Housing Development Finance Corporation Ltd (HDFC) Q4 FY23 Earnings Concall Transcript

Housing Development Finance Corporation Ltd (NSE:HDFC) Q4 FY23 Earnings Concall dated May. 04, 2023.

Corporate Participants:

Keki M. Mistry — Vice Chairman and Chief Executive Officer

V. Srinivasa Rangan — Executive Director

Renu Sud Karnad — Managing Director

Analysts:

Suresh Ganapathy — Macquarie Capital — Analyst

Mahrukh Adajania — Nuvama — Analyst

Mansi Sajeja — SBI Funds Management — Analyst

Adarsh Parasrampuria — CLSA — Analyst

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Sri Karthik Velamakanni — Investec — Analyst

Pooja Kabra — Sahasrar Capital — Analyst

Saurabh Kumar — JPMorgan — Analyst

Rakesh Kumar — B&K Securities — Analyst

Anand Dama — Emkay Global — Analyst

MB Mahesh — Kotak Securities — Analyst

Jai Mundhra — ICICI Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good afternoon and welcome to HDFC Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions]

We have with us, HDFC’s Vice Chairman and CEO, Mr. Keki M. Mistry; Managing Director, Ms. Renu Sud Karnad; Executive Director, Mr. V.S. Rangan; Member of Executive Management and Chief Investor Relations Officer, Mr. Conrad D’souza; and Additional Senior General Manager, Anjalee Tarapore.

I would now like to hand the conference over to Mr. Keki M. Mistry. Thank you, and over to you sir.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Thank you. Thank you very much. And good afternoon, everyone. At the outset, I would like to welcome all of you to HDFC’s earnings call for the current financial year. The Board of Directors at its meeting held earlier today approved the financial results for the year ended March 31, 2023, which were subjected to an annual audit.

Let me start with outlining a few developments in the economy over the last three months, which have a bearing on the corporation. The Monetary Policy Committee at its meeting held in February 2023, increased a policy repo rate by a further 25 basis points to keep inflation expectations anchored. The aggregate increase in repo rate since May 2022 has been 250 basis points.

During the quarter, there was a further uptick in interest rates, consequent to which we have increased deposit rates, as well as rates on our loan products. In its April 2023 Monetary Policy, RBI has paused the rate hikes, RBI will however monitor price stability in determining further rate action. The momentum in the economy was strong right through the financial year ending March 2023. This is reflected in a significant pickup in individual loan disbursements, and a 17% growth in the individual loan book on an AUM basis.

During the year, the loan book crossed INR6,00,000 crores and the AUM crossed INR7,00,000 crores. March 2023 witnessed the highest ever monthly individual disbursements in HDFC’s history. Asset quality has continued to reflect improvement. Stage 2 and Stage 3 loan assets have reduced from a peak of 9.2% in June 2021 to 6.7% in March 2022, and now further down to 5.0% in March 2023. Over the next few minutes I will give you a summary of the key highlights of the performance for the year and the quarter ended March 31, 2023.

Let me start by summarizing the progress of our business through this period. Our individual loan disbursements for the year ended March 2023, grew by 16% over the previous year. Housing disbursements constituted 93% of individual disbursements in the current year. Growth in home loans was seen in all segments of the market. 94% of new loan applications were received through the digital channels.

During the fourth quarter, we sold individual loans, aggregating to INR9,340 crores. The individual loans sold during the last 12 months amounted to INR36,910 crores. These loans were assigned to HDFC Bank pursuant to the mortgage sharing agreement with the Bank. Individual loan book growth on an AUM basis was 17%. If the loans amounting to INR36,910 crores had not been sold during the preceding 12 months, then the growth in the individual loan book would have been 24%.

On a balance sheet basis, our individual loan book increased to INR4,99,496 crores. In addition to this, the individual loans sold by the corporation and outstanding as of March 31st, 2023, amounted to INR1,02,071 crores. HDFC continues to service these loans. Individual loans outstanding on an AUM basis amounted to INR6,01,567 crores, a growth of 17% over the previous year.

As at March 31st, 2023, our non-individual loan book on an AUM basis was INR1,22,421 crores. As mentioned in earlier calls, construction finance loans unlike lease rental discounting loans have a longer disbursement period as they are disbursed based on progress of construction and after the developer has brought in his equity.

Further, over the last few quarters, we have seen some scheduled repayment of earlier facilities and resolution of some stressed assets. We have also on maturity run-down exposures in the loan book to ensure compliance with HDFC Bank’s norms in lieu of the impending merger. Such loans aggregated to around INR18,000 crores. The total assets under management as at March 31st, 2023, amounted to INR7,23,988 crores, as compared to INR6,53,902 crores in the previous year, a growth of 11%. If no loans have been sold during the preceding 12 months, then the growth in the total loan book would have been 16%.

Prepayment on retail loans amounted to 11.3% of the opening loan book. The average size of individual loans for the year ended March 31st, 2023, stood at INR36,20,000, as compared to INR33,10,000 in FY 2022. The contribution in value terms from customers with an increased — with an annual family income of INR18,00,000 or more has increased during the year to 53% from 45% during the corresponding period in the previous year.

During the year ended March 31, 2023, 23% of home loans approved in terms of number of customers and 9% in value term were to customers from Economically Weaker Section and the Lower Income Group. The average home loan to customers in the Economically Weaker Section amounted to INR10,70,000 and to customers in the Lower Income Group segment amounted to INR19,40,000.

If we break up the loan book outstanding as at March 31st, 2023, on an AUM basis into different categories, then individual loans constituted 83% of the total loan book, as compared to 79% in the previous year. Construction finance constituted 7% of the total loan book, lease rental discounting loans constituted 9% of the total loan book, while corporate loans constituted 4%.

If we were to look at the incremental loan book growth, then for the year ended March 31st, 2023, the entire growth is from individual loans. 98% of the loans were sourced through distribution channels. However, this is largely through HDFC Sales and HDFC Bank. HDFC Sales accounted for 51% with the loans sourced, while HDFC Bank accounted for 31%. Third-party DSAs accounted for 16%. Thus, 84% of HDFC’s individual business was sourced directly or through our associates.

The Emergency Credit Line Guarantee Scheme was extended to mitigate the economic distress caused by the COVID pandemic. Under ECLGS 1, 2 and 3, the Corporation has disbursed in aggregate amount of INR1,883 crores till March 2023, which amounted to 0.3% of the loan book. Amounts disbursed under this facility are guaranteed by the Central Government.

The Reserve Bank of India permitted a one-time restructuring of loans under its resolution of COVID-19 related stress. As at March 31st, 2023, the outstanding loans under OTR 1 and OTR 2 amounted to INR3,889 crores, which is equivalent to 0.6% of the loan book as compared to a peak of 1.4% in September of the previous year. 98% of the OTR loans are in the individual loan category.

The average collection efficiency for individual loans on a cumulative basis, this is not for the month, this is for the full year, over the last full year is over 99%. The Corporation has continued to report NPAs in accordance with the revised RBI circular of November 12, 2021. December 2021 was the first quarter when we were required to report NPAs under the new norms brought in by RBI.

Since then, we have re-engineered our recovery mechanisms and processes and I am happy to report that as of March 31st, 2023, gross non-performing individual loans calculated under the new norms stood at 0.75%, down from 0.99% in March 2022 and a peak of 1.44% in December 2021. So effectively, the decline has been from 1.44% to 0.75%.

Similarly, gross non-performing non-individual loans stood at 2.9%, down from 4.76% in March ’22. As for the new regulatory norms, the gross non-performing loans as at March 31st, 2023, stood at INR7,246 crores. This is equivalent to 1.18% of the loan portfolio, which is down from 1.91% in March ’22, and a peak of 2.32% in December 2021. So effectively over this period of time from December ’21 to March ’22 — to March ’23, I’m sorry, we’ve seen a decline from 2.32% to 1.18%.

The improvements in credit quality is also reflected in the credit costs, which I will cover later. As at March 31st, 2023, the Corporation carried a provision for loans of INR12,145 crores. Under IndAS accounting, both asset classification and provisioning had moved from the incurred loss model to the Expected Credit Loss model for providing for future credit losses.

Based on the model, the total EAD, that’s our exposure at default of INR6,19,798 crores is broken up as under Stage 1 constitutes 95% of the EAD, Stage 2 is 3.6%, and Stage 3, 1.4%. We have seen a 4.2 percentage point reduction in the aggregate of Stage 2 and Stage 3 assets from the peak of 9.2% in June 2021 to 5.0% of the exposure at default over the last seven quarters.

In fact, in the current financial year itself we have seen a 170 basis points reduction in the aggregate of Stage 2 and Stage 3 assets from 6.7% in March 2022 to 5.0% in March 2023. During the quarter, we have charged the profit and loss account with a sum of INR438 crores towards provisioning. The aggregate charge to the profit and loss account for the year is INR1,795 crores.

The ECL to EAD coverage ratio for Stage 2 assets is 27% and for Stage 3 is 53%. The provisions carried at the percentage of the EAD amounted to 1.96%. As a result of the improvements in asset quality over the last eight quarters, annualized credit cost for quarter four was 25 basis points. Credit cost for the year is 27 basis points, compared to 33 basis points in the previous year. We had stated in earlier earnings calls, that as asset quality related issues get resolved, we should, over a period of time, be able to normalize the credit costs to pre-COVID levels on a sustainable basis. This in turn will have a positive impact on the return on equity.

We continue to hold all our investments in HDFC Bank, HDFC Life, HDFC Asset Management, and all other subsidiaries and associate companies at the original cost of acquisition, which is the price we had paid whilst making those investments. These investments are not accounted for on a fair value basis.

If we were to mark-to-market the listed investments, as at March 31, 2023, the unrealized gain, which is the difference between the market price as on March 31, 2023 and the carrying cost would be INR2,41,392 crores. This unrecognized gain is not part of our net worth, nor has it been considered in our capital adequacy calculations. Our capital adequacy ratio on March 31st, 2023 stood at 24.3%, of which Tier 1 capital is 23.8% and Tier 2 capital is 0.5%. The capital adequacy is well above the regulatory requirement. Risk weighted assets stand at INR4,75,567 crores.

At this stage and as we’ve done it in the past earnings call, it is important to talk about the return on equity. Under the IndAS accounting norms, net worth includes certain items, which do not form part of Tier 1 capital under the prudential regulations. These include IndAS Transition Reserve, Deferred Tax Liability on Special Reserve, fair value gains on investments through OCI, investments in subsidiaries and associates in excess of 10% of net owned funds, and securitization gains recognized upfront in accordance with IndAS requirement. These items aggregate to INR20,725 crores. Hence, Tier 1 capital is INR1,13,260 crores, as against a reported net worth in March 2023 of INR1,33,985 crores.

A more appropriate way of calculating the ROE would therefore be on regulatory Tier 1 capital as against the conventional method of computing it on total net worth. The return on equity based on Tier 1 capital for the year ended March 31, 2023 is 16%. As of date, 3,600 warrants were converted into 3,600 shares at the Corporation at a price of INR2,165 per share. The last date for conversion of warrants is August 10, 2023.

As at March 31st, 2023, the Corporation’s total borrowings amounted to INR5,68,222 crores. Term loans including the external commercial borrowings of $1.5 billion equivalent drawn in the current year and refinance from the National Housing Bank accounted for 28% of the borrowings.

Market borrowings, that is NCDs and commercial paper accounted for 45% of the borrowings. Deposits as at the year end amounted to INR1,52,111 crores and constitute 27% of the borrowings. It is very important to mention here that whilst the deposit level has remained steady, retail deposits now constitute 73% of deposits, as compared to 62% in March 2022. We continue to encourage retail deposits, which constitutes 16% of the incremental borrowings during the year.

With the introduction of the liquidity coverage ratio in December 2021, the Corporation is required to maintain liquidity in High Quality Liquid Assets. The Corporation’s HQLA, which is High Quality Liquid Assets, is largely government securities. The government securities holding as at March 31st, 2023 is around INR63,000 crores. The average LCR for the last quarter was 128%, significantly higher than the regulatory requirement.

I will now move to the profit and loss account. The year has seen a volatile interest rate environment and therefore, some of the numbers of the current year are not strictly comparable with the previous year. There are three factors which have affected the profits of the current year. These are: One, the impact on net interest income due to the transmission gap between increase in funding costs and increasing in lending rates.

Two, due to volatility, equity markets — volatile equity markets, we had a significantly lower gains on fair value of investments through the profit and loss account as compared to the previous year. Fair value gains for the current year was lower at INR362 crores, compared to INR938 crores in the previous year.

Thirdly, the expense ratios are higher as we incurred expenses upfront on staffing, IT and branching to meet the increase in demand for housing loan, as well as some merger-related costs. There was also an increase in legal expenses, due to an increase in business, as well as resolution of some of the stressed assets. Needless to add, whilst these expenses have been incurred upfront, the benefit of the expenses incurred will accrue over the coming periods.

Let me first of all speak of the issues which have had an impact on the net interest income. In the year, financial year — in the current year, we have had rate actions, which have had an immediate impact on borrowing costs, which in turn, have not been simultaneous with the transmission of rates on the assets side. This we had mentioned in the previous earnings calls also. This has had a short-term impact on net interest income. We however, overcome — overcame this by passing on the rate hikes, so as to maintain net interest margins and spreads.

Secondly, during the financial year, RBI increased repo rate 6 times, in all aggregating to 250 basis points. In the run up to the expectation of the rate hikes, market rates and swap rates increased and this had an immediate impacts on our borrowing cost, while our lending rates increased only after an increase in policy rates. Thus, whilst we had an almost immediate impact on borrowing costs, the lending portfolio repriced over a quarter. This transmission lag has had a slight short-term impact on the NII growth for the year.

Lastly, the proportion of the retail loan book has increased to 83% over the last few quarters. Return on equity on both the retail and the non-individual business is more or less the same. However, the spreads in the non-individual loans are higher, due to one higher capital allocation and two higher credit costs.

Net interest income purely on the basis of interest without taking cognizance of the profit on sale of loans during the quarter stood at INR5,321 crores, compared to INR4,601 crores in the corresponding quarter of the previous year, a growth of 16%. For the year ended March 31st, 2023, the net interest income amounted to INR19,248 crores, compared to INR17,119 crores in the previous year.

If we adjust for the one-time impact of the transmission lag in passing on the rate hikes to the customer, as well as the impact of the swap benefits in the previous year, the NII growth for the year would have been 17%.

It is important to note that credit costs are lower as a result of improved asset quality consequent to a larger proportion of individual loans. As we mentioned several times in the past, we’ve always targeted the net interest margin of between 3.3% and 3.9%. The net interest margin for the year ended March 31st, 2023 stood at 3.6%. This is an improvement over the year and reflects on our ability to manage the transmission lag. Net interest margin for quarter four was 3.7%.

The spread on loans over the cost of borrowings for the year ended March 31st, 2023 was 2.29%. The spread on the individual loan book was 1.92% and on the non-individual book was 3.62%. Income earned from deployment of surplus funds in cash management schemes of mutual funds and government securities was much lower at INR245 crores as compared to INR561 crores in the previous year. This was due to average level invested this year in liquid funds at INR4,553 crores as compared to INR11,843 crores in the corresponding period of the previous year.

There was no profit on sale of investments during the fourth quarter, both in the current year as well as in the previous year. For the full year, there was a profit of INR184 crores on sale of investments, compared to INR263 crores in the previous year. Dividends received during the year — during the quarter, I’m sorry, was INR207 crores, compared to INR128 crores in the corresponding quarter of the previous year. Dividend during the year was received predominantly from a group companies. And during the course of the year, we earned a total of INR2,735 crores by way of dividend as compared to INR1,511 crores in the previous year.

During the quarter ended March 31st, 2023 for investments classified as fair value through profit and loss account, which is FVTPL, there is a gain of INR273 crores as against INR267 crores in the corresponding quarter of the previous year. For the full year, the net gain on fair value changes stood at INR362 crores, which is significantly lower when compared to INR913 crores in the corresponding period of the previous year. This is entirely due to the volatility in equity markets.

Under Indian Accounting Standards, the stock options granted to employees are measured at the fair value of the option on the date of grant. This fair value is accounted for as employee compensation costs over the vesting period of the options. Accordingly, employee benefit expenses for the year includes an amount of INR205 crores towards employees — towards stock option cost.

For the year ended, March 31st, 2023, the cost-to-income ratio stood at 9.2%. For the quarter ended March 31st, 2023, the standalone profit before tax was INR5,398 crores, compared to INR4,622 crores in the fourth quarter of the previous year, a growth of 17%. Tax provision for the third quarter amounted to INR973 crores, compared to INR922 crores in the fourth quarter of the previous year.

The standalone profit after tax for the fourth quarter stood at INR4,426 crores compared to INR3,700 crores in the fourth quarter of the previous year, resulting in a growth of 20%. For the year ended March 31st, 2023, the standalone profit before tax was INR20,014 crores compared to INR17,246 crores in the previous year, a growth of 16%.

Tax provision during the year ended March 31st, 2023, stood at INR3,775 crores compared to INR3,504 crores in the previous year. The standalone profit after tax for the year stood at INR16,239 crores compared to INR13,742 crores in the previous year, a growth of 18%.

Pre-tax return on average assets for the year was 3.0%. Post-tax return on average assets was 2.5%. The basic and diluted EPS on a face value of INR2 per share was INR89.20 and INR88.50 respectively. The consolidated profit before tax for the year stood at INR32,131 crores as compared to INR28,252 crores in the previous year. After providing INR4,431 crores for tax, the consolidated profit after tax for the year stood at INR27,700 crores as compared to INR24,042 crores, a growth of 15%.

The profit attributable to the Corporation was INR26,161 crores as compared to INR22,595 crores in the previous year, a growth of 16%. The Board of Directors after assessing the capital buffers and liquidity levels have declared an interim dividend of INR44 per share. This is a face value of the INR2 per share and this compares to INR30 per share in the previous year. The dividend payout ratio of 49.7%. The record date for determining the shareholders entitled to receive the interim dividend for the financial year ended March 31st 2023 is May 16, 2023. As at March 31st, 2023, the Corporation had 4,017 employees. Total assets per employee stood at INR175 crores. Net profit per employee was INR4 crores.

Let me spend a few minutes to give you an update on the merger. As you are aware, on April 4, 2022, the Board of Directors of HDFC Limited and HDFC Bank Limited approved a composite scheme of amalgamation of HDFC with HDFC Bank, subject to regulatory approvals from various authorities, statutory authorities, regulatory authorities, shareholders, creditors, etc. Upon the scheme becoming effective, the subsidiaries associates of the Corporation will become subsidiaries and associates of HDFC Bank. HDFC Bank will then be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of HDFC Bank.

The final hearing of NCLT was held on February 27, 2023, approving the scheme of amalgamation. You may also be aware that clarifications on requested forbearances have been provided by RBI. We are in the process of obtaining all the residual accruals from the respective regulators in respect of the subsidiary and associate companies. We expect the effective dates of the merger to be announced July 2023 based on the current progress. HDFC’s distribution efforts span 737 outlets, which include 214 offices of HDFC’s wholly-owned distribution company, HDFC Sales Limited. HDFC covers additional locations through its outreach programs.

We continue to engage with all our stakeholders on ESG. In accordance with the SEBI requirements, the business responsibility and sustainability report for the year will be uploaded on our website shortly. For further information on ESG-related queries, you may engage with Investor Relations team Anjalee and Conrad.

The Corporation’s Corporate Social Responsibility activities focused primarily on healthcare, education, persons with disability and environmental sustainability. CSR activities were conducted either directly or through the H T Parekh Foundation. The CSR spend during the year was INR214 crores.

The above were some of the highlights of the results for the year ended March 31st, 2023. We may now proceed to question-and-answer. I would request you to kindly introduce yourself and be brief with your question. And I and my colleagues who are sitting here will try to respond to your questions. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have a first question from the line of Suresh Ganapathy from Macquarie Capital. Please go ahead.

Suresh Ganapathy — Macquarie Capital — Analyst

Yeah, Keki, my first question is on the warrants which are expiring on 10th of August. What happens to that if suppose the merger happens in July?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So the warrants which would have been — the warrant holder who would have got HDFC Limited share will now get HDFC Bank shares in the same proportion as the merger, which is 1.68.

Suresh Ganapathy — Macquarie Capital — Analyst

Okay. Fine. That’s clear. Now, on the —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Let me complete that. In other words, if you were entitled to, let’s say, 100 shares of HDFC, instead of getting 100 shares of HDFC, you will now get 168 shares of the Bank.

Suresh Ganapathy — Macquarie Capital — Analyst

Okay. Clear. Now, on the LCR thing, so you are saying your LCR is 128% and your government securities holding is INR63,000 crores. In other words, INR63,000 crores divided by the net cash outflow is equal to 128%. Is that the way we should look at it? I mean, I’m just wanting to understand what is the excess cushion that you hold. Because once you go into the bank, you need to have an LCR of 100%. So, will I calculate that excess 28% as the excess SLR. If I do that, it comes out of the INR15,000 crores.

V. Srinivasa Rangan — Executive Director

So, Suresh, that amount is actually keeps fluctuating, because it all depends on the next 30 days outflows, okay? So as I mentioned to you last time also, depending upon how the liability profile is actually shaping up, the next 30 days outflows will keep fluctuating. So as you are talking today based on that our — and also the way the LCR is computed for NBFCs and the banks are different, because the run-rate for some of the liabilities are different for the bank and different from the NBFC. So if you consider all that if you were to apply this is 128% roughly, this is just a rough number, this 128% will probably convert back into something like 70%-odd of the Bank, 70%, 75% LCR for the Bank in a banking model, actually.

Suresh Ganapathy — Macquarie Capital — Analyst

Then the Corporation doesn’t carry any excess liquidity, right, because on the contrary, then the Bank will have to scale it up on day one, as per the RBI requirement.

V. Srinivasa Rangan — Executive Director

No, there are two parts. One is you are talking about SLR, CRR, you’re talking about LCR.

Suresh Ganapathy — Macquarie Capital — Analyst

Yeah. I mean, look — I mean, the point is, if you guys don’t carry any excess liquidity because it goes with 75%, that means there is no excess government securities, which is sitting on the HDFC Limited balance sheet, which will be accounted. I mean, what we are arguing here is that there is no question being provided by HDFC Limited whatsoever to the bank on the effective date of merger.

V. Srinivasa Rangan — Executive Director

But as I mentioned to you, it is not — it is not — this figure is not going to be constant till the date of merger, because as the liabilities are getting replaced with longer term liabilities, the LCR will automatically will go up and it will result in a higher this thing in the banking system also.

Suresh Ganapathy — Macquarie Capital — Analyst

Okay. I’m sorry, I’m just going to push myself to quick couple of questions, because it’s important for everyone. Can you tell me, based on your ALM pattern, how much proportion of term loans, deposits and bond market borrowings will mature in the next 12 months?

V. Srinivasa Rangan — Executive Director

So roughly about — if you take, this is the rough number, every month — month there will maturity, the scheduled maturities of all the various borrowings or somewhere in the range of INR10,000 crores to INR15,000 crores.

Suresh Ganapathy — Macquarie Capital — Analyst

Per month. Okay. Fine. So that’s a scheduled maturity. Okay. And my final question, the future for HDFC Credila.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So we will engage with RBI and sort of try and see whether we can get this onboarding of new customers resolved. Once we have some clarity, we will certainly come back to you. But we’ve already announced that we would look at — willing to look at reducing our stake in the Company from 100% to 10% and a variety of people are calling and making bids. So we are still collating all that.

Suresh Ganapathy — Macquarie Capital — Analyst

You can do this before July or you can — I mean, it is flexible? I mean, it can be done in an afternoon?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

To my mind, it can be done in the next couple of months, because the number of bids are — we’ve received a lot of bids. So hopefully by the end of June, we’d be able to arrive at some finality on how to close this. Theoretically assuming that there is no extension from RBI in terms of onboarding new customers.

Suresh Ganapathy — Macquarie Capital — Analyst

Okay. Very clear. Thank you so much.

Operator

Thank you. We have our next question from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Mahrukh Adajania — Nuvama — Analyst

Hi. What would have been the gross liability mobilization during the fourth quarter?

V. Srinivasa Rangan — Executive Director

Fourth quarter, okay. I guess —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I think, whilst Rangan is looking for the numbers, can you come to your second question?

Mahrukh Adajania — Nuvama — Analyst

My second question is, sir, what will be the contractual maturity of these liabilities, right, because the swap does not —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Yeah. So, when you see the current exchange filings we have been doing, you would have seen like a lot of incremental borrowings that we’ve been doing in recent times have all been long-term liabilities. We raised 10-year bonds, a month ago, we raised 10-year bonds recently. So we are [Indecipherable] increasing the tenure of our liabilities. Also, if you look at the deposits and I mentioned this in the call that we are reducing the level of corporate deposits and increasing the level of individual deposits, because individual deposits typically have a [Indecipherable].

Rangan will answer your question.

V. Srinivasa Rangan — Executive Director

The March quarter gross mobilization — this is the gross number. Now the net gross mobilization of liabilities across all products is INR85,000 crores.

Mahrukh Adajania — Nuvama — Analyst

Okay. And the total maturity of the book will be what now, the contractual maturity? I know that newer borrowings are at a higher maturity, but any ballpark number?

V. Srinivasa Rangan — Executive Director

I mentioned it in the last one. This is ranging from about INR10,000 crores to INR15,000 crores every month.

Mahrukh Adajania — Nuvama — Analyst

Okay. [Speech Overlap] That’s the repayment in terms of your —

V. Srinivasa Rangan — Executive Director

Scheduled maturity. Schedule maturities of repayments.

Mahrukh Adajania — Nuvama — Analyst

Okay.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So, when there is a — when a scheduled maturity, for example, you take a deposit. A significant portion more than two-thirds, probably much more than that 70%-plus of our deposits tend to get renewed on maturity. What is the scheduled maturity, it will be included as part of scheduled maturity, even though the amount will get reduced. So whilst INR10,000 crores might be scheduled maturity, in reality, this number turns out to be lower depending on the quantum of deposits that are maturing in the market.

Mahrukh Adajania — Nuvama — Analyst

Got it. And in terms of classification of infra bonds or classification of long-term bonds as infra, that should be easy to come by, do I don’t know that it requires RBI approval, but —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Well, this is something we will seek clarity from RBI and come back to you.

Mahrukh Adajania — Nuvama — Analyst

Okay. And just have one final question. So it happens in many quarters, but just trying to understand the logic behind it. So how does the direct income from assignment move, because sometimes it looks too high.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So what happens is at the beginning of the year, it is based on certain estimates as regards the expenses by the end of the year and estimates of prepayments in the — by the end-of-the year, you have the exact number. And therefore, there will be some adjustment that would happen in the last one.

Mahrukh Adajania — Nuvama — Analyst

Got it. Thanks a lot. Thank you.

Operator

Thank you. We have our next question from the line of Mansi Sajeja from SBI Funds Management. Please go ahead.

Mansi Sajeja — SBI Funds Management — Analyst

Sir, the liabilities that you have raised in last year is amounting to INR78,000 crore. And in this current financial year, we have seen another couple of bond issues. So what is — from that is all mainly long-term. What is the — on an interest rate sensitivity perspective, what is the — how are you managing the interest rate risk now that they’re going to be transfered to a bank? And for all the approval — fundraising approval that you have taken for the current financial year also, how would you do that?

V. Srinivasa Rangan — Executive Director

So, on the interest rate sensitivity, I think we mentioned it in the last time also that, if you look at the total liabilities, there are swaps which are done to manage the liabilities from converting from fixed to floating. They are roughly about INR2,20,000 crores-odd. And over and above that, the other liability is like a bank borrowing and others, which is another about INR1,00,000 crore, that would be also the more or less linked to the market benchmark, whether it is repo rate or whether it is [Indecipherable] and all that. So if you were to broadly look at the total liabilities of INR5,50,000 crores, about INR2,20,000 crores, plus another about INR1,10,000 crores or INR3,50,000 crores, INR3,40,000 crores will be liabilities, which are part of linked to the external benchmark or some sort of banking benchmarks.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So, you would have seen in all these quarters that interest rates go up, interest rates go down. You generally see that the spreads remain within a very narrow band because of our ability to hedge these systems.

Mansi Sajeja — SBI Funds Management — Analyst

Okay. So just one last thing in terms of various exemptions needed from various debt investors, there is classification of borrowings like housing finance and there is classification of CP as a different category. Any representations again done from your side, or it is depending upon each investors classification?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Sorry, we are not clear on the question.

Mansi Sajeja — SBI Funds Management — Analyst

So, we — so you are classified as a housing finance company, but then all these bonds will be grandfathered in a bank, which may have a different kind of a classification.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So, obviously, we have spoke — we have represented to all these respective regulators. And we will obviously hear from them in due course. But my sense is grandfathering is something which we would logically think that they would be able to grant that.

Mansi Sajeja — SBI Funds Management — Analyst

Okay. Thank you.

Operator

Thank you. We have a next question from the line of Adarsh Parasrampuria from CLSA. Please go ahead.

Adarsh Parasrampuria — CLSA — Analyst

Hi, Keki and Rangan. First —

Operator

Sir, you’re sounding very low. Can you please use your handset?

Adarsh Parasrampuria — CLSA — Analyst

Okay. Hopefully, this is better. Hi, Keki and Rangan. Question is on your rundown of loans on the corporate side. Are we largely through or there is still some more to go [Indecipherable] merger for —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I would say we are significantly done, very, very significantly done. There might be a little bit more or less, but I don’t think it’ll be much.

Adarsh Parasrampuria — CLSA — Analyst

Okay. And, sir, on your PSL compliant book, right, I just wanted to understand what — could you quantify by March-end, where we stand today, what could be the PSL compliant book that would be on our balance sheet?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Roughly about INR1,10,000 crores.

Adarsh Parasrampuria — CLSA — Analyst

Okay. And lastly, you did respond in terms of maturity per month. But if you could just broadly indicate some more color on especially the bank loans and bonds, because deposits might — you can renew that. Term loans and bonds, what kind of maturity increase that one would have seen, because we’ve seen you issue many long-term bonds and probably would have done something similar on the bank loans as well. So what kind of duration increase have you seen through the last six months or 12 months?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So you would have seen, Adarsh, that all the borrowings we’ve been doing through the bond market have all been long-term borrowings. We did a INR25,000 crore issue a couple of months ago 10-year bond. Recently, we did a bond issue, again 10-year bond. So it’s all largely long-term bonds. And ever since this LCR requirement came in, we have been trying to raise more of long-term funding, because short-term funding brings with it a certain element of cost because of the LCR requirement.

V. Srinivasa Rangan — Executive Director

So, Adarsh, if you have to look at the current year borrowing whatever we have done on a gross basis, the NCDs have come for a close to almost 100 months, which is almost close to 10-year type of a borrowing. The bank loans on an average has been about 15 months, but what is happening is, as the bank loans are maturing and all, we are also negotiating it for a longer period. So by the time I think the merger happens, some of the borrowings would have been actually converted into longer-term. And similarly, if you look at, we raised an ECB, which is close to about 42, 43 months, and then the deposits are close to about 3, 3.5 years.

Adarsh Parasrampuria — CLSA — Analyst

Got it. Just on the bank loan part, given that it’s been more like 15 months in the last 12 months, would the stock be also like a 15-month bank loan or the efforts would be to really — because this probably is the largest refinancing pressure as you moving to the bank. So, the bank loan book, right, which is INR1,50,000 crores that book what on a stock basis would be the duration?

V. Srinivasa Rangan — Executive Director

So, typically the — if you were to take the total bank book, we will be of a — on a stock basis, as they exist today on 31st March, they would be somewhere at about 10 to 11 months, depending upon the quantum of the amount by various other guys. But what is happening is the maturities and also some of the loans we are already talking to the banks, so they will probably be getting moved to a three-year type of a duration as we get into the next few days or in the next one month.

Adarsh Parasrampuria — CLSA — Analyst

Got it, sir.

V. Srinivasa Rangan — Executive Director

As we move the stock, the stock mostly about 60%, 70% of the stock will get move to about a three-year period.

Adarsh Parasrampuria — CLSA — Analyst

Because that’s — got it, sir. This has been helpful, sir. Thanks a lot for this.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Adarsh, just to clarify, the INR1,50,000 crores that you mentioned as bank loans, out of that, roughly INR1,00,000 crores is bank loans, the balance are — it also in that number of INR1,50,000 also includes the other term loans, which is ATVs and refinance, which is actually long-term.

V. Srinivasa Rangan — Executive Director

Bank loan is only about [Speech Overlap]

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Bank loans are only about INR1,00,000 crores.

Adarsh Parasrampuria — CLSA — Analyst

Got it. So, broadly, the way to understand is this INR1,00,000 crores-odd, which would have been on a stock basis today, having a refinancing in the next 12 months, that’s where the efforts will be to like renew it and have it for a longer tenure.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Yeah, absolutely.

Adarsh Parasrampuria — CLSA — Analyst

Got, sir. This has been super-helpful. Thanks a lot and all the best.

Operator

Thank you. We have our next question from the line of Shalini Vasanta from DSP Mutual Fund. Please go ahead.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Sir, hi. This is Vivek Ramakrishnan. My question was on SLRs. You’ll have to build the SLR book, from what I understand at the time of the merger and HDFC Bank has excess SLRs. So I just wanted to know how much SLRs you have at this point of time and how much you’ll need to build up by the time of the merger. That’s my only question. Thank you.

V. Srinivasa Rangan — Executive Director

So, broadly, the SLR, as Keki mentioned, is about INR63,000 crores, INR64,000 crores, that is a defect [Phonetic] plus the cash which we have. And from a requirement perspective, on our balance sheet, it is about INR1,00,000 crores. So you know what is the excess at the bank level and also you can conclude the [Technical Issues]. Because the bank is holding a higher this thing, because our LCR is about 110%, which automatically translates to a close to about 22%, 23% from an LCR perspective.

Vivek Ramakrishnan — DSP Mutual Fund — Analyst

Okay, sir. Thank you very much. Very, very useful. Thank you.

Operator

Thank you. We have our next question from the line of Sri Karthik Velamakanni from Investec. Please go ahead.

Sri Karthik Velamakanni — Investec — Analyst

Thank you so much. I just wanted to confirm the disclosure around LCR that you mentioned that the 127 under an HFC transmits to a 75% under the bank could. Is that the right interpretation.

V. Srinivasa Rangan — Executive Director

Sorry?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

120 translates to 75% —

V. Srinivasa Rangan — Executive Director

Yeah, it works out around 75%, 80% in the bank format, because the bank format is different.

Sri Karthik Velamakanni — Investec — Analyst

And you also indicated some glide path as to how this 80% moves to 100% eventually. Could you please elaborate on that again, please? Thank you.

V. Srinivasa Rangan — Executive Director

See, basically what is happening is, some of the — as Keki mentioned, the corporate deposits which are there, the growth on the deposit has been lower. So we have been replacing some of these maturities into longer-term. So automatically that changes the color of the LCR.

And secondly, some of the sort of deposits where there is [Technical Issues] the run-off actually higher, we are trying to get consent from some of the higher-value depositors to make it 31-day type of notice type of a product where they can — they will actually give a 31-day notice prior to taking any premature withdrawals. So that basically brings down the — that basically increases the LCR compound.

Sri Karthik Velamakanni — Investec — Analyst

And sir, lastly, the interest rate swap book that you’re currently carrying, could it be transfered into a bank, are these — and what would be the implications from a regulatory perspective, because of this particular portfolio?

V. Srinivasa Rangan — Executive Director

So, our understanding is that we have — I mean, the entire swap book will go into the bank. There is no regulatory restrictions from there. From an accounting perspective also, it will remain pretty the same, the same hedge accounting which we follow here, will continue to be followed at the Bank level also. So there is no change as far as either the accounting is concerned or the regulatory position is concerned.

Sri Karthik Velamakanni — Investec — Analyst

Thank you so much.

Operator

Thank you. We have our next question from the line of Pooja Kabra from Sahasrar Capital. Please go ahead. Pooja Kabra, we have unmuted your line. Please ask your question.

Pooja Kabra — Sahasrar Capital — Analyst

Hello?

Operator

Yes, we can hear you.

V. Srinivasa Rangan — Executive Director

Yeah, please go ahead.

Pooja Kabra — Sahasrar Capital — Analyst

Yeah. Thank you for the opportunity. I just wanted to ask that what is your attrition rate in the management level and once step down level?

V. Srinivasa Rangan — Executive Director

Zero, management level, zero.

Pooja Kabra — Sahasrar Capital — Analyst

Okay. And what is your ESOP [Indecipherable] ratio?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I’m sorry, what is your what ratio?

Pooja Kabra — Sahasrar Capital — Analyst

ESOP, provision for that?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Provision cost, that we mentioned, no. I think it’s some INR200 crores or something for the year.

Pooja Kabra — Sahasrar Capital — Analyst

Okay.

V. Srinivasa Rangan — Executive Director

I mentioned in the [Technical Issues].

Pooja Kabra — Sahasrar Capital — Analyst

The next question is like digitalization improvement idea, do you have any plan on this?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Digital improvement.

Renu Sud Karnad — Managing Director

On what?

Pooja Kabra — Sahasrar Capital — Analyst

Digitalization. Do you have any digitalization ideas?

Renu Sud Karnad — Managing Director

Yes, we are continuing to — continue to what we’re doing on digitalization. And as we move ahead and as we mentioned earlier, that we got a new LOS and sales force and we are trying to have different journey difference. So this is an ongoing process, it takes few months or maybe a year or so. But as we go ahead, things are getting added on more and more. So, I think, in another six months, the whole process most probably will be through. So it’s going on and it’s going on very well.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Just two things to add. One is that the employee benefit cost, you want to — we talked about the ESOP cost, it is INR205 crores for the whole year, compared to INR390 crores in the previous year. And 94% of the new loans we’ve done have been digitally onboarded.

Pooja Kabra — Sahasrar Capital — Analyst

Thank you so much, sir. Thank you.

Operator

Thank you. We have our next question from the line of Saurabh Kumar from JPMorgan. Please go ahead.

Saurabh Kumar — JPMorgan — Analyst

Sir, just wanted to confirm three numbers. One is for the NDTL calculation, the SLR number will be INR4,70,000 crores and for CRR INR3,60,000 crores. Is that assumption right?

V. Srinivasa Rangan — Executive Director

I will — you’re talking from HDFC Limited perspective, right?

Saurabh Kumar — JPMorgan — Analyst

Yes, yes, yes.

V. Srinivasa Rangan — Executive Director

I’ll just come back to you on that.

Saurabh Kumar — JPMorgan — Analyst

Okay. And also the adjusted net bank for PSL should be about INR5,00,000 crores-odd based on the numbers you’ve given, I just wanted to confirm this.

V. Srinivasa Rangan — Executive Director

Yeah, yeah.

Saurabh Kumar — JPMorgan — Analyst

Thank you, sir.

Operator

Thank you. We have our next question from the line of Rakesh Kumar from B&K Securities. Please go ahead.

Rakesh Kumar — B&K Securities — Analyst

Yeah. Hi. Thank you. So, just from this longer-term borrowing that we are doing, so is it to do with maintenance of [Indecipherable] for banking — for the HDFC Bank post-merger or is it — I take that it is for short-term liquidity?

V. Srinivasa Rangan — Executive Director

No, it’s not a short-term liquidity thing. But even if you look at the interest rate today, it is pretty flat, whether we borrow one year or whether we borrow a 10-year. And the assets are typically longer-term. So you need to fund these assets with longer-term liability. And as Keki mentioned, that when we borrow short-term, then it also — it’s in dual LCR.

Rakesh Kumar — B&K Securities — Analyst

And sir, total SLR we gave the number of — can you repeat the number, sir, please?

V. Srinivasa Rangan — Executive Director

Our SLR, we said, is about INR64,000 crores. We are holding about INR64,000 crores of common securities.

Rakesh Kumar — B&K Securities — Analyst

Sir, even in the case of HDFC Bank, though it has the excess liquidity, but LCR is just around 10% more than what is the mandatory requirement. So, like how would it add up like post-merger?

V. Srinivasa Rangan — Executive Director

So, basically, these two numbers are interdependent actually the LCR and the SLR numbers. So when you convert that 110% LCR into a SLR number, the SLR actually moves up [Technical Issues] my guess is about 22%, 23%. So to that extent, from an SLR perspective, there will be a surplus, which will be coming in there.

Rakesh Kumar — B&K Securities — Analyst

Okay. Thank you, sir.

Operator

Thank you. We have our next question from the line of Anand Dama from Emkay Global. Please go ahead.

Anand Dama — Emkay Global — Analyst

Sir, thanks for the opportunity. Sir, this quarter, we had seen deposit book actually running down quarter-on-quarter. This is more strategic or are basically primary from the customer side?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So, I mentioned that to you — I mentioned that when I originally spoke that we have not been encouraging or not been looking out too much for corporate deposits, because generally these tend to be of a shorter-term. And as I’ve been saying repeatedly on the call, when we get short-term money, there is a higher cost because of LCR request.

So, we prefer to take the individual deposit, which have a longer tenure and the proportion of individual deposits as a percentage of the total deposits has gone up quite sharply during the year. Individual deposits has constituted about 16% of our incremental funding during the year. So, corporate deposits have [Technical Issues] out, individual deposits has gone up quite sharply. The proportion of individual deposits to total deposits has also correspondingly [Technical Issues].

Anand Dama — Emkay Global — Analyst

And sir, what will be the average cost of this deposit book that you’re carrying around?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I mean, I’m giving a spread, the spread is 2.29%, now deposits will — it varies from time to time depending upon how much deposits you’re carrying broadly, the spread is the same in whichever segment you look at.

Anand Dama — Emkay Global — Analyst

And sir, lastly on the wholesale book, so I think individual bank [Technical Issues] we are going to seek the permission from the RBI in terms of the [Technical Issues]

Operator

I’m sorry, sir. Can you use your handset, please?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I can’t hear you. We can’t hear you.

Anand Dama — Emkay Global — Analyst

Yeah. Yeah. Sure, sir. Sir, on the wholesale book that you present carry on our books, so within which basically we have production construction developer finance year book. What’s going to be the status of that when some other happens.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Of course, it continues into the bank. [Technical Issues] As we do more construction finance loans, see, let me explain this. I explained it in the past several times, that when you do a corporate loan or you do a lease rental discounting loan, your entire loan get disbursed in one go. But when you do a construction finance loan, the disbursement is linked to the stage of construction. There are developer first puts in equity. If you get, and then after that you start disbursing as he constructs.

So, construction finance disbursements come over a longer timeframe. So there is a reasonably healthy pipeline in terms of construction finance deposits. It’s just that as we’ve been saying quarter-after-quarter, it takes a while before these disbursements happens. So there would be a fair amount of disbursements that have happened this quarter also, and there will be more as time goes by. And all these construction finance loans will move into the bank, because these are [Technical Issues].

Anand Dama — Emkay Global — Analyst

But [Indecipherable] what basically the land funding book because HDFC Bank in their call said, there is a land funding book basically, where they will need to seek the RBI permission.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Land funding books?

Anand Dama — Emkay Global — Analyst

I mean, yeah, they said something over that. So there I think they said that you will have to seek permission from the RBI to carry on to HDFC Bank’s book.

V. Srinivasa Rangan — Executive Director

Some of the dispensation on the non-individual book, they have —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

So those were — whatever is there, will not be — is not material at all. See, whenever a merger happens, there is always a grandfathering of assets and liabilities, which is soft. So in the grandfathering, there would be a whole lot of items which have got included, which could have included some element of what you were talking. But that quantum would be infinite.

Anand Dama — Emkay Global — Analyst

Okay. Sure, sir. Thanks.

Operator

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

MB Mahesh — Kotak Securities — Analyst

Hi. Good afternoon. Just two questions from my side. One is, if you look at the disbursement number, there seems to be, over a period of time, a little bit of a slowdown in the last couple of quarters. If you could just kind of highlight how is the situation on the ground?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

The situation on the ground continues to be strong. I don’t know whether you were there on the call right through or not, but I mentioned at the very beginning that March 2023 saw the highest amount of individual loan disbursements we have done in any month in HDFC’s history. So we said that the momentum we would expect to continue, and I would hope that year ended March 2024, should see almost similar kind of a growth, almost.

MB Mahesh — Kotak Securities — Analyst

Okay. And so far, you would say that the impact of interest rates has been extremely negligible on the ground?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

It is apparent. If the disbursements are strong and margins are strongest, it is apparent. You must understand that a housing loan is the long-term loan, not a one-year loan or a two-year loan. So when you’re taking a long-term loan on a floating rate basis, interest rates will go up and interest rates will come down. But the reality of the matter is that, when you’re taking — and all these loans are floating rate loans. So rates are high today. When they come down, we’ll get the benefit of lower rates. If they were low today, you will get the benefit of higher rates. So it has bought a incremental impact, if any, but not really an economic impact. On the other hand, shorter term loans, probably would have a bigger impact, because it’s unlikely that in the very short-term interest rates would come down.

MB Mahesh — Kotak Securities — Analyst

Sir, just to clarify here, is it — is that number right that we have that the disbursements in the month — in the fourth quarter would be about INR52,500 crores. Is that number right, because we don’t get the absolute numbers, we just get the percentage. So we are back to —

V. Srinivasa Rangan — Executive Director

It’s a little under INR50,000 crores. Yeah, it’s a little under INR50,000 crores.

MB Mahesh — Kotak Securities — Analyst

So that would translate to about a 10% growth on a Y-o-Y basis on disbursements for the fourth quarter. Is that number —

V. Srinivasa Rangan — Executive Director

No. See, you have to look at it for the whole year, because we have — each quarter has had its own challenges. But the fact is that, if you look, as Keki mentioned, the March, which was the last month of the year was highest ever. So now if you go back to October and November was a relative lower number because of the holiday season, between Diwali and Dussehra and such, and school holidays. So I would really look at it over a longer period. And if you look at the longer period, I think the absolute disbursement growth between ’23 and ’22 has been 16%, which I think is very healthy given the interest rate movements that have taken place during the year.

MB Mahesh — Kotak Securities — Analyst

Sure. My second question is that, how have borrowers managed the increase in interest rates, in the sense that, is there an outside limit under which a loan tenure can be increased?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Of course, there is an outside limit. Every case is evaluated on a case-to-case basis. It is not that automatically when rates go up, each term goes up. In a normal case the term does go up. However, the system is geared to identify cases where there is some degree of concern. In those cases, the customer is explicitly contacted and then either the term is lowered by making a part prepayment or the instalment amount is increased.

MB Mahesh — Kotak Securities — Analyst

Would you be able to quantify that as well or do you think it’s going to be difficult?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Quantify what?

MB Mahesh — Kotak Securities — Analyst

How have you addressed it, in the sense that how much of these loans may have seen tenure extensions versus EMI increases?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

In the normal course, if you understand the business, you would know that when rates go up, we increase the tenure of the loan, when rates come down, we will reduce the tenure of the loan. Housing loans get repaid roughly about 10%, 11% of the loans get repaid ahead of schedule every single year. This is a normal trend that happens. So when you look at a three years, five years PDS, it all sort of neutralizes. In the short-term, you might find that the term has gone up compared to what the original term was, but it will not happen to a — in a situation where the term goes up so much that it causes any kind of a concern or discomfort. In such cases, the system identify such individuals. And then on a case-to-case basis, the individual is contacted and either instalment has increased or due part of the loan is requested — the customer is requested to prepay part as well. So it’s worked several times over the years and frankly, it had never resulted in any kind of impact on recovery. Historically, and this is probably the third or fourth time probably that we’ve seen this thing happen.

MB Mahesh — Kotak Securities — Analyst

Sure. Perfect. Thanks. Thanks.

Operator

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

Jai Mundhra — ICICI Securities — Analyst

Yeah. Hi, sir. Thanks for the opportunity. If you can —

Operator

We cannot hear you clearly. Please use your headset.

Jai Mundhra — ICICI Securities — Analyst

Yeah. Hi. Good afternoon. Sir, if you can share the indicative yield on your corporate LRD and construction finance book for fourth quarter?

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Look, I told you that the spread on non-individual loans is 3.62%. The spread on individual loans is 1.92%, and the overall spread that we earned was 2.29%.

Jai Mundhra — ICICI Securities — Analyst

Right. And the cost of deposit or the cost of funds that you use, is that similar for both these segments or that can be —

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Broadly similar. But you can’t pinpoint these things, because you raised funds right through the quarter, and during the course of the quarter, interest rate volatility is always there. So there may be times when there is 20 basis points higher and there may be times when it’s 20 basis points lower. So what we have to do is, we have to manage our spreads carefully, and that’s what we’ve been doing all this year.

Jai Mundhra — ICICI Securities — Analyst

Sure. And — in the — during the call, I think it was mentioned that the absolute amount, which is — which would be reckoned for SLR and CRR calculation, if you have that number handy. I think it was told that you will come back.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

[Speech Overlap] that the total amount of government securities we carry INR64,000 crores.

Jai Mundhra — ICICI Securities — Analyst

No, no, sir. I was asking for NDTL, the total NDTL as of ’23 — I mean, as of FY ’23.

Keki M. Mistry — Vice Chairman and Chief Executive Officer

I think, Rangan will just look at it.

V. Srinivasa Rangan — Executive Director

Jai, can you call separately? We can give the numbers.

Jai Mundhra — ICICI Securities — Analyst

Sure, sir. Thank you.

V. Srinivasa Rangan — Executive Director

Yeah.

Operator

Mr. Mundra, are you done for now?

Jai Mundhra — ICICI Securities — Analyst

Yeah, thank you. Yeah, done.

Operator

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

Keki M. Mistry — Vice Chairman and Chief Executive Officer

Well, I’d just like to thank everyone for all your help and support all these years. And if you have any further questions on the results or on the process of merger, then please get in touch with Conrad, Anjalee, Rangan, me, whoever you want to. Thank you, everyone.

Operator

[Operator Closing Remarks]