Ladies and gentlemen, good day, welcome to the Bandhan Bank Q1 FY24 earnings 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. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Mundra. Thank you, over to you, sir. Thank you, Robin. Good evening, everyone, and a warm welcome to all the participants. It's our pleasure to welcome you all to discuss Bandhan Bank business and financial performance for the quarter ending June 2023. We will take this opportunity to update you on the recent developments in the industry as well as on Bandhan Bank during the quarter. To discuss all this in detail, we have with us our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh, Chief Operating Officer, Mr. Ratan Kumar Kesh, Chief Financial Officer, Mr. Sunil Samdani, Head, Retail Banking, Mr. Shantanu Sengupta, and myself, Vikash Mundra, Head of Investor Relations, along with other senior management team of the bank. We will be happy to provide you with any clarity if required on the current quarter numbers and the way forward. Now, I would like to request our founder, MD and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about our bank's operation and financial performance, along with developments for the quarter ending June 2023. Over to you, sir. Thank you, Vikas. Namaskar. Warm welcome to all of you. After the strong financial year 2023, I am pleased to state that April to June 2023 quarter has also been a stable quarter for the bank. I will take you through some of the key figures. The macro backdrop continues to strengthen. India looks set to remain world's fastest- growing large economy. India's GDP is expected to grow at above a strong 6.5% during financial year 2023-2024, with the prospects of strong private consumption and services sector growth. Despite a late onset of monsoon, weather disruption in few states and delayed sowing during quarter 1, 2024, the gradual improvement in rural demand may continue in the coming months if the forecast of a near normal monsoon by IMD true. Despite the policy under uncertainties in advanced economies, India's inflation of 4.6% year-on-year during quarter 1, financial year 2024, suggests a limited risk of further hike in interest rates in the near term. Prospects of decent GDP growth and stable interest rate environment should help the momentum in Indian BFSI sector in the coming quarters. Having said that, one must note that the first quarter of the financial year is often seasonally a somewhat softer patch for several entities in the financial services industry. quarter-on-quarter figures, sorry, quarter-on-quarter figures should be analyzed and interpreted carefully. During quarter 1, financial year 2024, Bandhan Bank's overall advance have shown a 6.7% growth year-on-year and a marginal decline in quarter-on-quarter. The quarter-on-quarter decline in loan book is primarily because of two reasons. We have seen a quarterly decline in the microfinance book, around 10% quarter-on-quarter, primarily due to seasonal factors and because of weather disturbance in a few states. Historically, also, if you see, for the last 2 financial years, we have always shown a quarter-on-quarter drop in a similar range in quarter one in our microfinance book. Second point, we also seen that as indicated earlier, we had a short-term loan against the fixed deposit, of which a single large account of INR 2,151 crore has been repaid in quarter one 2024, which helped us to de-grow of the book of advances. However, growth in case of retail asset and commercial banking continued to be impressive. The retail loan book, other than the housing finance book, consisting of personal loan, gold loan, two-wheeler loan, and auto loan, has grown by nearly 87% year-on-year. The commercial banking vertical, consisting of financial institution group and SME, registered a growth of 78% year-on-year and nearly 7% quarter-on-quarter. The housing finance book, sorry. The housing finance book, which faced issues last quarter, has come back to normal and has registered a growth of about 9.5% year-on-year. The share of secured assets as a part of our total loan book continues to increase. It cost 44% in quarter one, financial year 2024, as against 36% in financial year 2022. We expect that approximately half of our book should be secured book by financial year 2026. On the liability side, deposits at INR 108,000 crore, as at end June 2023, recorded a growth of 16.6% year-on-year, stronger than the industry growth rate of around 12%. Sorry. Due to our focus on granular retail deposits, our retail term deposit book has grown by around 17% year-on-year. The retail to total deposits ratio continues to hold above 71%. Customers continue to response their trust in the bank. Let me put forward a few data points in substantial the same. Our total number of liabilities customer increased by 11.5% year-on-year, and 3.4% quarter-on-quarter. Volume of total customer transaction increased by more than 50% year-on-year, 9% quarter-on-quarter. Total value of transaction has also increased by 15% year-on-year, 5% quarter-on-quarter. Our overall digital transactions have recorded an increase of 49% year-on-year, with average digital transaction per account going up by 33%. All these parameters shows that the bank are performing the deposit, especially in the retail segment, is very good, and future it will be like to continue very good growth of this deposit. CASA deposits came in slightly lower on account of seasonal impacts compared to the previous quarter, but still stands at a healthy 36% at INR 39,077 crore. This drop in the quarter has been seen across the industry, but we have the confidence on our customers, and my team will be again come back on that which is projected 40% of our CASA growth, CASA percentage. I would like to specially highlight that microfinance customers contributed only less than 4% of our total deposits. We have seen good improvement in the overall collection efficiency for the bank. Overall collection efficiency, excluding NPA, stood at 98% for the quarter end June 2023, up from 96% from the quarter ending June 2022. The bank has registered a net profit of INR 721 crore during the quarter one, financial year 2024, against a net profit of INR 887 crore in quarter one, financial year 2023. Our net interest income in quarter one, financial year 2024, came in at INR 2,491 crore, broadly similar to INR 2,514 crore, during quarter one, financial year 2023. However, sequentially, it is also stable at INR 2,472 crore in quarter four, financial year 2023. Our net interest margin stood at 7.3% in quarter 1 2024, same as that during quarter 4 2023. It is a very strong parameter for the bank on that. The NIM has continued from the last quarter, also the same in this quarter. Total credit cost for quarter 1 2024 was 2.4%, compared with the 2.9% quarter 4 2023. Our gross NPA in quarter 1 2024 stood at 6.76%, compared to the first quarter of the last year, 7.25%. Our net NPA has come 2.19%, and what was in a 1 year ago, 1.92%. The bank delivered an ROA of 1.9% and ROE 14.4% in quarter 1 2024. This quarter, we have added about 130 branches, over 70% of which are in Northern, Southern, and Western zones. We have added about INR 0.7 million new customers in this quarter. What is the future? We have made considerable investments in people, technology, and infrastructure in recent years. We expect that from the current financial year, the bank will start yielding positive results of these investments. We have initiated several steps to boost cross-sell and branch-led sales to grow the retail assets and liabilities portfolio, and also to increase productivity per employees, supported by our digital and analytical initiatives. Financial year 2024, we expected to grow our advances by nearly 20%+, and a little higher rate for deposits growth through 2024, with our focus remaining strong on the retail segment and the diversification with NIM, which are projected 7%. We expect credit cost to remain around the 2%, with a variance of 20 basis points. Puja is coming near future, which is this quarter, which is second quarter. We think that Puja have been helped us to credit growth again will be start for this year. Whatever we have been declined, will be like to recover by the March, and with our growth of the bank of advance 22%+. I wish you and your family all the very best. Thank you. Thank you, sir. Now, I would like to request Mr. Sunil Samdani, to give you some more details on the financial parameter during the quarter. Over to you. Good evening, ladies and gentlemen. I would like to take this opportunity to take you through some of the key highlights of the quarter in terms of financial numbers. Starting with collection efficiency. The collection efficiency, excluding NPA customer, continues to be healthy at 98%. The full-paying customer continues to be reasonably high at 96%. Moving to the DPD movement, you would witness that quarter-on-quarter, the movement in DPD has been stable with two major changes. One is 61-90 bucket and the NPA bucket. As far as the movement in 61-90 bucket, I would want to mention here that the ECLGS loans, which we have classified as NPA during the quarter, pursuant to change in IRAC norms by the regulator, these were earlier shown as stressed assets and were forming part of 61-90-day bucket. The NPA, as we discuss the slippages number, will make it amply clear as to how to view this NPA numbers. First, let me take you through this adjustment of ECLGS. At Bandhan, we have taken this guarantee under NCGTC, two schemes. One is the ECLGS fund, and the second is the CGFMU guarantee. As far as CGFMU guarantee goes, since it was in the nature of insurance, where we pay the insurance premium to get that guarantee, whenever the customer cross 90 DPD, we used to mark it as NPA. Accordingly, take provisions against them. As far as the ECLGS loan goes, these are 100% guaranteed by the NCGTC funds, and since there is no insurance premium, there is no premium paid, and it is not in the nature of insurance. As per the IRAC norms, since they are government guaranteed, we had not classified them as NPA. However, looking at the nature and the repayment track record, we felt that these are stressed customers. Accordingly, we used to classify them in SMA-2 bucket, which is 61 to 90. What changed? Starting 1st April, the new IRAC Norm Circular came in, which made it amply clear that all loans granted under the umbrella of NCGTC and the CGTMSE should be treated as NPA. Further, they said that banks are permitted not to make provisions against these exposures. Where do we stand against these new norms? As mentioned earlier, the ECLGS pool, which was part of our stressed pool under SMA-2, we mark it down to NPA. As far as CGFMU pool goes, that pool always was marked as NPA and continues to remain NPA. While the circular clearly says that the bank are permitted not to make any provisions, as a prudent and conservative measure, we have a coverage of 86% in terms of provision over these loans of NCGTC under ECLGS and CGFMU. That's the material change for the quarter. How does it impact our stressed pool? It has absolutely no impact on our stressed pool, because the ECLGS was earlier also classified as stressed assets as part of SMA-2, and it continues to remain stressed asset now under NPA. What's our stressed pool looking like? March 2023, this amount was INR 55 billion, with a successful coverage of INR 55 billion, with a provision of INR 38 billion, and the CGFMU guarantee of INR 17 billion. In June 2023, this amount goes up to INR 62 billion. The coverage increases to INR 103 billion, with INR 21 billion of guarantee cover and INR 43 billion of provisioning in place. I would also want you to take you through the slippages during the quarter. During the quarter, we had a slippages of INR 13.6 billion. I'm talking here the gross slippages. If I have to break this number of INR 13.6 billion, about INR 9.2 billion comes from the EEB, INR 2.2 billion comes from housing, the rest from the other businesses. How do we read these slippages, what's the status on the recovery or upgrades? As you all are aware, during the last six months, starting December 28, we had sold a substantial pool to ARC and have also got a guarantee repayment from the NCGTC of INR 916 crore. As a result of that, any recoveries in those accounts, we have to first pay to the NCGTC, if it's an NCGTC customer recovery, or if it's an ARC customer recovery, we pay it to ARC as per the terms of agreement, till their claims are satisfied. Let me first clarify on the slippages number. The INR 2 billion or INR 2.2 billion, or the INR 220 crore of slippages that we saw in housing, is more of the initial issues that we faced during the system, new system implementation. These customers slipped, we had an immediate upgrade, out of which of INR 1.6 billion or INR 160 crore. Technically, the other way to look at these slippages of INR 13.6 billion, would be to reduce these INR 2 billion from that. Secondly, since we have sold this portfolio, a large chunk of this, to ARC and we've received the claim from CGFMU in the month of December, the recoveries that we do from our customers are allocated towards repayments to these two entities. While the recoveries and upgrade numbers in our balance sheet looks at INR 2.8 billion or INR 280 crore, the real recovery from the customer stands at INR 550 crore. The rest either goes to ARC or to CGFMU. This being the first quarter after those material transactions, which happened at the end of Q3, which is 28th of December and in March, the real impact of recoveries is felt in this quarter, wherein the bulk of the recoveries go to the outside agencies. Now, where do we stand on the ARC pool that we have sold? How much more we need to pay to them? As you all know, we did this transaction in two tranches, one in December end and then the other one in the March end. In the December end, the contribution from the ARC and the investor was INR 414 crore. Of that, the total collections we have made is INR 424 crore. Which effectively means that by the end of this quarter, I mean the second quarter, we would completely repay our obligations towards the tranche we did in December 2022, including the IRR. This effectively means any further recovery towards this portfolio will start flowing into the bank's P&L, and that's where we will see these numbers improving in terms of recoveries and upgrades. As far as the other pool goes, which is the pool which we had done it in the month of March, the total receipt of those two pools between the write-off and the NPA portfolio was about INR 362 crore. Of which, INR 150 crore. I beg your pardon, INR 250 crore is something that we have already collected. Clearly, we see a scenario, starting H2, this recovery of close to INR 300 crore per quarter, should start flowing into the bank's P&L. Thank you very much for your patient hearing. I'm sure you'll have few questions. Happy to take them. Thank you. David, please start the Q&A part. Yes, thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Hi, good evening. Over what time frame do the ECLGS NPLs leave the book and. No, Can, Mahrukh, can you please repeat your question, please? My question was that, you know, these are covered by guarantee. Right. Over what time frame do these ECLGS NPLs move out of the book, as in get resolved? You know, you can recover the guarantee and, I mean, you can get the guarantee and resolve them, right? So. Sure, sure. Here now, there is a difference between the processes of claim that we do between CGFMU and the ECLGS. Currently, under ECLGS, you have to upload a single case-by-case details into their portal, and that's where they have a constraint in terms of, you know, the processing. That's why this process of claiming is slightly slow because of the capacity constraints. On the other hand, the CGFMU, it's a bulk upload, so that happens faster. What we are given to understand, that similar facility of uploading bulk or through a confirmation through CIC is underway, and that should help speed up the processes of recovery, the ECLGS guarantee loan. Hopefully, in another 3 months or max 3-6 months, we should be able to recover the entire ECLGS claim. Got it. That's helpful. My next question is, just on the SME pool, right? On an average, how much do you see would accrete to the SME pool every quarter from now on? Before I take your next question, just to add to your first question, that of this ECLGS book of INR 580 odd crore, this quarter, we have recovered from our customers close to INR 85 crore. Even organically, that recovery from the customer is happening faster, and as the claim comes, we expect this to be clear. Sorry, I interrupted you. Can you please repeat your next question? Sure. On a normalized basis now, how much... What is the ballpark range of accretion to 1-30 DPD? I mean, any range you could suggest? See, normally with 98% collection efficiency, that accretion should not be more than 2%, right? We've always seen in our business there is an element of seasonality, where the Q1 disbursements are lower, because of the flood season, the monsoon season, the movement into the DPD bucket is slightly higher in the first two quarters, vis-a-vis the last two quarters. Particularly Q1, where the slippages are the highest and then keeps on reducing as the quarters go by. We expect the slippages number to reduce starting second quarter onwards. Okay, makes sense. My last question is, so what kind of recovery through the income statement could we expect from ARC sale, say, in FY24? As I said, for this quarter, between repayment of ARC and CGFMU, the total amount is INR 270 odd crore, between INR 2 billion to INR 2.3 billion in the ARC pool and INR 42 million in the CGFMU pool. INR 420 million, I beg your pardon. Both put together, it's about INR 270 odd crore in Q1, and as I said, Q1 is historically the weakest quarter, so that's the minimum we should look at. Okay, thanks a lot. Thank you. Thank you. Bye. Thank you. We have the next question from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah, hi, thanks for the opportunity. Firstly, if you can share a data point on the interest reversals that we had during the quarter, and how do you see therefore the margin? Because despite the reversals, this quarter margins have still held up well. How do you see that going ahead? Here again, Nitin, I'll break this portfolio into two parts. The ECLGS pool with flipped and the other than ECLGS pool. ECLGS, we had reversed the interest long back-... as and when it became 90 plus, though it was never classified as NPA as per the extent RBI guidelines, and we never accrued interest on that. The reversal on that pool was not there. For the other businesses, that reversal number, I'll just get that number and I'll tell you. Right. Secondly, while on ECLGS, you mentioned that the money is expected in 3 months, maximum 6 months, but on CGFMU, how that organization taking up to the big claims that you are placing with them, do you expect the money to come on time? Because there is one more tranche that is expected in FY25. Can there be delays here? No, we don't see a delay there other than the procedural delays. We expect that money to come in by July end or at best August for TAF, and that's the expectation we are working on. Right. Okay, sure. Thanks so much. If you can later on just share with the reversal number. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Jai Mundhra from ICICI Securities. Please go ahead. Yeah. Hi, good evening, sir. My first question is on provision. Total provisions, I think last quarter was some. I mean, what is the quantum of total provision? We have given 4,300 crore provision for EEB. What would be the total provision, including all, you know, contingent, et cetera? The total provision as on June end stands at INR 57.5 billion. It is largely unchanged, right, from last quarter, around, INR 50.8 billion something. Yeah. It's gone up, no, by INR 7 billion now. Sorry, you said INR 57 billion? 57.25. Okay. Sure. Sir, that suggests that, I mean, what I'm trying to calculate is the PCR on the non-MFI businesses also, while of course they are more secured, they have housing and commercial. Still it looks like that the PCR on the non-MFI business is relatively lower. Maybe that is the, you know, the nature is secured, so maybe that is still okay. Is that the math roughly right? No. I'll give you the broad breakup. On the SME loans, we are covered around 58% in terms of PCR. The retail is about 45%, and the housing is about 40%. Okay. Sure. Great. Second question, Sunil, is on SMA zero one two number, right? Despite I can adjust the INR 580 crore from which have gone out of SMA 2 pool. If I look at SMA 1, 2, adjusted for this INR 580 crore loan, that is fairly unchanged, right? Even the SMA 0 has actually gone up only. While the collection efficiency has marginally lower from 98.5% to 98%, the SMA pool is still unchanged, right? Any thoughts there? No. In a scenario where, you know, the collection efficiency has dropped by 50 basis points and the SMA numbers have remained flat, I think one should look at it positively, because a steady state credit cost number, we are paying 2%, so which effectively means the flow rate from current till NPA at some point of time has to be in that range of 1%-2%. Okay. Right. Okay, safe to say that all this, I mean, the entire ECLGS linked loans have already been downgraded to NPA and, you know, nothing of such kind can reoccur, right? Because it would have done at the entire portfolio level across people who are, let's say, even. Okay, so mostly all these were the only, technically 90 DPD, only that. 90 DPD, yeah. If you recollect, my total ECL disbursements, ECLGS disbursements were close to INR 4,000 crore when we did it in 2021. The outstanding pool today is less than INR 600 crore, which effectively means that I have recovered, you know, close to 90% of that customers. Right. Understood, sir. Yeah. Thank you so much, and best wishes, sir. Thank you. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Saurabh Kumar from JP Morgan. Please go ahead. Sir, just two questions. One is, you've guided for this 20% loan growth, that means nearly 30% growth from your, you know, first quarter numbers. How do you think about that, especially in the context of, you know, you said that the diversification needs to be higher? Fair to say that one should expect a very sharp pickup in growth, I mean, at least the housing finance business going ahead? I'll come back to diversification. Growth will add. Yeah, on the number side, let me tell you. We've always seen a growth in first quarter. Last year, when we ended at 10%, 11% growth, it was on the back of almost 11% either written off or failed to ARC. Adjusting for that, it was a close to 20% growth with the same situation of, you know, close to 8% drop in first quarter. I think that's on the number side, and Mr. Ghosh, if you want to add on the growth. No, what you say that if you look on that the last year, first quarter, there is an also microcredit, I think, INR 5,000 crore have been down, declined, this year also INR 5,000 crore declined. Microfinance loan, we have been disbursed in the last year, INR 8,200 crore. This year, also first quarter, we are disbursing INR 8,000 crore. In that sense, if we see that the similarity of the last year, first quarter, and this year, first quarter is the same, fine. The next point on that, this growth actually starts as coming from the 1 month before from Puja, and year, it will be like to September, it will be in this year it will come. Sometimes Puja will be like to September, it will be start in August. This is the way we have been seeing in a trend of the last 20 years. I have the confidence on that, than this year, it will be again, this quarter, it will be come to again. Another point I feel that. Whatever we have seen that the decline in April and May, June, we have been seeing that very much, very minor, 200 crore is the difference between outstanding and the decline file on that. Whatever we see that in July, it is going on that such a way, I feel that the July will be also not going down further. For that reason, I have the confidence on that, the 20% plus growth, it will be happened in the bank, not any problem. Sir, if I can just ask of this 20%, how much would you expect the microfinance business to grow by? Microfinance growth, we have been given the 17% on that. Okay, okay. The second question, sir, is effectively, if your first quarter collection efficiency is 98, I just want to know if this 2% which slips into this SMA, you know, zero, what should be the expected credit loss now of this, on this? Because this is just, I mean, on time collection, right? What should be the credit cost? Should it be around 1.6%-1.8%? No, I have been looking in a different way on that. The one quarter, which is in my portfolio, has come as a decline. That is also little bit impacted to the collection efficiency. This is also as a seasonality. That not means it will be continuing the full year and quarter on quarter, this is in line. No. If you go to that, it will be improved again from the second quarter, and it will become on the. If you say that compared to the last year, first quarter, it was a 96% collection efficiency. It has come to this, the 98% is within one year on that, 2% increase. Mm. We expected on that, this financial year, when it will be like to next financial year, it will be come to better than that%. In that sense, on the basis of quarter first, we cannot be count only the credit cost. Credit cost count the total year performance of it. I got that, effectively, if your collection efficiency is 98%, 2% is slipping forward. I just want to know, typically, what is the loss rate on this or the NPA rate on this 2%? I hope we are thinking on that, the 2% will be come on the credit cost, which is overall, not on this pool. Broadly, you know, between the SMA buckets, all right, we've seen that, you know, 30%-40% remains in the SMA. Once it crosses, the 60-day DPD, and the rest flows, you know, between 30 and 60-day DPD. That is how one should look at it. My limited point is, basically, you are basically presenting to us that the SMA pool and the NPA pool is fully covered. I just want to know from an incremental basis, if your collection efficiency remains at 98%, what should be the core microfinance credit cost? I mean, from an incremental slippage basis, that's the limited point I'm trying to get at. Then on the incremental side, it should be around 2.5%. On the EB portfolio. Because, you know, there are two things, you know, you look at 98% collection efficiency. The other number, which is also important to look at, is the full-paying customers. The full-paying customers today stands at 96%, which means there are 4% customers whose DPD is constantly going up, right? They are paying half of their installments, which means that benefit is coming into the collection efficiency, but that benefit doesn't come to the DPD. Okay. That's why we say that. Okay, got it. Thank you. Thank you. We have the next question from the line of Prakhar Agarwal from Elara Capital. Please go ahead. Yeah, hi, sir. Thanks, sir, for this. Just two questions. One is, you at the start of the call mentioned that the credit cost guidance will be 2% with a variance of 20 basis points. What makes you add this 20 basis points? Because last quarter, we said last time when we had this call, we said the credit cost will be around 2%. With the type of confidence that we are showing in our improvement on asset quality, what makes you increase the guidance on this, on variance on this credit cost? No, no, I'm not confirming that, right? We would want to keep that something in our hand for future, which is unknown. Right. Our endeavor is to keep it within 2%. Got it. No, the thought process of asking this is, we did not highlight this in the last quarter, has the something changed in one quarter for us to add this variations or? No, nothing. Nothing, nothing that one should read here, nothing. Always, we are talking about that 2% credit cost, 20 basis point up and down. Got it. Second is on the update. Any update on the core banking transition that you probably are that were to happen for other portfolio apart from housing? What is when it's going to happen and what is the sort of impact that probably see? Given what we are aspirationally targeting in terms of growth of 20% and the runway that is required, could there be some sort of impact on that front because of this core banking transition, if that happened? I request Ratan to take that question. I, Prakash, we, like we met last time, couple of weeks back, we said that we would definitely make an endeavor to make sure that in Q2 we do the migration. Given that it's a mega migration, we are actually deciding whether to go big bulk in one go, or we would like to sort of go in maybe two phases. That decision, that we'll take internally, depending on how things go. Q2, definitely we will go live for a big chunk of it, for sure. Will there be some disruption for a period of 2-3 weeks? In such a migration, there could be. The upside is significantly higher. Therefore, you may see some disturbance for maybe 2 weeks or little more than that. It will come back with even more benefit in the next few weeks. That is it from my side. Thanks a lot. Thank you. Thank you. The next question is from the line of M. B. Mahesh from Kotak Securities. Please go ahead. Hey, Sunil, just one clarification. This INR 920 crore of slippages from the EE book, that has no one-off, right? No, that has no one-off. It's not. That slippage is also quite high, right? Sorry? Even if you just look at that slippages, just the INR 920 crore coming from your core business, that itself is points to still a very high slippage number on the non-EEB book. No, I agree with your point that it's slightly higher than our liking, but that typically happens in Q1, which is, you know, for lack of better words, I would say a sluggish quarter for us. Incrementally, if you break it between April, May and June, the June month has been around, little less than INR 200 crore or around INR 200 crore. Okay. Now- If I just kind of look back, you know, Q1 FY 23, there the slippages had been much lower in the non-EEB book. This year has been worse off than even last year. No, no. Q1 is not comparable to last year. Our book was under moratorium. You know, it, half of the book came out on 1st April, and the other half came out in 1st July. Any which way, April, none of them would slip into NPA in Q1. Okay. Okay, just one other clarification. This notification had come off in April 1st. Yes. you could flag this in the previous quarter, right? In the quarterly results. Any reason why this was not kind of told at that time? That doesn't change, Mahesh. These were anyway part of the stress pool, and they continue to be the part of stress pool, right? We don't need to take any provision, but we continue to take provisions the way we used to have it. Nothing changes as far as the risk on the bank goes. You do say that it's a material item for the quarter, but given that this notification had come on April 1st, wouldn't it have been better if this was told in the previous quarter results? No, Mahesh, you see, I appreciate that. Whether we say it in the first quarter, then the question comes, if you believe it's important, then why didn't you factor it in Q4 results? Which I would not have been able to factor it in Q4 results, because my auditors would not allow it. It is applicable from this financially. If I say that this is something which you need to factor in Q4 itself, then the other side, which is the auditors, will push me to, you know, will tell me that I won't allow you to factor it. Okay. Perfect, sir. Just one question to Mr. Ghosh. These expenses continues to run quite sharply for a business which has completely slowed down. How should we see into this? No, if you see that the cost to income ratio, in that sense, if you see that, my cost to on asset remain the 3.5%. It is not change anything on that. Only that point, because of the seasonality and, because of the seasonality, my income has come down. Second thing is that I have been opened 130 branches in this quarter, and there is an also little bit cost has given. It is not the cost, it is an investment of the bank. We are, which is projected on that, we will be like to get back on that, cost-to-income ratio. Okay. Thank you. Thanks. Thank you. The next question is from the line of Darpan Shah from Haitong Securities. Please go ahead. Yeah. Hi, thanks for the opportunity. Just to continue on this, migration or, you know, system upgradation part, well, when we are saying that most of the bulk will be done in 2Q, after that, we are expecting a 20% growth in the overall book. Is that right? Yes. We'll grow it. Okay. Sir, just to again, like, you know, as per in the Q2 con call, you had mentioned growth of around 22%-25%. Why there is a dip of almost, say, 300 basis points or 500 basis points in the growth guidance? No, we are strict on that at the 20%. Always, we have talked about the 20%. Okay. Okay, fair enough. Thank you. Thank you. Thank you. The next question is from the line of Param Subramanian from Nomura. Please go ahead. Yeah. Hi, thanks for taking my question. I just wanted some clarity around this ECLGS exposure. This INR 580 crore, this is the gross exposure to all those borrowers, right? Not the just the 20% part that is guaranteed by the government, right, Sunil? No, no. Two things here. Firstly, this is the entire exposure. INR 580 crore was at the beginning of the quarter. During the quarter, we've recovered INR 85 crore. That's one. Two, ECLGS, there is nothing 25, 75. 100% of the loan is guaranteed. Okay, this entire INR 580 crore is guaranteed. Yes. That is the gross exposure to all the borrowers to whom this INR 580 crore has been given out. Is that reading is correct, right? Yes. Outstanding today is little less than INR 500. Got that. Just a bit of clarity around this again. You are saying here that, you know, you have a coverage of 86% on this, and you had this previously also. I just wanted to understand how you are activating the PCR drop quarter-on-quarter, you know, to this ECLGS part. If you could just, you know, run us through that, you know, that quarter-on-quarter PCR drop, how it's coming through because of the ECLGS? No, no. What we are saying is between CGFMU and ECLGS together, we have a coverage of 86%. Since it's a 100% guaranteed loan, ideally, the regulator says that you don't need to make provision, but between the guaranteed portion of CGFMU and ECLGS together, we have 86%. Let me tell you one more point. If you look at my Q4 FY23 presentation, we have mentioned there that 99% of my NPAs are government guarantees. You know, if I may loosely, though it is strictly called the CGTMSE or the NCGTC guarantee, are covered under these guarantees. That was the case in March 2023, and it continues to be the case even in Q1. Okay. Okay, got it. Yeah, just one more question. This is on the DPD movement. The slide on, you know, Assam, portfolio DPDs. You know, the quarter on quarter doesn't seem to show any, you know, uptick across DPDs for Assam, you know, despite the floods. Is there any impact that, you know, we could expect coming into Q2, or is this largely, you know, recognized? Yeah, that's it from me. Thanks. The Assam flood impact is not material, even if it comes in Q2. We don't see it to be materially impacting our numbers, because our collection efficiency there continues to be healthy. Okay, fair enough. All the best. Thank you so much. Yeah. Thank you. Thank you. We have the next question from the line of Abhishek Murarka from HSBC. Please go ahead. Good evening, and thanks for taking my question. The first question is around NIM and cost of deposits, right? You said in your opening comment that loan growth would be around 20, deposit growth would be higher, so LDRs would continue to go down. CASA ratios probably would end the year lower than 39.5 or, you know, your end period end number for FY23. Incrementally, how do you see NIM sustaining at this level? You gave a guidance of, you know, I think 7%+ or something. Do you think there should be NIM pressure going forward? Clearly, we've given a range of 7%-7.5%, and we absolutely not see any reason why should we change that range, right? Despite our CASA ratio dropping, and more importantly, the CASA share dropping within CASA, we've still been able to maintain this, which we believe we will be able to reverse it, I'm talking about the CASA ratio, and if that happens, there is no reason to believe that we will not be in our guided range. Sunil, just to touch upon cost of funds or cost of deposits, particularly, even if you start accreting more CASA, incrementally, the rate differential between a TD and SA, you know, SA rate is still pretty high. Your incremental funding will still come from TDs, plus there is a back book repricing. Your cost of deposits, which have gone up, I think 50, 60 basis points QOQ, what kind of trajectory do you see that taking from here, let's say, over the next 2, 3 quarters? This cost of deposits which has gone up is for two reasons. One is, you're right, the TD repricing will happen, and that impact, if I have to take March 2023 as a base, is about 68 basis points. If everything has to reprice at today's date. The large part of the impact in Q1 is because of the mix change, which we are confident that we will be able to bring back that mix. You're saying additionally, around 60, 70 basis points of repricing is yet to be done. No, no. or some part of that would have happened? No, no. Not on today's cost. I am saying on March 2023 base. On today's call, how much is left to be done? I guess that's the more important number. I don't have that number handy. I will have to recalculate that. We had done that on the March 23 base. Right. We will do that, and we can share with you offline. What is also important is the yield on advances, which we have seen going up and will continue to go up, you know, as our assets on the advances get repriced. Sure. Okay, thanks. Secondly, on your branch addition, you know, last couple of quarters, we've added quite a bit of branches. Also, we are hiring, you know, to probably man those branches. What's the plan for the rest of the year? In all, we are looking at a 1,600 branch count by the end of this financial year. I would request Shantanu Sengupta to share, you know, to take this question. Yeah. Okay. First of all, thank you for the question. We are getting closer to about, you know, 1,700 odd branches as we move forward. To your question in terms of how we are evaluating this, we are seeing good traction in each of these branches as we come up. That is the plan, and we do believe that some of these incremental branches which will come outside as well as add value to our overall, you know, overall deposit book. That's the plan that we have in the new branches. Shantanu, if I look at your, you know, let's say, employee per branch ratio, it was a, you know, north of 50. We've added a lot of branches, so that's gone to maybe 45, 46. You need. You'll probably get back to that 50 range or 50-plus range, or do you see, you know, more structural, you know, lower employee per branch kind of ratio? Yeah. Basically, if you look at the model, the way it works, the recruitment happens upfront. As we sort of move forward, we'll start, you know, seeing the results coming out of the additional resources that we're taking in. I think, to your point, you know, as we move forward, we need to have people on board to actually start generating business from these branches. That's, that's the background. We have to recruit at least two, three months ahead of opening up a branch. That's why that headcount and the cost and the number has already been factored in. Absolutely. Yeah. Understood. Got it. Got it. Thanks so much for answering my questions. Thank you and all the best. Thank you. Thank you. To ask a question, ladies and gentlemen, we request you to please press star and one. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah, hi, thanks. Just a small question on collection efficiency. Again, while Sunil you mentioned that the drop is slightly due to seasonal factors and monsoon also, but Assam and West Bengal, both have still improved. Now that, the other states are forming the majority of the EEB book, so any specific states which have contributed to this decline? If you see that the decrease in Maharashtra and Madhya Pradesh and Delhi. Okay. Sir, will these be the three states in terms of the proportion of EEB book also in that ranking? No. For us, after West Bengal, it's Bihar, followed by UP, then Assam, and then MP and Maharashtra. Right. Sure. Thank you so much, Sunil. Thank you so much. Thank you. Thank you. We have the next question from the line of Prabal from Ambit Capital. Please go ahead. Yeah, hi, thank you. Thanks for the opportunity. sir, what is the outstanding restructured book for us? Sorry to interrupt, Prabal, but the line for you is not very clear. We request you to please use the handset while you're speaking. What's the outstanding restructured book for us? Zero. Sorry? Zero. When I say zero, means none of my customers are currently under any restructuring benefits, whether it's moratorium or any change. That has come out long back, since April, September 2021. Okay. Okay. The second question is, sir, on this ECLGS loans, were these already into 90-plus DPD and because of the RBI circular, they were classified into 60 to 90 DPD? It's a government-guaranteed loan. As per the IRAC norms, then, the government-guaranteed loans cannot be classified as NPA. Since they were DPD loans, we thought that if we can't classify them as NPA, at least call them as stress pool, and we showed them as SMA-2. They were always part of our stress book for the last two years. Okay. Sir, one clarification. In the beginning, MD sir said that there was one account of INR 2,200 crore which was repaid. Can you talk about that? No, it's a loan against term deposit account. We had a large deposit from a government entity. They had taken a loan against that term deposit for a short tenure of seven days, and that got repaid in the first week of April. Sir, just curious, why was the INR 2,002 crore account classified as a retail into the retail book? It was never classified into the retail book. These are time deposits, and anything above INR 2 crore, as per our definition at a customer level, is treated as bulk. Okay. Okay, got it. Thank you. All the best. Thank you. Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead. Good evening, and thank you for the opportunity. A couple of questions for me. What will be your average cost of term deposits on the book today? Just a sec. Just a minute. About 7.1%. The marginal TD rate that you are offering today would be in about what? About 7.7%. So, I mean- That's the gap. Mm-hmm. There's a 60 basis point that I was also talking about. Yeah. I'm assuming no further deposit rate increases from here on, that is the extent of repricing on the TD side that one can expect. Yeah. In fact, the last action on the TD was a drop in the last time. Sure. Sure. No, no. Sure, sure. second, going back to the ECLGS point, right? ECLGS, my understanding is that government scheme said that if you lend 20%, to an existing SME customer, that 20% was guaranteed. let's say you had an exposure of 100, you give 20, the 20 becomes guaranteed and not the 120. now when you've labeled those assets as NPA, is it that the 20 has become NPA or the entire 120 has been labeled as NPA? No, no, in banks, we don't have that option. You know, NPAs are always at tip level. Yeah. That's, that's a clarity. You label the entire 120 as an NPA, but the guaranteed portion will only be 20 out of that 120. This is the total outstanding of those customers, guaranteed, non-guaranteed, all put together. Okay, understood. Thank you very much. Those are my questions. Thank you. We have the next question from the line of Puneet Balani from Macquarie. Please go ahead. Hi. On the total non-EEB pool, the EEB pool at INR 62 billion, so it looks like a bulk of the slippages are, you know, from SMA zero and other accounts. You were saying it's seasonal, but can you, like, comment more on this? Like, what is it exactly? Because the number appears quite big, right? The INR 9.2 billion on non-EEB book and overall increase in the forward from the forward pool. No, no. First thing, let's understand this concept of slippages, right? We have a large pool, which is part of NPA, and there is a reasonable left amount of customers who continue to pay up, though they pay part, right? Yeah. There are instances where customers are 10 DPD, 20 DPD, but they are NPAs, and they've been marked as NPA, right? On one hand, there is slippages, and on the other hand, there is recovery from slippages. Right. Right? That's one piece. If you purely talk about slippages, as I mentioned earlier, that my slippages typically in Q1 after a strong Q4 and typically seasonality, Q1 is weak, is slightly higher, and that has been the case always. You know, if you compare it with the last year's first quarter, there itself, we had a slippages of about INR 950 odd crore, right? Of the total slippages of INR 1,150 crore at a bank level. This is not something unusual. That's the seasonality which always play out. Okay. Okay, that's amazing. Thank you. We have the next question from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, thank you, sir. I just had a clarification. Basically, before April 2023, it was your call where to classify these loans, and as a prudent measure, you classified them as SMA 2. It's fair to assume that probably in December 2022 also, these were part of SMA 2 only, correct? Yes. Okay. Okay, thanks. Thank you. Thank you. Thank you. Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you, ladies and gentlemen. Thank you for the patient hearing and participation. Appreciate it. Thank you. Thank you. Thank you. On behalf of Bandhan Bank, that concludes this conference. Thank you for joining us. You may now disconnect your lines.