Hardik?

Yes. Sir, we have actually seen a very strong other income growth. Can you let us know what exactly is contributing to that?

So three factors basically. One is that the technical write -off recovery has been quite healthy. We have been able to recover more than INR90 crores during this quarter. And the second thing is now the annuity which we were purchasing with ROC clause earlier, now we have started purchasing it without ROC clause. So the staff costs have come down drastically, which we indicated in our Q1 call also. And the third thing is now the money which has been reimbursed by government on account of pensions, now we are efficiently deploying it in investment as well as in the credit route. That is also giving a lot of boost.

Okay. Sir, another question is what is your loan growth guidance? And what exactly are the sectors which will be contributing to it?

So our loan growth guidance continues to be in the range of 15%. And our loan book is consisting of retail around 70% and corporate around 30%. So we continue to maintain the same percentage. And obviously, retail will be the dominating segment in the long-term growth.

Okay. And sir, in the first question, you mentioned something about the ROC clause. Can you explain what exactly is it?

So we were purchasing our annuities -- staff annuities, which the staff benefits annuities we were purchasing with return on capital clause. So because of that return on capital clause, we were paying extra premium of around 20% to 25%. So that we have then studied the industry, the other banks also. Nobody is purchasing that ROC clause now. So we ha ve actually taken a call to purchase it without ROC clause, as other banks are doing. So because of that, the premium has come down.

Okay. And can you quantify the impact of that in FY '25?

So that will be around INR120 crores to INR125 crores.

Okay. Understood, sir. And sir, another question is, sir, we have witnessed a marginal decline in yields quarter-on-quarter. Can you explain what has happened? And how should we look at the yield for the full year as well as in FY '25?

Yield on advances?

Yes.

Okay. And so what will you guide for FY '26, the margin guidance, the yield and the cost of deposit guidance?

So cost of deposits, today, we are at a round 4.8%. We are expecting it to be in this range only, because the interest rate increase, we are not expecting now. Maybe after a quarter or so, we can expect the decrease -- the reversal. But as far as yield on advances is concerned, so in the quarter -- 1 quarter, we have increased it from 9.5% to 9.57% maybe in this range, 9.6% or something, we are expecting it to be in this range. So we don't find much challenge in maintaining the yield on advances. That's why I told you that our focus is more on growing the retail book, so that our yield on advances is improved. Similarly, the treasury yield is also improving. So there also we are getting around 7.12% -- 7.1% or 7.12% now.

We have questions from the line of Jai. Please go ahead, sir.

Sir, firstly, there were media reports saying that the bank could see or the bank is likely -- I mean, something in terms of succession. If you can clear, I would take this opportunity to understand what does that mean? Or if this is the normal succession planning at the bank?

This is a normal succession planning process now, Jai. Actually, my tenure is ending at the end of December. So that process has been started by the government. And might be those reports you must have seen in the newspapers.

Sir, the MD of J&K Bank, would this be -- I mean, who appoints them. Does the J&K government has a role or this is purely by RBI or this is a joint thing? Or how does it work?

So it is more of a joint sort of effort, because J&K government is the promoter, 55%, I mean, majority shareholder. So they basically have the say in selection of 1 or 2 or 3 candidates. Then finally, one out of that lot is selected by Reserve Bank of India and advised.

Right. So sir, what is the status? I mean, has the Board sent one name? Or how is it right now? Or where are we in that process?

So that process has already started, as you have already indicated. We are yet to send it to Reserve Bank of India. Maybe in a few days' time, we should be able to send it. But the process is in an advanced stage now.

Okay. Sure. Secondly, sir, if you can highlight, are there any areas -- while we see that credit costs have been almost negative, but are you seeing any -- I mean, if you can share your SMA number, maybe zero, one and two? And are you seeing any trends, any portfolio which is seeing a little bit of higher stress? Or first, if you can share the SMA 0, 1, 2 number in absolute rupees crores, and then...

Our SMA numbers, SMA -0 is INR13,300 crores today. And our SMA -1 is INR4,086 crores. And SMA-2 is INR3,000 crores. This is as on 30th September. And today, our SMA-0 has come down to INR4,195 crores, SMA-1 INR3,000 crores, and SMA-2 INR1,200 crores. So what we are seeing, actually, SMA if it goes up, then salary comes and other repayments come, then it goes after -- before 10th, it goes down drastically. And yes, the number seems to be still a little on the higher side, but we are working on it. And you will find that every quarter -on-quarter basis, it will further go down. So we don't find much stress in our book. And in fact, if I can say that the big accounts, say anything above INR20 crores, we don't have any account SMA today out of the bigger accounts. These are all smaller accounts, agriculture and retail mainly.

Okay. So, sir, this SMA -0 plus 1 plus 2 of roughly INR20,000 crores, there is no corporate account, which is more than INR20 crores. Is that the understanding?

There is no account in SMA more than INR20 crores in corporate book.

Right. That is very good to hear. And so sir, I mean, you are saying that these accounts may be in SMA, but as and when the salaries process, they become perfectly stranded?

Absolutely. It is happening simply because there's the book -- traditionally, all the installments fed in the system to be paid on last day of the month, 30th or 31st. So that is the problem. Actually, because of that, the last day of the month, you'll find the higher level of SMA, and then the salary comes on 1st or 2nd or 3rd, then immediately, that goes down.

And sir, secondly, what is your thought process on bringing down GNPA? I mean, you could have either negligible credit costs and negative credit costs that we are showing right now or you can have slightly accelerated GNPA and maybe accelerated write -off and bring down GNPA. So how do you look at the write -off, because current stress formation is clearly negligible. So maybe you can use that time to bring down GNPA? Or how do you look at it?

So, Jai, actually, we have a very calibrated approach towards bringing down the gross NPA as well as net NPA. And that approach has actually paid rich dividends so far. We continue to have the similar approach. I mean, both credit as well as STIC because we have been continuously bringing the OTSs for the small loans and taking actions under SARFAESI and various other enablers with a disciplined approach. And because of that, a lot of people have finally turned and then they have repaid the money, that's why we have been able to bring the level from around 10% to 3.95% today. And our guidance is 3.5%. We are expecting that if we may even better that. So as of now, NPA seems to be absolutely no worry, Jai.

Right. And then, last thing, if you can highlight, where do you think the growth would be coming from within J&K and outside J&K?

Now J&K will pick up, because J&K, you know, in the first Lok Sabha election s and then the assembly elections back to back, so first, my staff was little involved in the election duties. And the government also was under model code of conduct. So that has had an impact on the growth of the bank. So now since everything is over, we are expecting that J&K economy now will pick up and the J&K book will show a better growth. Rest of India is already growing. We are expecting naturally because second half or the third and fourth quarters are generally better as far as growth is concerne d. So the momentum will remain in the Rest of India. Maybe the numbers will further improve. But now the momentum will be picked up in J&K and Ladakh.

Right. And sir, if I may just add, what is your -- is there any sensitivity of the -- now there is a regime change in the J&K, I mean, maybe very early days, but is there any -- I mean, what could be the risk in terms of growth, maybe new regime, maybe going slow on the earlier projects which have already been started or maybe in the interim period till the time they come out with their own spending plans? Could there be a risk in terms of the projects which are already halfway completed? Or could there be any other policy change which could impact J&K Bank?

We don't find much concern on t hat front. One that, whatever projects are going on are of big projects, basically the infrastructure projects, where I don't think any impact will be there of the local governance. The second thing is the growth is expected to come from MSME and the agriculture, where the policy framework is already in place, the type of policy the government is having, HADP, Holistic Agriculture Development Plan for agriculture. And similarly, one scheme, we call it Yuva scheme for MSME, which has been launched during the last 1 or 2 years. Those schemes are actually giving a lot of benefit to the people at large. So any popular government would rather further strengthen those schemes instead of putting the brakes on those. That is what my belief is. So instead of any c oncern, I think we find that there will be further boost to the economy and to these schemes.

The next question is from the line of Hardik. Please go ahead, sir.

I have a follow-up question that can you let us know your NPA recovery and technical write-off recovery pipeline?

So technical write-off recovery pipeline, our target is -- how much is our target for the year?

We are envisaging a recovery of about INR1,531 crores in the financial year. And out of that, we have already achieved INR760 crores. Further, recovery of INR771 crores is estimated in some accounts of big size ticket.

You're talking about NPA?

Yes. And in case of technical write-off accounts, we are envisaging a recovery of about INR350 crores in the next 2 quarters.

Let me sum up, Hardik. So as far as NPA is concerned, the recovery is expected in the range of INR700 crores to INR800 crores. As far as technical write -off accounts is concerned, we are expecting INR300-plus crores. Out of that, almost INR125 crores we have already recovered, rest of the amount will be followed in this half year.

So cost-to-income guidance, I think we have given it, 58% -- 57% to 58%. It will be definitely better than that.

Okay, sir.

So Hardik, if there are any questions, we can take them. Otherwise, we will request the participants can send the questions over e-mail also.

Yes sir, I think we are almost done. The operator can announce that if anybody has a question, they can come back directly to the bank or can route it through us. Yes sir, we can conclude. If you have any concluding remarks?

So thank you, Hardik, and thank you, Jai. Thank you all the participants for joining in today and being part of this healthy interaction. We hope to remain engaged mo re often, and we will be looking forward to your suggestions and guidance for further betterment of our institution. For any further questions, queries, detailed comments, etcetera, the team is always available, and you can also direct your queries to our Investor Relations desk, and we will definitely respond. Thank you so much.

On behalf of ICICI Securities, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.