Bank of India (BANKINDIA) Q4 2021 Earnings Call Transcript

Bank of India (NSE: BANKINDIA) Q4 2021 earnings call dated Jun. 04, 2021

Corporate Participants:

Atanu Kumar Das — Managing Director & Chief Executive Officer

M Karthikeyan — Executive Director

Swarup Dasgupta — General Manager

Hari Kishan — General Manager

Analysts:

Ashok Ajmera — Ajcon — Analyst

Jai Mundhra — B&K Securities — Analyst

Praful Kumar — Dymon Asia — Analyst

Sushil Choksey — Indus Equity Advisors — Analyst

M B Mahesh — Kotak Securities — Analyst

Rahul Gupta — Morgan Stanley — Analyst

Suraj Das — B&K Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Bank of India Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. We have with us today Shri A.K. Das, MD and CEO; Shri P.R. Rajagopal, Executive Director; Shri Swarup Dasgupta, Executive Director; Shri M Karthikeyan, Executive Director; Shrimati Monika Kalia, Executive Director and other top management team from Bank of India. I would now like to hand the conference over to Shri A.K. Das, MD and CEO. Thank you, and over to you, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Thank you, thank you very much. Good afternoon, I extend a very warm welcome to each one of you for today’s interactive session and share with you the financial results for Q4 of last year and the entire full financial year FY 2021. At the outset, let me thank all our customers and stakeholders, including our analysts fraternity for their unstinted support during the challenging times.

During the financial year, the bank among others extended financial support to various sectors of the economy for elevating the stress caused by the pandemic. The bank at the same time continued its core strategy of improving asset quality and reorientation of advances growth towards RAM segments and other segments. The gross and net NPAs of the bank during the year witnessed improvement both quantum and percentage wise. The net NPA ratio as you might be seeing in the presentation declined from 3.88% in March 2020 to 3.35% in March 2021. The bank maintained a high PCR of more than 86%. Slippage ratio came down from 4.61% in March 2020 to 2.40% in March 2021.

There has been a marked improvement in credit cost also, which came down from 4.06% in FY ’20 to 1.80% in FY ’21. Although pandemic induced stress in various economic sectors is inevitable, the bank remained always vigilant for moderating its impact especially on overall asset quality. As a deliberate strategy, the bank apart from catering to the corporate segment redirected in a more reinvigorated way higher credit flow towards RAM segments which witnessed a credit growth of 10.57% and it’s share in advances increased to more than 50%. Credit to MSME segment went up by 12.7% and retail credit by 11.9%.

The bank has taken several initiatives to enhance its competitiveness in the area of IT. We are upgrading our system to Finacle 10 very shortly, to be precise during the month of July. The platform is being instituted for providing our customers an end-to-end digital journey in lending processes apart from enabling bank to widen customer outreach through improved MIS system and data analytics. Specialized processing centers in the field of MSME, retail, and agri have been revamped and their number is being increased. It is these centers that will prove to be key drivers of growth with improved tech [Phonetic] and margins.

During 2021, the bank’s capital has been augmented through AT-1 bond of INR1,352 crores and coupled with infusion of capital by government to the tune of INR3,000 crores and plough back of internal accruals, the capital adequacy ratio has improved from 12.51% in December ’20 to a significantly higher 14.93% in March 2021 with CET1 of 11.51%. We will continue to build and maintain the bank’s well capitalized one to support growth and boost resilience. I am happy to share that the bank has posted a net profit of INR250 crores for the quarter four of FY ’21 and INR2,160 crores for the full year FY ’21.

I thank again all of you for your continued support and place on record my sincere thanks to all customers, other stakeholders, including government of India, Reserve Bank of India and our staff pool of 51,000 plus who battled all odds during COVID times for helping the bank reach the present stage. I now invite — there is a presentation or — okay, I think with this opening remarks, we open up the floor for interaction. Thank you very much.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon. Please go ahead.

Ashok Ajmera — Ajcon — Analyst

Good evening, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Good evening.

Ashok Ajmera — Ajcon — Analyst

Sir, the performance of this quarter is little dismal. In fact, it came much below our expectation because this quarter — I mean the last quarter, we were very gung ho, but this quarter I think we have failed on most of the parameters. So straight away like the advances like in the last time you had assured that there will be good growth of the advances, even the profitability front also we are little bit disappointed and if you look at the — I mean all the ratios, everything in this quarter has become negative whereas the COVID effect for the second wave started only from April. So my first question, sir is what is our — what was our collection efficiency, sir?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Our collection overall was 91%.

Ashok Ajmera — Ajcon — Analyst

March, April and May, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

91% overall in the month of May. March, April and May, it is over 90%.

Ashok Ajmera — Ajcon — Analyst

The collection efficiency is giving a good assurance for the — if it is good in April and May also, having said that, sir, on recovery front from the written-off accounts, we have failed. I mean it has been lower, much lower than the expectation and if you look at the, even the you know like pro forma credit, pro forma provisioning or pro forma NPA, the actual NPA is above that, how much was the miscalculation in the judgment of the pro forma NPA? Over and above, how much we had to provide?

Atanu Kumar Das — Managing Director & Chief Executive Officer

INR7,198 crores to be precise were the pro forma NPA. That crystallized soon after the judgment. I think overall, it has been INR8,000 crores plus slippage compared to about INR15,000 crores the previous year and our April slippage, if you have observed the numbers of other banks, it is much, much better than — INR8,000 crores slippage is a good number according to us. Kindly compare this number with other major peer bank numbers also. Slippage is one area where we have done exceedingly well last year.

Ashok Ajmera — Ajcon — Analyst

Good to know that. Sir, on the operating profit also, I mean our — the cost to income ratio has gone up to 58% from the 51% in Q3. What could be the major reasons for that?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Quarterly trends shows it has gone up to 58% although for annual, it is 49.92%. A major factor there was first is payment and provision for wage settlement. Second, more important factor was the denominator aspect where our operating profit has been lower for various reasons, which I will come to little later. So the income part, net total income part also is affected. So it has reduced because of our net interest income also is negative. So that has affected the ratio. So 49.92% is the overall full year cost to income ratio which we are planning to bring down below 47% by the end of current financial year.

Ashok Ajmera — Ajcon — Analyst

Yeah, because as against the income of — which came down to INR11,380 crores from INR12,310 crores, the interest expense remains almost the same, except [Phonetic] INR110 crores. So, total net income is only INR4,990 crores as against INR5,807 crores in this quarter. So what exactly went so much wrong. I mean that is what we were wondering.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Nothing, nothing wrong, nothing wrong except the core fact that our advances grew at 1.28%, which was very low. That we acknowledge and lot of rate transmission happened and over the last year, we tried to switch over many of our accounts. For example, MSME 63% of our accounts are now RBLR linked. Similarly in retail, about 31% of our accounts are RBLR linked.

So obviously, it will have an impact on the income level, but the major factor is low advances growth, which we tried our level best. We did a lot of sanctions. For example in corporate segment, we sanctioned about [Phonetic] INR92,000 crores, but the offtake was only to the tune of INR46,000 crores, so 50%. Similarly —

Ashok Ajmera — Ajcon — Analyst

But sir, there is a lot of scope in MSME.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Kindly let me finish Mr. Ashok. Kindly let me finish.

Ashok Ajmera — Ajcon — Analyst

Yes, sir. Yes, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

You’ve asked lot of questions, I need to answer it to your satisfaction. And then similarly in line of credit, ODCC, the availment 63% only. It has remained like that for the entire year. All of us are aware of the demand issues. The real sector uptick is not there. So I think it’s a matter of time before things start picking up and accordingly we will move. Our credit book is also a function of the overall demand scenario.

So this being the case and rate transmission compared to 250 basis points policy rate cut, we have passed on about 135 basis points in our MCLR. That also has affected income. I think it’s a temporary phenomena, but gradually we have to move down to lower spreads. Like in most advanced countries, 3% is slowly becoming kind of a luxury. So we need to operate more efficiently within a narrower spread. That is what is our take and we are alive to that reality.

Ashok Ajmera — Ajcon — Analyst

Sir, what I was saying, sir, the MSME — in MSME space —

Operator

Sorry to interrupt, sir. This is the operator. May I request you to rejoin the queue please for any follow-up. Before we take the next question, a reminder to the participants, please limit your questions to two per participant. Should you have any follow-up, may we request you to rejoin the queue. The next question is from the line of Jai Mundhra from B&K Securities. Please go ahead.

Jai Mundhra — B&K Securities — Analyst

Yeah, hi, sir. Thanks for the opportunity. I have a couple of questions. First is, sir, if you can tell us the restructuring, I mean one-time restructuring that we have done so far and what is the number under implementation. I mean, where we have received the proposals?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Okay, once again, I’ll hand you over to my Executive Director Mr. Karthikeyan. He will respond to your queries, please.

M Karthikeyan — Executive Director

Totally, we have done restructuring which are eligible amounts amounting to INR23,400 crores, of which we restructured about INR4,428 crores as on 31/3/21. The segments being in personal segment — personal loan segment it was about INR738 crores, in MSME, we did about INR3,449 crores and in corporate it’s about INR640 crores. That’s — the total came to around INR4,428 crores.

Jai Mundhra — B&K Securities — Analyst

And what is the — I did not hear the number correctly. What is the total number? So INR4,400 crores is the which have been implemented. Is there anything which is over this in pipeline etc?

M Karthikeyan — Executive Director

Yeah, going forward probably in the COVID 2, yes, there initially, if you could see, sir, the percentage of availment of restructuring was a little bit less because the impact was much lower, but going in the COVID 2 scenario probably yes, the severity is going to be a bit harsher. So our COVID 2 restructuring will give a lot of scope for that nearly about 19 lakh accounts are eligible for us and a book of about INR91,000 crores. So we feel about 60% of them will undergo. There’s a good — we have started that process, so we can see about a good number of responses coming in — are accepting this portfolio.

Jai Mundhra — B&K Securities — Analyst

Okay, sure sir. So that was one. And sir, secondly, on your SMA 2 book right, you have given the number which is credit [Phonetic] data but if you can give the number which includes below INR5 crore exposure also, would you have that number?

M Karthikeyan — Executive Director

Yeah, presently you should appreciate that our SMA book — last year if you see, beginning [Technical Issues] it was around 20% of the book, but due to our efforts, we have reduced it to about 12% at 31/3/21 and going forward in this couple of months, we have reduced it to 11.5%. So there is a good fresh slippage control which is happening as our MD and CEO told in the opening remarks. Our fresh slippage much, much better when compared to the peers in the market.

We have the numbers, in SMA 2, we have total of INR16,460 crores, which is the SMA 2 portfolio of which the retail is about INR4,076 crores. Agriculture will amount to INR3,091 crores and corporate credit will be around INR6,423 crores. So there is good numbers happening and we are sure that this ratio — we intend to not cross more than INR3,000 crores. That’s our plan for Q1.

Jai Mundhra — B&K Securities — Analyst

Right, so if I hear the number correctly, sir, what is the total — sorry, if you could repeat what is the total SMA 2 retail, corporate, and total including below INR5 crores.

M Karthikeyan — Executive Director

I’ll give you present numbers or you want March 31st?

Jai Mundhra — B&K Securities — Analyst

No, March 31st and whatever number, sir. I want the total number. I mean below INR5 crores also.

M Karthikeyan — Executive Director

So INR52,164 crores is the number.

Jai Mundhra — B&K Securities — Analyst

This is SMA 1, 2, zero all put together?

M Karthikeyan — Executive Director

Exactly.

Jai Mundhra — B&K Securities — Analyst

Right, off this you said — and this is the present number, right. March-April end or what is this? March-end?

M Karthikeyan — Executive Director

March-end.

Jai Mundhra — B&K Securities — Analyst

Okay and this would have gone up only, right because of the pandemic in the April-May.

M Karthikeyan — Executive Director

It has come down. That is what I’m saying. [Speech Overlap].

Atanu Kumar Das — Managing Director & Chief Executive Officer

Mr. Karthikeyan told you Jai, that total SMA portfolio as a percentage of loans outstanding, it was 20.17% in December 2020. It has come down to 12.59% in March ’21 and further to 11.51% in May ’21. So there is a progressive improvement in the stressed asset portfolio.

Jai Mundhra — B&K Securities — Analyst

Right, sure sir. I’ll come back in the queue, sir. Thank you.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Okay.

Operator

Thank you. The next question is from the line of Praful Kumar from Dymon Asia. Please go ahead.

Praful Kumar — Dymon Asia — Analyst

Sir, just one question, did you mention how much was the interest reversal this quarter?

Swarup Dasgupta — General Manager

Interest reversal is around INR660 crores.

Praful Kumar — Dymon Asia — Analyst

INR660 crores, okay. Thank you, sir. And secondly, in terms of credit growth now, system credit growth is still close to 6%. For next year, what are you targeting? What are the key levers, you know, as you mentioned about sanctioned pipelines. [Speech Overlap].

Swarup Dasgupta — General Manager

Around 6% to 6.5%.

Praful Kumar — Dymon Asia — Analyst

Around 6% — so maintaining what the industry growth would be next year?

Swarup Dasgupta — General Manager

Yeah.

Praful Kumar — Dymon Asia — Analyst

It’s something you’re confident to deliver?

Swarup Dasgupta — General Manager

Yes, yes.

Praful Kumar — Dymon Asia — Analyst

Okay, thank you.

Operator

Thank you. The next question is from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, this is Sushil Choksey, not Kisan Choksey. Good afternoon, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Good afternoon. Good afternoon.

Operator

Mr. Choksey, if you can speak closer to the handset, please.

Sushil Choksey — Indus Equity Advisors — Analyst

Yeah, good afternoon. My first question is you have consolidated the bank well over the period of last 12 to 24 months including in COVID and it seems that bank’s full top management team is now in place with new appointments. How are we capitalizing on the situation with sufficient equity available and our PCR is also there, recovery has been stable and you are saying the recovery process for the current collection is also good. So how are you seeing if COVID is over and if India is going to grow at the GDP forecasted by RBI, how are we well placed to capitalize it?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, as Mr. Swarup said, we are at the moment projecting a guidance of about 6% to 6.5% growth in credit, but I’m sure that number will undergo some revision once we are through with Q2 when we will see the full impact of COVID going away and lot of economic activity plus the RBI related dispensations and new schemes ECLGS 4.0 and COVID 2.0, I think we will — this 6% and 6.5% will be a minimum we are aiming at, but it could go up.

We will need a revisit and maybe while we are sharing the Q1 numbers, we will be able to give a definitive kind of guidance on that and capital part, we are well capitalized 14.93% is growth capital and CET1 of 11.5%-odd. So I think there are no issues. Capital will help us expand our credit book and also resilience to us to take any kind of shocks if at all there is any. So we are well poised I think. Only we are waiting for the demand segment to get revived and the normal activities to start.

Sushil Choksey — Indus Equity Advisors — Analyst

Okay. Secondly, sir, there is media highlighting since yesterday that NITI Aayog has shortlisted two candidates and one big bank and one small bank. So, our name is surfacing in that. Do you have any cues or any indication if we are the candidate, how are we going to [Speech Overlap].

Atanu Kumar Das — Managing Director & Chief Executive Officer

Absolutely, no cues because not two alone, but there are different kinds of permutations and combinations making rounds in the market. So I think it’s prudent to wait for the final call in black and white and then respond to that. As of now, we don’t have anything official in this regard.

Sushil Choksey — Indus Equity Advisors — Analyst

Okay, second question. Sir, with inflation likely to rise because of commodity inflation specifically, and if the demand is going to increase post COVID assuming everything stabilizes in the next 30 days and we don’t face another phase after that. How are we placed in the treasury?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Sorry, would you like to —

Sushil Choksey — Indus Equity Advisors — Analyst

How are we placed in the treasury — rising inflation trend, the bonds market will definitely have a turbulence, how are we placed in that?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, my Treasury head, he wil respond, yeah, Hari.

Hari Kishan — General Manager

Yeah, inflation expectations have been at an elevated level since the beginning of the financial year, but of late has been intervening in the market overtly and covertly and anchoring at 6%. And RBI has today announced GSAP 2 also. With the kind of open market operations and conventional and unconventional tools that RBI using, we think we’re well poised to repeat this performance in the next year.

Sushil Choksey — Indus Equity Advisors — Analyst

You are comfortable with RBI’s direction — are you worrying about [Indecipherable] should I assume.

Hari Kishan — General Manager

Inflation and supply concerns remain, but I think RBI has been reassuring the market with its open market operations with its overt and covert interventions in the markets and yields thatremain anchored around 6% and we expect the yields to remain in this range.

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Indecipherable] continues to advocate.

Sushil Choksey — Indus Equity Advisors — Analyst

Thank you, sir. I’ll come back in the queue if there is further question.

Operator

Thank you. The next question is from the line of M B Mahesh from Kotak Securities. Please go ahead.

M B Mahesh — Kotak Securities — Analyst

Good afternoon. Just three questions from my side. One on the, in your Page number 26, there is a restructuring of an aviation exposure there. Did it move through the NPL line also?

Atanu Kumar Das — Managing Director & Chief Executive Officer

No, it has not. No, it has not.

M B Mahesh — Kotak Securities — Analyst

It was restructured directly?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, it was restructured last year only.

M B Mahesh — Kotak Securities — Analyst

No, it’s visible in FY ’20, it is visible in FY ’21.

Atanu Kumar Das — Managing Director & Chief Executive Officer

See, the point, it is not slipping into NPA for a very simple that there is a sovereign guarantee available for that particular account from central government. Under the IRAC norms, if there is a sovereign guarantee, it need not be marked down as NPA.

M B Mahesh — Kotak Securities — Analyst

Okay. And sir, some the other banks see recovery of the income from written-off accounts has been on the lower side this year, any broad indication as to how are you seeing next year?

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Speech Overlap] NCLT recoveries since NCLTs have started, we feel that the NCLT recoveries would actually bring us good recoveries in written-off accounts because most of these accounts are written-off accounts, those that have gone to NCLT. Almost we have FTT [Phonetic] of around INR40,000 [Phonetic] crores there in the NCLT where we are looking at substantial recoveries in the current year.

M B Mahesh — Kotak Securities — Analyst

Okay, any broad indications in numbers or —

Atanu Kumar Das — Managing Director & Chief Executive Officer

It is very difficult to give indication. Let the NCLT start fully functioning. [Indecipherable] things will be clear.

M B Mahesh — Kotak Securities — Analyst

Okay, my last question is on the NARCL. Any broad indication as to what would be the benefit for you and have they told you anything with respect to how is the accounting [Indecipherable]. Thank you.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, Hari, you can respond.

Hari Kishan — General Manager

Yeah, NARCL as things stand today, we have identified accounts aggregating — with exposures aggregating to [Technical Issues].

M B Mahesh — Kotak Securities — Analyst

Sorry, how much, sir?

Operator

Sir, sorry to interrupt. Members of the management, your voice is very muffled.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, I’ll just respond to that, just listen to me. Mahesh it is like this, the advantage in terms of exchange of these assets from bank to the NARCL books is very apparent in terms of gross NPA numbers coming down substantially in the asset side of the book and in the investment side of the book anyway, NAV will be calculated and they are all valued properly and whatever de-rating that is required with respect to those assets will be de-rated and then it will be booked at the value it is supposed to be booked over there in the investment books. So there will be both reversal of provisions wherever possible and if there is an appropriation of provisions also, in some cases. So accordingly in terms of my asset book, where you will have substantial benefit in terms of reduction in the gross NPA levels.

M B Mahesh — Kotak Securities — Analyst

The question was, any quantum around [Speech Overlap].

Atanu Kumar Das — Managing Director & Chief Executive Officer

We have, we have in the first shortlist that has been drawn up, there are about 21 accounts. We are involved with 21 accounts amounting to INR5,500 crores.

M B Mahesh — Kotak Securities — Analyst

And these are all currently in gross NPAs is it or its already been written-off and moved out of the books?

Atanu Kumar Das — Managing Director & Chief Executive Officer

All the accounts are 100% provided accounts.

M B Mahesh — Kotak Securities — Analyst

Okay, so at best, you are saying there will be some reversal on accounting.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yes.

M B Mahesh — Kotak Securities — Analyst

And when is it expected to be completed?

Atanu Kumar Das — Managing Director & Chief Executive Officer

It will start functioning from the end of June we are envisaging. Let the things crystallize, then we will — in the Q2, we will be in a position to tell how the things pan out.

M B Mahesh — Kotak Securities — Analyst

Great, thanks a lot.

Operator

Thank you. The next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.

Rahul Gupta — Morgan Stanley — Analyst

Hi, sir. Couple of questions from my side. You earlier mentioned that around INR4,400 crores restructuring is implemented until now. So what would be the restructuring, which is invoked and not yet implemented under restructuring one.

M Karthikeyan — Executive Director

That’s what earlier I had said that nearly 47 lakh accounts were eligible for restructuring in COVID 1, only 15 lakh accounts were restructured, but now going forward, COVID 2, we anticipate a book of nearly about INR91,000 crores odd lying with us and of this, we anticipate about 60% of that will get fructified [Phonetic] in the COVID 2.

Atanu Kumar Das — Managing Director & Chief Executive Officer

So what is further to clarify what Karthikeyan sir has said, basically, we don’t have any cases where they remain invoked and yet to be restructured. So whatever accounts where invocation has happened, where borrower has given consent for restructuring, where eligible for, I mean they have satisfied the criteria for restructuring, they stand restructured as of date. There is nothing called invoked and yet to be restructured.

Of course in terms of COVID 2, we are envisaging around INR4,000 crores of outstanding book may opt for restructuring because again these schemes are opt-in schemes where borrowers have a right to opt-in or opt out and in our case, what has happened is in the first COVID 1.0 restructuring many borrowers did not opt for restructuring. So we are just waiting and seeing whether COVID 2.0, there maybe a demand for restructuring that what we are envisaging because there is a lot of stress in the MSME books from the borrower side.

Rahul Gupta — Morgan Stanley — Analyst

Got it, got it, sir, very clear. Sir, my second and last question is that you earlier mentioned that overall SME loans outstanding would be around 11.5% by May-end. So what would be this number only for SMA 1 and SMA 2 as of May-end.

Swarup Dasgupta — General Manager

It will definitely — the point is the restructuring will definitely see that the fresh slippages are going to go down and as of now I was just saying, it has come to 11.5% in May itself. Going forward, it will go much better. We anticipate lower numbers on this.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, historically, if you see Rahul, historically the bank in the past years in the absence of COVID, we used to always have an SMA book of around 6% to 7%, okay. It never exceeded that even in the worst of the times in terms of the thin [Phonetic] balance sheet phase that the banking industry had. So it will continue to be at 6%, 7%. So what has happened is the COVID has actually little aggravated the results. Added to that, the moratoriums given and then some — MSME book coming into a little stress and then retail book also coming into stress. All these have added to this kind of percentage at the SMA level. We feel that it will taper down to — back to 6% or 5% going forward.

Rahul Gupta — Morgan Stanley — Analyst

Okay. I got it very clear. My question was that out of 11.5% overall SMA loans, what would be SMA 1 and SMA 2?

Atanu Kumar Das — Managing Director & Chief Executive Officer

The SMA 2 is around 4.5% as of date.

Rahul Gupta — Morgan Stanley — Analyst

And what about SMA 1 sir?

Atanu Kumar Das — Managing Director & Chief Executive Officer

SMA 1 is also — SMA 1 is not even — less than that around 3%, 3.5%.

Swarup Dasgupta — General Manager

In fact, in fact, the entire SMA number is equally spread over zero, 1, and 2.

Rahul Gupta — Morgan Stanley — Analyst

Okay, got it. Very clear, sir. Thank you. Thanks for the time.

Operator

Thank you. The next question is from the line of Suraj Das from B&K Securities. Please go ahead.

Suraj Das — B&K Securities — Analyst

Hello, sir. Thank you so much for giving the opportunity. So I have couple of questions, first question is on ECLGS. So, sir, if you can just give us the amount which was sanctioned and disbursed under total ECLGS?

Atanu Kumar Das — Managing Director & Chief Executive Officer

ECLGS — the total sanctioned was INR5,200 crore, out of which disbursal about INR4,700 crores under ECLGS. And in the ECLGS 2.0, I think about INR700 crores has been sanctioned and about INR500 crores has been disbursed.

Suraj Das — B&K Securities — Analyst

My second question is if you can give us the absolute amount for BBB and BB rated exposure on the corporate book and what is the corporate PCR on corporate GNPA?

Atanu Kumar Das — Managing Director & Chief Executive Officer

PCR on corporate GNPA, we won’t be able to give. PCR specific to corporate accounts, we may not be able to give you right away, but it will be booked. I’ll tell you as at March, AAA is INR3,300 crores, AA 14 accounts INR8,950 crores. A, 13 accounts, INR6,296 crores.

Swarup Dasgupta — General Manager

BBB as of now is around INR3,804 crores in absolute numbers.

Suraj Das — B&K Securities — Analyst

And BB sir?

Swarup Dasgupta — General Manager

BB is very, very less — very less, it is less than INR1,000 crores.

Suraj Das — B&K Securities — Analyst

Okay, sir. And sir, my last question is on the — moving to a new tax regime. So, sir. I mean, what is your thoughts on moving on to the new tax regime and what is the outstanding DTA that you have on your balance sheet?

Hari Kishan — General Manager

Thank you, sir. See in the new tax regime, currently what happens, we have that something is pending in the court regarding the MAT credit. The MAT credit that unless a decision comes under MAT credit, there is around INR845 crores MAT credits yet to take in our books and then subsequently, we will go for new tax regime after we get the saving in that new tax regime once there is a good profit the next year.

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Foreign Speech].

Hari Kishan — General Manager

DTA is around 14,000 [Phonetic].

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Speech Overlap]. See we are — Suraj, it is like this, basically, what we are looking at it is, the switch over is new tax rate of 22%. Of course, the pros and cons of it we are still weighing it and it will largely depend upon the decision of the court on minimum alternate tax. So if you are going to get that then that benefit once be derived, then in terms of switching over the new tax regime [Technical Issues].

Suraj Das — B&K Securities — Analyst

Okay, okay understood sir. Thank you so much, sir. Sir, just one clarification. So on this Slide number 26 that where you have given the restructured advances slide, it includes the COVID-19 restructuring as well. I mean is it the total restructured book that you have?

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yes, yes it is INR11,000 crores you are talking about?

Suraj Das — B&K Securities — Analyst

Right, right.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah it includes everything.

Suraj Das — B&K Securities — Analyst

Okay, thank you so much, sir.

Operator

Thank you. The next question is a follow-up from the line of Ashok Ajmera from Ajcon. Please go ahead.

Ashok Ajmera — Ajcon — Analyst

Thank you sir for giving me the opportunity again. Sir, now in my second opportunity, sir I would like to have some of your comments on the segment-wise reporting of the profitability. Sir while the treasury profit has gone down from INR1,564 crores in the Q3 to INR844 crores, there is a major loss of INR1,438 crores in the retail banking. Generally, it all depends on the provision which you make into the various segments. Do you have any ready calculation for this that why the retail banking has given the loss in this quarter of INR1,438 crore, wholesale banking has given the profit of INR1,025 crores, treasury INR844 crores, and unallocated items have given loss of INR166 crores. Whether someone can explain this that why such a variance is there in the numbers of Q3 and Q4?

Atanu Kumar Das — Managing Director & Chief Executive Officer

There are two, three things. Basically what has happened is the of course, you know what the treasury numbers are already. On the corporate book continues to be at a particular level and there is a switchover in many cases, in the case of retail to RBLR and the quantum of interest that we gained in these loans have come down substantially in the last quarter also because the lag effect was there and then it’s got into the last quarter for it [Phonetic] in terms of net interest income.

Apart from that, there is also, you are also aware, see what has happened is Q3, Q4 you also asked a question earlier on this point saying that there was a moratorium for six months from Supreme Court, sorry, from RBI and there is a judgment — there is a Supreme Court moratorium also continued with respect to loan accounts, okay. Now, they were not marked down as NPA. They continued to accrue interest in the books.

Now at the last quarter when Supreme Court judgment came, we had to actually mark down many of these accounts as NPA. Now if you see whatever markdown has happened that there will be a reversal of interest. So there will be a loss to that extent. So this reversal of interest, which would otherwise have been [Indecipherable] got accumulated and had to be reversed in the last quarter. So if you see around INR660 crores or INR700 crores interest which have otherwise been normally disaggregated against each quarter got accumulated in the last quarter and had to be reversed. This is the major reasons for loss being shown from Q3 to Q4.

M Karthikeyan — Executive Director

And mainly in the retail book.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Naturally, not only in retail because corporate book, moratorium was not there. Many people did not obtain moratorium. Even MSME book also, many people did not take moratorium. So this is basically a book where moratorium was availed. [Speech Overlap] marking down the NPA.

Ashok Ajmera — Ajcon — Analyst

Yeah, I got it sir. My second question was sir, that there is a transfer of the securities from HTM to AFS of almost about I think INR15,200 crores, you should take both the central and state government. So, at the time of transfer, is there any process of either booking a loss or profit on that transfer pricing and the holding price? And is it connected with the profit from the sale of investment of INR2,447 crores?

Swarup Dasgupta — General Manager

At the time of transfer of securities from HTM to AFS, there is no booking of loss. What we have transfered at amortized cost. In case the value of the securities is above par, we just transfer at amortized cost. If the securites transfered from AFS to HTM, we have to transfer it at market value. The book value is higher than the market value, then there is a loss which is reported. And that in 2020 was a small number. In 2020, ’21 also it has been a rather insignificant kind of number. If you net off the MTM gain on the securities transfered from HTM to AFS, the interest with the capital loss on account of transfer of securities from AFS to HTM, the MTM gain is substantially higher.

Ashok Ajmera — Ajcon — Analyst

All right sir. So after the transfer to AFS, I mean the securities were — that is why the profit on the sale of investment is higher in this quarter as compared to the last quarter.

Swarup Dasgupta — General Manager

You’re talking about Q1 of this current year? [Speech Overlap] Securities are transferred once in a year at the beginning of the financial year, so we had sold off the securities that were transferred in 2020 by the third quarter. There is no profit that is accrued to us on account of sale of credit [Phonetic] that was from HTM to AFS in the fourth quarter.

Ashok Ajmera — Ajcon — Analyst

Sir on this —

Operator

Mr. Ajmera —

Ashok Ajmera — Ajcon — Analyst

Just a question, just one more a little observation. Sir in note number 15, as per the RBI circular, those I think six accounts were beyond I mean 30 days to 180 days period which is not expired on March 1, 2021, it is written number one, so what is the significance of March 1, 2021 in this note and secondly, this six accounts of INR9,836 crores, what is the probability of this account getting resolved or restructured or what is the NPA component of it? Note number 15 sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

See, most of these accounts, their restructuring is in process. You are aware of that prudential framework circular of 7th June where 180 days is there. The significance of 1st March — 1st March was required for the purpose of additional provision that we have managed to make in these accounts. There was a reckoning as to whether additional provisions in terms of 5% that was prescribed prudential framework circular has to be made or not. So that quarter, there was no requirement to make additional provisions in terms of the RBI guidelines. That’s why our provision was not made and then subsequently also, most of these accounts are likely to be restructured. They are in the path to restructuring. Like typically if future got already restructured, okay, [Indecipherable] already got restructured. Those accounts only, okay.

Ashok Ajmera — Ajcon — Analyst

All right, sir. Okay, sir. Thank you, sir. I’ll take it further if I get the opportunity.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, thank you.

Operator

Thank you. The next question is a follow-up from the line of Jai Mundhra from B&K Securities. Please go ahead.

Jai Mundhra — B&K Securities — Analyst

Yeah, hi, sir. In your agri portfolio of 55,000 [Phonetic], if you can break that up into crop loan or maybe gold loan or basically, or any other cuts that you have that how much is backed by gold and how much is crop loan and how much is other thing? That was one. The entire loan book of agri [Speech Overlap].

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, see the gold loan portfolio is around INR11,000 crores only that much. Remaining and all crop loans only. You can take as such.

Jai Mundhra — B&K Securities — Analyst

Sure, sure. And sir, secondly, sir, what would be your expectations of slippages in absolute amount and credit cost in absolute amount? I mean you can give a range also if you have that number?

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Speech Overlap] Which quarter are you talking about?

Jai Mundhra — B&K Securities — Analyst

Full year ’22.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Full year ’22 is very difficult. Well, we’ll have to again see the impact of COVID 2 is very, very difficult to predict as of now. We’ll let you know because as on date, I don’t foresee a great problem in terms of the corporate book because our trade book is fairly good now because earlier last year and earlier years also most of the credit cost used to come from corporate book. Even last year, the credit cost was very high because of one single account. So that is not an issue now. So we are looking at the stress in the retail, agri and MSME book [Technical Issues] restructuring succeeds and then the economy grows and everything is on the right path in the first quarter, we’ll have to sit within the first quarter and observe how this pans out.

So once it happens, then we’ll be able to know what will be the slippages and what — as on the date, the slippage ratio is around 2.4%. That continues to be there and I don’t think it will be a huge in so far as we are concerned, because our retail book as well as MSME and agri book is fairly okay and there is a stress no doubt in there because of the COVID. Once COVID reverses, we see substantial improvement in this book. If there is substantial improvement in the book, naturally, the slippage ratio also will not be as much and then the credit cost also will not be as much. Another thing I would like to share with you that we used to always have what is known as the salvage ratio substantially at 12% or 13% of the slippages book. So that has come down substantially due to COVID. So again if it reaches back to 12%, 13% salvage ratio, we don’t foresee a great slippage ratio as well as the credit cost going forward in 2022 [Phonetic]. So that we will know the clear picture only in the Q1.

Jai Mundhra — B&K Securities — Analyst

Sir, if I were to look at your book, so corporate is probably taken care of. Agri as you said INR11000 crores is backed by gold and retail hopefully should hold on. What would be your rough sense on the MSME stress. I mean could it be large enough to have the full year slippages slightly higher than ’21 or even if that were to go should not outweigh the improvement that you will be seeing on your corporate book.

Atanu Kumar Das — Managing Director & Chief Executive Officer

It will definitely not out buy 2021 slippages. ’22 will be perfectly okay because there is a lot of support that is coming to MSME. No doubt MSME book is under the stress as of date and our composition of MSME book is such that we have a huge micro loan and small loan segment over there where we see a lot of stress as of date. So one, there is a lot of support from the government. Another stimulus package is also expected and added to that, there is an extension that is given to ECGLS and all by government and there is also guarantee support that will come to MSME substantially and you are also aware that today RBI has declared a special dispensation to [Indecipherable] there will be a lot of support MSME. So we don’t see that book behaving very badly in 2022. As you are already observerd agri and retail book will be taken care substantially.

Jai Mundhra — B&K Securities — Analyst

Right sir. And last thing, sir. What would be your recovery expectations. I mean, apart from V1, is there any account where you’re seeing near-term recovery or maybe over the next six to nine months.

Atanu Kumar Das — Managing Director & Chief Executive Officer

V1, of course is very close to resolution. We will be happy if it gets resolved in this quarter itself. Other than that, see — so INR8,000 crores is what we are looking at our recovery target, but again, I think it has an upside there going by the fact that about and similar things are going in ILFS also where we have more than INR3,000 crores exposure. In a sense, I feel, as you know, 38,000 [Phonetic] locked up in NCLT and in that about eight or nine big accounts, which are at various stages, they aggregate to about INR18,000 crores.

So through the year if NCLT is reactivated I think there will be substantial gains in terms of NPA reduction and also at least partial writeback. This apart even if FCL happens this year then, as we told earlier INR5,500 crores, that could be hiked up from the NPA numbers and also with some attendant benefits of write-back plus another two, three schemes we have launched for the remaining amount of NPA where traction was not happening till recently because of COVID lockdown in various places. Now people are moving into different areas reaching out to the NPA borrowers.

So that also in this quarter for example, we had a target of about INR3,000 crore, out of which about INR2,100 crores or INR2,200 crores we have already achieved there Q1. And similarly [Indecipherable] we are contemplating about INR500 crore worth of [Indecipherable] left. If not this quarter, early next quarter we are there and we are having mega auction every month. The first two such auctions have happened but again states they put some curbes in such exercises. So I think from next month onwards July 15th is our next mega auction option where 600, 700 properties are being put up for auction. I think all these things I think definitely they will improve the recovery climate quite significantly during the current financial year.

Jai Mundhra — B&K Securities — Analyst

All right. So, sir. Just two clarification here, sir. This INR8,000 crore number that you said is the recovery plus write-off or is just the plain recovery that you were saying.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Plain reduction [Phonetic] [Speech Overlap].

Jai Mundhra — B&K Securities — Analyst

Okay and second thing is this INR2,100 crores that you already achieved, this would include this large retail account, which would have moved to — this would move to restructure, right? Is that the right understanding?

Atanu Kumar Das — Managing Director & Chief Executive Officer

No, no mostly it is cash recovery plus upgradation that is our overall number and when last year also we arrived at OTS with lots of clients and all, there are milestone payments. So there also money is coming in. So all this put together, we have achieved about — plus we have weekly recovery camps for smaller accounts. So that — all those things put together about INR2,100 crores is recovery number as on date.

Jai Mundhra — B&K Securities — Analyst

So what happened to the large retail account. I mean is it NPA or upon restructuring it has become standard or where is it now. I mean, what is the status?

Atanu Kumar Das — Managing Director & Chief Executive Officer

No, it has been restructured and status will be standard.

Jai Mundhra — B&K Securities — Analyst

Very standard restructure, right.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah.

Jai Mundhra — B&K Securities — Analyst

Okay, great, sir. Thank you, sir. Thank you so much.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. The next question is a follow-up from the line of Praful Kumar from Dymon Asia. Please go ahead.

Praful Kumar — Dymon Asia — Analyst

Yeah, thanks for the opportunity sir. Just wanted to check on margins. Now you said that lot of repricing has happened on the yield on advances. Do you have any levers to grow margins from the contraction we have seen is close to 45 basis point in this year. So any way you can see 20 basis point, 25 basis point in the coming year in margins.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Ideally speaking if we reach a level of 2.6% that should be quite significant. Again, I will reiterate that this 3% benchmark the paradigm has completely changed. At times, it may be easy because of one-off accruals and all, but on a stable basis I think we should be happy if you are maintaining a margin up 2.5% to 2.6%. That’s what we will be aiming at.

Praful Kumar — Dymon Asia — Analyst

Understood sir, in that purview, in terms of you reaching to maybe a target ROA 0.7, 0.6.

Atanu Kumar Das — Managing Director & Chief Executive Officer

0.5 is what we are targeting. See, I mean let’s be realistic. With these kind of uncertainties for us also it’s quite a tricky exercise to give specific numbers.

Praful Kumar — Dymon Asia — Analyst

[Speech Overlap] My point here is given the fact that it’s a new paradigm of a 2.5 [Phonetic] to 260 [Phonetic] basis point of margin. So improved profitability what the levers that the management had except the client cycle that it’s playing out and all, anything that you can do in terms of saving cost or augmenting fee income so that the overall profitability of the franchise can be better because 30 basis point, 40 basis point of structural margin shift downwards. I just want to pick your thoughts on how do you think you can mitigate it by other levers if you have on the cost side or any other [Speech Overlap].

Swarup Dasgupta — General Manager

Two, three things I would like I what sir has told, Praful, it is like this, see the interest expenses have not come down because there is a lag effect on the interest that we pay on the liability franchise and it has been — we have been reducing and even the industrty is also reducing substantially the interest expended on the liability franchise. So the real benefit of that interest deduction in the liability franchise will accrue to us during this current year. That is one point. Another thing is there is a very, very palatable [Phonetic] from corporate book to retail book. You see the RAM has also gone up to 51% today for the bank and there the margins are better compared to the corporate book. Corporate has seized our margins substantially and we have to have lot of problems in terms of our yield on advances due to corporate book.

So yield on advances is likely to be anywhere between 8%, 8.5%. Going forward if we actually shift our focus to MSME and retail with all kinds of support that we get in the — through the stimulus from the government, we see a lot of scope gap in MSME and retail book growing substantially because last year also we have grown substantially around 11% and 12% respectively. So we continue to grow and we actually aim to grow at around 18% in the case of retail book.

We also aim to grow around 15% to 16% in MSME book considering the support we have our margins are good. So that’s why we are looking at and we try to improve the margins. This is our basic focus in terms of improving our margins from present 2.4% to 2.6% what MD sir has told. Okay, this is the idea. Insofar as your other aspects of it, now leveraging the cost aspect of it, we are substantial [Indecipherable] attributable is only the wage cost that we had to incur the last year.

So wage cost will be there in the current year, number one. Number two, as the net interest income goes up, naturally the cost also is going to come down because we are not actually envisaged the huge expansion in the physical network that we have, we are shifting our focus to digital from physical. So from that perspective there will be a complete cost reduction during the current year which will accrue in the year coming — going forward. So accordingly, our margins are likely to improve this current year as well as in the next coming year.

Praful Kumar — Dymon Asia — Analyst

Thank you, sir. That was very useful.

Operator

Thank you. We take the next question, a follow-up from the line of M B Mahesh from Kotak Securities. Please go ahead.

M B Mahesh — Kotak Securities — Analyst

Sir, just one question on the INR3,800 crores of corporate slippages which happened this quarter, if you could give us some color on sectors which drove that slippages? That would be all, thanks.

Atanu Kumar Das — Managing Director & Chief Executive Officer

[Foreign Speech] We will give you Mahesh the details. There is no big account that has actually slipped in the corporate book. There are five, six accounts that have slipped. We will give you the details with sector. The accounts we cannot give you. We can give you certainly the sector details.

Swarup Dasgupta — General Manager

Kkindly send a mail, we will send the reply.

M B Mahesh — Kotak Securities — Analyst

Absolutely. Thanks.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Okay.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Shri A.K. Das for closing comments. Over to you, sir.

Atanu Kumar Das — Managing Director & Chief Executive Officer

Yeah, thank you very much all analyst friends and all. Today it was almost 1.5 hour an interesting session and we are happy to get your feedback on certain areas of strength, also gray areas where we need to work further. So we value your suggestions and feedback and we look forward to your support also and hope to see you soon after Q1 numbers are finalized and once again thanks from team Bank of India to all of you. Thank you very much.

Operator

[Operator Closing Remarks]