Bank of Baroda analyst Q&A

Yes. Thank you, sir. The first question is from Rikin Shah. Rikin if you can please unmute yourself.

Hi. Good evening sir. Am I audible?

You are audible, Rikin. Please go ahead.

Thank you for the opportunity. Three questions sir. The first one is on the fee income. So, the fee income is still pretty soft at sub 10% YOY. Would you be able to share what's happening here and is there any possibility of acceleration from here onwards? Second, we have withheld kind of margin guidance, but clearly there has been some reclassification. So , would you be able to share how the margin trajectory looks like from 2.91% that we saw in the current quarter to the next few quarters? And lastly, in terms of the ROA, we did 1.03% ROA this quarter but that is after substantial amount of trading gains which may not incur in the coming quarters. So , suffice to say that meeting 1% ROA is only a possibility if the trading gains sustained but without that, the 1% ROA would be a tough target to achieve?

Okay, thanks. On the fee side, yes, it's slightly soft as far as the growth is concerned. The bank is clearly focusing on the fee side, and it's being something that we are targeting for the last many quarters now. We earlier said we run some kind of an internal focus on fee and flow and focusing, cash management we have significantly progressed. We captured cash management on the MSME sector more as compared to the corporate. So , I think the growth would be upsized and that is what key focus. I cannot give you a number here, but then clearly the management is working to improve the fee side of the income. On the margin guidance, this is an income tax refund which has been accounted as per the regulatory clarification of the matter and all the banks have done that. And suppose you exclude the impact of this, the NIM would be 2.81% as compared to 2.91%, that we are showing. And this is in comparison to 2.86% that we declared in Q4. So, if you look at including or excluding, the cut is almost 6 to 7 bps. And here the comparison I want to give you, if you look at multiple media articles there in, the average cut in the NIM based on the declared results of banks, it is almost average is 17 bps, whereas we are able to sustain at 6 to 7 bps cut in the NIM. Going forward the next quarter still be under pressure, but I think the deposit repricing is going to happen for the next quarter, almost 70 to 80% of that. So , the upside benefit going to see clearly in Q3 and Q4. So , on a full year basis, we are giving a guidance of 2.85 to 3 %. But again, we'll just see after September anything we need to revisit on that because clearly, as all of us understand that this is a transition time, we need to factor all these factors, multiple factors are therein. On the ROA of 1.03 %, this is the 12 th quarter we have posted ROA in excess of one. And you know there is a substantial treasury gain here, no doubt about it. And Treasury gain has come on two counts. One is with regard to a lowering of yield and that typically of the AFS book, then you take ad vantage of the lower yield movement. And secondly, the RBI comes out with a lot of OMOs in between. Then out of the HTM you can offer those to the OMO. So, the OMO, possibly that things can continue and then possibly still giving a good upside on the trading profit. In spite of the fact that whatever says our full year guidance, when we say ROA it is always full year guidance, so even if there is pressure on the provisioning side taken a bit of prudential provisioning therein. So, a lot is there in the system to sustain the profitability at the level at which we are operating now. We have maintained in 12 quarters, so I think there will be no question to maintain next quarter also.

Sir, just a couple of follow-ups, if I may, on margin itself. If you could share what is the percentage of loan book mix in terms of repo, other EBLR, MCLR, fixed. Number two, if you could just share what out of 100 basis point of repo rate cut that has ha ppened, how much of that has already flown through in the book so far. And lastly, in terms of cost of funds, you did mention that we would see 70-80% deposit repricing happening in the next quarter. So, if you could just talk about what is the typical duration of the term deposits and how much cost of funds can go down from the current levels.

Yeah, so coming to the segment of the loan, the BRLR book is almost 35%, your MCLR book is 45%, fixed is 6%, T -bill is 7% and the G -SEC is 6%. That broadly covers the mix of the percentage over there. In terms of the cut in repo, yes, on the retail side, full benefit has been passed on. As far as MCLR is concerned, we have only announced one cut, but that would depend upon the cost moderation. The model is that once the cost moderates that we have to pass on. So , it will take its own time to get repriced. Thirdly, external benchmark, obviously, because these are high -quality assets, so they have the opportunity in the bond market. So, there will be a lot of repricing happening on that count. So, this is a quarter we need to watch out that is something, but then repricing. But the cost moderation, again as you talked about at 5.05 % cost of deposit, I would say one of the positive narrative in the entire bank with regard to the way we have maintained the cost of deposit at 5.05 %. And even in the case where there is a, I mean, the duration normally of term deposit is almost one year. So almost 3 -4 months have gone, 70% is going to reprice. So going by that, we are thinking on the cost of deposit, at least there will be a 15 to 17 bps moderation going forward by September. And that typically take care of the repricing that are going to happen on the asset side. So, that will be almost at a margin guidance, which we had given. But notwithstanding the fact that because a lot of uncertain elements are there, there will be a bit of pressure that continues at least for one quarter. And thereafter, there is a positive offset on the higher side.

Thank you, sir.

Thank you. I would request everyone to please limit yourself to two questions and we'll come back to you if there is time. The next question is from Ashok Ajmera. Please unmute yourself.

Good evening, sir. Yes, definitely compliments that in spite of this very difficult quarter, going through the transition, you have shown a good operating profit and somehow, I mean, balanced most of the things, which shows your, of course, your leadership and the top management of the Bank of Baroda are working very hard on it. Having said that, sir, some couple of some questions and some observations, sir. In the SMA books, we have given only percentage and that is also a mix of 1 and 2. Can I know exactly the numbers of SMA 1 in this quarter and SMA 2? Because we have seen in the most of the banks, SMA 2 numbers have suddenly gone up. So, in your case, if it has gone up, then what is the explanation for that? So, since I don't have the number, I cannot ask exactly on that. Only the percentage is there.

Thank you, Ajmera sir. Thank you for complimenting the bank. As I said, we work on how do we optimize the fundamental strength of the bank. So that is what actually, thank you very much for that. Talking of the SMA, we only give as a percentage we are giving and if possible, then I will share the data, but I will just give color to the SMA 1 and 2. If you look at the percentage that we have given at 0.4%, it consist s of three accounts which are the government entity, government guaranteed, but always move between SMA 1, 2 and then standard. So, this quarter there are two accounts still being there in the SMA, so slightly pushing the SMA percentage higher. If you exclude these three accounts, the SMA 1 and 2 CRILC book is at 0.10%. I mean, that if you look at, you are comparing also this CRILC data in terms of percentage, then 0.4% is one of the lowest if I compare large peers. So , in that way, the bank is quite confidently working on that in terms of percentage. But on the number side, I will let you know in case that is published, we have published earlier, and then we will inform you on the number. Lal Singh sir, you want to add on this. Anything else you want to add on this?

No, sir, nothing.

Okay, thank you. So, this data with regard to number, absolute number, we will let you know on that.

All right, sir. Sir, on this, you talked about this international account and 210 days, and you said it is a very asset-backed, security-backed account. So, in this financial year only these 210 days period will get over. So, there are chances, and you already have provided 40% of that. So, there are very positive chances of getting off totally without any scratch from this account?

Yes, absolutely right. The current position is that because the account also has a lot of state backing on that in that international territory. I think there can be a resolution within 200 days, and if that happens, obviously, this 40% would be reversed after that. And as of today, frankly, it is on a curative process, actually, there is a standstill condition. But as a prudent measure, because I mean, the domestic regulation talks about NPA, we have provided 40%. Otherwise, on the international, you are not required because there is a standstill condition on that. It is getting into a resolution process, but there is a curative process and there is a preventive protection therein.

Yes, one point, sir, if I come on recovery, the recovery from the written off account in this quarter is a little slower than the March quarter, it can be understood also. But overall, giving a color of the recovery, our entire recovery book, like including, we have all that NCLT, maybe 99.9% provided for 43,402 crores in that account. Plus, we have a very good robust, I mean, written off book also, from where the chances are good and every year we are making good recovery. So, on the overall recovery front, I mean, I think the other three quarters should be much better than this quarter, sir.

Yeah, it would be much better. As you rightly said, our average run rate on the recovery TWO without any one-off, let me again say without any one-off is roughly around 750 crores per quarter. But June is typically a lot of transfer does happen slightly because of this, all this, the recovery normally, if you look at June ‘24 also it was lower. But you are right, the subsequent quarter will be much better than the numbers we have announced in June, with a hope that a couple of one- offs can still be in the pipeline which are working strongly.

And you know, sir, means on the NCLT and the transfer to asset recovery companies, NARCL or other things, can you give at least something in next two to three quarters? Are we having a lot of such accounts in the pipeline, which are towards sale or resolution from where we can expect some larger recovery?

Frankly, as far as NARCL or ARC sale, we do not have much of pipelines for that. Actually, we are trying for a very strong recovery mechanism itself. We are trying for multiple resolution process just to recover money. So, in terms of pipeline, I do not have much in terms of NARCL particularly. But there are a couple of accounts, which again, there are discussions going on. But the fact of the matter is that the recovery target for the full year, that includes recovery and TWO, I think we will be exceeding the 10,000 that we have fixed internally to recover for the full year.

Last one, sir, on that airline account, the same question I asked to Central Bank also. So, earlier, we used to think that the recovery or the amount will be much, I mean, amount will be recovered much faster, because you have that 1200 crores, that land p arcel, which is separately secured with you two Bank, the value of this might have gone up now to maybe 1700 - 1800 crores now. So, what is the status on that, sir? Are we expecting some major thing happening on that account in this year?

See, again, I mean, this s ale of asset, particularly large piece of land parcel is always a time-consuming exercise. And the process is on again on the same, Central Bank is the lead and they are taking lead on that and we are supporting that. Apart from the land parcel that we talked about, see, earlier we said the ECLGS money we got it, so one third of the exposure has gone down. There is arbitration issue that is also going on the international market, where there is a strong possibility of offset therein. So, there are multiple processes going on, but then land parcel is always time-consuming and we need to be patient on that.

Thank you, sir. If time permits, I will come back again.

Thank you very much.

Thank you, sir. Next question is from Kunal Shah

Sir, firstly, you mentioned in terms of making some prudent provisioning out there. So, just want to get that sense. So, this is very well reflected in terms of the standard asset provisioning, which is there at 320 odd crores instead of maybe despite our book running down by two and a half percent. So, ideally, there shouldn't have been any standard asset provisioning. There should have been the release. And what is this, maybe is this particularly towards any maybe…so, the standard asset provisioning --- what was the rationale for creating this?

Yeah, a couple of like we go by the IRAC provisioning, but a couple of accounts where there is an inherent weakness which as per the auditors, they think that we need to slightly be more prudent on that and we provide as part of the guidance of the auditor. So, typically, if you look at IRAC and the prudential, there is a gap over there. Actually, we have provided slightly more depending upon the weakness of the account. So, like a couple of large accounts, which is again, I mean, gets into SMA 1 , 2, again going back to standard, again going to SMA 1, 2. Even if the possibility of this account getting into NPA is less because of the vintage that you have seen in those accounts. There also we made a bit of provision, even if IRAC basis it may not be a requirement, but as a prudential measure, because the auditors would say that there is an inherent weakness which is continuing for a long time, you need to provide. So, these are the extra provisioning that we have made in the books, as far as the provisioning requirement is concerned. Otherwise, we are complying fully with IRAC norms. At the same time, if there is an auditor guidance on the matter then we comply to that.

Sir, what was the provisioning and what was the outstanding amount if you can just highlight that?

Come back again, Kunal, I didn’t get your question.

No, no. So, what was the overall book wherein we have identified that to be having some inherent weakness and what was the provisioning taken against it? If you can just mention the absolute numbers for both.

That's part of a couple of the SMA 1, 2 book which we are showing, it is roughly around, you can take it on the standard asset, roughly around 5 -600 crores is there, which is a n incremental provisioning that we have done based on the weakness of those accounts.

Okay. So, 5-600 incremental and after the release, it's showing like 324 odd crores. Yeah.

Okay. And secondly, on the international book, so maybe you indicated that this is more on the restructured side, but maybe have we taken a look on the entire book, looking at what is happening globally. And no doubt the odds would be more like, say, the e xposure to the domestic corporates, but do we see any risk? And maybe this is the first quarter wherein we have started to see some kind of a pain emerging on international and this could again be the area of concern going forward?

No, absolutely not. Actually, this account was under our monitoring for long because it was a restructured account on the international book and our restructured book was earlier discussed on that. It was upgraded because it completed one year curative pro cess and the account was standard at that time, but it was showing weakness. So, we knew that there are weakness. And as of today, it has gone to a resolution process, right, it has not gone into those. So, it is a resolution process. We need to be, I mean, respect those processes in those countries.

And I was not particularly with respect to this country.

No, I am giving you color. Actually, as a prudent measure, we have made 40% provision therein, right, which can be upgraded the moment the curative process, the resolution happens, the money can be pulled back immediately, point one. Secondly, the asset ha s an asset coverage of more than one for very long. And if you look at the vintage of the account, the account, there is a reducing balance over a period of time. So, we are not seeing any challenge for recovery in this account. Even if in a worst case scenario, the account is not getting upgraded, we are hopeful for a full recovery out of this account. But we are hopeful that the account may get upgraded during this year, then there is a write-back possible.

No, I was just saying X of this account on the balance overseas exposure. How are we evaluating? Because there are like a lot of global events which are happening. So, just to make sure that our book is robust and we don't see the further slippages on the international side, because that tends to be chunky. So, how are we evaluating the entire portfolio? And do we see any further stress which can come in over next two to three -odd quarters on the international or on the overseas exposure?

No, absolutely not. We do monitor, we have a mid -office which talks about, which maps out every account globally in terms of the exposure therein. There is no stress in any other account. This account was in SMA 1, 2 for some time and now getting into NPA. So, there is no other account as on today, which is again showing the sign of SMA 1 , 2 and still standard. So, in that way, I do not see any challenge on the international front and particularly on the NPA position.

Sure. And one last question, if I can, just like the increase across the retail products on a sequential basis, be it housing, auto, you indicated even in terms of the PL. So, is it like maybe with the seasoning of the portfolio, the kind of growth which we had, maybe would you see more to flow in, in terms of the slippages, particularly because PL has been growing quite aggressively and now we have seen GNPA is at closer to like say 4.8 odd percent. So, maybe just if you can indicate for th e overall retail as well as the MSME segment.

So, if you look at the, there are two factors here, the percentage GNPA and also the slippage ratio in all this product. And we continue to grow strong on the retail and MSME. Retail is growing very strongly for the bank and so has the MSME - we picked up in last one year. If you look at the slippage, I mean, maybe on retail, if you look at the slippage vis-à-vis June, there may be a couple of 100 crores or 150 crores in addition. But if you look at the slippage ratio, because the denominator has also gone up, but the slippage ratio will be still contained. But personal loan, yes, there is bit of the legacy book has an incremental NPA going forward. But the book is not large enough, point one. And secondly, in terms of slippage ratio, I do not think there is a concern because the retail slippage ratio as on June is below that of June last year. So, in that way, the denominator is also going up. So, it is part of a normal business in terms of where to maintain. So, both the GNPA of the retail products and MSME, the slippage ratio in the retail products and MSME, these are well within our threshold and maintaining the same level of outstanding as compared to the last year.

Okay. Thank you.

Thank you. Next question is from Bhavik Shah.

Hi, sir. Thanks for the opportunity. Sir, our L2 maturity book is down 4% quarter on quarter. Is it because of OMO operations or we have sold our 5% which was allowed under the new investment guidelines?

Mr. Tyagi, can you respond to this?

Thank you, sir. So, in fact, you said you picked up rightly. We took the advantage of OMOs and earned good profit also. There were a good opportunity.

Okay. Thank you, sir. And sir, when is your ALCO meeting? So, I just want to understand how this repo pass-through will work. So, is it on T plus one or it happens later?

Yeah, Tyagi ji.

No. So, in fact, the Repo cuts passed on immediately and ALCO meets every month on a fixed frequency.

Okay. Understood, Sir. And, Sir, last question. Sir, last year your provision for employees was 800 crores and this quarter we are close to 1,000 crores. So, should that be the run rate going forward, AS 15 provisions, I mean?

Madam Beena, can you take it up or CFO? Madam, you are on mute. You are on mute.

Yeah. So, basically the discount rate has gone down, that is why the provision requirement has gone up for this particular series.

Understood, Sir. So, this will be steady state for the next 3-4 quarters as well, right?

It depends. It depends on the rate movements again.

Okay, cool. Thank you so much, Sir. Thanks for the opportunity.

Thank you.

Next question from Ankit Bihani

Yeah, hi. Can you hear me?

Yeah, please go ahead.

Yeah, I just had two questions. One was on your written off pool, which as of FY25 it was at 764 billion. I just wanted to know what would be the v intage wise breakup like less than 5 year, 5-10 and greater than 10, if you have that data?

I do not have. Lal Singh Sahab, can you respond or we can provide the data later?

Yes, Sir, we will provide the data later.

Yeah.

Okay. I just wanted to check how that less than 5 year written has moved across? You know, a time series data would be helpful. And the second question is on margins which is at 2.91%. So, there are no other one-offs, right, in this margin that you have reported because the banks that we have seen reporting have seen higher decline in margins?

No, there is no one -off. Actually, I tell you what is that impact we are talking about. The Interest Income Tax refund earlier a part of other non interest income and it has been reclassified Income Tax refund as an interest income. So, consequently, that the name is getting changed. So, we recalibrated the name that we declared earlier. On that basis which was declared at 2.86% is 2.98%. So, if you compare pre, post anything, the cut is only 7 bps and that is one-off. The story here, which again how it is compatible with all the numbers. When I am running Cost of deposit at 5.05%, a CASA ratio of 39.33 %, I think the margin something strongly collaborate with all these numbers and that is what our strength in the current market vis -à-vis large peers in that space where we operate in terms of maintaining the margin. So, there is no other one-off.

Okay, thank you. Those were my questions.

Thank you. Next question is from Mr. Sushil Choksi.

Congratulations team Bank of Baroda for stable numbers. Sir, looking at your outlook on Treasury, how many Repo cuts are you hearing or you are likely to project?

Okay. To respond this, actually, we have a very strong economist with us, Mr. Madan Sabnavis. So, our house view is that we are expecting further 25 bps cut. But the expectation is more towards the end of the calendar year rather than immediately. I mean, I am talking about we are not expecting any cut in the next policy but possibly can happen after September.

So, are you estimating 10-year G-Sec to touch 6% or looks difficult?

See, 10-year is not only dependent on the Repo cut but also influenced by the U.S. Treasury, right. And you know what is happening on the U.S. Treasury. So, let the Fed also cut the rate, then possibly yes, 6. If the Fed is not cutting rate, then possibly can be marginal decline but not to a large extent. Tyagi Sahab, any comment?

Sir, actually you have said it all. In fact, when the rate cut had happened, at that time the 10-year G-Sec has come down to 6.70, 6.80. It has pulled it up without any other ostensible reason. So, we believe that going forward U.S. Fed move as well as our own inflation trajectory and commentary on the liquidity will also play its own role.

Sir, what is your yield on RAM Advances? And second thing, your corporate advances you have shredded, are these mainly PSU-led or AAA rated which were not yielding even 6% or 6.25% when you have shredded? Or there are some typical loans which are replaced with CP and NCBs?

You are right. Typically, the corporate book, it is more on the fine price, which has got into further fine, which again slightly suboptimal in terms of our margin and all. So, you are absolutely right. Otherwise, the core corporate is actually growing muc h stronger. Actually, we have not declared the core corporate growth but it is growing much stronger than the 4.2% growth that we have shown. You are right. These are high-quality assets, fine price has become further fine making it slightly challenging for us to hold on to those assets. But, again, we will try to work it on for this quarter. On the RAM, I mean, I will give you a ballpark number. It is almost, I mean, the Repo is, I mean, it is almost 250 or 300, almost at 9.5 kind of a number we have a RAM yield on that.

Sir, you had given a guidance in last Analyst Meet that your RAM should be 64 by year-end and the balance should be corporate. Are we on a trajectory or we are looking at exceeding RAM number at 64 with the current yield of 9-9.5?

No, I mean, we gave a guidance of 64-65 but we always said 2-3 years. So, it is not going to happen this year because this year, look, as of today if we are at 62.7 because the corporate growth is a bit muted. When the corporate growth catches to almost like 9%-10%, possibly this number may not be the same level. But yes, the retailization narrative and the retailization push is working strong for the bank. You would have seen the retail growth has been consistently 3% -4% above the system retail growth. I am talking about the large peers, not the full system. So, in that way, we continue to work to grow on the retail and maybe 2-3 years we will be in a position to achieve 64- 65%.

Sir, any digital expenditure, human resource expenditure which you are likely to incur and any asset monetization plan in the subsidiary?

So, digital, earlier we said, our normal OpEx and CapEx, normally we tag it at 10% of the Operating Profit for the full year. And that is something we work and we also give an upside therein that if there is a requirement, we will take it to 15% but that is something we are working on that. Employee headcount, yes, we have a plan to hire almost 15,000 employees at different cadre, more on the operational and the relationship side in this year. Actually, it takes a time to onboard them and put them into the system but there is a good hiring plan. We are expanding laterally because there is a plan to open almost like we’ve opened more than 250 branches last year and another plan to open another 300 branches this year. So, we are literally expanding. So, in that scenario it is a, I mean, changes happening across in headcount, operating, I mean, the spend on the IT. And we are working on all the things, I mean, on a holistic basis.

Sir, we are one of the early banks to have a shared service, which you had set up in Gujarat, and was supporting your RAM business, specifically your FX and many other things.

Yeah.

The entity has almost provided, if on a headcount of 74,000 total, almost provided slightly above 10% to us in terms of their resources, who are deployed now. So, almost 10% of the payroll headcounts they have provided. They are doing excellent service. They are doing activity, which again put me on an efficient curve in terms of the cost structure. And we will continue to engage them more and more the moment we find that they can do those because it's also a trade-off in terms of the skillset. So, the moment you find they have the skill set to do my activity, we’ll more and more do that. At the same time, on the payroll also since we are expanding, I will continue to hire more and more employees on the payroll also.

Sir, are we using this facility for some other banks to do work?

We are not allowed to do that. I mean, it is only for only Bank of Baroda captive.

Okay. Thank you for answering all my questions and good luck for the year.

Thank you very much. Thank you.

Thank you, Sir. The last question for the evening is from Jay Mundra.

Yeah. Hi, Sir. Good evening and thanks for the opportunity. Sir, first question on your yield, domestic yields. They are down like 15 basis points QoQ. Assuming no more action from RBI, what would be your sense? How should it behave in the, let's say, in the near term and maybe for the rest of the year? So, the 50 basis point rate cut done in the June, that will still be there for the next…That was only there for 1 month, how do you look at the domestic yield in the near term?

So, that's a very fair question. And as we said that margin can be under pressure or continue to be under pressure one more quarter.

I was asking QoQ?

Yeah. So, on the BRLLR or the Repo linked, already the reprice has happened and the full quarter, the impact will come in this quarter, September quarter. At the same time, non- BRLLR, which are MCLR or the external link, continue to reprice at a lower level and that is happening in the market. So, the moment there is a cost moderation, we will continue to decrease the MCLR and that impact also would come. At the same time, as I said that the positive narrative of the bank is on the liability side. At a cost of deposit of 5.05 %, with a CASA of 39.33 %, with a margin of 2.91 %, I think we are in a much better position to reprice deposit and get the benefit. A normal thumb rule as on today, actually asset side I cannot give you how much cut on asset, I mean, yield on asset would happen. But normal expectation, in case we are abl e to reprice the maturing deposit for September quarter, at least we are going to get a benefit of around 15-17 bps reduction in the Cost of deposit and the Cost of fund. And that would be significant because deposit has a larger base. So, I think in that scenario, we are almost able to possibly maintain on the margin guidance. Saying so, the margin would be under pressure. But on a full year, since we are very positive about the Q3 and Q4, on a full year guidance we are thinking somewhe re around 2.85 -3% we will be in a position to maintain on a full year basis. Saying that, Q2 can be something we need to watch it out. It can be under pressure but we are in a better position to nullify the impact on the asset repricing from the liability mix that we carry as on today.

Yeah. So, Sir, just to get this clear, 15-17 basis point is the stock impact on the overall Cost of deposit right, based on repricing of including bulk deposit and including the savings account also because we have cut savings rate by 20-25 basis point.

Yeah. Actually, you would have seen, there is an RBI report saying that on the average lending rate has gone down by almost…Although fresh loan it has gone down by 51 bps but the average has gone down by…I mean, the average has gone down by almost 17 -18 bps. So, on the average lending, on the outstanding loan. Whereas deposit on the outstanding deposit has gone down by only 2 bps.

Right. Sir, that RBI data is very, I mean, that has not much sense actually. It keeps on fluctuating every month.

No-no, that’s what. Actually, m y sense I can tell you because the deposit are sticky because of the fixed nature. And assuming a deposit of a 1 year duration on the term deposit, bulk and CD have reacted big time. But assuming a deposit duration of 1 year, almost 4 months have gone now. So, balance there is a six month. I mean, balance there is 8 months. So, by end of September, I think 70% -80% of the deposit would get repriced in the manner. I mean, assuming a larger component of bulk, a slightly lesser component of the retail term deposit. So, by that time we will have a fair view with regard to the trajectory going forward. But we are working on this issue, yeah. And, otherwise, the NIM cut for the bank would have been very significant as compared to…You have seen the other banks NIM cut but we are still able to maintain. That’s what the liability management we run, right. So, that's what is our strength, I believe.

Right-right. And, Sir, overseas NIM are actually have gone up despite, you know, sharp moderation in the global interest rates. And we also had a small slippages in overseas book also. And still the overseas margins have gone up from 1 .70 to 1.75. I mean, they should ideally fall more than the domestic margins, right, because they would have gone up even sharper. Is that a fair understanding?

No, no. Actually, overseas markets slightly move ahead of us in terms of the realignment, restructure. That is what. So, the peak level of NIM in overseas was 2.23 %, it has gone down to almost like 1.70%. So, it has stabilized at that level. So, now, again, we are able to get some good deals slightly at a better off rate. So, in that way, it has moved marginally from 1.70 to 1.75 %. Otherwise, the NIM cut of the overseas already happened and that is from a peak level of 2.23 % has gone down to 1.70 and now it has stabilized. I mean, I am not differentiating between 1.75 % and 1.70%. Anything, Tyagi Sahab, you want to add on the overseas NIM?

No, Sir, you have said it all. In fact, that is the reason that 5 basis point is transient, in fact. So, the earlier Fed cuts have already been priced in up till March.

Okay. And, Sir, lastly on MSME, right. So, if you see the bulk of the slippages is now coming from MSME. And some time back we used to give this breakup of MSME book by CMR, right, how much is CMR 1, 2, 3 and then maybe 3, 2, 7 or some bucketing there would be v ery helpful because now the entire, I mean, majority of the slippages are coming from MSME. So, if you can provide some more color on the rating of the MSME book, even now if you have as of June 30th? And just on qualitatively, most of, I mean, the entire MSME should be secured, right. We don't do any unsecured MSME or you have some proportion which is unsecured MSME?

No, actually, our MSME is basically, see, that is what on the retail piece also these are all secured retail. Personal loan is very less therein. Whereas MSME also, all our loans are secured. The unsecured MSME we do not do much. The only case where unsecu red MSME, if there are adequate backup because now we have come out with a cashflow based OD product, which is again unsecured. So, the component is very less here. We don't do otherwise a business loan unsecured like what the NBFC and others do. So, our most of the portfolio is a secured one. Secondly, couple of area where I would have seen a growth in MSME because we are focusing on CV & CME, that is one segment public sector banks were not very strong and now we as a bank are quite strong on that. Supply chain is also picking up. T ReDs, there are good volumes happening now. So, core MSME, we are bundling along with the Cash Management System so that we understand the cashflow. But unsecured component is less. But then a couple of schemes were recently announced, unsecured OD, and that is based on the GST return. So, these are a couple of small scheme operating but not much. Lal Singh Sahab, anything you want to add on unsecured loan?

No, there is not much unsecured loans in the MSME. And wherever the loans are without securities, those are covered by the CGTMSE guarantee coverage from the government; guaranteed schemes.

Okay. And last question, Sir, if I may ask, what would be your best guess for the staff cost for full year FY26 assuming whatever is happening on interest rate? Because a lot of banks have also started doing PLI and we would have done the one PLI, 15 days this t hing. But I do not recall a very big PLI Scheme for us in FY25. If you have, what kind of PLI schemes that you are running for employees? And what would be your sense on the staff cost for FY26?

Sir, if I may submit, we are making adequate provisions towards PLI, Sir, keeping in mind the requirement.

So, adequately provided on PLI. At the same time, AS 15 also I believe we have adequately provided, right.

Yes-yes. Yes, Sir. Yes, Sir.

Any further data on that, we can provide you offline.

Sure, Sir.

Thank you.

Thank you everyone, that was the last question we will be able to take. Can I ask Sridhar Sir to please give the vote of thanks?

I would like to extend my sincere gratitude to you all for joining us today for the announcement and discussion of our financial results. Thank you once again for your time and continued support. Have a great day ahead. Thank you.

Thank you very much. Thank you. ************