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Edited Transcript of RBLBANK.NSE earnings conference call or presentation 22-Oct-19 11:00am GMT

Q2 2020 RBL Bank Ltd Earnings Call

MUMBAI Oct 24, 2019 (Thomson StreetEvents) -- Edited Transcript of RBL Bank Ltd earnings conference call or presentation Tuesday, October 22, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Deepak Ruiya;Head - Financial Control

* Jaideep Iyer

RBL Bank Limited - Head of Strategy

* Surinder Chawla

RBL Bank Limited - Head of Retail Liabilities & Wealth Management

* Vishwavir Ahuja

RBL Bank Limited - MD, CEO & Director

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Conference Call Participants

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* Aakash Dattani

HDFC Securities Limited, Research Division - Research Analyst

* Abhishek Murarka

IIFL Research - VP

* Aditya Jain

Citigroup Inc, Research Division - Assistant VP & Senior Research Associate

* Jai Mundhra

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

* Krishnan ASV;SBICAP Securities;Vice President

* M.B. Mahesh

Kotak Securities (Institutional Equities) - Senior Analyst

* Nitin Kumar Aggarwal

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Pankaj Agarwal

AMBIT Capital Private Limited, Research Division - VP of Research

* Ravikant Bhat

IndiaNivesh Securities Limited, Research Division - Research Analyst

* Srijan Sinha

Future Generali - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the earnings call of RBL Bank to discuss the financial performance of Q2 and half year FY '20. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Vishwavir Ahuja, Managing Director and CEO of RBL Bank. Thank you, and over to you, Mr. Ahuja.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [2]

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Yes, thank you. Yes. Good evening, ladies and gentlemen. Thank you again for joining us on this earnings call for Q2 and half year FY '20.

I can imagine that there is a lot of anticipation about our results this time. And I hope we can bring clarity in terms of our current short-term challenges but, more importantly, our franchise strengths, our continued very strong operating fundamentals, and our future journey, which we believe is as robust and exciting as before.

Please bear with me because this is a slightly longer speech this time as we'd like to go over many aspects of our business. To start off, I just want to say, one, our core franchise strength remains intact. As you can see, our operating profit and growth trajectory remains in line with the past several quarters, in fact, operating profit even this quarter 42% year-on-year.

We continue to invest in our retail businesses, deposit franchise, and we see strong traction in these businesses. Our credit challenges, on which we will talk in detail later, will be fully absorbed in this fiscal itself and most of it in this and the next quarter itself.

Briefly on the performance highlights for this quarter. For the quarter, advances growth was strong at 27% year-on-year. Our wholesale business growth was 12%, for obvious reasons, a little slower, but the nonwholesale businesses continued to grow strongly at 49% year-on-year.

Deposit growth continued to remain healthy at 31% year-on-year. CASA deposits grew 42% during the same period. CASA percentage in fact up to an all-time high of 26.5% in Q2 '20 as against 25.8% last quarter and 24.5% same time last year. So it's been an over 2% growth in the last 12 months, in fact -- 2% improvement. In fact, our daily average LCR was 156% for the quarter. These 2 data points demonstrate our growing deposit franchise.

We continue to expand our business franchise. In this quarter, we added 14 branches largely in metro and urban centers, and we are on track to get to a 380- to 400-branch number by the end of this fiscal. In our financial inclusion business, we added 143 BC branches in this quarter with 75 of these in RBL Finserve. In total, we now have 1,156 BC branches.

Revenue growth momentum remains strong and has grown 41% year-on-year in Q2 FY '20. NIM increased to 4.35%, another all-time high, from 4.0% Y-on-Y and 4.31% in the last quarter.

Our net interest income growth at 47% year-on-year in this quarter continues to be much higher than our loan growth, and our overall yield on advances improved 15 basis points Q-on-Q to 12.11%, largely because of the business mix.

Noninterest income grew 33% year-on-year, and our core fee income grew 19% year-on-year in Q2 '20. Our noninterest income was 34% of our total income for the quarter. Our cost-to-income ratio was steady at 51.5%. And our operating profit -- this is very important, our operating profit grew 42% year-on-year and 3% quarter-on-quarter in Q2 '20 to a number of INR 636 crores. So up to operating profit, preprovision pre-taxes, there has been a 42% growth.

Our PAT for the quarter was INR 54 crores. Our PBT was INR 100 crores after provisions. And we will go into the reasons later.

Our rating for Tier 2 bonds was reaffirmed at AA- by CARE Ratings. So as you can see, we have shown healthy growth across advances, deposits, income and operating profits. It is the few credit challenges around a clutch of corporate accounts, which we need to address, absorb and move forward and shall be the only cause for muted profits this quarter and essentially the next.

Certainly, the economy has not been doing well. And the corporate credit environment has worsened over the last few months with the slowdown getting exacerbated. There are enough data points on the economy and all of you are aware of what is happening in the environment, so I don't think we need to dwell too much on that. It's been a challenging period for us also. And we will try and take you through it candidly and to the best of our ability.

With that background, now on to the specific asset quality issues we are facing in our wholesale business and its implications. Since our last call, there has been a lot of speculation and a lot of rumors that have been floating around the size and severity of challenges on the asset quality front in the corporate portfolio.

As I said earlier, the stress levels in the economy have increased. The deterioration in credit environment has had some impact on us, more than we initially anticipated. Resolutions also have been slower, given the system, the endemic stress being higher, market volatility being there to a large extent and poor coordination between lenders has not allowed transactions to progress as well as they should, and this is resulting in resolutions not happening or getting inordinately delayed.

Also, since we last spoke, we've had time to review our own exposure in far greater detail. While we have previously looked at a reasonable case outlook, now given the pessimistic external environment, we have decided to be much more conservative in terms of problem recognition and provisioning that we may need to take, more like closer to a worst-case scenario. It doesn't mean that resolution won't happen, but we have taken a call to conservatively provide for -- in this year itself, as I said earlier, and see how we can progress thereafter on the resolution front.

In this quarter, we have recognized an additional NPA of INR 800 crores. And on this, we have taken an additional provision of approximately INR 350 crores. This is significantly higher than the regulatory required provisions.

This should reflect about half of both the NPA as well as the provisions that we may need to take in the light of our stressed portfolio.

Significant portion of the remaining would come in the next quarter with a small tail in the fourth quarter. As a result of this, our gross NPA percentage for the quarter is now at 2.6% as against 1.3% at the end of last quarter. And our net NPA position is at 1.56% in Q2 FY '20 as against 0.65% in Q1 FY '20. Our PCR, as of September 30, was 58.45%.

I want to reiterate, as I did earlier, that the stress we are seeing is specific to certain corporates only, and we don't see any concern in respect of our exposures to the perceived at stress sectors like real estate, construction, infra, renewable energy, et cetera. We have given color on this in our presentation deck. But at the same time, I will touch upon them now also.

In fact, in all these sectors, there is no instances of any SMA-1 or 2. Specifically, on our real estate book of approximately INR 2,500 crores, fully secured, we have an average ticket per client of approximately INR 57 crores. There is no SMA-1 or SMA-2 on this book. The largest ticket size on this is 1 entity of approximately INR 500 crores, which is fully backed by a standby letter of credit from a AA-rated Middle East bank. So if you back this off, the exposure and particular exposure even much, much smaller.

On our construction book of approximately INR 4,000 crores, the average ticket size per client is approximately INR 44 crores, and the book is largely nonfunded in nature. Again, no SMA-1 or SMA-2 in this book, and almost 80% of this book is with a maturity of less than 1 year.

Our total NBFC book is approximately INR 4,100 crores excluding the exposure to our strategic partner, which is also our largest relationship. Of this INR 4,100 crore, HFC is approximately INR 900 crore and the balance is other NBFCs. These exposures are fully secured.

On the HFCs, our total book is approximately INR 900 crore, as I mentioned, and an average of approximately -- with an average of approximately INR 115 crores with book having maturity of about 1 year, once again. No SMA-1 or SMA-2 on this book.

On the remaining NBFC book of INR 3,000-odd crores, the average ticket size is approximately INR 82 crores. The maturity is between 2 to 3 years. Again, no stress in this book, no SMA-1, no SMA-2.

Lastly, on the power sector book of approximately INR 2,400 crores, average ticket size of INR 52 crores with more than 2/3 of the book maturing in less than a year. Again, no SMA-1, no SMA-2. There is no project finance exposure in our entire book. Overall, if I talk about SMA-1 and SMA-2 position, it is 0.45% SMA-1 and 0.39% SMA-2. And if you back off the so-called stressed account portfolio, then these numbers are 0.3% SMA-1 and 0.22% SMA-2. Yes, So this is -- and the remaining is the balance, obviously. So that's on the asset quality in our wholesale business.

Before I move on, I just want to make a point here that some of the exposures that have been attributed to us based on filings of -- filings analysts, investors have pulled out from dated MCA charge filings and other documents, our peer banks have also spoken about this issue. And if you were to speak to the data providers themselves, they will, I'm sure, also clarify that there are limitations around this data. Like companies not updating their MCA records, et cetera, these are sanction letters and not outstandings. These clients may not be existing in the book, et cetera. Rest assured, we have done as we've done in the past. If you see any challenges around this, we will come out and let our stakeholders know in an absolutely timely manner.

Now moving on to the nonwholesale book, which continues to perform very well. The nonwholesale business continued its momentum, growing 49% year-on-year. Within this, the Retail Assets segment grew 62%, and the development banking and financial inclusion, DB&FI segment, by 24%.

Yields continued their uptrend by 34 basis points to increase to 15.52% in the nonwholesale business. This continues to be driven by product mix, while the yields in each product segment have been steady.

This time, I want to touch upon the Retail Asset business environment a little bit in view of the slowing economy and a threat of job losses. We have been doing rigorous, rigorous portfolio reviews as well as bureau discussions to see if there's any imminent stress building up in the environment. The good news is that we are not seeing any significant trend on the bureau of worsening in segments we operate in.

At the same time, our portfolio also -- our portfolios also continued to be stable in terms of both delinquency trends as well as early warning signals at 6 and 9 months on book MOBs. We do track acquisitions with a select peer set of banks for any early delinquency trends, and so far, even that is stable both for us and actually for the peer set. We have put out some of these details in our investor deck this time.

However, at the same time, a slowing economy, extended working capital cycles and potential demands more caution as we build portfolios. Suitably, we have tightened all underwriting filters and scoreboards and removed any potential vulnerable or high-risk segments.

On an average, anywhere between 15% to 20% of the new acquisitions have been cut. The sales team are aligning themselves to this and finding ways to grow only in the desired segments.

One of our leading businesses, the credit cards business, now stands at 2.3 million cards as of end September 2019. It was 2 million in June, up from 1.2 million a year ago. This quarter, we acquired 3.8 lakh customers versus 3.9 lakhs in the previous quarter -- 3.8 lakh new customers this quarter versus 3.9 lakhs the previous quarter.

The new card acquisition growth has come down marginally as we have tightened our credit acceptance filters in view of the environment mentioned earlier by me. The aggregate retail card spends saw growth of 19% quarter-on-quarter and were 2.2x as compared to the same quarter last year. In order to further reduce risk within the cards portfolio, we have taken steps around limit reduction and balance conversion for customers showing somewhat higher risk.

These steps shall enable us to be ready to face any kind of eventuality of a credit stress in the environment should it happen in the future. However, I would like to reiterate that we are seeing no indications in our portfolio or environment deterioration as of now, and these steps are moderately proactive in nature.

In the loan against property, LAP segment, you'd recall that we run a very tight ship in terms of customer segments and collateral. Here also, we have further tightened our underwriting standards and NPVs, keeping in mind the stressed working capital situations for MSMEs. We'll also put a few industry/customer segments under caution, i.e., FMCG traders, jewelry, et cetera.

The portfolio quality continues to be stable in terms of delinquencies. The EMI bounce stats are also stable with no deterioration. However, we have noticed that once a customer crosses 30 days dpd, the efforts and time required to bring them back to current state are more. Therefore, we're consciously targeting collection efforts in the first bucket.

Coming to the Micro-banking segment. The overall market remains steady. The collection experience in the districts impacted by floods, typhoons has been better than expectations with collections climbing steadily, and past experience has shown that these become normal in 4 to 6 months. Our focus is largely on further granularizing our geographical spread.

Our concentration in the top 3 and 5 states is far lower than our other larger peers. We have kept a close watch on the ticket sizes, which are also lower than our peers. In this quarter, Micro-banking business grew 31% year-on-year, and MSE business (sic) [MSME business] showed a 52% growth Y-on-Y.

We added a total of 143 BCs, 115 in Micro-banking and 28 in MSME in the quarter, taking, as I said earlier, our total BC branch strength to 1,156 across 24 states. We're now further accelerating our BC branch opening and intend to open another 150 branches in the remainder of the year. A large number of these will be in existing districts where we have presence. The intention is to cover more villages where the micro finance penetration is low.

Lastly, on profitability and capital. In terms of profitability for the year, we expect that, from Q4, we should be more or less back to our normal trajectory. If you see our results, we are growing well at an operating profit level and across the franchise. That has not changed. Therefore, for the full year, we expect our profitability to be lower than last year but approximately in the range of 75% to 80% on last year's profits.

Meanwhile, on capital, we ended the quarter with a capital adequacy ratio of 12.28% with Tier 1 capital adequacy ratio of 11.26%. There has been a lot of speculation if and when we will raise capital. We are planning to complete our capital raising within this fiscal year and now shall work towards that. There is significant positive interest among our existing and new investors.

In summary, I want to reiterate a few points, as follows: Our credit challenges will be fully absorbed in this fiscal. Our operating profit and growth trajectory remains intact. We continue to invest in our retail businesses, deposit franchise, et cetera, and we see strong traction in this business. On capital, we will raise capital before the end of the year.

With that, we will now open up the call for questions.

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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 Aakash Dattani from HDFC Securities.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [2]

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My first question is on the mention of the approximately INR 1,800 crores of stress on Slide #25. If memory serves me right, this number was about INR 1,000 crores in the previous quarter. So if you could possibly articulate further what has led to this INR 800 crore bump-up? And how much of that includes the buffer mentioned on that slide?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [3]

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Yes, yes, sure. So let me put it this way. First, I think if you were carefully listing to my commentary, I did indicate that we've taken the sort of deterioration in the environment into consideration and also the fact that some of the sort of likely scenario are looking a little more difficult than they were before, and we all know the reasons behind that. While the number of accounts are more or less the same and barring an addition of maybe 1 or 2, namely one of the -- some of this probably things will happen later, which you're unaware of. Frankly, the rest of it is in the buffer zone, to put it that way. And I would say that maybe 10% or 15% of that is in the buffer zone.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [4]

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So 10% or 15% of the INR 1,800 crores?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [5]

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Of the total.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [6]

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Of the total. Okay. And so -- the bank's NIMs are...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [7]

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We have mentioned -- sorry, to interrupt. We have mentioned that this covers the East-based

group, diversified media group, south-based coffee group and all of that. So that way the commentary is not much different, except that, given the environment, we want to be a bit conservative in our assessment. And also as an intention to aggressively attack this and so take payment as much as we can within the last quarter, which has just passed, and the current quarter, which is running.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [8]

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And my second question is on the NIMs. So the NIMs are up quarter-on-quarter. And I would assume that, with the significant slippages, what would be the interest reversals this quarter.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [9]

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Interest reversals should be in the INR 20 crores plus/minus range.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [10]

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Okay. And if you could specify the outs, the GNPAs on the card portfolio and the writeoffs in that portfolio during the quarter.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [11]

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So the GNPA in the cards book is around the same number of over 1.33-odd percent. I don't have the write-downs. Do you have the write-downs?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [12]

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Write-offs usually happen within 180 days. So credit costs, we would be running similar to...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [13]

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Yes, 4.44, 4.45, which was the previous quarter result.

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Operator [14]

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We will move on to the next question that is from the line of Krishnan ASV from SBICAP Securities.

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Krishnan ASV;SBICAP Securities;Vice President, [15]

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I have 2 of them. Number one, is the current MD or the senior management team currently under investigation by the RBI for NPA or other [reason]. That's my first question.

Number two, I would just like to understand, despite you being in silent period, you tend to meet a lot of investors. Is there an element of this surprise or nasty shock that has been indicated to investors because of which the stock has been sliding?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [16]

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I'm a bit perplexed by your questions, first of all. I mean I don't understand what is the genesis or the basis for asking the first question, first of all, and I'll let it ride, yes, because -- I mean, you obviously know something or don't know something.

The second part also is an innuendo. I'm sorry to put it that way. And frankly, we don't -- I mean, as I said in one of my media interviews also that we have neither concerns or habituated to actually watch the developments in the stock market. And as far we are concerned, we have built an impeccable institution which stands on very strong pillars, very strong ethical standards, very professionally managed, and extremely well-run and is continuing to function and grow in extremely healthy manner.

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Krishnan ASV;SBICAP Securities;Vice President, [17]

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Fair point, Vishwavir. I think what I'm trying to understand is...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [18]

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As the RBI inspection was concluded last month and finalized in a satisfactory manner.

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Krishnan ASV;SBICAP Securities;Vice President, [19]

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So my only point was, this was a good opportunity to at least reassure all of us in case this noise is indeed noise, so...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [20]

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Yes, like you said, this...

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Krishnan ASV;SBICAP Securities;Vice President, [21]

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This question was very well warranted. And your replies are extremely well appreciated.

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Operator [22]

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The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.

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Nitin Kumar Aggarwal, Motilal Oswal Securities Limited, Research Division - Research Analyst [23]

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I have a few questions mainly around asset quality. Firstly, this quarter, we have changed the rating disclosure to external-based ratings. So how well do you think this represents the asset quality picture for the bank versus the internal rating disclosure that you were sharing earlier?

And also, if you can give some color on the movement in rating profile. Because this quarter, we have seen like intense downgrade in the system. So how has that impacted our rating of the portfolio?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [24]

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First of all, before Jaideep answers your questions, I just want to say that this was a huge request and a demand from, I guess, one of you to -- because internal ratings are internal ratings. To put our ratings -- to put the portfolio against the externally rated benchmarks. So this is in response to a disclosure request that we have put it out this way. Also, the comparison of internal versus external is also in one of the slides. So the comparable picture is given for you to see, what is slide number?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [25]

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Slide #51. We have given the slide which gives you a comparative with last quarter.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [26]

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And in future, we will report in the context of external ratings, but this time, we've given you the comparable chart.

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Nitin Kumar Aggarwal, Motilal Oswal Securities Limited, Research Division - Research Analyst [27]

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Right. The movement of ratings in terms of downgrades and slippages, how has that led to that...

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [28]

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So we've had slippages. Some of that actually has become NPA in the current quarter. So externally downgraded ratings, some of that has slipped into NPA this quarter. If you look at the chart on Page 23, we do have a slight bump-up sequentially on our below investment-grade ratings, largely compensated by the fact that there is a decrease in the BBB ratings as well. So we continue to face downgrades in the book like in the external environment, but some of that has been cushioned by the fact that we have taken a substantial part of that as NPA this quarter.

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Nitin Kumar Aggarwal, Motilal Oswal Securities Limited, Research Division - Research Analyst [29]

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Okay. And second, on the slippages, like of the total 13.8 billion slippages that you have reported, 8 billion comes from the stressed pool? So if you can give some color on the remaining balance as this also is a large number considering our run rate?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [30]

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Yes. So approximately INR 250 crores to INR 275 crores, a chunk of that was a technical slippage which got upgraded because we recovered the entire outstanding due. There was a technicality which resulted in that. If you remove that, then we are in the INR 250 crores plus/minus range on the routine slippages. So we will be -- given the increase in retail portfolio, that will also happen. So we should be in the INR 200 crores to INR 250 from a BAU perspective.

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Nitin Kumar Aggarwal, Motilal Oswal Securities Limited, Research Division - Research Analyst [31]

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Okay. And I [calculate] of the total INR 18 billion stressed pool, in all, like how many accounts are there. You mentioned that these 4 groups are the dominant part here, but in all, how many accounts are there? And if you can give some proportion in terms of the size of these 4 groups, in respect to the total INR 1,800 crores. And besides that, whatever the number of accounts if you can mention that because there has been a substantial increase from INR 1,000 crores to now INR 1,800 crores this quarter.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [32]

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No, I think we have answered that question many times over, but specifically, we have not put a number against each. We are -- we don't give out by name. It's a matter of principle. We have not been doing it. I don't think it is fair also. And also, it is not even a good practice because, in some cases, these are performing accounts where there may be some stress, but there are collection efforts going on. And I think it's tactically also not the right thing to do, first, I want to make that statement very clear.

Having said that, given the fact that this is an expectation, and we need to make a proper disclosure of this, we have given you a pretty close sort of -- to the exact position by putting in, in the manner we have and in terms of the total [exposure.] And I've also indicated in a previous answer that there is an element of buffer that we have included, and I gave you the quantum of that. We've also said in our commentary that these are a handful of accounts, okay. So I think -- or a clutch of accounts or a handful of accounts. So I'll leave it at that.

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Operator [33]

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The next question is from the line of Abhishek Murarka from India Infoline.

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Abhishek Murarka, IIFL Research - VP [34]

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I have 2 or 3 questions. One, if I just observe the OpEx growth, which is around 40%, 41%, it is much higher than loan growth. So I just wanted to understand which parts of the business are you spending this additional expenses on, if you could just sort of elaborate on that.

My second question would be on one of the housing finance groups, which has recently came up, and I think you also had to -- you came on television and clarified some of it. I just want to know if that exposure is part of this INR 1,800 crores. And if you can quantify how much exposure you have to that group.

The third question is just a clarification. So basically, the movement of this INR 1,000 -- of this INR 1,800 crore of watch list that you have, this would consist of INR 800 crores that has slipped into NPA and a standard part, which is INR 1,000 crores, which is a standard, which is not part of the NPA. Is that correct?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [35]

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So, Abhishek the last point is correct, absolutely. That's pretty clear in the slide. On the -- I'll take the OpEx question. On the OpEx, I think there are 2 things which are driving OpEx. One is, we continue to invest in our retail franchise in terms of branches. So we are not going slow on that. We expect to be around 380 to 400 branches by the year-end, which would approximately mean almost 140 branches expanded in the last, let's say, 12 months and the next 6 months, which is a fairly substantial

(technical difficulty)

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Operator [36]

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Hello. Ladies and gentlemen, the lines of the management seems to have dropped off, please stay connected while we reconnect the management.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [37]

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So sorry, Abishek, are you there?

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Abhishek Murarka, IIFL Research - VP [38]

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Yes.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [39]

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Yes, so as I was saying, I think it continues. So that is what (inaudible) we have discussed in the past, the costs are upfronted. So if you notice in the current slide as well, we've -- on a Y-o-Y basis, we have doubled the card book. And we continue to have an acquisition run rate of more than 100,000 cards a month. So those -- as long as those acquisitions vis-à-vis the base continue, we will have a cost increase, which is driven. But having said that, despite that cost increases, obviously, we are improving on our return metrics in that business progressively.

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Abhishek Murarka, IIFL Research - VP [40]

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Sure, sure. Yes, there was one more question. This housing finance company, whether it's part of the INR 1,800 crores.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [41]

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I'll answer that. So between then and now, there has been both reduction in the exposure and strengthening of the structure around that exposure in a manner that we are completely fortified. And therefore, there is no need to consider that anywhere near being stressed.

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Abhishek Murarka, IIFL Research - VP [42]

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Okay. But if you can share anything, any quantification?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [43]

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No. No quantification. As I said, the number -- there also was a very miniscule number which had been suggested. And it was -- since then, it has significantly come down to an even more miniscule number, and that is self exposure and well fortified.

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Abhishek Murarka, IIFL Research - VP [44]

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Okay. So it is not part of this INR 800 crore item? This additional...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [45]

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No, no, no.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [46]

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Under recoveries some of these

(technical difficulty)

provide further on these accounts.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [47]

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Yes. So the fact is that, actually speaking, technically speaking, what the...

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Operator [48]

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(technical difficulty) Sorry to interrupt, sir. Sir, your audio is not sounding clear. Can you come a little closer to the mic?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [49]

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Yes. Hello, can you hear me? So I want to say that, basically, the level of NPA recognition and provisions taken are far beyond the regulatory requirements. In fact, we have recognized a significant portion in the NPA number, even when it was actually not needed or required to be done based on the -- whatever NPA norms are. We've done it because of reasons of basically and -- what we may call prudence, our assessment of the stress situation and the pain that we follow. And our intention to basically decide now and in this coming 2-, 3-month period, whatever we need to do to clean everything and be back on track by the fourth quarter of this year. So that has been the driving intent okay, in terms of what we are doing.

Now yes, I mean, and in the next 2, 3 months, whatever we need to do, we'll do. But we have already taken more than sufficient amount of provision from that point of view. And while some movements in the positive direction are happening, but we want to make sure that they are well contained and well recognized.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [50]

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The other thing is I think the consequence of the delayed resolution actually results in potentially a high number technically slipping in more than the LGD impact. So I think that is the reason why we also wanted to expand the number conservatively on the stress book.

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Abhishek Murarka, IIFL Research - VP [51]

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Actually, how is our exposure placed in the water for the recovery cash flow that may happen from these accounts.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [52]

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Barring, let me answer that, frankly. Barring, in one case, which was an obvious NPA case in our case, the other -- in all the others, we are extremely well placed. So there was, frankly, one bad case, and that was in the sense of straight NPA, and it has been so recognized, and almost 100% provision has been taken. So that having been said, the rest -- in the rest, we are in extremely good position. We are definitely pari passu or you have superior or favorable security coverage or whatever it is so without going into details. So that's the answer.

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Operator [53]

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The next question is from the line of Pankaj Agarwal from AMBIT Capital.

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Pankaj Agarwal, AMBIT Capital Private Limited, Research Division - VP of Research [54]

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Your retail NPAs have almost doubled down on Y-o-Y basis. So any color on this?

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Deepak Ruiya;Head - Financial Control, [55]

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Pankaj, the retail NPAs are actually a function of the changing mix, and as our unsecured pools grow, so you will see a slight increase there, plus the LAP book is also now fully matured. At one stage, I think, last year, we took in about 60, 70 basis points. So that is also now a little higher in the 1.1% to 1.25% kind of ranges. And that is what is kind of resulting in this increase. But this is in line with expectation. And as the mix keeps changing, this NPA number couldn't be more a reflection of that.

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Pankaj Agarwal, AMBIT Capital Private Limited, Research Division - VP of Research [56]

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Okay. So it's broadly to do with your mix change in the retail profit?

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Deepak Ruiya;Head - Financial Control, [57]

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Yes. Yes.

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Pankaj Agarwal, AMBIT Capital Private Limited, Research Division - VP of Research [58]

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Okay. And second, if I look at your Q-o-Q, deposit growth is roughly 3.3%. I mean it's -- if you look at last 3, 4 years, in second quarter, you normally see 5% to 6% deposit growth. So have you lately seen some pressure on deposits, especially in the light of PMC Bank fiasco?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [59]

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Now Pankaj, sorry, I'll let Surinder answer that. But before that, we had almost $150 million borrowing from IFC for long term during the quarter, which if you -- and we had some very good refinanced borrowings, which we had an opportunity to take at much lower yields. And therefore, the need for the marginal bulk deposit went down. If you see, our CASA has grown sequentially pretty healthily as well as Y-o-Y. So clearly, no such issue at all. Surinder, if you have to give more color on deposits.

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Surinder Chawla, RBL Bank Limited - Head of Retail Liabilities & Wealth Management [60]

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I can add to that saying that, because that there are new branches coming in as well, the granularity of our CASA growth is also improving, so is this case with our time deposit. It is just that we wanted to ensure that we don't become high-cost deposits, and therefore, the bulk deposits have consciously been not attracted for by at a very high rate. Just to add, we're sitting on almost INR 4,000 crores of excess G-Sec T-Bills simply because deployment is slower than the kind of deposits and borrowing opportunities. And therefore, as you remember, which made in his comments in the speech, we are running at about 156% LCR. So it's a function of that rather than anything else.

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Operator [61]

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The next question is from the line of [Yamini Kumar] from Kotak Mutual Fund. The line for the current participant has dropped off. We'll move on to the next question that is from the line of M.B. Mahesh from Kotak Securities.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [62]

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Three questions from my side. The first one is on the slippages side. If I look at INR 1,377 crores of slippages, you said INR 800 crores has come from the sales group, INR 250 crores pertains to another corporate, which has upgraded in the current quarter. Or how should we read into the number?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [63]

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Yes, Mahesh.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [64]

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And any color on what are the nature of the slippage?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [65]

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Well, very technically, it crossed the dpd within the quarter, and then they could mobilize funds enough to clean up the entire overdue basis, which it gets upgraded.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [66]

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In a sense, look, is there a potential of this because it seems to be a slightly large number, if it's pertaining to ones in the corporates. So I just wanted to check as to, will this be a potential stress at a later point in time.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [67]

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Not really, Mahesh. That's not an issue in this case.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [68]

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Okay. Just confirming this. So INR 800 crores here, INR 250 crores has come here. So it's about roughly about INR 1,050 crores. And you're looking at a balance, which is still about INR 350 crores, slightly on the higher side, even if you look at the trend levels.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [69]

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So we had some slippages in agri, Mahesh, of about INR 70 crores of slippages in agri, so which was a little bunched up, should come back to normalized levels. So if I exclude that, then we should be in the INR 225 crores to INR 250 crores range.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [70]

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Okay. Perfect. This is question one. Second one is on the cards NPLs. You've given a fairly detailed discussion on that topic. You kind of made a comparison with the Credit Information Bureau's report. The data that we seem to be getting from the Bureau suggest a different set of numbers, especially, on the 90-plus dpd on the cards business. Just trying to understand where is the difference that you're seeing and what we get -- what we see from the rating agencies -- from the credit information bureaus.

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Deepak Ruiya;Head - Financial Control, [71]

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So which number would we be looking at specifically?

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [72]

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So if you look at the industry slide...

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Deepak Ruiya;Head - Financial Control, [73]

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Yes, so if you look at the industry, 90-plus. In fact, the last one was 1.77, I got, at least. Right? We mentioned 1.8 here.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [74]

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Okay, okay. So when you're saying that the industry is at 1.8, and you were at 4.8?

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Deepak Ruiya;Head - Financial Control, [75]

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No, no, no. (inaudible) Yes. So see the blue -- the purple bar, which you are seeing is a 30-plus rate. And the green bar is a 90-plus rate. We've given 2 sets. We've given RBL at 1.3, 90-plus, and industry at 1.8.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [76]

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Okay. So here is 9 -- perfect, perfect. Well, okay, sorry for this. It was a mistake from my end.

Final question, on the origination norms, there has been some discussion in today's news article in ET which suggested that origination through DSAs, fintech platforms have been significantly curtailed in terms of the power at which they've been exercising earlier. One, we wanted to understand how much of -- how much does this impact your business? And B, how are you kind of attacking this issue? And if you can tell us how much you've originate -- how much you've securitized from that side of the business, it would be helpful.

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Deepak Ruiya;Head - Financial Control, [77]

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Yes. So first, let me just tackle this in terms of the origination piece. I think the -- this advisory was there a couple of months back, which is basically saying that your partners, whether they are agents or BCs, cannot do a KYC original scene and verified on their own, and therefore, a bank officer should be doing that. In line with that, we had already started moving on to doing Aadhaar-based biometric for all our customers, so that we are able to do this. So in fact, in about another few days, we'll be launching this. All our partners will carry Aadhaar devices. And therefore, we'll do this. So it's more a change in terms of sourcing, process point of view. And in a way, it is good because what it does is that, any instance of fraud, et cetera, kind of gets removed because now you are meeting the customer and taking a biometric impression from there.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [78]

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So per se, this does not impact too much, but would you say that it has increased the OpEx of the business or messing with the dynamics of the business?

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Deepak Ruiya;Head - Financial Control, [79]

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It's a onetime piece because you will -- we will -- I mean, between us and our partners, we'll have to invest in those biometric dongles, which is there. So that is the piece. Also, what it does is it kind of makes digital acquisition a little painful because you do -- you will still need to go and meet the customer unless you can get XML Aadhaar done, which is a very few set of customers. So that's the impact which it has, nothing significantly to impact our volumes. But yes, the process will change big time for everything which we do.

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M.B. Mahesh, Kotak Securities (Institutional Equities) - Senior Analyst [80]

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Perfect. This is useful. And what are the origination from these channel partners?

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Deepak Ruiya;Head - Financial Control, [81]

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So I would say it differs from different -- for different products, for example, the financial inclusion, everything is BC. And in this, we even count our subsidiary as a BC. So technically, even my subsidiary should be doing a biometric. And I'm not authorized to do that. So 100% of that. Our MSME business is entirely through a subsidiary. But again, it's a BC, so everything will fall. So more or less, almost everything falls into it apart from 10%, 15%, which we generate from our branches.

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Operator [82]

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The next question is from the line of Jai Mundhra from B&K Securities.

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [83]

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Just wanted to understand a few things, A, if you can clarify or quantify the sectoral slippages in this quarter, mainly from this INR 8 billion, which has slippages.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [84]

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I think we gave you a very detailed sector-by-sector explanation with data points there. And we also said in our commentary that we have no sectoral concerns, of course, any problem sector or sensitive sector. And as I earlier said, there are 5 or 6 sectors, I give a very detailed breakdown in commentary.

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [85]

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Sir, I want to understand, sir, out of the INR 1,800 crores, INR 800 crores has already slipped, then INR 1,000 cores is...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [86]

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That's within the names mentioned -- the cost of all groups.

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [87]

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Correct. I wanted to know which of these sectors have actually slipped and which are still kind of a watch list.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [88]

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That's getting into that sale specific point? Yes, it's from those 4, I mean, I just mentioned that to you.

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [89]

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Sure. In, sir -- in our retail loans, are we following the daily stamping basis because some of the banks have now moved to daily stamping basis on retail NPA classification?

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Deepak Ruiya;Head - Financial Control, [90]

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Yes, we've also moved towards daily stamping now,

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [91]

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On our entire retail portfolio?

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Deepak Ruiya;Head - Financial Control, [92]

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Yes. Yes.

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Jai Mundhra, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [93]

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Sure, sir. And third is just the clarification that if we want to provide that, regarding that large housing company, which [MB] has also mentioned on TV as we have a very small exposure. Is that included in these names? Or it is not very relevant in overall scheme of things?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [94]

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Yes. No, I mentioned a little earlier that, firstly, even from that level of exposure, it has reduced further. Also, I think in terms of the security structure that we had, that has been further strengthened in a manner that we feel fully fortified and do not have any concern on that exposure, hence, it is not included in this number.

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Operator [95]

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The next question is from the line of Srijan Sinha from Future Generali Insurance.

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Srijan Sinha, Future Generali - Equity Analyst [96]

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Yes. Apologies. Your voice was -- been clicking and within, so I'll have to go back to that slippage number once more for clarification. So this INR 250-odd crore technical slippage that you're talking about, is this a single account?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [97]

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Substantial -- a part of that is single account, yes.

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Srijan Sinha, Future Generali - Equity Analyst [98]

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And has that account totally repaid or just the overdue amount has been repaid?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [99]

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No. So if the overdue amount was repaid, it couldn't have been upgraded.

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Srijan Sinha, Future Generali - Equity Analyst [100]

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So the entire amount has been repaid?

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [101]

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Entire overdue has been repaid.

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Srijan Sinha, Future Generali - Equity Analyst [102]

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Entire overdue -- just the overdue has been -- any sense on the -- is it still a 30 dpd or 60 dpd account?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [103]

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No, it's below 30.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [104]

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It is below 30.

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Srijan Sinha, Future Generali - Equity Analyst [105]

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It is below 30, but it is still overdue.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [106]

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It would be -- I don't even know whether the September 30 interest has been serviced. So it's either 0 or less than 30.

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Operator [107]

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The next question is from the line of Ravikant Bhat from IndiaNivesh Limited.

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Ravikant Bhat, IndiaNivesh Securities Limited, Research Division - Research Analyst [108]

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Just one question. So if I recall from the previous con call, I think you had said that the LGD on the identified stressed accounts should not be more than 25% to 30%, therefore, that would be the provision level on these accounts that we would be targeting. Does that stay unchanged after having expanded the stressed to a big figure?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [109]

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No, I think it's a fair question. But in some senses, I did suggest in my commentary that our assessment is moving to a more conservative level, and we are taking into consideration a scenario where some of these resolutions can be a little more protected. And in the meantime, it will be more prudent to take a higher level of provisions.

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Ravikant Bhat, IndiaNivesh Securities Limited, Research Division - Research Analyst [110]

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Sure. So sir, when you say that you would move to a normalized level of things beginning 4Q, what kind of provision would you have in mind?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [111]

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I'm saying that whatever is required in terms of this scenario between now and -- we would intend to take it rather than postpone that. I mean I don't want it -- the identified group of names and that sort of stressed account portfolio needs to be completely addressed and the required impacts to be absorbed and taken is what I'm saying.

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Ravikant Bhat, IndiaNivesh Securities Limited, Research Division - Research Analyst [112]

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And the would be...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [113]

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Yes. In other words, in the current quarter, some efforts were made in the previous quarter, which we reported now. Many efforts are going on. And to the extent we are successful, we are successful; to the extent, we're not successful. Yes. I am saying that we will take pretty much bulk of that in this quarter itself. So that only a tail is left for the next quarter, which should not, therefore, impact the normalized level of profitability for the fourth quarter in any significant manner. So yes.

In other words, what I'm saying is your third quarter may not be worse but may not be significantly better than what it is now, yes. But then after that, very confidently we are able to say that we intend to revert to normalized level of performance and in all respects in terms of growth and profitability.

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Operator [114]

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The next question is from the line of [Dheepan Merba] from [Excelsior Equities Private Limited.]

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Unidentified Analyst, [115]

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I just want to ask if you had an internal investigation of the insider trading, which was done on 30th July post the -- decide by (inaudible) VG Siddhartha.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [116]

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First of all, that news item itself was unfounded, misplaced and malicious. And we issued a statement to the authorities and to the exchanges all to that effect. After that, there has been no investigation and -- because I think the genesis of the news itself was such that there was no need for an investigation in the very first place.

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Unidentified Analyst, [117]

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So the company did not do any internal investigation?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [118]

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Yes, of course, we did. However these...

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Unidentified Analyst, [119]

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I'm asking, so what was the outcome of that internal investigation because it is just too coincidental, sir. It is just too coincidental, sir.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [120]

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Sorry?

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Unidentified Analyst, [121]

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It is just too coincidental that the news is out and 27 senior employees of RBL Bank sold shares of RBL Bank the next day. And when you say that you are only one on highly ethical standard, sir, it does [beg] the question, sir.

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [122]

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I think -- no, no. I think -- the investigation itself was not something that was any -- that had to go into much depth, just very simple cases that these are normal activities within trading windows. And in both cases, these were played in locations, et cetera, et cetera. So you must understand that, unlike some other players, in our case, a significant portion of the entire employee base of the bank are ESOP holders. Many of them have, in a sense, borrowings against this. And in many cases, these things happen naturally, which was the case in pretty much most of the cases. So there is nothing, any of them could do under the circumstances either. And in the remaining very few cases, they have taken proper approvals within trading window and acted in the normal way. There was no untoward activity from that point of view.

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Unidentified Analyst, [123]

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Sir, I understand you are saying most of it was invocation of the pledge and a small amount was of permissions taken, and it was probably...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [124]

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I would like to go no further into this issue, please because this is an issue with nobody. I mean, I've told you there is no inquiry. There is no investigation, internal, external, not required. It was a misplaced news item. I don't understand why you want to go to...

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Unidentified Analyst, [125]

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Because the reason we are getting into it, sir, is that it is just too coincidental, sir. The events are too closely linked and the list of people who have sold their shares -- this is all in the public domain now, they're all leaders, heads of the various departments, sir. That is why the question comes, and the spot has dipped significantly from that point. And it does raise an issue as far as the -- I mean, I don't have the right words to put it, but it is just too coincidental, sir. That's the reason we're raising this issue. And if you say that most of it is because of pledge invocation, then it is -- to an extent, I raise those concerns.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [126]

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[Dheepan,] I think you get to see one day trading. We get to see behaviors of people. July, for example, is the month when people get their ESOPs vested because, for us, the performance appraisal cycle is July to June. So July is a month when people actually get their options vested. When people get their options vested, many of them exercise. And there -- many of them exercise and sell. You get to -- your are looking at a picture, one day. We have the benefit of looking at the picture of many, many employees across many, many months, years before that. So if you look at that, there is no unusual trend. You are picking up on that because you're only adding that data point. That's the point I'm trying to...

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Unidentified Analyst, [127]

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Okay. One more question I have is that you were looking at capital raising. So are you comfortable raising money at such low stock prices? I mean, and diluting this (inaudible) significantly. Would it not be more prudent to just slow down the growth and have the whole process cleaned up and see appreciation of stock price and then look at some sort of an equity dilution?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [128]

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All I will say, in all of our segments, is that there are equally important and weighty views on both sides. And in the past, we have taken a slightly different approach to capital raising. Our own management and Board's prudential thinking on the matter is that every time -- and we've said this at least 4 or 5 times in the last 4, 5 years, and every time we approach or are about to go under 1 -- 11% of Tier 1 capital, we tend to, irrespective of issues that you have just brought out of dilution, this, that or otherwise, we have prudentially gone ahead and raised money. In other words, whenever -- we just wanted to remain as well capitalized and prudential as possible with enough capital buffer. That is our philosophy.

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Jaideep Iyer, RBL Bank Limited - Head of Strategy [129]

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Sorry. Just one small point. In addition, if you noticed, we've burnt very less capital. So I guess, obviously, from our ability to kind of sustain, we also, obviously, are working on that. So we kind of are very similar to last quarter's levels. So that's a...

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [130]

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All Jaideep is saying is that we have room not to do it for a fair amount of time, which is a given -- you've also taken that while -- but at the end of the day, I guess, this is obvious.

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Operator [131]

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The next question is from the line of [Harsh Desai] from Value Quest.

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Unidentified Analyst, [132]

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This is [Ash] from [Rolland Capital]. Yes, my question was with regards to your wholesale advances, so of course, you've taken a more cautious approach and slowed down your lending debts. But I just wanted to your long-term vision for the books? Is it like a 2 quarter, 3 quarter thing, where you're kind of slowing down till all this plays out, and then you start growing your wholesale book again? Or what is the stand from your wholesale book growth?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [133]

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I think we have a solid business franchise in this space. And the wholesale book is not just the large corporate. It's also the next layer of mid-corporates and the smaller corporates in the country. So I think -- I mean, if you track the performance of this book over the last 5, 6 years. I mean except for this year, I was looking at the data points for our gross NPA position in this business, particularly in the CIB space so the last 5 years, since FY '15, '16 onwards.

And the -- other than the fact that we've managed to create a space in this space across the various product and service categories, and I think we are now well recognized, appreciated, strong relationships, all of that is in place. So in a sense, we are well penetrated in this space. And our gross NPA or asset -- common asset we'll report of you, has not exceeded even half -- 50 basis points in the past.

So I think what has happened this year around, like I said, a very few set of names is driven off whatever market environment we have right now or economic environment we have right now, largely. These are not bad decisions we may have made, barring maybe one case. Because if you see, the last 4, 5 years, we avoided all the difficult and sensitive sectors. We've avoided all the so-called troubled names and names where there were questions, and none of them -- whether they were NCLT cases or other groups or other companies, so we have a pretty clear track record and a very good track record in selection and in managing this portfolio, and it is also great growth to -- a good level of scale and size. So certainly, we will be this business.

Now the philosophy going forward based on some learnings is that we need a much more granular base of customers. Some of the exposure levels where, in hindsight, are higher than they need to have been to specific names or groups. And that's a bit of a learning, which we have taken in our stride. So model changes and changes in our risk underwriting standard and this culture will be more along those lines.

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Unidentified Analyst, [134]

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Correct. So one more question. Thanks for a very elaborate answer, and I have one more question with regards to our credit card portfolio. So for credit card business, the operating costs are very high upfront and they're processing later. So just trying to understand for how much longer would there be this drag on OpEx in the credit card business? And when would we actually starting the point of this business?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [135]

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So the cards business is fairly profitable. In fact, in a couple of last quarters, interactions as well, we've kind of said that the -- it already delivers ROAs much in excess of the bank ROAs. We expect it to reach average industry level, good player ROAs when we reach about 6.5 million. But today also, we have margin excess of the bank ROAs. So it has high OpEx. It doesn't mean it's a drag on profitability.

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Unidentified Analyst, [136]

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Okay, okay. Got it, got it. And what sort of ROAs is this book generally?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [137]

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So while we don't specify this. I think the industry level average ROAs, if you look at it, should be in the 3.5% kind of range.

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Operator [138]

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We'll move on to the next question that is from the line of Aditya Jain from Citibank.

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Aditya Jain, Citigroup Inc, Research Division - Assistant VP & Senior Research Associate [139]

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Just to confirm my understanding, the increase from INR 1,000 crores to INR 1,800 crores, the underlying accounts are broadly the same. But earlier, we were including a part of the exposure to those accounts. But now, we're including the entirety of the exposure to those accounts. Is that right?

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Vishwavir Ahuja, RBL Bank Limited - MD, CEO & Director [140]

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No, no, no. That is not right. We have -- like I said, there are certainly 1 or 2 names that have been added based on news that has come since, and we've talked about that. And we've also added a bit of a buffer, as I said, which can happen, given the deterioration in the credit environment. I mean, which is something I talked at length about to say that we are taking a conservative view of the current environment.

I mean even in these 2 names, which have been already identified. A couple of them were AA+ rated companies just last year. So I mean -- and they have come at the tail end of the -- if I mention the NPA cycle of the industry, which has been playing out over the last 4, 5 years. So my point is that I don't think anybody can sit here and say that -- so therefore, it is important to take a conservative view and place some cushion in your thinking.

Yes, last time when we sat, we said, okay, let's take the most reasonable case and -- on the expectation that things will either remain stable or turn or whatever it is. That's one aspect. So that's on the gross -- NPA number of the gross percentage exposures. The other aspect of it is the level of provisions. When this happens, when this kind of environment prevails, then, obviously, like I said, the resolutions themselves are more painful and protected. And the longer it takes, that lets you get back. So you need higher provisions. As simple as that. And I'm saying both, and I'm saying we have taken very, very aggressive, conservative, if I may say, initiatives in both directions. I also said that the number that we have provided in this quarter is far higher than the number that would have -- we would have been required to provide.

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Operator [141]

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Ladies and gentlemen, we now conclude the Q&A session. If you have any further questions, please contact RBL Bank Limited via e-mail at ir@rbl.com. On behalf...