsecured loans, you know what we have extra credit, that is people who have [ salary ] accounts with us and we give them unsecured loans that continue to grow at between 25% to 30%. So that is the [ take on policies ].
[indiscernible] from [ DSP ]. The question is again on loan growth part. And overall, when you look at your own SLR, which is very healthy at 25%, 26%, [indiscernible] you have extremely strong liquidity at this point in time. In fact, you are the strongest in terms of liquidity today. You see a situation where other corporate banks are actually very badly hobbled, and not in a position to take growth. My question to you is, when you -- the guidance that you have given, in a way does it partly imply that you will be losing loan market share growth is where I'm coming from, and why be conservative in an environment where the environment has started to improve, when your balance sheet itself is now reasonably clean and you are extremely strong on liquidity, with the SLR that was given.
So basically, the way I look at it, that what was happening, and even in the past year it has happened that some of the credits, which we allowed to go because we were not happy with the price. So as far as the approach is concerned, it is definitely focused on growth. But as I said, that if the covenants or the pricing is not to our liking, then we're not going to purchase -- to chase that kind of assets. And as Mr. Sriram also mentioned, that when you are looking at loan [ book ], you have to be mindful of the fact that the guidelines for the largest [indiscernible] are in place and some of the shift, as far as the last corporate account is concerned, that will move to the market, particularly bonds and CDs. So when you are looking at the growth, this growth in CDs, and CDs also will have to be taken into consideration.
[indiscernible] NIMs, where you are the highest in terms of your loan growth. In corporate bonds, et cetera, then you are giving up a part of your margin. That's the...
That is inevitable because that is the framework which has been given by now the regulators, but that is all about very large exposures. But otherwise, there is a lot of value, again, in the smaller [ sites ] [indiscernible], cannot approach the market. And the way the reorganization has taken place, it frees a lot of manpower which was earlier all engaged in many [ invested assets ]. So there are -- there is a set of people who will be focused only on pursuing the growth opportunities and the task of managing the asset will be confined to Stressed Assets Resolution Group. So that should also help in -- help the bank. And as I said, the competitive scenario is [indiscernible] in '17
This pricing can be both ways, in the sense that it depends on the type of credit that they're looking at. If it say for a PSU unit, maybe the pricing will be tied to the bond market, but there are others which we get good pricing as well, on the bond side. The advantage of the bond is that the downsell happens pretty fast, and we are able to churn, get the profit and redeploy the funds in a different asset. If you see today, the state loans itself is much higher than the MCLRs that we are talking of. So that is how the market shifts between, rather the rates -- interest rate shifts between the market and then we will be mindful of that as well. And one of the things that we are now trying to do is, what we are saying, it's right [indiscernible] there are opportunities for us in the absence of a lot of other players. It's [indiscernible] in the credits that we are very comfortable with, try and originate and then distribute. So that thing we have not done earlier, now increasingly, a few deals we have done, and that would be one way of building up our portfolio, getting a lot of fee income, and then churn the asset between the loan and the market.
Sir, this is Ashok Ajmera from Ajcon Global. Sir, now with this increasing watch list, and most of the bad accounts have been factored in. And you say that for the new loans we are very cautious. Two things emerges, the two questions. Number one, this 12% CAGR growth, it means 24% until 31st March, 2020. In spite of a part of it being answered as the retail SME loan, but if you see your overall loan book, unless you again, get back to large corporates, unless you get back to those, again, Infra, power and other [ boards ], other segments of the loans, I don't think this 24% number can be just made up by saying that home loan will increase by 17% or car loan will increase by 24%. What is the exact -- have you calculated the exact number? This 24% in just two years? Or less than 2 years. From where it will come?
If you are just answering to one of our colleague's question. One is that there will be a concentration of people who will do corporate business, that is what we are trying to say. All right, if there 45 people who are doing 45 banks who are doing, well there may be less than 10 banks who will do it at the moment. The second thing is that, as I said, there's an opportunity for us to originate the Institute Model in some way, is what we are trying to do. Third is that these resolutions which are happening now, is giving us some additional good companies who are taking over some of these resolutions, and there will be, these [ reserves ] will start to grow -- they grow. For the last 2 to 3 years, there was nothing in that. They did not only grow, it will also give us interest income because these are all NPAs, which are not producing anything at all. So there are ways and means in which we will do all that. We will be very cautious as far as the learnings that we are talking of, that there is [ a no ] in terms of project finance that we did. What are the big learnings that we have today? Made our governance so tight, that we are mindful of that, then we don't do the same mistakes again. So that is what the Chairman was alluding to, that when we do that. But if there is one balance sheet funding for the strong companies, which are AA and AAA between the markets and the loan book, we will try and capitalize on every opportunity.
So my request is [indiscernible] next quarter when we meet. If a little more detailed working can be done on this? You have rightly, said that many of these [ guides ], the companies which have gone bad with the new management, with the stronger management, their need of funds also will be required, and they will be good accounts. But the first one, which you said, the [indiscernible] approach or the ancillary approach, I think, [indiscernible] what the way the trend we're seeing. Because one industry goes down, 70 other [indiscernible] our account goes down. So there -- it has been tried time and again, in the last 40, 50 years.
So that is true. That is what like -- it also depends upon how the market goes, right? It is not that we will go in isolation, but the optimism is around corporate banking and project finances and the [ big number ] is growing. The way [indiscernible], the way the housing loan market has started [indiscernible]. With the opportunity for growth is higher. So it's just based on certain assumptions. But if you ask me, that is definitely an aspirational number in terms of credit growth, but the focus will remain on what are we getting out of it, understand, in terms of profit. So [ vary ] or the focus will always be on profit. We're not going to lose sight of it. In the process, it may so happen that we may allow certainties or certain transactions to go past us. It is not that the top line growth is the focus and we have to grab it. That is not the strategy at all.
Just two things. One is that, this watch list, just a [ random defect ]. How many percentage of this can go absolutely bad?
Not more than 60%.
So about 15,000...
Basically, you look at it, what have we said. What I've said is that our...
Because, SME 2 is also included...
No, SME 2 entire, SME 1 is stressed, and non-SME also is here, What I have said that our gross location now will not exceed 2%. Which means, on a book of 20 [indiscernible] the idea behind putting this --[Audio Gap]That what we are seeing, we mean it. INR 12,000 crores, INR 14,000 crores is retail, which will happen. And about the corporate, this is my worst case scenario. That if at all, assuming that 100% goes into, even then, this 2% is, what I have said, I was mentioning that in terms of gross NPA, in terms of absolute number, even as percentage, this will come down this year for sure.
Some color on the international business. That'll be last?
We will come back on this later.
But we will answer every question, don't worry.
Sir, my first question -- my question is, really on the power exposures and the watch list, the [ INR 102 billion ] of power exposure would be spread across how many accounts?
Two accounts.
Two accounts, only.
They were two large ones.
[indiscernible], then we don't count.
That [indiscernible]. It's there in this INR 10,575 crores, even the small changes there.
Okay. But 80% would be the bigger, from 80%, 85%?
Yes.
And last week, there was a news article that the PMO is considering or the PMO had called banks to discuss a scheme to resolve stress power. So is there any meat in that news article? It's there any such ongoing scheme?
That you will have to ask the news reporters who have reported. But as far as State Bank is concerned, so we are trying that the resolution happens for both stressed assets, their PPA is out there. Either full or partial and few linkages are there. So it is not in the interest of anybody that these assets go into NCLT. So these have been identified and we are working towards a resolution plan. And...
Is the government helping out for it? Is the government helping out or it's bank related?
Not physically, it is banks [indiscernible]. But whatever support we need from the government, either from the power industry or from the PMO or the finance ministry, so I'm very sure and confident that, that help will be available and that is what the assurance is.
This is [indiscernible] from [indiscernible] Advisors. So I just wanted to understand one thing, with respect to recoveries, so usually when there is higher slippages we have observed there are higher recoveries.
There are.
Higher recoveries?
Yes.
So what is it a function of? I mean, why can't recoveries be on a stable line, independent of what the slippages are? And if I have to like understand what the recoveries are going to be over the next year, irrespective of the [ right path ] that are going to come in from NCLT, technically, the -- from the GNPA book.
Not the GNPA book. We have not ignored the recovery which will come through NCLT process.
So -- no, that happened on its own. But...
[ It should be larger ]. Today, if I've understood your question, that today banks [ lost ] NPA book is INR 223,000 crores, out of which INR 80,000 crores is NCLT 1 and 2. So far NCLT 1 and 2, there's a [ in queue ]. And the rest of the book of -- which is about, say, INR 150,000 crores. So INR 150,000 crores, there is a certain percentage which we have targets for recovery through other means. And some of it, again, some of the cases in this list, again, will end in NCLT. So what exactly is the...
The question is why is it specifically high when there are like slippages -- when the slippages are high and not a constant function by itself, irrespective of what the slippages are?
You see there are two aspects. One is where we transfer the NPS by whatever provision is made to an advance and then collection [ return ]. So right, there are -- typically, the recoveries are between 6% to 10% of the opening balance of the -- that portfolio, which is around one like INR 4,000 crores or INR 5,000 crores is the total portfolio. If you see last year's performance, the -- rather the opening balance of about 75,000. So if you see last year's performance, it was about INR 5,400 crores of recovery as against [ INR 3,900 crores ] the previous year. So there has been an increase of about INR 1,500 crores, which works out to over 8% of the opening balance of that portfolio. So typically what we would like to do is to keep that range between, say, around 8% to 10%. So that, that portion keeps on giving us a -- sort of a steady other income. The second is what you're talking about with bonds which are the NPS. So where the recovery has happened by two matters. One is a cash recovery, the other is the upgradation. Then we have what we have -- what's just happened is that for the last year or so, most of the accounts have gone into -- big ones have gone into the NCLT. And you see whether there's been a resolution in Q1 as well, you will find that the -- it will be totally cash and in the sense that the whole INR 36,400 crores of various banks is completely cash. And about INR 11,000 crores will be counted as a recovery for us. In that sense, as the process of recovery, which involves no legal intervention areas through NCLT or through other means as of this year or whatever. And then when it kicks in, you will get -- largely you will find that this year there could be chunkier recoveries, there could also be some quarters which are blank depending on how the courts start to [indiscernible]. That is where we have said that there could be in that list one of NCLT complete that we have got over INR 79,000 crores or INR 80,000 crores of NPA there. In one way or the other, by the end of this year, it will have to be resolved. The [indiscernible] -- the 270 days plus whatever time it happens for that. So INR 80,000 crores of NPAs, whatever is recovered from there, will be recovered. The balance will have to be provided for. Already, it has been provided for. So that is how these two things move.
[Indiscernible] from [ Investec ]. So you have a current rupee situation, global bond market at 3 0 7. And your 10-year bond rate is 7.9. Most of the big banks in U.S. started talking about 4% interest rates. The Indian market estimates are that 30% to 40% of India's [ debt ] has to be refinanced or repaid over a period of 12 to 24 months. Between SBI and SBI Capital Markets, how are we reaping that bounty which we can now [ put ]?
How can you?
How are we going to reap the harvest in that -- either with repricing, reborrow, renew fresh line [indiscernible] to be your -- because of the rupee situation, they'll have to borrow locally as they'll have to refinance.
Yes. So there is an opportunity there between the -- in terms of whatever refinance is, but the cost of funds also will continue to increase in the whole international market. As the LIBOR goes up, you will find that the [indiscernible] -- when we start to raise [ results ] and our refinancing also, whether it is MTN or whatever it will have to be at a higher cost. So in terms of margins, it may not be too high in the international side. On the Indian side, of course, there is a possibility. I don't know how the interest rates will pan out in the future. We close the year at about 7.42%. Today, it's around 7.85%, 7.90%. Depending -- my guess is that there will be another quarter where we'll have to have a little bit of stress. But if the monsoon comes out well, there is every chance that the interest rates may rebound back. But if it doesn't rebound, you will -- I guess, as the interest rates go higher up, then, as I said, to an earlier question also, both on the bond side as well on the loan side, there will be a significant opportunity for us to improve our margins there.
But -- your question was about the opportunities for refinancing. So the only limiting factor which sometimes come [ in lieu ] of the State Bank of India is our potential exposure [ norms ]. There are potential exposure [ norms ] from Reserve Bank of India and our internal also [ norms ] for, taking exposures on the single borrower or a group of borrower. So -- but otherwise, our capability to refinance or [ despite these ] opportunities, SBI's in a fairly good, strong position.
Basically, if you factor that, your credit growth can be much higher than what you are estimating in the 24 month. That's what I was going...
He has a different view. You're [indiscernible].
[Indiscernible] anything over that.
We'll take an average of the two.
Average of the two.
[Indiscernible].
Yes?
Yes. So my question is on your cost-to-income ratio. How are you seeing things? Because no other similar corporate focused banks are now having cost-to-income ratios of 40-odd percent. We are still above 50%. Surely, there will be retirements and if you're to actually reach a 1% ROA, cost has to be brought down meaningfully. So what is a target number?
One is that about the income part. The last year's, the last two years, in fact, because of all this NPA, the income has been impacted. So one is definitely that we have to work on both the numerator and denominator. The income, definitely, the NIMs as well as the focus on other incomes which we are having. So this will help us in improving the income. Even a 10 basis point improvement in the NIM means INR 3,500 crores for the bank. And if it is 20 basis points, INR 7,000 crores. So we have to increase that. And as far as the costs are concerned, one is they have been fairly contained and the efficiency which we are looking at because all the technology initiatives that should help us in keeping the cost under control. And definitely, 40 or 39 or 41, 42 immediately that is not possible for the State Bank of India. But in 2 years' time, if I'm able to come at around 45% or 46%, that is something, I think, we should get the targeted ROA of 0.9% to 1%.
And in a related question. In terms of number of employees, while there will be natural retirements, would you also be hiring enough or the absolute number of people would be coming off or will that mean...
So the absolute number of people will be coming down. But we have to hire because every month, more than 1,000 people retire from the bank. And we have to do some replacements for sure. We have -- already are in the process of recruiting about 7,800 associates and 2,000 probationary officers. By the time they join, another 6,000, 7,000 people would have retired. So the number which [ is on date ], it's not going up very significantly. But periodically, that replacement is there. But it is not head-to-head, means that if 13,000 people retired, we are not going to recruit 13,000.
This is [indiscernible] from Motilal Oswal. Just a question on your movement of total standards [indiscernible], if you could help us understand the lifelike movement in this. So last quarter, your outstanding standards [indiscernible] was in the range of INR 50,000 crores. And now it's at -- around INR 26,000 crores. So there is a roughly INR 24,000 crores reduction. So if I look at the movement of slippages from this part has been only [ INR 17,400 ]. So what would the rest of the reduction have come from? So is there any category of stress that was included in the earlier list and not in this one?
Anshula?
See, there is about INR 5,000 crores or INR 6,000 crores of assets which we have removed. Because if you recall, when we met last time, I had said that INR 50,000 crores, it was not a watch list. It was just the actual number of the total restructured stress pool, which was still continuing as standard. And we had said that all of this is not going to slip. So whatever has slipped is INR 17,500 crores, around INR 26,000 crores is in the watch list. The balancing amount of INR 7,000 crores to INR 8,000 crores -- INR 7,000-odd crores. Our assessment at this point is that it is safe and it can continue as regular. So that has been removed. That's the only difference in this.
Okay. And your earlier watch list did not put the SME 1 and SME 2 books either?
Sorry?
Your earlier watch list did not include SME 1 or SME 2 books either, so this one has?
This one has, yes.
See, I tell you one thing, while we did not ostensibly include SME 1 or 2...
It was a part of the savings compared.
It was an [ overwrite ]. Because it is the SME 2, you restructure, isn't it, or the SME 1? You don't restructure perfectly regular accounts. So we were not tracking it separately, but there were definitely a subset of that INR 50,000 crores. And this time, we have put all SME 2s in the watch list. Consciously, SME 1, we have chosen and put the stressed ones.
[Indiscernible].
[Indiscernible].
Yes.
So you have mentioned about your stressed assets for the problematic accounts in the domestic side. You have INR 300,000 crores in overseas assets. What is the condition over there? Is there any stress or is there any kind of the problems out there?
So it's been reasonably well contained, in the sense that our -- the gross NPA in overseas book is about 2.3%. And the net NPA is 1.2%. So it is actually some of the resolutions which will come -- which has come already in the first quarter will help us to bring that down also significantly.
[Indiscernible].
So we have been able to, as I said, contain the stressed assets. The international book is reasonably good and then the context of the domestic book is far better. Is that answer -- is that what you wanted?
Yes. My question was again -- I agree that there is a certain element of once the resolution comes and you should see a better scenario out there. But [ you've given a ] watch list for the domestic book. My question specifically is, is there any...
No, no, it is on the -- international also is included in that.
Included in that?
Yes. But it is not [indiscernible] significant.
Significant, okay. The second question is with regard to your ROA [ strength ]. I mean, the road map that you have to achieve 1%. If I look back at the history of the last 10 years, 15 years, even at the peak, we have struggled to cross 1%. It was a little under 1% of weak ROA. So in the changed environment, with your subsidiaries, SBI Life, SBI Mutual Fund, everything doing very well and continuing to grow, why a target of just reaching 1% in ROA?
Don't want to sound too optimistic. Let me put it this way. And we're just recovering from a very bad year, so rather 2 bad years, right? So in such a scenario, I think, [ rulers demands ] that we don't to be over-optimistic and even like the way I look at it, that 1% itself means that we're looking at the net profit on the current book of INR 26,000 crores. So it is not a small number in that sense. And with the best of the circumstances at State Bank, we are ahead by the very soft bond prices and the best ROA we would have achieved is 1.1%.
Yes, or 0.9%.
0.98%.
0.9%. 0.9%. Yes.
Actually, if you see, our operating profit is around INR 60,000 crores, around that figure. And if you [indiscernible] the guidance, we've given about 1% of credit cost. It comes to around INR 52,000 crores, INR 53,000 crores, INR 54,000 crores. On that, if you take tax, for example, it is -- when we increase size, it is [indiscernible]...
But the bank's -- [indiscernible] size is big. And banks like...
So -- but the story has been so different in the last 10 years. Things have changed. Where your subsidiaries were probably not contributing earlier and it has started to contribute and business now you have a vertical and the wealth management side. You can have third-party products sold, cross-selling can happen, which is not there 10 years back or in the history. Or is it that you do not have the confidence your third-party product sales will actually start contributing or cross-selling will start contributing?
We are confident about everything. What I'm saying is that when we are giving any sort of guidance, we don't want to be in a situation where you give a guidance and don't achieve it, right? Say, for example, this is in the watch list of INR 25,000 crores. So I'm very confident that it will never be INR 25,000 crores slippage. It's not going to exceed INR 15,000 crores, INR 16,000 crores. But it still, or just to say of the comfort that what we are saying, we mean it, so that's all this number we have pulled. And look, this is all we have in our books. So I think live with this for one more -- maybe 4 quarters and we will be able to give better guidance at the end of the year 2019. But I'd wish that what is your wish, it comes true.
Okay. If I may ask a last -- ask one final question. Yes.
[Indiscernible] to add to that. I think the big difference is the credit cost. Even when we had the ROE of 0.9% credit cost was 60, 70 basis points. Even now, I think the best estimate or the best guidance is to give it 2% actually. Again, so [ M&A ] is 2%, so I think if the credit cost goes [ to 2 points, 6 points ], I think, ROE will definitely be much higher than 1%.
But definitely, the entire organization, I can say, there's [ only ] talks about profit, nothing else.
So that if I may, I'll just take one -- a couple of questions from the webcast. So one question is only on the data points. What are the outstanding stress standards as a provisions? So that number is INR 4,541 crores, which forms about 18% of the watch list. On the watch list, we have about 18% provision. And the other question was countercyclical provision buffer, how much do we have? So we continue to hold INR 1,250 crores as countercyclical provision buffer that has not been used. So the other question is that slippage outlook we have said for FY '19 may be below 2%, of which INR 26,000 crores are stressed account itself. Would this mean that we are back to a normal slippage run rate of 60 to 80 basis points annualized? I think we have said 1.3% or so by '20.
By '20. So that's what I'm saying. That if all goes well and nothing catastrophic happens, then if I look at my corporate book, about INR 15,000 crores. If I look at my retail book, INR 12,000 crores. So the best scenario for me is INR 27,000 crores, which is close to what has been mentioned, 0.6%, 0.7%. And the worst case scenario is INR 40,000 crores, which is 2%. And if it is INR 27,000 crores, INR 30,000 crores, so that is 1.5%, right? About 1.5% or so.
1.3%. Yes, about 1.3%.
1.3%, so the range is fairly right. But here, we have built the worst case scenario for us, not the best case scenarios.
We'll take the last two questions because time is running out.
Yes. So this is [indiscernible] from Reliance Mutual Fund. Since the economy is really improving, we are seeing higher [indiscernible] manufacturing and even the CapEx indicators. With top 1,000 corporates with State Bank of India, what kind of specific effort is the company making so that you become lender of first choice basically? Because when we look at the surveys of when we interact, you're among top 4, 5 but not the first. So what do you do to get there? Because this is a great opportunity. And second is you have around 30 [ crores ] clients, 30 [ crores ] customers.
40.
40 [ crores ] and 10 are basically the...
Financers.
But they're good customers.
Yes, they are good customers. So what kind of opportunity does exist really to create significant volume of business from them?
Right. So the -- I will use a different -- we're already a first lender of the choice for any large [indiscernible], but what we are trying to do is the first banker of the choice for all their activities. That is where we speak about the ecosystem, capturing that ecosystem which has great value. The bank has been making efforts, it's not that it has not been making efforts, but the efforts will be much more focused. So each corporate account, their ecosystem has been completely mapped and where State Bank stands, in terms of banker financing, in terms of dealer financing, in terms of [ employer financing ], in terms of their logistics. So that kind of mapping we have done. So what we're looking at is not that I look to you only for borrowing money. That is not the objective. What I'm looking at is that what value do you offer to us? But I think that we will remain the lender of the choice because, one, our capability to underwrite large [ traders ], it does not exist with any other bank. Second is that our cost on the deposit of funding side, it is very competitive. So what the -- only thing which we are not doing is that booking business at any cost. That is the only difference and on the retail side, this -- I will exclude that INR 12 crores, INR 13 crores and general account also because they generally sell not always has become valuable to us. We've already crossed the breakeven levels in terms of like the kind of deposits are held in these accounts and we are using very effectively our BC channel and we are strengthening that channel. So the space in terms of the micro finance opportunity or the small value loans, using technology, using [ that system ] BC channel, using business associate channel. So that means State Bank is very well positioned across the segments. But for corporate, I think, a slight difference on what you said. And what I said, we are the lenders of first choice.
Also to supplement, we are leveraging analytics in a big way. So that is something which is going to come very handy going forward when it comes to offering the next best product to the customers which they're possibly looking for.
Absolutely. So like Asian [ banks ] are -- Maruti, for example, the large companies which are leaders with State Bank of India is -- actually they really need to grow much faster to maintain their leadership or enhance their leadership and this is the opportunity for you. So this, let's say, experience of the last 2, 3 years because the investment cycle has been bad and companies have been badly impacted and, therefore, the banks have been impacted, how do you really, let's say, remove the impact of this negative experience and really not lose opportunities? That is what the key thing is.
No. That is where the -- all the structural issues also comes in place. So largely what was happening that -- say, for example, our corporate accounts growth or our mid-corporate. So our people there, including right from relationship to top level, so everybody was looking at stress. There's a 90% or 80% of their time was [indiscernible]. So one is that now that we felt that this is the opportune time with the -- all the bad assets and this having been recognized provision, strengthening of this has [indiscernible] resolution grow that in large chunk of people or set of people, they're focused only on the growth and the good quality asset. And they'll -- this one set of people, they are focused entirely on resolution of the stressed assets. So that itself I think will make a big difference both in terms of the turnaround time and because the people who are in the field is where the relationship managers what -- who were facing that customer, they also have a comfort in their mind that there is someone in the risk who is also looking at the credit proposals and will not allow anything to pass through which does not meet bank's risk appetite or underwriting standards. So what I'm saying is just to change itself, I am hoping that it will deliver good results to us. And the choice is -- as far as choice is concerned, even today, I think the State Bank of India remains the first port of call for anyone. So...
Specifically, if you wanted, one of these group relationship managers that we have now obtained, there is one for every groups so that we get the benefit of all the group accounts. In some accounts, they have no credits. In some accounts, they have credit. So we have that. Second is there is a very -- focus now on credit light sort of customers, where we didn't have that much because they are people like, for example, the FMCG companies, the IT companies, and so on. They don't borrow. But we have ForEx, we can give CMP and so on and so forth. So that has started general financing, so that is there. The third is the area of products itself, the bouquet of products is being announced in a different way. So that give us a lot of income. So a lot of the specific initiatives have been taken in terms of putting in place structure which will address this. And the big thing was that we were a little bit more focused on this NPS and resolution and it was clogging our mind. That to some extent with the creation and the complete structure of [ occupational ], complete vertical which will take over SME 2 and the worst accounts will leave the other relationship managers to focus on the good accounts and do the business and other related work. So we're sure that we'll be able to do much better in the years to come.
Last question?
[Indiscernible] from PhillipCapital.
[Indiscernible], no problem.
Few data points. How much of 5:25 is there in the watch list?
[Foreign Language] 5:25 is for the SDR, this is all history, so let us not talk about it. And then...
[Indiscernible].
Let him finish. Let him finish. And then [indiscernible].
Can you tell me what is the gross NPA in the power sector?
Gross?
NPA in the power sector?
About 19%, 1-9.
And is there any fresh addition to the watch list that was not in the last quarter?
19% is NPA and about 6.5% is in the watch list currently.
So this is Sanjay Parekh from Reliance Mutual Fund. Sir, our historical delinquency has been high, part of it is -- was because the cycle was bad. But for the new lending that we do -- I mean, we've been historically 10% to 20%, 25% in certain -- in all the segments. How do we ensure that we significantly go down to get the credit cost lower on a longer-term basis?
So basically you have to look segment by segment. All segments are different. If you look at our housing loan or car loan or personal loans, they are best in the industry. Comparable to anyone. If you look at agriculture, it will be [ limited ] 5%, 6%. Can't expect any improvement over that. Although, there are efforts even to improve their through the supply chain, through use of the [indiscernible] to recover. Tie-ups, use of [indiscernible] because there's a lot of things happening there. But that is one segment there, I think, even 5% to 6% is all right [indiscernible]. SME's something where like because of the GSTN, the steps we have taken. So we should be able to bring down the default percentages there. And corporate is something because it was cyclical and we were hit by the very bad cycle and we did a lot of infrastructure financing, which did not turn out to be a good story. Otherwise, in '9, '10, everybody believed that it's a great story. You also believed the people from private sector who invested and we as lenders, so everybody believed that infrastructure is a great story, but the thing has turned out to be otherwise. So basically, we have the entire effort that would be that -- continue to maintain quantities or improve further on the retail side. Agriculture, as I said, that 4% to 5% is something which we have to live with. Same I would say for SME because it includes a lot of government-sponsored schemes and these things. So all the savings which will come is through the corporate lending and which is, again, very large. If you look at our book or pool of INR 20,000 crores, so INR 55,000 crores is retail, agriculture, SME and all personal loans together, that's just all corporate, so that is where the whole trouble for the bank came. It was -- I would say that's not anticipated when these credits were underwritten. Because, let me tell you, that nobody signs a credit proposal if it is not believed that it is a good credit quality. But things did not go the way they were supposed to and we are paying the price. We have paid the price. Hopefully, in future, we will not. Last one. Yes, right away.
The government is [indiscernible] official State Bank of India is so efficient that they were to pick up 4, 5 people from here, so that is [ their bank ]. [Indiscernible] very well said, there is -- more people are not [indiscernible].
One is that I'm happy at the news report, not by the fact that my people are going to go away, but the very fact that there's a recognition of this. That SBI, even if we get 4, 5 executives, so we will not be impacted. So that is the belief which is in the government, that is the belief we can certainly be at. There's this strong, huge pipeline that [indiscernible] was ready to take over. So that is not the issue, and I think it is a positive. It is perfectly positive for the bank. But if that happens, this is all news, reports, conjectures, speculation.
[Indiscernible] impact to be [indiscernible]?
My people at the general manager level will be [ right up to you ].
Right, thank you very much. Are there still [indiscernible], if something is remaining, we should. Yes -- no, no. There is one more gentleman here, yes. We should not -- please mic.
Sir, we would also have some portfolio of the non-RBI-directed NCLT exposure where, as a banker, we would have filed the NCLT. So can we share the portfolio of like the [ non-RBI-directed NCLT ]?
Non?
Non-RBI-directed. No, unless -- it is not very significant, but we can share you offline. We can...
It's not significant.
Not an issue but out of INR 78,000 crores, NCLT 1 and 2., it's all RBI-directed, right? So the -- I think the rest would not exceed even INR 5,000 crores, INR 6,000 crores. But I think that is the number it can be not any more.
[Indiscernible].
[Indiscernible] is very small. [Indiscernible]?
Okay. And apart from that, what is the overall claim that you would have had on these NCLT cases which are, again, RBI-directed NCLT cases? Because what we have -- like all -- given the overview about INR 77,000-odd crores is largely the exposure that we have to them. But...
It is a claim.
Oh, it's a claim that we would have...
INR 78,000 crores, [indiscernible], is it a claim or is it a book? Oh, sorry, it is book.
This is the book. This is the book.
[Indiscernible] INR 92,000 crores, INR 93,000 crores.
Claim will have [indiscernible] and all that. But largely, the recovery is percentage that we see is on the books that is outstanding in the books.
Okay. So proportionately, when we get the money from the -- from Tata Steel, also will be the case or the new one? Will it be proportioned to the claim ratio or...
Proportioned to the claim.
Proportioned to the claim. So that is...
INR 1,000 crores. INR 1,000 crores.
INR 1,000 crores.
INR 1,000 crores. [Indiscernible] if you have a claim ratio across the banks?
Very little marginal difference because our leader's interest rate may be a little bit up or down. That's it. But otherwise, it won't be significantly -- 1% or 2% the other way.
Yes. And about INR 7,000 crores to INR 8,000-odd crores actually entered the watch list this quarter. So any sector color on that -- those INR 7,000 crores to INR 8,000 crores [indiscernible]?
See, I'll just again reiterate, I've said it 3 or 4 times, that INR 50,000 crores was not a watch list. I think we made a mistake in giving that number. In quarter 3, it was not a watch list, it was just the outstanding in these various portfolios. And that time also we have said that it is not all going to slip because many of those accounts were decent accounts. I mean, they were not going to slip. So it was not on the watch list.
So I'm very happy with the...
The remaining watch list at that time was around INR 11,000 crores.
So half of the questions around SDR, [indiscernible], all are gone. [Indiscernible].
They've been put to rest.
So life is very simple now.
Hopefully.
SME 1. [Foreign Language] We like your question today. [Foreign Language]
Sir, on the deposit side itself, when we look at the private sector here in terms of how much they've gained this quarter and particularly in deposits. You seem to have lost market share in deposits as well. Just a perspective on how you hope to regain that back.
Right. So I think we don't have -- we haven't lost much but some decline for sure. But if you look at it in terms of the pricing of the bulk deposit and term deposit, so bank has been, again, not aggressive in that money. If you look at our current accounts and savings accounts, so that CASA ratio has improved. So either way, I look at the market share with bulk deposit, term deposit, everything comes in. But if I look at my share in the CASA market, so I'm more happy where I've increased my share in the CASA and not in term deposit or bulk deposit. So therefore, it is a consideration, again, around the cost of deposits and not around the market share. So we will be aggressive in CASA, but we'll not be as aggressive on the term deposit.
There has been some recovery from NCLT provisions based on judgment. From a purely [ political ] standpoint, it's there some provision required to be made in the next quarter?
In the?
On the NCLT loans.
So next quarter or current quarter?
Next quarter. I mean, 1Q.
Because in the next quarter, the [ position ] does not change. So the current quarter will be like there may be some requirement so that's why we're not looking at the quarter. I'm looking at the half year. Because there is some spillover in terms of recovery, some provisioning limit take upfront as we have done in the last year. So the -- I'm not as much worried about that because this 56% on NCLT 1 and 75% on NCLT 2 for the half year or the year, I have sufficient portion. Now within inter-quarter [indiscernible], was not -- there should not be a quarterly result.
Suppose an aging provision comes in June --
Bank quarterly isn't stopping revenue.
-- and the resolution comes in September, so to that extent, we'll have to put that in aging provision if resolution comes later.
Yes. So there's a timing [indiscernible], that is very much...
And Maruti, your question, SME 1 total is INR 2,990 crores, a part of it is in the watch list, a part of it is outside the watch list. [ Mr. Gimina ] had a question on the international book.
[Foreign Language]
It was answered but anyways [indiscernible]. I was maybe concerned about the...
Because they are doing well, you're not bothered about that?
Yes.
[Indiscernible], I think you're done.
But yes, I am expecting that -- again, I'm seeing...
They're out of the book.
Just one question.
Go ahead. One more.
Just one question, sir.
Okay. Go ahead.
Last quarter, we had about INR 5,800 crores of SDR...
5,000?
INR 5,800 crores of SDR was the -- in the stressed asset pool. Now you said that it is about INR 5,600 crores that has slipped, including SDR and S4A. And you also made a comment that all SDR has slipped. So how do the prestatements reconcile?
Okay. Let me tell you. We have, if you recall, in December, around INR 11,000 crores of standard SDR and S4A together. You can see it [indiscernible]. So out of that, INR 5,660 crores has slipped into NPA. The rest of it all, other than 2 very small accounts in S4A, which are fully implemented in regular, which are less than INR 400 crores put together, the rest of it is in this watch list.
5 accounts S4A are in the watch list.
So 5 accounts S4A are in the watch list. All SDRs have slipped and become NPAs. So SDR is a closed story now. And whatever 5 S4A, which are stressed but not yet classified as NPA, those are in this watch list.
And June quarter, you will no question on this anyway. This is the last opportunity [indiscernible] around SDR [indiscernible].
Sorry. Please go ahead.
What is the associated nonfunded exposure here?
What we run -- associated nonfunded exposure to that. It would be roughly what, 10%, 12%, I suppose. Difficult to say, it varies from case to case, industry to industry.
Sure. And what is the change in accounting policy on the cards business?
On the?
Cards business? There was a one-off thing because of the 2 [indiscernible]...
[Indiscernible].
No, the profit is...
[Indiscernible] otherwise, the potential [indiscernible] is only 25% or the 30 days overdue. But what we have done is, we have done 100% [indiscernible] for the 30 days [indiscernible]. So which means that we have [indiscernible] closing which is much higher than [indiscernible].
Okay. Thank you very much. [Indiscernible] the presentation, kindly join us for [indiscernible] outside.