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Edited Transcript of CANBK.NSE earnings conference call or presentation 7-Nov-19 11:00am GMT

Q2 2020 Canara Bank Ltd Earnings Call

Bangalore Nov 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Canara Bank Ltd earnings conference call or presentation Thursday, November 7, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* R. A. Sankara Narayanan

Canara Bank - MD, CEO & Director

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Conference Call Participants

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* Anand A. Laddha

HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer

* Anirvan Sarkar

* Bhavik Shah

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Dixit Doshi

* Harshvardhan Agrawal

Infina Finance Private Limited - Investment Analyst

* Jai Mundhra

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Mahrukh Adajania

IDFC Securities Limited, Research Division - Director

* Mona Khetan

Reliance Securities Limited, Research Division - Senior Analyst of Banking

* Praful Kumar

Pinpoint Asset Management Limited - Portfolio Manager

* Sushil Choksey

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Presentation

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Unidentified Analyst, [1]

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Very good evening to all of you. So today, we have with us the entire management of Canara Bank, represented by Mr. Sankara Narayanan, who is the MD. Then we have Mr. Rao and Mr. Debashish Mukherjee who are the EDs of the company, along with the senior management of the -- general managers of the bank.

So without any -- spending any more time, I will straight over hand over to Mr. Narayanan for his opening remarks.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [2]

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Good evening, everyone. Pleasure having you all in conference call. Canara Bank Q2 results were approved by the Board yesterday. And total business as on September 30, it's up by 7.71% year-on-year. It's INR 10,55,000 crores. Gross deposits up by 10%. It is at INR 6,09,000 crores. Gross advances up by 4.22% at INR 4,46,000 crores. Net profit year-on-year is up by 21.89% to INR 365 crores. Operating profit is up by 9.37% at INR 2,545 crores. Gross NPA both on an amount as well as on percentage, it is down, and it is at 8.68%. Net NPA is down from 6.54% to 5.15% as on September. Provision coverage ratio, it was at 61% in last year. And currently, it is at 70.11%. Capital adequacy after government infuse is INR 6,000 plus crores in September. It has improved to 13.99%.

And with this -- the overall parameters, there -- it is on profitability, growth, NPA reduction, provision, capital in all the segments, bank has done reasonably very well and that we are confident to maintain the same trend for December and the current year and going forward.

And I must also update that the subsidiaries, 8 plus 2, what we have, they are also doing pretty well. The combined profitability also was declared yesterday, and all the subsidiaries are doing reasonably very well, whether it is insurance or mutual fund or housing finance, or securities and the financial services, factoring we are getting value-added from them. And the -- other than the proposed sale of Canara housing finance, we have no intent to have a look on any other subsidiary for noncore assets. As on date, the capital is comfortable and the sale of -- the proposal to sell the CanFin Homes is also in advanced stage, and we are confident it should be going through smoothly in a month or so.

So I will leave the floor for question and answers on any issues related. Or if you have anything specific, more details if you want, we are happy to share with you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Praful Kumar from Pinpoint Asset Management Limited.

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Praful Kumar, Pinpoint Asset Management Limited - Portfolio Manager [2]

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Just 2 small questions. First, have you used any RBI dispensation for the MSME accounts, SMA accounts? And if yes, how much is the quantum?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [3]

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See RBI has given that onetime restructuring for the MSME accounts. We have identified total about 1 lakh accounts, which are due for restructuring on which the scheme is available till March 20. As on date, whatever eligible accounts are there the bank is addressing them. And as far as we are concerned, the total amount restructured so far is INR 2,097 crores, [total] is INR 16,854 crores.

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Praful Kumar, Pinpoint Asset Management Limited - Portfolio Manager [4]

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Total is INR 16,854 crores. Okay.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [5]

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Eligible as on 1st January 2019. As on 30 September, we have done INR 2,097 crores. And the remaining proposals on merits and liability, it will be considered.

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Praful Kumar, Pinpoint Asset Management Limited - Portfolio Manager [6]

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Okay, okay. And secondly, sir, what's your SMA-2 accounts? Total quantum SMA-2?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [7]

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SMA-2, I will update on -- just a second. Over INR 5 crores. I have 178 accounts amounting to INR 7,900 crores.

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Praful Kumar, Pinpoint Asset Management Limited - Portfolio Manager [8]

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INR 7,900 crores?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [9]

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Yes.

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Praful Kumar, Pinpoint Asset Management Limited - Portfolio Manager [10]

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And finally, sir, exposure to HFCs, like Dewan and Reliance. Can you give those exposures and whether they're already NPA?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [11]

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Dewan is not at NPA in any bank. It will be uniformly stated as NPA going forward, depending on the record of repayments. Our total exposures in our NBFC, I have given INR 51,830 crores. Under HFC, I have a total exposure of INR 20,510 crores. At private, INR 20,159 crores and public, INR 11,161 crores. We have INR 248 crores, it pertains to IL&FS. DHFL, we have a total exposure of INR 2,120 crores. And the discussions are on. Today also there is a meeting in Bombay (sic) [Mumbai] IBA lenders, and we're looking for the outcome is for restructuring or for recoveries whatever way it is, and we are confident that some resolution should come through.

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Operator [12]

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Next question is from the line of Dixit Doshi from Whitestone Financial Advisors.

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Dixit Doshi, [13]

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My question is related to plan to sell stake in CanFin Homes. So I understand that the last date for bidding was today. So are we again going to postpone it? Or it's done?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [14]

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As of now, we are going ahead with our plans. There is no question of extension or cancellation.

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Dixit Doshi, [15]

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Okay. Today, it was last day. So it was almost done?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [16]

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Yes, it should be. Because the successful bidder will be announced on 14th. And second thing, of course, the market is a listed company. The prices are very transparent. And depending on the bid and our interest if it is up to the level what we expect, we will definitely consider the best bid. If it is not up to the standards, we will take a call depending on the Board decision.

As of now, we are keen to give to the best bidder at the price which is suitable for the bank as well as the majority stake what we have.

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Dixit Doshi, [17]

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But whatever we have seen over the last 1 year in terms of the liquidity and the other issues regarding HFCs and NBFCs, are we confident of getting the bids for this company?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [18]

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See simple thing is, we leave it to the market. If they are interested in bidding, we are there. It is a open market. There is no compulsion for anyone to come for bidding or to save it. It is absolutely a transparent process, and it has a value. Till last 6 months, they have recorded a net profit of INR 180 crores, and it is one of the strongest NBFC, HFC operating in India. So I'm not yet having a feel of the benefits or the positive of my subsidiary. But if there is a genuine and a decent investor, we will be happy to consider it. Otherwise, we are too happy to continue in our books also. Nothing -- there is no compulsion for us to realize the gains and survive as a bank.

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Operator [19]

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(Operator Instructions) Next question is from the line of Bhavik Shah B&K Securities Private Limited.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [20]

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So firstly, sir, we had a slippage of INR 26 billion -- INR 2,600 crores. Sir, as in -- can you just break it up between agri, MSME, corporate slippages?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [21]

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Can you kindly repeat the question? I have missed it.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [22]

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Okay. Sir, can I get a breakup of slippages between corporate, MSME, agri?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [23]

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See in Q2, MSME, the slippages were INR 800 -- slippage is INR 851 crores. Agriculture, it is INR 705 crores. Other priority sector, INR 64 crores. Total priority sector is INR 1,620 crores. And industry is INR 170 crores. Other nonpriority sector INR 201 crores and total nonpriority sector is INR 371 crores. And total domestic slippages is INR 1,991 crores, and balance INR 600 crores is overseas wherever account as per regulatory norms, which has to be classified as NPA, it has been done. So total amount slippages during current year -- current quarter is INR 2,601 crores.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [24]

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Yes. Okay. And sir, corporate would be? Sorry, I missed it.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [25]

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Corporate is INR 170 crores, 1-7-0.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [26]

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And sir, which are -- so these accounts are -- is there any lumpy accounts or all they are granular?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [27]

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On INR 170 crores, there is no lumpy at all. It must be very small accounts only.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [28]

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Okay. And sir, can you share the exposure to the accounts that ICA has been signed?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [29]

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ICA has been -- we have signed for 43 accounts amounting to INR 21,000 crores.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [30]

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And sir, how much of this would be standard?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [31]

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INR 7,000 crores is standard, remaining things are NPA. INR 14,000 crores is NPA, INR 7,000 crores is standard.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [32]

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Okay. And sir, you haven't disclosed standard restructured S4A, 5:25?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [33]

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See, these are pretty old -- there is no change at all compared to the last quarters, and we found it has no market. There is no addition. Whatever is there last time, it continues. And that is the reason. As it is not going to make any material change or impact, we have not done that slide this time. Otherwise, if you want the statistics, we have it ready. Once again, I will update you. On S4A, we have 8 accounts, it's amount is INR 1,400 crores. Standard are INR 700 crores, NPA is INR 700 crores. On 5:25, we did for 15 accounts amounting to INR 3,300 crores, standard is INR 2,000 crores, NPA is INR 1,200 crores. On 5:25, 11 accounts amounting to INR 3,330 crores. Standard is INR 2,786 crores. And NPA is INR 545 crores. These are all old record. There is no change. That means whatever accounts are standard, it remains standard.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [34]

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Okay. And sir, do we have any residual standard exposure to RADAG group?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [35]

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Which group?

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [36]

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Reliance -- RADAG. Anil Dhirubhai Ambani Group.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [37]

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We have some accounts, but the issue is, as on date whatever account has to be classified as NPA, we have done it. And the resolutions plan also in progress as far as this group is concerned in some of the accounts. We have total exposure of 9 accounts amounting to -- total liability to the group is INR 1,870 crores, and whichever accounts, there are 1, 2, 3 -- 3 accounts are standard, remaining 6 are NPA, where appropriate provisions have been made.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [38]

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Okay. And sir, our exposure to Indiabulls Group would be?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [39]

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I -- the account is standard and performing. It is better that we don't go into the details of all the accounts until otherwise they have any material impact on my balance sheet.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [40]

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Sure, sir. Sir, only 1 last question, sir.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [41]

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That is, I avoid answering on good accounts which are performing.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [42]

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We understand, sir.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [43]

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Because it will have a negative impact, not only for the bank but also for the company.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [44]

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Yes, sir. Sir...

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Operator [45]

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Sorry to cut your, Mr. Shah. I would request you to come back in the question queue for a follow-up question. (Operator Instructions) Next question is from the line of Anirvan Sarkar from Principal Mutual Funds.

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Anirvan Sarkar, [46]

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Just 1 or 2 questions here. So it's very encouraging to see the slippages have trended downwards for the last few quarters. Just trying to understand why our margins are still on a decline? Because now we are in the lower -- I mean, the lower part of 2% plus. So how should we think of this going ahead? And what could be the trajectory going ahead. Could you put some light on that?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [47]

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Last time, the slippages were at 0.63%. I'm talking about the quarter, and I'm confident with better credit monitoring and also most of the accounts, which need to be classified as NPA, our bank has done it, classified it as substandard or NPA or whichever way it is and monitoring it also for recovery or resolutions. On other accounts, the monitoring inspections and reviews have been timely. And as things stand, we are very confident that there are no surprises other than that...

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Anirvan Sarkar, [48]

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Sir, my question was on net interest margin. So I was...

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [49]

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Okay. You are talking about NIM?

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Anirvan Sarkar, [50]

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Yes. Sir, when the slippages are low, ideally with your interest reversal is coming down, the margins should have improved, but that's not happening. So I just wanted to know.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [51]

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Global NIM is 2.24%, 2.29% this time. And we have a balance sheet of about INR 60,000 crores in overseas. And definitely, the spreads over there is quite low, meaning buyers credit or export credit. What has been extended is at a rate of LIBOR plus 50 to 75. And that has really impacting the overall NIM of the bank, but with current situations, we are very confident for December, we will be moving towards 2.4% or 2.45%. And definitely, with INR 30,000 crores worth of proposal spending for disbursement stage at various branches, we are confident the NIM as well as the profitability will improve further.

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Anirvan Sarkar, [52]

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Are we planning to bring down the international book or improve margins there or how is it...

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [53]

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Improving the margins. We have few proposals which will give us a return of LIBOR plus 300 to 350.

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Anirvan Sarkar, [54]

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Okay. I see. And if you could throw some light on the pending resolution cases of Essar and Bhushan Power. You're quite close, but not yet there.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [55]

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But it is uniform for all the banks. We are also waiting. I think September 15, some Supreme Court decision is there on. Hearing is over, decision is expected from Supreme Court on Essar. Bhushan, it is going through that Enforcement Directorate issue. Collectively, I think, the leaders are following up with respective departments and litigation. We are confident some resolution should come. That's the reason most of the banks have stopped talking about NCLT resolutions.

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Operator [56]

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Next question is from the line of Mahrukh Adajania from IDFC Securities.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [57]

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Sir, I have a couple of questions. The first one on DHFL. So what's the exact status on DHFL being classified as fraud? And has there been any precedence of RBI allowing banks to classify only a small portion of the full account as drawn? Because usually when RBI ask banks to classify the whole account that gets classified as drawn.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [58]

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In this one, still, the meeting is on for resolutions at central level, State Bank, Bank of Baroda and other banks are trying their best as well as we are also supporting rightful resolutions and recovery process in these accounts. Let's wait for that decision before looking for a fraud. And if a fraud is to be declared, then we have to see whether it is part amount or full amount. So far we are concerned, any fraud it is the total account. So part recognition so far in any account, whether it is secured or unsecured, that type of dispensation has not been so for thought of, but we will be happy to hear from the consortium or the committee of banks. Whatever the group does, we will follow that.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [59]

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Okay. But the RBI does not mandate, is it?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [60]

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As far -- we don't have any mandate as far as fraud are part or full. There is no such update either from consortium bank. So as of now, the account is standard with all the banks, number one. Number two, based on record of recovery, it may slip to NPA in current quarter, "may." And if it slips the recovery or resolutions will be done collectively.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [61]

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Okay, sir. Sir, and the question is that in terms of the standard ICA accounts, could you name a few? Like, there are 7 standard accounts.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [62]

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One second. Normally, we don't deal on standard accounts, where ICA has been signed, but still, let me see whether it warrants declaration. Only 1 second.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [63]

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Yes, sir.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [64]

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Okay. See the -- in ICA, this airline is there, which is performing.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [65]

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Which one, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [66]

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Air India is there. And...

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [67]

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Sir, which one is the first one, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [68]

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Air India.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [69]

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Okay.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [70]

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Bajaj Hindusthan Sugar; HCC, Hindustan Construction Limited -- HCL, sorry; then Teesta Urja Limited; Gayatri Projects; and GMR and Dewan.

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Mahrukh Adajania, IDFC Securities Limited, Research Division - Director [71]

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GMR, which one, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [72]

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GMR Kamalanga Energy. And DHFL.

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Operator [73]

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(Operator Instructions) Next question is from the line of Harsh Agrawal from Infina Finance.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [74]

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Sir, just wanted to confirm, you mentioned our exposure to ADAG group is at around INR 1,800 crores. So this is the amount which is an NPA or which is standard as of now?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [75]

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See, I told you, in ADAG, we have 9 accounts on which 3 accounts are standard, 5 accounts are NPA. Sorry, 6 accounts are NPA.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [76]

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Right. So if you can give the exposure to the standard accounts?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [77]

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Standard accounts total exposure is INR 900 crores. So it is 50-50.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [78]

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Sure. And sir, on DHFL, just wanted to understand, is this account being classified as SMA-2 currently? Because if it might fall into NPA during the quarter so it must be in the SMA book as of now?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [79]

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SMA-2 it is there.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [80]

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Okay. So ex of Dewan, our SMA-2 book is only at INR 5,800 crores?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [81]

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As on date.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [82]

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Sorry?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [83]

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As on date.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [84]

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Yes, yes. So I just wanted to understand, like, you said our SMA book is INR 7,900 crores...

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [85]

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Yes, yes. This INR 2,100 crores will get knocked off if it becomes NPA.

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [86]

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Okay. And sir, if you could just help me with the SMA-2 number for the last quarter.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [87]

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Last quarter, 1 second. Can I check and update?

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Harshvardhan Agrawal, Infina Finance Private Limited - Investment Analyst [88]

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Yes. Sure, sir. Sure.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [89]

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I now -- I have only September number. I'm not given the position of June.

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Operator [90]

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Next question is from the line of Anand Laddha from HDFC Mutual Fund.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [91]

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Sir, on the ADAG group exposure, you just mentioned INR 900 crores is standard exposure.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [92]

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Yes.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [93]

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And sir, there has been no ICA signed in the ADAG group, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [94]

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So these are all specific projects. These are all performing projects in road and otherwise, so.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [95]

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Okay. Sir, we don't have any exposure to the financial entity like Reliance Capital, Reliance Home Finance, Reliance Commercial Finance?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [96]

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We have Reliance Commercial Finance around small. But the main thing is the other accounts, which are substandard with, other banks are treated the same way. There's -- the NPA is INR 900 crores, performing is INR 900 crores.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [97]

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And on just performing accounts, INR 900 crores, Reliance commercial is part of that?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [98]

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Yes, it is part of that. Small amount is there.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [99]

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Okay. And sir, if you can give us again, on the margin side, sir, if you can break up your margin between domestic NIM and international NIM. How much is your domestic NIM? And where do you see this NIM, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [100]

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You have international NIM ready with you? Can you give us some time, we will come back to this one with exact details and update before concluding the remarks.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [101]

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Okay. Sir, if you can give some outlook on likely slippages in second half, how do you see that? And also outlook on provisioning costs for us?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [102]

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See on SMA-2, there are about INR 7,000 plus crores are there on which I do not see more than 2 accounts, which are causing concern. If at all, DHFL and one more small account is there. And we are very confident that the total amount for half year will not be exceeding more than INR 2,400 crores in total. There are about -- major accounts. I'm talking about INR 50 crores and above. There are about -- 8 accounts are there. On 8 accounts, we are confident other than 2 accounts amounting to INR 2,300 crores. We do not see any issue on balance accounts, which include SME balances.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [103]

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Perfect. Sir, this quarter, if I say INR 2,600 crores is overall slippages. Of that only INR 200 crores odd was the corporate slippages?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [104]

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Yes, sir.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [105]

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And how much was international slippages, sir, in that?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [106]

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International was around INR 600 crores.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [107]

--------------------------------------------------------------------------------

Okay. So if I had to remove international, that is also corporate. So overall, INR 800 crores was the corporate slippages, 1,800 crores was the retail SME and agri slippages?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [108]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [109]

--------------------------------------------------------------------------------

Sir, can you give some color like this INR 1,800 crores of ramp slippages would that -- will they continue or they would also see some decline?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [110]

--------------------------------------------------------------------------------

It will definitely see a decline for 2 reasons, the monsoon has been good, and all are dependent on the economic conditions also, if GDP improves. And we look at things optimistically and positively. I'm confident the slippages will not be more than what we have done for current quarter as far as the SME and others have concerned. And we are hopeful that upgradations, recoveries also will be robust as it has happened during the last 2 quarters. We are very confident to contain the net slippages to, this time it was 0.63%. It will be the only surprise or higher amount is DHFL, if at all if it happens. The remaining things will be much lower than that.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [111]

--------------------------------------------------------------------------------

Okay. Sir, are we carrying any contingent provision on DHFL, sir?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [112]

--------------------------------------------------------------------------------

Not -- we have not done, because there is no point in providing upfront. But for an information, this quarter, we have provided around close to INR 300 crores -- we have provided INR 300 crores as ad hoc provision for presuming the aging provisions and other things for the next few quarters. Otherwise, my net profit should have been close to INR 700 crores this quarter. So this is only deliberately done so that the pressure on next quarters will be bare minimum.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [113]

--------------------------------------------------------------------------------

Okay. And sir, on the DHFL, the whole exposure is through the loan book, and it's not through the investment. In the sense, it is -- the exposure is not through the bond book?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [114]

--------------------------------------------------------------------------------

It is only loan book. It is -- as far as we are concerned, we have taken the entire loan book, but there is a small -- small book also is there for INR 280 crores, which is not taken in that. Both put together, the total exposure is INR 2,400 crores.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [115]

--------------------------------------------------------------------------------

INR 2,300 crores, sir?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [116]

--------------------------------------------------------------------------------

INR 280 crores is the bond book.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [117]

--------------------------------------------------------------------------------

Okay. INR 280 crores plus INR 2,020 crores is the direct exposure?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [118]

--------------------------------------------------------------------------------

INR 2,100 crores is the direct exposure.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [119]

--------------------------------------------------------------------------------

Okay. Okay. And on the bond book, sir, we could have given -- done some mark-to-market sir? How much provision we could have done?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [120]

--------------------------------------------------------------------------------

It is done. It is -- whatever is the market price, the total provision has been accounted there.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [121]

--------------------------------------------------------------------------------

Okay. And sir lastly, on the employee cost side, sir...

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [122]

--------------------------------------------------------------------------------

Which were -- somebody asked about domestic NIM. Our domestic NIM as on September is 2.45%.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [123]

--------------------------------------------------------------------------------

Okay. And this you expect to go to 2.65% in the second half?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [124]

--------------------------------------------------------------------------------

We are hoping that it should improve with the increase in business as well as the increase in profitability also.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [125]

--------------------------------------------------------------------------------

Okay. Sir, on the employee cost side. So do we do -- on the pension side, sir, at what rate discounted we are using it? Do we do extra valuation every quarter?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [126]

--------------------------------------------------------------------------------

Once in a year actually calculation is there, but we follow the stringent table, 2006, '07, of LAC table, which is more stringent also. And the -- whatever provisions required for terminal benefits have been perfectly done.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [127]

--------------------------------------------------------------------------------

Okay. But sir, compared to last year, the bond yield has come down to G-Sec yield. So do you think Q4 would have a large provisioning because of that?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [128]

--------------------------------------------------------------------------------

No. We are including the staff cost that is arrears and all that. We are providing and our bond -- average bond yield is also around 7.4% as on September, and I'm confident there won't be any fresh requirements as far as the PF and pensions are concerned. They are well invested, and there won't be any surprises as far as the sharp provisioning is concerned.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [129]

--------------------------------------------------------------------------------

Okay. And sir lastly, if you can give some color on power resolution. Do you foresee some resolution on the power sector? And for us, which are the accounts which are expected to see some resolution?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [130]

--------------------------------------------------------------------------------

It is uniform for all the banks, whether it is State Bank or any account which is expected by...

--------------------------------------------------------------------------------

Unidentified Company Representative, [131]

--------------------------------------------------------------------------------

Prayagraj Power.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [132]

--------------------------------------------------------------------------------

Prayagraj is expected to be...

--------------------------------------------------------------------------------

Unidentified Company Representative, [133]

--------------------------------------------------------------------------------

NSL India.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [134]

--------------------------------------------------------------------------------

NSL.

--------------------------------------------------------------------------------

Unidentified Company Representative, [135]

--------------------------------------------------------------------------------

(foreign language) RattanIndia.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [136]

--------------------------------------------------------------------------------

RattanIndia. RattanIndia and Prayagraj, they are expected to be resolved, but we keep our fingers crossed because these resolutions are subject to the entire consortium of almost all banks that are involved in this.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [137]

--------------------------------------------------------------------------------

Sir, what could be our exposure to these 2 power exposure, Prayagraj and RattanIndia?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [138]

--------------------------------------------------------------------------------

INR 600 crores.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [139]

--------------------------------------------------------------------------------

These 2 taken together?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [140]

--------------------------------------------------------------------------------

Taken together.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [141]

--------------------------------------------------------------------------------

Okay. And sir, we also heard about Coastal Energen that is also getting -- got an offer for onetime resolution. Do you have any exposure to that?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [142]

--------------------------------------------------------------------------------

We have exposure, and we are considering it. We are not accounting it in our recoveries or resolutions as far as the projections are concerned. This quarter, something should come up.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [143]

--------------------------------------------------------------------------------

Okay. So what sort of exposure to Coastal Energen, sir?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [144]

--------------------------------------------------------------------------------

INR 180 crores.

--------------------------------------------------------------------------------

Operator [145]

--------------------------------------------------------------------------------

Next question is from the line of Jai Mundhra from B&K Securities Private Limited.

--------------------------------------------------------------------------------

Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [146]

--------------------------------------------------------------------------------

Sir, just 2 questions. One is on your staff cost. Now what is the kind of wage revision hike that you're assuming when you meet this bipartite pension hike?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [147]

--------------------------------------------------------------------------------

See IBA has given last offer at 10%. It may -- they are indicating slightly higher also. But as far as we are concerned, we have put 11% for calculation. And incidentally, before Diwali, we have paid that one month salary across. So provisions are also there. But the casting, we are very confident it will be close to what we have provided and additional 1%, 2% will not be a big hit as far as the bank is concerned.

--------------------------------------------------------------------------------

Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [148]

--------------------------------------------------------------------------------

Correct. And what did you say, sir? You have provided 1 month salary to...

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [149]

--------------------------------------------------------------------------------

We have paid one month salary of arrears.

--------------------------------------------------------------------------------

Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [150]

--------------------------------------------------------------------------------

Okay.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [151]

--------------------------------------------------------------------------------

All the banks, not only Canara Bank. All the banks, which -- provisions have been made. Ad hoc payment of arrears have been paid as 1 month salary. That also outflow has happened during Diwali time.

--------------------------------------------------------------------------------

Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [152]

--------------------------------------------------------------------------------

Understood. And secondly, sir, this -- I missed in your opening remarks, you mentioned that this MSME, which was eligible for restructuring that was somewhere around INR 16,000 crores number, right? Was that number correct or something else?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [153]

--------------------------------------------------------------------------------

Yes, INR 16,000 crores.

--------------------------------------------------------------------------------

Unidentified Company Representative, [154]

--------------------------------------------------------------------------------

1-6.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [155]

--------------------------------------------------------------------------------

1-6. 1-6.

--------------------------------------------------------------------------------

Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [156]

--------------------------------------------------------------------------------

Yes, INR 16,000 crores. Okay. Second, sir, and the last question is, sir, if you can share SMA-1 number also? And how much of that is corporate? I mean, just to get a sense.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [157]

--------------------------------------------------------------------------------

Only 1 second. SMA-1 above INR 5 crores. There are 131 accounts amounting to INR 3,564 crores.

--------------------------------------------------------------------------------

Operator [158]

--------------------------------------------------------------------------------

Next question is from the line of Mona Khetan from Reliance Securities.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [159]

--------------------------------------------------------------------------------

So you mentioned of your SMA-2 exposure of INR 7,900 crores and the accounts there, ICA has been signed, the standard accounts at about INR 7,000 crores. What would be the overlap between these 2? I understand there's one DHFL account. But apart from these, are there any other overlaps between these 2?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [160]

--------------------------------------------------------------------------------

See INR 7,900 crores, if you remove DHFL of INR 2,100 crores, the balance is INR 5,800 crores and not many accounts have gone to ICA. I have given the list of ICA accounts also where 7 accounts, I have given you the details. And that includes Air India also, where the amount is INR 900 crores.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [161]

--------------------------------------------------------------------------------

Right. So out of these 7 accounts, are there any of these that are in SMA-2 as well?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [162]

--------------------------------------------------------------------------------

Some -- 4 accounts are under SMA-2 out of 7.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [163]

--------------------------------------------------------------------------------

Okay.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [164]

--------------------------------------------------------------------------------

So total amount of all 5 accounts, including DHFL is about INR 3,800 crores.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [165]

--------------------------------------------------------------------------------

So INR 3,800 crores is the overlap. That is the 4 accounts that are under SMA-2 as well?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [166]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [167]

--------------------------------------------------------------------------------

Okay. And on your Essar thing that you hold, what would be the provisioning that you hold?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [168]

--------------------------------------------------------------------------------

Which one?

--------------------------------------------------------------------------------

Unidentified Company Representative, [169]

--------------------------------------------------------------------------------

Essar Steel.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [170]

--------------------------------------------------------------------------------

Essar Steel.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [171]

--------------------------------------------------------------------------------

100%.

--------------------------------------------------------------------------------

Unidentified Company Representative, [172]

--------------------------------------------------------------------------------

It is 50-50.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [173]

--------------------------------------------------------------------------------

Which one?

--------------------------------------------------------------------------------

Unidentified Company Representative, [174]

--------------------------------------------------------------------------------

Essar.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [175]

--------------------------------------------------------------------------------

Essar Steel?

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [176]

--------------------------------------------------------------------------------

Essar Steel.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [177]

--------------------------------------------------------------------------------

We have 50% because we are -- that resolution process is almost -- we thought it is sealed and signed. So depending on the amount, what is expected process, the required provisions we have provided. But if you take NCLT 1 and 2, both put together, the provision -- outstanding, the provision is 80%.

--------------------------------------------------------------------------------

Mona Khetan, Reliance Securities Limited, Research Division - Senior Analyst of Banking [178]

--------------------------------------------------------------------------------

Sir, and how about Bhushan Power? Or what's our provisioning there?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [179]

--------------------------------------------------------------------------------

100%.

--------------------------------------------------------------------------------

Operator [180]

--------------------------------------------------------------------------------

(Operator Instructions) Next question is from the line of Bhavik Shah from B&K Securities Private Limited.

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Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [181]

--------------------------------------------------------------------------------

Sir, just a data-keeping question, sir. Sir, what would be a standard restructured book?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [182]

--------------------------------------------------------------------------------

That is that old one INR 5,000 crores.

--------------------------------------------------------------------------------

Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [183]

--------------------------------------------------------------------------------

Okay. And sir, is the capital raise that we have now, are we actually planning to use it? Do we expect to take our CCR up or we wait for the model?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [184]

--------------------------------------------------------------------------------

See 2 things. One is on capital raise, it will be used for growth capital. As far as the regulatory is concerned, we are absolutely above requirement, 14% almost. And on PCR, 70% is the current level. And presuming there is no separators or slippages as far as -- other than the 2 accounts, what we discussed for INR 2,500 crores. And if some upgradation comes, we are hopeful to maintain -- we are expecting somewhere towards 73% to 75% PCR on total NPA to provisions by March.

--------------------------------------------------------------------------------

Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [185]

--------------------------------------------------------------------------------

Okay. And sir, and slippages guidance would be intact? We guided like INR 10,000 crores last quarter.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [186]

--------------------------------------------------------------------------------

See, we had equal number of upgradations and recoveries also. And I'm very confident that we will maintain the same plan to ensure that we keep the asset quality, both in numbers as well as in percentages absolutely under control.

--------------------------------------------------------------------------------

Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [187]

--------------------------------------------------------------------------------

Okay. And sir, this quarter CAR deposits have grown very sharply. Sir, any specific thing there?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [188]

--------------------------------------------------------------------------------

You are talking about CASA?

--------------------------------------------------------------------------------

Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [189]

--------------------------------------------------------------------------------

Yes, sir. Specifically, current account.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [190]

--------------------------------------------------------------------------------

The amount has really grown up from INR 170 cores to INR 185 crores, and we're confident we'll maintain the same level. But when compared to our peer banks, 30% on overall basis is -- it has room for improvement. So we are -- our main thrust when we talk to branches is improvement in CASA, retail quality, retail credit growth, credit monitoring and recovery. This is the order of update we regularly give to our branches, and we are confident we'll maintain the trend across.

--------------------------------------------------------------------------------

Bhavik Shah, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [191]

--------------------------------------------------------------------------------

Okay, so. And sir my last question, sir. Sir, this quarter, our yield on funds have dipped while our yield on advances have grown. So the yield on advances were up like 18 to 15 basis points, while yield on funds were down. Sir, any disconnect? Why was there a disconnect? Is it because of investments?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [192]

--------------------------------------------------------------------------------

Yield on advances is 8.34%. This is partly due to repricing of some of the advances, depending on the risk perception as well as the price what they are paying to other banks, number one. Yield on funds, there were some profit booking in treasury. It is a combination of both. So it is somewhere around 7.03%. And I think compared to the level of profit booked and interest earned, I think it is fair enough.

--------------------------------------------------------------------------------

Operator [193]

--------------------------------------------------------------------------------

(Operator Instructions) Next question is from the line of Anand Laddha from HDFC.

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Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [194]

--------------------------------------------------------------------------------

Sir, just on the Essar Steel exposure, sir. What could be your exposure to Essar Steel and Bhushan Power, sir?

--------------------------------------------------------------------------------

Unidentified Company Representative, [195]

--------------------------------------------------------------------------------

Essar Steel is INR 3,400 crores. Bhushan INR 1,800 crores -- INR 1,900 crores.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [196]

--------------------------------------------------------------------------------

Okay. Essar Steel INR 3,400 crores.

--------------------------------------------------------------------------------

Unidentified Company Representative, [197]

--------------------------------------------------------------------------------

Bhushan Power INR 1,900 crores.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [198]

--------------------------------------------------------------------------------

Bhushan Power is INR 1,900 crores.

--------------------------------------------------------------------------------

Anand A. Laddha, HDFC Asset Management Company Limited - Manager of Equities, Fund Manager of Foreign Securities, Senior Equity Analyst and Equity Dealer [199]

--------------------------------------------------------------------------------

Okay. And on the CanFin Homes stake sale. Sir, by when do you think the transaction would get complete?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [200]

--------------------------------------------------------------------------------

See today is the last date for finding bid. That announcements have been given. 14th is the -- 14th of November is the date on which we are expected to declare the winner. And depending on the type of bid what it comes. Because there is -- competition committee is also there in case outside bidders are there. If the same -- the present investors come for bidding, I don't have the problem of going to SEBI and announcing for open offers and other things. So depending on that, we are expecting the deal to conclude. In case -- the price is reasonable. Again, I make this as a rider. If the bid is good enough on 14th, if we accept then it should be maximum one month's time with regulatory approvals it should go through.

--------------------------------------------------------------------------------

Operator [201]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Sushil Choksey from Indus Equity Advisors.

--------------------------------------------------------------------------------

Sushil Choksey, [202]

--------------------------------------------------------------------------------

First is, how much is our MUDRA outstanding, sir?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [203]

--------------------------------------------------------------------------------

One second, Chokseyji, and thanks for organizing and coordinating. And under MUDRA, total amount is INR 11,748 crores. It includes [RR] DiYA. As far as bank is concerned, it is -- total amount is INR 8,000 crores -- INR 8,500 crores.

--------------------------------------------------------------------------------

Sushil Choksey, [204]

--------------------------------------------------------------------------------

And what is the nonperforming number in this?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [205]

--------------------------------------------------------------------------------

NPA under MUDRA is -- total under MUDRA it is INR 1,151 crores. That is roughly around 11%.

--------------------------------------------------------------------------------

Sushil Choksey, [206]

--------------------------------------------------------------------------------

Sir, the next question is any updates on merger. I understand the valuation and other thing is still far off, but any points which you would highlight in the call for the merger?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [207]

--------------------------------------------------------------------------------

Merger, it is approved and it is -- suggestions from government, which has been adopted by both the banks book and RFP has been done and shortlisting are being done for financial due diligence, legal due diligence, fairness and valuation. We expect the process of -- they may be starting the process by next week and complete by second week December or maximum third week December. Then the Board will prepare a draft scheme of amalgamation. And with swap price, we'll indicate to DFS for getting appropriate regulatory approval because it has to go to RBI or alternate mechanism and Cabinet approval, which is -- which may take maximum 1 week's time. That is, we expect government notification by before first week January, as it happened in case of Bank of Baroda, Dena and Vijaya amalgamation. And the likely date for our amalgamation will be 1st April as it has been done earlier. So the process is going on smoothly across all 5 banks. And as far as we are concerned, it is -- both are in same region. And having gone through this process in earlier bank, I'm very confident we will manage it much better and much smoother, both our integration as well as the business parameters, whatever is concerned.

--------------------------------------------------------------------------------

Sushil Choksey, [208]

--------------------------------------------------------------------------------

Is it too early to ask you on cost savings because you are in the same town and lot of interlap might be happening between Canara and Syndicate?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [209]

--------------------------------------------------------------------------------

See, I'm very confident the immediate savings will be on the administrative offices across. The regional office, circle office and corporate office, if they can use the staff effectively across, then that itself is a great cost savings to start with. Then later on, if it is required only if 2 branches in the same streets or building, if they are doing excellent business, there is no point in immediately looking for any sort of merger or closure. We are not thinking on those lines as far as the branches are concerned to start with. We are looking at seamless absorption of the staff at all levels from 60 000 to 90,000, we will be going on staff and branches from 6,300 to 10,400. That will be the total number of branches. And business from INR 10,50,000 crores to INR 16,50,000 crores, that's the target we are looking at. So it is not the rationalization of branches, but we will look at the product services are given to customer seamlessly with better IT solutions. And we are almost settled or prepared for product pricing and policies uniformly for both the banks. This will be done before January 2020, and I'm confident the promotion process also will be completed before that, and we will be perfectly ready with the organization structure and placements to match 1st April. We will not delay even for 1 day as far as the seamless transition of staff from both the banks to have value addition to the entire process.

--------------------------------------------------------------------------------

Sushil Choksey, [210]

--------------------------------------------------------------------------------

My next question, sir. You are already on the verge of closure on CanFin Homes builds. We are virtually at 52-week high and with 30% stake, which we are likely to sell, the realization should be in the region of INR 1,650 crores to INR 1,700 crores minimum. Any plans once the resources are raised?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [211]

--------------------------------------------------------------------------------

See, I -- if that profit comes there, number one, it strengthens my provisional requirements also. As I told, Q3 and Q4, whatever additional provision coverage is it, that I will match with this profitability definitely so that, unlike the past, we do not want to show spikes and drops -- dips as far as the profitability is concerned. That will give a lot of comfort to the bank, not only on profitability and provision, it gives us additional capital, which can give us the strength to have better growth capital.

--------------------------------------------------------------------------------

Sushil Choksey, [212]

--------------------------------------------------------------------------------

And sir, next question. In view of merger of OBC and PNB, Canara HSBC OBC Life Insurance, any plans to up the stake with these resources being raised or?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [213]

--------------------------------------------------------------------------------

This is too early for us to comment on. But as far as we are concerned, the choice that is Canara HSBC OBC Insurance Company will have -- currently, they are serving about 8,500 or 9,000 branches. They will have additional 1,500 branches to reach as far as the business is concerned. Now coming to the company, we are in talk with HSBC. And definitely, we will discuss with PNB also to see whether the partnership can continue in the combined entity. So it is a question which individual management has to take a call. But as far as Canara and HSBC are concerned, we are totally committed to ensure that organization delivers.

--------------------------------------------------------------------------------

Sushil Choksey, [214]

--------------------------------------------------------------------------------

But can PNB hold 2 licenses?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [215]

--------------------------------------------------------------------------------

I'm not sure. That is the reason I'm -- it's too early to comment on. We will definitely -- and it is very difficult to exit also on a particular date.

--------------------------------------------------------------------------------

Sushil Choksey, [216]

--------------------------------------------------------------------------------

No, that's fine. The road map may be visible.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [217]

--------------------------------------------------------------------------------

That we will discuss and come back.

--------------------------------------------------------------------------------

Sushil Choksey, [218]

--------------------------------------------------------------------------------

Sir, you've have highlighted the profit after tax of subsidiaries associated in JVs. Have you worked out a value, specifically, where Canara, HSBC is concerned, because there is embedded value?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [219]

--------------------------------------------------------------------------------

No. Actually, I don't have the figures ready, but the company has cleared all the accumulated losses. They are in breakeven. This year, they will be declaring dividend. And definitely, the embedded value will be much more than what they document. So they may be going for a transparent listing also.

--------------------------------------------------------------------------------

Sushil Choksey, [220]

--------------------------------------------------------------------------------

Okay. Sir, second question is keeping in mind of NCLT 1, 2, some visibility likely to emerge in this quarter. And we also must have filed some cases in NCLT and some cases might be in consortium where we are party to it. Keeping this track record in mind, where do you -- if I take 6 months. So that is March 2020 or September 2020, where you think, based on the current assumptions, you would see your gross NPA and net NPA number?

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [221]

--------------------------------------------------------------------------------

Gross NPA from 5 -- sorry, we are around 8.2% or something as far as NCLT...

--------------------------------------------------------------------------------

Unidentified Company Representative, [222]

--------------------------------------------------------------------------------

8.6%.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [223]

--------------------------------------------------------------------------------

8.6%. Gross NPA I'm looking where -- you are talking 1-year forward, right?

--------------------------------------------------------------------------------

Sushil Choksey, [224]

--------------------------------------------------------------------------------

Yes, 6 months to 1 year forward. So absolute number was, if you can also indicate number.

--------------------------------------------------------------------------------

R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [225]

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No, no, I can tell you on percentages, that will be much better. We are looking below 8% as far as the gross NPAs are concerned and below 4 points as far as the net NPA is concerned. I'm talking for 6 months.

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Sushil Choksey, [226]

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Sir, keeping you in mind the second half performance and the current infusion, the book value would be -- is very reasonable compared to the market price. Would you like to bring down your shareholding to 75% within current year or that you would wait for the opportunity?

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [227]

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See as of now, our -- you are talking about the government holding, right?

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Sushil Choksey, [228]

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That's right.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [229]

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They are -- after the infusion, their holding will be close to 78%. And definitely, there is a big room, 27% can be technically raised from the market, but with 14% capital adequacy ratio with the possible gain in housing finance as well as on -- Canara Home Finance as well as on the current year profits, so far we have made almost INR 700 crores for the current half year. So if this trend is maintained, both put together that itself will give me additional 60 to -- 60 basis point improvement as far as the capital adequacy is concerned with current level of advances. I'm sure there is no immediate requirement to raise equity, but there are good rooms for even T1 and T2, AT1 type of bonds as far as the debt is concerned. And we are in talks with the rating agencies because in international market, our bonds are trading much better than some of the peer banks, and I expect better rating profile also domestic, which will help me to raise AT1 and Tier 2 at prices comparable with the other bigger banks what is operating in Indian market. I'm confident it will be done.

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Sushil Choksey, [230]

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Sir, you highlighted on the international book, you have proposals where you are likely to get LIBOR plus 300, 350 bps...

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [231]

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I have about at least 6 proposals almost in final stages. We are waiting for the Board's clearance, I'm sure that will go through in the next 1.5 months' time.

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Operator [232]

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(Operator Instructions) As there are no further questions, I will now hand the conference over to the management for closing comments.

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R. A. Sankara Narayanan, Canara Bank - MD, CEO & Director [233]

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Excellent, sir. Thanks for coordinating this conference call with most of the analysts, and from Canara Bank, we can confidently assure that growth will be much more positive with quality assets, either it is retail or corporate, number one. Number two, the profitability will be definitely much better than what we have recorded in June and September quarter, and we will ensure the asset quality also improves going forward in the next 5 months' time. And we need your support, and we need your good wishes, and I'm absolutely delighted with the type of questions. And some of the questions or names, we would have avoided the direct names, but it is always better for us to -- even for you when you are updating to avoid specific names in reports or summary that will be good for the whole industry to grow as well as perform in more positive note. Thank you very much. Pleasure talking to you all.

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Operator [234]

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Thank you very much.