Equitas Small Finance Bank (EQUITASBNK) Q4 FY23 Earnings Concall Transcript

Equitas Small Finance Bank (NSE:EQUITASBNK) Q4 FY23 Earnings Concall dated May. 06, 2023.

Corporate Participants:

Vasudevan PN — Managing Director & CEO

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Natarajan Muthusubramanian — EVP & Head – Treasury

Sridharan N — Chief Financial Officer

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

Analysts:

Darpin Shah — Haitong Securities India Private Limited — Analyst

Shreepal Doshi — Equirus — Analyst

Savi Jain — 2Point2 Capital Advisors — Analyst

Renish Bhuva — ICICI Securities — Analyst

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

Nidhesh Jain — Investec India — Analyst

Aravind R. — Sundaram Alternates — Analyst

Manish Agarwalla — PhillipCapital — Analyst

Ashlesh Sonje — Kotak Securities — Analyst

Rajeev Mathur — YES Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning and welcome to the Earnings Call of Equitas Small Finance Bank Limited’s Financial Performance for Q4 FY ’23. We have with us today Mr. PN Vasudevan, MD and CEO; Mr Sridharan N, CFO; Mr. Murali Vaidyanathan, Senior President and Country Head, Branch Banking, Liabilities Product and Wealth; Mr. Rohit Phadke, Senior President and Head Assets; Mr. Natarajan M, President and Head, Treasury; and Mr. Rahul Rajagopalan, DVP, Strategy and IR.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.[Operator Instructions] Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. PN Vasudevan. Thank you and over to you, sir.

Vasudevan PN — Managing Director & CEO

Good morning, and thank you for dialing-in on a Saturday morning. At the macro-level in many parts of the world, we are witnessing turbulence in the financial sector. However, the Indian banking system seems to be far more resilient and outlook, as things stand today, look quite positive. The banking sector credit growth has been on a high at around 15% last year, while the deposit growth has been around the 10% level. Clearly, the scramble for deposits has led to increase in the current financial year.

Moving on to Equitas, I believe that the initial years of building a brand, raising liabilities, building systems, embarking on technology journey, adding people, all have come out well and we feel that we are on the right path in our journey of building a stable sustainable and scalable bank. On asset quality, I’m happy to share that the overall asset quality has improved significantly over the last year. Our GNPA as of March ’23 at 2.6% is at the same level of pre-COVID days. Last year we had guided for a 1.5% credit cost and the actuals has turned out to be at the same level. Since opening GNPA for the current year has come to the normal level, we believe credit cost also would get back to its normal level of around the 1.2% to 1.25%.

On advances growth, we had recorded a 35% last year. For the current year, we expect advances to grow around the 25% to 30% level. We have not been guiding on ROA, but since we became a bank, we have been saying as a model, Equitas should be geared for a 2% to 2.25% ROA, assuming that there are no heavy headwinds from the market. We became a bank in September ’16 and the demonetization happened in November ’16, which led to stress in the micro-finance book. It took us nearly three years for this to come to an ROA of 2.1% for the quarter-ending December ’19.

With COVID hitting us in March ’20, we faltered on the ROA again and it took us about 1.5 years to come back to the 2.2% ROA for the quarter-ending December ’22. After becoming a bank six years back, this is the first time that we have been able to deliver an over 2% ROA consecutively for two quarters. I hope that with God’s grace we should be able to maintain consistency on this front going-forward.

Our balance sheet continues to remain robust and we are well-capitalized with capital adequacy at 23.8%. I’m also happy to report that the Board of Directors of the Bank has recommended a maiden dividend of INR1 per equity share for the financial year ’23. Our landed cost of money has been coming down over the years after becoming a bank. For the next five, six years, we expect this to play out further, because of the kind of robust retail liability franchise that we have been able to build over the last five, six years. This should help to get our cost of funds very close to the larger banks as we move into the next five, six years phase of the bank.

The full benefit of having become a bank would be visible over these five, six years. With a good retail liability franchise built-up, a wide range of retail lending products in place and probably the best of governance standards in the industry, I believe we are entering into the best phase of the bank. And in this journey, I look forward to all of your continued support to the bank. We look forward to your support in this exciting journey.

I thank you once again for dialing-in on a Saturday morning. Thank you so much, and I now hand the call over to Rohit.

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

Thank you, Vasu sir, and a very good morning to everybody. Advances have grown by 35% year-on-year and 12% quarter-on-quarter to INR25,861 crores. Quarterly disbursement at INR5,917 crores grew by 80% year-on-year. This is the highest-ever quarterly disbursement. Collections too have been strong and the GNPA in absolute term has come down from INR837 crores in March ’22 to INR724 crores in March ’23. SBL advances have crossed INR10,000 crores. Buoyed by strong demand in the retail sector, small-business loan’s lead pipeline remained strong.

SBL disbursements grew by 56% year-on year. Quarterly disbursement for SBL too ever highest disbursement in a quarter. Merchant OD disbursements continue to gather momentum and the portfolio is showing an increasing trend month-after month. Ex-bucket collection efficiency in SBL continues to be at 99.6%. CV sales have grown by 38% year-on-year-on the back of strong demand, load availability and higher freight rates. Passenger vehicle sales have hit an all-time high with sales of 36.2 lakh units, a growth of 23% year-on-year.

Vehicle finance also delivered their highest-ever disbursements in a quarter. Improving cash flows of customers have resulted in improving collections. Expected collection efficiency for vehicle finance was at 99%. The overdue pool, GNPA and 1 to 90 DPD for the vehicle finance businesses all have reached pre-COVID levels. Microfinance has also seen a strong comeback with growth in advances and improving collection efficiencies in GNPA reduction. Ex-bucket collection efficiency in microfinance was at 99.6%.

Affordable home loans continue to gather pace. In addition to Gujarat and Maharashtra, affordable home loans are now operational in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. Based on the strong demand from all sectors and improving cash flows for customers, I do see a good momentum building up for quality growth in advances.

Thank you. Over to Murali Vaidyanathan.

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Thank you, Rohit. Good morning, all. I think, like Mr. Vasu clearly mentioned, credit growth going across is a very well come sign. And there is a squeeze of liquidity we are seeing it across and despite that, we can happily say that we have grown on our deposits by 34%. It has been a continuous journey for us as we are looking up to enhancing our acquisition through our sales, as well as specialized digital channel through B2C and B2B2C. I’m happy to say that all those three cylinders are firing adequately and we have introduced something called VRM one year back, and Virtual Relationship Managers are helping us and that portfolio has grown significantly. So, is the physical RM channels, so Relationship Management is helping us to grow the core, which we call it as a program Book Elite. Now Elite book has crossed 11,500 crore RV, thanks to family-based banking concept, so close to 68,000 families are banking with us. That shows the insight of it.

Second thing is we are seeing a good green-shoot on current account. We are getting into transaction-centric approach and current account has been backed-up by our acquiring business, where we are, like Rohit rightly mentioned merchant OD on one side, we also have POS machines, QR code and payment and transaction solutions. We are there in Top 25 and I think, single largest SFB at this point of time in terms of machines as well as transaction value. So, that’s one good value proposition which is working.

On the issuance side, good to see that our debit card spend in terms of e-com, as well as offshore, we are actually making a good industry benchmark and we should continue to focus on that side. RTD is looking up. Since saver is a key concept for us, we are getting into say more-and-more. As we get deeper and deeper shifting of money temporarily should happen because that’s the best-value and best emerging need which is happening. So overall, domestic side, we are consolidated and grown well. On NR side, the growth has been very encouraging. We are now present in close to 100 countries across where we have customers and our book has crossed INR1,400 crores of NR book and that’s another healthy sign of creating a channel and going detailed into it helped us.

In terms of PPT, that is party income, our insurance, mutual fund and our third-party distribution of broking accounts and all-in-all showing a very good traction and helping the customers to expand their investment as well as trading requirements. So increasingly, we see that our continued focus on CASA to gain the acquisition, penetrating through RTD as a key approach.

And with that note, I hand it over to Mr. Natrajan, Treasury — to take over– give us the Treasury perspective.

Natarajan Muthusubramanian — EVP & Head – Treasury

Good morning, everyone. FY ’23 has been a challenging one on the market front as the Russian invasion of Ukraine made things worse for Central Banks globally fight against a higher non-transitory inflation levels. Cryptocurrency and crypto extend meltdowns, bank collapses in the US and Europe and economic collapse of small countries where second order derivative effects of steep interest rate hike cycle that led to disruption and heightened volatility in markets across the globe.

For FY ’24 inflation appears to have pleated out globally, but continues to remain elevated. This is resulting in interest rates remaining higher for longer period and the discipline growth. Global consumer sentiment continues to remain strong and outside of tech, global labor market continues to be robust. With falling energy prices and reopening of China, global slowdown is not expected to be as severe as feared earlier. India continues to remain better positioned both structurally and cyclically and is expected to be one of the fastest-growing economies in the world with RBI’s GDP growth at 6.5%. This is supported by India’s high-frequency data indicators suggest sustained GST collections, strong manufacturing and agricultural activity output, moderating inflation and the credit growth, all pointing towards elevated activity levels, which signals confidence in the Indian economy. Markets continue to look for Central Banks for cues on interest rates and volatility may remain elevated till clarity emerges on the direction of rates, as Central Banks continue to fight inflation.

Coming to Equitas treasury performance for last quarter. This has been another stable performance. Profit on sale of investments was INR2.9 crores and MTM depreciation for the quarter stood at INR1 crore. Our funding profile has been quite stable with the opportunities available to raise funds, both in the form of refinance as well as IBPCs.

With this, I hand it over to Sridharan.

Sridharan N — Chief Financial Officer

Good morning to everyone. We had a good quarter on all fronts including growth in advances, deposits and profit. Our net interest income for the quarter came at INR707 crores as compared to INR552 crores during the same quarter last year, registering a growth of 28% Y-on-Y. Other income for the quarter came in at INR215 crores as compared to INR105 crores, a growth of 104%. Other income for the quarter includes INR70 crores of income received from sale to ARC. Net income grew 32% year-on-year to INR922 crores as compared to INR6 crores during the same quarter last year.

The total operating expenditure came at INR536 crores as compared to INR374 crores during the same quarter previous year. Cost-to-income moderated to 58.09% for the quarter. Excluding the impact of income from ARC sale, the cost-to-income would have been 62.87% for the quarter. Core pre-provisioning operating profit grew 11% year-on-year and 13% quarter-on-quarter to INR316 crores. Core PPoP through assets expanded to 3.79% for the quarter from 3.62% of last quarter. PAT for the quarter came in at INR190 crores as against INR120 crores during the same period last year, registering a growth of 59% Y-on-Y. And the annual PAT showed a growth of 104% to INR574 crores from INR281 crores in FY ’22.

As has indicated earlier, the bank has completed its microfinance loans through an ARP amounting to INR581 crores, out of which loan amounting to INR500 crores were already written-off and balance were 100% provided. Out of the sale proceeds of INR80 crores, the bank has recognized INR70 crores as other income and reverse the excess provision on NPA assets sold to the ARC amounting to INR11 crores. The bank has also provided INR40 crores against the security receipts held as per the RBI guidelines.

Now moving on to asset quality and provision, the bank carries a total provision of INR549 crores, NPA provision of INR412 crores and provision on standard assets at INR137 crores. In order to strengthen the PCR, the management made additional provisions of INR90 crores and total provision for the quarter is at INR85 crores. Details on thse are given on Slide 10 of our investor presentation. GNPA improved by 147 bps year-on year and came in at 2.6% in Q4 FY ’23 as compared to 3.46% in Q3 FY ’23 and 4.06% in Q4 FY ’22. NNPA came at 1.14% in Q4 FY ’23, as compared to 1.73% in Q3 FY ’23 and 2.37% in Q4 FY ’22. Provision coverage ratio improved to 56.9%. As of March 30, 2023, the total CRAR at 23.8% comprising of Tier 1 at 23.08% and Tier 2 at 0.72%.

With this, I would like to hand over to operator and we’ll be happy to take questions from your end. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Darpin Shah from Haitong India. Please go ahead.

Darpin Shah — Haitong Securities India Private Limited — Analyst

Hi, good morning, congratulations to the team for such a wonderful numbers. So, my first question is on cost to assets. We are, we ended the year FY ’23 at approximately 6.3%, so where do you see this trending over the next couple of years? And what will be the drivers for it?

Vasudevan PN — Managing Director & CEO

Hi, morning. Cost to assets will come down over the next few years, but it will come down very slowly, because cost to assets is going to be a factor of the product mix that we have. The existing products that we currently are lending and they are all generally very high touch, high feel kind of credit process that, that we have and the ticket sizes are at a lower level. In fact, the average disbursement value per account, if I remove microfinance and the NBFC lending, then the average ticket size comes to anywhere around INR6.4 lakhs to INR6.5 lakhs per customer. So, the current mix is the that we have that kind of a mix of portfolio today requiring high-touch and feel credit process and our current cost to assets is where it is today.

This is going to come down over the next few years as we introduce newer products where the touch and feel might be a little less required, the ticket size might be more than an average of INR6 lakh. All that will lead to a reduction in this. But that’s going to be very slow process, it’s not going to happen in a hurry. So, over the next maybe three, four years we might see it coming down now slowly and marginally.

Darpin Shah — Haitong Securities India Private Limited — Analyst

Okay, sir. Would you like put any numbers for FY ’25? FY ’24-’25, both the years?

Vasudevan PN — Managing Director & CEO

I don’t have a number for FY — FY ’24 though I think you can broadly take it that it will be remaining very much close to where it is today. Because the new products that we’ll introduce is largely going to be personal loan, but it will come only in the second half of the year and so it will not have material impact for the current year. So, it may not change — the current year may not change much, but ’25 may change, but will be very marginal. I don’t have a number, but it will be marginal.

Darpin Shah — Haitong Securities India Private Limited — Analyst

Okay, thanks. And the second question is on growth trends. So, you already mentioned about 25%, 30% kind of a growth. So, your microfinance again will be the — it will be following the same proportion as it is today, or we’ll see some trending down.

Vasudevan PN — Managing Director & CEO

Yeah, microfinance is currently around 18.7% or so. And over the next five years, we should see that coming down by maybe approximately about 4% to 5%.

Darpin Shah — Haitong Securities India Private Limited — Analyst

Okay, okay, thanks. I will come in the queue for follow-up questions. Thank you.

Vasudevan PN — Managing Director & CEO

Sure, thank you.

Operator

Thank you. We have our next question from the line of Shreepal Doshi from Equirus. Please go ahead.

Shreepal Doshi — Equirus — Analyst

Hello, sir, good morning and congrats to the whole team for the great quarter. Sir, wanted to understand firstly, that the additional provisions that we have taken for the purpose of strengthening, it also states that there were some change in policy. So, what is this about?

Vasudevan PN — Managing Director & CEO

Can you repeat that? It was not quite clear.

Shreepal Doshi — Equirus — Analyst

Sir, we have taken an additional provision of INR90 crore during the quarter and it is mentioned that this was due to change in policy, the provision policy for March ’23, so what is the tweak in the policy. Just wanted to understand that.

Vasudevan PN — Managing Director & CEO

Okay, so these are basically some kind of provisioning changes on the various NPA buckets. So, when the NPA is, 90 days, it becomes NPA, then at various stages of the NPA we have certain provisioning percentages. So, we changed some of that by increasing the percentage of provision at a earlier stage of the NPA, so it’s basically that. And this has to be consistent. So, whatever we change will remain consistent going forward.

Shreepal Doshi — Equirus — Analyst

Okay, okay. But this isn’t really…

Vasudevan PN — Managing Director & CEO

Shreepal, if you refer to the Q4 presentation of last year, you will get the details what we’ve said.

Shreepal Doshi — Equirus — Analyst

Okay, I’ll take it offline in that case. Sir, just wanted to understand that during this year — during the last 12 months, we’ve added 3,000 employees and so I just want you understand what function or business segments this recruitment would be in? And going ahead, what is our branch expansion strategy, because we have not really added many branches in the last two, three years? So, from that point of view, wanted to understand this aspect.

Vasudevan PN — Managing Director & CEO

See on the branch part of it, you know, we do have a pretty good network of branches today and the first focus is going to be to leverage the existing branch network. There will be approximately an addition of maybe about 15 liability branches and maybe another about 30 to 40 asset branches for the current financial year, but by and large the focus will remain leveraging the existing branch network that we have.

In terms of the staff, I will ask Rahul to brief you.

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

Shreepal, from last quarter to this quarter, roughly around 550-odd employee additions have happened. From this 300 is on the asset side and 200 is on the liabilities side and from this 300 again, 50 is largely towards collection. So, rest all our business, so, which is sales, front-end roles.

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

Even on the liability side.

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

Yes.

Shreepal Doshi — Equirus — Analyst

Got it, got it, sir. Do we still have this approach of having a certain liability branches? We don’t have — I mean, don’t we just have one branch wherein both asset and liability would be done, right?

Vasudevan PN — Managing Director & CEO

So, those are things which will evolve over a period of time. As the customer segments become common, then the servicing outlet also will become common. So, that’s something that will evolve over a period of time, but it’s going to take time.

Shreepal Doshi — Equirus — Analyst

Got it, sir. One last question. So the next project in pipeline is to — is the aspiration to become universal bank. So, what’s the timeline for the same? Or what are your thoughts on the same?

Vasudevan PN — Managing Director & CEO

So, we have completed the merger of the whole of the holdco with the bank. That was an important milestone that we had to achieve to meet the licensing conditions that we had from the regulators. So, that just got completed in the last quarter. So, we are in touch with the regulators and as and when they gave us a green signal that we can apply for a universal bank, we will do that.

Shreepal Doshi — Equirus — Analyst

Got it, sir. Thank you. Thank you so much and good luck for the next quarter.

Vasudevan PN — Managing Director & CEO

Yeah. Sure, thank you.

Operator

Thank you. We have a next question from the line of Savi Jain from 2Point2 Capital Advisors, LLP. Please go ahead.

Savi Jain — 2Point2 Capital Advisors — Analyst

Yeah, hi. Can you hear me?

Operator

Yes, we can.

Savi Jain — 2Point2 Capital Advisors — Analyst

Yes, congratulations on the numbers. One question I had was on the asset fee income that has not tracks the disbursement growth, which typically as tracked on the past. So, it is a little muted. Can you explain why…?

Vasudevan PN — Managing Director & CEO

Can you please repeat?

Savi Jain — 2Point2 Capital Advisors — Analyst

So, asset fee income, ex of the one-off ARC other income, if we remove that, the asset fee income growth Q-o-Q has been separate despite a significant growth in the disbursement number. So typically, there is a correlation between the disbursement and asset fee income. So, I just wanted to know why this quarter it has been separate.

Vasudevan PN — Managing Director & CEO

Yeah, so it has gone from 95 to 102. So, it has increased.

Savi Jain — 2Point2 Capital Advisors — Analyst

No, no. If you look at the disbursement growth has been significantly higher, right. So, 4,797 has gone to 5,917 Q-o-Q. That’s a 23.3% Q-o-Q growth in disbursements.

Vasudevan PN — Managing Director & CEO

I’ll come back offline on this. I don’t have a ready answer as of now.

Savi Jain — 2Point2 Capital Advisors — Analyst

Okay. And another question was on the OpEx, especially the other OpEx, which is — one besides the employee cost, that has gone up by 14% Q-o-Q. So, is there a one-off there or what exactly has led to such a large increase this quarter?

Sridharan N — Chief Financial Officer

So, there is no one-off, actually, rather increase in the employee expenses actually. Other expenses. See, there is no one-off or something. It is because of the increase in that business actually, growth.

Vasudevan PN — Managing Director & CEO

Just to give you detail, our switching cost as well as our inter-change cost, net of digital expenses, that is also…

Sridharan N — Chief Financial Officer

[Technical Issues]

Vasudevan PN — Managing Director & CEO

Yes, so the other expenses growth is normal only, it’s normal business expenses. Along with the business growth it happens. And as I mentioned earlier, there will be some level of investments that we are committed on the digital side. So, this also includes that cost.

Savi Jain — 2Point2 Capital Advisors — Analyst

So next year, will there be a higher than the asset growth, will there be higher OpEx increase or will there be negative operating leverage as well? I think the trajectory is quite steep for the other expenses.

Vasudevan PN — Managing Director & CEO

Yeah, see our OpEx growth will continue to remain on the higher side fundamentally, because of two factors. One is that our business model is a high-touch and feel model. And so to that extent, the cost will remain sticky. Second thing is that as we have been mentioning earlier, there are three factors on which we keep investing. One is in terms of our digital. Second is in terms of our brand awareness. We have to put money behind our brand awareness campaign. We have not been able to spend much in the past, but that’s something that we will probably increase and third, is that new product rollouts. We are looking at a personal loan at some point in time, we will look at a credit card at some point in time. And now the live Category A, Category 1 license has been given to us on forex. So, there some amount of investment that will do on this three new products going forward, as well as on the branding and in terms of digital, which I mentioned earlier.

So, cost-to-income, I mean, people have been asking us whether our cost-to-income will come down from — 63% or 64%, will it come down at some point below 60% and all that, but our response has been generally that we should be kind of looking at a cost-to-income at a similar level to where it is today. Fundamentally because whatever benefit we are able to get out of leveraging our existing investments in various resources will get used to support the future of the bank in the areas that I just mentioned. So by and large, you can expect our cost-to-income to remain at similar levels to where it is today, which means that OpEx cost increase should be fairly similar to what we are seeing presently.

Savi Jain — 2Point2 Capital Advisors — Analyst

Okay and on the the ARC sale, the income that you have recognized this quarter. From what I understand there’s not going to be any further provisioning on this in the future, right?

Sridharan N — Chief Financial Officer

Yeah, there will not be any further provisioning because the security receipts have been 100% provided at cost. So any collection, which will come on NAV basis as well as realization basis will be accounted as income.

Savi Jain — 2Point2 Capital Advisors — Analyst

Got it. Thank you.

Sridharan N — Chief Financial Officer

Thank you.

Vasudevan PN — Managing Director & CEO

Thank you.

Operator

Thank you. We have our next question from the line of Renish Bhuva from ICICI Securities. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah, hi, Vasu and team, congrats on a good set of numbers. Just two questions from my side. So, one is on the margin side. So, if you look at the trajectory margin has been structured around 9, 9.1. Despite our cost of fund increasing quarter-by-quarter or even this quarter yields are flattish, but cost of funds went up almost 20 basis points and margin have still remain where it is. So, what is the disconnect here, sir?

Vasudevan PN — Managing Director & CEO

See, the cost of funds has gone up by 20 basis points during the quarter. But we we’re also able to recover part of that in the form of increased lending rate and partly in terms of some level of operating efficiency which comes in the system. So, while the NIMs are more or less flat, just marginally higher than the last quarter, going forward also, we should expect that maybe in the immediate term, when I say medium term, maybe the next two to three-quarter kind of an immediate term, we should broadly expect to see the NIM around this same 9% level, give or take 10 basis points this way or that way.

But as we have been always saying earlier also, the NIMs will go down over a three-year, four-year period as both new products get launched and they start taking up a decent size of the book, which will come at a larger ticket size, which means that it will have a lower operating cost, etc. So, as those kind of get rolled out and they start contributing more, the NIMs should start coming down, but I think that’s at least an year-plus away.

Renish Bhuva — ICICI Securities — Analyst

Got it. Sir, I mean, is it fair to assume that incrementally whatever pressures we might see on the cost of fund side, we’ll be able to pass on to the customers?

Vasudevan PN — Managing Director & CEO

It’s a combination as I mentioned of passing on the part of that to the client by way of increased lending rate and also partly in terms of some level of efficiency that we continue to see in the system.

Renish Bhuva — ICICI Securities — Analyst

Got it, no sir, because I mean when we talk to peers, the commentary has been that it has been challenging to pass on higher lending rates especially in the vehicle finance business, so I just wanted to get a sense for what is our stance.

Vasudevan PN — Managing Director & CEO

By and large, see, we are not talking of a very large increase being passed on to the clients, because last quarter, the RBI rate did grow by 25 basis points, but subsequently in the last review, it remained flat. So, we don’t expect that from here on, there’ll be too much of requirement to increase their lending rate and this marginal increases that we might have to do over the next two, three, four months, it may be very marginal frankly, it may not be very high is what we believe.

Renish Bhuva — ICICI Securities — Analyst

Got it, sir. Got it, sir. And sir, my second question is on the retail TD share, so of course, more than 90% is non-callable. But if you look at the trajectory from last six quarter, the share of retail TD actually went down to 60% from 80%, year, year and a half back. So, despite in most of the calls we have been highlighting that we are focusing on retail TD, but ultimately our bulk TD proportion is going up quarter-by-quarter, so. I mean, how one should read these data points, sir.

Sridharan N — Chief Financial Officer

Yeah, there are three steps to it. One is retail TD in terms of number of customers we are adding into the book has gone up in last six months, which means average ticket size have come on and then granularity has gone up, that is one thing. Second thing, individuals opting for bulk TD has gone up. Earlier it used to be only institutions, for example, we have a new segment were NRIs and individuals is also started giving. See for us, we classify exactly what is given to us by the regulators, 2 core and above categorized it. So, even if you come with say 2.1 crore, it makes sense to take it into a bulk TD route. So, NRIs helped us. And similarly, individuals have helped us.

Third thing, there was a space available in the last quarter where we could get non-callable with a reasonably high duration of one year [Indecipherable] and one year-plus. So, we went on to that. So increasingly, you will see retail TD in terms of individuals growing and in bulk also, individuals, as well as NRIs coming in. One of the reason is the breadth and depth and taxation also. So, we are seeing a trajectory picking up there. And in bulk, we predominantly don’t focus on 100 crore, 200 crore, it’s between 3 crore to 10 crore as a specific bucket which deals as the arbitrage of costing as well as spread of number of accounts.

Renish Bhuva — ICICI Securities — Analyst

And sir, what is the rate differential between retail TD and bulk TD.

Vasudevan PN — Managing Director & CEO

See, retail TD is published rate, right. Bulk TD is based on TAP. So, we normally push for retail TDs only and retail TD rate.

Renish Bhuva — ICICI Securities — Analyst

Okay, but not materially high rates?

Vasudevan PN — Managing Director & CEO

Today actually, bulk is cheaper too at a industry level.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it. And sir, just last question, again equate on the participant which asked earlier. Then if we look at in conjunction with the FX and the OpEx part, so let’s say with the business growing, other OpEx is growing, but that is not sort offsetting by the higher asset fees, so. I mean, of course it means that we are seeing higher on sourcing and at the same time, we are not able to charge the same fees to the customer. Is that the right way to look at it or is there some other things which are still happening there?

Vasudevan PN — Managing Director & CEO

So, on the fee part that you’re asking, see, one is, you know as you keep building the portfolio, operating efficiencies will come into play and as the operating efficiencies will come into play that will take care of the increased cost that — the variable cost that we’ll incur. Secondly, you said that whether the sourcing costs are high. No. In SBL, 92% of our sourcing is direct, only 8% is through whatever, connectors are intermediaries. So, outsourcing is not the issue.

On the fee part of it, what has happened is, we have also got into other segments, not merely our traditional segments, but more credit segments where there was an opportunity last quarter, CVs have gone up, so prime CV is a segment. In SBL, secured business loans, which was a slightly high-ticket size customer that was an opportunity. And that is why the fee income has not grown in proportion to the disbursements, so the disbursements spike is very high. So, the customer interest income and the operating efficiencies itself we take care of the increased disbursement. It will not lead to a negative cost.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it, sir. This is helpful, sir. Thank you very much, sir.

Operator

Thank you. We have our next question from the line of Abhishek Murarka from HSBC. Please go ahead.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

Yeah, hi, good morning Vasu and team, and congratulations for a fantastic quarter. My question is first on credit cost guidance, what do you see it as for FY ’24, especially given this new provisioning policy? So, just some guidance on that would be helpful.

Vasudevan PN — Managing Director & CEO

So, as I mentioned in my earlier remarks also for the current year, we should, we should be budgeting credit cost of between 1.2% to 1.25%.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

Okay, okay, perfect. And my second question is, just some color on the business side. So, in vehicles how much yield increase have you been able to take in the last, let’s say, a year and currently, how easy are you finding it to pass on? I know you said that there is competition, you had replied to Renish also. But just some context in terms of the business dynamics, what’s happening in terms of ability to pass-on rates?

Sridharan N — Chief Financial Officer

So, in vehicle, 50% of our book is on the UCV. Yeah, only about 35% to 40% is on the new CV and the remaining 10% in used cars. So, the pressure on margins is primarily on the new CV, which is a limited book. We intend to — we have scaled-up for used cars in the last year and we intend to scale-up used cars further, so the used-car and used CV is a high-margin product where we don’t see a pressure on margins as of now and the new CV piece is very small, so the product mix will work in favor of vehicle finance.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

What would be the rate, the blended yield right now for used versus use?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

So currently, the blended yield for vehicle finance is 15% –16%.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

16%, okay, okay. All right. And just some similar commentary around SBL, what would be the yield and how much increase has been taken?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

SBL blended yields at 16.5%.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

Sorry, could you repeat that?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

About 17%.

Abhishek Murarka — HSBC Securities & Capital Markets (India) — Analyst

Okay, okay, got it, got it. Right. Okay, thanks. Thanks and all the best.

Vasudevan PN — Managing Director & CEO

Thank you.

Operator

Thank you. We have our next question from the line of Nidhesh Jain from Investec. Please go ahead.

Nidhesh Jain — Investec India — Analyst

Thanks for the opportunity. Sir, firstly on the liabilities, we have seen a bit moderation in CASA on a sequential basis. So, how should we think about CASA growth in FY ’24? And secondly, when do we see CASA cost — cost of CASA for us to trend downwards, because that still remains quite sticky? When do we get comfort to reduce the SAR rate for us?

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Hi, Murali, here. First, your question is very valid. See, at this point of time, the arbitrage between SAR rates and TD is very welcoming for a long-term saver. So, if you look into the segment, which we operate, saver as a segment, number of people opting to go for TD within the book taking existing money and bringing in new money, both are going up, so. I think at this stage, we should leave it to the depositors, because it is part of consumption cycle and we should be optimally priced. Today, on SAR rate, there are already most of the banks have crossed 7.25% also. And there are banks, which are crossed 6% also. So, the optimum pricing, we’ll start seeing once the interest rate starts dipping and giving us a favorable turn.

So at this point of time, if you see a laddering in terms of pricing, I’m sure you are aware, up to INR1 lakh bucket it is 3.5%, INR1 lakh to INR5 lakh, it is 5.5%, if you see these two buckets are growing because the compulsive proposition of spend which we have put in with debit card has gone up. So actually, the higher bucket where you have 7%, those are the people actually shifting towards TD and getting the arbitrage out. So, effective cost of — till we keep growing the 3.5% bucket and 5% bucket for us, it will help us to bring the cost of funds down. And CASA, the only way to pick up now is getting in the new customers to a continuous opportunity, which is available in the market, then keep cross-selling TD for a longer duration. That is going to be our approach and we are continuing in that direction.

Nidhesh Jain — Investec India — Analyst

Okay. So, can you share some data on what percentage of our SAR is from connecting customers…

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

It is there in presentation slide number, saving slab-wise 20, 23, we have up to INR1 lakh, it is 6%, INR1 lakh to INR1 crore, 63%, so 70% of the bucket. Okay, between that 1 to 5 will be another 8% to 9%. Top 15% of the book that is up to INR1 lakh and [Indecipherable] is contributing 15% of the book. So, we need to keep expanding the pie to get the cost of funds down. We need to expand INR1 lakh to INR1 crore bucket to get the SAR. This is two strategy through which relationship banking is working for existing book. Digital banking is working to source customers and sales channel is there to get the effective penetration.

Nidhesh Jain — Investec India — Analyst

Sure. How is our success in getting salaried accounts in the market?

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Salaried. Salaried, there are two sets of Salaried. We have created — one is, you create a corporate code and specifically target. We have close to 1,800 corporates with 30% of the employees going through us. We also do a unitary basis because our proposition is for savers. We don’t have the range of consumer products. So, in our SAR book today, 38% to 40%, 38% to 40% is salaried individuals who are holding balances with us because of the proposition. So our focus is to get individual targeted. Second is to to get the [Indecipherable] on, third stage work-in progress, which UAT has done, we will take through a digital route to target specific corporates of [Indecipherable] that work is on.

Nidhesh Jain — Investec India — Analyst

And secondly, on the asset side, we have written off almost INR1,000 crores of loan over last three years, FY ’21, FY ’22, ’23. So, if you can share some break up, how much is microfinance and how much is non-microfinance and what will be the strategy to get recovery from these return off pools?

Vasudevan PN — Managing Director & CEO

One sec, let then get the data on the breakup of written-off assets, but Rohit meanwhile, can talk about what is our likely recovering.

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

So, I just give you a sample example of the restructured pool, you’ll understand how it has behaved. In in the opening opening balance, we had INR1,881 crores of assets restructured. Out of those INR881 crores, INR833 crores worth of customers foreclosed or settled their accounts. So, the live book, there is only INR726 crores and about INR491 crores of customers have been are who are either written-off or in vehicle finance, repo sale has happened. Out of this microfinance, INR123 crores has been written-off and vehicle finance INR153 crores of customers have the vehicles were re-possessed and current NPAs, INR219 crores, so 73% of the customers have really been normal, it’s only about 27% of the restructured book customers who have not been able to pay.

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

This is on the written-off asset. See, if you look at no, the microfinance, close to INR535 crores, of which we have sold INR500 crores.

Vasudevan PN — Managing Director & CEO

Last three year written-off, he wants a breakup.

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Last three years, around INR400 crores in microfinance and INR150 crores in CV and and VL unsecured INR51 crores. That’s the breakup.

Vasudevan PN — Managing Director & CEO

Total into…

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

INR600 crores.

Vasudevan PN — Managing Director & CEO

In the last three years, we have written only INR600 crores. Not more than that?

Murali Vaidyanathan — Senior President & Country Head – Branch Banking – Liabilities, Products & Wealth

Technical…

Vasudevan PN — Managing Director & CEO

Technical, okay. Nidhesh, you got that.

Nidhesh Jain — Investec India — Analyst

Yeah, so — okay. So as per the — I think I’ve included both written-off and technical write-offs that was amounting to around INR1,000 crores in last year.

Vasudevan PN — Managing Director & CEO

See, the technical write-off is what we have write-off fundamentally arising out of microfinance, most of them. The other written-off is basically in vehicle finance. When we repossess a vehicle and it is sold and there is a shortfall that is written-off in the same quarter. And second thing is that in vehicle finance when the NPA bucket crosses a certain level like let’s say, two years or three years and we have not been able to repossess a vehicle even after that, then after that point in time, we do again a technical write-off in that vehicle finance portfolio also. So, that’s how it goes normally.

Nidhesh Jain — Investec India — Analyst

Okay, sure, sure. Thank you, sir. Thank you. That’s it from my side.

Vasudevan PN — Managing Director & CEO

Thank you, Nidhesh.

Operator

Thank you. We have our next question from the line of Aravind R from Sundaram Alternates. Please go ahead.

Aravind R. — Sundaram Alternates — Analyst

Hi, thank you for the opportunity. Llike I might have missed this, but I just wanted to understand the growth trajectory in credit in different segments and what you’re seeing different segments in proportion, like in vehicle finance as percentage of total loans or something like that.

Operator

I’m sorry, can you use your handset, please?

Aravind R. — Sundaram Alternates — Analyst

Can you hear me now?

Vasudevan PN — Managing Director & CEO

Yeah, Aravind. Now you are audible. Can you please repeat what is it — what is the question, please?

Aravind R. — Sundaram Alternates — Analyst

Yeah. Thank you for the opportunity. Like I just wanted to understand credit growth expectation in the next few years. And what is the mix you are expecting in each of the segments. I just wanted to understand that, yeah.

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

So, as Vasu sir mentioned, you know that we expect growth to be between 25% to — advances growth to be between 25% to 30% this year. And I think we’ll maintain that pace. On the mix between different segments, I think mortgages will be at about 50% of the book, microfinance will come down from 19% currently to about 15% and vehicle finance will be at about 20% to 25% of the book. So, this is what the current scenario is. This is what we are looking at as of now.

Aravind R. — Sundaram Alternates — Analyst

Yes. Thank you.

Operator

Thank you. We have our next question from the line of Manish Agarwalla from PhillipCapital. Please go ahead.

Manish Agarwalla — PhillipCapital — Analyst

Yeah, congratulations team and just one question on RBI draft on P&L charges. So any thoughts, how does that impact Equitas?

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

If you recall, we have been consolidating the past NBFC EHL with.

Vasudevan PN — Managing Director & CEO

The recent circular on P&L charges. I don’t think we will have much of an impact.

Manish Agarwalla — PhillipCapital — Analyst

Okay. So, despite being the fact that we are in a segment where the overdues are on the regular criteria. We don’t see any major impact in our numbers.

Vasudevan PN — Managing Director & CEO

Hello, can you repeat. You are not audible.

Manish Agarwalla — PhillipCapital — Analyst

Yeah, so the point I was trying to make is that we are in a segment which self assist and the overdues in that segment are very regular in nature, thought [Indecipherable] it might be very low. So, we don’t have — we don’t see any impact of this draft regulation on P&L charge, that’s what you want to confirm. Correct?

Vasudevan PN — Managing Director & CEO

Yes, yes, that’s what we are saying that there won’t be any impact on us on that circular if the circular comes into effect.

Manish Agarwalla — PhillipCapital — Analyst

Okay. The other data keeping question I had, can you confirm what is the outstanding standard asset provisioning and contingent provisioning in the book right now?

Vasudevan PN — Managing Director & CEO

Hello?

Manish Agarwalla — PhillipCapital — Analyst

Yeah. Outstanding standard asset provisioning and contingent provisioning if any in the book?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

Yes, the NPA provisioning is INR412 crores and INR136 crores is on the standards provisioning and restructured standard provisioning. So, totaling to INR548 crores.

Manish Agarwalla — PhillipCapital — Analyst

Okay. And finally, the restructured book, which we have this entirely pertains to SBL, or we have some portion of vehicle there?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

No, no, it’s across the bank. The number which we have quoted INR234 crores is across the bank.

Manish Agarwalla — PhillipCapital — Analyst

Can you quantify between…

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

[Technical Issues] has becomes zero…

Vasudevan PN — Managing Director & CEO

And the breakup, do you have breakup?

Rohit Gangadhar Phadke — President & Head – Emerging Enterprise Banking & Mortgages

One sec, we will give you the breakup.

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

See, we have in SBL, INR109 crores, CV INR80 crores and MSC INR45 crores. The entire microfinance moved. So the three totaling to INR235 crores.

Manish Agarwalla — PhillipCapital — Analyst

Okay, fine. Thank you very much. It’s helpful.

Vasudevan PN — Managing Director & CEO

See, basically, on the restructured book, there was certain level of worry in the market in terms of the size of our restructured book when we initiated that in December of ’21. We had a 10% of our book restructured, 9.7% or whatever. Around 10% of our book was restructured. But the reality is that it’s played out fairly well, and today, at the end of March ’23, we are left with only about INR235 crores of restructured book. And against that restructured book, we have an NPA of INR177 crores, which is all put out in your presentation at page 11, and again, this INR177 crores of NPA in restructured book, we have 88% provision coverage in the system. So, I think we are fairly well-covered on the restructuring and it’s actually played out well.

And you know a bank like ours, which is focusing on a certain segment of borrowers who are from the very, very, the low-income segment, we just got to be a lot more humane and consider it and empathetic to our client base in terms of stress like what we saw in the last two years, we can’t just be like any other bank trying to keep our restructuring or moratorium etc., low, we can do that, we just got to be supportive to these customers, because you know the message that we keep giving internally also to our sales staff and our credit staff, when they do a transaction for a customer is that if they make a mistake because you know the customer doesn’t — beyond a point, he doesn’t even know how much he is actually making out of his business.

We got to sit down and create a kind of a balance sheet or P&L for the customer to determine his level of income and then remove something for his expenses and say what’s the balance available for an EMI repayment and use that to calculate the loan that he can actually be able to borrow and service. So, we do that kind of calculation for the customer and the message to the team is that you guys make a mistake, what happens is, the bank will have a small write-off of the bank will get on with its own life will never be impact that. But for that individual customer for whom our stuff makes the mistake. At the end of the process that the bank will roll-out, the customer will lose his property and that property is probably the only property he has in his life and he loses his property.

So, we just got to be very careful, very sympathetic and very empathetic with kind of segment of borrowers that we deal with. And so we did go for a very large level of restructuring in 2021, but it’s played out well. And the bank has actually come out very strongly after that. And today the restructuring is mostly completed in terms of either payment or in terms of closure or in terms of NPA and rate and all or whatever. Similarly, I’ll just give you one more data point. I mean, just to refresh all your memories. In 2020, when RBI came with a moratorium, 90% by value and 97% by number of customers took the moratorium in Equitas bank. Just can you believe that number? 90% by value took moratorium, 97% by number of customers took the moratorium.

But at the end of two-year of COVID, the bank is absolutely back to very strong financial position, our J&Js are absolutely back to our pre-COVID levels, collections are very robust, customers have been able to come back very strongly and repay their loans and the save their property and protect their security, whatever they’ve given to the bank. And so it’s really play-out very well. So, this kind of an empathetic approach is something that a bank like us will have to keep in mind all-the-time. So, I just thought that I’ll just gave you that background, because quite often we tend to in our own analytics on financial numbers, I think sometimes, we tend to forget the kind of customers that we service and when you forget that then I don’t think you are doing the right business at all.

Manish Agarwalla — PhillipCapital — Analyst

Yeah, thank you, Vasu sir for your replay and all the best.

Vasudevan PN — Managing Director & CEO

Sure, sure. Thank you. Bye.

Operator

Thank you. We have our next question from the line of Ashlesh Sonje from Kotak Securities. Please go ahead.

Ashlesh Sonje — Kotak Securities — Analyst

Hi team, good morning. First question is on the slippages front we have seen a meaningful sequential decline on slippages, can you give some color on what is driving this decline?

Sridharan N — Chief Financial Officer

So, slippages were down to INR190 crores from INR286 crores, so I think slippages are improving because there is enough cash flow with the customer now. Collections are improving in the field and I think this trend will be maintained.

Ashlesh Sonje — Kotak Securities — Analyst

You expect the number to decline further from here during FY ’24?

Sridharan N — Chief Financial Officer

It will definitely improve. It will not — it will not be bad, that much I can tell you 100%, it will definitely be better than INR190 crores.

Ashlesh Sonje — Kotak Securities — Analyst

Okay, okay, perfect. And secondly, on the cost of funds front we have seen a sequential increase of about 20 basis-points. But looking at the liabilities book that we have today, how much — if we assume no further hikes on the term deposit rates and the SAR rates, which we offer, what is the amount of increase on the cost of funds that we’re likely to see at the peak?

Vasudevan PN — Managing Director & CEO

See it is directly proportional to the product mix. Today, we are at CASA of virtually close to, last quarter 42, and that has actually cost of SAR is 6.2 or 6.3. Incrementally as you saw CD, the incremental cost of TD is now closer to 8.5. So, which means there is an arbitrage of 23 — 230 bps to be very precise. So, if we continue to get CASA 45% as our total composition, we can maintain the CASA costing right. TD is market-driven, TD which was 7.1 has moved up to 7.5, so 40 bps increase is what has happened in last three-quarters if you see. So, if we have to sustain that, we need to increase the CAR to CASA ratio. CASA ratio and importantly, getting into the TD mix.

So, TD is market-driven. TD despite that 250 bps of RBI hike, we have still not gone up to the 250 bps. We are at 150, 160 bps at this point of them. 175 basis points post this hike. So, I think today we don’t see an increase in SAR rate. So, which means, SAR book can be — as we grow, we can maintain the cost of fund on CASA. On TD, we are going on duration-centric. So, we are looking at certain buckets only. So, that is directly driven by the price. So, I think 3 bps to 4 bps hike per month over next six months is seen, then as it cools down, we need to bring it back.

Ashlesh Sonje — Kotak Securities — Analyst

So, when you say 3 basis points to 4 basis points is the hike on cost of funds on a monthly basis that is…

Vasudevan PN — Managing Director & CEO

Because of the proportion of 55%, yes, yes.

Ashlesh Sonje — Kotak Securities — Analyst

Is that because of the TDs getting repriced or you are talking about hike in the…

Vasudevan PN — Managing Director & CEO

[Speech Overlap] existing TD, see there are two sources of TD, one is you get from the market, which is an open-market sourcing, which is directly. Secondly, you’re replacing on maturity a lower cost TD with a higher cost one, because that is market driven again.

Ashlesh Sonje — Kotak Securities — Analyst

Okay, okay, perfect. Thanks a lot. This is helpful.

Operator

We have our next question from the line of Manuj Oberoi from YES Securities. Please go ahead.

Rajeev Mathur — YES Securities — Analyst

Yeah, hi, sir, this is Rajeev, congratulations on very strong set of numbers. Just a few questions. Firstly, SMA 1 and 2 position as of December, what will that be?

Vasudevan PN — Managing Director & CEO

SMA 1 and 2…

Rajeev Mathur — YES Securities — Analyst

As of December?

Vasudevan PN — Managing Director & CEO

That’s basically talk of standard asset provisioning.

Rajeev Mathur — YES Securities — Analyst

No, no I am saying SMA 1 and 2 portfolio as of the end of December. So, you have given as the end of March in the presentation.

Vasudevan PN — Managing Director & CEO

Okay, okay, okay. Okay, you’re talking of Slide 11, where we have given you March ’22 and March ’23 data. So, what’s the December number of SMA. The total of SMA 1 and 2 in December is…3.88 is the total of SMA 1 and 2 in December. And in March, that has come down to 3.19 or something like that.

Rajeev Mathur — YES Securities — Analyst

And sir, what happened to those INR60 crore of restructured standard provision, which we were planning to utilize? So, have they been fully consumed in the current quarter in the form of additional provisions?

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

This quarter will have consumed INR11 crores which has been written back, so over a period, actually, depending on the collection, prescribed to the RBI guide, rest will be equalized.

Rajeev Mathur — YES Securities — Analyst

So, what is residual balance of those provision now, which can we written back maybe?

Rahul Rajagopalan — Deputy Vice President – Strategy & Investor Relations

Yeah, one second. We have balance of INR6 crores. In Q3, we utilized INR30 crores.

Rajeev Mathur — YES Securities — Analyst

Yeah. Got it, so only INR6 crores now. Yeah, and just last thing. So, I see you holding PCR of 88% on the restructured NPLs, which is significantly higher than the overall PCR on the NPLs. So, why so?

Vasudevan PN — Managing Director & CEO

I mean, these are restructured assets, because at some point the customer was under stress. So basically, we have a — we have a policy of having a higher provision for restructured. And so that whatever trouble that might arise in future out of that should be reasonably covered up. Our overall PCR on the entire NPA book is 57% as of March, and — so we should be looking to increase that 57% over the next few quarters. And our target is clearly to go to the 70% level in the next few quarters.

Rajeev Mathur — YES Securities — Analyst

Got it, sir, thank you so much.

Vasudevan PN — Managing Director & CEO

Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. PN Vasudevan for his closing comments. Over to you, sir.

Vasudevan PN — Managing Director & CEO

Yeah, thank you. Thanks all of you for dialing-in and keeping us on our toes with all your questions. We really appreciate it that you are taking your time-out and to helps us improve our business and keep it going forward. So, we look forward to your continued support. Wishing you all the very best. Bye-bye.

Operator

[Operator Closing Remarks]