INDIAN BANK (NSE: INDIANB) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Anand Dama — Analyst
Shanti Lal Jain — Managing Director and Chief Executive Officer
Mahesh Kumar Bajaj — Executive Director
Analysts:
Ashok Ajmera — Analyst
Mona Khetan — Analyst
Dixit Doshi — Analyst
Suraj Das — Analyst
Jai Mundhra — Analyst
Unidentified Participant
Presentation:
Anand Dama — Analyst
Yeah. Good evening, everyone. We welcome you all to Indian Bank’s Post Results Conference Call for the Second Quarter FY ’25, hosted by Emkay Global.
From the top management, we have with us today Shri Shanti Lal Jain, MD and CEO; Shri Mahesh Kumar Bajaj, Executive Director; Shri Ashutosh Chaudhry, Executive Director; Shri Shiv Bajrang Singh, Executive Director; and Shri Brajesh Kumar Singh, Execute Director.
I request the MD, sir to first briefly summarize the key highlights from the second quarter results and also provide future direction on growth, margins and asset quality, post which we will have the Q&A session.
Over to you, MD, sir.
Shanti Lal Jain — Managing Director and Chief Executive Officer
Yeah. Good evening. Welcome to all analysts and investors in the post results con call. We have declared our results today, and you might be having the investor presentations. For immediate understanding, I will talk a few highlights.
We have — our business has grown by 10% and deposit — of this deposit has grown by 8% and the credit has grown by 12%. Under the credit, our retail credit has grown by 15%, agriculture by 16%, MSME by 8%, but the standard MSME has grown by 12%, and the corporate 9% and the standard corporate 10%. So all are basically double digit — all are in double digit, and we could maintain our CASA more than 40%. So we are at 40.47% as against 40.56% of the last.
In the beginning we said — given the guidance that our deposit will grow between 8% to 10%. We have grown by around 8%, and we raised infra bonds of INR10,000 crores, which works out to 1.5% so 8% and 1.5%, 9.5% in total, we are there.
In the credit side, we said 11% to 13%, and we have grown 12%. This is a business side and profitability, of course, the operating profit has grown by 10%. The net profit has grown by 36%. The profitability has grown on the back of NII growth of 8%, bad debt recovery of 44%, fee-based income up 11% and cross sale income, 5% and the PSLC income more than 8%.
So — as far as your question on the margin side also, our margin was 3.39 global and 3.49 domestic as against 3.44 of the last quarter, so a reduction of 5 bps. If you adjust the P&L charges it is — impact is 6 bps. Earlier, it was 2, now it is 8. So incremental is 6. If you add 6 bps of 3.39, it is 3.45, which is more than the last quarter margin.
Now come to the domestic — same story is the domestic side. Now our ROA has improved from 1.06 to 1.33 or 1.20 of the last quarter. ROE also is 21%. Cost income ratio 44%, 45%. We had made an additional provision close to INR150 crores because of the FIMMDA rate has come down to 6.94%, and we decided that let us make higher provisions and based on the actual as well.
Yield in the quarter, the cost of deposit has grown by 8%, yield on advance has also grown by the 8% both side 8%. And in the investment side, because the investment — yield itself is coming down. So whatever incremental investment you make, it cannot be 7.15% and the rate itself is a — is a 6.86%. And — so there will be an impact of that also. As far as asset quality is concerned, it has come down from 3.77% to 3.48%.
The net NPA has come down 0.39% to 0.27%. And the provision coverage ratio increased from 96.6% to 97.7%.
Our story for recovery more than slippage is continuing. Last time INR2,000-odd crores we have recovered, and the slippage is INR1,357 crores. And you see last quarter also last year also, prior to that also, our recovery was more than our slippage, as a result of our gross and net NPAs coming down. And our collection efficiency is 95%. We are maintaining that collection efficiency. So point is that whatever is due — some overdue is there, we are recovering that overdue also and maintaining this.
Capital adequacy ratio is 16.55%. And if we add a half yearly profit of INR5,110 crores, it is 17.84%. 17.84% is against 11 point — 16.5% virtually as against 11.50% of regulatory, right.
Now this SMA book has slightly increased from by INR2,400 crores — INR2,300 crores SMA, and which is because of the one account of INR2,200 crores, which was appearing in SMA 2, as on 30th September has now come down to SMA 1 [Phonetic] part of the irregularity [Phonetic] has been paid by the customer, it is a government-guaranteed account.
As far as digitization is concerned, our today, 91%, 92% of the transactions are happening on a digital basis. So regarding all our other current, we have given a guidance of recovery of INR7,000 crores, we are INR3,958 crores.
We have set the AUC recovery to INR2,000 crores [Phonetic] for a full year, we are at INR1,200 crores. NIM, we have given 3.40%, we are at 3.39%. Domestic rather 3.40%, we are at 3.49%. ROA, we said that around 1.20%, now, we are at 1.33%. ROE, we said 19%, 20%, we are at 21%. So credit cost has also come down and it is 0.65%. Slippage ratio also has come down to 1.06%.
Lot of things we are doing for digitization, a lot of things we are doing for HR side, so I request my colleague, Bajaj Ji, to tell you about the digitization that we are doing. And then we are open to question, and you raised about two, three points, let me reply this also.
Growth, we will continue to have our same — same the guidance, which we have given. Margin side also, our endeavor is always to stick to our guidance and rather give better than the guidance of 3.40%, which we said we’ll continue that also. And asset quality, of course, the collection efficiency is 95%. And SMA 2 number barring this one account is same and INR20 crores here and there, not much. So asset quality also will be going probably better.
Bajaj Ji, please.
Mahesh Kumar Bajaj — Executive Director
Thank you, sir. Good evening, friends from the analysts and the investors. We have already placed this presentation on digital transformation, digital migration. I’ll just touch a couple of points, then we’ll take questions. Our — the migration from branch channel to digital channel have gone up from 89% to 92% and Y-o-Y 3% plus.
Apart from that, we have come up with a new omnichannel app. The mobile banking users have gone up by 20%, which is 1.51 crores to 1.81 crores [Phonetic]. Same way, transaction has also gone up by 10%. The UPI users have gone up from 1.5 crore to 1.95 crore, which is Y-o-Y 27% plus and remitter transaction also 62% Y-o-Y. Even if you talk about the daily UPI transaction, now the daily UPI transaction are INR2.28 crores, which is remitter INR1.55 crores and beneficiary INR0.73 crores.
Apart from that, the net banking user also have gone up 98 lakh to 1.11 crores. And the credit card user also gone up by 50% from 1.77 lakhs to 2.56 lakhs. Same way the FASTag users also have gone up by 37%. And PoS also have gone up by 56%.
We are continuing our digital initiatives, the journeys, which we started in the June ’22. This half year, we have completed 24 journeys, and we are prioritized 56 journeys, Q1 6 [Phonetic], Q2 18 and Q3 13 and Q4 19 journeys, we have planned. Last year, we did a digital business of INR81,250 crores. And last half year, it was INR29,116 crores. This half year, it is INR79,059, which is 172% Y-o-Y plus.
Same way, in RAM 24,000 to 63,000, which is 162% growth and e-deposits on the liability side also, it was 4,911 [Phonetic], now it is 15,000 [Phonetic], which is 206%.
Apart from this assets and liability, we have taken certain other initiatives, which is like EBG, EOTS, death claim. So there also, there is an improvement INR0.3 crore to INR537 crores, and even adoption also has gone MSME to 77%, retail 73% and agri 91%. And the — even the last time also, the question was how much we are spending on the IT. It remains almost same.
The — of the opex, it is 10% and NIS, if you see, it is 27%. Apart from this, we have — we already on the capital expenditure, INR135 crores for this half year, we have done, and we are committed to almost INR400 [Phonetic] crores to INR450 crores, INR500 crores of capital expenditure apart from this revenue expenses.
So we’ll take questions at the end during the call. So these were the few initiatives we have taken by them — by us.
Shanti Lal Jain — Managing Director and Chief Executive Officer
Now we are open for question-and-answer.
Questions and Answers:
Anand Dama
Yeah. Thank you, sir. We will now open up the floor for Q&A session. [Operator Instructions] The first question we’ll take up from Ashok Ajmera, ji. Ashok ji, please unmute yourself.
Ashok Ajmera
Hello, good evening, sir, and…
Shanti Lal Jain
Good evening.
Ashok Ajmera
Before my time gets over, sir, let me, first of all, wish you a very, very happy Diwali to everyone to you and the — all the people there, the analyst fraternity as well as the people in the Indian Bank. And sir, compliments to you, sir, for a good set of numbers, especially on the profitability front, good profitability, and all the — most of the parameters of the profit, the expenses, the asset quality, the gross NPA has also come down substantially, the net NPA is now 0.27%.
And — but having said that, sir, I just — if I look at the business growth, both the deposit and the credit though the — on an annualized basis the tracking four quarters, if you are taking then it’s okay, 10%, 12%, 11%. But if you look at the current FY ’25 half year, our business growth is hardly 1.79%. Our deposit growth is only 0.75% and our credit growth is only 3.16%.
So having said that, if we look at the entire FY ’25, even based on your target also, sir, you need to raise the deposit of almost about INR70,000 crores in the remaining five months, six months, you need to disburse the credit of almost INR52,000 crores. So for that, sir, what is the road map ahead, I mean, what are the plans? What are the sanctioned pipeline and the proposal, which are already in sanctioning stage or disbursement stage? And how do we basically plan to meet these kind of targets for the whole of FY ’25? This is my first question.
Shanti Lal Jain
Okay. Ajmera Ji, we told that we will grow in credit 11% to 13%. We are growing 12%. It means we are as per the trend. You rightly said that the growth in the first half vis-a-vis the gap, which we have to fill in the next half is an issue, which you are raising. But you see the last year number. Last year number is the same when you growing as per trend, what will happen last year, also, we’ve grown INR40,000 crores in the second half. This year also the gap is INR40,000 crores in the second half. The same number we are continuing. This is how the business is happening in the country. So we are actually exactly on the track — exactly on the track.
Now your question was how much was the sanctions? How much was the — in pipeline? I’m telling you, we — this year, we have sanctioned 20% more than the last year. Last year, in the first half, we sanctioned INR27,000 crore, this time, we have INR32,000 crores. So it means, we have a more pipeline, right? So this — the pipeline I’m telling you that the three, four parts of this pipeline, undisbursed term loan is around close to INR7,000 crores. Sanctions, which we already — sanctions INR7,200 crores. INR7,000 crores, where the partial disbursement has happened and partial disbursement based on the growth or based on the completion of the project will give around INR16,000 crores, INR17,000 crores of a proposal in pipeline. Undisbursed working capital limits are close to INR28,000 crores.
So considering this repayment and all the sanctions, which we are having, we are confident of achieving this. Of course, the number slightly came down because two reasons. One is that whatever the — in the corporate lending, if the margins are not there, then we allowed let it go. Rather you know, we continuously, we are on the profitable growth path. We are not on a growth path because you see our margins and everything.
Ashok Ajmera
Yes, sir.
Shanti Lal Jain
So this is — so we are confident that the way we are doing every time this time also, because your band is 11% to 13%, you are growing 12%, we are on the track. You are on the track as per the last. Likewise, in the deposit also, we said 8% to 10%, we are at 8%. So my point is the growth in credit and the growth of deposit, you see both we match.
Even if you say up September ’23 to September ’24 growth in deposit and growth in credit, you see the gap of around INR6,000 crores or INR7,000 crores. We’ve raised the intra bond of INR10,000 [Phonetic], we — rather we have a profitability more than the INR5,000 crores this time, last time INR4,000 crores — INR9,000 crores. So the liquidity point of view also, we are comfortable — from the growth point also, we are comfortable. All other engines whether retail, agri and MSME, we are growing 14%, which is more than the guidance we have given.
Ashok Ajmera
Thanks for this reassurance, sir, because like some of the banks they have done — recently, we just concluded one of the other big banks analyst meet. And there in the first half itself, they grew about 6%, 6.5%, 7%. So that is why the question came to my mind that — but anyway, if you are as long as you are meeting the targets of the whole of the FY ’25, I mean, there is no issue, and that reassurance goes very well.
Having said this, sir, you had covered this SMA 2, I couldn’t hear it properly that time. So you said that one account out of the 3,301, which has come in SMA 2 above INR5 crores, is around INR2,000 crores something and it is a government account. So can you just repeat it, sir, or explain it a little more clearly, sir?
Shanti Lal Jain
Okay. So actually, what we said that the SMA 2 number, right? So just SMA 2 number was — SMA 1 plus 2 was just a minute…
Ashok Ajmera
No 2 are [Phonetic] INR3,301 crores.
Shanti Lal Jain
Just a minute, let me… As compared to INR1,075 crores in the last quarter. Okay. I’m just telling just a minute. SMA 1 and 2 was INR2,450 crores in June, which has increased to INR4,762 crores. Slide number 32. So incremental is INR2,300 crores. Out of INR2,300 crores, INR2,200 crores is one account first point. First point is one account in the corporate, and that is why you are seeing corporate, it was 365 [Phonetic] become INR2,500 crores. So INR2,200 crores. And this is a government account guaranteed by a government and they have paid this regularity [Phonetic], which was SMA 2 in September has now become SMA 1. So the part of the irregularity [Phonetic] they have cleared. Clear, sir?
Ashok Ajmera
Yes, sir. Yes, sir. This is yes because the figure just shot up this thing. And sir, this — our — on the recovery front, again, you are within the target, I mean, there’s a good recovery. So can you give some color on the present recoveries and going forward with the NARCL and NCLT are the things are speeding up? Are we going to have a better recovery than even our targeted one because we also got good pool of even return of accounts also and a lot of cases are at a positive stage.
Shanti Lal Jain
Yeah. So last time, we have recorded INR8,600 crores, right? At this time, we say we’ll be having a less recovery because INR7,000 crores to INR8,000 crores more or less. So virtually internally, we decided close to INR2,000 crores of a recovery, we’ll do. In the last two quarters, we recorded close to INR4,000 crores. This is one point. Now going forward, the recovery. This is second question. So two things is there that we are having INR41,000 crore of PW a book of INR19,000 crores, so around close to INR60,000 crore of a book, right? We are having close to INR22,000 crores of NCLT book.
Now this — going forward, the recovery, which we are expecting from the NCLT, surfaces, OTS and ARC because we have — NCLT, I told we have a huge pool. SARFAESI also last time — last time, we recovered around INR860 crores. In the last half, we recovered INR400 crores [Phonetic]. So same number we are trying to achieve that this year also. Half year INR400 crores, next year INR400 crores.
Likewise, in the OTS last time, we recovered INR1,500 crores. This half year, we recovered INR755 crores. So we are going totally on those lines. ARC, of course, last time we have recovered INR465 crores. In this year, we have recovered INR97 crores. So — But you see one presentation, NARCL. We have seven account of INR700 crores, where bids have been received.
So we’ll go for the Swiss challenge and this amount when we’ll transfer to NARCL, naturally this ARC recovery will happen. So we are not on the track — around INR2,000 crores of quarterly recovery. Of course, our guidance will continue to be around INR7,000 crores to INR7,500 crores of recovery. So we are moving on that direction, sir.
Ashok Ajmera
Point well taken, sir. Last question in this round out [Phonetic] treasury, sir. Our performance of treasury is reasonable in this quarter also. I mean, we have made some good decent profit also — trading profit also as well as the — also the valuation profit and gains also. So going forward, sir, what is your take on when we — I think we expect some rate cut also in December. We’ll be having the better profitability on the overall treasury operations including the equity debt trading also as well as on the — because of the rate cut on the valuation front also. So overall, in the next six months, I mean, this current six months will be better than the last six months on the treasury?
Shanti Lal Jain
Two things — two, three things I’ll complete the entire investment book. First of all, we have added the investment by INR5,000 crores in June to September, right, because we are having a liquidity and the first point. And we have — INR3,000 crores we have added in SLR and INR2,000 crores in non-SLR, right?
Now second point is, there’s a yield on investment, which is very, very important. Our yield on investment in June was 7.15%, in September, it is 7.17%. So our yield on investment is 7.17% and the 10-year G-Sec is 6.86% [Phonetic], 6.87% [Phonetic]. So we have much above the 10-year G-Sec second point.
Now as per the guidelines, the unrealized profit on AFS will go to the reserve — AFS reserve and FVTPL comes in the P&L account. INR700-odd crores, which is unrealized profit because of this is go to the AFS reserve. We could have even INR700 crores more, we could have earned. But we thought that let us have a good margin continue — we have a good margin and continuously profitability. So this is our treasury. Otherwise, the profit would have INR200 crores plus INR700 crores.
Ashok Ajmera
Yes. Yes, yes, sir.
Shanti Lal Jain
It would have come down in the time to come, right? This is the second point.
So third point is that what we are doing is treasury, we know that interest rate has come down. That is why we have built the book at 7.17 [Phonetic]. Today also, when the — and the yield is between around 6.9%, we are buying. If it is going below 6.8%, we are sailing this how we are moving. So we think that it should be around 6.75% to 6.85% or this should be the trend. But we are sitting in a very comfortable position, sir.
Anand Dama
Thank you, sir.
Shanti Lal Jain
Thank you.
Anand Dama
We’ll take the next question from Mona. Mona, please unmute yourself.
Mona Khetan
Yeah. Hi, sir. Good evening. Congratulations on a good set of numbers.
Shanti Lal Jain
Thanks
Mona Khetan
Just two questions. Yeah. So firstly, in your notes to accounts, you’ve mentioned that about INR300 crores of provisions were made outside of the minimum regulatory requirements. So this is part of PCR itself, right, or it’s outside of PCR?
Shanti Lal Jain
No, whatever provision we make, if it is a standard asset provision, it cannot be a part of the PCR because NPA provision only comes in…
Mona Khetan
Okay, sir. These are standard provisions.
Shanti Lal Jain
These are standard.
Mona Khetan
Okay. Got it. And secondly, so if I have to look at the balance sheet level, what sort of outstanding standard provisions we have on the books?
Shanti Lal Jain
In the entire book, we are having standard asset provision close to INR8,500 crores.
Mona Khetan
Okay. And how much of this is towards restructured book?
Shanti Lal Jain
Generally, we are having restructured book close to around 30% — 28%.
Mona Khetan
28% PCR on…
Shanti Lal Jain
28% [Speech Overlap]. It is again a regulatory requirement of 10%, we are having 28%.
Mona Khetan
Got it. That’s all from my side. Thank you.
Anand Dama
Yeah. Thank you, Mona. Next question we’ll take from Dixit. Dixit, please unmute yourself.
Dixit Doshi
Yeah. One question. Firstly, when clarification, you mentioned that this one corporate — government corporate account, which is in SMA 2. So we have received some amount after the September, you are saying and therefore it is moved to SMA 1 now.
Shanti Lal Jain
Part of the irregularity — suppose the irregular [Phonetic] amount say INR100 crores, and we recovered INR50 crores. So the irregularity, which was 60 days has become less than 60 days — 30 days.
Dixit Doshi
Okay. And are we holding any provision against this account?
Shanti Lal Jain
We are having a provision based on the portfolio and all, so.
Dixit Doshi
Okay. And my last question is, in the non-interest income, under the miscellaneous income has gone up to INR228 crores from INR99 crore year-on-year or INR135 crores quarter-on-quarter. So was there any one-off in this INR228 crore? Any significant one-off?
Shanti Lal Jain
Basically, this is the penal interest. Major part of it is a penal charges.
Dixit Doshi
Okay. Therefore, it has gone up substantially Y-o-Y.
Shanti Lal Jain
That is why the NII growth is looking less [Indecipherable].
Dixit Doshi
Okay. Okay. Understood. Thank you. That’s it from my side. Thanks.
Anand Dama
Yeah. Thank you, Dixit. [Operator Instructions] So before that, there is one this — one of — one other the question, which is there in the chat box. What is the LCR for the second quarter? And any impact that you saw primarily because of the RBI supervision, which ask you of the banks basically to rework their LCR.
Shanti Lal Jain
What is the question? What is the…
Anand Dama
What is the — what is the LCR for second quarter, liquidity coverage.
Shanti Lal Jain
LCR is close to around 120% plus. We are — last quarter, we were having LCR of 114% June, now around of 120% plus 121%, 122% this — the range we are in.
Anand Dama
There were these banks basically who had said that there was this RBI supervision and because of which there was some impact on the LCR. So how come basically our LCR has actually gone up? Is it that we have raised some funds recently?
Shanti Lal Jain
No, what happens, the RBI is based on the guidelines, we also fine tune our guidelines. So after considering everything, it is 122%.
Anand Dama
Okay. Okay. Sure, sir. Sir, and secondly was this — there was this Telangana farm loan waver. Any impact of that basically has reflected into our numbers. Similarly, if you look at — a lot of banks have reported higher NPAs in the retail segment. Obviously, we do not have as much of exposure to unsecured loans, but can you share [Phonetic] that we are seeing in any other segment?
Shanti Lal Jain
No, we are having even less than INR200 crores. So we are not having much exposure in Telangana. And they are paying us money [Foreign Speech]. So we are having close to INR200 crores — INR206 crores.
Anand Dama
Like in the retail book…
Shanti Lal Jain
[Indecipherable].
Anand Dama
Yeah. In the retail book, are you seeing some stress?
Shanti Lal Jain
No, you see our retail book, SME and all these, slippage is INR120 crores, and the collection efficiency is 95%, 96%. So there is no issue, sir. INR110,000 [Phonetic] crores booking small ones.
Anand Dama
Sure, sir. [Operator Instructions] Suraj [Phonetic], yeah, please unmute yourself and ask your question.
Suraj Das
Yeah. Hi, sir. Thanks for the opportunity. Sir, one question on your housing finance book. So if I see the Slide 12, the housing finance rating mix has changed drastically because I think some accounts from the AAA has been, I mean, either prepaid or something like that and corresponding the housing finance book has also come down to INR13,000 crores to INR8,000 crores. So if you can give some color here?
Shanti Lal Jain
Yeah, yeah. One of the big accounts, which — because of the rate in all issues that is repaid back.
Suraj Das
Okay. Okay. Sure. Is it, sir, ICICI home finance?
Shanti Lal Jain
Account specific will not work.
Suraj Das
Okay. Thank you.
Anand Dama
Thank you, Suraj. Next question we will take from Jai Mundhra. Jay, please unmute yourself.
Jai Mundhra
Yeah. Hi, sir, good evening. Sir, couple of questions. First, sir, on — we have this Ind Bank Housing, right, which — where we held — which is 51%, where we own 51%. If you look at the draft RBI circular on the investments, etc., how do you see the fate of that entity? Would you be okay to merge with the bank? Or how should one look at it?
Shanti Lal Jain
No, this I’d Bank Housing, we are closing.
Jai Mundhra
Okay. So this anyway was going to get down irrespective of RBI circular.
Shanti Lal Jain
No, no, we are closing it because there is no activity in the company except they are having some assets. They are having some assets, so we are in the process of selling those assets.
Jai Mundhra
Okay. So — okay, understood. But we — earlier we — I mean, we only have 51% stake, right? I mean, the other 49% we’re…
Shanti Lal Jain
No, we are having 51% and then the HUDCO is there with us and — 25% HUDCO and rest with the public. But last so many days, last so many years, there is no activity except the asset, which we’re..
Jai Mundhra
Yeah. Yeah. Yes. So that is a different kind of an entity. I was just looking if…
Shanti Lal Jain
No we are in the process of selling the asset, which they are having.
Jai Mundhra
Right. Okay. And sir, secondly, if you can share your loan book mix by benchmark, how much is EBLR, MCLR fixed rate book and foreign currency, etc?
Shanti Lal Jain
Yeah. So my — as on 30th September, MCLR book is 58%, and the repo link is 36%, and fixed is 5% and others is 1%.
Jai Mundhra
Okay. Sure. And sir, this MCLR…
Shanti Lal Jain
MCLR also, one-year MCLR is 80%.
Jai Mundhra
Okay. Sure. And sir, repo will anyway be within immediate or maybe one-week repricing kind of a thing, right? Fair to assume that…
Shanti Lal Jain
Yeah. Repo — repo will be the next day.
Jai Mundhra
Right. Right. Okay. And sir, this on PSL, right? So I think the other income spike you have already answered. On the PSL gains that we have seen, I believe we have a policy of amortizing PSL gains throughout the year. So that the amount is more or less consistent. But what I wanted to check was if — I mean, where is the commission that we get. If I look at annual report, we tend to sell most of the category in SMF at small and marginal farmers, the small sale is there in the PSLC agri. But if you can highlight what kind of the yields that you get or that you have got in the Q1 and Q2?
Shanti Lal Jain
Two, three things basically. In PSLC side, our income, which used to be INR400-odd crore in ’22, INR657 crores in ’24, now INR700 odd crores and around INR364 crores — INR182 crores last year and 182×2 [Phonetic], INR364 crores, we are carrying it forward, which will be the income for the Q3 and Q4. So this — earlier, we used to have one quarter. But from last year, we changed this policy. So this is going on. And we are selling the PSLC in small and marginal farmers, in other categories as well. But better return is in this category. 95% of our original, small and marginal farmers.
Jai Mundhra
Right. And what kind of the yield could be there, sir, for this first half or maybe the last quarter on the PSLC?
Shanti Lal Jain
Around 2%, somewhere 2.1%, 2.15%. This is on a market. It is a market basically, around 2% you can say.
Jai Mundhra
Okay. So the market rate for PSL has been holding up, right? I mean earlier, it has gone down to as low as maybe 0.5% also. But as of now, it is reasonably…
Shanti Lal Jain
No, no, with the — what happens with the paces of time that it will come down. So we sold out in the first quarter itself.
Jai Mundhra
Okay. Understood. Sure. And sir, lastly, on credit cost, right? So while the math is okay, that you have reduced your net NPA by 12 basis points, and we have reported a credit cost of 65 basis points annualized, right? So, so far, the math is good. But right now, you have a net NPA, which is very, very low, right. So going ahead, the credit cost could be like 20 basis points, 30 basis points also. What is the — what is your assessment, sir, assuming you have said that there is no asset quality stresses any part of the portfolio and the SMA 2 number that we saw is also government entity. So the incremental credit cost assuming you make your net NPA stable, could be as low as 20 basis points, 30 basis points, 35 basis points. Would that be a fair assessment?
Shanti Lal Jain
The credit cost is coming down because of the net NPA itself is coming down, right? So naturally, the credit cost will further come down. How much it will come down will depend on the further slippages in a small account even can — in agri or other accounts. But definitely, the credit cost will come down considerably.
Jai Mundhra
Right. And last question, sir, if you have the number for SMA 1 plus 2 at the bank level, right? Because even in this quarter, a lot of slippages would have come from below INR5 crores account. So if you have that number, it will be very, very helpful, sir.
Shanti Lal Jain
Okay. That we’ll provide you.
Jai Mundhra
Thank you. Sure. Agreed and all the very best, sir.
Shanti Lal Jain
Thank you, sir. Thank you.
Anand Dama
Thank you, Jai. Next question will take from Mona. Mona, please unmute yourself.
Mona Khetan
Yeah. Hi, sir. Just a follow-up question. So if I look at the liability accretion in H1 between deposits and borrowings, you’ve relied or the bank has relied a lot more on borrowings versus deposits. So if you could just highlight what is going on here? Is it a challenge in deposits? Or is it because you’re getting borrowings at a much competitive rate? If you could just throw some light here? Thank you.
Shanti Lal Jain
You see what is — 400 days deposit rate is 7.30% today. If you see the bulk deposit interest rate is anywhere between 7.7% to 7.9%. These are the two rates. What is — on what rate, we raised the infra bond at a average price of 7.18%. Plus, there is no CRR/SLR obligation, no DICC’s obligation. So if you reduce the cost of around 40 bps because of negative carryover, it comes to around 6.8%. So which is — which makes a huge sense to us, and therefore, we have gone for infra bond, because ultimately, the margins are important, and we have a huge infra book of close to INR55,000 crores even — so there’s opportunity for us. So we are going for that.
Mona Khetan
Got it, sir. Thank you. Thank you. That’s helpful.
Anand Dama
Thank you, Mona. Next question we’ll take from Rakesh [Phonetic]. Rakesh, please unmute.
Unidentified Participant
Thanks for the opportunity and quite a stable performance, especially on the asset quality side, quite good performance this quarter again. Sir, just one question with respect to the loan write-off. So are we looking at close to another INR3,000 crores of loan write-off in the second half, considering the run rate and plus what we had in the loss asset, as on March ’24?
Shanti Lal Jain
You see our loan write-off rate itself is coming down.
Unidentified Participant
Correct, sir.
Shanti Lal Jain
So going forward, it will — lesser write-off is against the current write-off because some of the outstanding, which we are getting, we are getting a tax benefit as well. So considering all aspect in view, we go for write-off, technical write-off. But some write-off will always happen because of the compromise and because of our balance sheet management.
Unidentified Participant
Correct. Correct. And sir, PCR, we are expecting to like maintain at this level? Or just considering that accumulated provision number is also coming down. So just from that perspective, I’m asking the PCR number, we would maintain around this level only sir, correct no, sir?
Shanti Lal Jain
PCR be at 97.6% or close to 98% of the PCR we are having.
Unidentified Participant
Sure. Sure. Sure. Thank you so much, sir. Thank you, sir. All the best, sir.
Anand Dama
Sir, one question which has come in the chat box is that another public sector bank had a higher AS-15 provision during the current quarter. Is there a possibility that we might also do something similar maybe in next second half?
Shanti Lal Jain
No, we have already increased our AS-15 provision from INR547 crores of the September ’23 to INR812 crores. We already increased AS-15 provision. And the reason for increasing the AS-15 provision is that we brought the discount rate to 6.94% as against 7.16% of the June and all. So we are exactly what the current market is.
Anand Dama
Great, sir. Yeah. Sir I think we do not have any further questions. Maybe we can close the part. Sir, if you have any closing comments to make.
Shanti Lal Jain
Thank you very much for all analysts and investors for sparing your valuable time and giving us an insight and giving us a motivation to do better. So to kindly keep supporting us. Thank you very much, and Happy Diwali to you all.
Anand Dama
Yeah. Thank you, all participants and Happy Diwali from us.